Operations Management Chapter 5 Design of Goods and

Operations Management Chapter 5 – Design of Goods and Services © 2008 Prentice Hall, Inc. 5– 1

Product Decision þ The good or service the organization provides society þ Top organizations typically focus on core products þ Customers buy satisfaction, not just a physical good or particular service þ Fundamental to an organization's strategy with implications throughout the operations function © 2008 Prentice Hall, Inc. 5– 2

Product Strategy Options þ Differentiation þ Low cost þ Rapid response © 2008 Prentice Hall, Inc. 5– 3

Product Life Cycles þ May be any length from a few hours to decades þ The operations function must be able to introduce new products successfully © 2008 Prentice Hall, Inc. 5– 4

Sales, cost, and cash flow Product Life Cycles Cost of development and production Sales revenue Net revenue (profit) Cash flow Negative cash flow Introduction © 2008 Prentice Hall, Inc. Loss Growth Maturity Decline Figure 5. 1 5– 5

Product Life Cycle Costs Percent of total cost 100 – Costs committed 80 – 60 – Costs incurred 40 – 20 – Ease of change 0– Concept design © 2008 Prentice Hall, Inc. Detailed Manufacturing design prototype Distribution, service, and disposal 5– 6

Product-by-Value Analysis þ Lists products in descending order of their individual dollar contribution to the firm þ Lists the total annual dollar contribution of the product þ Helps management evaluate alternative strategies © 2008 Prentice Hall, Inc. 5– 7

Product-by-Value Analysis Sam’s Furniture Factory Individual Contribution ($) Total Annual Contribution ($) Love Seat $102 $36, 720 Arm Chair $87 $51, 765 Foot Stool $12 $6, 240 Recliner $136 $51, 000 © 2008 Prentice Hall, Inc. 5– 8

New Product Opportunities 1. Understanding the customer 2. Economic change 3. Sociological and demographic change 4. Technological change g n i m r o t s n i a l o Br o t l fu e s u is a 5. Political/legal change 6. Market practice, professional standards, suppliers, distributors © 2008 Prentice Hall, Inc. 5– 9

Product Development System Ideas Figure 5. 3 Ability Customer Requirements Functional Specifications Scope of product development team Product Specifications Scope for design and Design Review engineering teams Test Market Introduction Evaluation © 2008 Prentice Hall, Inc. 5 – 10

Quality Function Deployment þ Identify customer wants þ Identify how the good/service will satisfy customer wants þ Relate customer wants to product hows þ Identify relationships between the firm’s hows þ Develop importance ratings þ Evaluate competing products þ Compare performance to desirable technical attributes © 2008 Prentice Hall, Inc. 5 – 11

QFD House of Quality What the customer wants Target values How to satisfy customer wants Relationship matrix Competitive assessment Customer importance ratings Interrelationships Weighted rating Technical evaluation © 2008 Prentice Hall, Inc. 5–

House of Quality Example Your team has been charged with designing a new camera for Great Cameras, Inc. The first action is to construct a House of Quality © 2008 Prentice Hall, Inc. 5 – 13

Interrelationships House of Quality Example What the Customer Wants What the customer wants Lightweight Easy to use Reliable Easy to hold steady Color correction © 2008 Prentice Hall, Inc. Relationship Matrix Analysis of Competitors How to Satisfy Customer Wants Technical Attributes and Evaluation Customer importance rating (5 = highest) 3 4 5 2 1 5 – 14

Interrelationships House of Quality Example © 2008 Prentice Hall, Inc. Relationship Matrix Ergonomic design Paint pallet Auto exposure Auto focus Technical Attributes and Evaluation Aluminum components Low electricity requirements What the Customer Wants Analysis of Competitors How to Satisfy Customer Wants 5 – 15

Interrelationships House of Quality Example What the Customer Wants High relationship Medium relationship Low relationship Lightweight Easy to use Reliable Easy to hold steady Color corrections Relationship Matrix Analysis of Competitors How to Satisfy Customer Wants Technical Attributes and Evaluation 3 4 5 2 1 Relationship matrix © 2008 Prentice Hall, Inc. 5 – 16

Interrelationships House of Quality Example What the Customer Wants Relationship Matrix Analysis of Competitors How to Satisfy Customer Wants © 2008 Prentice Hall, Inc. Ergonomic design Paint pallet Auto exposure Auto focus Aluminum components Relationships between the things we can do Low electricity requirements Technical Attributes and Evaluation 5 – 17

Interrelationships House of Quality Example What the Customer Wants Relationship Matrix Analysis of Competitors How to Satisfy Customer Wants Technical Attributes and Evaluation Lightweight Easy to use Reliable Easy to hold steady Color corrections Our importance ratings 3 4 5 2 1 22 9 27 27 32 25 Weighted rating © 2008 Prentice Hall, Inc. 5 – 18

Interrelationships How to Satisfy Customer Wants Technical Attributes and Evaluation How well do competing products meet customer wants Lightweight Easy to use Reliable Easy to hold steady Color corrections Our importance ratings © 2008 Prentice Hall, Inc. 3 4 5 2 1 22 Company B Relationship Matrix Company A What the Customer Wants Analysis of Competitors House of Quality Example G G F G P P P G P P 5 5 – 19

Interrelationships How to Satisfy Customer Wants 2 circuits 2’ to ∞ 75% Target values (Technical attributes) 0. 5 A Technical Attributes and Evaluation Company A 0. 7 60% yes 1 Technical evaluation Company B 0. 6 50% yes 2 Us 0. 5 75% yes 2 © 2008 Prentice Hall, Inc. Panel ranking Relationship Matrix Failure 1 per 10, 000 What the Customer Wants Analysis of Competitors House of Quality Example ok G ok F ok G 5 – 20

Company B Company A Ergonomic design Paint pallet Auto exposure Auto focus Aluminum components Completed House of Quality Low electricity requirements House of Quality Example Lightweight 3 G P Easy to use 4 G P Reliable 5 F G Easy to hold steady 2 G P Color correction P 1 P Company A Technical evaluation Company B Us © 2008 Prentice Hall, Inc. Panel ranking Failure 1 per 10, 000 2’ to ∞ 75% 0. 5 A Target values (Technical attributes) 2 circuits Our importance ratings 22 9 27 27 32 25 0. 7 60% yes 1 ok G 0. 6 50% yes 2 ok F 0. 5 75% yes 2 ok G 5 – 21

House of Quality Sequence Deploying resources through the organization in response to customer requirements Quality plan Customer requirements House 1 House 2 House 3 Production process Design characteristics Specific components Production process House 4 Figure 5. 4 © 2008 Prentice Hall, Inc. 5 – 22

Organizing for Product Development þ Historically – distinct departments þ Duties and responsibilities are defined þ Difficult to foster forward thinking þ A Champion þ Product manager drives the product through the product development system and related organizations © 2008 Prentice Hall, Inc. 5 – 23

Organizing for Product Development þ Team approach þ Cross functional – representatives from all disciplines or functions þ Product development teams, design for manufacturability teams, value engineering teams þ Japanese “whole organization” approach þ No organizational divisions © 2008 Prentice Hall, Inc. 5 – 24

Manufacturability and Value Engineering þ Benefits: 1. Reduced complexity of products 2. Additional standardization of products 3. Improved functional aspects of product 4. Improved job design and job safety 5. Improved maintainability (serviceability) of the product 6. Robust design © 2008 Prentice Hall, Inc. 5 – 25

Issues for Product Development þ Robust design þ Modular design þ Computer-aided design (CAD) þ Computer-aided manufacturing (CAM) þ Virtual reality technology þ Value analysis þ Environmentally friendly design © 2008 Prentice Hall, Inc. 5 – 26

The Ethical Approach þ View product design from a systems perspective þ Inputs, processes, outputs þ Costs to the firm/costs to society þ Consider the entire life cycle of the product © 2008 Prentice Hall, Inc. 5 – 27

Goals for Ethical and Environmentally Friendly Designs 1. Develop safe and more environmentally sound products 2. Minimize waste of raw materials and energy 3. Reduce environmental liabilities 4. Increase cost-effectiveness of complying with environmental regulations 5. Be recognized as a good corporate citizen © 2008 Prentice Hall, Inc. 5 – 28

Guidelines for Environmentally Friendly Designs 1. Make products recyclable 2. Use recycled materials 3. Use less harmful ingredients 4. Use lighter components 5. Use less energy 6. Use less material © 2008 Prentice Hall, Inc. 5 – 29

Time-Based Competition þ Product life cycles are becoming shorter and the rate of technological change is increasing þ Developing new products faster can result in a competitive advantage © 2008 Prentice Hall, Inc. 5 – 30

Product Development Continuum External Development Strategies Figure 5. 6 Alliances Joint ventures Purchase technology or expertise by acquiring the developer Internal Development Strategies Migrations of existing products Enhancements to existing products New internally developed products Internal Lengthy High © 2008 Prentice Hall, Inc. Cost of product development Speed of product development Risk of product development Shared Rapid and/ or Existing Shared 5 – 31

Acquiring Technology þ By Purchasing a Firm þ Speeds development þ Issues concern the fit between the acquired organization and product and the host þ Through Joint Ventures þ Both organizations learn þ Risks are shared þ Through Alliances þ Cooperative agreements between independent organizations © 2008 Prentice Hall, Inc. 5 – 32

Defining The Product þ First definition is in terms of functions þ Rigorous specifications are developed during the design phase þ Manufactured products will have an engineering drawing þ Bill of material (BOM) lists the components of a product © 2008 Prentice Hall, Inc. 5 – 33

Product Documents þ Engineering drawing þ Shows dimensions, tolerances, and materials þ Shows codes for Group Technology þ Bill of Material þ Lists components, quantities and where used þ Shows product structure © 2008 Prentice Hall, Inc. 5 – 34

Bills of Material BOM for Panel Weldment © 2008 Prentice Hall, Inc. NUMBER DESCRIPTION QTY A 60 -71 PANEL WELDM’T 1 A 60 -7 R 60 -17 R 60 -428 P 60 -2 LOWER ROLLER ASSM. ROLLER PIN LOCKNUT 1 1 A 60 -72 R 60 -57 -1 A 60 -4 02 -50 -1150 GUIDE ASSM. REAR SUPPORT ANGLE ROLLER ASSM. BOLT 1 1 A 60 -73 A 60 -74 R 60 -99 02 -50 -1150 GUIDE ASSM. FRONT SUPPORT WELDM’T WEAR PLATE BOLT 1 1 Figure 5. 9 (a) 5 – 35

Group Technology þ Parts grouped into families with similar characteristics þ Coding system describes processing and physical characteristics þ Part families can be produced in dedicated manufacturing cells © 2008 Prentice Hall, Inc. 5 – 36

Group Technology Scheme (a) Ungrouped Parts (b) Grouped Cylindrical Parts (families of parts) Grooved Slotted Threaded Drilled Machined Figure 5. 10 © 2008 Prentice Hall, Inc. 5 – 37

Group Technology Benefits 1. Improved design 2. Reduced raw material and purchases 3. Simplified production planning and control 4. Improved layout, routing, and machine loading 5. Reduced tooling setup time, work-inprocess, and production time © 2008 Prentice Hall, Inc. 5 – 38

Product Life-Cycle Management (PLM) þ Integrated software that brings together most, if not all, elements of product design and manufacture þ Product design þ CAD/CAM, DFMA þ Product routing þ Materials þ Assembly þ Environmental © 2008 Prentice Hall, Inc. 5 – 39

Transition to Production þ Know when to move to production þ Product development can be viewed as evolutionary and never complete þ Product must move from design to production in a timely manner þ Most products have a trial production period to insure producibility þ Develop tooling, quality control, training þ Ensures successful production © 2008 Prentice Hall, Inc. 5 – 40

Transition to Production þ Responsibility must also transition as the product moves through its life cycle þ Line management takes over from design þ Three common approaches to managing transition þ Project managers þ Product development teams þ Integrate product development and manufacturing organizations © 2008 Prentice Hall, Inc. 5 – 41