Product Development Chapter 6

Introduction Product Development is a process which generates concepts, designs, and plans to create services and goods to meet customer needs. 1. Analyze market to assess need 2. Design product 3. Design process for making product 4. Develop plan to market product 5. Develop plan for full-scale production 6. Analyze financial feasibility

Increasing Importance of Product Development Customers demand greater product variety. Customers are causing shorter product life cycles. Improving technology is causing new products to be introduced The impact of increasing product variety and shortening product life cycles is having a multiplicative effect on the need for product development. Today, in order to be competitive, the firm may have to produce many different products with a life cycle of only five years or less. End of Life issues

Product Design Specifies materials Determines dimensions & tolerances Defines appearance Sets performance standards

Service Design Specifies what the customer is to experience Physical items Sensual benefits Psychological benefits

An Effective Design Process Matches product/service characteristics with customer needs Meets customer requirements in simplest, most cost-effective manner Reduces time to market - haste vs. speed to market Minimizes revisions - quality designed into the product

Stages in the Design Process Idea Generation — Product Concept - can you create your own market? What role does the voice of the customer play in idea generation? Feasibility Study — Performance Specifications Preliminary Design — Prototype - testing and redesign Final Design — Final Design Specifications Process Planning — Manufacturing Specifications - make to order/stock – assembly line?

Idea Generation Suppliers, distributors, salespersons Trade journals and other published material Warranty claims, customer complaints, failures Customer surveys, focus groups, interviews Field testing, trial users Research and development

More Idea Generators Perceptual Maps Visual comparison of customer perceptions Benchmarking Comparing product/service against best-in-class Reverse engineering Dismantling competitor’s product to improve your own product

Perceptual Map of Breakfast Cereals HIGH NUTRITION LOW NUTRITION GOOD TASTE BAD TASTE

Perceptual Map of Breakfast Cereals HIGH NUTRITION LOW NUTRITION GOOD TASTE Cocoa Puffs BAD TASTE Rice Krispies Wheaties Cheerios Shredded Wheat © Russell and Taylor, Prentice Hall, 2004

Perceptual Map of Breakfast Cereals HIGH NUTRITION LOW NUTRITION GOOD TASTE Cocoa Puffs BAD TASTE Rice Krispies Wheaties Cheerios Shredded Wheat How do I get here? © Russell and Taylor, Prentice Hall, 2004

Feasibility Study Market Analysis - Market Segmentation Economic Analysis Technical / Strategic Analysis Performance Specifications Risk Analysis

Economic Analysis Can we produce it at a volume to make a profit? If not, why produce? How many do we have to make to break even?

Sales Price – Variable Costs Break Even Analysis Total Costs = Total Revenues (Volume x Price) = (Fixed Costs + Variable Costs) Profit = (Total Revenue – Total Costs) Fixed Costs Sales Price – Variable Costs B/E Point =

Sales Price ($10) – Variable Costs ($5) Example Fixed Costs = $2000 Variable Costs = $5/item Sales Price = $10/item Fixed Costs ($2000) Sales Price ($10) – Variable Costs ($5) B/E PT = B/E point = ($2000/$5) 400 items

Risk Analysis 1. Identify the Hazards 2. Assess hazards to determine risks. 3. Develop controls and make risk decisions. 4. Implement controls. 5. Supervise and evaluate.

Preliminary Design Create form & functional design Build prototype How will it look? Create form & functional design Build prototype Test prototype Revise prototype Retest

Functional Design (How the Product Performs) Reliability Probability product performs intended function for specified length of time Maintainability Ease and/or cost or maintaining/repairing product

System Availability PROVIDER MTBF (HR) MTTR (HR) A 60 4.0 B 36 2.0 System Availability, SA = MTBF MTBF + MTTR PROVIDER MTBF (HR) MTTR (HR) A 60 4.0 B 36 2.0 C 24 1.0 At first glance it would appear that the items from Provider A has the longest mean time between failures. This is why the Systems Availability computation is necessary.

System Availability PROVIDER MTBF (HR) MTTR (HR) A 60 4.0 B 36 2.0 C 24 1.0 Although Provider A’s products have the longest mean time between failure, look at the Mean Time To Repair – when calculating the System Availability, the products from Provider C provides the best System Availability. SAA = 60 / (60 + 4) = .9375 or 93.75% SAB = 36 / (36 + 2) = .9473 or 94.73% SAC = 24 / (24 + 1) = .96 or 96%

Production Design Part of the preliminary design phase Simplification Standardization Modularity

Final Design & Process Plans Produce detailed drawings & specifications Create workable instructions for manufacture Select tooling & equipment Prepare job descriptions Determine operation & assembly order Program automated machines

Improving the Design Process Design teams Concurrent design Design for manufacture & assembly Design to prevent failures and ensure value Design for environment Measure design quality Utilize quality function deployment Design for robustness Engage in collaborative design

Preferred solution = cross functional teams Design Teams Preferred solution = cross functional teams Marketing, manufacturing, engineering Suppliers, dealers, customers Lawyers, accountants, insurance companies

Concurrent Design Improves quality of early design decisions Decentralized - suppliers complete detailed design Incorporates production process Scheduling and management can be complex as tasks are done in parallel include the customer in the process!!

Design for Manufacture and Assembly Design a product for easy & economical production Incorporate production design early in the design phase Improves quality and reduces costs Shortens time to design and manufacture also known as Design for Six Sigma

Design for Six Sigma Define – the goals of the design activity Measure – customer input to determine what is critical to quality from the customers’ perspective – what are customer delighters? What aspects are critical to quality? Analyze – innovative concepts for products and services to create value for the customer Design – new processes, products, and services to deliver customer value Verify – new systems perform as expected

DFM Guidelines Minimize the number of parts, tools, fasteners, and assemblies Use standard parts and repeatable processes Modular design Design for ease of assembly, minimal handling Allow for efficient testing and parts replacement

Design for Assembly (DFA) Procedure for reducing number of parts Evaluate methods for assembly Determine assembly sequence

Design Review Failure Mode and Effects Analysis (FMEA) A systematic approach for analyzing causes & effects of failures Prioritizes failures Attempts to eliminate causes

Value Analysis (Value Engineering) Is there value added? Ratio of value / 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? Should we contract it out?

Design for Environment Design from recycled material Use materials which can be recycled Design for ease of repair Minimize packaging Minimize material & energy used during manufacture, consumption & disposal green laws in Europe -

Design for Robustness Product can fail due to poor design quality Products subjected to many conditions Robust design studies Controllable factors - under designer’s control Uncontrollable factors - from user or environment Designs products for consistent performance

A Well-Designed Service System is Consistent with firm’s strategic focus Customer friendly Easy to sustain Effectively linked between front & back office Cost effective Visible to customer

CHAPTER 8 Process Selection affects the outcome – in production or sports:

What is Process Selection? Series of decisions that includes technical/engineering issues and volume/scale issues Technical/engineering: basic methods that produce a good or service Scale: how many or how much to produce; how many to serve at a time Trade off analysis between capacity and costs

Why process selection is critical Dell – from make/assemble to order in Texas to make/assemble to stock off shore Does this work? Break even analysis may depend on process costs Which process gives the lowest costs – assumption?

The Point of Indifference Comparing Two Processes What is it? Who cares? How do you calculate it?

Comparing Two Processes Process A Fixed = $2000 Variable = $5/item Process B Fixed = $11000 Variable = $2/item

Comparing the Processes FixedA + (VarA)x = FixedB + (VarB)x 2000 + 5x = 11,000 + 2x 3x = 9000 X = 3000 So what?

Trade off analysis Customer demanded quantity drives the trade off analysis and decision process Example: → retail stocks at Christmas 2008 and 2009 season - goal save money by stocking less → At what point do you lose sales due to lower stockage levels?

Process Design/Selection/Capacity Have to be simultaneous operations – some texts suggest sequential steps Decision process has to be customer based → what should it be? → how many should be produced/how many are we capable of producing? → how should it be produced?

Process Strategy - Defines Capital intensity Process flexibility Vertical integration Customer involvement

Goal of Process Design Reduce lead time for product to the customer Is it best to be the first to market and establish the market? Or, be the follower and let someone else do the R&D/design/risk?

Problems with Managing Large, Unfocused Operations Growing facilities add more levels of management and make coordination and control difficult. New products are added to the facility as customers demand greater product variety. Hidden overhead costs increase as managers add staff to deal with increased complexity.

Process Planning Make-or-buy decisions Process selection Specific equipment selection Process plans Process analysis

Make-or-Buy Decisions 1. Cost 2. Capacity 3. Quality 4. Speed 5. Reliability 6. Expertise What about Proprietary Information? Barrier to Make-or-Buy?

Source: Aberdeen Research, “Low-Cost Country Sourcing Success Strategies: Maximizing and Sustaining the Next Big Supply Savings Opportunity,” Jun 2005

Process Plans Blueprints Bill of material Flat or multiple layers - part or assembly Assembly chart / product structure diagram Operations process chart - list of operations involved in assembly Routing sheet - sequence of events

Process Analysis The systematic examination of all aspects of a process to improve its operation Faster More efficient Less costly More responsive Basic tools Process flowchart Process diagrams Process maps

Operations Process Chart Part name Crevice Tool Part No. 52074 Usage Hand-Vac Assembly No. 520 Oper. No. Description Dept. Machine/Tools Time 10 Pour in plastic bits 041 Injection molding 2 min 20 Insert mold 041 #076 2 min 30 Check settings 041 113, 67, 650 20 min & start machine 40 Collect parts & lay flat 051 Plastics finishing 10 min 50 Remove & clean mold 042 Parts washer 15 min 60 Break off rough edges 051 Plastics finishing 10 min

Process Analysis – What processes feed other processes?

Process Flowchart Operation Transport Inspect Step Delay Storage Distance (feet) Time (min) Description of process 1 2 3 4 5 6 7 8 9 10 11 Unload apples from truck Move to inspection station Weigh, inspect, sort Move to storage Wait until needed Move to peeler Apples peeled and cored Soak in water until needed Place in conveyor Move to mixing area Total Page 1 0f 3 480 30 20 15 360 190 ft 20 ft 50 ft 100 ft Date: 9-30-02 Analyst: TLR Location: Graves Mountain Process: Apple Sauce

Principles for Redesigning Processes Walk the Process! Remove waste, simplify, consolidate Link processes to create value Let the swiftest and most capable execute Capture information digitally, data mine, and use information to improve operations

Principles for Redesigning Processes Provide visibility through information about process status Fit the process with sensors and feedback loops Add analytic capabilities Connect, collect and create knowledge around the process Personalize the process

Techniques for Generating Innovative Ideas Vary entry point to a problem Draw analogies Change your perspective Use attribute brainstorming

RFID Active Tags Always on Battery powered Can be read from up to 300 ft US Army Savi Tags Passive Tags Small Must be activated May be turned off England California Rolex

Robotics Questions? Programmable manipulators Follow specified path Better than humans with respect to Hostile environments Long hours Consistency Adoption has been slowed by ineffective integration and adaptation of systems Welding at Harley Davidson Plant Questions?

Facilities

Objectives of Facility Layout Eliminate waste or redundant movement Facilitate the entry, exit, and placement of material, products, or people Incorporate safety and security measures Promote product and service quality Encourage proper maintenance activities Provide a visual control of operations or activities Provide flexibility to adapt to changing conditions Increase capacity

Objectives of Facility Layout Minimize material handling costs Utilize space efficiently Utilize labor efficiently Eliminate bottlenecks Facilitate communication and interaction between workers, between workers and their supervisors, or between workers and customers Reduce manufacturing cycle time or customer service time

Basic Types of Layouts Process Layout Product Layout Machines grouped by process they perform Product Layout Linear arrangement of workstations to produce a specific product Fixed Position Layout Used in projects where the product cannot be moved

Manufacturing Process Layout D G A Receiving and Shipping Assembly Painting Department Lathe Department Milling Department Drilling Department Grinding P

A Product Layout In Out

Fixed-Position Layouts Typical of projects Equipment, workers, materials, other resources brought to the site Highly skilled labor Often low fixed Typically high variable costs

Designing Process Layouts Minimize material handling costs Block Diagramming Minimize nonadjacent loads Use when quantitative data is available Relationship Diagramming Based on location preference between areas Use when quantitative data is not available

Block Diagramming Create load summary chart Calculate composite (two way) movements Develop trial layouts minimizing number of nonadjacent loads

Block Diagrams 3 2 5 1 4 (a) Initial block diagram

Block Diagrams 1 2 3 4 5 (a) Initial block diagram (b) Final block diagram

Relationship Diagramming (Murther’s Grid) Used when quantitative data is not available Muther’s grid displays preferences Denote location preferences with weighted lines

Relationship Diagramming Example Production Offices Stockroom Shipping and receiving Locker room Toolroom

Relationship Diagramming Example A Absolutely necessary E Especially important I Important O Okay U Unimportant X Undesirable A O U E X I Production Offices Stockroom Shipping and receiving Locker room Toolroom

Relationship Diagramming Example A Absolutely necessary E Especially important I Important O Okay U Unimportant X Undesirable A O U E X I Production Offices Stockroom Shipping and receiving Locker room Toolroom

Relationship Diagramming Example 1 Absolutely necessary 2 Especially important 3 Important 4 Okay 5 Unimportant 6 Undesirable 1 4 6 5 2 3 Production Offices Stockroom Shipping and receiving Locker room Toolroom

Service Layouts Usually process layouts due to customers needs Minimize flow of customers or paperwork Retailing tries to maximize customer exposure to products Computer programs consider shelf space, demand, profitability Layouts must be aesthetically pleasing

Designing Product Layouts Product layouts or assembly lines Develop precedence diagram of tasks Jobs divided into work elements Assign work elements to workstations Try to balance the amount work of each workstation

Line Balancing Precedence diagram Cycle time Network showing order of tasks and restrictions (constraints) on their performance Cycle time Maximum time product spends at any one workstation

Hybrid Layouts Cellular layouts Flexible manufacturing systems Group machines into machining cells Flexible manufacturing systems Automated machining & material handling systems Mixed-model assembly lines Produce variety of models on one line

Cellular Layouts Identify families of parts with similar flow paths Group machines into cells based on part families Arrange cells so material movement is minimized Locate large shared machines at point of use

Advantages Of Cellular Layouts Reduced material handling and transit time Reduced setup time Reduced work-in-process inventory Better use of human resources Easier to control - visibility Easier to automate

Disadvantages Of Cellular Layouts Inadequate part families Poorly balanced cells Expanded training and scheduling of workers Increased capital investment

Manufacturing Cell Out In HM VM Direction of part movement within cell Worker 1 Worker 2 Worker 3 Direction of part movement within cell S L HM VM G Final inspection Finished part Key: S = Saw L = Lathe HM = Horizontal milling machine VM = Vertical milling machine G = Grinder Paths of three workers moving within cell Material movement

Mixed Model Assembly Lines Produce multiple models in any order on one assembly line Harley, Opel Issues in mixed model lines Line balancing U-shaped line Flexible workforce Model sequencing

Facility Location Models

Types Of Facilities Auto plants, steel mills, chemical plants Heavy manufacturing Auto plants, steel mills, chemical plants Light industry Small components mfg, assembly Warehouse & distribution centers Retail & service

Factors in Heavy Manufacturing Location Construction costs Land costs Raw material and finished goods shipment modes Proximity to raw materials Utilities Labor availability

Factors in Light Industry Location Construction costs Land costs Easily accessible geographic region Education & training capabilities

Factors in Warehouse Location Transportation costs Proximity to markets (Customers)

Warehouse Size Considerations Customer service level layout # of products (Stock Keeping Units - SKUs) customer base size of products racks/shelving demand variability MHE requirements/aisle size regulations - CAL OSHA - earthquake; safety; fire

Factors in Retail Location Proximity to customers Ease of customer entry and exit Location is everything

Global Location Factors Government stability Government regulations Political and economic systems Economic stability and growth Exchange rates Culture Climate Export import regulations, duties and tariffs Raw material availability Number and proximity of suppliers Transportation and distribution system Labor cost and education Available technology Commercial travel Technical expertise Cross-border trade regulations Group trade agreements

Regional Location Factors Labor (availability, education, cost and unions) Proximity of customers Number of customers Construction/leasing costs Land costs Modes and quality of transportation Transportation costs Incentive packages Governmental regulations Environmental regulations Raw material availability Commercial travel Climate Infrastructure Quality of life

Regional Location Factors Community government Local business regulations Government services Business climate Community services Taxes Availability of sites Financial Services Community inducements Proximity of suppliers Education system

Site Location Factors Customer base Construction/ leasing cost Land cost Site size Transportation Utilities Zoning restrictions Traffic Safety/security Competition Area business climate Income level

Location Incentives Tax credits Wal-Mart in Wyandotte Relaxed government regulation Job training Infrastructure improvement Money

Center-of-Gravity Technique Locate facility at center of geographic area Based on weight and distance traveled Establish grid-map of area Identify coordinates and weights shipped for each location