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Unit 2

Management of Conversion System

Chapter 4: Product and process design
Lesson 9 - Product design

Learning Objectives
After reading this lesson you will be able to understand
Product development process
Product design process
Basic principles of designing products for production

Developing and designing great products are keys to success in business. Anything less
than an excellent product strategy can be destructive to a firm. Top companies’ focus on
few products and concentrate on maintaining a high level of quality for those products to
maximize the potential for success. For instance Honda’s focus is engines. Virtually all
of Honda’s sales e.g. autos, motorcycles, generators, lawn mowers, are based on its
excellent engine technology. Likewise, Intel’s focus is on computer chips, while
Microsoft’s is on PC software.

However, most products have a limited and even predictable life cycle and companies
must be constantly looking for new products to design, develop and take to market. Good
operations managers insist upon strong communication between customer, product,
processes, and suppliers that results in a high success rate for their new products.
One product strategy is to build particular competence in customizing goods or services.
This approach allows the customer to choose product variations while reinforcing the
organization’s strength. Dell Computers, for example, has built a huge market by
delivering computers with the exact hardware and software desires by the end user. And
Dell does it fast – it understands that speed to market is imperative to gain a competitive
Many service firms also refer their offerings as products. So while the term products may
often refer to tangible goods, it also refers to offerings by service organizations.

An effective product strategy links product decisions with investment, market share,
product life cycle, and breadth of the product line. The objective of the product decision
is to develop and implement a product strategy that meets the demands of the market
place with a competitive advantage.

Goods and services selection is very important. How management selects those?
Let us now focus on it.

Product Options
Management has many options in the selection, definition, and design of goods and
services. Product selection is choosing the good or service to provide customers or
clients. For instance, hospitals specialize in various types of patients and various types of
medical procedures. They select their product when they decide what kind of hospital to
be. A hospital’s management may decide to operate a general-purpose hospital, a
maternity hospital, or even a hospital specializing in heart diseases. Numerous other
options exist for hospitals, just as they exist for restaurants and automobile companies.

Product decisions are fundamental and have major implications throughout the operations
function. They influence capital equipment cost, layout design, space requirements, the
skills of people hired and trained, materials, and the processes used.

What are the factors influence in generation of new product opportunities?

Product selection, definition, and design take place on a continuing basis because so
many new product opportunities exist.
Five factors influencing market opportunities are
1. Economic change, which brings increasing levels of affluence in the long run but
economic cycles and price changes in the short run. For instance, in the long run,
more and more people can afford an automobile, but in the short run, a recession
may alter the demand for automobiles.
2. Sociological and demographic change, which may appear in such factors as
decreasing family size. This alters the size preference for homes, apartments, and
3. Technological change, which makes possible everything from home computers
to mobile phones to artificial hearts.
4. Political/legal change, which brings about new trade agreements, tariffs, and
government contract requirements.
5. Other changes, which may be brought about through market practice,
professional standards, suppliers, and distributors.

As operations managers you must be aware of these factors and be able to anticipate
changes in product opportunities, the products themselves, product volume, and product

Let’s now move over to the concept of - Product Life

Products are born, they live, and they die. They are cast aside by a changing society.
Product’s life can be divided into four phases: introduction, growth, maturity, and
decline. Figure 4.1 shows the general phases of product life.
Product life cycles may be a matter of :-
a few hours (a newspaper),
months (seasonal fashions),
years (TV, video recorders), or
decades (house).
Regardless of the length of the cycle, the task for the operations manager is the
same i.e.
to design a system that helps introduce new products successfully.
If the operations function cannot perform effectively at this stage, the firm may be
saddled with losers – products that cannot be produced efficiently and perhaps not at all.
Why does an organization need new products?
Well, a very logical question.
Let me attempt an answer.

An organization cannot survive without introducing new products. Older products are
maturing and others in periods of decline must be replaced. This requires a constant
successful introduction of new products and active participation by the operations
manager. Successful firms have learned how to turn opportunities into successful

Product development goes through eight stages, starting with ideas and ending with
delivery to market and then final evaluation. Figure 4.2 shows this progression
Figure 4.2 Product development stages

How well the development process is managed may well determine not only product
success but also the firm’s future. A variety of sources contribute to the process. The
emphasis can be external (market driven), internal (technology and innovation driven), or
a combination of both.

In spite of all of the efforts that go into introducing new products, most do not succeed,
for example, TV serials. Computer game software is another product category that sees a
lot of winners and losers. Consequently, product development is an ongoing process. This
means that the number of products that must be reviewed for production and, in some
cases, actually produced, can be substantial. Operations managers must be able to
accommodate this volume of new product ideas while keeping current products moving

“Product development time is going to be a great competitive battleground in the 1990s –

as intense, I would say, as the revolutionary push for quality in the eighties.” Allan
Gilmour, Executive VP Ford.1 This stills remains valid and will remain true for coming
decade. We can see this clearly in the case of cell phones, automobiles; everyday new
features are added to make others obsolete.
Let me ask you a question now.
What is Time-based competition?

Time-based competition
Product life cycles are becoming shorter. This increases the importance of product
development. Therefore, faster developers of new products continually gain on slower
developers and obtain a competitive advantage. This concept is called time-based
Much of the current competitive battlefield is focused around the speed of product to
market. If an organization loses here, catching up in other areas is very difficult. Faster
product introduction has a cumulative and positive effect not only in the marketplace but
also on innovative design, quality improvements, and cost reduction.

Adapted form Principles of Operations Management (B. Render and J. Heizer) Prentice

Dear students, by this time you must be very excited. Generally we take all these things
for granted and use the product as it is.
Let’s now concentrate on the question:-
what constitute product development team and
what are the different aspect of product development process.
Product development
The best product development approach seems to be a formal team approach. Such teams
are known variously as product development teams, design for manufacturability teams,
and value engineering teams. Successful product development teams typically have:

1. Support of top management

2. Qualified, experienced leadership with decision-making authority
3. Formal organization of the group or team
4. Training programs to teach the skills and techniques of product development
5. A diverse, cooperative team
6. Adequate staffing, funding, and vender assistance.

Product development teams are charged with the responsibility of moving from market
requirements for a product to achieving a product success. This includes marketability,
manufacturability, and serviceability. Use of such teams is also called concurrent
engineering and implies a team representing all affected areas (known as a cross
functional team). Concurrent engineering also implies speedier product development
through simultaneous performance of various aspects of product development.
Design for manufacturability and value engineering teams, on the other hand, have a
somewhat narrower charge. They are charged with improvement of designs and
specifications at the research, development, design, and production stages of product
development. (Refer back to Figure 4.2)
In recent years, many companies have reduced production costs, decreased product
development time, and improved product quality by changing their product design
processes. The product design processes of these companies have four common elements:
1. A philosophy of designing for production
2. Concurrent design of the product and the production process
3. Use of multidisciplinary teams
4. Collaboration with suppliers and customers.

Designing for production is a philosophy by which the designer thinks about how the
product will be made (or the service delivered) as the product is being designed so that
potential production problems caused by the design can be resolved early in the design
process. The basic premise of this philosophy is that the ultimate cost and quality of the
product and the time to bring the product to market are primarily determined by how well
the product is designed with respect to its producibility.

One way to ensure that product design is compatible with and promote efficient, high
quality production is to design and test the production process while the product is being
designed; this method is called concurrent design or concurrent engineering (CE). As
the product is being designed, engineers an production personnel develop the actual
production system or a prototype system (either in physical or computer simulated form)
to determine how the product will be made. They also evaluate how well the design
characteristics fit the company’s proposed and existing production equipment, methods,
capabilities, and product mix.
Although in theory deign for production can be performed by individual product
designers, team design concept and CE imply that operations personnel should be
involved in the product design at an early stage. Increasingly, companies are including
personnel from operations, marketing, sales, engineering, and purchasing on product
design teams. A purchasing agent can guide the design so that it uses standard or
common parts whenever possible. An engineer can evaluate whether the design could b
changed to require simpler machining processes or less expensive tooling. Operations
personnel can determine how the product will fit within existing processes, how easily it
can be assembled, and whether design changes will reduce production costs. For
example, manufacturing engineers on the Boeing 777 design team changed a bend in the
fuselage that had been in all its previous planes and solved a 30-year manufacturing
The use of multidisciplinary product design teams is becoming widespread, and
companies that have included customers and suppliers on these teams report significant
benefits. For many years, computer software companies have used “beta sites” (test
customers) to evaluate new software and suggest changes. Now companies such as
Boeing, Fisher-Price, and Marriott regularly include customers in the design process
Equipment and material suppliers can identify potential problems and recommend
improvement before the product design is finalized. In many cases, the supplier can direct
a customer to use components that are similar or identical to those the supplier makes for
other customers or that use the same tools or processing. A study by the consulting firm
A. T. Kearney, Inc., found that involving suppliers in the product development process
can cut the costs of purchased parts and services by 30%.
In addition to cost benefits, supplier-customer cooperation can improve the quality of the
product. For example, Rockwell International, one of Honda’s suppliers, redesigned the
Accord’s rear cargo area to add more space. This saved Honda money and provided a
better car to Honda’s customers.

Quality robust design is an important term. Let’s attempt to define it.

Quality robust design means that the product is designed so that small variations in
production or assembly do not adversely affect the product. For instance, AT&T
developed an integrated circuit that could be used in many products to amplify voice
signals. As originally designed, the circuit had to be manufactured very precisely to avoid
variations in the strength of the signal. Such a circuit would have been costly to make
because of stringent quality controls needed during the manufacturing process. But
AT&T’s engineers, after testing and analyzing the design, realized that if the resistance of
the circuit were reduced – a minor change with no associated costs – the circuit would be
far less sensitive to manufacturing variations. The result was a 40% improvement in
Product development teams, design for manufacturability teams, and value engineering
teams may be the best-cost avoidance technique available to operations management.
Value engineering takes place when the product is selected and designed. Value analysis
however, takes place during the production process when it is clear that a new product is
a success. Improvement leads to either a better product or a product made more

John Mayo, “Process Design as Important as Product Design,” The Wall Street Journal,
October 29, 1984, p. 32
Another pertinent issue is that of:-

Product by value
The effective operations manager directs efforts toward those items that show the greatest
promise. This is the Pareto principle applied to product mix. Resources are invested in the
critical few and not the trivial many. Product-by-value analysis lists products in
descending order of their individual rupees contribution to the firm. Product-by-value
analysis also lists the total annual rupees contribution of the product. Low contribution on
a per-unit basis by a particular product may look substantially different if it represents a
large portion of the company’s sales.

A product-by-value report allows management to evaluate possible strategies for each

product. These might include:-
increasing cash flow
(for example, increasing contribution by raising selling price or lowering cost),
Increasing market penetration
(for example, improving quality and / or reducing cost or price), or
reducing costs
(for example, improving the production process).
The report may also tell management which product offerings should be eliminated and
which fail to justify further investment in research and development or capital equipment.
The report focuses management’s attention on opportunities for each product.
Dear friends, yet another fascinating aspect of the entire process concerns with the
Defining and documenting the product.
Allow me to explain.

Defining and documenting the product

Once new goods or services are selected for introduction, they must be defined. First, a
good or service is defined in terms of its function, that is, what it is to do. The product is
then designed; that is, it is determined how the functions are to be achieved. Management
typically has a variety of options as to how a product is to achieve its functional purpose.
For instance, when producing an alarm clock, aspects of design such as the colour, size,
or location of buttons may make substantial differences in ease of manufacture, quality,
and market acceptance.

Rigorous specifications of a good or service are necessary to assure efficient production.

Equipment layout and human resources cannot be decided upon until the good or service
is defined, designed, and documented. Therefore, every organization needs documents to
define its products.
For instance, McDonald’s Corporation has 60 specifications for potatoes that are to be
made McDonald’s French fries.
Basic principles of designing products for production
Attention to production, CE, and team design are important in obtaining compatibility
between the product and the production process. But this is not enough. Those involved
in product design need design principles and tools to guide their thinking and to help
them evaluate alternative product designs. The overriding principle of product design is
“Make it simple!” Simplicity of design and simplicity of the production process can be
promoted by using the following principles:
1. Minimize the number of parts
2. Use common components and processes
3. Use standard components and tools
4. Simplify assembly
5. Use modularity to obtain variety
6. Make product specifications and tolerances reasonable
7. Design products to be robust

In the case of an airplane, as in most manufactured items, a component is typically

defined by a drawing, usually referred to as an engineering drawing. An engineering
drawing shows the dimensions, tolerances, materials, and finishes of a component. The
engineering drawing will be an item on a bill-of-material.

The bill-of-material (BOM) lists the components, their description, and the quantity of
each required to make one unit of a product. An engineering drawing shows how to make
one item on the bill-of-material.

In the food service industry, bills-of-material manifest themselves in portion control

For eg., products such as :-
paints, or
may be defined by formulas or proportions that describe how they are to be made.
Motives are defined by scripts, and insurance by legal documents, known as policies.
Ask your mom whether she prefers cooking to buying from outside. This is a ticklish
issue for the organization and has wide reaching implications.
Let’s ponder on it now.
Make or buy
For many products, firms have the option of producing components or purchasing them
from outside sources. Choosing between these options is known as the make-or-buy
decision. The make-or-buy decision distinguishes between what the firm is willing to
produce and what it is willing to purchase. Many items can be purchased as a “standard
item” produced by someone else. Such a standard item does not require its own bill-of-
material or engineering drawing because its specification as a standard item is adequate.
Examples are standard nuts and bolts.

Product design tools

Several tools and methods have been developed to help product designers make products
of higher quality at lower cost. These are:
1. Quality function deployment
An important aspect of product design is to identify customers’ preferences with
respect to product features and to convert them into appropriate technical or design
attributes. Professor Yoji Akao developed a structured method for doing this called
quality function deployment (QFD). The method is based on completing a series of
matrices and then combining them into a comprehensive table referred to as the
house of quality.
2. Value analysis (or value engineering) is a design methodology developed by
Lawrence Miles in the late 1940s that focuses on the function of the product,
rather than on its structure or form, and tries to maximize the economic value of a
product or component relative to its cost. Three important aspects of value
analysis are (i) the use of multidisciplinary teams, (ii) a systematic procedure for
evaluating product functionality and value, and (iii) a focus on product
3. The Taguchi method is one of the most popular tools use in robust design.
Taguchi’s approach is based on three principles: (i) when the value of a product
attribute, such as shape or length, deviates from its target value, the cost to society
(consumers and producers) in terms of lower quality increases more than linearly
(increases at an increasing rate). (ii) The design features of the product and the
production process together determine the amount of variation in the product
attributes. (iii) Using experimentation, those product and process characteristics
that affect product attributes can be determined, an by manipulating these
characteristics, products can be designed to educe the attribute variations that
result from normal production variations.
4. Computer aided design. Product design is greatly enforced through the use of
computer-aided design (CAD). Where CAD is used, a design engineer starts by
developing a rough sketch, or, conceivably, just an idea. The designer then
utilizes a graphic display as a drafting board to construct the geometry of a
design. As a geometric definition is completed, a sophisticated CAD system will
allow the designer to determine various kinds of engineering data, such as
strength or heat transfer. CAD will also allow the designer to ensure that parts fit
together. So there will be no interferences when parts are subsequently assembled.

Once the designer is satisfied with the design, it becomes part of a drawing database on
electronic media. The CAD system, through a library of symbols and details, also helps
to ensure adherence to the drafting standards.

The field of CAD is merging with the field of CAM. Current CAD technology has
branched out to provide tooling departments with data and to produce a computer
program for numerically controlled machines. Thus we have the integration of CAD and
CAM, resulting in CAD/CAM. In this manner the initial programming generated at the
design stage can be used to create a computer program that will be used not only by
drafting departments, but also in tooling and manufacturing departments. Because the
CAD data are available for subsequent use by others, tools design personnel and
programmers of numerically controlled machines are aided. They can now proceed to
design tooling and programs with confidence that they have the latest accurate
engineering data and engineering drawings.

Benefits of CAD/CAM
1. Product quality
CAD provides an opportunity for the designer to investigate more alternatives,
potential problems, and dangers.
2. Shorter design time
Since time is money, the shorter the design phase, the lower the cost
3. Production cost reductions
Faster implementation of design changes lowers costs
4. Database availability
Consolidating product data so everyone is operating from the same information
results in dramatic cost reductions
5. New range of capabilities
CAD/CAM removes substantial detail work, allowing designer to concentrate on the
conceptual and imaginative aspects of their task. This is indeed a major benefit of

1. Pick a product and list issues that need to be considered in its design
and manufacture. The product can be something like a stereo,
telephone, desk, or kitchen appliance. Consider the functional and
aesthetic aspects of design as well as the important concerns for
2. Give a specific example of how product simplification principles have
been used in the design of a common service product.