1. © Nigel Slack and Michael Lewis 2003 Quality Performance objectives Dependability Development and Organization (Product and service development and improvement) Speed Flexibility Cost Resource Usage Market Competitiveness Decision areas Issues covered in this chapter Capacity Supply Network Process Technology Issues include: Relating product and process development Managing product/service development as a process Meeting market requirements for new products and services Managing product/service development resources

2. © Nigel Slack and Michael Lewis 2003 Increased competitiveness Shortened life-cycles Fragmented markets Rapid technology change Means of building capabilities Involves all parts of the business The increasing strategic importance of product and service development OPERATIONS RESOURCES MARKET REQUIREMENTS Product and service development

3. © Nigel Slack and Michael Lewis 2003 Development of the Service Development of the Process Development of the Product Development of the Process In most service operations the overlap between service and process development is implicit in the nature of service In manufacturing operations overlapping the activities of product and process development is beneficial

4. © Nigel Slack and Michael Lewis 2003 Products and services should be developed in such a way that they can be created effectively Processes should be developed in such a way that they can create all products and services which the operation is likely to introduce Decisions taken during the development of the product or service will have an impact on the decisions taken during the development of the process which produces the product or service or vice versa Developing the Product or Service Developing the Process which Produces the Product or Service The development of products/services and processes are interrelated and should be treated together

5. © Nigel Slack and Michael Lewis 2003 Product/service development is itself a process TRANSFORMED RESOURCES Technical information Market information Time information TRANSFORMING RESOURCES Test and design equipment Design and technical staff INPUTS THE DEVELOPMENT ACTIVITY OUPUT FINISHED DESIGNS

6. © Nigel Slack and Michael Lewis 2003 Introducing ……… the Ballpoint Pen 1939 Hungarian brothers Ladislao and Georg Biro file patent and in 1944 produce first commercial ballpoint pen. Eversharp buy US distribution rights. Before first shipment, Milton Reynolds’ copy product on sale in US (also retractable). Legal wrangles unearth Biro brothers’ 1939 patent preceded 50 years earlier! Reynold enjoyed early success but quality problems undermine market image. Both Eversharp and Reynolds go bust. Parker introduce reengineered product to overcome some reliability problems. Parker reasonably successful with mid-price product. French company Bic make further product modifications and overcome mass production problems. Bic make the product ‘consumer disposable’ and change the pen market.

7. © Nigel Slack and Michael Lewis 2003 Product/service and process development - the Ballpoint pen New Core Process Next Generation Process Redesigned Processes Minor Modifications Add-ons and Enhancements Extension of Product/Service Range Next Generation Product/Service New Core Product/Service Degree of Product/Service Change Degree of Process Change Research and Advanced Development Eversharp Bic Parker Reynolds Biro Brothers

8. © Nigel Slack and Michael Lewis 2003 ‘Pioneer’ Process Developments to Process Extension to Processes Modifications to Process Modification to product/service Extension to product/service Development of product/service ‘Pioneer’ product/service The link between product/service and process development can be closer in service industries Degree of process change Research and advanced development Internet banking service Call-center banking service Branch banking service Increasing difficulty Degree of product/service change

9. © Nigel Slack and Michael Lewis 2003 Degree of Product/Service Change Degree of Process Change Research and Advanced Development Internet banking service Call- center banking service Branch banking service Boundary for service operations Volvo 1970s and 80s The ‘Mini’ 1960 Boundary for manufacturing operations New Core Process Next Generation Process Redesigned Processes Minor Modifications Add-ons and Enhancements Extension of Product/Service Range Next Generation Product/Service New Core Product/Service

10. © Nigel Slack and Michael Lewis 2003 Quality - Error free designs which fulfil market requirements Speed - Fast development from concept to launch Dependability - Designs delivered to schedule Flexibility - Designs which include latest ideas Cost - Designs produced without consuming excessive cost Capacity - Amount of development resource matched to demand over time Supply Network - Relationships with outside sources of development knowledge Process Technology - Provision of design technology (CAD), expert systems, etc. Development and Organization - Organization of development resources and improvement strategy. Performance Objectives Market Competitiveness Resource Usage Operations strategy for the product and service development operations Decision areas

11. © Nigel Slack and Michael Lewis 2003 Concept generationConcept screeningPreliminary designDesign evaluation and improvementPrototyping and final designDeveloping the operations process A typical ‘stage model’ of the product and service development process

12. © Nigel Slack and Michael Lewis 2003 Reliable/resilient Accurate Fast Responsive Secure Remote links Connectivity Scalability Absolute importance Relative importance Technical difficulty Importance to customer Availability R-3 conformt. Password x2 Intranet compatibility Memory requirement Database Interfaces Firewalls HOWs 1 2 3 4 5 Competitive score 1 = MinimumX = Us A = Competitor A B = Competitor B 5 = Maximum B B B B B B B B A A A A A A A A X X X X X X X X 984872549905478 1st7th4th5th8th2nd5th3rd 4 3221543 1 = easy, 5 = difficult 9 10 7 4 8 6 5 2 WHATs Strong relationship Medium relationship Weak relationship 931931 WHATs vs HOWs Strong positive Positive Negative Strong negative HOWs vs HOWs A Quality Function Deployment (QFD) Matrix

13. © Nigel Slack and Michael Lewis 2003 Design characteristics Relationship matrix Customer requirements Trade- offs Component characteristics Relationship matrix Design characteristics Trade- offs Process characteristics Relationship matrix Component characteristics Trade- offs Individual activities Relationship matrix Process characteristics Trade- offs ‘House of quality’ Component deployment Process planning Activity planning QFD matrices can be linked with the ‘hows’ of one matrix forming the ‘what’ of the next

14. © Nigel Slack and Michael Lewis 2003 Uncertainty Regarding the Final Design Certainty Regarding the Final Design TIME Product/service development involves progressively reducing the number of possibilities until the final design is reached Choice and evaluation "Screens" CONCEPT FINAL DESIGN SPECIFICATION Large Number of Design options One Design

15. © Nigel Slack and Michael Lewis 2003 Many concepts enter the development process One ‘best’ design emerges Customer’s original specification One recycle (sometimes) Discussions with customer Expansion of original idea Narrowing of options for customer Mutually agreed development specification Development of agreed design (a) (b) (a) The idealised development funnel; (b) one company development funnel

16. © Nigel Slack and Michael Lewis 2003 Delay in breakeven Time Cash Sales Revenue Cumulative cash flow Sales revenue (delayed launch) Cumulative cash flow (delayed launch) Delay in launch Slow and/or delayed development times, which can be the result of quality or flexibility failure, will increase costs and can reduce revenue

17. © Nigel Slack and Michael Lewis 2003 Confirmed development need only in the short-term Reluctant to invest in long-term development resources So in the short-term the project runs into problems Lose business opportunities The ‘vicious cycle’ of under resourcing development capacity

18. © Nigel Slack and Michael Lewis 2003 In-house design capability Outsourced design capability Close, but loose Distant, through contracts Control of resource Strong Weak in the short-term, potentially stronger in the long-term Familiarity High Low/limited Accessibility Fixed Variable Cost Small Great (Potentially) Risk of knowledge leakage The in-house-outsourced continuum

19. © Nigel Slack and Michael Lewis 2003 RESIDENT CUSTOMER ENGINEER Focus – helping suppliers to develop their products at supplier’s sites, to meet customer needs GUEST DESIGN ENGINEER Focus – helping the product design effort at the customer’s site by bringing supplier product and process knowledge SUPPLIER DEVELOPMENT ENGINEER Focus – helping suppliers at their site to improve production methods RESIDENT PRODUCTION ENGINEER Focus – helping the manufacture of customer’s products through knowledge of, and changes in, supplier products Supplier located (employee of customer) Customer located (employee of supplier) Largely concerned with product development Largely concerned with process development A broad typology of guest engineers

20. © Nigel Slack and Michael Lewis 2003 INCREASING PROJECT ORIENTATION Balanced matrix Project matrix (Heavyweight project managers) Project 2 Project 3 Project team (‘Tiger’ teams) Function Functional organization ABCD Project 1 Functional matrix (Lightweight project managers) Project 2 Project 3 Project 1 Function ABCD ABCD ABCD Project 2 Project 3 Project 1 Project 2 Project 3 Project 1 Organizational structures for product/service development

21. © Nigel Slack and Michael Lewis 2003 Safety Quality Flexibility Cost Performance Objectives Market Competitiveness Resource Usage Decision areas Operations strategy matrix for Project Orlando * ** ** * * * * * Capacity Size of team? Supply Network Subcontract any development? Process Technology Build pilot plant? Development and organisation Dedicated team? No significant relationship. Is the company willing to subcontract any responsibility for safety? Pilot plant may enable potential hazard to be detected. Dedicated team may help reinforce safety objective. No significant relationship. Strict quality standards need to be communicated to any subcontractor. Pilot plant may enable better quality learning. Dedicated team may help to reinforce quality objective. Need to have development capacity to respond quickly to accelerated development needs. Does subcontractor development imply reduced flexibility? Pilot plant would be dedicated so increase flexibility, but may have scale- up problems. Dedicated team likely to be more flexible if all necessary skills are represented in it. Very significant, the larger the development team the higher the cost of development. Subcontracting development to specialists may reduce total development cost. Pilot plant is likely to be more expensive that using partners’ capacity. Dedicated team likely to be more expensive, functional organisation usually gives higher utilisation of staff.