Introduction

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 edge.

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?

Marketers see product research as the first stage in Product Life Cycle Management. Product research is
a business and engineering term which describes the complete process of bringing a new product to
market. There are two parallel aspects to this process: -

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1. Product engineering.
2. Marketing analysis.

Types of New products

There are several types of new products. Some are new to the market, some are new to the firm, and
some are new to both. Some are minor modifications of existing products while some are completely
innovative. These are displayed in the following diagram.

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.

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Factors Influencing Selection

Product selection, definition, and design take place on a continuing basis because so many new product
opportunities exist.

Five factors influencing market opportunities are: -

 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.

 Sociological and demographic change, which may appear in such factors as decreasing family size.
This alters the size preference for homes, apartments, and automobiles.

 Technological change, which makes possible everything from home computers to mobile phones to
artificial hearts.

 Political/legal change, which brings about new trade agreements, tariffs, and government contract
requirements.
 Other changes, which may be brought about through market practice, professional standards,
suppliers, and distributors.

Product Life Cycle

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.

Product life cycles may be a matter of: -

1. A few hours (a newspaper),

2. Months (seasonal fashions),
3. Years (TV, video recorders), or
4. Decades (house).

1. Regardless of the length of the cycle, the task is the same, i.e., to design a system that helps introduce
new products successfully.

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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 products.

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 forward.

"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.

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.

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 competition.

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.
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The Process

Many organizations have product research methodologies that provide a standard framework for planning
and managing development efforts. If your organization doesn't have one, you should consider using
something like this one.

There are several stages in the product research process: -

Idea Generation

The ideas for new products obtained from customers, R&D department, competitors, focus groups,
employees, or trade shows. The formal idea generating techniques include attribute listing, forced
relationships, brainstorming, morphological analysis, problem analysis and early, rapid prototyping.

Idea Screening

This involves eliminating unsound concepts. One must ask three questions:

1. Will the target market benefit from the product ?

2. Is it technically feasible to manufacture the product?
3. Will the product be profitable ?

Concept Development and Testing

This step includes developing the marketing and engineering details:

1. Who is the target market ?

2. What benefits will the product provide ?
3. How will consumers react to the product ?
4. How will the product be produced ?
5. What will it cost to produce it ?

One should also test the concept by asking a sample of prospective customers what they think of the
idea.

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Business Analysis

Following things are required to be done while conducting a business analysis: -

1. estimate likely selling price

2. estimate sales volume
3. estimate profitability and breakeven point
 Beta Testing and Market Testing

The purpose of Beta testing is to determine how the product performs in an actual user environment. It is
critical that real customers perform this evaluation, not the firm developing the product or a contracted
testing company. The steps followed are as follows: -

1. produce a physical prototype or mock-up

2. test the product in typical usage situations
3. make adjustments where necessary
4. produce an initial run of the product and sell it in a test market area to determine customer acceptance.

Technical Implementation

Following things are needed to be done in this step: -

1. New program initiation
2. Resource estimation
3. Requirement publication
4. Engineering operations planning
5. Department scheduling
6. Supplier collaboration 7. Resource plan publication
8. Program review and monitoring
9. Contingencies - what-if planning

Commercialization

Finally commercialisation means completion of product research. This means: -

1. launch the product

2. produce and place advertisements and other promotions
3. fill the distribution pipeline with product
4. critical path analysis is useful at this stage

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The steps discussed may be iterated as needed. Some steps may be eliminated. To reduce the time the
process takes, many companies are completing several steps at the same time (referred to as concurrent
engineering). Most industry leaders see product research as a proactive process where resources are
allocated

to identify market changes and seize upon new product opportunities before they occur (in
contrast to a reactive strategy in which nothing is done until problems occur). Many
industry leaders see product research as an ongoing process (referred to as continuous
development) in which a product research team is always looking for opportunities.

Because this process typically requires both engineering and marketing expertice, cross-functional teams
are a common way of organizing a development project. The team is responsible for all aspects of the
project, from initial idea generation to final commercialization, and they usually report to senior
management (often to a vice president). In those industries where products are technically complex,
development research is expensive, and product life cycles are short, strategic alliances among several
organizations helps to spread the costs, provide access to a wider skills set, and speeds the process.

People respond to new products in different ways. The adoption of a new technology can be analyzed
using a variety of diffusion theories such as the Diffusion of innovations theory.
Example

The engineering development life cycle is a subset of the overall product and process development cycle.
The formal development effort may come under the definition, implementation, and testing phases. The
development life cycle, shown here for a software project (using the old waterfall approach) shows the
distinct activities that need to happen either in series, with overlaps, or iteratively using a spiral
methodology.

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This figure provides the framework for understanding the relationship between the major milestones in the
project approval process and the design reviews that are part of a normal engineering development
methodology.

An Approach

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.

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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.

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.

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.

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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.

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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

standards.

E.g., products such as chemicals, paints, or petroleum 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.

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.

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2. Value Analysis

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 simplification.

3. The Taguchi Method

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.

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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 CAD/CAM.

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Protecting New Products

When developing a new product many legal questions arise, including: -

1. How do I protect the innovation from imitators?

2. Can the innovation be legally protected?
3. For how long?
4. How much will this cost?

The answers are complicated by the fact that several legal concepts may apply to any given innovation,
product, process, or creative work. These include patents, trademarks, service marks, tradenames,
copyrights, and trade secrets. It is necessary to know which are applicable and when each is appropriate.
This varies somewhat from jurisdiction to jurisdiction. The advice of a lawyer that specializes in these
matters is essential.

Generally, copyrights are fairly easy to obtain but are applicable only in certain instances. Patents on the
other hand, tend to involve complex claims and approval processes, tend to be expensive to obtain, and
even more expensive to defend and preserve.

Conclusion

Products are initially conceptualized to provide a particular capability and meet identified performance
objectives and specifications. Given these specifications, a product can be designed in many different
ways. The designer's objective must be to optimize the product design with the production system. A
company's production system includes its suppliers, material handling systems, manufacturing processes,
labor force capabilities and distribution systems.