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GOODS

Sudip Dutta, PGPM 2010 - 2012

NEW PRODUCT DEVELOPMENT

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PRODUCT DESIGN CONSIDERATIONS

When a product/service is designed:

The detailed characteristics of the product/service

are established.

The characteristics of the product/service directly

affects how the product/service can be produced/

delivered.

How the product/service is produced/delivered

determines the design of the production/delivery

system.

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PRODUCT DESIGN CONTD

Sources of Product Innovation

Developing New Products/Services

Getting Them to Market Faster

Improving Current Products/Services

Designing for Ease of Production

Designing for Quality

Designing and Developing New Services

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PRODUCT DESIGN CONTD.

Forecasting

Product and

Service Design

Technological

Change

Capacity

Planning

Process

Selection

Facilities and

Equipment

Layout

Work

Design

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BASIC DESIGN OF A SOLAR CAR

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FINALLY THE SOLAR CAR

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LOCATION

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A SEQUENCE OF DECISIONS

National DecisionNational Decision

Regional DecisionRegional Decision

Community DecisionCommunity Decision

Site DecisionSite Decision

Political, social, economic stability;

Currency exchange rates; . . . . .

Climate; Customer concentrations;

Degree of unionization; . . . . .

Transportation system availability;

Preference of management; . . . . .

Site size/cost; Environmental impact;

Zoning restrictions; . . . . .

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FACTORS AFFECTING

THE LOCATION DECISION

FACTORS AFFECTING

THE LOCATION DECISION

Economic

Site acquisition, preparation and construction

costs

Labor costs, skills and availability

Utilities costs and availability

Transportation costs

Taxes

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FACTORS AFFECTING

THE LOCATION DECISION

FACTORS AFFECTING

THE LOCATION DECISION

Non-economic

Labor attitudes and traditions

Training and employment services

Communitys attitude

Schools and churches

Recreation and cultural attractions

Amount and type of housing available

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ANALYZING SERVICE LOCATION DECISIONS

Consumer BehaviorConsumer Behavior

ResearchResearch

Market ResearchMarket Research

Data Gathering forData Gathering for

Each Location AlternativeEach Location Alternative

Revenue Projections forRevenue Projections for

Each Location AlternativeEach Location Alternative

Why do customers buy our

products and services?

Who are our customers?

What are their characteristics?

What are the economic projections?

What is the time-phased revenue?

Profit Projections forProfit Projections for

Each Location AlternativeEach Location AlternativeWhat are the projected revenues

less time-phased operating costs?

Where are our customers concentrated?

What are their traffic/spending patterns?

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LAYOUT

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FACILITY LAYOUT

Facility layout means planning:

for the location of all machines, utilities, employee

workstations, customer service areas, materialstorage areas, aisles, restrooms, lunchrooms,

internal walls, offices, and computer rooms

for the flow patterns of materials and peoplearound, into, and within buildings

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LOCATE ALL AREAS IN AND AROUND

BUILDINGS

Equipment

Work stations

Material storage

Rest/break areas

Utilities

Eating areasAisles

Offices

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Variety

How much

Flexibility

What degree

Volume

Expected output

Job Shop

Batch

Repetitive

Continuous

PROCESS SELECTION

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CLOSENESS RATING GRID

55

66

44

44

22

3333

55

44

11

2266

2244

3333

11

665511

22

Dept. A

Dept. B

Dept. C

Dept. D

Dept. E

Dept. F

Dept. G

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TYPICAL CLOSENESS RATINGS

Closeness Meaning

Rating of Rating

1 Necessary

2 Very Important

3 Important

4 Slightly Important

5 Unimportant

6 Undesirable

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CAPACITY PLANNING, AGGREGATE PLANNING,

MASTER SCHEDULE, AND SHORT-TERM SCHEDULING

Capacity Planning1. Facility Size

2. Equipment Procurement

Aggregate Planning

1. Facility Utilization2. Personnel needs

3. Subcontracting

Master Schedule

1. MRP2. Disaggregation of master plan

Short-term Scheduling

1. Work center loading

2. Job sequencing

Long-term

Intermediate-term

Intermediate-term

Short-term

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QUALITY

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Design quality

How does the product or service appear inpre-

production or pre-deliveryphases (i.e. on a CAD

terminal, on a blueprint, etc.)

Conformance quality

Degree to which the design specifications are met bytheproduction or deliverysystem

QUALITY DEFINITIONS

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Performance quality

Degree to which the product or service

meets or exceeds customer expectationsin the marketplace (i.e. product or service

performance characteristics)

QUALITY DEFINITIONS

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NATURE OF QUALITYDimensions of Quality

Determinants of Quality

Costs of Quality

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BEST-IN-CLASS AND WORLD-CLASS

Customers expectations of quality are not the same

for different classes of products or services

Best-in-class qualitymeans being the best product or

service in a particular class of products or services

Being a world-class companymeans that each of its

products and services are considered best-in-class

by its customers

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SOME DIMENSIONS OF PRODUCT QUALITY

Performance relative to customers intended use

Features special characteristics

Reliability likelihood of breakdowns, malfunctions

Serviceability speed/cost/convenience of servicing

Durability amount of time/use before repairs

Appearance effects on human senses

Customer service treatment before/during/after sale

Safety user protection before/during/after use

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DETERMINANTS OF QUALITY

Quality of design products/service designed based oncustomers expectations and desires

Quality capability of production processes processes must

be capable of producing the products designed for thecustomers

Quality of conformance capable processes can produceinferior product if not operated properly

Quality of customer service a superior product does notmean success; must have quality service also

Organization quality culture superior product and servicerequires organization-wide focus on quality

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TQM may be defined as managing the

entire organization so that it excels on all

dimensions of products and services that

are important to the customer

TOTAL QUALITY MANAGEMENT

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PDCA CYCLE

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BENCHMARKING AND

CONTINUOUS IMPROVEMENT

Benchmarking

The practice of establishing internal standards of

performance by looking to how world-class

companies run their businesses

Continuous Improvement

The company makes small incremental

improvements toward excellence on a continualbasis

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