Chapter 3

Product and service design or redesign should be closely tied to an organization strategy. It is a major
factor in cost, quality, time to market, customer satisfaction and competitive advantage.

Various activities and responsibilities of product and service design

1. Translate customer wants and needs into product and service requirements
2. Refine existing product and services
3. Develop new product and or services
4. Formulate quality goals
5. Formulate cost targets
6. Construct and test prototypes
7. Document specification

The driving forces for product and service design or redesign are market opportunities or threats:
1. Economic- low demand, the need to reduce cost
2. Social and Demographic- Population shifts, aging baby boomers
3. Competitive- New or changed products and services, new advertsing/promotion
4. Cost or Availability- raw materials, labor
5. Technological- processes, product components

VALUE ANALYSIS- Examination of the function of parts and materials in an effort to reduce the cost
and/or improve the performance of a product (reduce cost and materials)

VALUE is the amount that buyers are willing to pay for what a firm provides them and is measured by
total revenue

Common questions used in value analysis

 Could a less expensive part of material be used?
 Is the function necessary?
 Can the function of two or more parts be performed by a single part?
 Can a part be simplified?
 Could product specifications be relaxed?
 Could standard parts be substituted for non-standard parts?

The main focus of product and service design is customer satisfaction. It is essential for designers to
understand what customer wants and design with that in mind. Marketing is the primary sources of this
information.

Quality is a high on the list of priorities in product and service design but for many electronic products
high tech appearance is a design factor. Designing for operation taking into account the capabilities of
the organization in designing goods and services in addition legal, environmental and ethical
considerations can influence the design function.

Legal Considerations
  Product liability- The responsibility a manufacturer has for any injuries or damages caused by as
faulty product. Some of the associated costs: Litigation (the process of taking a case through
court), Legal and insurance costs, Settlement costs, Costly product recalls, Reputation effects.
 Uniform Commercial Code- Under the UCC, products carry an implication of merchantability and
fitness (a product must be usable for its intended purposes)

Ethical (normative) Behavior

 Produce designs that are consistent with the goals of the organization. Do not compromise on
quality, or cut corners, even in areas that are not apparent to the customer
 Give customers the value they expect
 Make health and safety a concern. Do not place employees, customers, or third parties at risk
because of faulty products and services
 Consider potential to harm the environment

OTHER ISSUES IN PRODUCT AND SERVICE DESIGN

LIFE CYCLES-Incubation, growth, maturity and decline

1. Introduction- it may be treated as a curiosity. Demand is low because potential buyers are not
yet familiar with the item.
2. Growth- The demand increases because awareness of the product and services increases.
3. Maturity- there are few, design changes and demand levels off.
4. Decline- Market becomes saturated demand decline.

(Additional Information)

LIFE CYCLE ASSESSMENT-The assessment of the environmental impact of a product or service

throughout its useful life; Focuses on such factors as: Global warming, Smog formation, Oxygen
depletion and Solid waste generation.

LCA procedures are part of the ISO 14000 environmental management procedures.

The ISO 14000 family addresses various aspects of environmental management. It provides practical
tools for companies and organizations looking to identify and control their environmental impact and
constantly improve their environmental performance. ISO 14001:2004 and ISO 14004:2004 focus on
environmental management systems. The other standards in the family focus on specific environmental
aspects such as life cycle analysis, communication and auditing.

Sustainability- refers in using resources in ways that do not harm ecological systems that support human
existence. Key aspects of designing for sustainability: Life cycle assessment, Reduction of costs and
materials used, Re-using parts of returned products, Recycling
STANDARDIZATION- Extent to which there is absence of variety in a product, service or process.
Standardized service implies that every customer or item processed receives essentially the same
service.
ADVANTAGES OF STANDARDIZATION
1. Fewer parts to deal with in inventory & manufacturing
2. Reduced training costs and time
3. More routine purchasing, handling and inspection procedures
4. Orders fillable from inventory
5. Opportunities for long production runs and automation
6. Need for fewer parts justifies increased expenditures on perfecting designs and improving
quality control procedure
DISADVANTAGES OF STANDARDIZATION
1. Designs may be frozen with too many imperfections remaining.
2. High cost of design changes increases resistance to improvements
3. Decreased variety results in less consumer appeal.

MASS CUSTOMIZATION- A strategy of producing basically standardized goods or services, but

incorporating some degree of customization in the final product or service; Facilitating Techniques are:
1. Delayed differentiation- The process of producing, but not quite completing, a product or
service until customer preferences are known. It is a postponement tactic (Example: Produce a
piece of furniture, but do not stain it; the customer chooses the stain)
2. Modular design- A form of standardization in which component parts are grouped into modules
that are easily replaced or interchanged
 Advantages: easier diagnosis and remedy of failures, easier repair and replacement,
simplification of manufacturing and assembly
 Disadvantages: Limited number of possible product configurations, Limited ability to repair
a faulty module; the entire module must often be scrapped

RELIABILITY-The ability of a product, part, or system to perform its intended function under a prescribed
set of conditions; It has an impact on repeat sales, reflect on the product’s image and it also create legal
implication if it is too low.
• Failure- Situation in which a product, part, or system does not perform as intended
• Normal operating conditions- The set of conditions under which an item’s reliability is specified

ROBUST DESIGN- A design that results in products or services that can function over a broad range of
conditions.
Taguchi’s Approach- Japanese engineer Genichi Taguchi’s approach is based on the concept of robust
design. The central feature of Taguchi’s approach is parameter design. This involves determining the
specification settings for both the product and process that will result in robust design.

THE DEGREE OF NEWNESS

Product or service design changes:
– Modification of an existing product or service
– Expansion of an existing product line or service offering
– Clone of a competitor’s product or service
– New product or service
The degree of change affects the newness of the product or service to the market and to the
organization.
For organization
 Low level of newness can mean a fairly quick and easy transition to producing the new product
 High level of newness can mean slower and more difficult and more costly, transition.

For the market

 Low level of newness would mean little difficulty with market acceptance, low profit potential
 High level of newness would mean more difficulty with acceptance and rapid gain in market
share with high potential for profits.

PHASES IN PRODUCT DESIGN AND DEVELOPMENT

1. Idea Generation- product development begins with idea generation. Ideas can come from a
variety of sources.
2. Feasibility Analysis- Entails market analysis, Economic analysis, and technical analysis. It requires
collaboration among different departments of the organization.
3. Product Specification – This involves detailed description of what is needed to meet customer
wants and requires collaboration between legal, marketing and operations.
4. Process Specification- Alternatives must be weighted in terms of cost, availability of resources,
profit potential and quality. This involves collaboration between accounting and operations.
5. Prototype Development- One (or few) units are made to see if there are any problems with the
product and process specifications.
6. Design Review- Make any necessary changes or abandon. Involves collaboration among
marketing, finance, engineering, design and operations.
7. Market Test- A market test is used to determine the extent of consumer acceptance. If
unsuccessful return to the design review phase. This phase is handled by marketing.
8. Product Introduction- Promote the product. This phase is handled by marketing.
9. Follow-up Evaluation- Determine if changes are needed and refine forecasts. This phase is
handled by marketing.

IDEA GENERATION- Ideas comes from a variety of sources.

1. Supply-chain based- Customers, suppliers, distributors, employees and maintenance and repair
personnel can provide insights.
2. Competitor based- By studying how a competitor operates and its products and services, many
useful ideas can be generated. Reverse engineering- Dismantling and inspecting a competitor’s
product to discover product improvement.
3. Research based- Research and Development (R&D)- Organized efforts to increase scientific
knowledge or product innovation
 Basic research- Has the objective of advancing the state of knowledge about a subject
without any near-term expectation of commercial applications
 Applied research- Has the objective of achieving commercial applications
 Development- Converts the results of applied research into useful commercial
applications.
DESIGNING FOR MANUFACTURING
 • Concurrent engineering- Bringing engineering design and manufacturing personnel together
early in the design phase to simultaneously develop the product and process for creating the
product. This concept may include marketing and purchasing personnel and the views of
suppliers and customers may also be sought.
• Computer Aided Design (CAD)- Product design using computer graphics
Advantages: increases productivity of designers, 3 to 10 times; creates a database for
manufacturing information on product specifications; provides possibility of engineering and
cost analysis on proposed designs
CAD that includes Finite Element Analysis (FEA) can significantly reduce time to market. It
enables developers to perform simulations that aid in the design, analysis, and
commercialization of new products.
• Production Requirements- Designers must take into account production capabilities: Equipment,
Skills, Types of materials, Schedules, Technologies, Special abilities.
Forecasts of future demand can be very useful, supplying information on the timing and volume
demand and information on demands for new products and services.
Manufacturability-is a key concern for manufactured goods: Ease of fabrication and/or assembly
it has important implications for Cost, Productivity, Quality.
Design for manufacturing (DFM)- The designing of products that are compatible with an
organization’s abilities
Design for assembly (DFA)- Design that focuses on reducing the number of parts in a product
and on assembly methods and sequence
• Recycling- Recovering materials for future use. It applies to manufactured parts and to materials
used during production. Companies recycle for a variety of reasons including: Cost savings,
Environmental concerns, Environmental regulations
Design for Recycling (DFR)-referring to product design that takes into account the ability to
disassemble a used product to recover the recyclable parts
• Remanufacturing- Refurbishing used products by replacing worn-out or defective components.
It can be performed by the original manufacturer or another company
Design for disassembly (DFD)- Designing a product to that used products can be easily taken
apart
• Component Commonality-When products have a high degree of similarity in features and
components, a part can be used in multiple products
Benefits: Savings in design time, Standard training for assembly and installation, Opportunities to
buy in bulk from suppliers, Commonality of parts for repair, Fewer inventory items must be
handled

KANO MODEL- can be an interesting way to conceptualize design characteristics in terms of customer
satisfaction.
• Basic quality- Refers to customer requirements that have only limited effect on customer
satisfaction if present, but lead to dissatisfaction if absent
• Performance quality- Refers to customer requirements that generate satisfaction or
dissatisfaction in proportion to their level of functionality and appeal
• Excitement quality- Refers to a feature or attribute that was unexpected by the customer and
causes excitement
SERVICE DESIGN
• Service- Something that is done to, or for, a customer
• Service delivery system- The facilities, processes, and skills needed to provide a service
• Product bundle- The combination of goods and services provided to a customer

System design involves development or refinement of the overall service package.

1. The physical resources needed
2. The accompanying goods that are purchased or consumed by the customer or provided with the
service.
3. Explicit service- the essential feature of service such as tax preparation
4. Implicit service- extra feature such as friendliness, courtesy.

Service package- the physical resources needed to perform the service, the accompanying goods and the
explicit and implicit services included.

OVERVIEW OF SERVICE DESIGN

It begins with a choice of service strategy, which determines the nature and focus of the service, and the
target market. Key issues in service design: Degree of variation in service requirements and Degree of
customer contact and involvement.

DIFFERENCES BETWEEN SERVICE AND PRODUCT DESIGN

1. Products are generally tangible; Services are generally intangible.
2. Services are created and delivered at the same time.
3. Services cannot be inventoried
4. Services are highly visible to consumers and must be designed with that in mind.
5. Some services have low barriers to entry and exit
6. Location is often important to service design with convenience as a major factor.
7. Services systems range from those with little or no customer contact to those that have a very
high degree of customer contact.
8. Demand variability alternately creates waiting lines or idle services resources.

PHASES IN THE SERVICE DESIGN PROCESS

Service Blueprinting- A method used in service design to describe and analyze a proposed service

MAJOR STEPS IN SERVICE BLUEPRINTING

1. Establish boundaries for the service and decide on the level of detail needed.
2. Identify and determine the sequence of customer and service actions and interactions
3. Develop time estimates for each phase of the process as well as time variability.
4. Identify potential failure points and develop a plan to prevent or minimize them as well as a plan
to respond to service errors.
CHARACTERISTICS OF WELL DESIGNED SERVICE SYSTEMS
1. Being consistent with organization mission
2. Being user friendly
3. Being robust if variability is a factor
4. Being easy to sustain
5. Being cost effective
6. Having value that is obvious to customers
7. Having effective linkages between back of the house operations (no contact with the customer)
and front of the house operations (direct contact with customers). Front operations should focus
on customer service while back operations should focus on speed and efficiency.
8. Having a single, unifying theme such as convenience and speed
9. Having design features and checks that will ensure service that is reliable and of high quality.

CHALLENGES OF SERVICE DESIGN

1. There are variable requirements
2. Services can be difficult to describe
3. Customer contact is usually much higher in services
4. Services design must take into account the service counter encounter.

GUIDELINES FOR SUCCESSFUL SERVICE DESIGN

1. Define the service package in detail.
2. Focus on the operation from the customer perspective.
3. Consider the image that the service package will present both to customers and prospective
customers.
4. Recognize that designer familiarity with the system may give them a quite different perspective
than that of the customer
5. Make sure that managers are involved and will support the design once it is implemented.
6. Define quality both tangibles and intangibles.
7. Make sure that recruitment, training and reward policies are consistent with service
expectations.
8. Establish procedures to handle both predictable and unpredictable events.
9. Establish systems to monitor, maintain and improve service.