Product Design

Product Design

Humor in Product Design

As the customer wanted it. As Marketing interpreted it.

As Operations made it.

As Engineering designed it.

Product Design

Whats a Product?

Need-satisfying offering of an organization

Example P&G does not sell laundry detergent P&G sells the benefit of clean clothes

Customers buy satisfaction, not parts May be a good and/or service: a product service bundle
Product Design 3

Product Components
Product

Brand (Name)

Product Idea

Package

Physical Good

Features

Quality Level

Service (Warranty)
4

Product Design

Product Life Cycle

Sales

Introduction

Time
1995 Corel Corp.

Product Design

Product Life Cycle

Sales

IntroGrowth duction

Time
Product Design

1995 Corel Corp.

Product Life Cycle

Sales

IntroGrowth duction

Maturity

Time
Product Design
1995 Corel Corp.

Product Life Cycle

Sales

IntroGrowth duction

Maturity

Decline

Time
Product Design

1995 Corel Corp.

Product Life Cycle

Sales

IntroGrowth duction

Maturity

Decline

Time
Product Design 9

Product Development
Designing The Product-Service Bundle

Product Design

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LEARNING OBJECTIVES
Demonstrate your understanding of the cross-functional linkages involved in designing product-service bundles Describe the tasks involved in designing product-service bundles Summarize the traditional approach to designing product-service bundles Describe the modern approach to designing product-service bundles Compare and contrast a variety of tools that are useful in the design processes, and use break-even analysis

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Importance of Product Design

When a product is designed

Its detailed characteristics are established Determining how the product can be produced Influencing the design of the production system

Also, Product Design directly affects

Product Quality
Production Costs Customer Satisfaction

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Importance of Product Design

THEREFORE THE DESIGN OF GOODS AND SERVICES ARE CRUCIAL TO SUCCESS IN TODAYS GLOBAL COMPETITION

Product Design

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INTRODUCTION
Designing product-service bundles is facilitated by managing white spaces Development of a product-service bundle requires completion of a defined set of tasks Customers are less likely to accept partial satisfaction of requirements Product-service bundle design is an ongoing process

Product Design

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Product Decisions

Involve selecting products to offer, defining products, & designing products Objective

Meet marketplace demand with a product having a competitive advantage Example: equipment, layout, skills etc.

Affect entire organization

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Product Decisions
ENTAILS EVALUATION OF COMPETING PRODUCT CONCEPTS AND/OR MAJOR MODIFICATION OF CURRENT PRODUCTS

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Product Decisions

INVOLVES TRADE-OFFS AMONG

Product Performance - meeting customer needs Development Speed - getting the product to market soonest Product Cost - total cost to the customer Development Program Expense - the one time costs to develop the product
Product Design 17

TASKS IN THE DESIGN OF PRODUCT-SERVICE BUNDLES Doing market research Performing basic scientific research Choosing or developing a technology Developing specific applications, systems, and/or products and services Testing performance of new systems and/or products and services

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TASKS IN THE DESIGN OF PRODUCT-SERVICE BUNDLES

Creating a value-adding system:

product creation processes delivery systems maintenance and support services allied service and product delivery systems supplier capabilities distribution system
Product Design 19

TASKS IN THE DESIGN OF PRODUCT-SERVICE BUNDLES

Ensuring legal and regulatory compliance of new applications, systems, and/or products and services Obtaining patents, trademarks, and copyrights Develop marketing plan:
place, price, promotion customer education
Product Design 20

THE TRADITIONAL APPROACH TO THE DESIGN OF PRODUCT SERVICE BUNDLES

Over-the-wall approach
set of sequentially related tasks each task represented by different function each function works in isolation from others

Trends that challenge the traditional approach

globalization of business rapid technological change shortening product life cycles e-commerce
Product Design 21

THE TRADITIONAL APPROACH OVER THE WALL DESIGN

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THE MODERN APPROACH TO THE DESIGN OF PRODUCT-SERVICE BUNDLES

Over-the-wall approach spans white spaces; it doesnt manage them Greater emphasis on management of all functions throughout the design process Cross-functional design team typically manages the entire design process Concurrent team approach
Product Design 23

DESIGNING PRODUCT-SERVICE BUNDLES: MODERN APPROACH

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24

TEAM STRUCTURE INSTEAD OF FUNCTIONAL STRUCTURE

Each function spins in its contribution Customer is seen as part of the design team Functional excellence remains important, but is subordinate to customer satisfaction Ability of members to make significant contributions at each stage of the design process Concurrent team approach is not always easy
Product Design 25

CONCURRENT ENGINEERING INSTEAD OF SEQUENTIAL/HIERARCHICAL ENGINEERING

Concerns of more than one function are considered simultaneously Concurrent Engineering Strategies/Methods:
Design for manufacturing (DFM) Taguchi methods Design for disassembly Design for procurement Design for environment Life cycle analysis
Product Design 26

GROUP TECHNOLOGY AND ADDITIONAL DESIGN STRATEGIES Group technologybased on commonalities Modular designconsiders an items components or subsystems independently Product simplification improves manufacturability, serviceability or reliability by reducing the complexity E-commerce plays a role in the design process

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QUALITY FUNCTION DEPLOYMENT (QFD)

Used to integrate customer expectations with product design decisions Competitive analysis gathers information on customer satisfaction Technical analysis gathers information on production technologies, reliability, and performance Design targets are used to position the productservice bundle to best advantage
Product Design 28

GENERIC HOUSE OF QUALITY

Product Design

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Product Development Stages

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Product Development Stages

Idea Generation Market Requirements Functional Specification Product Specification Design Review Test Market Introduction Life Cycle Management
Product Design 31

Few Successes
Number
2000

1750 Market Design review, 1500 req. Testing, Intro. 1000 Functional spec. 1000 Product Successful 500 spec. product 500 100 1 25
0

Development Stage Product Design

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Idea Generation Stage

Product Design

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Idea Generation Stage

Provides ideas that provide basis for entry into market Sources of ideas

Market need (60-80%); engineering & operations (20%); technology; competitors; inventions; employees

Follows from marketing strategy

Identifies, defines, & selects best market opportunities

Product Design 34

Factors Creating Market Opportunities

Product Design

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Factors Creating Market Opportunities

Economic change Sociological & demographic change Technological change Political/legal change Other changes

Market practice, suppliers etc.

Product Design 36

Market Requirements Stage

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Market Requirements Stage

Identifies & positions key product benefits

Stated in core benefits proposition (CBP) Example: Long lasting with more power (Sears Die Hard Battery)

House of Quality

Identifies detailed list of product attributes desired by customer

Focus groups or 1-on-1 interviews

Product Char. Customer Req.

Product Design 38

Functional Specification Stage

Product Design

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Functional Specification Stage

Defines product in terms of how the product would meet desired attributes Identifies products engineering characteristics

Example: printer noise (dB)

House of Quality
Product Char.

Prioritizes engineering characteristics May rate product to competitors

Customer Req.

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Product Specification Stage

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Product Specification Stage

Determines how product will be made Gives products physical specifications

Example: Dimensions, material etc.

House of Quality

Defined by engineering drawing Done often on computer

Component Spec.

Called ComputerAided Design (CAD)

Product Design

Product Char.
42

Computer Aided Design (CAD)

Designing products at a computer terminal or work station

Design engineer develops rough sketch of product Uses computer to draw product
1995 Corel Corp.

Often used with CAM

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Benefits of CAD/CAM

Shorter design time Database availability New capabilities

Example: Focus more on product ideas

Improved product quality Reduced production costs

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Designing for Product Reliability

Design Issue

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Reliability

Often a desired attribute of customers Probability that a component or system will function for a given time Ways to increase

Improve individual components Responsibility of design engineering & purchasing Provide redundancy Design includes backup components
Product Design 46

System Reliability

System: a group of interacting parts Reliability depends on two factors

Number of components Component reliability Rs = R1 x R2 x R3 x ... x Rn

Equation

0 Ri 1 Components are independent

Product Design 47

System Reliability

System: a group of interacting parts Reliability depends on two factors

Number of components Component reliability Rs = R1 x R2 x R3 x ... x Rn

Equation

Ri = Reliability of component i

0 Ri 1 Components are independent

Product Design 48

Failure

Change in product or system from satisfactory to below standard

No. failures FR(%) 100% No. units tested No. failures FR( N ) No. unit hours operated 1 MTBF FR( N )
Product Design 49

Redundancy

Increases system reliability Means at least 1 component has a backup (duplicate) Reliability of component with backup

= P(1st working) + [P(2nd working x P(1st failing)]

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Redundancy Example
What is the reliability of this system? .92 .95
Backup components

.89 .90

.98

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Redundancy Example
What is the reliability of this system? .92 .95
Backup components

.89 .90

.98

R = [.95 + .92(1-.95)] [.98] [.90 + .89(1-.90)] = (.996) (.98) (.989) = .965 = 96.5%
Product Design 52

Design Review Stage

Product Design

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Design Review Stage

Determines how product will be made economically & quality robust Shows steps in process

Example: Drill hole to 1/4 diameter

House of Quality
Production Process

Often uses value engineering to reduce costs

Component Spec.
54

Product Design

Life Cycle Management Stage

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Life Cycle Management Stage

Involves adjusting strategies to deal with opportunities & threats Uses product-by-value analysis

Lists products in descending order of unit & total contribution ($) Competitive response Changes in market environment Insufficient return on investment (ROI)

Reasons for product failure

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PRODUCT COSTING METHODS

Activity-based costing:
allocates costs to the product-service bundle on overhead activities performed

Break-even analysis:
used to justify a new product-service or change an existing one can be used to compare alternatives relies on inexact demand and cost estimates

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COST VOLUME BREAK-EVEN ANALYSIS

Y = 55X

Product Design

Y = 5000 + 45X

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Organization for New Product Development

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INTEGRATING OPERATIONS MANAGEMENT WITH OTHER FUNCTIONS

Historical functions most involved in designing products and services:

marketing involved in identifying customer requirements engineering involved in actually producing

Modern design processes draw on cross-functional teams

separating design from other operational decisions can hinder efforts to satisfy customers
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 Development process requires crossfunctional thinking Difficult to separate product-service bundle from value-adding system Design process involves both customers and suppliers Design process including all stakeholders results in win-win design

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Organizing for New Product Development

Team approach works best

Composed of marketing, engineering etc. Responsible for product during all stages of life cycle

Product development teams

Design for manufacturability & value engineering teams

Responsible for improving product design to reduce costs

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Required Factors for Team Success

Support of top management Qualified, experienced leadership Formal team organization Training in product development Diverse, yet cooperative members Adequate staffing, funding, & vendor assistance
Product Design 63

Strategic Importance of Product Development

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Importance of New Products

60% 50% 40% 30% 20% 10% 0%

Percent of Sales from New Products

48% 34% 26%

Middle 1/3

11%
Bottom 1/3
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Industry Leader

Top 1/3

Position of Firm Product Design in Industry

Time-Based Competition

Competing on the basis of the speed in bringing products to market

May be new or existing products

Faster developers have competitive advantage

Companies differentiate themselves by introducing newer products faster Example: Intel 386, 486, & Pentium chips
Product Design 66

Time-Based Competition Example

Mean Passenger Car Development
Company

Toyota Honda Ford GM 0 10 20

27 36 37

From concept approval to production

46

30

40

50
67

Product Design

Months

End of Chapter
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