1. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-1 Operations Management Design of Goods and Services

2. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-2 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

3. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-3  Need-satisfying offering of an organization  Example  P&G does not sell laundry detergent  P&G sells the benefit of clean clothes  Customers buy satisfaction, not parts  May be a good or a service What is a Product?

4. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-4 Product Strategy Options  Product differentiation  Low cost  Rapid response

5. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-5 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

6. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-6 Product Idea Package Physical Good Features Quality Level Service (Warranty) Brand (Name) Product Components

7. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-7 Product Life Cycle  Introduction  Growth  Maturity  Decline

8. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-8 Product Life Cycle Introduction  Fine tuning  research  product development  process modification and enhancement  supplier development

9. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-9 Product Life Cycle Growth  Product design begins to stabilize  Effective forecasting of capacity becomes necessary  Adding or enhancing capacity may be necessary

10. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-10 Product Life Cycle Maturity  Competitors now established  High volume, innovative production may be needed  Improved cost control, reduction in options, paring down of product line

11. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-11 Product Life Cycle Decline  Unless product makes a special contribution, must plan to terminate offering

12. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-12 Product Life Cycle, Sales, Cost, and Profit Sales, Cost & Profit. IntroductionMaturityDeclineGrowth Cost of Development & Manufacture Sales Revenue Time Cash flow Loss Profit

13. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-13 Products in Various Stages of Life Cycle Growth Decline Time Sales Virtual Reality Roller Blades Jet Ski Boeing 727 Introduction Maturity

14. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-14 Few Successes 0 500 1000 1500 2000 Development Stage Number 1000 Market requirement Design review, Testing, Introduction 25 Ideas 1750 Product specification 100 Functional specifications One success! 500

15. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-15 Product-by-Value Analysis  Lists products in descending order of their individual dollar contribution to the firm.  Helps management evaluate alternative strategies.

16. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-16 Product Development Stages  Idea generation  Assessment of firm’s ability to carry out  Customer Requirements  Functional Specification  Product Specifications  Design Review  Test Market  Introduction to Market  Evaluation Scope of product development team Scope of design for manufacturability and value engineering teams

17. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-17 Quality Function Deployment  Identify customer wants  Identify how the good/service will satisfy customer wants  Relate customer wants to product hows  Identify relationships between the firm’s hows  Develop importance ratings  Evaluate competing products

18. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-18 QFD House of Quaoity

19. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-19 House of Quality Sequence Indicates How to Deploy Resources to Achieve Customer Requirements

20. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-20 Idea Generation Stage  Provides basis for entry into market  Sources of ideas  Market need (60-80%); engineering & operations (20%); technology; competitors; inventions; employees  Follows from marketing strategy  Identifies, defines, & selects best market opportunities

21. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-21 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 House of Quality Customer Requirements Product Characteristics

22. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-22 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  May rate product compared to competitors’ House of Quality Customer Requirements Product Characteristics

23. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-23  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) Product Specification Stage House of Quality Product Characteristics Component Specifications

24. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-24 Quality Function Deployment  Product design process using cross-functional teams  Marketing, engineering, manufacturing  Translates customer preferences into specific product characteristics  Involves creating 4 tabular ‘Matrices’ or ‘Houses’  Breakdown product design into increasing levels of detail

25. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-25 You’ve been assigned temporarily to a QFD team. The goal of the team is to develop a new camera design. Build a House of Quality. © 1984-1994 T/Maker Co. House of Quality Example

26. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-26 House of Quality Example High relationship   Medium relationship  Low Relationship Customer Requirements Customer Importance Target Values

27. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-27 House of Quality Example High relationship  Medium relationship  Low Relationship Target Values Light weight Easy to use Reliable What the customer desires (‘wall’) Aluminum Parts Auto Focus Auto Exposure Customer Requirements Customer Importance

28. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-28 House of Quality Example High relationship   Medium relationship  Low Relationship Customer Requirements Customer Importance Target Values Light weight Easy to use Reliable Aluminum Parts Auto Focus Auto Exposure 3 1 2 Average customer importance rating

29. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-29 House of Quality Example High relationship  Medium relationship  Low Relationship Customer Requirements Customer Importance Light weight Easy to use Reliable Aluminum Parts Auto Focus Auto Exposure      3 2 1 Relationship between customer attributes & engineering characteristics (‘rooms’)

30. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-30 House of Quality Example High relationship  Medium relationship  Low Relationship Customer Requirements Customer Importance Target Values Light weight Easy to use Reliable Aluminum Parts Auto Focus Auto Exposure      3 2 1 51 1 Target values for engineering characteristics (‘basement’); key output

31. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-31 House of Quality Example High relationship   Medium relationship  Low Relationship Customer Requirements Customer Importance Target Values Light weight Easy to use Reliable Aluminum Parts Auto Focus Auto Exposure      3 2 1 51 1

32. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-32 Organizing for Product Development  Historically – distinct departments  Duties and responsibilities are defined  Difficult to foster forward thinking  Today – team approach  Representatives from all disciplines or functions  Concurrent engineering – cross functional team

33. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-33 Manufacturability and Value Engineering  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  robust design

34. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-34 Cost Reduction of a Bracket via Value Engineering

35. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-35 Issues for Product Development  Robust design  Time-based competition  Modular design  Computer-aided design  Value analysis  Environmentally friendly design

36. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-36 Robust Design  Product is designed so that small variations in production or assembly do not adversely affect the product

37. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-37 Modular Design  Products designed in easily segmented components.  Adds flexibility to both production and marketing

38. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-38  Designing products at a computer terminal or work station  Design engineer develops rough sketch of product  Uses computer to draw product  Often used with CAM © 1995 Corel Corp. Computer Aided Design (CAD)

39. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-39  Shorter design time  Database availability  New capabilities  Example: Focus more on product ideas  Improved product quality  Reduced production costs Benefits of CAD/CAM

40. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-40  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

41. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-41 Virtual Reality  Computer technology used to develop an interactive, 3-D model of a product.  Especially helpful in design of layouts (factory, store, home, office)

42. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-42 Value Analysis  Focuses on design improvement during production  Seeks improvements leading either to a better product or a product which can be more economically produced.

43. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-43 Environmentally Friendly Designs  Benefits  Safe and environmentally sound products  Minimum raw material and energy waste  Product differentiation  Environmental liability reduction  Cost-effective compliance with environmental regulations  Recognition as good corporate citizen

44. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-44 “Green” Manufacturing  Make products recyclable  Use recycled materials  Use less harmful ingredients  Use lighter components  Use less energy  Use less material

45. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-45 Time-based Competition  Product life cycles are becoming shorter.  Faster developers of new products gain on slower developers and obtain a competitive advantage

46. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-46 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

47. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-47  Engineering drawing  Shows dimensions, tolerances, & materials  Shows codes for Group Technology  Bill of Material  Lists components, quantities & where used  Shows product structure © 1984-1994 T/Maker Co. Product Documents

48. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-48 © 1995 Corel Corp. Bill of Material Example

49. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-49 Make-or-Buy Decisions  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

50. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-50  Parts grouped into families  Similar, more standardized parts  Uses coding system  Describes processing & physical characteristics  Part families produced in manufacturing cells  Mini-assembly lines © 1984-1994 T/Maker Co. Group Technology Characteristics

51. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-51 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

52. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-52 Group Technology Schemes Enable Grouping of Parts

53. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-53  Improved product design  Reduced purchases  Reduced work-in-process inventory  Improved routing & machine loading  Reduced setup & production times  Simplified production planning & control  Simplified maintenance Group Technology Benefits

54. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-54 Production Documents  Assembly Drawing  Assembly chart  Route sheet  Work order

55. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-55  Shows exploded view of product HeadNeck Handle End Cap © 1984-1994 T/Maker Co. Assembly Drawing

56. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-56 1 2 3 SA1 A1 A2 Tuna Fish Mayonnaise Bread Tuna Assy FG Sandwich Assembly Chart for A Tuna Sandwich

57. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-57 Assembly Drawing and Assembly Chart

58. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-58 Route Sheet  Lists all operations

59. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-59 Work Order Dept Oper Date Work Order Approved: JM Manufacturing © 1984-1994 T/Maker Co. Authorizes producing a given item, usually to a schedule

60. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-60 Engineering Change Notice (ECN)  A correction or modification of an engineering drawing or bill of material

61. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-61 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

62. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-62 Service Design - Nature of Customer Participation

63. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-63 Improving Customer Relations at a Drive-up Window  Be especially discreet when talking with customer through the microphone  Provide written instructions for customers who must fill out forms you provide  Mark lines to be completed or attach a note with instructions  Always say ”please” and “thank you”  Establish eye contact with the customer if the distance allows it  If the transaction requires that the customer park the car and come into the lobby, apologize for the inconvenience.

64. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-64 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

65. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-65 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

66. PowerPoint presentation to accompany Heizer/Render - Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 5-66 Transition to Production  First issue: knowing when to move to production!  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  Fourth: recognize that responsibility must also transition