Chapter 4 ProductService Design Chapter 4 ProductService Design

Chapter 4 Product/Service Design Chapter 4: Product/Service Design 1

Introduction Chapter 4: Product/Service Design 2

Progressive Corp. Prior to 1988, carved our profitable niche serving high-risk drivers l In 1988 two major events occurred l l Allstate overtook it in high-risk niche California passed proposition 103 Round-the-clock immediate response program adopted Chapter 4: Product/Service Design 3

Progressive Corp. continued Special vans equipped with airconditioning, comfortable chairs, desk, and two cell phones. l Often settlement check offered on spot l 80% of accident victims contacted within 9 hours of learning of accident l 70% of vehicles inspected within one day l Typically claim wrapped up with a week l Chapter 4: Product/Service Design 4

Thermos In 1992 had 25% share of $1 billion barbecue grill market l Product becoming a commodity l CEO believed consumers were too intelligent to be tricked by clever advertising and slick packaging l Survival dependent on constant innovation, high quality, at right price l Chapter 4: Product/Service Design 5

Thermos continued Interdisciplinary team with representatives from marketing, manufacturing, engineering, and finance to design new grill l Team used to reduce project completion time l As example, initially designers opted for tapered legs l Chapter 4: Product/Service Design 6

Thermos continued Manufacturing noted that tapered legs would have to be custom made l Design changed to straight legs l Under previous system, manufacturing would not have found out about legs until design completed l Chapter 4: Product/Service Design 7

Thermos continued Team developed revolutionary electric grill l Technology used to give food barbecued taste l Burns cleaner than gas or charcoal l Grill won four design awards in its first year l Chapter 4: Product/Service Design 8

Caterpillar Used virtual-reality system called CAVE (cave automatic virtual environment) to take large earthmoving equipment for test drive before it was actually built l Surround-screen and surround sound cube with 10 -foot sides l Super-computer projects 3 D graphics onto the walls l Chapter 4: Product/Service Design 9

Caterpillar continued Inside CAVE, people can walk around and operate imaginary controls l System responds to movements l Provides many perspectives l Backhoe and wheel loader recently introduced incorporate visibility and performance improvements based on data collected from virtual test-drives l Chapter 4: Product/Service Design 10

Themes Illustrate in Examples Two examples related to design of products and one to the design of a service l Importance of product and service design to an organization’s competitiveness l l l Progressive Thermos Chapter 4: Product/Service Design 11

Themes continued l Technology l l l In Progressive’s case, new technology such as cellular phones made new service possible In Caterpillar’s case, new technology used to enhance design process Design Teams Chapter 4: Product/Service Design 12

Impacts of Selection/Design Decisions Fit l Materials l Labor l Equipment l Process l Financing l Chapter 4: Product/Service Design 13

Three Stages in Output Selection and Design l Selection stage l l l Product and service design stage l l Idea generation Screening and selection Preliminary design Prototype testing Final design Process design Chapter 4: Product/Service Design 14

Steps in Product-Service Selection and Design Chapter 4: Product/Service Design 15

The Selection Stage Chapter 4: Product/Service Design 16

Generation of Ideas Employees with customer contact play a key role in generating new ideas l Can imitate proven new idea l Purchase new idea l Marketing “pull” versus technology “push” l Product versus process research l Chapter 4: Product/Service Design 17

The Development Effort Chapter 4: Product/Service Design 18

Mortality Curve of Chemical Product Ideas from Research to Commercialization Chapter 4: Product/Service Design 19

Service Gap Identifier 20

Product-Process Innovations Over Time Chapter 4: Product/Service Design 21

Screening and Selection l l l Assessing technical feasibility Determining up-front capital needs Evaluation may include calculation of payback period, return on investment, or net present value Chapter 4: Product/Service Design 22

Analysis of Organizational Fit Experience with particular output l Experience with production system required for the output l Experience in providing an output to the same target recipients l Experience with the distribution system for the output l Chapter 4: Product/Service Design 23

Typical Checklist for Organizational Fit Chapter 4: Product/Service Design 24

The Aggregate Project Plan l Project Portfolio l l Derivative projects Breakthrough projects Platform projects R&D projects Chapter 4: Product/Service Design 25

The Aggregate Project Plan Chapter 4: Product/Service Design 26

An Example Aggregate Project Plan Chapter 4: Product/Service Design 27

Using the Aggregate Project Plan Identify gaps in portfolio l Evaluate resource requirements l Employee development l Chapter 4: Product/Service Design 28

The Product/Service Design Stage Chapter 4: Product/Service Design 29

The Product Design Stage Preliminary Design l Prototype Testing l Final Design l Chapter 4: Product/Service Design 30

Preliminary Design Tradeoff Analysis l Standardization l Modularity l Computer-Aided Design l Chapter 4: Product/Service Design 31

Tradeoff Analysis Factors to Consider l l l Function Cost Size and shape Appearance Quality Reliability l l l Environmental impact Producability Timing Accessibility Recipient input requirements Chapter 4: Product/Service Design 32

Using QFD to link customers’ attributes to technical, component, and operation requirements Chapter 4: Product/Service Design 33

The House of Quality for a Car Door Chapter 4: Product/Service Design 34

Advantages of Standardization Minimizes number of parts needed to stock l Minimizes number of equipment setups l Simplified operations procedures l Quantity discounts due to larger purchases l Minimized service and repair problems l Chapter 4: Product/Service Design 35

Disadvantages of Standardization Possible lower quality because standard parts used rather than specially made parts l Inflexible production l Chapter 4: Product/Service Design 36

Modularity computer 5 hard drive sizes 5 choices for RAM 5 choices for CPU 4 modem choices 5 x 5 x 4 = 500 possible computer configurations with only 19 different parts Chapter 4: Product/Service Design 37

Computer-Aided Design Develop drawings on computer screen l Can retrieve old designs and changes as necessary rather than creating new designs from scratch l Computer-aided engineering (CAE) l Computer-aided process planning (CAPP) l Computer-aided manufacturing (CAM) l Chapter 4: Product/Service Design 38

Prototype Testing Design concept developed in preliminary stage tested l Physical models l Computer simulation l Rapid prototyping (RP) l Actual product or service l Accept, extend, modify, or reject preliminary design l Chapter 4: Product/Service Design 39

Final Design Simplification and value analysis l Safety and human factors l Reliability l Manufacturability l Chapter 4: Product/Service Design 40

Methods to Speed New Output Introduction Contract R&D l Product/process teams l Overlap development stages l Combine/eliminate stages l Incremental emphasis l More extensive application l Use new technologies l Chapter 4: Product/Service Design 41

Commercialization Chapter 4: Product/Service Design 42

Commercialization Process of moving an idea for a new product or service from concept to market Chapter 4: Product/Service Design 43

History of the Typewriter Mechanical typewriter dominated market for 25 years l Then the electromechanical typewriter dominated market for 15 years l Electric typewriter dominated for the next 7 years l First generation microprocessor based machines dominated for next 5 years l Chapter 4: Product/Service Design 44

Characteristics of Companies with Superior Commercialization Capabilities Commercialize two to three times as many new products and processes as their competitors l Two to three times as many technologies incorporated into products l Get product to market in half time l Compete in twice as many product and geographic markets l Chapter 4: Product/Service Design 45

Example: Assume following applies to laser printer industry Market growing 20% annually l Prices declining 12% annually l Five year life cycle As a project leader, would you choose between incurring a 30% cost overrun to finish project on schedule or miss deadline by six months? l Chapter 4: Product/Service Design 46

Laser Printer example continued Incurring the 30% cost overrun will reduce cumulative profits by 2. 3% l Launching printer six months late will reduce cumulative profits by 33% l Chapter 4: Product/Service Design 47

To Improve Commercialization Capability Must Measure It Time to market l Range of markets l Number of markets l Breadth of technologies l Chapter 4: Product/Service Design 48

Improving Commercialization Capability Make it a priority l Set goals and benchmarks l Build cross-functional teams l Promote hands-on management to speed actions and decisions l Chapter 4: Product/Service Design 49

Disruptive Technologies Disruptive technologies l Sustaining technologies l Chapter 4: Product/Service Design 50

Performance Trajectories: Traditional Versus Online Distance Education Learning Programs Chapter 4: Product/Service Design 51