1. POM - J. Galván 1 PRODUCTION AND OPERATIONS MANAGEMENT Ch. 6: Design of Goods and Services

2. POM - J. Galván 2 Learning Objectives How should products/services be designed systematically? How should products/services be designed systematically?

3. POM - J. Galván 3 As Engineering designed it. © 1984-1994 T/Maker Co. As Operations made it. © 1984-1994 T/Maker Co. As Marketing interpreted it. © 1984-1994 T/Maker Co. As the customer wanted it. © 1984-1994 T/Maker Co. Humor in Product Design

4. POM - J. Galván 4 Need-satisfying offering of an organization Need-satisfying offering of an organization Example Example P&G does not sell laundry detergent P&G does not sell laundry detergent P&G sells the benefit of clean clothes P&G sells the benefit of clean clothes Customers buy satisfaction, not parts Customers buy satisfaction, not parts May be a good or a service May be a good or a service What is a Product?

5. POM - J. Galván 5 Product Strategy Options Product differentiationProduct differentiation Low costLow cost Rapid responseRapid response

6. POM - J. Galván 6 Generation of New Product Opportunities  Economic change   Sociological and demographic change   Technological change   Political/legal change   Changes in market practice professional standards suppliers and distributors

7. POM - J. Galván 7 Product Idea Package Physical Good Features Quality Level Service (Warranty) Brand (Name) Product Components

8. POM - J. Galván 8 Product Life Cycle Introduction Introduction Growth Growth Maturity Maturity Decline Decline

9. POM - J. Galván 9 Product Life Cycle Introduction Fine tuning Fine tuning research research product development product development process modification and enhancement process modification and enhancement supplier development supplier development

10. POM - J. Galván 10 Product Life Cycle Growth Product design begins to stabilize Product design begins to stabilize Effective forecasting of capacity becomes necessary Effective forecasting of capacity becomes necessary Adding or enhancing capacity may be necessary Adding or enhancing capacity may be necessary

11. POM - J. Galván 11 Product Life Cycle Maturity Competitors now established Competitors now established High volume, innovative production may be needed High volume, innovative production may be needed Improved cost control, reduction in options, paring down of product line Improved cost control, reduction in options, paring down of product line

12. POM - J. Galván 12 Product Life Cycle Decline Unless product makes a special contribution, must plan to terminate offering Unless product makes a special contribution, must plan to terminate offering

13. POM - J. Galván 13 Product Life Cycle, Sales, Cost, and Profit IntroductionMaturityDeclineGrowth Loss Cost of Development & Manufacture Sales Revenue Net Revenue Time

14. POM - J. Galván 14 Percent of Sales From New Product

15. POM - J. Galván 15 Products in Various Stages of Life Cycle GrowthDecline Time Sales Virtual Reality Roller Blades Jet Ski Boeing 727 Introduction Maturity

16. POM - J. Galván 16 0 500 1000 1500 2000 Development Stage Number 1000 Market requirement Design review, Testing, Introduction 25 Ideas 1750 Product specification 100 Functional specification 500 Few Successes

17. POM - J. Galván 17 Product Development Stages Idea generation Idea generation Assessment of firm’s ability to carry out Assessment of firm’s ability to carry out Customer Requirements Customer Requirements Functional Specification Functional Specification Product Specifications Product Specifications Design Review Design Review Test Market Test Market Introduction to Market Introduction to Market Evaluation Evaluation Scope of design for manufacturability and value engineering teams Scope of product development team

18. POM - J. Galván 18 Idea Generation Stage Provides basis for entry into market Provides basis for entry into market Sources of ideas Sources of ideas Market need (60-80%); engineering & operations (20%); technology; competitors; inventions; employees Market need (60-80%); engineering & operations (20%); technology; competitors; inventions; employees Follows from marketing strategy Follows from marketing strategy Identifies, defines, & selects best market opportunities Identifies, defines, & selects best market opportunities

19. POM - J. Galván 19 House of Quality Customer Requirements Product Characteristics 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

20. POM - J. Galván 20 Defines product in terms of how the product would meet desired attributes Defines product in terms of how the product would meet desired attributes Identifies product’s engineering characteristics Identifies product’s engineering characteristics Example: printer noise (dB) Example: printer noise (dB) Prioritizes engineering characteristics Prioritizes engineering characteristics May rate product compared May rate product compared to competitors’ to competitors’ House of Quality Customer Requirements Product Characteristics Functional Specification Stage

21. POM - J. Galván 21 Determines how product will be made Determines how product will be made Gives product’s physical specifications Gives product’s physical specifications Example: Dimensions, material etc. Example: Dimensions, material etc. Defined by engineering drawing Defined by engineering drawing Done often on computer Done often on computer Computer-Aided Computer-Aided Design (CAD) Design (CAD) House of Quality Product Characteristics Product Characteristics Component Specifications Product Specification Stage

22. POM - J. Galván 22 Manufacturability and Value Engineering Benefits: Benefits: reduced complexity of products reduced complexity of products additional standardization of products additional standardization of products improved functional aspects of product improved functional aspects of product improved job design and job safety improved job design and job safety improved maintainability of the product improved maintainability of the product robust design robust design

23. POM - J. Galván 23 Issues for Product Development Robust design Robust design Product is designed so that small variations in production or assembly do not adversely affect the productProduct is designed so that small variations in production or assembly do not adversely affect the product Time-based competition Time-based competition Product life cycles are becoming shorterProduct life cycles are becoming shorter Modular design Modular design Products designed in easily segmented componentsProducts designed in easily segmented components Computer-aided design Computer-aided design Designing products at a computer terminal or work stationDesigning products at a computer terminal or work station Value analysis Value analysis Seeks improvements leading either to a better product or a product which can be more economically producedSeeks improvements leading either to a better product or a product which can be more economically produced Product-by-value analysis Product-by-value analysis Lists products in descending order of their individual dollar contribution to the firmLists products in descending order of their individual dollar contribution to the firm

24. POM - J. Galván 24 Engineering drawing Engineering drawing Shows dimensions, tolerances, & materials Shows dimensions, tolerances, & materials Shows codes for Group Technology Shows codes for Group Technology Bill of Material Bill of Material Lists components, quantities & where used Lists components, quantities & where used Shows product structure Shows product structure Product Documents

25. POM - J. Galván 25 What documents are needed for production? Depends on the production technology/machinery available Depends on the production technology/machinery available Adapted to the manufacturing process implemented Adapted to the manufacturing process implemented What, who, when, how should be done with our machines What, who, when, how should be done with our machines

26. POM - J. Galván 26 Gate Valve

27. POM - J. Galván 27 “Exploded” Drawing of the Gate Valve

28. POM - J. Galván 28 Engineering Drawing of the Gate Valve Provide part specifications and dimensions in sufficient detail for manufacturing

29. POM - J. Galván 29 Parts List of the Gate Valve The parts list provides a listing of the component parts of a product. In addition to make or buy decisions, a parts list includes part number, part name, number of parts per product, and drawing references

30. POM - J. Galván 30 Bill of Materials for the Gate Valve Bill of materials is also referred to as a structured parts list since it includes all of the information typically included in the parts list, as well as information concerning the structure of the product.

31. POM - J. Galván 31 Make-or-Buy Decisions Decide whether or not you want (or need) to produce an item Decide whether or not you want (or need) to produce an item May be able to purchase the item as a “standard item” from another manufacturer May be able to purchase the item as a “standard item” from another manufacturer

32. POM - J. Galván 32 Parts grouped into families Parts grouped into families Similar, more standardized parts Similar, more standardized parts Uses coding system Uses coding system Describes processing & physical characteristics Describes processing & physical characteristics Part families produced in manufacturing cells Part families produced in manufacturing cells Mini-assembly lines Mini-assembly lines Group Technology Characteristics

33. POM - J. Galván 33 112mm 60mm 4mm x 45° chamfer 80mm Product Code: 1 5 3 1 Part function (round rod) Material (steel) Max. length (50 < L < 150) Primary machine (lathe) Round Rod Group Technology Code Example

34. POM - J. Galván 34 Improved product design Improved product design Reduced purchases Reduced purchases Reduced work-in-process inventory Reduced work-in-process inventory Improved routing & machine loading Improved routing & machine loading Reduced setup & production times Reduced setup & production times Simplified production planning & control Simplified production planning & control Group Technology Benefits

35. POM - J. Galván 35 Production Documents Assembly Drawings Assembly Drawings Assembly chart Assembly chart Route sheet Route sheet Work order Work order

36. POM - J. Galván 36 Shows exploded view of product Shows exploded view of product HeadNeck Handle End Cap Assembly Drawing

37. POM - J. Galván 37 Assembly Chart

38. POM - J. Galván 38 Assembly Chart I It is an analog model of the assembly process. Circles with a single link denote basic components, circles with several links denote assembly operations/subassemblies, and squares represent inspection operations.

39. POM - J. Galván 39 Assembly Chart II

40. POM - J. Galván 40 Route Sheet Lists all operations Lists all operations

41. Information Gathering Information about process : - Route sheet (equipment and operation times) - Precedence Diagram (prerequisite assembly steps before new assembly step) - Operation process chart (processing operations, assembly operations, and inspections)

42. POM - J. Galván 42 Route Sheet for one Component of the Gate Valve Route sheet summarizes whether a part will be purchased or produced, how the production of a part will be achieved, what equipment will be used, and how long it take to perform each operation.

43. POM - J. Galván 43 Precedence Diagram for Assembling the Gate Valve A precedence diagram establishes the prerequisite assembly steps that must be completed before performing a given assembly step.

44. POM - J. Galván 44 Operations Process Chart By superimposing the route sheets and the assembly chart, a chart results that gives an overview of the flow within the facility. This chart is the operations process chart.

45. POM - J. Galván 45 Work Order Dept Oper Date Work Order Approved: JM Manufacturing © 1984-1994 T/Maker Co. Authorizes producing a given item, usually to a schedule

46. POM - J. Galván 46 Engineering Change Notice (ECN) A correction or modification of an engineering drawing or bill of material A correction or modification of an engineering drawing or bill of material

47. POM - J. Galván 47 Configuration Management A system by which a product’s planned and changing components are accurately identified and for which control and accountability of change are maintained A system by which a product’s planned and changing components are accurately identified and for which control and accountability of change are maintained

48. POM - J. Galván 48 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. Particularly useful when there are a series of decisions and outcomes which lead to other decisions and outcomes. Considerations: Considerations: Include all possible alternatives and states of nature - including “doing nothing” Include all possible alternatives and states of nature - including “doing nothing” Enter payoffs at end of branch Enter payoffs at end of branch Approach determining expected values by “pruning” tree Approach determining expected values by “pruning” tree

49. POM - J. Galván 49 Transition to Production First issue: knowing when to move to production! First issue: knowing when to move to production! Second: must view product development as evolutionary, not responsibility of single individual/department Second: must view product development as evolutionary, not responsibility of single individual/department Third: expect to need a trial production period to work the bugs out Third: expect to need a trial production period to work the bugs out Fourth: recognize that responsibility must also transition Fourth: recognize that responsibility must also transition

50. POM - J. Galván 50 Documents in the design of services Are they needed? Are they needed? Whenever rules must be applied in many different sites (e.g. Mcdonald’s) Whenever rules must be applied in many different sites (e.g. Mcdonald’s) Whenever procedures must be followed to fullfil requirements Whenever procedures must be followed to fullfil requirements

51. POM - J. Galván 51 McDonald’s manuals

52. POM - J. Galván 52 McDonald’s manuals

53. POM - J. Galván 53 What do you need to implement this reception message?