1. Designing Goods and Services and Process Selection
Chapter 3

2. MGMT 326 Capacity, Facilities, & Work Design Foundations of Operations
Products &
Processes
Quality
Assurance
Planning
& Control
Managing
Projects
Introduction
Strategy
Product
Design
Process
Design

3. Designing Goods and Services
Basic
Concepts
Design and strategy
Feasibility study
Operations issues
Service Design
Service package
Approaches to
service design
Designing Goods
Product
Characteristics
Form design
Functional design
Learning from
other companies
Design Methods
Design for manufacture
Concurrent engineering

4. Brief Outline of Chapter
Product design
Process selection
Traditional manufacturing processes
Service processes
Automation

5. Strategy and Product Design
The core product may be a good or a service
Product design should support the business strategy
Product design should meet the needs of a target market.
Product design should give the company a competitive advantage.

6. Feasibility Study
Purpose is to determine whether the company can make a product that
Meets the needs of customers in a target market
Can be made by the company with the required level of quality and delivery schedule
Can be sold at a price that customers are willing to pay
While allowing the company to meet its profit targets. This depends on costs estimated by Accounting and revenue estimated by Marketing

7. Operations Issues in Product Design
Product design and technology
Product design is a joint responsibility of marketing, operations, engineering (in manufacturing) and Accounting/Finance
Process technology (along with engineering)
Would we need a new or modified facility?
Can the firm make this product with consistent quality?
How many workers will we need?
What skills will they need?

8. Designing Services – Service Package
Physical elements: facility, equipment and furnishings, inventories
Sensory and aesthetic aspects
Psychological benefits
Quality standards

9. Approaches to Service Design
Design for efficiency:
Compete on consistency, cost, speed
High standardization
Limited variety
Automation may be used
High-volume services purchase at low cost.
Example: fast food

10. Approaches to Service Design (2)
Customer involvement in producing the service
The customer does part of the work
Reduces costs and may allow the customer to do some customization
Example: self-service salad bar
Many services use both high efficiency and customer involvement
Examples: ATM's, vending machines, self-checkouts in stores

11. Approaches to Service Design (3)
High customer attention
Highly customized service, provided by highly trained people
Used in professional services (medical care, legal services, high-end tax preparation services)
Also used by luxury retailers, hotels, restaurants

12. Designing Goods
Form design: Sensory aspects of the product (aesthetics)
Size, color, shape, sound
"Look and feel"
Form design contributes to customer's impressions of quality
Functional design: how the product performs

13. Form Design: How the Product Looks, Etc.
Ipod Nano
Toyota Camry

14. Functional Design of Goods What the Product Does

15. Functional Design of Goods (2) How the Product Performs
Fitness for use: product performs as intended
Durability: how long the product lasts
Reliability: consistent performance
Maintainability: ease and cost of repairs

16. Learning from Other Companies
Benchmarking: comparing your operations with those of a "best in class" firm
Product benchmark – compare your product with competing products
Process benchmark
How competing products or services are produced
How other companies perform business functions
Cost benchmark – what your competitors spend to make comparable products

17. Learning from Other Companies (2)
Reverse engineering: taking your competitor's products apart and figuring out how it is made
Physical products
Software
Market research on competitor's products: customer needs and satisfaction

18. Design for Manufacture
Value engineering: Eliminate product features that add cost but do not add value to the customer.
Reduce the number of parts.
Reduces the cost of ordering, purchasing, and storing parts.
Reduces the space required to hold inventory
Reduces the number of tools and operations required (by eliminating bolts, screws, etc.)
Reduces the time required to make the product

19. Design for Manufacture (2)
Example of reducing the number of parts, operations, and tools.

20. Design for Manufacture (3)
Modular design: Design products to be assembled from standard components.
Example: Dell buys standard video cards, processors, power supplies, hard drives, etc., and assembles computers
Use standard parts to reduce design costs and purchasing costs.
Examples: Computer makers often buy standard power supplies.

21. Sequential vs. Concurrent Design

22. Concurrent Engineering
Design the product and the process at the same time.
Use a design team that includes marketing, operations, engineering, operations, and suppliers.
Stay in touch with customers during the design process.
Requires good project management and coordination among all groups involved.

23. Advantages of Concurrent Engineering
Increases the chances of a successful product.
Shorter design time
Shortens time to market.
Reduces design costs
Supplier expertise can help design a product that meets customer needs at lower cost
Reduces the need to make expensive changes in the product and the process later

24. Process Selection Process Types Process Design Tools Reengineering
Flowcharts
Automation
Intermittent
Project
Batch
Advantages
and
Disadvantages
Types of
Automation
Computer-aided
design and
engineering
Robots
Material handling
FMS
CIM
Repetitive
Assembly line
Continuous
Impact of Process Type
Layout
Inventory policy
Costs

25. Intermittent Operations
Intermittent operations: processes used to produce a variety of products with different processing requirements at lower volumes
Project processes: used to make one-of-a-kind items to customer specifications
Batch processes: used to make small quantities of products in batches based on customer orders or specifications
Also called job shops

26. Repetitive Operations
Repetitive operations: Processes used to make one product or a few standardized products in high volume
Line process – also called an assembly line or flow shop
May have assemble-to-order options
Continuous process: operates continuously, produces a high volume of a fully standardized product
Some firms use more than one type of process

27. Underlying Process Relationship Between Volume and Standardization
High-volume
processes are
usually more
standardized
than low-volume
processes.

28. Process Choice and Layout
Intermittent operations usually use a process (department) layout: workers & equipment are grouped by function
Different products may take different paths through the production process
Repetitive operations use a product layout: workers & equipment are grouped in the order in which they will be needed. The product passes from one work station to the next.

29. Process Choice and Inventory Policy

30. Process Choice and Costs
Intermittent processes
Lower capital costs than repetitive processes
Lower breakeven point than repetitive processes
High variable cost per unit
High total cost per unit
Repetitive processes
Higher capital costs than intermittent processes
Higher breakeven point than intermittent processes
Low variable cost per unit
Low total cost per unit if volume is high

31. Process Design Tools
Process flow analysis is a tool used to analyze and document the sequence of steps within a total process. Usually first step in process reengineering.
Process reengineering is the fundamental rethinking and radical redesign of a process to bring about dramatic improvements in performance
Cost
Quality
Time
Flexibility

32. Process Design Tools (2)
Both operations processes and business processes can be re-engineered.
Re-engineer a process before you automate it or computerize it.

33. Process Flow in a Pizza Restaurant

34. Automation
The use of equipment to perform work without human operators, at least for a period of time
May involve a single machine, a group of machines, or an entire factory
ATM’s and vending machines are examples of automation in services

35. Automation (2) Advantages Disadvantages Consistent quality
Capacity to produce a large volume of goods
Low variable costs
Low total costs if volume is high
Disadvantages
Large-scale automation is not cost-justified unless volume is high
Computer or equipment failure can shut down production
Expertise required to maintain equipment

36. Computer-Aided Design & Engineering
Computer-aided design (CAD): use of computer software to design products
Similar software is used to make animated films
Computer-aided engineering (CAE): use of computer software to evaluate and improve product designs
Specialized CAD/CAE software is used by architects and landscape architects

37. Data Flow in Manufacturing Technology
Product
design
data
Final
design?
Computer
aided design (CAD)
Computer
aided
engineering
(CAE)
Final
design
data
Yes
Computer
aided
process
planning
(CAPP)
Manufacturing
instructions
Computer
aided
manufacturing
(CAM)
Finished
goods

38. Computer Aided Manufacturing (CAM) and Robots
CAM is the use of a computer to program and control
re-programmable
manufacturing equipment
A traditional robot is a mechanical arm with a power supply and a computer that controls the movements of the arm

39. Uses of Robots Uses of robots in processes
Monotonous work, such as assembly line work
Work that is hard or unhealthy for people, such as painting or nuclear plant cleanup
Work that requires great precision
Making integrated circuits
Surgery – guided by a surgeon
Uses of robots in products: Robot vacuum cleaners, lawn mowers, toys, assistive robots for disabled people

40. Automated Materials Handling
Automated guided vehicle
Conveyor belts are used in manufacturing & services
Robots move materials short distances
Automated guided vehicles move materials longer distances in plants, offices, hospitals

41. Flexible Manufacturing System (FMS)
System that links flexible manufacturing cells and/or robot assembly lines under control of a central computer
Includes materials handling
Usually includes automated inspection

42. Flexible Manufacturing System (FMS)
System that links flexible manufacturing cells and/or robot assembly lines under control of a central computer
Includes materials handling
Usually includes automated inspection

43. Flexible Manufacturing System
Computer control room
Tools
Tools
Conveyor
Machine
Machine
Machine
Machine
Machine
Machine
Unload
Load
Finished
goods
Parts

44. Computer Integrated Manufacturing (CIM)
CAD, CAE, and CAPP
Flexible Manufacturing System
Production planning and inventory management
Purchasing
Common databases and control systems for all these functions
Provides product flexibility, cost savings, and short manufacturing lead times