Inputs 6M

Conversion/Transformation Process

Output

Machine

MoneyMaterial

Men

Method

Management

Goods

Services

Unit 1 Operations Management

Production and operations management concerns itself with the conversion of inputs into outputs, using physical resources, so as to provide the desired utility/utilities- of form, place, possession or a state or a combination thereof- to the customer while meeting the other organizational objectives of effectiveness, efficiency and adaptability

ProductionThe term production refers the transformation of raw materials into finished goods and/or producing services in order to satisfy the customer needs. Production involves application of processes by which the inputs can be transformed into desired product (output) of potential utility with improving the properties and adding economic values through the best method without compromising with the quality. The different forms of production processes are:

1) Production by extraction or separation: In this type of production, the desired products are produced by separating the content of a mixture.

Example: Producing the different fuel products in oil refinery.

2) Production by improvement or modification: The chemical and mechanical properties of materials are improved without any physical change. For example: Annealing or Hardening of metal by slow heating or sudden cooling respectively.

3) Production by assembly: In this type of production, the desired product is produced by assembling various components. Example: Car assembly, assembly of computers.

A Production System/ Process

Nature of ProductionThe nature of production can be explained with the help of following features:

1) Production as a system: The production is a system, which transforms the inputs into desired outputs with the help of various resources. Inputs may be labor, raw material, equipment, capital etc.Example: In extracting the metal from its ore, the ore is input, the extraction is a transformation process and the extracted metal is final output.

2) Production creates utility and adds value: Production creates goods and services of potential utilities. During the transformation process of raw material into finished goods, various types of utilities are created while adding value to the output to satisfy the customer needs. Example: In the process of production of petrol from crude oil, the diesel and gasoline are produced as utilities.

3) Production as a transformation process: The term transformation consists of processes or activities wherein various resources such as workers, machines and equipment are used to convert inputs into outputs. It is the core part of the production process.

4) Production as an organizational function: The various functions are required to complete the operation process by all the organizations to manufacture the goods. These are marketing function, finance function, production function and human resource function. In every organization, production plays a vital and central role in achieving the objectives of the organization.

Production Management

The need of production is generated by the customer needs on input side and fulfilled by the satisfaction of customer on the output side by the produced goods and services. The needs of customer flow into the organization, which then transforms into the products that satisfy the consumer. It can be represented by a simple input output diagrams.

Fig 1.6: Production Management

Production Management may be defined in various ways according to the different views:

1.) The activities performed by the management for selecting, designing, directing, operating, controlling and updating the production system.

2.) Production management can be defined as a function of management, related to planning, directing, coordinating and controlling the resources required for production of the specified product by appropriate methods.

Transformation by organization (process)

Output (Satisfaction of Customer)

Input

(Customer Needs)

3.) Production Management means a process of effective planning, directing, coordination and controlling of production. The production management is responsible for the actual transformation of raw materials into finished goods.

4.) Various activities like material supply and processing activities of an enterprise are planned, organized, coordinated and controlled by the production department, so that the specified products are produced by specified methods to meet the objectives of the enterprise and the customer.

“Production Management is concerned with those processes, which convert the input into outputs. The inputs are various resources like material, men, machine, methods etc. and the outputs are goods.”

--- H.A.Harding

“Production Management deals with the decision making related to production processes so that the resulting goods are produced according to specifications, in the quantities and by the schedule demanded and at the minimum cost.”

---- E.S. Buffa’s

In general the word production is often used to mean the same as manufacturing. In order to go through a process of manufacturing, the requirement is of the manpower, the job, the equipment and the necessary material. To run production, we require some service activities to ensure the manufacturing activities could go on smoothly into the right direction.”

Operations ManagementThe term ‘Operations Management’ is an extension of production management. Operations management emerged from the field of production or manufacturing of finished goods and services management, which is concerned with the application of basic concept, practices and principles of management to those areas of the organization, which are linked with the production of goods and/or services. It is defined as the systematic direction and control of the processes and applications, which convert unfinished or semi finished inputs into useful products.

Broadly speaking, Operations Management deals with all the processes and activities involved with designing, producing and delivering a product and/ or service. The operations management functions consist of five sequential steps, which are as follows:

Step 1: Identification of customer’s needs and translation into a statement of explicit

forecast. Step 2: Analysis of forecast and integration of facility for a statement of resource plans.

Step 3: Satisfaction of resource plans by the suppliers either internal or external and

generation of the inputs.

Step 4: Movement of inputs into the conversion facility, which produces the output

either physical or intangible.

Step 5: Delivering the goods or services to the customer up to their satisfaction with

distribution facility.

Characteristics of Operations Management

1) Basic Business Function (Producing the quality product or service) to satisfy the customer

Operations Management is the basic function of any business. It is a line function which interacts with all other business functions and provides a quality products or services (package of attributes) to satisfy the needs of the customer which is ultimate goal of any business.

2) Responsibility to produce and deliver on time

Operations Management deals with the activities, decisions and responsibilities of production mangers, as they are responsible to manage the production and delivery of products and services.

3) Real Value Addition Function

Operations Management is that part of any function or manager’s responsibilities, which involves the use of the transformational model for the production of goods and services. The transformation model is basically an input- transformation-output model to provide the real value addition not only to satisfy the customer, but also bring the repeat orders to increase the business profits.

4) Changing physical properties to provide competitive edge

All operations transform inputs into outputs by changing some aspect like physical properties, informational properties, possession, location, storage or accommodation, and physiological state so as to compete with business rivals with a strategic base.

5) Decision Making is a core function

In the operations function, the management decisions can be categorized into three broad areas: Strategic or long term decisions, intermediate decisions and short term decisions.

6) Use of Management Models to manage the Operations

According to management approaches, the operations manager’s job is to manage the process of converting inputs into desired output. In doing so, the manager uses various approaches such as the classical, behavioral and systematic models of management.

Components of Operations Management

The three basic components of operations management are mentioned as under:

Product DevelopmentProduct development is the process of designing, creating, and marketing a service or product. The product can either be new to the market or new to the producing company or an existing modified product. In many cases, a product will be labeled afresh and improved when some changes are made.

Process Design and ManagementProcess design is the selection of inputs, resources, workflows and methods that transform inputs into outputs. Input selection begins by deciding which processes are to be done in-house and which processes are to be done outside. The major decisions concerning the production and operations are those concerned with design of physical processes for producing goods and services.

Supply ChainIt is a chain to organizations, activities, technology, people, information and resources involved in supplying a product or service from producer to the end user. The complete supply chain activities transform and transfer the natural resources, raw materials and components into a finished product up to the end customer.

Significance of Production and Operations Management in BusinessOperations Management plays a crucial role in business as it is the core function which is related with transformation of raw material into finished goods and services in order to satisfy customer needs. The various points of importance are listed as below:

Operations Management is line functional area of business, which accounts for more than 70 percent of deployment of manpower and investments.

Operations Management function supports corporate strategy.

It exchanges the critical information about product, process, quality, supply chain, time of purchase of raw material and stores, time of delivery of finished goods, etc. with different functional areas like marketing, finance and personnel. This includes in-bound logistics, out-bound logistics and aspects of technology development.

The Operations function plays a very important role in fulfilling and satisfying the needs of customer. The total bundle of characteristics provides the level of value, the customers deem appropriate. The customers buy the products with the following considerations:

- Attributes- Price- Quality- Image- Performance- Safety

- Durability- Place – distribution-- Time – delivery, availability   

The value driven by the customers in the product or service can only be added in terms of complete package of attributes and features by the Production and Operations Department.

The company survives by providing the customers with what they want i.e. a complete package as per the needs of the customer. Every Product or Service is really a collection of different attributes and must be with right product at right place and at right price. The company should perform its operations and should produce the products and services of right quality at right time. This is only possible with the significant and crucial role played by the Production and Operations Department.

Production Cycle

(Manufacturing Vs Service Operations)

The production process may be defined as the transformation of inputs i.e., raw-materials and components or semi finished goods into certain outputs such as semi finished goods or finished products with the help of some conversion process. During the conversion process the value addition is done i.e., outputs should have more value than the value of inputs. The simple production process can be shown in the fig. as below:

Inputs (6 Ms)Materials

MenMoney

MachineryMethods

Management

Adjustmentif needed

Conversion Process

Transforming inputs into outputs

Random Fluctuations

a) In the Processb) From the

environment

Monitoring(Feedback)

Comparison ofActual Vs. Planned

Output Analysis

OutputGoods/ Services

Fig. Production Cycle

The production process can be classified into manufacturing operations and service operations. The tangible products or goods are produced through manufacturing operations with the help of certain machinery and equipment along with the manpower while services are mostly manpower oriented with less use of machinery.

Manufacturing Operations

The Manufacturing operations transform material, money, machinery into finished and tangible products through manpower, management and methods. Manufacturing operations are basic processes and can be clubbed into various categories which change the shape, size or physical/ chemical properties of the inputs. The manufacturing operations are classified as follows:

1. Forming Processes

2. Machining Processes

3. Assembly Processes

4. Treatment Processes

5. Fabrication Processes

6. Chemical Processes

7. Testing Processes

1. Forming Processes

These processes basically change the physical shape and size of the jobs without any removal of the material. The various forming processes are listed as under:

Casting – The casting is a process of pouring the molten metal into a moulded cavity and allowed the sufficient time to retain the shape of cavity. The various types of casting are Sand and Die Casting.

Forging – In forging process, the metal is heated and placed in a die and a compressive force is applied to the metal and finally the metal takes the shape of the die. The various types of forging processes are Hot and Cold Forging.

Moulding – Moulding is a manufacturing process for producing parts and components from both thermoplastic and thermosetting plastic materials. Material is fed into a heated barrel, mixed and forced into a mould cavity where it cools and hardens to the configuration of the mould cavity. The various types of moulding are Injection and Centrifugal Moulding

Extrusion – Extrusion is a process used to create objects of a fixed cross-sectional profile. A material is pushed or drawn through a die, barrel and mandrel of the desired cross-section. Extrusion is also classified as Forward, Backward and Impact Extrusion.

Stamping – A cold working process. A force is applied to acquire desire size and shape with the help and die and punch.

Embossing – The dies are used to stretch and form as per requirements. The stretching here means the metal is expanded and pulled and diameter or thickness is reduced with the help of applied force and forming means the desired shape with the help of die is given.

Spinning – It is shaping a metal against a mandrel rotating on high speed lathe. Coining - A compressive force is applied to produce the shallow configurations of the

blank. 2. Machining Processes

In these processes, generally the metal is removed from the job. The metal removal operation is performed with the help of machine and a tool which changes the shape of raw material, provides required particular surface finish and converts into needed dimensions. Some of the machining process is listed as follows:

Turning- It is performed on lathe machine with help of cutting tool. Drilling – It is performed by a rotating drill bit on a work piece. Boring – A drill hole diameter is enlarged by a boring bit. Reaming – When a drill hole is made to an accurate size by a reamer. Milling - A rotating multipoint cutting tool i.e. milling cutter is used

Etching – It is also known as chemical milling under controlled chemical reactions, which is used to remove the metal from the surface of the job.

Grinding – The rotating grinding wheels made of abrasive materials are used. Filing – The various types of files like triangular, flat, square, half round, round etc. are

used. Shaping or Planing – Shaping tools and shapers are used for these operations. Electro-Chemical Machining – It is a chip less chemical process in which electrodes and chemicals are used and the metal is removed with the help of electrical and chemical processes. Electro-Discharge Machining – It is also a chip less process but only electric energy is

used. Laser Machining – Electric beam is used to remove the metal from a job.

3. Assembly Processes

The assembly processes are used to join the various components with the help of various mechanisms which are listed as under:

Welding – Two pieces of metals are joined together fusion due to heat or electrical energy with the pressure.

Soldering – It is a metal joining process with the help of soldering alloy at a lower temperature.

Brazing – It is also a metal (non ferrous alloys) joining process and the base metals is filled up between the joined by capillary action and solidifies upon cooling.

Fastening – Screws, Nuts and Bolts are tightened to join the parts and components. Here disassembly is also easily possible by loosening the screws, nuts and bolts.

Joining through adhesives – Chemical adhesives used to bind the similar or dissimilar materials.

Riveting – Used rivets in the holes made through two or more joining items.

4. Treatment Processes

(A) Heat Treatment – The alloys are subjected to heat treatment to obtain desire mechanical properties like toughness, hardness or even softness. The heat treatment processes involved heating, soaking, cooling, etc. The various heat treatment processes are listed as below:

Annealing – It is metal softening process in which internal stresses are removed by slow cooling the job in the furnace itself to make machining easy.

Normalizing – It is modified form of annealing but cooled at room temperature outside the furnace in still air.

Hardening – Metal is heated at a high temperature and kept for a period time and then cooled rapidly by quenching in water, oil or salt water (brine).

Tempering – In this metal is reheated to a temperature below the critical point and kept for a particular time at the same temperature then cooling

slowly in oil or liquid salt bath containing mixture of chloride, fluoride or nitrate to reduced brittleness and the ductility of the metal.

(B) Surface Treatment – This treatment is applicable to the metals and alloys for the use of industrial and domestic applications to remove the deficiencies of tarnishing and corrosion if exposed to the atmosphere. Here some coating is used on most metal items for the protection from atmosphere and many a times for the purpose of giving new aesthetic look. In this method, there are two steps; first the cleaning of surface and then finishing of the surface. The cleaning is done with the help of acids, alkaline, electrolyte, vapor degreasing and ultra sonic methods. Various methods is used for finishing of surface are plastic coating, electroplating, powder coating, galvanizing, anodizing metal spraying, phosphating and hot dipping.

5. Fabrication Processes

Fabrication is basically an assembly involving casting, forging, welding and parts and made of thick metal plates. There are three types of fabrication – light, medium and heavy fabrication.

Examples:

Light Fabrication – Utensils and Bicycles Medium Fabrication - Automobiles and Aircrafts Heavy Fabrication - Locomotives and Earthmoving

6. Chemical Processes

Chemical Processes are generally metal removal or metal addition processes. Many a times these processes change the finish of the product also. Generally chemical processes are applied in combination of electrical processes. Electro chemical plating on good conducting metals is an example of this category. The various types of plating like gold, silver, copper, tin, nickel, chromium plating are the examples of this category. Chemical etching is the pure chemical process which removes the metal as per design required.

7. Testing Processes

These are not basically the manufacturing processes but assist in producing the manufacturing items of accurate specifications and of required quality. Testing processes are of two types:

Destructive Testing Processes – Here the job/ sample is destroyed and cannot be used. These processes are used for the diagnostic purposes to find out any defects.

Non-Destructive Testing Processes – Here the sample can be used even after testing as a good product.

The testing processes can be applied in both the categories to test the product (acceptance sampling) or processes (process control charts like X-Bar and R Charts.

Difference between Production and Operations Management

There are some differences between these two terms. The major differences between the two terms are as follows:

1. According to the nature of output, in Production Management the finished products are tangible for example production of cars and bikes, while in case of Operations Management the nature of output may be in the form of either tangible or intangible just like banking, restaurant and transportation services.

2. With respect to the consumption of output, in Production Management the products consumed over a period of time, while in Operations Management other than products, the services should be availed immediately.

3. In case of nature of work, Production function requires less labor and more equipment and in Operations Management in case of services, the requirement of labor is more and equipment is less.

4. Finally the difference between the two terms is with respect to the degree of customer participation, the Production Management requires no participation of customer in the transformation process while in case of Operations Management, the customer frequently participates in the conversion process in case of services atleast.

To sum up the differences between the two terms it is also assumed that Operations Management is a new version of the Production Management, which includes additional activities like procurement of raw material, supply chain and value chain.

Classification of Operations (Kinds of Production Systems)

The type of product line decides the organization of manufacturing system and planning and control of

production. The basic principles, which guide the formulation of planning, policy and its execution, may

be the same for all the manufacturing concerns. But emphasis on particular aspects of production

management in fulfilling of specific requirement of the plant and the management approach to the

problems of inventory, mission setting, routing, loading, follow up and general control will differ

depending upon the type of production system.

In general there are three classification of production system. These are as under:

1. Job Production:

In this type of production system, one or more varieties of products in small or big quantities designed and produced as per the specifications of customers within pre-fix time and cost. The quantity involved is generally small and the manufacturing of the products will take place as per the specifications given by the customer. Thus because of the high variety, the scheduling becomes complicated. This system may be classified further in the following categories:

1) Job produced only once2) Job produced at irregular intervals3) Job produced at regular intervals

Nature of Job Production1) The requirement for each product, capabilities for each work center and order

priorities are different, so there is a need of detailed planning. In comparison to repetitive line manufacturing, the scheduling of job production is relatively complicated.

2) Every job is unique. So highly skilled operators, who can take up each job as a challenge, are required.

3) Opportunity to use innovative ideas and creative methods exists.4) Various functional departments are needed as per the specifications.5) Because of job production, operators become more skilled and competent as each

job gives them learning opportunity.

Examples of Job Production

Aircraft, Customer Clothing, Large Turbo generator, Construction

Equipment, Special purpose machine and like.

2. Batch Production:

In this type of production, job routes through various functional units and divided in batch. The batch production is defined by APICS (American Production and Inventory Control Society) as a form of manufacturing, when the production of plant and equipment is terminated, the plant and equipment can be used for producing similar products. Batch production aims at satisfying the continuous customer demand for an item. However, the plant is capable of a particular production rate that exceeds the demand rate. The quantities in batch production are decided based on the balancing of two costs that is set up cost and inventory carrying cost.

This production system can also be classified under three categories. These are:

1.) A batch produced only once: Here customer places the order with the firm for the product of his specifications. The size of the order is greater than that of job production order. The firm has to plan for the resources after taking the order from the customer.

2.) A batch produced at irregular intervals as per customer order or when the need arises: As the frequencies are irregular, the firm can maintain a file of its detailed plans and it can refer to its previous files and start the production.

3.) A batch produced periodically at known intervals: Here the firm either receives the order from the customer at regular intervals or it may produce the product to satisfy the demand. It can have well designed file of its plans, material requirement and instructions for the ready reference. It can also purchase materials required in bulk in advance. As the frequency of regular orders goes on increasing the batch production system becomes mass production system. Here also, in case the demand for a particular product ceases, the plant and machinery can be used for producing other products with slight modification in layout or in machinery and equipment.

3. Continuous Production:The continuous production system is the specialized manufacturing of identical products on which the machinery and equipment is fully engaged. The continuous production is normally associated with large quantities and with high rate of demand. Hence the advantage of automatic production is taken. This system is classified as per the following categories:

(i) Mass Production: Here same type of product is produced to meet the demand of an assembly line or of the market.

(ii) Flow Production: In flow production, production process generally follows a specific and fixed sequence of operations and the material flows in a particular sequence. The difference between mass and flow production is the type of product to be produced and its relation to the plant.

Nature of Mass Production:

1.) There are dedicated special purpose machines having higher production capabilities and output rates.

2.) Higher capacity utilization is possible due to line balancing.3.) Material handling can be fully automated. 4.) Production cost per unit comes down due to economies of scale.5.) As standardization of product and process sequence, so the line layout is recommended.

Nature of Flow Production:

1.) The variation in finished product quality is due to different sources of supply of raw material.

2.) Larger investment and usually capital-intensive units.3.) Shorter lead time4.) Demand for By-Products and joint products.

 Nature and Types of Decision Making in Production and Operations Management

Operations managers have to take the decisions at three levels:

– Strategic – Tactical – Operating

1) STRATEGIC DECISIONS IN OPERATIONS: These are the decisions which have following characteristics:

Longer term decisions Usually made at the senior management level Product and service strategy Competitive priorities Positioning strategy Location, capacity Long term partnerships Quality system and overall approach to quality

2) TACTICAL DECISIONS: These decisions have a bundle of features which are as follows: 2) TACTICAL DECISIONS: These decisions have a bundle of features which are as follows:

Medium term decisions Tactical in nature Made by middle and senior managers Process design Technology management Job design and workforce management Capacity management Facility location Facility layout

3) OPERATING DECISIONS: There are routine decisions but have very important impact on any business. The nature of these decisions can be well described by the following aspects:

Shorter term decisions Made at middle and lower management levels Forecasting Materials management Inventory management Aggregate planning Master production scheduling Production control Scheduling

Functions of Production and Operations Management

The functions of operations management depends on the size of firm as it decides the organizational control and decision making powers at different levels of management.

In small size firms, all other functions like production, marketing, finance, personnel etc are looked after by one manager.

In medium sized firms, different functions are performed by different managers. In large sized firms, operations management looks after production activities only.

Some common functions of operations department are as under:

1) Selection of material :The operations manager selects appropriate material for the product. For that purpose, research on material is necessary to find out the availability of material and their suitability to the process, budget and thus to the product.

2) Selection of appropriate method :The suitable method of production is the most important task. The appropriate method will be selected by operations department suitable to the available resources and constraints.

3) Selection of suitable machinery and equipment: The operation department selects the suitable machinery and equipment

according to the design and requirement of the process and layout of the shop

floor.

4) Fixation of production targets and delivery dates: The operations department has to keep the cost at minimum for the survival in the competitive situation. Thus the department has to decide what should be done in maintaining the cost at the desired level.

5) Scheduling of activities :To achieve the production target, it has to be specified clearly the exact start and finish time of different activities. Accordingly, the department has to manage the timings of purchase of the materials and to plan the activities of manpower.

6) Routing and making the layout of lines: Fixing the route for raw material, components and various activities from the

warehouse to the production facility and then to the finished goods warehouse

and fixing the layouts of various lines of production to achieve the production

target are also the major functions of this department.

7) Dispatching: Various documents such as routing sheet, inspection cards for the components

of various products are planned and prepared by the production department for

starting the production. Releasing of these documents is known as dispatching.

8) Follow-up: Follow up of all the scheduled activities is necessary. The management wants to know whether the activities are being carried out as per the plans or not. The actual work is compared with the plan and thus analysis of the progress of the work is also done by the operations department. It there is any derivation from the target, then it should be rectified.

9) Inspection; A separate Quality Control Department does the quality inspection of the

products to find out any chances of qualifying of the defective products. But

many a times, this work is also done by operations department.

Responsibilities and Duties of Production ManagerMaintain a professional appearance and make commitment to quality Continuous improvement and respect for individuals Supervise the Production Team to produce and prioritize jobs Comply with all safety requirements. Communicate effectively with the General Manager/Owner, the Sales Team, and the Production Team.6. Follow systems and procedures outlined in the company manuals.7. Meet all assigned goals and assist others in accomplishing their goals.8. Meet all customer commitments through the production of timely, efficient and high quality products and service9. Update and maintain production schedule.10. Organize workflow according to workload to meet delivery schedule and to complete assigned jobs.11. Maintain production control records and provide information to sales representatives,

customers and management with regard to delivery12. Coordinate and maintain the order entry standards and procedures for the company13. Schedule, plan and conduct Morning Production Meetings.14. Prepare, update, and communicate the production schedule15. Manage the coordination and control of all jobs/work orders.16. Monitor quality, accuracy, and timeliness of all orders to ensure customer commitments are met through production of high quality material that meets customer delivery expectations.

New Product Development

The various stages of new product development are as follows:

Stage 1: Need Identification

(Idea Generation)

Stage 2: Advance Product Planning

(Conceptual Feasibility)

Stage 3: Advance Design

(Technical Feasibility)

Stage 4: Detailed Engineering Design

(Design for function, reliability, maintainability, safety, productivity)

Stage 5: Production Process Design and Development

Stage 6: Product Evaluation and Improvement

Stage 7: Product Use and Support

Product Design

Product design deals with its form and function. From implies the shape and appearance of the product while function is related to the working of the product. So that the product design includes, preparation of drawings, specification, experimental and development effort associate with the product to be product or manufactured.

Product Design

Product design refers to transforming the new, innovative and effective ideas into a product through a process. The entrepreneurs conceive and then analyze the idea, implement through the feasibility studies and system’s approach and then finally convert that idea into a tangible

product or intangible service. This process can be facilitated and enhanced by computers, information technology, digital tools and the nano-technology. The process has three stages as described below:

First Stage

Creating an idea from imagination, observation through conscious or sub-conscious efforts or research.

The idea should solve to satisfy the need, to do a specific task or job.

Second Stage

The Product Design Solutions come from the need of meeting the user expectations, using the various techniques ranging from exploration, ergonomics and prototyping.

Producing as per the design.

Third Stage

Then it is the last stage of marketing which is responsible for selling and distributing the product up to the last stage of operations i.e. consumer.

Objectives of Product Design

The product or service design is the basic and first step in the process of providing the product or service to the customer in order to fulfill and satisfy the needs of the customer. So the basic objective of product design is to satisfy the customer to the maximum at minimum cost thereby increasing the market share and profit to the stakeholders. Other than this objective, some more important objectives are listed as below:

Customer needs and desire are satisfied by products and services by efficient product design.

Existing products are modified to enhance the use value or utility. The quality functions are taken care by better product design. The cost of the product is minimized and the product is made simpler through product

design process. The marketability of the product can be improved. The product design increases usability, liability, functionality, aesthetics and

dependability. Product design can make the process of manufacturing simpler, ergonomical and cheaper.

Guiding Principles in Designing the Product

For the good design, the following ‘guiding principles’ can be used:

An effective NPD process: A good process requires effective teamwork, encourages strong communication and provides management control.

Expert designers constituting as part of core team: A project may require a human expert, stylistic input or software interface design skills. Strong teams understand when and where external support is required.

Design supplementing competence and skill: External specialists should be considered as a part of the design team. Such partnerships are a critical ingredient of success.

Appropriate projects for optimum use of resources: An effective product strategy should be linked closely to the overall business strategy and needs the selection of the right projects, because of the cost incurred.

Design fulfilling market needs: Formulating a shared vision of the product to be designed, bringing together marketing, industrial design, production and engineering aspects is important. It should be based on the market, how it is segmented and where the opportunity is to be targeted.

Practical design leading to optimum production: The team should maintain the shared vision throughout the project from idea through to production.

Involvement of Consumer needs in design: Users can create valuable insights into future needs and wants. User involvement during concept selection can help significantly in decision-making. Finally, users must be included in market testing.

Inculcating creativity through innovative ideas: A main feature of strong design teams is the ability to be divergent in the search for solutions to problems and creating a culture, which supports innovation and creativity.

Multiple Phase Prototyping from the beginning: Product design is having high inherent risks, like market, business and technical risks. Prototyping, model making, simulation, concept testing and evaluation can be an effective way of exploring and reducing these risks.

Importance of both tangible and intangible attributes: In some companies, design teams focus on performance and functionality - the 'tangible' product attributes and often pay little attention to 'intangible' attributes. But there should be equal consideration of the 'tangible' and 'intangible' product attributes.

Optimum Variety with minimum cost and complexity: Products are generally designed one at a time. Modular approach can reduce complexity as well as cost while delivering the variety.

Importance of Product Design

The whole operations management revolves around the product design as it directly influences the utility of a product or services to the customer. Certain aspects of product design are very critical and important for the product life cycle, which are listed as below:

During the design stage itself the complete package of attributes of a product or service is established.

The production process also depends on the design of product i.e. which technology to be used, skill level of manpower is also determined at this stage.

The whole aggregate planning also depends on product design. The product design creates the utility value in the mind of target customer by specifying

the features related to performance, durability, reliability, safe use, aesthetics and thus marketability.

A good product design is the initial assurance of the success of product and project.

There are many more aspects taken care by product design. As it is the starting point of the whole production process, so it becomes very important to design the product or service in an effective and efficient manner.

Factors Affecting Product Design

The product depends on many issues ranging from the requirements and needs of the customer, the feasibility of the process, quality of raw materials, budget and competitive price of the product to the quality parameters to be put into the products. Some of these factors are listed as below:

Product attributes to be included so that the utility could be increased. Easy to manufacture to the operator so that product could be made in a simpler way. Customer requirements must be fulfilling to satisfy his/her needs and to get repeat

orders. Availability of manpower with required skill level is another factor of affecting the

product design. Cost/price limit is another factor which limits the product design with respect to addition

or modification of attributes package in the product. Process/ Technological capability to handle the product to be manufacture. Process methods and layouts limit the product design and its modification. The quality level of raw materials to be used is another important factor. The balance to be obtained between the cost and functions of the products. The packaging aesthetics and attractiveness are major issues in product design. The desired quality level of the finished product is also important in this regard. The branding and brand loyalty of existing products in product mix also decide about

the quality level of the product in question and so the product design.

The above factors are very crucial to decide about the level of exercise and efforts to be made in product design.

Service Design

Service Design is the process of planning and organizing all the inputs and resources like the people, infrastructure, communication and materials of a service, in order to improve its quality, the interaction

between service organization and customers and the performance quality, e.g., a restaurant may choose to have a Service Design agency change its menu set out, or change the layout and appearance of the restaurant to improve the customer's experience and perception.

The major portion of the Gross Domestic Product (GDP) in many of the developed and developing countries comes from service operations. In India particularly, in the previous years, the share of service sector is more than 55% in this regard. The design of services is also equally important. All the issues, concerns, factors and considerations are applicable to services also. Even beyond these issues, the service sector involves more manpower, so the human, technological and commercial concerns become more predominant and designing the services. The nature of services is altogether different than the products. Certain assumptions are made in case of services. The more details about services have been taken in the following paragraphs.

Nature of Services

Few generalizations are the basis of services. These are as follows:

1. Everyone is expert on services – we all know, what we want from a service organization.2. What is well in providing one kind of service may be disastrous in other type. e.g., meal and fast

food.3. Quality of work is not quality of service, e.g., Auto dealer may be good in work but may consume

a week to get the job done.4. Most services are mix of tangible and intangible attributes. All require different approaches to

design and mange than the production of goods.5. The services with higher degree of contact are those, where products and services are consumed

on the spot, e.g. the food served and consumed in the restaurants.6. Effective management of services requires proper understanding of marketing, personnel and

operations.7. In services, the cycle of encounters are either through face to face, phone, electromechanical

devices or mail interactions.

Types of Services

There are two types of service operations such as service as a business and service to serve the organization internally.

(A) Services Business: The management of organizations, where primary business requires interaction with the customers to produce the services falls into this category, e. g., banks, airlines, hospitals, law firms, restaurants. There are two types of services as mentioned below:

1. Facility Based Services are those services where customer must go to the service facility e.g. Clinic, Hospitals and Bank.

2. Field Based Services are those services where production & consumption of services takes place in customer’s environment, e.g. home delivery of food, insurance service by the agent, etc.

Customer

Service strategy

Main & central position

PeopleSystems

Technology has transferred many facility based services to field based services.

e.g., Telemarketing brings shopping center.

(B) Internal Services: This category of services is required to support the larger activities of the organization, e.g. data processing, accounting, engineering and maintenance service is viewed parallel to quality. Here the customer is focal point of all decisions and actions in any service organization as shown in figure

Fig. Internal Service System focusing Customer

There are two viewpoints. First is that the organizations exist to serve the customers. The Systems and people exist to facilitate the process of service.

The other view point is that the service organization exists to serve the workforce. They determine the following:

How is the service perceived by the customer? How does the management treat the workers and employees? How do the serving personnel treat the public? i.e., Customer gets the kind of service that

management deserves. If workforce is well trained and well motivated, then they will be more enthusiastic and do better

job for their customers. The whole Operations are responsible for efficient service systems. e.g. the procedures,

equipment and facilities responsible for managing the work of service workforce.

Operational Classification of Services

There are two types of classifications:

(a) General Classification on the basis of work e.g; Financial, Health, Transformations services. But these are indicators about the types of processes.

(b) Classification on the basis of Customer Contact in creation of the services. Service systems are operationally distinguished from one another with respect to physical presence of customer during the process of creation of service and also in providing the service to the customer.

1. High Degree of Customer Contact (HDCC)

2. Low Degree of Customer Contact (LDCC)

HDCC service system is more difficult to rationalize and more difficult to control as customer affects the time of demand, exact nature of service, quality as compared to the service where customer’s presence is either very less or remote from the point of service creation.

Designing Service Organizations

There are certain facts about the nature of services.

Services can’t be stored as we can’t inventory services, so we create the services as the demand arises.

So the capacity to create and provide the services becomes the dominant issue in case of service design.

The service capacity should be optimum. There should be neither loss of customer nor excessive cost due to excess capacity.

The Assistance and consultation of marketing is always advisable to decide about the service capacity. e.g. discounted fare and rates in air travel, hotel and restaurant booking.

Many a times, it becomes difficult to separate out the operations management functions from marketing functions in services. The waiting line models are the powerful mathematical models/ tools for this type of analysis. Certain questions like how many tellers should be installed in the bank? How many phone lines must be there in mail order operations? Can be analyzed with these models?

In designing a service organization, four elements are to be emphasized, which are listed as below:

a) Identification of target market. i.e. strategic service vision (who is customer?)b) Service concept (how we differentiate our service with respect to the services provided by other

organizations?)c) Service strategy (what is the service package and operating focus?)d) Service delivery system (what is actual process, number and skill level of staff and facilities by

which the service is created are the major factors which distinguish service design and product development.)

Issues in Designing services:

There are certain facts and considerations to be taken care, while designing the services:

1) Process and production must be developed simultaneously. In fact in services, the process itself is the production.

2) Although equipment and software supporting a service can be protected by patents and copyrights, but service operations itself lacks the legal protection from duplication and imitation.

3) It is only a service package, not the definable goods.4) Training individuals is part of service package. e.g Professional Service Organizations (PSO),

prior certificates of approval are necessary e.g., Law firms and hospitals.5) Many service Organizations can change their service means higher degree of flexibility such as

barber shops, retail stores and restaurants.

Challenges in Product and Service Design

The concerns of environment and ethical and legal issues are major challenges in designing the product and service. The governmental rules and regulations with respect to environment, ecology, pollution and safety of consumer and operator provide the bigger challenges for the design engineers. The examples of establishing the factory in the vicinity of population or without pollution control devices anywhere, fastening the seat belt while travelling beyond a specified speed limit and emission levels (e.g. Euro – I, II, III Standards) are very important and critical in designing products and services.

Similarly, the design engineer and company management are responsible for any type of injuries or damages caused to operator or customer due to defective product design e.g. sharp edges may cause the injury to the users of the products. In the same way certain ethical concerns are also raised by many social organizations that the company has to followed while designing the products for example animal and environmental protection, software with sufficient safety from the viruses and hacking.