1. Developing Products and Services
Chapter 15

2. Chapter Objectives Be able to:
Explain why product design is important to the success of a business.
Describe the six dimensions of product design that are of particular interest to operations and supply chain managers.
Describe the five phases of product and service development and explain the difference between sequential development and concurrent engineering.
Discuss the different roles played by areas such as engineering and accounting during the development process.
Describe some of the most common approaches to improving product and service designs, including the Define-Measure-Analyze-Design-Verify (DMADV) process, quality function deployment (QFD), design for manufacturability (DFM), and target costing.

3. Product Design and Development
Product Design – The characteristics or features of a product or service that determine its ability to meet the needs of the user.
Product Development Process– The overall process of strategy, organization, concept generation, product and marketing plan creation and evaluation, and commercialization of a new product.
© Product Development and Management Association

4. Four Reasons for Developing New Products and Services
New products or services can give firms a competitive advantage in the marketplace.
New products or services provide benefits to the firm.
Companies develop new products or services to exploit existing capabilities.
Companies can use new product development to block out competitors.

5. Product Design Dimensions
Repeatability
Testability
Serviceability
Product volumes
Product costs
Match between the design and existing capabilities

6. Product Design Dimensions
Repeatability
Consistent production
Tolerance to manufacturing variations (robustness)
Testability
Ease with which critical components or functions can be tested during production
Serviceability
Ease of repair, service, and evaluation

7. Product Design Dimensions
Product Volumes
Expanding firm’s operations by building facilities, hiring workers, buying new equipment, or planning with key suppliers
Product Costs
Obvious costs – Easiest to see and manage
Hidden costs – Not easy to track but can have a major impact
Number of parts in a product
Engineering changes
Transportation costs

8. Product Design Dimensions
Match with Existing Capabilities
Product design flexibility
Easy to add features?
Easy to upgrade?
Process flexibility
Share processes / parts?
Will upgrades make current operations obsolete?

9. Development Process
Concept development phase – The company identifies ideas for new or revised products and services.
Planning phase – The company begins to address the feasibility of a product or service.
Design and development phase – The company starts to invest heavily in the development effort and builds and evaluates prototypes.

10. Development Process
Commercial preparation phase – The firms start to invest heavily in the operations and supply chain resources needed to support the new product or service.
Launch phase – For products, this means “filling up” the supply chain with products. For services, it means making the services available to the target marketplace.

11. Development Process Phases
Table 15.1

12. Sequential Development vs. Concurrent Engineering
Sequential development – A process in which a product or service idea must clear specific hurdles before it can go on to the next development phase.
Concurrent engineering – A process where activities in different development stages are allowed to overlap with one another, shortening the total development time.

13. Concurrent Engineering
Figure 15.1

14. Organizational Roles Engineering – Provide the expertise.
Marketing – Understanding the marketplace.
Accounting – Play the role of “scorekeeper.”
Finance – Judge the financial impact and determine how to acquire the needed capital.
Designers – Handle product design and create “identities” for companies, environments, and service experiences.
Purchasing – Identify the best suppliers and sign them up early in the process. Act as a consultant for materials.
Suppliers – Bring opportunities for improvement, reduce financial risks, save time in development.

15. DMADV Steps: Define – Measure – Analyze – Design – Verify
Define the project goals and customer deliverables
Measure and determine customer needs and specifications
Analyze the product or process options to meet the customer needs
Design the product or process
Verify the results

16. Quality Function Deployment
Quality function deployment – A graphical tool used to help organizations move from vague notions of what customers want to specific engineering and operational requirements
Also called the House of Quality

17. Quality Function Deployment
QFD Matrix:
Left side: Shows customer requirements and their relative importance to target customers.
Along the top: Lists specific product characteristics.
Main body: Shows how each of the product characteristics does or does not support the customer requirements.
Roof: Shows synergies between some of the features.

18. Quality Function Deployment
QFD Matrix for a Cell Phone
Figure 15.2

19. Quality Function Deployment
Using QFD Matrices to move from Customer Requirements to Process Specifications.
Figure 15.3

20. Computer-Aided Systems
Computer-aided design (CAD) – An information system that allows engineers to develop, modify, share, and even test designs in a virtual world.
Computer-aided design/computer-aided manufacturing system (CAD/CAM) – An extension of CAD where CAD-based designs are translated into machine instructions, which are then fed automatically into computer-controlled manufacturing equipment.

21. Design for… Approaches
Design for manufacturability (DFM)
Considering manufacturing issues in design and development.
Parts standardization, modular architecture.
Design for maintainability (DFMt) –
Considering maintainability issues over the product’s projected life cycle during the design and development process.

22. Design for… Approaches
Design for Six Sigma (DFSS)
Considering achieving Six Sigma quality levels in
product and process design.
Design for the environment (DFE)
Considering environmental, safety, and health issues over the product’s projected life cycle during the design and development process.

23. Target Costing and Value Analysis
Target costing – The process of designing a product to meet a specific cost objective.
Setting the planned selling price and subtracting the desired profit as well as marketing and distribution costs.
Value analysis – The process of examining all elements of a component, an assembly, an end product, or a service to make sure it fulfills its intended function at the lowest total cost.
Value = function/cost

24. Developing Products and Services Case Study
Design for Supply Chain Programs

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Printed in the United States of America.