Operations Management Design of Goods and Services 1

2 As Engineering designed it © T/Maker Co. As Operations made it © T/Maker Co. As Marketing interpreted it © T/Maker Co. As the customer wanted it © T/Maker Co. Humor in Product Design

Product Development System Idea generation Assessment of firm’s ability to carry out Customer Requirements Functional Specification Product Specifications Design Review Test Market Introduction to Market Evaluation 3

Idea Generation Stage Provides basis for entry into market Sources of ideas Market need; engineering & operations; technology; competitors; inventions; employees Follows from marketing strategy Identifies, defines, & selects best market opportunities 4 Back

Customer Requirements Stage Identifies & positions key product benefits Stated in core benefits proposition (CBP) Example: Long lasting with more power (Sears’ Die Hard Battery) Identifies detailed list of product attributes desired by customer Focus groups or 1-on-1 interviews 5 Back

Functional Specification Stage Defines product in terms of how the product would meet desired attributes Identifies product’s engineering characteristics Example: printer noise (dB) Prioritizes engineering characteristics Product compared to competitors’ 6 Back

Product Specification Stage Determines how product will be made Gives product’s physical specifications Example: Dimensions, material etc. Defined by engineering drawing Done often on computer Computer-Aided Design (CAD) 7 Back

Quality Function Deployment Determines what will satisfy the customer Translates those desires into specific product characteristics Product design process using cross-functional teams Marketing, engineering, manufacturing “House of quality” tool used 8

9 Manufacturability and Value Engineering Help improve pdt’s design, pdn, maintainability & use Benefits: reduced complexity of products additional standardization of products improved functional aspects of product improved job design and job safety improved maintainability of the product Best cost-avoidance technique Focus on achieving functional specs in the most optimal manner

10 Cost Reduction of a Bracket via Value Engineering

Issues for Product Development Robust design Modular design Computer-aided design – DFMA; 3D object modeling Computer-aided manufacturing Virtual Reality Technology Value analysis Environmentally friendly design 11

12 Robust Design Product is designed so that small variations in production or assembly do not adversely affect the quality of the product e.g IC amplifier developed in AT&T

13 Modular Design Products designed in easily segmented components. Adds flexibility to both production and marketing Customization possible through modularity E.g. high-fidelity stereos, Harley Davidson, McDonalds, Dell Computers, etc

14 Interactively designing & documenting products at a computer terminal or work station © 1995 Corel Corp. Computer Aided Design (CAD) Design engineer develops rough sketch of product Uses computer to draw product Often used with CAM

15 Shorter development cycles Better products Accurate flow of info to other departments Helpful for tool-designers and programmers of CAM Cost effective method for making design changes Benefits of CAD

16 Design for Manufacturing and Assembly (DFMA) 3-D Object Modeling CAD/CAM – CAD info is translated into machine control instructions (CAM) © 1995 Corel Corp. Extensions of CAD

17 Use of specialized computer programs to direct and control manufacturing equipment CAD/CAM often used together © 1995 Corel Corp. Computer Aided Manufacturing (CAM)

18 Production Flexibility Product Quality Shorter design time Database availability New capabilities Example: rotate and depict objects in 3D form Reduced production costs Benefits of CAD/CAM

19 Virtual Reality Computer technology used to develop an interactive, 3-D model of a product with the help of images Especially helpful in design of layouts (factory, store, home, office)

20 Environmentally Friendly Designs Goals include Developing safe and environmentally sound products Minimizing waste of raw materials and energy Differentiating product from competitors Reducing environmental liabilities

21 “Green” Manufacturing Making environmentally sound products through efficient processes Make products recyclable e.g. Tuborg Use recycled materials e.g. Scotch-Brite Use less harmful ingredients Use less energy Use less material

22 Product Development Continuum External Development Strategies Alliances Joint Ventures Purchase Technology or Expertise by Acquiring the Developer Internal Development Strategies Migrations of Existing Products Enhancement to Existing Products New Internally Developed Products Internal  Cost of Product Development  Shared Lengthy  Speed of Product Development-----  Rapid and/or Existing High  Risk of Product Development  Shared

23 Engineering drawing Shows dimensions, tolerances, & materials Shows codes for Group Technology Bill of Material Lists components, quantities & where used Shows product structure Product Definition

24 Engineering Drawing Example Back

25 Bill of Material for a Panel Weldment Hard Rock Café’s Hickory BBQ Bacon Cheeseburger NumberDescriptionQtyDescriptionQty A60-71Panel 1Bun Hamburger Patty Cheddar Cheese Bacon BBQ Onions Hickory BBQ Sauce Burger Set Lettuce Tomato Red Onion Pickle French Fries Seasoned Salt 11-inch Plate HRC Flag 1 8 oz. 2 slices 2 strips ½ cup 1 oz. 1 leaf 1 slice 4 rings 1 slice 5 oz. 1 tsp 1 A 60-7 R R P 60-2 Lower Roller Assembly Roller Pin Locknet R A Guide Assem. Rear Support Angle Roller Assem. Bolt A A R Guide Assm, Front Support Weldm’t Wear Plate Bolt Bill of Materials – Manufacturing Plant and Fast-Food Restaurant Back

26 Parts grouped into families Similar, more standardized parts Uses coding system Describes processing & physical characteristics Part families produced in manufacturing cells Mini-assembly lines © T/Maker Co. Group Technology Characteristics

27 112mm 60mm 4mm x 45° chamfer 80mm Product Code: Part function (round rod) Material (steel) Max. length (50 < L < 150) Primary machine (lathe) Round Rod Group Technology Code Example

28 Group Technology Schemes Enable Grouping of Parts

29 Moment-of-Truth at a Computer Company Experience Detractors I had to call more than once to get through. A recording spoke to me rather than a person While on hold, I get silence,and wonder if I am disconnected. The operator sounded like he was reading a form of routine questions. The operator sounded uninterested I felt the operator rushed me. Standard Expectations Only one local number needs to be dialed I never get a busy signal I get a human being to answer my call quickly and he or she is pleasant and responsive to my problem A timely resolution to my problem is offered The operator is able to explain to me what I can expect to take place Experience Enhancers The operator was sincerely concerned and apologetic about my problem He asked intelligent questions that allowed me to feel confident in his abilities The operator offered various times to have work done, to suit my schedule Ways to avoid future problems were suggested

30 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. Considerations: Include all possible alternatives and states of nature - including “doing nothing” Enter payoffs at end of branch Approach determining expected values by “pruning” tree

Operations Management Process Strategy

Process Strategies Involves determining how to produce a good or provide a service within constraints Objective Meet or exceed customer requirements Meet cost & managerial goals Has long-run effects Production efficiency Product & volume flexibility Cost & quality

Fit of Process, Volume, and Variety Process focus projects, job shop, (print, carpentry) Standard Register Repetitive (autos, motorcycles) Harley Davidson Product focus (commercial baked goods, steel, glass) Steel, Cement High Variety One or few units per run, high variety (allows customization) Changes in modules Modest runs, standardized modules Low Variety; Changes in attributes (such as grade, quality, size, thickness, etc.) Long runs only Mass Customization (difficult to achieve, but huge rewards) Dell Computer Co., Levis Jeans Low-Volume (Intermittent) Repetitive Process (Modular) High-Volume (Continuous)

Process-Focused Strategy Facilities are organized by process Similar processes are together Example: All drill presses are together Low volume, high variety products ‘Jumbled’ flow Other names Job shop Operation Product A Product B

Process-Focused Example CuttingAssemblySandingFinishingPlaning Drilling Shaping Turning Job A Job B 4455 Custom Woodworking Shop

Process Focus - Pros & Cons Advantages Greater product flexibility More general purpose equipment – equipments not dedicated to one product Disadvantages High production cost per unit More difficult production planning & control Low equipment utilization (5% to 25%)

Process-Focus Examples Bank Machine Shop Hospital

Repetitive Focused Strategy Facilities often organized by assembly lines Characterized by modules Parts & assemblies made in modules Modules combined for many output options Other names Assembly line Production line E.g. auto-manufacturing, pc’s, house-hold appliances, etc

Assembly Line Example ComponentsSubassem. Assemblies Product/Material Flow Production Operation Raw Material Components Components. Subassem. Fin. Goods

Repetitive Focus - Considerations Product focused process that uses modules More structured than process-focused, less structured than product focused Enables semi-customization Using modules, it enjoys economic advantage of continuous process, and custom advantage of low- volume, moderately high-variety model

Repetitive Focus - Examples Truck Clothes Dryer Fast Food McDonald’s over 95 billion served

Repetitive Focus

Product-Focused Strategy Facilities are organized by product High volume, low variety Conversion or further processing of undifferentiated materials such as petroleum, chemicals, or beer Follows a predetermined sequence of steps, but flow is continuous rather than discrete – highly standardized Other names Line flow production Continuous production

Production Process at NUCOR Steel

Product Focus - Pros & Cons Advantages Lower production cost per unit Lower but more specialized labor skills Easier production planning and control Higher equipment utilization (70% to 90%) Disadvantages Lower product flexibility More specialized equipment

Product-Focused Examples Paper (Continuous) Soft Drinks (Continuous, then Discrete)

Mass Customization Using technology and imagination to rapidly mass-produce products that cater to unique customer desires Under mass customization the three process models become so flexible that distinctions between them blur, making variety and volume issues less significant