1. Product Development
Chapter 6

2. 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

3. 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

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

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

6. 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

7. 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?

8. 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

9. 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

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

11. 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

12. 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

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

14. 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?

15. 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 =

16. 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

17. 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.

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

20. 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

21. 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 B C
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.

22. System Availability PROVIDER MTBF (HR) MTTR (HR) A 60 4.0 B 36 2.0C
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) = or 93.75%
SAB = 36 / (36 + 2) = or 94.73%
SAC = 24 / (24 + 1) = .96 or 96%

23. Production Design Part of the preliminary design phase Simplification
Standardization
Modularity

24. 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

25. 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

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

27. 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!!

28. 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

29. 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

30. 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

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

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

33. 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?

34. 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 -

36. 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

37. 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

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

39. 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

40. 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?

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

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

43. Comparing the Processes
FixedA + (VarA)x = FixedB + (VarB)x
x = 11, x
3x = 9000
X = 3000
So what?

44. 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?

45. 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?

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

47. 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?

48. 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.

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

50. 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?

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

52. 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

53. 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

54. Operations Process Chart
Part name Crevice Tool
Part No
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 , 67, 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

55. Process Analysis – What processes feed other processes?

56. 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:
Analyst: TLR
Location: Graves Mountain
Process: Apple Sauce

57. 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

58. 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

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

60. 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

63. 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?

64. Facilities

65. 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

66. 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

67. 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

68. Manufacturing Process LayoutD G A
Receiving and
Shipping
Assembly
Painting Department
Lathe Department
Milling
Department
Drilling Department
Grinding P

69. A Product Layout In
Out

70. 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

71. 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

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

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

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

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

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

78. 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

79. 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

80. 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

82. 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

83. 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

84. 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

85. 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

86. 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

87. 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

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

89. 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

90. 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

91. Facility Location Models

92. 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

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

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

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

98. 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

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

100. 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

101. 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

102. 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

103. 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

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

105. 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