Chapter 4

Product and
Service Design
1

Trends in Product & Service Design

Customer satisfaction
Designing products & services that are user friendly
User friendly software

Reducing time to introduce/produce new product or

service
PhD degree in 6 months

The organizations capabilities to produce or deliver the

right item on time
Compaq could not deliver enough laptops in mid 90s

Environmental concerns

Designing products that use less material

Toyota Prius

Product and Service Design

Major factors in design strategy
Cost
Quality
Time-to-market
Customer satisfaction
Competitive advantage
Product and service design or redesign should be
closely tied to an organizations strategy

Activities of Product or Service Design

Translate customer wants and needs into product
and service requirements
Refine existing products and services
Develop new products and services
Formulate
quality goals
cost targets

Construct and test prototypes

Document specifications
4

Reasons for Product or Service Design

Economic
Low demand, excessive warranty claims
SUVs easily topple over and have high warranty claims

Social and demographic

Changing tastes, aging population
SUVs for generation X people who age but want to stay dynamic

Political, liability, or legal

Safety issues, new regulations, government changes
SUVs easily topple over and manufacturers are sued

Competitive
New products and services in the market, promotions
SUV sales are increased with promotions.
The profit margins on SUVs are huge so a lot of room for promotions

Cost or availability
Raw materials, components, labor

Technological
Components, production processes

Objectives of Product and Service Design

Main focus
Customer satisfaction

Secondary focus
Function of product/service
Cost/profit
Quality
Appearance
Ease of production/assembly
Ease of maintenance/service
6

Design For Operations

Taking into account the capabilities of the
organization in designing goods and services

Location of facilities
Suppliers
Transportation fleet
Current workforce
Current technology
Standing contracts

All can all limit the implementation of a new

design
7

Legal, Ethical, and Environmental Issues

Legal
IRS, FDA, OSHA
Product liability: A manufacturer is liable for any injuries or
damages caused by a faulty product.
Uniform commercial code: Products carry an implication of
merchantability and fitness

Ethical
Releasing products with defects
Releasing Software with bugs
Sending genetically altered food to nations suffering food shortages

Environmental
EPA

Designers Adhere to Guidelines

Produce designs that are consistent with the
goals of the company
Give customers the value they expect
Make health and safety a primary concern
Consider potential harm to the environment

Forthcoming Aspects of Product Design

Product Life Cycles
Standardization
Mass Customization
Modular Design
Robust Design
Concurrent Engineering
Computer-Aided Design
10

Other Issues in Product and Service Design

Product/service life cycles

How much standardization
Product/service reliability
Range of operating conditions

11

Life Cycles of Products or Services

Saturation

Demand

Maturity

cassettes
Decline

Design
for low
volume

Growth Compact discs

Introduction

Flash memory

Time
12

Standardization
Standardization
Extent to which there is an absence of variety in a
product, service or process

The degree of Standardization?

Standardized products are immediately
available to customers
Calculators & car wash

13

Advantages of Standardization
Fewer parts to deal with in inventory & manufacturing
Less costly to fill orders from inventory

Reduced training costs and time

More routine purchasing, handling, and inspection
procedures
Opportunities for long production runs, automation
Need for fewer parts justifies increased expenditures
on perfecting designs and improving quality control
procedures.
14

Disadvantages of Standardization
Decreased variety results in less consumer appeal.
Designs may be frozen with too many imperfections
remaining.
High cost of design changes increases resistance to
improvements
Who likes optimal Keyboards?

Standard systems are more vulnerable to failure

Epidemics: People with non-standard immune system stop the
plagues.
Computer security: Computers with non-standard software stop the
dissemination of viruses.

15

Mass Customization
Mass customization:
A strategy of producing standardized goods or
services, but incorporating some degree of
customization
Modular design
Delayed differentiation

16

Mass Customization I: Customize Services

Around Standardized Products
Warranty for contact lenses:

DEVELOPMENT

Source: B. Joseph Pine

PRODUCTION

MARKETING

DELIVERY

Deliver customized services as

well as standardized products
and services
Market customized services with standardized
products or services
Continue producing standardized products or services
Continue developing standardized products or services

17

Mass Customization II: Create Customizable

Products and Services
Gillette sensor adjusting to the contours of the face:

DEVELOPMENT

PRODUCTION

MARKETING

DELIVERY

Deliver standard (but

customizable) products
or services
Market customizable products or services
Produce standard (but customizable) products or services
Develop customizable products or services

18

Mass Customization III: Provide Quick

Response Throughout Supply Chain
Skiing parkas manufactured abroad vs in USA

DEVELOPMENT

PRODUCTION

MARKETING

DELIVERY

Reduce Delivery Cycle Times

Reduce selection and order processing cycle
times
Reduce Production cycle time
Reduce development cycle time

19

Mass Customization IV: Provide Point of

Delivery Customization
Paint mixing:

DEVELOPMENT

PRODUCTION

MARKETING

DELIVERY

Point of delivery
customization

Deliver standardize portion

Market customized products or services
Produce standardized portion centrally
Develop products where point of delivery customization is feasible

20

Delayed Differentiation
Delayed differentiation is a postponement tactic
Producing but not quite completing a product or service until customer
preferences or specifications are known

Postponing the completion until customer specification are

known
Examples: Wheeled loaders

21

Postponement Case Study: Hewlett & Packard

H&P produces printers for Europe market. Product manuals (different
languages), labels and power supplies (plugs are different for UK, Continental
EU and US) were used to be packaged along with printers in US.
HP postpones commitment of a printer to a certain geographic market by
producing universal printers and then applying power supplies and labels (the
parts that differentiate printers for local markets) at the last stage once demand
is more certain
Packaging was postponed to local distribution centers in each European
country. Packaging is closer to demand (in location and time) so H&P can
respond faster and redistribute the supply:
Ireland has 1600 with demand 1100
Portugal has 800 with demand 1000
Send 200 from Ireland to Portugal

For more read: H.L. Lee and C. Billington, "Evolution of Supply Chain Management
Models and Practice at Hewlett-Packard Company," Interfaces, 25, 5, 1995: 42-63.

22

Delayed Differentiation=Postponement
Postponement is delaying customization step as much as
possible. Producing but not quite completing a product or
service until customer preferences or specifications are
known.
(Salad) + (Dressings ={1000 Islands, Vinaigrette, })

Need:

Indistinguishable products before customization

Customization step is high value added
Unpredictable, negatively correlated demand for finished products
Flexible processes to allow for postponement

23

Modular Design
Modular design is a form of standardization in
which component parts are subdivided into
modules that are easily replaced or
interchanged. It allows:

easier diagnosis and remedy of failures

easier repair and replacement

simplification of manufacturing and assembly

Disadvantage: variety decreases

24

Modular Design
Modular design is a form of standardization in which
component parts are subdivided into modules that
are easily replaced or interchanged.
A bad example: Earlier Ford SUVs shared the lower
body with Ford cars

Due to standardization, it allows:

easier diagnosis and remedy of failures
easier repair and replacement
simplification of manufacturing and assembly

25

Types of Modularity for Mass Customization

Component Sharing Modularity, Dell

Cut-to-Fit Modularity,
Gutters that do not require
seams
Bus Modularity, E-books

Mix Modularity, Paints

Sectional Modularity, LEGO

26

Mass Customization V: Modularize

Components to Customize End Products
Computer industry, Dell computers:

DEVELOPMENT

PRODUCTION

MARKETING

DELIVERY

Deliver customized product

Market customized products or services
Produce modularized components
Develop modularized products

27

Reliability
Reliability: The ability of a product, part, or
system to perform its intended function under a
prescribed set of conditions

Failure: Situation in which a product, part, or

system does not perform as intended

Normal operating conditions: The set of

conditions under which an items reliability is
specified
A regular car is not to be driven at 200 mph
A bed is not to be used as a trampoline

28

Improving Reliability
Good component design improve system reliability
Production/assembly techniques
Testing
To figure out defectives / weak units
Dell tests each computers electric circuitry after the assembly
Redundancy/backup
Exactly why your car has a spare tire
Preventive maintenance procedures
Medical check-ups to discover potential diseases
User education
System design

29

Robust Design
Design that can function over a broad range of conditions
Taguchis Approach:
Design a robust product
Insensitive to environmental factors either in manufacturing or in use.
Columbia parkas with fleece inside

For skiing and rainy weather: Take out the fleece use the outer shell
For dry cold air: Wear the fleece without the outer shell
For a snow storm: Wear the fleece with the shell
When you put on weight: Ease the belts for a relaxed fit
When you are sweating: Open air ducts for breathing your body

Central feature is Parameter Design. How to set design parameters?

Design of experiments a Statistics concept
Determines:
factors that are controllable and those not controllable
their optimal levels relative for good product performance

30

Phases in Product Development Process

1.
2.
3.
4.
5.
6.
7.
8.
9.

Idea generation
Feasibility analysis (Demand, cost/profit, capacity)
Product specifications (customer requirement)
Process specifications (produce in economic way)
Prototype development
Design review
Market test
Product introduction (promotion)
Follow-up evaluation
31

Idea Generation
Supply chain based

Ideas

Competitor based

Research based

32

Sources of Ideas for Products and Services

Internal
Employees
Marketing department
R&D department
External
Customers, sometimes misleading
Competitors
Reverse engineering is the dismantling and inspecting
of a competitors product to discover product improvements.
Benchmarking is comparing and contrasting product and process
characteristics against those of competitors
Both can be classified as environmental scanning activity

Suppliers & Customers,

Ford helps its suppliers in designing components

33

Research & Development (R&D)

Organized efforts to increase scientific knowledge or
product innovation & may involve:
Basic Research advances
Universities, IBM research centers
Applied Research
Motorola, Alcatel
Development
All companies

34

Manufacturability
Manufacturability is the ease of
fabrication and/or assembly which is
important for the following aspects:

Cost

Productivity

Quality

35

Design for Manufacturing

Beyond the overall objective to achieve customer
satisfaction while making a reasonable profit is:
Design for Manufacturing (DFM) : The designers
consideration of the organizations manufacturing
capabilities when designing a product.
The more general term design for operations
encompasses transportation, services as well as
manufacturing

36

Over the Wall Approach vs

Concurrent Engineering

New
Product

Mf
g

Desig
n
37

Concurrent Engineering

Concurrent engineering: Bringing

engineering design and manufacturing
personnel together early in the design
phase.
Manufacturing personnel helps to identify production
capabilities, selecting suitable materials and process, the conflicts
during production can be reduced.
Early consideration of technical feasibility.
Shortening the product development process.

38

Product design
Design for manufacturing (DFM)
Design for assembly (DFA)
number of parts, methods, sequence.
Design for recycling (DFR)
Remanufacturing
Design for disassembly (DFD)

39

Computer-Aided Design
Computer-Aided Design (CAD) is product design using
computer graphics.
increases productivity of designers, 3 to 10 times
creates a database for manufacturing information on product
specifications
Simplifies communication of a design. Design teams at various
locations can work together.
provides possibility of engineering and cost analysis on proposed
designs

Transonic Systems Inc. manufactures customized medical devices;

pomps, blood vessel, blood pressure measurement equipment.
Design to manufacturing was long, problematic, designers and manufacturing
engineers could not work on designs simultaneously, some of the previous
designs were lost (talking of knowledge management).
Savior: CAD

40

Recycling-Remanufacturing
Recycling: recovering materials for future use
Recycling reasons
Cost savings
Environment concerns
Environment regulations

Remanufacturing: replacing worn out parts in

used products
Kodak cameras

Design for disassembly is considering ease of

disassembly while designing a product
Reverse supply chains

41

Quality Function Deployment

Quality Function Deployment
Voice of the customer
House of quality
QFD:

An approach that integrates the voice of the

customer into the product and service development
process.

42

The House of Quality

Correlation
matrix
Design
requirements

Customer
requirements

Relationship
matrix

Competitive
assessment

Specifications
or
target values

43

Quality Function Deployment

A structured and disciplined process that provides a means to
identify and carry the voice of the customer through each stage
of product or service development and implementation
QFD is for:
Communication
Documentation
Analysis
Prioritization

breakthroughs

44

House of Quality Example for a Car Door

Correlation:
X
X

Easy to open

Doesnt leak in rain

No road noise

Water resistance

Accoust. Trans.
Window

Check force
on level
ground
Energy needed
to open door

X = Us
A = Comp. A
B = Comp. B
(5 is best)
1 2 3 4

AB

XAB
A XB
X A

63
Reduce energy
level to 7.5 ft/lb

Importance weighting
Target values

Technical evaluation
(5 is best)

Competitive evaluation

X AB

5
4
3
2
1

B
A
X

63

BA
X

45

B
A
X

27

B
X
A

BXA

27
Maintain
current level

Maintain
current level

Stays open on a hill

Reduce energy
to 7.5 ft/lb.

Reduce force
to 9 lb.

Easy to close

Door seal
resistance

oC
us
t.

Maintain
current level

Customer
Requirements

ce
t

Engineering
Characteristics

Energy needed
to close door

Im
po
rta
n

Strong positive
Positive
Negative
Strong negative

Relationships:
Strong = 9
Medium = 3
Small = 1

BA
X

45

The QFD and Kano Model

Japanese QFD Results

Design time reduced by to

Problems with initial quality decreased
Comparison and analysis of competitive products became possible
Communication between divisions improved

The Kano Model

Product Characteristics:
Must have = Order qualifiers
Expected = Order qualifiers, winners
Excitement = Order winners
1. Make sure that you have the order qualifiers
2. Determine the level of order winners with a cost/benefit analysis

46

Service Design
Service is an act
Service delivery system
Facilities
Processes
Skills

Explicit services
Core of the service: Hair styling

Implicit services
Excitement characteristics: Courtesy

Many services are bundled with products

Maintenance services
Conecpt of selling solutions: Products and Services
E.g. IBM

47

Phases in Service Design

1.Conceptualize
2.Identify service components
3.Determine performance specifications
4.Translate performance specifications into
design specifications
5.Translate design specifications into delivery
specifications

48

Service Blueprinting

Service blueprinting: A method used in service

design to describe and analyze a proposed service
A useful tool for conceptualizing a service delivery
system
Major Steps in Service Blueprinting

1.
2.
3.
4.
5.
6.

Establish boundaries
Identify steps involved
Prepare a flowchart, see the next page, source in justice-flowchart.pdf
Identify potential failure points
Establish a time frame
Analyze profitability

49

50

Characteristics of Well Designed

Service Systems

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.

Consistent with the organization mission

User friendly: Do we understand it?
Robust: Can it function under various conditions?
Easy to sustain: Requires to much effort?
Cost effective: Does it cost too much?
Value to customers: Who are the customers?
Effective linkages between back-office operations
Single unifying theme: What does the justice system do?
Ensure reliability and high quality
Consistency.
Up-to-date: Does it evolve?

You be the judge for

the justice system
How do you rate the
system in terms of
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.

51

Challenges of Service Design

Variable requirements
Criminals and the cases are different

Difficult to describe
How do you describe a criminal action?
We need the court system.
Descriptions are not exact because they are based on words.
This is exactly why lawyers make a living; or perhaps more.

High customer contact

Service cannot be inventoried

Service customer encounter

52

Differences Between Product

and Service Design
Most often product and services are provided together.
Products vs. Services are
Tangible intangible
Services created and delivered at the same time
Services cannot be inventoried
Services highly visible to customers
Services have low barrier to entry
Location important to service
Ambiance
Convenience
53

Service Variability & Customer

Influence Service Design
Figure 4-3
Variability
in
Service
Requirements

High

Customized
Clothing

Moderate

Dept. Store
Purchase

Low
None

Telephone
Purchase
Internet
Purchase
None

Low

Moderate

High

Degree of Contact with

Customer
Where are medical services, internet law consultants?

54

Operations Strategy

Shorten time-to-market
Package products and services
Sell solutions not products

Increase emphasis on component commonality

Use multiple-use platforms
Consider tactics for mass customization
Look for continual improvement

55

Summary: Product design

Remanufacturing-recycling
Robust design
Design for manufacturing (DFM)
Design for assembly (DFA)
Design for disassembly (DFD)
Design for recycling (DFR)
Reliability

56

Practice Questions
True/ False:
1.One of the main advantages of standardization is
that it increases the potential variety of products.
2. Product failures can be easier to remedy with
modular design.
3. Quality function deployment (QFD) is based on
a set of standards which relate customer
requirements to company capabilities.
1.Answer: False Page: 127
2.Answer: True Page: 129
3.Answer: False Page: 143

57

Practice Question
Multiple-Choice:
4. The term standardization is closely associated
with:

A) customization

B) high cost

C) longer lead times

D) variety

E) interchangeability
Answer:

E Page: 127

58

Practice Question
4. A formal way to document customer
requirements is:

A) consumer surveys

B) quality function deployment (QFD)

C) focus groups

D) Delphi technique

E) sales/marketing matrix
Answer: B Page: 142

59

Practice Question
6. The stage in a product or service life cycle
where some firms adopt a defensive research
posture is:

A) incubation

B) growth

C) maturity

D) saturation

E) decline
Answer: E Page: 126

60

Reliability

Reliability: The ability of a product, part, or system to perform its intended

function under a prescribed set of conditions

Failure: Situation in which a product, part, or system does not perform as

intended

Normal operating conditions: The set of conditions under which an items

reliability is specified

Reliability is a Probability, that the product or system will:

Function when activated
Function for a given length of time
Independent events
Redundancy; Why to have spare tires on the car?

61

Parallel vs Serial Components

A product is composed of several components. Suppose components fail/work
independently.

If all components must function for the product to function, components are
serial. Example: Laptop and projector.

Water flowing from left to right analogy. P(System works)=P(A works) P(B works)

If at least one component must function for the

product to function, components are
parallel. Example: Two batteries of a laptop.
P(System fails)=P(A fails) P(B fails)

62

Example: Reliability Diagram

Determine the reliability of the system shown
.90

.92

.90

.95

.98

Compare this diagram to that of Example S-1

63

Example
The system can be reduced to a series of three components
By collapsing parallel components

0.98

1-(0.10)(0.10)

1-(0.05)(0.08)

0.98 x 0.99 x 0.996

64

Failure Rate:
Personal life expectancy Strike life expectancy
Figure 4S-1

Infant
mortality

Failures due
Few (random) failures
to wear-out
Time, T
65

Exponential Distribution for Life X

X ~ Expo( ), f ( x) e x , E ( X ) 1 / MTBF , P( X T ) e T
pdf f(x)

Reliability=P(x>T)=1-F(T)
cdf F(T)=P(X<T)
T

Time

66

Use Exponential Distribution

to Model Lifetime
Exponential distribution is a simple density
used to model lifetimes
Its failure rate is constant
So does not apply to human life. Insurers use more
complicated densities.

The reliability of each part in a system

Reliability=P(Part works at T)=1-F(T)
Once reliabilities are computed for all parts,
combine parts according to whether serial or
parallel
67

Improving Reliability
Component design
Production/assembly techniques
Testing
Redundancy/backup
Preventive maintenance procedures
User education
System design

How much of reliability is good? Cost-benefit analysis.

68