PRODUCT AND SERVICE DESIGN

Customer Satisfaction begins with product and service design.

Moreover, decisions are made in this area impact operations and the organization’s overall success.

Process selection and capacity planning impact the ability of the product system to deform and to satisfy
customers. Flexibility, Production time, and cost are key considerations in process design.

Process selection and layout are closely related. Layout decisions are influenced by decisions made in
product and service design.

Work design focuses on the human element in production systems. Increasingly, managers are realizing
that workers are a valuable asset and can contribute greatly to the organization’s success.

Strategic planning is beginning to incorporate employee participation to help improve production

systems.

Design decisions have strategic significance for business organizations. Many of these decisions are not
made by the operations manager.

Nonetheless, because of the important links between operations and each strategic area, it is essential
to the success of the organizations to involve all of the functional area of the organization in design
decisions.

WHAT DOES PRODUCT AND SERVICE DESIGN DO?

The various activities and responsibilities of product and service design include the following (functional
interactions are shown in parenthesis)

1. Translate customer wants and needs, into product and service requirements. (marketing, operation)

2. Refine existing product and services. (marketing)

3. Develop new product and/or services. (marketing. Operations)

4. formulate quality goods. (marketing, operation)

5. Formulate cost targets. (accounting, finance, operations)

6. Construct and test prototypes. (operations, marketing, engineering)

7. Document specifications.

REASONS FOR PRODUCT ANDSERVICE DESIGN OR REDESIGN

Product and service design has typically had strategic implications for the success and prosperity of an
organization. Furthermore, it has an impact on future activities. Consequently, decisions in this area are
some of the most fundamental that managers must make. Organizations become involved in product
and 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 in:

1.ECONOMIC (low demand; excessive warranty claim; the need to reduce cost)

2. SOCIAL AND DEMOGRAPHIC (aging baby bloomers; population shifts)

3. POLITICAL, LIABILITY OR LEGAL (government changes; safety issues; new regulations)

Introduction

Product and service design plays a strategic role in the degree to which an organization is able to
achieve its goals.

It is a major factor in customer satisfaction, quality and production costs. Basis for judging the
organization.

Quality is clearly affected not only by design but also, during production, by the degree to which
production conforms to the intent of design.

A key factor in the production of goods is manufacturability, which refers to the ease with which
design features can be achieved by production.

Similarly, design affects costs – the cost of materials specified by design, and labor and equipment
costs.

Production development involves nearly every functional area of an organization to some extent.
However, three functions have major involvement here: marketing, design, and operations. It is an
Iterative Process. Competitive advantage. Deploy resources effectively and increase the
effectiveness of output.

Product or Service Design Activities

Translate customer’s want and needs into product and service requirements.

Refine existing products and services.

Develop new products or services

Formulate quality goals

Formulate cost targets

Construct and test prototypesDocument specifications

7  Reasons for product or service design

Organizations become involved in product or service design for a variety of reasons. An obvious one
is to be competitive by offering new products or services. Another one is to make the business grow
and increase profits. Furthermore, the best organizations try to develop new products or services as
an alternative to downsizing. When productivity gains result in the need for fewer workers,
developing new products or services can mean adding jobs and retaining people instead of letting
them go. Sometimes product or service design is actually redesign. This, too, occurs, for a number
of reasons such as customer complaints, accidents or injuries, excessive warranty claims, or low
demand. The desire to achieve cost reductions in labor or materials can also be a motivating
factor.Economic (oil price increase, result in small cars)Social and Demographic
environmentPolitical, liability or legal issuesTechnologyCompetitive threats