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Chapter 3: Product and Service Design

Major Factors in Design Strategy

Quality: Quality, of course, is typically high on the list of priorities in product and service
design. Having high quality is enough for a product or service to become exceptionally good.

Cost: Product and service designers, in a competitive market, face lot of pressures in
designing one which is cost effective, better quality and the one that attracts a consumer.

Sometimes the designer is informed about the maximum cost of the product or service. So he
has to design the product within this cost. In such a case, he has no freedom to over-design
the product or service. The designer is also guided by the cost of competitor's.

Time-to-market:

Customer satisfaction: Customer Satisfaction begins with product and service design. The
designed product or service must satisfy customers in terms of good product or service
requirements like quality, performance, reliability, conformance, etc. The product or service
must create confidence among customers so that they become loyal to it and start entrusting
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its company. This will lead to repeated cycle of sales for the company, thus boosting its
profits.

Competitive advantage:

What Does Product and Service Design Do?

Product or Service Design Activities

A range of activities fall under the heading of product and service design. The activities and
responsibilities of product and service design include the following (functional interactions
are shown in parentheses):

1. Translate customer wants and needs into product and service requirements. (Marketing,
operations)
2. Refine existing products/services: Product and service requirements suggested by
customers in accordance to their changing tastes and preferences lead businesses to
change or improve existing products. (Marketing)
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3. Develop new products/services: Businesses can develop new products or services in
accordance to changes in technology, tastes and preferences. (Marketing, operations)
4. Formulate quality goals: Businesses should plan quality standards, assurances and
specifications to create quality-driven products/services. (Marketing, operations)
5. Formulate Cost targets: Businesses should take costs into consideration for identifying
relevant risks, benefits or consequences. (Accounting, finance, operations)
6. Construct prototypes for trials and tests: To target towards the right audience,
specifications for trials and testing of products/services should be maintained.
(Operations, marketing, engineering).
7. Create document specifications: Documentation of production and operations related
activities should be maintained by the organization.

Reasons for Product or Service Design

Organizations become involved in product or service design or redesign for a variety of

reasons. The main forces that initiate design or redesign are market opportunities and threats.
The factors that give rise to market opportunities and threats can be one or more changes.
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 Economic changes such as low or high demand, excessive warranty claims, the need to
reduce costs.
 Social and demographic changes such as aging baby boomers, population shifts.
 Political, liability, or legal changes such as government changes, safety issues, new
regulations.
 Competitive changes such as new or changed products or services, new
advertising/promotions.
 Cost or availability of raw materials, components, labor
 Technological changes in product components, processes. Advances in processing
technology may require altering an existing design to make it compatible with the new
process technology. For example, new digital recording technology allows television
viewers to skip commercial when they view a recorded program.

Objectives of Product and Service Design

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

Secondary focuses in product and service design relate to

o Function of product/service
o Cost and potential profit (in for-profit organizations),
o Quality,
o Appearance,
o Forecasted volume,
o Ease of production,
o Ease of assembly, and
o Ease of maintenance or service.

The phases in product design and development

Product design and development generally proceeds

16 in a series of phases

Idea generation:

 Product development begins with idea generation.

 Ideas can come from a variety of sources. They can be
a. Supply-chain based.

A supply chain can be a rich source of ideas. Customers, suppliers, distributors, employees,
and maintenance and repair personnel can provide valuable insights.

Customer input can be obtained from surveys, focus groups, complaints and unsolicited
suggestions for improvement.

Input from suppliers, distributors, employees, and maintenance or repair personnel might
come from interviews, direct or indirect suggestions, or complaints.

b. Competitor based.

By studying a competitor's products or services and how the competitor operates (pricing
policies, return policies, warranties, location strategies, etc.), an organization can get many
ideas.
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Beyond that, some companies purchase a competitor's product and then carefully dismantle
and inspect it, searching for ways to improve their own product. This is called reverse
engineering.

c. Research based.

Research is another source of ideas for new or improved products or services.

Research and development (R&D) refers to organized efforts increase scientific knowledge
that are directed toward increasing scientific knowledge and product or process innovation.
R&D efforts may involve basic research, applied research, or development.

o Basic Research refers to the study that is aimed at expanding the existing base of
scientific knowledge.
o Applied Research is the research that is designed to solve specific practical problems
or answer certain question.
o Development converts the results of applied research into useful commercial
applications.

Feasibility analysis 16

Feasibility analysis includes-

o Market analysis (demand),

o Economic analysis (development cost and production cost, profit potential), and
o Technical analysis (capacity requirements and availability, and the skills needed).

Also, it is necessary to answer the question, “Does it fit with the mission?” It requires
collaboration among marketing, finance, accounting, engineering, and operations.

Product specifications

Product specifications involves detailed descriptions of what is needed to meet (or exceed)
customer wants, and requires collaboration between legal, marketing, and operations.

Process specifications

Once product specifications set, attention turns to specifications for the process that needed to
produce the product. Alternatives must be weighed in terms of cost, availability of resources,
profit potential, and quality. This involves collaboration between accounting and operations.
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Prototype development.

With completing product and process specifications, one (or a few) units are made to see if
there are any problems with the product or process specifications.

Design review

Design review involves making any necessary changes, or abandon. It involves collaboration
among marketing, finance, engineering, design, and operations.

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.

Product introduction

Product introduction involves promote the product where a new product is launched, debuted
or published in the market for users. This phase is handled by marketing.

Follow-up evaluation

Follow-up evaluation involves determining 16

if changes are needed, and refining forecasts.
This phase is handled by marketing.

Issues in product and service design

Life Cycles

Many new products and services go through a life cycle in terms of demand.

- When an item is introduced, demand is generally low because potential buyers are not
yet familiar with the item.
- With the passage of time, design improvements usually create a more reliable and less
costly output. Demand then grows for these reasons and because of increasing
awareness of the product or service.
- At the next stage in the life cycle, the product or service reaches maturity: there are
few, if any, design changes, and demand levels off. Eventually, the market becomes
saturated, which leads to a decline in demand.
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- In the last stage of a life cycle, some firms adopt a defensive research posture
whereby they attempt to prolong the useful life of a product or service by improving
its reliability, reducing costs of producing it (and, hence, the price), redesigning it, or
changing the packaging. In some instances, firms may seek alternative uses of their
products (e.g., baking soda, duct tape).

Standardization:

 Standardization refers to the extent to which there is absence of variety in a product,

service, or process.
 Standardized products are made in large quantities of identical items. For example,
calculators, computers etc.
 Standardized service implies that every customer or item processed receives essentially
the same service. An automatic car wash is a good example, where each car, regardless of
how clean or dirty it is, receives the same service.
 Standardized processes deliver standardized service or produce standardized goods.

Advantages:
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1. Design costs are generally lower.
2. Fewer parts to deal with in inventory and in manufacturing, which greatly lower the cost
of production while increasing productivity and making replacement or repair relatively
easy compared with that of customized parts.
3. Reduced time and cost to train employees and reduced time to design jobs
4. Scheduling of work, inventory handling, and purchasing and accounting activities become
much more routine, and quality is more consistent.
5. Standardized products are immediately available to customers. Orders fillable from
inventory.
6. Opportunities for long production runs and automation.
7. Need for fewer parts justifies increased expenditures on perfecting designs and improving
quality control procedures.

Disadvantages:

1. Standardization reduce product variety.

2. Decreased variety results in less consumer appeal. Customers may reluctantly accept a
product only because nothing else suits their needs. But that creates a risk that a
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competitor will introduce a better product or greater variety and realize a competitive
advantage.
3. Designs may be frozen with too many imperfections remaining.
4. A manufacturer may freeze (standardize) a design prematurely and once the design is
frozen, it may increases resistance to modification and improvement as design changes
require high costs. A familiar example of this is the key arrangement of computer
keyboards.

Designing for Mass Customization

 Mass customization is a strategy of producing standardized goods or services, but

incorporating some degree of customization in the final product or service.
 Two tactics of mass customization:

Delayed differentiation: Delayed differentiation is a postponement tactic. It is the process of

producing, but not quite completing a product or service rather postponing completion until
customer preferences or specifications are known. For example, furniture makers can produce
dining room sets, but not apply stain, allowing customers a choice of stains. Once the choice
is made, the stain can be applied in a relatively
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customers, giving the seller a competitive advantage.

Modular design: Modular design is a form of standardization in which component parts are
subdivided into modules that are easily replaced or interchanged. One familiar example of
modular design is computers, which have modular parts that can be replaced if they become
defective. By arranging modules in different configurations, different computer capabilities
can he obtained.

Advantages of modular design: 1. Failures are often easier to diagnose and remedy because
there are fewer pieces to investigate.

2. The faulty module is conveniently removed and replaced with a good one.

3. The manufacture and assembly of modules generally involve simplifications:

- Fewer parts are involved, so purchasing and inventory control become more routine,
fabrication and assembly operations become more standardized, and training costs
often are relatively low.

Disadvantages of modular design:

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1. The main disadvantages of modular design stem from the decrease in variety: The
number of possible configurations of modules is much less than the number of possible
configurations based on individual components.
2. Another disadvantage is the inability to disassemble a module in order to replace a faulty
part: the entire module must be scrapped—usually at a higher cost.

Reliability:

 Reliability is a measure of the ability of a product, a part, a service, or an entire system to

perform its intended function under a prescribed set of conditions.
 The importance of reliability is underlined by its use by its use by prospective buyers in
comparing alternatives and by sellers as one determinant of price.
 Reliability also can have an impact on repeat sales, reflect on the product's image, and if it
is too low, create legal implications.

Failure: The term failure is used to describe a situation in which a product, part, or system
does not perform as intended.

Normal operating conditions: Reliabilities are always specified with respect to certain
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conditions, called normal operating conditions. These can include load temperature, and
humidity ranges as well as operating procedures and maintenance schedules.

Reliability can be improved in a number of ways:

1. Improving component design

2. Improving production/assembly techniques
3. Improving testing
4. Use backups.
5. Improve preventive maintenance procedures
6. Improve user education
7. Improve system design
Robust Design

 Robust design is a concept from the teachings of Dr. Taguchi, a Japanese quality guru.
 Design that results in products and services that can function over a broad range of
conditions is called robust design
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 It is defined as reducing variation in a product without eliminating the causes of the
variation. This variation (sometimes called noise) can come from a variety of factors and
can be classified into three main types: internal variation, external variation, and unit to
unit variation.
- Internal variation is due to deterioration such as the wear of a machine, and aging of
materials.
- External variation is from factor relating to environmental conditions such as
temperature, humidity and dust.
- Unit to Unit variation is variations between parts due to variations in material,
processes and equipment.

Examples of robust design include umbrella fabric that will not deteriorate when exposed to
varying environments (external variation), food products that have long shelf lives (internal
variation), and replacement parts that will fit properly (unit to unit variation).

 The more robust a product or service, the less likely it will fail due to a change in the
environment in which it is used or in which it is performed.

The Degree of Newness 16

Product or service design change can range from the modification of an existing product or
service to an entirely new product or service:

I. Modification of an existing product or service.

II. Expansion of an existing product line or service offering.
III. Clone of a competitor's product or service.
IV. New product or service.

The degree of change affects the newness to the organization and the newness to the market.

Cultural Differences

Product designers in companies that operate globally also must take into account any cultural
differences of different countries or regions related to the product.

Global Product Design

 Organizations that operate globally are discovering advantages in global product design,
which uses the combined efforts of a team of designers who work in different countries.
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 Such virtual teams can provide a range of comparative advantages over traditional teams
such as engaging the best human resources from around the world without the need to
assemble them all in one place, and operating on a 24-hour basis, thereby decreasing the
time-to-market.
 The use of global teams also allows for customer needs assessment to be done in more
than one country with local resources, opportunities, and constraints to be taken into
account.

DESIGNING FOR MANUFACTURING

Concurrent Engineering

Concurrent engineering means bringing design and manufacturing engineering people

together early in the design phase to simultaneously develop the product and the processes for
creating the product.

Advantages: 1. Manufacturing personnel are able to identify production capabilities and

capacities. 2. Early opportunities for design or procurement of critical tooling which might
have long lead times. 3. Early consideration of the technical feasibility of a particular design
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or a portion of a design. 4. The emphasis can be on problem resolution instead of conflict
resolution.

Disadvantages: 1. Long-standing existing boundaries between design and manufacturing

can be difficult to overcome. 2. There must be extra communication and flexibility if the
process is to work, and these can be difficult to achieve.

Computer-Aided Design (CAD)

 Computer-aided design (CAD) uses computer graphics for product design.

 The designer can modify an existing design or create a new one on a monitor by means of
a light pen, a keyboard, a joystick, or a similar device.
 Once the design is entered into the computer, the designer can maneuver it on the screen:
- It can be rotated to provide the designer with different perspectives,
- It can be split apart to give the designer a view of the inside, and
- A portion of it can be enlarged for closer examination.
 Computer-aided design (CAD) is used to design components and products to exact
measurement and detail.
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 A major benefit of CAD is the increased productivity of designers. No longer is it
necessary to laboriously prepare mechanical drawings of products or parts and revise
them repeatedly to correct errors or incorporate revisions.

Production Requirements

 Design needs to clearly understand the capabilities of production (e.g., equipment, skills,
types of materials, schedules, technologies, special abilities) which helps in choosing
designs that match capabilities.
 When opportunities and capabilities do not match, management must consider the
potential for expanding or changing capabilities to take advantage of those opportunities.
 The term design for manufacturing (DFM) is used to indicate the designing of products
that are compatible with an organization's capabilities. A related concept in
manufacturing is design for assembly (DFA). Design for assembly (DFA) focuses on
reducing the number of parts in an assembly, as well as on the assembly methods and
sequence that will be employed.

Recycling
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Recycling means recovering materials for future use.

Design for recycling (DFR): Design that facilitates the recovery of materials and
components in used products for reuse.

Companies recycle for a variety of reasons, including 1. Cost savings. 2. Environment

concerns. 3. Environmental regulations.

Re-manufacturing

 Remanufacturing refers to refurbishing used products by replacing worn-out or defective

components, and reselling the products.
 This can be done by the original manufacturer, or another company.
 Among the products that have remanufactured components are automobiles, printers,
copiers, cam-eras, computers, and telephones.
 There are a number of important reasons for doing this.
- One is that a remanufactured product can be sold for about 50 percent of the cost of a
new product.
- Another is that the process requires mostly unskilled and semiskilled workers.
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 Design for disassembly (DFD) includes using fewer parts and less material, and using
snap-fits where possible instead of screws or nuts and bolts.

Component Commonality

Companies often have multiple products or services to offer customers. Often, these products
or services have a high degree of similarity of features and components.

For example, car manufacturers employ internal components such as water pumps, engines,
and transmissions on several automobile nameplates.

Service Design

 Service refers to an act that is done to or for a customer (client, patient, etc.).
 It is provided by a service delivery system, which includes the facilities, processes, and
skills needed to provide the service.
 Many services are not pure services, but part of a product bundle—the combination of
goods and services provided to a customer.

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

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1. The physical resources needed.
2. The accompanying goods that are purchased or consumed by the customer, or provided
with the service.
3. Explicit services (the essential/core features of a service. such as tax preparation).
4. Implicit services (ancillary/extra features, such as friendliness, courtesy.

Overview of Service Design

 Service design begins with the choice of a service strategy, which determines the nature
and focus of the service, and the target market.
 This requires
- An assessment by top management of the potential market and profitability (or need,
in the case of a nonprofit organization) of a particular service, and
- An assessment of the organization's ability to provide the service.
 Once decisions on the focus of the service and the target market have been made, the
customer requirements and expectations of the target market must be determined.
 Two key issues in service design are
- The degree of variation in service requirements and
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- The degree of customer contact and customer involvement in the delivery system.
 These have an impact on the degree to which service can be standardized or must be
customized.
- The lower the degree of customer contact and service requirement variability, the
more standardized the service can be.
- Service design with no contact and little or no processing variability is very much
like product design.
- Conversely, high variability and high customer contact generally mean the service
must be highly customized.
 A related consideration in service design is the opportunity for selling: The greater the
degree of customer contact, the greater the opportunities for selling.

Differences between Service Design and Product Design

Service operations managers must cope with issues that may be insignificant or non-existent
for managers in a production setting. These include the following:

1. Products are generally tangible; services are generally intangible. Consequently, service
design often focuses more on intangible factors
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product design.
2. In many instances services are created and delivered at the same time (e.g., a haircut, a
car wash). In such instances there is less extension in finding and correcting errors before
the customer has a chance to discover them. Consequently, training, process design, and
customer relations are particularly important.
3. Services cannot be inventoried. This poses restrictions on flexibility and makes capacity
issues very important.
4. Services are highly visible to consumers. Thereby service must be designed with that in
mind- this adds an extra dimension to process design, one that usually is not present in
product design.
5. Some services have low barriers to entry and exit, which places additional pressures on
service design to be innovative and cost-effective.
6. Location is often important to service design, with convenience as a major factor. Hence,
design of services and choice of location are often closely linked.
7. Service systems range from those with little or no customer contact to those that have a
very high degree of customer contact. Here are some examples of those different types:
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- Insulated technical core; little or no customer contact (e.g., software development).
- Production line; little or no customer contact (e.g., automatic car wash).
- Personalized service (e.g., haircut, medical service).
- Consumer participation (e.g., diet program, dance lessons).
- Self-service (e.g., supermarket).

If there is little or no customer contact, service system design is like product system
design.

8. Demand variability alternately creates waiting lines or idle service resources.

Phases in the Service Design Process

1. Conceptualize: Service design starts with a service concept or idea, which needs to be
very comprehensive. Service concept describes in details-the needs of the targeted
customers, what actions to take to meet these needs, and how to operationally implement
these actions.
Thus service concept can be developed through:
 Idea generation
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 Assessment of customer wants/needs (marketing)
 Assessment of demand potential (marketing).

2. Identify service package components needed: It requires collaboration among

marketing and operations. When purchasing a service, customers actually buy a service
package or service bundle. There are three elements of the service package:
(1) The physical goods.
(2) The sensual benefits, and
(3) The psychological benefits.
The physical goods of the service are the tangible aspects of the service that customers
receive, or are in contact with, during service delivery. In a fine-dining restaurant the
physical goods are facilities such as comfortable tables and chairs, tablecloths, and fine
china.
The sensual benefits are the sights, Smell, and sounds of the experience—all the items
customers experience through their senses. Finally, the psychological benefits include the
status, comfort, and well-being provided by the experience.
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3. Determine performance specifications: Performance specification is a written
requirement that describes the nature of the performance required, which may be defined
by the desired outcome, or by reference to standards on the basis of customer
requirements and expectations. This also involves collaboration between operations and
marketing.

4. Translate performance specifications into design specifications: Design specification

is a document includes activities that are performed while providing service, facility
where service will be designed, provider’s skills and cost and time estimates.
5. Translate design specifications into delivery specifications: Delivery specification
includes schedule, deliverables and location of providing service.

Service Blueprinting

Service blueprint is a method used in service design for describing and analyzing a proposed
service. It is a diagram that visualizes the relationships between different service components
— people, props (physical or digital evidence), and processes — that are directly tied to
touchpoints in a specific customer journey.
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A service blueprint is much like an architectural drawing, but instead of showing building
dimensions and other construction features, a service blueprint shows the basic customer and
service actions involved in a service operation.

The following figure illustrates a simple service blueprint for a restaurant.

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At the top of the figure are the customer actions, and just below are the related actions of the
direct contact service people. Next are what are sometimes referred to as "backstage
contacts"—in this example, the kitchen staff—and below those are the support, or "back-
room," operations. In this example support operations include the reservation system,
ordering of food and supplies, cashier, and the outsourcing of laundry service.

The major steps in service blueprinting are as follows:

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. A
flowchart can be a useful tool for this purpose.
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.
5. Determine which factors can influence profitability.

Characteristics of Well-Designed Service Systems

There are a number of characteristics of well-designed service systems. They can serve as
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guidelines in developing a service system. They include the following:

1. Being consistent with the 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 (i.e., no contact with
the customer) and front-of-the-house operations (i.e., 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 or speed.
9. Having design features and checks that will ensure service that is reliable and of high
quality.

Challenges of Service Design:

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Service design presents some special challenges that are less likely to be encountered in
product design as service design also involves design of the delivery system. Among the
challenges are the following:

1. There are variable requirements. This creates a need for a robust design that will
accommodate a range of inputs and perhaps a range of outputs.
2. Services can be difficult to describe. By their very nature, verbal descriptions can be
somewhat imprecise.
3. Customer contact is usually much higher in services.
4. Service design must take into account the service—customer encounter. There can be a
relatively large number of variables to deal with in the service—customer encounter.

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