24/11/2014

1

5 - 1© 2011 Pearson Education, Inc. publishing as Prentice Hall

55 Design of Goodsand Services

Design of Goodsand Services

PowerPoint presentation to accompanyHeizer and RenderOperations Management, 10ePrinciples of Operations Management, 8e

PowerPoint slides by Jeff Heyl

5 - 2© 2011 Pearson Education, Inc. publishing as Prentice Hall

The objective of the product decisionis to develop and implement a

product strategy that meets thedemands of the marketplace with a

competitive advantage

Product Decision

5 - 3© 2011 Pearson Education, Inc. publishing as Prentice Hall

The good or service the organizationprovides society

Top organizations typically focus oncore products

Customers buy satisfaction, not justa physical good or particular service

Fundamental to an organization'sstrategy with implications throughoutthe operations function

Product Decision

24/11/2014

2

5 - 4© 2011 Pearson Education, Inc. publishing as Prentice Hall

Product Strategy Options

Differentiation Shouldice Hospital

Low cost Taco Bell

Rapid response Toyota

5 - 5© 2011 Pearson Education, Inc. publishing as Prentice Hall

Product Life Cycles

May be any length from a fewhours to decades

The operations function mustbe able to introduce newproducts successfully

5 - 6© 2011 Pearson Education, Inc. publishing as Prentice Hall

Product Life Cycles

Negativecash flow

Introduction Growth Maturity Decline

Sale

s, c

ost,

and

cash

flow Cost of development and production

Cashflow

Net revenue (profit)

Sales revenue

Loss

Figure 5.1

24/11/2014

3

5 - 7© 2011 Pearson Education, Inc. publishing as Prentice Hall

Product Life CycleIntroductory Phase

Fine tuning may warrantunusual expenses for1. Research2. Product development3. Process modification and

enhancement4. Supplier development

5 - 8© 2011 Pearson Education, Inc. publishing as Prentice Hall

Product Life Cycle

Growth Phase

Product design begins tostabilize

Effective forecasting ofcapacity becomes necessary

Adding or enhancing capacitymay be necessary

5 - 9© 2011 Pearson Education, Inc. publishing as Prentice Hall

Product Life Cycle

Maturity Phase

Competitors now established High volume, innovative

production may be needed Improved cost control,

reduction in options, paringdown of product line

24/11/2014

4

5 - 10© 2011 Pearson Education, Inc. publishing as Prentice Hall

Product Life Cycle

Decline Phase

Unless product makes aspecial contribution to theorganization, must plan toterminate offering

5 - 11© 2011 Pearson Education, Inc. publishing as Prentice Hall

Product Life Cycle Costs

Costs incurred

Costs committed

Ease of change

Concept Detailed Manufacturing Distribution,design design service,

prototype and disposal

Perc

ent o

f tot

al c

ost

100 –

80 –

60 –

40 –

20 –

0 –

5 - 12© 2011 Pearson Education, Inc. publishing as Prentice Hall

Product-by-Value Analysis

Lists products in descendingorder of their individual dollarcontribution to the firm

Lists the total annual dollarcontribution of the product

Helps management evaluatealternative strategies

24/11/2014

5

5 - 13© 2011 Pearson Education, Inc. publishing as Prentice Hall

Product-by-Value Analysis

IndividualContribution ($)

Total AnnualContribution ($)

Love Seat $102 $36,720Arm Chair $87 $51,765Foot Stool $12 $6,240Recliner $136 $51,000

Sam’s Furniture Factory

5 - 14© 2011 Pearson Education, Inc. publishing as Prentice Hall

New Product Opportunities

1. Understanding thecustomer

2. Economic change3. Sociological and

demographic change4. Technological change5. Political/legal change6. Market practice, professional

standards, suppliers, distributors

5 - 15© 2011 Pearson Education, Inc. publishing as Prentice Hall

Scope ofproduct

developmentteam

Product DevelopmentSystem

Scope fordesign andengineering

teams

Evaluation

Introduction

Test Market

Functional Specifications

Design Review

Product Specifications

Customer Requirements

Ability

Ideas

Figure 5.3

24/11/2014

6

5 - 16© 2011 Pearson Education, Inc. publishing as Prentice Hall

Quality FunctionDeployment

1. Identify customer wants2. Identify how the good/service will satisfy

customer wants3. Relate customer wants to product hows4. Identify relationships between the firm’s hows5. Develop importance ratings6. Evaluate competing products7. Compare performance to desirable technical

attributes

5 - 17© 2011 Pearson Education, Inc. publishing as Prentice Hall

Manufacturability andValue Engineering

Benefits:1. Reduced complexity of products2. Reduction of environmental impact3. Additional standardization of products4. Improved functional aspects of product5. Improved job design and job safety6. Improved maintainability (serviceability) of

the product7. Robust design

5 - 18© 2011 Pearson Education, Inc. publishing as Prentice Hall

Issues for ProductDevelopment

Robust design Modular design Computer-aided design (CAD) Computer-aided manufacturing (CAM) Virtual reality technology Value analysis Environmentally friendly design

24/11/2014

7

5 - 19© 2011 Pearson Education, Inc. publishing as Prentice Hall

Robust Design

Product is designed so that smallvariations in production orassembly do not adversely affectthe product

Typically results in lower cost andhigher quality

5 - 20© 2011 Pearson Education, Inc. publishing as Prentice Hall

Modular Design

Products designed in easilysegmented components

Adds flexibility to both productionand marketing

Improved ability to satisfy customerrequirements

5 - 21© 2011 Pearson Education, Inc. publishing as Prentice Hall

Using computers todesign products andprepare engineeringdocumentation

Shorter developmentcycles, improvedaccuracy, lower cost

Information anddesigns can bedeployed worldwide

Computer Aided Design(CAD)

24/11/2014

8

5 - 22© 2011 Pearson Education, Inc. publishing as Prentice Hall

Design for Manufacturing and Assembly(DFMA) Solve manufacturing problems during the

design stage 3-D Object Modeling

Small prototypedevelopment

CAD through theinternet

International dataexchange through STEP

Extensions of CAD

5 - 23© 2011 Pearson Education, Inc. publishing as Prentice Hall

Computer-AidedManufacturing (CAM)

Utilizing specialized computersand program to controlmanufacturing equipment

Often driven by the CAD system(CAD/CAM)

5 - 24© 2011 Pearson Education, Inc. publishing as Prentice Hall

1. Product quality2. Shorter design time3. Production cost reductions4. Database availability5. New range of capabilities

Benefits of CAD/CAM

24/11/2014

9

5 - 25© 2011 Pearson Education, Inc. publishing as Prentice Hall

Virtual Reality Technology

Computer technology used todevelop an interactive, 3-D model ofa product from the basic CAD data

Allows people to ‘see’ the finisheddesign before a physical model isbuilt

Very effective in large-scale designssuch as plant layout

5 - 26© 2011 Pearson Education, Inc. publishing as Prentice Hall

Value Analysis

Focuses on design improvementduring production

Seeks improvements leading eitherto a better product or a productwhich can be produced moreeconomically with lessenvironmental impact

5 - 27© 2011 Pearson Education, Inc. publishing as Prentice Hall

Ethics, EnvironmentallyFriendly Designs, and

Sustainability It is possible to enhance productivity

and deliver goods and services in anenvironmentally and ethicallyresponsible manner

In OM, sustainability means ecologicalstability

Conservation and renewal of resourcesthrough the entire product life cycle

24/11/2014

10

5 - 28© 2011 Pearson Education, Inc. publishing as Prentice Hall

Ethics, EnvironmentallyFriendly Designs, and

Sustainability Design

Polyester film and shoes Production

Prevention in production andpackaging

Destruction Recycling in automobiles

5 - 29© 2011 Pearson Education, Inc. publishing as Prentice Hall

The Ethical Approach

View product design from asystems perspective Inputs, processes, outputs Costs to the firm/costs to society

Consider the entire life cycle ofthe product

5 - 30© 2011 Pearson Education, Inc. publishing as Prentice Hall

The Ethical Approach Goals

1. Developing safe end environmentallysound practices

2. Minimizing waste of resources3. Reducing environmental liabilities4. Increasing cost-effectiveness of

complying with environmentalregulations

5. Begin recognized as a goodcorporate citizen

24/11/2014

11

5 - 31© 2011 Pearson Education, Inc. publishing as Prentice Hall

Guidelines for EnvironmentallyFriendly Designs

1. Make products recyclable2. Use recycled materials3. Use less harmful ingredients4. Use lighter components5. Use less energy6. Use less material

5 - 32© 2011 Pearson Education, Inc. publishing as Prentice Hall

Time-Based Competition

Product life cycles are becomingshorter and the rate oftechnological change isincreasing

Developing new products fastercan result in a competitiveadvantage

5 - 33© 2011 Pearson Education, Inc. publishing as Prentice Hall

Acquiring Technology By Purchasing a Firm

Speeds development Issues concern the fit between the acquired

organization and product and the host Through Joint Ventures

Both organizations learn Risks are shared

Through Alliances Cooperative agreements between

independent organizations

24/11/2014

12

5 - 34© 2011 Pearson Education, Inc. publishing as Prentice Hall

Defining The Product

First definition is in terms offunctions

Rigorous specifications aredeveloped during the design phase

Manufactured products will have anengineering drawing

Bill of material (BOM) lists thecomponents of a product

5 - 35© 2011 Pearson Education, Inc. publishing as Prentice Hall

Engineering drawing Shows dimensions, tolerances, and

materials Shows codes for Group Technology

Bill of Material Lists components, quantities and

where used Shows product structure

Product Documents

5 - 36© 2011 Pearson Education, Inc. publishing as Prentice Hall

Engineering Drawings

Figure 5.8

24/11/2014

13

5 - 37© 2011 Pearson Education, Inc. publishing as Prentice Hall

Bills of MaterialBOM for Panel Weldment

NUMBER DESCRIPTION QTYA 60-71 PANEL WELDM’T 1

A 60-7 LOWER ROLLER ASSM. 1R 60-17 ROLLER 1R 60-428 PIN 1P 60-2 LOCKNUT 1A 60-72 GUIDE ASSM. REAR 1R 60-57-1 SUPPORT ANGLE 1A 60-4 ROLLER ASSM. 102-50-1150 BOLT 1A 60-73 GUIDE ASSM. FRONT 1A 60-74 SUPPORT WELDM’T 1R 60-99 WEAR PLATE 102-50-1150 BOLT 1 Figure 5.9 (a)

5 - 38© 2011 Pearson Education, Inc. publishing as Prentice Hall

Parts grouped into families withsimilar characteristics

Coding system describesprocessing and physicalcharacteristics

Part families can be producedin dedicated manufacturing cells

Group Technology

5 - 39© 2011 Pearson Education, Inc. publishing as Prentice Hall

Group Technology Scheme

Figure 5.10

(a) Ungrouped Parts(b) Grouped Cylindrical Parts (families of parts)

Grooved Slotted Threaded Drilled Machined

24/11/2014

14

5 - 40© 2011 Pearson Education, Inc. publishing as Prentice Hall

1. Improved design2. Reduced raw material and purchases3. Simplified production planning and

control4. Improved layout, routing, and

machine loading5. Reduced tooling setup time, work-in-

process, and production time

Group Technology Benefits

5 - 41© 2011 Pearson Education, Inc. publishing as Prentice Hall

Documents for Production

Assembly drawing Assembly chart Route sheet Work order Engineering change notices (ECNs)

5 - 42© 2011 Pearson Education, Inc. publishing as Prentice Hall

Assembly Drawing

Shows explodedview of product

Details relativelocations toshow how toassemble theproduct

Figure 5.11 (a)

24/11/2014

15

5 - 43© 2011 Pearson Education, Inc. publishing as Prentice Hall

Assembly Chart1

2

3

4

5

6

7

8

9

10

11

R 209 Angle

R 207 Angle

Bolts w/nuts (2)

R 209 Angle

R 207 Angle

Bolt w/nut

R 404 Roller

Lock washer

Part number tag

Box w/packing material

Bolts w/nuts (2)

SA1

SA2

A1

A2

A3

A4

A5

Leftbracket

assembly

Rightbracket

assembly

Poka-yokeinspection

Figure 5.11 (b)

Identifies the point ofproduction wherecomponents flow intosubassemblies andultimately into thefinal product

5 - 44© 2011 Pearson Education, Inc. publishing as Prentice Hall

Route SheetLists the operations and times requiredto produce a component

Setup OperationProcess Machine Operations Time Time/Unit

1 Auto Insert 2 Insert Component 1.5 .4Set 56

2 Manual Insert Component .5 2.3Insert 1 Set 12C

3 Wave Solder Solder all 1.5 4.1componentsto board

4 Test 4 Circuit integrity .25 .5test 4GY

5 - 45© 2011 Pearson Education, Inc. publishing as Prentice Hall

Work OrderInstructions to produce a given quantityof a particular item, usually to a schedule

Work OrderItem Quantity Start Date Due Date

Production DeliveryDept Location

157C 125 5/2/08 5/4/08

F32 Dept K11

24/11/2014

16

5 - 46© 2011 Pearson Education, Inc. publishing as Prentice Hall

Engineering Change Notice(ECN)

A correction or modification to aproduct’s definition ordocumentation Engineering drawings Bill of material

Quite common with long product lifecycles, long manufacturing lead times, or

rapidly changing technologies

5 - 47© 2011 Pearson Education, Inc. publishing as Prentice Hall

Configuration Management

The need to manage ECNs has ledto the development of configurationmanagement systems

A product’s planned and changingcomponents are accuratelyidentified and control andaccountability for change areidentified and maintained

5 - 48© 2011 Pearson Education, Inc. publishing as Prentice Hall

Product Life-CycleManagement (PLM)

Integrated software that bringstogether most, if not all, elements ofproduct design and manufacture Product design CAD/CAM, DFMA Product routing Materials Assembly Environmental

24/11/2014

17

5 - 49© 2011 Pearson Education, Inc. publishing as Prentice Hall

Service Design Service typically includes direct

interaction with the customer Increased opportunity for customization Reduced productivity

Cost and quality are still determined atthe design stage Delay customization Modularization Reduce customer interaction, often

through automation

5 - 50© 2011 Pearson Education, Inc. publishing as Prentice Hall

Service Design

Figure 5.12

5 - 51© 2011 Pearson Education, Inc. publishing as Prentice Hall

Service Design

Figure 5.12

24/11/2014

18

5 - 52© 2011 Pearson Education, Inc. publishing as Prentice Hall

Application of DecisionTrees to Product Design

Particularly useful when there are aseries of decisions and outcomeswhich lead to other decisions andoutcomes

5 - 53© 2011 Pearson Education, Inc. publishing as Prentice Hall

Application of DecisionTrees to Product Design

1. Include all possible alternatives andstates of nature - including “doingnothing”

2. Enter payoffs at end of branch3. Determine the expected value of

each branch and “prune” the tree tofind the alternative with the bestexpected value

Procedures

5 - 54© 2011 Pearson Education, Inc. publishing as Prentice Hall

(.6)

Low sales

(.4)

High sales

(.6) Low sales

(.4)

High sales

Decision Tree ExamplePurchase CAD

Hire and train engineers

Do nothing

Figure 5.14

24/11/2014

19

5 - 55© 2011 Pearson Education, Inc. publishing as Prentice Hall

(.6) Low sales

(.4)

High sales

Decision Tree ExamplePurchase CAD

(.6)

Low sales

(.4)

High sales

Hire and train engineers

Do nothing

Figure 5.14

$2,500,000 Revenue- 1,000,000 Mfg cost ($40 x 25,000)

- 500,000 CAD cost$1,000,000 Net

$800,000 Revenue- 320,000 Mfg cost ($40 x 8,000)- 500,000 CAD cost- $20,000 Net loss

EMV (purchase CAD system) = (.4)($1,000,000) + (.6)(- $20,000)

5 - 56© 2011 Pearson Education, Inc. publishing as Prentice Hall

(.6) Low sales

(.4)

High sales

Decision Tree ExamplePurchase CAD

(.6)

Low sales

(.4)

High sales

Hire and train engineers

Do nothing

Figure 5.14

$2,500,000 Revenue- 1,000,000 Mfg cost ($40 x 25,000)

- 500,000 CAD cost$1,000,000 Net

$800,000 Revenue- 320,000 Mfg cost ($40 x 8,000)- 500,000 CAD cost- $20,000 Net loss

EMV (purchase CAD system) = (.4)($1,000,000) + (.6)(- $20,000)= $388,000

$388,000

5 - 57© 2011 Pearson Education, Inc. publishing as Prentice Hall

(.6)

Low sales

(.4)

High sales

(.6) Low sales

(.4)

High sales

Decision Tree ExamplePurchase CAD

$388,000

Hire and train engineers$365,000

Do nothing $0

$0 Net

$800,000 Revenue- 400,000 Mfg cost ($50 x 8,000)- 375,000 Hire and train cost

$25,000 Net

$2,500,000 Revenue- 1,250,000 Mfg cost ($50 x 25,000)

- 375,000 Hire and train cost$875,000 Net

$2,500,000 Revenue- 1,000,000 Mfg cost ($40 x 25,000)

- 500,000 CAD cost$1,000,000 Net

$800,000 Revenue- 320,000 Mfg cost ($40 x 8,000)- 500,000 CAD cost- $20,000 Net loss

Figure 5.14

24/11/2014

20

5 - 58© 2011 Pearson Education, Inc. publishing as Prentice Hall

Transition to Production Know when to move to production

Product development can be viewed asevolutionary and never complete

Product must move from design toproduction in a timely manner

Most products have a trial productionperiod to insure producibility Develop tooling, quality control, training Ensures successful production

5 - 59© 2011 Pearson Education, Inc. publishing as Prentice Hall

Transition to Production Responsibility must also transition as the

product moves through its life cycle Line management takes over from design

Three common approaches to managingtransition Project managers Product development teams Integrate product development and

manufacturing organizations