5 - 1© 2014 Pearson Education Product Design PowerPoint presentation to accompany Heizer and Render Operations Management, Global Edition, Eleventh Edition Principles of Operations Management, Global Edition, Ninth Edition PowerPoint slides by Jeff Heyl 5 © 2014 Pearson Education

5 - 2© 2014 Pearson Education OUTLINE ▶ Goods and Services Selection ▶ New Product Development ▶ QFD ▶ Organizing for Product Development ▶ Key Isues for Product Design ▶ Documents for Product Definition ▶ Documents for Production ▶ Service Design ▶ Application of Decision Trees to Product Design

5 - 3© 2014 Pearson Education ► Organizations exist to provide goods or services to society ► Goods and services selection are critical to achieving competitive advantage ► Great products are the key to success ► Top organizations typically focus on core products Goods and Services Selection

5 - 4© 2014 Pearson Education Some Well Known Companies Having Competitive Advantage Through Their Products Honda: engine technology Microsoft: PC software Intel: Microprocessors Michelin: Tires Dell Computer: Customized hardware and software and Dell does this very fast.

5 - 5© 2014 Pearson Education The objective of the product decision is to develop and implement a product strategy that meets the demands of the marketplace with a competitive advantage Product Decision

5 - 6© 2014 Pearson Education Product Strategy Options ► Differentiation  Shouldice Hospital in Canada specializing in hernia operation ► Low cost ► Taco Bell, Wallmart ► Rapid response  Toyota (product development under 2 years. Industry standard is over 2 years)

5 - 7© 2014 Pearson Education Product Life Cycles ► May be any length from a few days to decades ► The operations function must be able to introduce new products successfully

5 - 8© 2014 Pearson Education Product Life Cycles  May be any length from a few hours (a newspaper), months (cell phones), years (furnitures), to decades (Wolgswagen Beetle)  A product’s life is divided into four phases:1. Introduction, 2. Growth, 3. Maturity, 4. Decline  The operations function must be able to introduce new products successfully

5 - 9© 2014 Pearson Education © 2011 Pearson Education, Inc. publishing as Prentice Hall Importance of New Products Industry leader Top third Middle third Bottom third Figure 5.2a Percentage of Sales from New Products 50% 40% 30% 20% 10% Position of Firm in Its Industry

5 - 10© 2014 Pearson Education Product Life Cycle Negative cash flow IntroductionGrowthMaturityDecline Sales, cost, and cash flow Cost of development and production Cash flow Net revenue (profit) Sales revenue Loss Figure 5.2

5 - 11© 2014 Pearson Education Life Cycle and Strategy Introductory Phase ► Fine tuning may warrant unusual expenses for 1.Research 2.Product development 3.Process modification and enhancement 4.3Supplier development

5 - 12© 2014 Pearson Education Product Life Cycle Growth Phase ► Product design begins to stabilize ► Effective forecasting of capacity becomes necessary ► Adding or enhancing capacity may be necessary

5 - 13© 2014 Pearson Education Product Life Cycle Maturity Phase ► Competitors now established ► High volume, innovative production may be needed ► Improved cost control, reduction in options, paring down of product line

5 - 14© 2014 Pearson Education Product Life Cycle Decline Phase ► Unless product makes a special contribution to the organization, must plan to terminate offering

5 - 15© 2014 Pearson Education © 2011 Pearson Education, Inc. publishing as Prentice Hall Product-by-Value Analysis  Lists products in descending order (from largest to smallest) of their individual dollar contribution to the firm  Lists the total annual dollar contribution of the product  Helps management to evaluate alternative strategies so that limited existing resourses are to be invested in few critical and not in many trivial.

5 - 16© 2014 Pearson Education © 2011 Pearson Education, Inc. publishing as Prentice Hall Product-by-Value Analysis Individual Contribution ($) Total Annual Contribution ($) Love Seat$102$36,720 Arm Chair$87$51,765 Foot Stool$12$6,240 Recliner$136$51,000 Sam’s Furniture Factory

5 - 17© 2014 Pearson Education © 2011 Pearson Education, Inc. publishing as Prentice Hall Quality Function Deployment (QFD) 1.A planning tool used to fulfill customer expectations 2.Identify what will satisfy the customer 3.Translate those customer desires into the TARGET DESIGN 4.Originally developed in Japan in the late 1960s. 5.Now widely used not only in Japan but in Europe, US and all over the world.

© 2014 Pearson Education © 2011 Pearson Education, Inc. publishing as Prentice Hall House of Quality Example Your team has been charged with designing a new camera for Great Cameras, Inc. The first action is to construct a House of Quality

© 2014 Pearson Education © 2011 Pearson Education, Inc. publishing as Prentice Hall House of Quality Example Customer importance rating (5 = highest) Lightweight 3 Easy to use 4 Reliable5 Easy to hold steady 2 Color correction1 What the customer wants What the Customer Wants Relationship Matrix Technical Attributes and Evaluation How to Satisfy Customer Wants Interrelationships Analysis of Competitors

© 2014 Pearson Education © 2011 Pearson Education, Inc. publishing as Prentice Hall House of Quality Example What the Customer Wants Relationship Matrix Technical Attributes and Evaluation How to Satisfy Customer Wants Interrelationships Analysis of Competitors Low electricity requirements Aluminum components Auto focus Auto exposure Paint pallet Ergonomic design How to Satisfy Customer Wants

5 - 21© 2014 Pearson Education Four Approaches to Organizing for Product Development 1) Historically – distinct departments R&D Dept, Eng. Dept, Mnfg. Eng. Dept, Prod. Dept.  Duties and responsibilities are well defined (Advantage)  Difficult to foster forward thinking (Disadvantage)

5 - 22© 2014 Pearson Education Organizing for Product Development 2) A Champion  To assign a product manager to champion the product through the product development system and related organizations

5 - 23© 2014 Pearson Education Organizing for Product Development 3) Team approach (Concurrent Engineering)  Cross functional – representatives from all disciplines or functions  Product development teams, design for manufacturability teams, value engineering teams Marketability, manufacturability, serviceability 4) Japanese “whole organization” approach  No organizational divisions

5 - 24© 2014 Pearson Education Design for Manufacturability and Value Engineering  DESIGN FOR MANUFACTURABILITY AND VALUE ENGINEERING activities reduce complexity of products, reduce cost, improve functional aspects of product, improve maintainability (serviceability) of the product.  In short, they help to meet the customer requirements in an optimal way.

5 - 25© 2014 Pearson Education Design for Manufacturability and Value Engineering and Design for Manufacturability and Value Engineering and Concurrent Engineering Concurrent Engineering: Team approach to design products Cross functional – representatives from all disciplines or functions  Product development teams, design for manufacturability teams, value engineering teams Marketability, manufacturability, serviceability

5 - 26© 2014 Pearson Education Issues for Product Design ► Robust design ► Modular design ► Computer-aided design (CAD) ► Computer-aided manufacturing (CAM) ► Virtual reality technology ► Value analysis ► Environmentally friendly design

5 - 27© 2014 Pearson Education Robust Design ► Product is designed so that small variations in production or assembly do not adversely affect the product ► Typically results in lower cost and higher quality

5 - 28© 2014 Pearson Education Modular Design ► Products designed in easily segmented components ► Adds flexibility to both production and marketing ► Improved ability to satisfy customer requirements

5 - 29© 2014 Pearson Education © 2011 Pearson Education, Inc. publishing as Prentice Hall  Using computers to design products and prepare engineering documentation  Shorter development cycles, improved accuracy, lower cost  Supports “mass customization”  3-D Object Modeling Small prototype development Computer Aided Design (CAD)

5 - 30© 2014 Pearson Education © 2011 Pearson Education, Inc. publishing as Prentice Hall Computer-Aided Manufacturing (CAM)  Utilizing specialized computers and program to control manufacturing equipment  Often driven by the CAD system (CAD/CAM)  CNC Machines

5 - 31© 2014 Pearson Education Virtual Reality Technology ► Computer technology used to develop an interactive, 3-D model of a product from the basic CAD data ► Allows people to ‘see’ the finished design before a physical model is built ► Very effective in large-scale designs such as plant layout

5 - 32© 2014 Pearson Education Value Analysis ► Focuses on design improvement during production ► Seeks improvements leading either to a better product or a product which can be produced more economically with less environmental impact ► Note that while Value Engineering focuses on preproduction design improvement, Value Analysis takes place during the production process.

5 - 33© 2014 Pearson Education Ethics and Environmentally Friendly Designs It is possible to enhance productivity, drive down costs, and preserve resources. Effective at any stage of the product life cycle  Design  Production  Destruction

5 - 34© 2014 Pearson Education Guidelines for Environmentally Friendly Designs 1.Make products recyclable 2.Use recycled materials 3.Use less harmful ingredients (Using soy-based inks) 4. Use lighter components Mercedes is using banana plant fiber for car exteriors Biodegradable and lightweight 5. Use less energy 6. Use less material

5 - 35© 2014 Pearson Education ► Engineering drawing ► Shows dimensions, tolerances, and materials ► Shows codes for Group Technology ► Bill of Material ► Lists components, quantities and where used ► Shows product structure Product Definition Documents

5 - 36© 2014 Pearson Education Engineering Drawings Figure 5.8

5 - 37© 2014 Pearson Education Bills of Material BOM for a Panel Weldment NUMBERDESCRIPTIONQTY A 60-71PANEL WELDM’T1 A 60-7LOWER ROLLER ASSM.1 R ROLLER1 R PIN1 P 60-2 LOCKNUT1 A 60-72GUIDE ASSM. REAR1 R SUPPORT ANGLE1 A 60-4 ROLLER ASSM BOLT1 A 60-73GUIDE ASSM. FRONT1 A SUPPORT WELDM’T1 R WEAR PLATE BOLT1 Figure 5.9 (a)

5 - 38© 2014 Pearson Education A Product Structure Diagram Showing BOM

5 - 39© 2014 Pearson Education Documents for Production ► Assembly drawing ► Assembly chart ► Route sheet ► Work order ► Engineering change notices (ECNs)

5 - 40© 2014 Pearson Education Assembly Drawing ► Shows exploded view of product ► Details relative locations to show how to assemble the product Figure 5.11 (a)

5 - 41© 2014 Pearson Education Assembly Chart R 209 Angle R 207 Angle Bolts w/nuts (2) R 209 Angle R 207 Angle Bolt w/nut R 404 Roller Lock washer Part number tag Box w/packing material Bolts w/nuts (2) SA 1 SA 2 A1 A2 A3 A4 A5 Left bracket assembly Right bracket assembly Poka-yoke inspection Figure 5.11 (b) Identifies the point of production where components flow into subassemblies and ultimately into the final product

5 - 42© 2014 Pearson Education Route Sheet Lists the operations and times required to produce a component SetupOperation ProcessMachineOperationsTimeTime/Unit 1Auto Insert 2Insert Component Set 56 2Manual Insert Component.52.3 Insert 1 Set 12C 3Wave SolderSolder all components to board 4Test 4Circuit integrity.25.5 test 4GY

5 - 43© 2014 Pearson Education Work Order Instructions to produce a given quantity of a particular item, usually to a schedule Work Order ItemQuantityStart DateDue Date ProductionDelivery DeptLocation 157C1255/2/085/4/08 F32Dept K11

5 - 44© 2014 Pearson Education Engineering Change Notice (ECN) ► A correction or modification to a product’s definition or documentation ► Engineering drawings ► Bill of material Quite common with long product life cycles, long manufacturing lead times, or rapidly changing technologies

5 - 45© 2014 Pearson Education Service Design  Service typically includes direct interaction with the customer  Increased opportunity for customization  Reduced productivity ▶ Service productivity is low partially because of customer involvement in the design or delivery of the service, or both

5 - 46© 2014 Pearson Education Strategies to Improve Service Efficiency ▶ Limit the options ▶ Improves efficiency and ability to meet customer expectations (a menu in a restaurant or a series of photographs in the case of hairstyle) ▶ Delay customization ▶ (Which dressing would you prefer with your salad?) ▶ Modularization ▶ Eases customization of a service (Burger King)

5 - 47© 2014 Pearson Education Strategies to Improve Service Efficiency ▶ Automation ▶ Reduces cost, increases customer service (ATM’s) ▶ Moment of truth ▶ Critical moments between the customer and the organization that determine customer satisfaction (call center)

5 - 48© 2014 Pearson Education Application of Decision Trees to Product Design ► Particularly useful when there are a series of decisions and outcomes which lead to other decisions and outcomes

5 - 49© 2014 Pearson Education Application of Decision Trees to Product Design 1.Include all possible alternatives and states of nature - including “doing nothing” 2.Enter payoffs at end of branch 3.Determine the expected value of each branch and “prune” the tree to find the alternative with the best expected value Procedure

5 - 50© 2014 Pearson Education (.6) Low sales (.4) High sales (.6) Low sales (.4) High sales Decision Tree Example Purchase CAD Hire and train engineers Do nothing Figure 5.13

5 - 51© 2014 Pearson Education (.6) Low sales (.4) High sales Decision Tree Example Purchase CAD (.6) Low sales (.4) High sales Hire and train engineers Do nothing $2,500,000Revenue – 1,000,000Mfg cost ($40 x 25,000) – 500,000CAD cost $1,000,000Net $800,000Revenue – 320,000Mfg cost ($40 x 8,000) – 500,000CAD cost – $20,000Net loss EMV (purchase CAD system)= (.4)($1,000,000) + (.6)(– $20,000) Figure 5.13

5 - 52© 2014 Pearson Education (.6) Low sales (.4) High sales Decision Tree Example Purchase CAD (.6) Low sales (.4) High sales Hire and train engineers Do nothing $2,500,000Revenue – 1,000,000Mfg cost ($40 x 25,000) – 500,000CAD cost $1,000,000Net $800,000Revenue – 320,000Mfg cost ($40 x 8,000) – 500,000CAD cost – $20,000Net loss $388,000 EMV (purchase CAD system)= (.4)($1,000,000) + (.6)(– $20,000) = $388,000 Figure 5.13

5 - 53© 2014 Pearson Education (.6) Low sales (.4) High sales (.6) Low sales (.4) High sales Decision Tree Example Purchase CAD $388,000 Hire and train engineers $365,000 Do nothing $0 $0 Net $800,000Revenue – 400,000Mfg cost ($50 x 8,000) – 375,000Hire and train cost $25,000Net $2,500,000Revenue – 1,250,000Mfg cost ($50 x 25,000) – 375,000Hire and train cost $875,000Net $2,500,000Revenue – 1,000,000Mfg cost ($40 x 25,000) – 500,000CAD cost $1,000,000Net $800,000Revenue – 320,000Mfg cost ($40 x 8,000) – 500,000CAD cost – $20,000Net loss Figure 5.13