Operational Management.

Product and service design.

Claudia Daniela López Reta 1597215Ana Bárbara Núñez Alvarado 1622416Dante Daniel Arriaga Botello 1640105Cesar Alfonso Luna Pamela Lizbeth Ortiz Valtier 1586754Mauricio Alejandro González Arredondo 1694097

Product and service design.• The product design process.• The Product Development Process.• Economic Analysis of Product Development Projects.

-Build a Base-Case Financial Model.-Sensitivity Analysis to Understand Project Trade-Offs.

• Designing for the costumer.-Quality Function Deployment.-Value Analysis/Value Engineering.

• Designing products for manufacture and assembly.-How does design for manufacturing and assembly (DFMA) work?

• Designing service products.• Measuring product development.

• Case: IKEA: Design and pricing.• Case: Dental Spa.

Case: Ikea: Design and Pricing.• https://www.youtube.com/watch?v=jQd7oAQiV5I

The Product Designing Process.• The producing companies are called contract manufacturers, and they

have become successful in industries.Such as electronic products, clothing, drug, plastic, and custom manufacturing.

• A company´s core competency is the one thing that it can do better than its competitors.

• It also has many steps for planning the in development process

• Planning • Concept development • System level design • Design detail • Testing and refinement • Production ramp up

I'm going to give you an example of process intensive products For example products include semiconductors foods, chemicals and paper for this product the production process has an impact on properties of the products so that product design cannot beat separate from the production price is the sign in many cases these prices products are produced and very high volumes and the are bulk raider than described goods

Customized products in this case next sample is that projects are a slight variation of the standard configuration and I are typically developed in response to our specific order by a customer for example we could say is Products that includes motors batteries and containers because companies can be very good and quickly producing

In high risk Products are those that entail usually large is related to the technology or market so that there is substantial technical or market risk

And finally quick build products for the development of some products such as a software and many electronic products building and testing prototype models has become such as a rapid process that the design build test cycle can be repeated many times

Build a base case financial model consist of estimating the timing and magnitude or a future cash flow and then computing the net present value

I'm going to tell you the most basic categories of cash flow for a typical new product development project are

Development cost Ramp up cost Marketing and support cost Production cost Sales revenue

If you follow these steps the financial model we use is simplified to include only the major cash flows that are typically used in practice but conceptually it is identical to more complex modelsAnd finally we have complex system Detail design of the components is high parallels process often refers to as current engineering

The product development process.

• The process of developing new products or services can be divided into a number of key stages:

• Idea generation - coming up with innovative new ideas.• Idea distillation - screening out any ideas not worth taking forward.• Concept definition - considering specifications such as technical

feasibility and market potential. If you're planning a new product, you should also consider the design process at this point - see our guide on how can I use design in my business?

• Concept development - creating a prototype product or pilot service.• Test marketing and finalising the concept - modifying the product or

service according to customer, manufacturer and support organisations' feedback. This means deciding the best timing and process for piloting your new product or service

. • Product launch - before setting a date for your launch, you should determine how you will sell, promote and support your product or service. It is important to get it right the first time, but remember that any decisions to delay your launch should be balanced against the danger that your competitors will beat you to market.

• Some of these stages could overlap, but the presence of a staged product development process will help keep timing and costs under control. For more information on managing projects, see our guide on how to manage your research, design and development.

ECONOMIC ANALYSIS OF PRODUCT

DEVEOPMENT PROJECTS

A product development team at Polaroid Corporation was in the midst of developing a new photograph printer, the CI-700. The CI-700 would produce instant full color photographs from digital images stored in a computer. The primary markets for the product are the graphic arts, insurance, and real estate industries. During the CI-700´s development, the Polaroid team was faced whit several decisions that it knew could have a significant impact on the product´s profitability:

• Should the team take more time for development in order to make the product available on multiple computer “platforms” or would a delay in bringing the CI-700 to market be too costly?

• Should the product use print media (instant film)from polaroid´s consumer camera business or new and specialized premium-quality print media?

• Should the team increase the development spending in order to increase the reliability of the CI-700?

Economic analysis is useful in at least two different circumstances:• Go/no-go milestones. For example, should we try to develop a product

address a new market opportunity? Should we proceed with the implementation of a selected concept? Should we launch the product we have developed? These decisions typically arise at the end of each phase of development.

• Operational design and development decisions. Operational decisions involve questions such as: should we spend $100,000 to hire an outside firm to develop this component in order to save two months of development time? Should we launch the product in four months at a unit cost of $450 or wait six months, when we can reduce the cost to $400?

It is important to remember that economy analysis can capture only those factors that are measurable and that projects often have both positive and negative implications that are difficult to quantify. Also is difficult for an economic analysis to capture the characteristics of a dynamic and competitive environment.

Build a Base-Case Financial Model

Constructing de base-case model consists of estimating the timing and magnitude of future cash flows and the computing the net present value (NPV) of those cash flows.

The timing and magnitude of the cash flows are estimated by merging the Project Schedule with the Project Budget, sales volume forecast, and estimated production cost. The level of detail of cash flows should be coarse enough to be convenient to work with, yet contain enough detail to facilitate effective decision making.

The most basic categories of cash flows for a typical new-product-development project are: • Development cost (all remaining design, and refinement cost up to production ramp-up)• Ramp-up cost • Marketing and support cost• Production cost• Sales revenue

SENSITIVITY ANALYSIS TO UNDERSTAND PROJECT TRADE-OFFSSensitivity analysis use the financial model to answer “What if” question by calculating the change in NPV corresponding to a change in the factor included in the model. As an example, consider the sensitivity of NPV to changes in development cost. By making incremental changes to development cost while holding other factors constant, we can see the incremental impact on project NPV.

Many scenarios can be developed for the project, including the following• Project development sales: Consider the impact of 25 percent increase in the project development time.

This would raise the development time from four to five quarters and delay the start of the production ramp-up, marketing efforts, and product sales.

• Sales volume: Increasing sale is a powerful way to increase profit. Of course, a decrease in sales can result in significant loss.

• Product cost or sales price: Consider that a $1 increase in a price or a $1 decrease in cost results in a $1 increase in profit. Of course, the $1 increase in price may have a significant impact on demand.

• Development cost: A dollar spend or saved on development cost is worth the present value of that dollar to the value of the project.

Designing for the costumer.• ·Customers buy satisfaction, not parts ·May be a good or

service• Slides used in class may be different from slides in student

pack

• Typical Phases of Product Design and Development ·Planning ·Concept Development ·System-level Design ·Design Detail ·Testing and Refinement

• Designing for the Customer: • Quality Function Deployment • ·Cross-functional teams from• marketing, design engineering,• and manufacturing ·Voice of the• customer- ·House of Quality -

• Quality Function Deployment ·Identify customer wants ·Identify how the good/service will satisfy customer wants ·Relate customer wants to product hows ·Identify relationships between the firm’s hows ·Develop importance ratings ·Evaluate competing products

• Quality Function Deployment ·Identify customer wants ·Identify how the good/service will satisfy customer wants ·Relate customer wants to product hows ·Identify relationships between the firm’s hows ·Develop importance ratings ·Evaluate competing products

• Concurrent Engineering Defined

• – the simultaneous development of project design functions –open and interactive communication existing among all team members for the purposes of

• Value analysis value engineer The purpose of value and analysis in value engineering is to simplify product and process is is to achieve equivalent or better performance at the lower cost to them while maintaining all functional requirements defined by the customer

Designing products for manufacture and assembly.• Design for Manufacturing and Assembly ·Greatest

improvements related to DFMA arise from simplification of the product by reducing the number of separate parts:

• Slides used in class may be different from slides in student pack

• Measuring Product Development Performance ·Time-to-market

Designing Service Products.

• 1. Service experience fit: This mean that the new service should fit into the current service experience for the costumer.

• 2. Operational fit: Even the greatest service idea require operational support to execute.

• 3. Financial impact: Designing and implementing a new service is costly and should be financially justified

• Complexity and divergence.

Complexity is the number of steps involved in a service and possible actions that can be taken at each step.

• Divergence is the number of ways a costumer/service provider interaction can vary at each step according to the need and abilities of each.

Measuring Product Development• There is strong evidence that generating a steady stream

of new product to market is extremely important to competitiveness. To succeed, firms must respond to changing customer needs and the move of their competitors.

• Firms also must bring new products and processes to market efficiently. Because the number of new products and new process technologies has increased while models lives and lives cycles have shrunk. Firms must mount more development projects than previously and these projects must use fewer resources per project.

.• In the U.S. automobile market, for example the

growth of models and market segments over the last 25 years has meant that an auto firm must initiate close to four times as many development projects simply to maintain its market share position. But smaller volumes per model and shorter design live mean resource requirements must drop dramatically. Remaining requires efficient engineering, designs, and development activities.