5 - 1Copyright © 2017 Pearson Education, Ltd.
Design of Goods
and Services
PowerPoint presentation to accompany
Heizer, Render, Munson
Operations Management, Twelfth Edition, Global Edition
Principles of Operations Management, Tenth Edition, Global Edition
PowerPoint slides by Jeff Heyl
Modified by Nikolaos P. Rachaniotis
Assistant Professor in Supply Chain Management
Department of Industrial Management and Technology, University of
Piraeus
5
5 - 2Copyright © 2017 Pearson Education, Ltd.
Outline
► Global Company Profile: Regal Marine
► Goods and Services Selection
► Generating New Products
► Product Development
► Issues for Product Design
► Product Development Continuum
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Outline - Continued
► Defining a Product
► Documents for Production
► Service Design
► Transition to Production
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► Global market
► 3-dimensional CAD system
► Reduced product development time
► Reduced problems with tooling
► Reduced problems in production
► Assembly line production
Regal Marine
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Learning Objectives
Define product life cycle
Describe a product development system
Explain how time-based competition isimplemented by OM
When you complete this chapter you should be able to :
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Learning Objectives
Describe how goods and services are definedby OM
Describe the documents needed forproduction
Explain how the customer participates in thedesign and delivery of services
When you complete this chapter you should be able to :
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► Organizations exist to provide goods orservices to society
► Great products are the key to success
► Top organizations typically focus on coreproducts
► Customers buy satisfaction, not just aphysical good or particular service
► Fundamental to an organization'sstrategy with implications throughout theoperations function
Goods and Services Selection
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► Limited and predicable life cyclesrequire constantly looking for,designing and developing newproducts
► Utilize strong communication amongcustomer, product, processes andsuppliers
► New products generate substantialrevenues.
Goods and Services Selection
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Goods and Services Selection
Figure 5.1
The higher the percentage of sales from the last 5 years, the more likely the firm is to be a leader.
50% –
40% –
30% –
20% –
10% –
0% –Industry leader
Top third
Middle third
Bottom third
Position of firm in its industry
Pe
rce
nt
of
sa
les
fro
m
new
pro
du
cts
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Product Life Cycle
Best period to
increase market
share
R&D engineering is
critical
Practical to change
price or quality
image
Strengthen niche
Poor time to
change image,
price, or quality
Competitive costs
become critical
Defend market
position
Cost control
critical
Introduction Growth Maturity Decline
Co
mp
an
y S
trate
gy/Issu
es
Figure 2.5
Life Cycle Curve
Hybrid engine vehicles Laptop computers
DVDs
Video physical rentals
3D printers
3-D game players
Xbox One
Apple SmartWatch
Electric vehicles
Boeing 787
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Product Life Cycle
Product design and development critical
Frequent product and process design changes
Short production runs
High production costs
Limited models
Attention to quality
Introduction Growth Maturity Decline
OM
Str
ate
gy/Iss
ues
Forecasting critical
Product and process reliability
Competitive product improvements and options
Increase capacity
Shift toward product focus
Enhance distribution
Little product differentiation
Cost minimization
Overcapacity in the industry
Prune line to eliminate items not returning good margin
Reducecapacity
Introduction Growth Maturity Decline
OM
Str
ate
gy/Iss
ues
Figure 2.5
Standardization
Fewer rapid product changes, more minor changes
Optimum capacity
Increasing stability of process
Long production runs
Product improvement and cost cutting
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Product Life Cycles
► May be any length from a fewdays to decades
► The operations function must beable to introduce new productssuccessfully
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Product Life Cycle
Cost of development and productionSales revenue
ProfitLoss
Loss
Figure 5.2
Introduction Growth Maturity Decline
$
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Life Cycle and Strategy
Introductory Phase
► Fine tuning may warrantunusual expenses for
1) Research
2) Product development
3) Process modification andenhancement
4) Supplier development
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Product Life Cycle
Growth Phase
► Product design begins tostabilize
► Effective forecasting of capacitybecomes necessary
► Adding or enhancing capacitymay be necessary
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Product Life Cycle
Maturity Phase
► Competitors now established
► High volume, innovativeproduction may be needed
► Improved cost control, reductionin options, paring down ofproduct line
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Product Life Cycle
Decline Phase
► Unless product makes a specialcontribution to the organization,must plan to terminate offering
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Product Life Cycle Costs
Costs incurred
Costs committed
Ease of change
Concept Detailed Manufacturing Distribution,
design design service,
prototype and disposal
Perc
ent
of
tota
l cost
100 –
80 –
60 –
40 –
20 –
0 –
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Product-by-Value Analysis
► Lists products in descending orderof their individual monetarycontribution to the firm
► Lists the total annual monetarycontribution of the product
► Helps management evaluatealternative strategies
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Generating New Products
1. Understanding the customer
2. Economic change
3. Sociological and demographic change
4. Technological change
5. Political and legal change
6. Market practice, professional standards,suppliers, distributors
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Scope of
product
development
team
Product Development Stages
Scope for design and engineering
teams
Evaluation
Introduction
Test Market
Functional Specifications
Design Review
Product Specifications
Customer Requirements
Feasibility
Concept
Figure 5.3
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Organizing for Product
Development
► Traditionally – distinct departments
► Duties and responsibilities are defined
► Difficult to foster forward thinking
► A Champion
► Product manager drives the productthrough the product developmentsystem and related organizations
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Organizing for Product
Development► Team approach
► Cross functional – representatives fromall disciplines or functions
► Product development teams, design formanufacturability teams, valueengineering teams
► Japanese “whole organization”approach
► No organizational divisions
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Organizing for Product
Development► Product development teams
► Market requirements to product success
► Cross functional teams often involvingvendors
► Open, highly participative environment
► Concurrent engineering
► Simultaneous performance of productdevelopment stages
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Manufacturability andValue Engineering
► Benefits:
1. Reduced complexity of the product
2. Reduction of environmental impact
3. Additional standardization of components
4. Improvement of functional aspects of the product
5. Improved job design and job safety
6. Improved maintainability (serviceability) of the product
7. Robust design
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Cost Reduction of a Bracket via Value Engineering
Figure 5.5
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Issues for Product Design
► Robust design
► Modular design
► Computer-aided design (CAD)
► Computer-aided manufacturing (CAM)
► Virtual reality technology
► Value analysis
► Sustainability and Life Cycle Assessment(LCA)
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Robust Design
► Product is designed so that smallvariations in production or assemblydo not adversely affect the product
► Typically results in lower cost andhigher quality
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Modular Design
► Products designed in easily segmentedcomponents
► Adds flexibility to both production andmarketing
► Improved ability to satisfy customerrequirements
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► Using computers todesign products andprepare engineeringdocumentation
► Shorter developmentcycles, improvedaccuracy, lower cost
► Information and designscan be deployedworldwide
Computer Aided Design (CAD)
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► 3-D Object Modeling
► Small prototype development
► Design for Manufacturing and Assembly (DFMA)
► Solve manufacturing problems during the design stage
► CAD through the internet
► International data exchange
► 3-D printing
Extensions of CAD
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Computer-Aided
Manufacturing (CAM)
► Utilizing specialized computers andprogram to control manufacturingequipment
► Often driven by the CAD system(CAD/CAM)
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1. Product quality
2. Shorter design time
3. Production cost reductions
4. Database availability
5. New range of capabilities
Benefits of CAD/CAM
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Virtual Reality Technology
► Computer technology used to developan interactive, 3-D model of a productfrom the basic CAD data
► Allows people to ‘see’ the finisheddesign before a physical model is built
► Very effective in large-scale designssuch as plant layout
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Value Analysis
► Focuses on design improvementduring production
► Seeks improvements leading either toa better product or a product that canbe produced more economically withless environmental impact
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Sustainability and Life Cycle
Assessment (LCA)
► Sustainability means meeting the needs ofthe present without compromising theability of future generations to meet theirneeds
► LCA is a formal evaluation of theenvironmental impact of a product
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Product Development
Continuum
► Product life cycles are becomingshorter and the rate of technologicalchange is increasing
► Developing new products faster canresult in a competitive advantage
► Time-based competition
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Defining a Product
► First definition is in terms of functions
► Rigorous specifications are developedduring the design phase
► Manufactured products will have anengineering drawing
► Bill of material (BOM) lists thecomponents of a product
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Monterey Jack Cheese(a) U.S. grade AA. Monterey cheese shall conform to the following
requirements:
(1) Flavor. Is fine and highly pleasing, free from undesirable flavors and odors. May possess a very slight acid or feed flavor.
(2) Body and texture. A plug drawn from the cheese shall be reasonably firm. It shall have numerous small mechanical openings evenly distributed throughout the plug. It shall not possess sweet holes, yeast holes, or other gas holes.
(3) Color. Shall have a natural, uniform, bright and attractive appearance.
(4) Finish and appearance—bandaged and paraffin-dipped. The rind shall be sound, firm, and smooth providing a good protection to the cheese.
Code of Federal Regulation, Parts 53 to 109, General Service Administration
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► Engineering drawing
► Shows dimensions, tolerances, andmaterials
► Shows codes for Group Technology
► Bill of Material
► Lists components, quantities and whereused
► Shows product structure
Product Documents
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Engineering Drawings
Figure 5.8
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Bills of MaterialBOM for a Panel Weldment
NUMBER DESCRIPTION QTY
A 60-71 PANEL WELDM’T 1
A 60-7 LOWER ROLLER ASSM. 1
R 60-17 ROLLER 1
R 60-428 PIN 1
P 60-2 LOCKNUT 1
A 60-72 GUIDE ASSM. REAR 1
R 60-57-1 SUPPORT ANGLE 1
A 60-4 ROLLER ASSM. 1
02-50-1150 BOLT 1
A 60-73 GUIDE ASSM. FRONT 1
A 60-74 SUPPORT WELDM’T 1
R 60-99 WEAR PLATE 1
02-50-1150 BOLT 1 Figure 5.9 (a)
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Bills of Material
Hard Rock Cafe’s Hickory BBQ Bacon Cheeseburger
DESCRIPTION QTY
Bun 1
Hamburger patty 8 oz.
Cheddar cheese 2 slices
Bacon 2 strips
BBQ onions 1/2 cup
Hickory BBQ sauce 1 oz.
Burger set
Lettuce 1 leaf
Tomato 1 slice
Red onion 4 rings
Pickle 1 slice
French fries 5 oz.
Seasoned salt 1 tsp.
11-inch plate 1
HRC flag 1Figure 5.9 (b)
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Make-or-Buy Decisions
▶ Produce components themselves orbuy from an outside source
▶ Variations in
▶Quality
▶Cost
▶Delivery schedules
▶ Critical to product definition
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► Parts grouped into families withsimilar characteristics
► Coding system describesprocessing and physicalcharacteristics
► Part families can be producedin dedicated manufacturing cells
Group Technology
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Group Technology Scheme
Figure 5.10
(a) Ungrouped Parts(b) Grouped Cylindrical Parts (families of parts)
Grooved Slotted Threaded Drilled Machined
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1. Improved design
2. Reduced raw material and purchases
3. Simplified production planning andcontrol
4. Improved layout, routing and machineloading
5. Reduced tooling setup time, work-in-process and production time
Group Technology Benefits
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Documents for Production
► Assembly drawing
► Assembly chart
► Route sheet
► Work order
► Engineering change notices (ECNs)
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Assembly Drawing
► Shows exploded view of product
► Details relative locations to show how to assemble the product
Figure 5.11 (a)
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Assembly Chart
1
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-yoke inspection
Figure 5.11 (b)
Identifies the point of production where components flow into subassemblies and ultimately into the final product
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Route SheetLists the operations and times required to 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 4.1components to board
4 Test 4 Circuit integrity .25 .5test 4GY
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Work Order
Instructions to produce a given quantity of a particular item, usually to a schedule
Work Order
Item Quantity Start Date Due Date
Production DeliveryDept Location
157C 125 5/2/16 5/4/16
F32 Dept K11
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Engineering Change Notice
(ECN)
► A correction or modification to aproduct’s definition or documentation
► Engineering drawings
► Bill of material
Quite common with long product life cycles, long manufacturing lead times, or rapidly
changing technologies
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Configuration Management
► The need to manage ECNs has led tothe development of configurationmanagement systems
► A product’s planned and changingcomponents are accurately identified
► Control and accountability for changeare identified and maintained
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Product Life-Cycle
Management (PLM)
► Integrated software that brings together most, if not all, elements of product design and manufacture
► Product design
► CAD/CAM
► DFMA
► Product routing
► Materials
► Layout
► Assembly
► Maintenance
► Environmental
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Service Design
► Service typically includes directinteraction with the customer
► Process – chain – network (PCN)analysis focuses on the ways inwhich processes can be designedto optimize interaction betweenfirms and their customers
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Process-Chain-Network (PCN)
Analysis
Figure 5.12
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Process-Chain-Network (PCN)
Analysis
1. Direct interaction region includes process stepsthat involve interaction between participants
2. The surrogate (substitute) interaction regionincludes process steps in which one participantis acting on another participant’s resources
3. The independent processing region includessteps in which the supplier and/or the customeris acting on resources where each hasmaximum control
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Process-Chain-Network (PCN)
Analysis
▶ All three regions have similar operating issuesbut the appropriate way of handling the issuesdiffers across regions – service operationsexist only within the area of direct andsurrogate interaction
▶ PCN analysis provides insight to aid inpositioning and designing processes that canachieve strategic objectives
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Adding Service Efficiency
▶ Service productivity is notoriously lowpartially because of customerinvolvement in the design or deliveryof the service, or both
▶ Complicates product design
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Adding Service Efficiency
▶ Limit the options
▶ Improves efficiency and ability to meetcustomer expectations
▶ Delay customization
▶Modularization
▶ Eases customization of a service
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Adding Service Efficiency
▶ Automation
▶Reduces cost, increases customerservice
▶Moment of truth
▶Critical moments between the customerand the organization that determinecustomer satisfaction
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Documents for Services
► High levels of customer interactionnecessitates differentdocumentation
► Often explicit job instructions
► Scripts and storyboards are othertechniques
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First Bank Corp. Drive-up
Teller Service Guidelines
• Be especially discreet when talking to the customer through themicrophone.
• Provide written instructions for customers who must fill out formsyou provide.
• Mark lines to be completed or attach a note with instructions.
• Always say “please” and “thank you” when speaking through themicrophone.
• Establish eye contact with the customer if the distance allows it.
• If a transaction requires that the customer park the car and comeinto the lobby, apologize for the inconvenience.
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Transition to Production
► Know when to move to production
► Product development can be viewed asevolutionary and never complete
► Product must move from design to productionin a timely manner
► Most products have a trial production periodto insure producibility
► Develop tooling, quality control, training
► Ensures successful production
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Transition to Production
► Responsibility must also transition as theproduct moves through its life cycle
► Line management takes over from design
► Three common approaches to managingtransition
► Project managers
► Product development teams
► Integrate product development andmanufacturing organizations