Chapter 3 Product Design Process Selection Operations Management

Chapter 3 - Product Design & Process Selection Operations Management by R. Dan Reid & Nada R. Sanders 2 nd Edition © Wiley 2005 Power. Point Presentation by R. B. Clough - UNH © 2005 Wiley

Product & Service Design n n The process of deciding on the unique characteristics of a company’s product & service offerings Serves to define a company’s customer base, image, competition and future growth © 2005 Wiley

Products versus Services n Products: n n n Tangible offerings Dimensions, materials, tolerances & performance standards Services: n n Intangible offerings Physical elements + sensory, esthetic, & psychological benefits © 2005 Wiley

Strategic Importance n n Products & service offerings must support the company’s business strategy by satisfying the target customers’ needs & preferences If not, the company will lose its customer base and its market position will erode © 2005 Wiley

Product Life Cycle n Product life cycle stages n n n Introduction Growth Maturity Decline Facility & process investment depends on life cycle © 2005 Wiley

Steps in Product Design Idea Development: n n A need is identified & a product idea to satisfy it is put together Product Screening: n n Initial ideas are evaluated for difficulty & likelihood of success Preliminary Design & Testing n n Market testing & prototype development Final Design n n Product & service characteristics are set © 2005 Wiley

Idea Development n Existing & target customers n n Benchmarking n n Studying “best in class” companies from your industry or others and comparing their practices & performance to your own Reverse engineering n n Customer surveys & focus groups Disassembling a competitor’s product & analyzing its design characteristics & how it was made Suppliers, employees and technical advances © 2005 Wiley

Product Screening n Operations: n n n Marketing: n n n Are production requirements consistent with existing capacity? Are the necessary labor skills & raw materials available? How large is the market niche? What is the long-term potential for the product? Finance: n What is the expected return on investment? © 2005 Wiley

Break-Even Analysis © 2005 Wiley

Break-Even Analysis n Total cost = fixed costs + variable costs (quantity): n Revenue = selling price (quantity) n Break-even point is where total costs = revenue: © 2005 Wiley

Break-Even Analysis Example n A firm estimates that the fixed cost of producing a line of footwear is $52, 000 with a $9 variable cost for each pair produced. They want to know: n n If each pair sells for $25, how many pairs must they sell to break-even? If they sell 4000 pairs at $25 each, how much money will they make? © 2005 Wiley

Example Solved n Break-even point: n Profit = total revenue – total costs © 2005 Wiley

Preliminary Design & Testing n n n General performance characteristics are translated into technical specifications Prototypes are built & tested (maybe offered for sale on a small scale) Bugs are worked out & designs are refined © 2005 Wiley

Final Design n Specifications are set & then used to: n n Develop processing and service delivery instructions Guide equipment selection Outline jobs to be performed Negotiate contracts with suppliers and distributors © 2005 Wiley

Other Design factors n n n Design for Manufacture Product Life Cycle Concurrent Engineering © 2005 Wiley

Design for Manufacture (DMF) n n n Minimize parts Design parts for multiply applications Use modular design Avoid tools Simplify operations © 2005 Wiley

DFM Benefits n Lower costs: n n n Lower inventories (fewer, standardized components) Less labor required (simpler flows, easier tasks) Higher quality: n Simple, easy-to-make products means fewer opportunities to make mistakes © 2005 Wiley

Concurrent Engineering n n A design approach that uses multifunctional teams to simultaneously design the product & process Replaces a traditional ‘over-the-wall’ approach where one group does their part & then hands off the design to the next group © 2005 Wiley

Sequential Design © 2005 Wiley

Concurrent Engineering © 2005 Wiley

Concurrent Engineering Benefits n n n Representatives from the different groups can better consider trade-offs in cost & design choices as each decision is being made Development time is reduced due to less rework (traditionally, groups would argue with earlier decisions & try to get them changed) Emphasis is on problem-solving (not placing blame on the ‘other group’ for mistakes) © 2005 Wiley

Process Selection n Process selection is based on five considerations n n n § Type of process; range from intermittent to continuous Degree of vertical integration Flexibility of resources Mix between capital & human resources Degree of customer contact Process types can be: §Project Process §Batch Process §Line Process §Continuous Process © 2005 Wiley

Types of Processes n Intermittent operations: n n Capable of producing a large variety of product designs in relatively low volumes Continuous operations: n Capable of producing one (or a few) standardized designs in very high volumes © 2005 Wiley

Continuum of Process Types © 2005 Wiley

Differences between Intermittent and Continuous Operations © 2005 Wiley

Product Strategies and Process Choice © 2005 Wiley

Process Selection Facility Layout © 2005 Wiley

Process Technologies n n Automation Automated Material Handling: n n n Automated guided vehicles (AGV) Automated storage & retrieval systems (AS/RS) Computer-Aided Design (CAD) software Robotics & Numerically-Controlled (NC) equipment Flexible Manufacturing Systems (FMS) Computer-Integrated Manufacturing (CIM) © 2005 Wiley

Service Design Approaches to Service Design: n n n Substitute Technology for People Get the Customer Involved Provide High Level of Customer Attention © 2005 Wiley

Homework Ch. 3 Problems: 1, 2, 4, 5, 8. © 2005 Wiley