MGT3303 Michel Leseure Design Activities in Operations Management Learning objectives: –To review all key design activities in the field of operations management –Focus on the design of manufactured goods –To understand the key challenges of design tasks Product design & Innovation Challenges of design Best practices in NPD The importance of time to market

MGT3303 Michel Leseure New Product Development The process of converting an idea into a product or service The development task may be more or less innovative: –Invention: products or services that are radically new –Expansion: products or services that are new to the firm –Revisions of existing products and services

MGT3303 Michel Leseure Information flow in NPD Needs/Wants Mkt Function Outline Specification Designers Customers Product and/or service Operations Function Operational Specification Case of a market-led NPD

MGT3303 Michel Leseure Product Design Process Concept Generation Screening Prototyping and Final Design Evaluation & Improvement Preliminary Design Concept Package Process From Slack et al., 2004

MGT3303 Michel Leseure No Idea generation Final design Preliminary design Feasibility study Process planning Product feasible? Yes Prototype Manufacturing Design & Manufacturing Specifications Product C oncept Performance Specifications Russell & Taylor’s Framework

MGT3303 Michel Leseure Failures in NPD NPD can fail because: –The process itself is costly and uncertain – a technically successful innovation might not be profitable –The process is hard to manage – innovating firms require special skills –Reward of success are hard to appropriate – innovations can be copied and bettered by competitors

MGT3303 Michel Leseure NPD & Product Superiority History has proved that technological superiority is NOT a sufficient condition for NPD success –VHS vs. Beta –Concorde –Qwerty keyboards, path dependency –Dos and Windows, increasing economies of scale

MGT3303 Michel Leseure The Challenge of Design: Achieving Integration Source: Simon & Schuster from Fast Cycle Times: How to Align Purpose, Strategy, and Structure for Speed by Christopher Meyer. Copyright © 1993 by Christopher Meyer.

MGT3303 Michel Leseure Design Changes Company 2 90% of Total changes complete Company 1 Time Product is commercialised Number of Design Changes

MGT3303 Michel Leseure Best practices in NPD

MGT3303 Michel Leseure Best Practices in NPD Concurrent engineering, supplier involvement, cross-functional teams –Improve communication between parties through: Well designed NPD and information exchange processes The right organisational structure The right organisational climate Process integration –CADCAM, Rapid prototyping Idea generation –Brainstorming –Benchmarking –Reverse engineering

MGT3303 Michel Leseure Perceptual Maps Good taste Bad taste High nutrition Low nutrition Cocoa Puffs Rice Krispies Wheaties Cheerios Shredded Wheat

MGT3303 Michel Leseure Best Practices in NPD Platform and modularity Design for manufacture, design for assembly Failure mode effect analysis Value analysis QFD (covered in next class)

MGT3303 Michel Leseure Platform Technology –The platform concept “A platform can broadly be defined as a relatively large set of product components that are physically connected as a stable sub-assembly and are common to different final models” (Meyer and Lehnerd, 1997) –The modularisation concept “A module can be described as a large group of components that is physically coherent as a sub-assembly and which often has standardised interface designs (Muffato, 1999).

MGT3303 Michel Leseure Examples of Platforms Swiss army knives Swatch watches Xerox copiers Hewlett-Packard printers The Boeing 747 family of aircraft Kodak single use camera Sony Walkman –Original designed as a platform in 1979 –There are 250+ models –New designs (i.e. innovations) only account for 25% of all models –This means that 85% of the models were a simple re- combination of modules

MGT3303 Michel Leseure Evolution of Platforms/Products

MGT3303 Michel Leseure Platforms and Scalability (Rolls Royce Engines)

MGT3303 Michel Leseure Benefits of Platforms At the production level –Similar models more easily assembled in the same production process –Some companies even define platform from a production rather than product- function standpoint! From a multi-product perspective –Ability to target sub-segments within a product family at a fraction of the cost of independent designs

MGT3303 Michel Leseure Benefits of Modules Possibility of producing product variations which have only limited impact on production and assembly processes Limited proliferation of parts Reduction of throughput time because many pre-assembly operations are eliminated Greater productivity and quality from automation

MGT3303 Michel Leseure Design for Manufacture

MGT3303 Michel Leseure Failure Mode and Effects Analysis (FMEA) A systematic approach for analyzing causes and effects of failures Prioritizes failures Attempts to eliminate causes Similar to: Fault Tree Analysis (FTA) – more visual – studies interrelationship between failures

MGT3303 Michel Leseure FMEA

MGT3303 Michel Leseure

MGT3303 Michel Leseure Value Analysis ( or value engineering) Ratio of value to cost Assessment of value: 1. Can we do without it? 2. Does it do more than is required? 3. Does it cost more than it is worth? 4. Can something else do a better job 5. Can it be made by less costly method, tools, material? 6. Can it be made cheaper, better or faster by someone else?

MGT3303 Michel Leseure The Timing of NPD

MGT3303 Michel Leseure Product Lifecycle Introduction Growth Maturity Decline Time Sales Volume Beware of design gaps!

MGT3303 Michel Leseure Time to Market Performance Time to market –First mover advantage –Ability to deliver a product on time Essential for a product which is « sold in » A printer brought 6 months to the market within development cost will lose the organisation 33% of profits A printer brought on time to the market 30% over-budget will lose the organisation 2.3% of profits (McKinsey) –Time-based competition

MGT3303 Michel Leseure Time to Market Performance

MGT3303 Michel Leseure Second Mover Advantage Many researchers have questioned the idea of “first-mover advantage” First mover advantage only works if the product which is launched is perfectly reliable! Otherwise, a second company can imitate the first mover and avoid the mistakes that were made! –Second Mover advantage! –There is an optimal timing for new product introductions! –Time vs. quality trade-off

MGT3303 Michel Leseure Follower Advantage! From (Cottrell and Sick, 2002)

MGT3303 Michel Leseure Summary Several key issues in managing innovation: –Timing of NPD –Reliability of NPD –Role of process, best practices, and organisation

MGT3303 Michel Leseure Suggested Homework Question 3.1, p. 110 Morocco’s textile sector is an important part of the Moroccan economy. Write an assessment of this sector’s design capabilities. Questions 3.3, 3.4, 3.6 p. 110 There are a number of innovation/invention prizes in Morocco. What types of new product designs could be a winner?