1. Chapter 4: Product/Service Design1 Chapter 4 Product/Service Design

2. Chapter 4: Product/Service Design2 Introduction

3. Chapter 4: Product/Service Design3 Progressive Corp. Prior to 1988, carved our profitable niche serving high-risk drivers In 1988 two major events occurred Allstate overtook it in high-risk niche California passed proposition 103 Round-the-clock immediate response program adopted

4. Chapter 4: Product/Service Design4 Progressive Corp. continued Special vans equipped with air- conditioning, comfortable chairs, desk, and two cell phones. Often settlement check offered on spot 80% of accident victims contacted within 9 hours of learning of accident 70% of vehicles inspected within one day Typically claim wrapped up with a week

5. Chapter 4: Product/Service Design5 Thermos In 1992 had 25% share of $1 billion barbecue grill market Product becoming a commodity CEO believed consumers were too intelligent to be tricked by clever advertising and slick packaging Survival dependent on constant innovation, high quality, at right price

6. Chapter 4: Product/Service Design6 Thermos continued Interdisciplinary team with representatives from marketing, manufacturing, engineering, and finance to design new grill Team used to reduce project completion time As example, initially designers opted for tapered legs

7. Chapter 4: Product/Service Design7 Thermos continued Manufacturing noted that tapered legs would have to be custom made Design changed to straight legs Under previous system, manufacturing would not have found out about legs until design completed

8. Chapter 4: Product/Service Design8 Thermos continued Team developed revolutionary electric grill Technology used to give food barbecued taste Burns cleaner than gas or charcoal Grill won four design awards in its first year

9. Chapter 4: Product/Service Design9 Caterpillar Used virtual-reality system called CAVE (cave automatic virtual environment) to take large earthmoving equipment for test drive before it was actually built Surround-screen and surround sound cube with 10-foot sides Super-computer projects 3D graphics onto the walls

10. Chapter 4: Product/Service Design10 Caterpillar continued Inside CAVE, people can walk around and operate imaginary controls System responds to movements Provides many perspectives Backhoe and wheel loader recently introduced incorporate visibility and performance improvements based on data collected from virtual test-drives

11. Chapter 4: Product/Service Design11 Themes Illustrate in Examples Two examples related to design of products and one to the design of a service Importance of product and service design to an organization’s competitiveness Progressive Thermos

12. Chapter 4: Product/Service Design12 Themes continued Technology In Progressive’s case, new technology such as cellular phones made new service possible In Caterpillar’s case, new technology used to enhance design process Design Teams

13. Chapter 4: Product/Service Design13 Impacts of Selection/Design Decisions Fit Materials Labor Equipment Process Financing

14. Chapter 4: Product/Service Design14 Three Stages in Output Selection and Design Selection stage Idea generation Screening and selection Product and service design stage Preliminary design Prototype testing Final design Process design

15. Chapter 4: Product/Service Design15 Steps in Product-Service Selection and Design

16. Chapter 4: Product/Service Design16 The Selection Stage

17. Chapter 4: Product/Service Design17 Generation of Ideas Employees with customer contact play a key role in generating new ideas Can imitate proven new idea Purchase new idea Marketing “pull” versus technology “push” Product versus process research

18. Chapter 4: Product/Service Design18 The Development Effort

19. Chapter 4: Product/Service Design19 Mortality Curve of Chemical Product Ideas from Research to Commercialization

20. 20 Service Gap Identifier

21. Chapter 4: Product/Service Design21 Product-Process Innovations Over Time

22. Chapter 4: Product/Service Design22 Screening and Selection Assessing technical feasibility Determining up-front capital needs Evaluation may include calculation of payback period, return on investment, or net present value

23. Chapter 4: Product/Service Design23 Analysis of Organizational Fit Experience with particular output Experience with production system required for the output Experience in providing an output to the same target recipients Experience with the distribution system for the output

24. Chapter 4: Product/Service Design24 Typical Checklist for Organizational Fit

25. Chapter 4: Product/Service Design25 The Aggregate Project Plan Project Portfolio Derivative projects Breakthrough projects Platform projects R&D projects

26. Chapter 4: Product/Service Design26 The Aggregate Project Plan

27. Chapter 4: Product/Service Design27 An Example Aggregate Project Plan

28. Chapter 4: Product/Service Design28 Using the Aggregate Project Plan Identify gaps in portfolio Evaluate resource requirements Employee development

29. Chapter 4: Product/Service Design29 The Product/Service Design Stage

30. Chapter 4: Product/Service Design30 The Product Design Stage Preliminary Design Prototype Testing Final Design

31. Chapter 4: Product/Service Design31 Preliminary Design Tradeoff Analysis Standardization Modularity Computer-Aided Design

32. Chapter 4: Product/Service Design32 Tradeoff Analysis Factors to Consider Function Cost Size and shape Appearance Quality Reliability Environmental impact Producability Timing Accessibility Recipient input requirements

33. Chapter 4: Product/Service Design33 Using QFD to link customers’ attributes to technical, component, and operation requirements

34. Chapter 4: Product/Service Design34 The House of Quality for a Car Door

35. Chapter 4: Product/Service Design35 Advantages of Standardization Minimizes number of parts needed to stock Minimizes number of equipment setups Simplified operations procedures Quantity discounts due to larger purchases Minimized service and repair problems

36. Chapter 4: Product/Service Design36 Disadvantages of Standardization Possible lower quality because standard parts used rather than specially made parts Inflexible production

37. Chapter 4: Product/Service Design37 Modularity computer 5 hard drive sizes 5 choices for RAM 5 choices for CPU 4 modem choices 5 x 5 x 5 x 4 = 500 possible computer configurations with only 19 different parts

38. Chapter 4: Product/Service Design38 Computer-Aided Design Develop drawings on computer screen Can retrieve old designs and changes as necessary rather than creating new designs from scratch Computer-aided engineering (CAE) Computer-aided process planning (CAPP) Computer-aided manufacturing (CAM)

39. Chapter 4: Product/Service Design39 Prototype Testing Design concept developed in preliminary stage tested Physical models Computer simulation Rapid prototyping (RP) Actual product or service Accept, extend, modify, or reject preliminary design

40. Chapter 4: Product/Service Design40 Final Design Simplification and value analysis Safety and human factors Reliability Manufacturability

41. Chapter 4: Product/Service Design41 Methods to Speed New Output Introduction Contract R&D Product/process teams Overlap development stages Combine/eliminate stages Incremental emphasis More extensive application Use new technologies

42. Chapter 4: Product/Service Design42 Commercialization

43. Chapter 4: Product/Service Design43 Commercialization Process of moving an idea for a new product or service from concept to market

44. Chapter 4: Product/Service Design44 History of the Typewriter Mechanical typewriter dominated market for 25 years Then the electromechanical typewriter dominated market for 15 years Electric typewriter dominated for the next 7 years First generation microprocessor based machines dominated for next 5 years

45. Chapter 4: Product/Service Design45 Characteristics of Companies with Superior Commercialization Capabilities Commercialize two to three times as many new products and processes as their competitors Two to three times as many technologies incorporated into products Get product to market in half time Compete in twice as many product and geographic markets

46. Chapter 4: Product/Service Design46 Example: Assume following applies to laser printer industry Market growing 20% annually Prices declining 12% annually Five year life cycle As a project leader, would you choose between incurring a 30% cost overrun to finish project on schedule or miss deadline by six months?

47. Chapter 4: Product/Service Design47 Laser Printer example continued Incurring the 30% cost overrun will reduce cumulative profits by 2.3% Launching printer six months late will reduce cumulative profits by 33%

48. Chapter 4: Product/Service Design48 To Improve Commercialization Capability Must Measure It Time to market Range of markets Number of markets Breadth of technologies

49. Chapter 4: Product/Service Design49 Improving Commercialization Capability Make it a priority Set goals and benchmarks Build cross-functional teams Promote hands-on management to speed actions and decisions

50. Chapter 4: Product/Service Design50 Disruptive Technologies Disruptive technologies Sustaining technologies

51. Chapter 4: Product/Service Design51 Performance Trajectories: Traditional Versus Online Distance Education Learning Programs