6. .

Construct and test prototypes

(marketing, operations, engineering)
STRATEGIC PRODUCT AND SERVICE - prototypes or samples
DESIGN 7. Document specifications
- specifications – stating the precise
• The essence of an organization is the requirements; the specs of the product
goods (products) and services it offers.
• Hence, every aspect of the 8. Translate product and service
organization is structured around the specifications into process
design of these products & services specifications (engineering,
STRATEGIC
operations)
- detailed plan to achieve success or any desired
goal Its purpose is to control how an
- in this chapter it means a detailed plan regarding item is to be manufactured or
the design of the product and service to achieve
rendered and thereby control the
success for any desired goal rather than poorly
designed products and services. material features and properties,
performance, and reliability of
The kind and the quality of goods and services we
the process output.
offer and create is a great factor in determining the
success of any business organization.
9. Involve inter-functional
• PRODUCT AND SERVICE DESIGN collaboration
- should be closely tied to an -includes the different departments.
organization’s strategy. cooperating in the design of the product
- this is a major factor in cost quality, and service in order to achieve a common
time to market, customer goal
satisfaction, and competitive
advantage compared to other KEY QUESTIONS
companies that offer a different
product and service design. 1. Is there a demand for it?

• PROPERLY DESIGNED PRODUCT AND
SERVICE IS VERY IMPORTANT!
IF poorly designed it could lead to: – faulty
design, incorrectly implemented which could
lead to service failures, injuries, lawsuits,
product recalls etc…
WHAT DOES PRODUCT & SERVICE
DESIGN DO?
1. Translate customer wants and
needs into product and service
requirements (marketing,
operations)
- using surveys and feedbacks to know the
customers wants and needs
2. Refine existing products and
services (marketing)
- ex. Cars – Toyota Hiace 2020
3. Develop new products and services
(marketing, operations)
- ex. New models of iphones – 3 cameras
with higher specs in order to attract new
customers
4. Formulate quality goals (marketing,
operations)
- quality goals that goes with the design
5. Formulate cost targets (accounting,
marketing, operations)
- goes with the quality
- higher quality = higher cost
• Market size
• Demand profile (short or long
term)
2. Can we do it?
• Manufacturability - the
capability of an organization
to produce an item at an
acceptable profit
• Serviceability - the capability
of an organization to provide
a service at an acceptable
cost or profit
(Is outsourcing an option?)
3. What level of quality is appropriate?
• Customer expectations
• Competitor quality
• Fit with current offering
4. Does it make sense from an
economic standpoint?
• Liability issues, ethical
considerations, sustainability
issues, costs and profits
• For nonprofits – is cost within
the budget

Quality, Design, and Costs are interrelated.


REASON TO DESIGN OR RE-DESIGN
The driving forces for product and service
design or redesign are market
opportunities or threats:
• ECONOMIC
o low demand
• high demand = produce more of the
product
low demand = design or re-design product
in relation to being competitive in the
market
o the need to reduce costs – refer
to reading (Case – page 139)
* Integrating cost analysis into early
product design because the design
of the product determines the final
cost.
• SOCIAL AND DEMOGRAPHIC
o e.g. aging baby boomers,
population shifts
An example of this, if the population
is mostly aged, there might be a
need to produce more products
suited to them such as medicine,
diapers, food based on their diet
etc…
• POLITICAL, LIABILITY, OR LEGAL
o e.g. safety issues, new
regulations, gov’t. changes
o leaders try to impose new
regulations, laws, and
ordinances
Ex.
o Use of Eco bags in grocery
stores
o Making products that are free
of hazards (choking hazards)
DESIGN PRODUCTS THAT ARE FREE OF
HAZARDS!
• COMPETITIVE
o e.g. new products & services,
new advertising/promotion
o Use of calculators vs.
adopting a system in
supermarkets
o Web page for advertising or
promotion vs. use of flyers or
brochures
o Use of printed questionnaire
in R & D vs. use of google
forms or other online
platforms
• COST OR AVAILABILITY
o e.g. raw materials, labor,
energy etc.
o when there is a shortage try
to find substitutes that will
change the design of product
o in labor, cost of labor in labor
intensive production entails
higher cost rather than
getting a specialized
equipment
o in energy, air-condition units
are being re-designed to
lessen energy consumption
in households
• Technological
o e.g. in product components,
processes
With the advancement of
technology, it can directly &
indirectly affect product & service
design. It is undeniable that new
technology should be adopted in
the design or re-design of products
and services to remain efficient and
competitive in the market.
Can a complaint from a customer become
a basis for generating new ideas to re-
design? YES.
IDEA GENERATION:
MAIN SOURCES OF DESIGN
1. SUPPLY-CHAIN BASED
o Ideas can come from anywhere
in the supply chain:
✓ Customers
✓ Suppliers
✓ Distributors
✓ Employees
✓ Maintenance & repair
personnel
2. COMPETITOR BASED
o By studying how a competitor
operates and its products and
services, many useful ideas can
be generated
e.g. pricing policies, return
policies, warranties, location
strategies
o Reverse engineering
– Dismantling and
inspecting a competitor’s
product to discover
product improvements

3. RESEARCH BASED
• Research and development (R&D)
Organized efforts to increase scientific
knowledge or product innovation
o Basic research
– Has the objective of
advancing the state of
knowledge about a subject
without any near-term
expectation of commercial
applications
o Applied research
– Has the objective of achieving
commercial applications
o Development
– Converts the results of
applied research into useful
commercial applications.
LEGAL CONSIDERATIONS
• Product liability
o The responsibility a
manufacturer has for any injuries
or damages caused by a faulty
design
–
potential harm to the
environment or to
humanity.
• Automobile pollution
o Safety issues - airbags, seatbelts,
energy-absorbing bumpers etc.
• Some of the concomitant costs
o Litigation (to contest in legal
proceedings)
o Legal and insurance costs
o Settlement costs (closing cost,
charges when sales is executed)
o Costly product recalls
o Reputation effects
• Uniform Commercial Code
o Under the UCC, products carry
an implication of
merchantability and fitness
- product should be usable for
its intended purpose
ETHICAL CONSIDERATIONS
• Designers are often under pressure
to
o Speed up the design process
o Cut costs
• These pressures force trade-off
decisions
o What if a product has bugs?
– Release the product and
risk damage to your
reputation
– Work out the bugs and
forego revenue
DESIGNERS MUST ADHERE TO
GUIDELINES SUCH AS:
• Produce designs that are consistent
with the goals of the organization.
• Give customers the value they
expect
• Make health and safety a primary
concern.
OTHER FACTORS TO BE CONSIDERED IN
THE DESIGN OF PRODUCTS & SERVICES:
• HUMAN FACTORS
– safety & liability are two critical
issues (crashworthiness of vehicles,
insurance companies, automobile
producers & government)
including adding new features that can
contribute to “ease of use”
• CULTURAL FACTORS
– designers operating globally must
account for any cultural differences
related to the product or service
which means different designs for
different countries or regions.
(Reading – page 111)
SUSTAINABILITY
• Using resources in ways that do not
harm ecological systems that
support human existence
• Key aspects/points of designing for
sustainability
o CRADLE-TO-GRAVE
ASSESSMENT (LIFE-CYCLE
ASSESSMENT)
– as a key point/aspect in
designing for sustainability)
– The assessment of the
environmental impact of a
product or service
throughout its useful life.
 Can packaging be
– Focuses on such factors as: improved or made less
✓ Global warming costly
✓ Smog formation
✓ Oxygen depletion 2. RE-USE: Remanufacturing
✓ Solid waste generation • Refurbishing used
– GOAL OF LCA products by replacing
✓ Choose products and worn-out or defective
services that have the components
least environmental o Can be performed by
impact while still the original
taking into account manufacturer or
economic another company
considerations. • Reasons to
✓ LCA procedures are remanufacture:
part of the ISO 14000 ✓ Remanufactured
environmental products can be sold
management for about 50% of the
procedures cost of a new product
✓ The process requires
o END-OF-LIFE PROGRAMS mostly unskilled and
semi-skilled workers
o THE 3-RS ✓ In the global market,
European lawmakers
1. Reduction of costs & are increasingly
materials used requiring
2. Reuse of parts of returned manufacturers to take
products back used products
3. Recycling • Design for disassembly
(DFD)
- They are considered as the o Designing a product
three aspects of potential to that used
cost savings & reducing products can be
environmental impact. easily taken apart

1. REDUCE: Costs and Materials 3. RECYCLE

• Value analysis • Recovering materials for
o Examination of the future use.
function of parts and o This applies to
materials in an effort manufactured parts
to reduce the cost o As well as applies to
and/or improve the materials used during
performance of a production
product • Why recycle?
• Value analysis Questions ✓ Cost savings
o Is the item necessary; ✓ Environmental
does it have value; concerns
could it be ✓ Environmental
eliminated? Are regulations
there alternative • Design for recycling
sources for the item (DFR)
o Could another o Product design that takes into
material, part, or account the ability to
service be used disassemble a used product to
instead recover the recyclable parts
o Can two or more
parts be combined Thus, to help achieve sustainability, design
o Can specifications be products & services in favor of the 3Rs!
less stringent to save because we only have one planet earth!
time or money
o Do
suppliers/providers
have suggestions for
improvements PRODUCT OR SERVICE LIFE STAGES

INTRODUCTION PHASE
– a product or service is introduced &
maybe treated as curiosity item.
GROWTH PHASE
– over time, design improvements &
increasing demand yield higher reliability
and lower cost leading the growth of
demand.
MATURITY PHASE
– where demand levels off. Few, if any,
design changes are needed. Generally,
costs are low & productivity is high. New
uses for products & services can extend
their life.
DECLINE PHASE
– decisions be made on whether to stop a
product/service and replace it with new
ones or abandon the market, or to attempt
to find new uses or find new users for the
existing product or service.
Different phases or stages call for different
strategies. Forecast of demand & cash
inflow are the key inputs for strategy.
Some products do not exhibit life cycles.
Most new products do.
KEY ISSUES IN PRODUCT & SERVICE
DESIGN
• Product Life Cycle Management refers
to a systematic approach in managing
of a product or service from conception
to end of life.
Three phases of PLM applications:
a. Beginning of life, which involves
design & development
b. Middle of life, which involves
working with suppliers, managing
product information
c. End of life, which involves strategies
for product discontinuance,
disposal, or recycling.
• Standardization
- extent to which there is an absence of
variety in a product, service, or process
o Products are made in large
quantities of identical items
o Every customer or item
processed receives essentially
the same service
WHAT ARE THE ADVANTAGES OF
STANDARDIZATION?
ADVANTAGES:
o immediately available to customers
o they have interchangeable parts
o making replacement easy
DISADVANTAGES:
o reduction in variety
o creates a risk for competitor to
introduce a better or more
appealing product or service
o designs may be frozen & resist
modifications
• Designing for Mass customization
o A strategy of producing basically
standardized goods or services,
but incorporating some degree
of customization in the final
product or service
o Facilitating techniques
– Delayed differentiation
– Modular design
TECHNIQUES FOR MASS CUSTOMIZATION
a. Delayed differentiation
• The process of producing, but
not quite completing, a
product or service until
customer preferences are
known
• It is a postponement tactic
o Produce a piece of
furniture, but do not
stain it; the customer
chooses the stain
o Internet packages
which can be
delivered in standard
packages but modified
according to
customer’s preferences
b. Modular design
• A form of standardization in which
component parts are grouped into
modules that are easily replaced or
interchanged
(e.g. Dell Companies offered
opportunities for companies to
configure modules according to
their specification)
MODULAR DESIGN
ADVANTAGES
o Easier diagnosis and remedy of
failures
o Easier repair and replacement
o Simplification of manufacturing and
assembly
o Training costs are relatively low
DISADVANTAGES
o Limited number of possible product
configurations
o Limited ability to repair a faulty
module; the entire module must
often be scrapped
• Reliability
o The ability of a product, part, or
system to perform its intended
function under a prescribed set
of conditions
o Failure
– Situation in which a product,
part, or system does not
perform as intended
• Potential ways to improve Reliability
✓ Improve component design
✓ Improve production and/or
assembly techniques
✓ Improve testing
✓ Use back ups
✓ Improve preventive
maintenance procedures
✓ Improve user education
✓ Improve system design
• Robust design
o A design that results in products or
services that can function over a
broad range of conditions
– 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
(e.g. many products undergo
heating process -- food, ceramics,
pharmaceutical products. Hence, a
robust design for a product would
be unaffected by a minor variation
in temperature)
• Degree of Newness
o Product or service design changes:
1. Modification of an existing
product or service
2. Expansion of an existing
product line or service offering
3. Clone of a competitor’s product
or service
4. New product or service
o The degree of change affects the
newness of the product or service to
the market and to the organization
o A high degree of newness might
mean more difficulty in acceptance
or might mean rapid market share
or high potential in profits.
• Quality Function Deployment (QFD)
o An approach that integrates the
“voice of the customer” into both
product and service
development
– The purpose is to ensure that
customer requirements are
factored into every aspect of the
process
– Listening to and understanding
the customer is the central
feature of QFD
KANO MODEL
A THEORY BY DR. NORIAKI KANO, JAPANESE
PROFESSOR
• Basic quality (putting the right
length of cord in appliances)
o Refers to customer
requirements that have only
limited effect on customer
satisfaction if present, but
lead to dissatisfaction if
absent
• Performance quality (exceeding the
lifespan of car battery)
o Refers to customer
requirements that generate
satisfaction or dissatisfaction
in proportion to their level of
functionality and appeal
• Excitement quality (a “Wow factor”)
o Refers to a feature or
attribute that was
unexpected by the customer
and causes excitement
SERVICE DESIGN
• 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
o Degree of variation in service
requirements
o Degree of customer contact
and involvement
The lower the degree of customer
contact & service requirement
variability, the more standardized
the service can be)
 The greater degree of customer
contact, the greater the
opportunities for selling.
DIFFERENCES BETWEEN SERVICE
AND PRODUCT DESIGN
1. Products are generally tangible,
services intangible
2. Services are created and delivered
at the same time
3. Services cannot be inventoried
4. Services are highly visible to
consumers
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. Service 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 service
resources
PHASES IN SERVICE DESIGN
1. Conceptualize (Idea Generation,
assessment of customers
wants/needs (marketing),
assessment of demand potential
(marketing)
2. Identify service package
components needed (operations &
marketing)
3. Determine performance
specifications (operations &
marketing)
4. Translate performance
specifications into design
specifications
5. Translate design specifications into
delivery specifications
THE WELL-DESIGNED SERVICE SYSTEM
CHARACTERISTICS
• Being consistent with the
organization mission
• Being user-friendly
• Being robust if variability is a factor
• Being easy to sustain
• Being cost-effective
• Having value that is obvious to the
customer
• Having effective linkages between
back- and front-of-the-house
operations
• Having a single, unifying theme
• Having design features and checks
that will ensure service that is
reliable and of high quality
GUIDELINES FOR SUCCESSFUL SERVICE
DESIGN
1. Define the service package in detail
2. Focus on the operation from the
customer’s perspective
3. Consider the image that the service
package will present both to
customers and to prospective
customers
4. Recognize that designers’ familiarity
with the system may give them a
quite different perspective than that
of the customer, and take steps to
overcome this
5. Make sure that managers are
involved and will support the design
once it is implemented
6. Define quality for 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 system to monitor,
maintain, and improve service
OPERATIONS STRATEGY
• Effective product and service design
can help the organization achieve
competitive advantage:
o Packaging products and
ancillary services to increase
sales
o Using multiple-use platforms
o Implementing tactics that
will achieve the benefits of
high volume while satisfying
customer needs for variety
o Continually monitoring
products and services for
small improvement
opportunities
o Reducing the time it takes to
get a new or redesigned
product or service to the
market
 DEFINING AND MEASURING CAPACITY

• Measure capacity in units that do

not require updating
CAPACITY PLANNING – Why is measuring capacity in
dollars problematic?
• CAPACITY
– The upper limit or ceiling on the • Two useful definitions of capacity
load that an operating unit can – Design capacity
handle o The maximum output rate or
– Capacity needs include service capacity an operation,
o Equipment process, or facility is designed
o Space for
o Employee skills

STRATEGIC CAPACITY PLANNING – Effective capacity

• GOAL
– To achieve a match between the
long-term supply capabilities of an
organization and the predicted level
of long-term demand
o Overcapacity → operating costs
that are too high
o Undercapacity → strained
resources and possible loss of
customers
o Design capacity minus
allowances such as personal
time and maintenance
MEASURING SYSTEM EFFECTIVENESS
• Actual output
– The rate of output actually
achieved
– It cannot exceed effective capacity
• Efficiency

CAPACITY PLANNING QUESTIONS

• Key questions: • Utilization

– What kind of capacity is needed?
– How much is needed to match
demand?
– When is it needed?

• Related questions:
– How much will it cost?
EXAMPLE – EFFICIENCY AND UTILIZATION
– What are the potential benefits
and risks? • Design Capacity = 50 trucks per day
– Are there sustainability issues? • Effective Capacity = 40 trucks per day
– Should capacity be changed all at • Actual Output = 36 trucks per day
once, or through several smaller
changes
– Can the supply chain handle the
necessary changes?

• Capacity decisions
1. Impact the ability of the
organization to meet future DETERMINANTS OF EFFECTIVE CAPACITY
demands
• Facilities
2. Affect operating costs
• Product and service factors
3. Are a major determinant of
• Process factors
initial cost
4. Often involve long term • Human factors
commitment of resources • Policy factors •
5. Can affect competitiveness • Operational factors
6. Affect the ease of • Supply chain factors
management • External factors
7. Have become more
important and complex due
to globalization
8. Need to be planned for in
advance due to their
consumption of financial and
other resources;

CAPACITY STRATEGIES
• Leading
– Build capacity in anticipation of
future demand increases
• Following
– Build capacity when demand
exceeds current capacity
• Tracking
– Similar to the following strategy,
but adds capacity in relatively small
increments to keep pace with
increasing demand
STRATEGY FORMULATION
• Strategies are typically based on
assumptions and predictions about:
– Long-term demand patterns
– Technological change
– Competitor behavior
• These typically involve:
– Growth rate and variability of
demand
– Costs of building and operating
facilities of various sizes
– Rate and direction of
technological innovation
– The likely behavior of competitors
– Availability of capital and other
inputs
CAPACITY CUSHION
• CAPACITY CUSHION
– Extra capacity used to offset
demand uncertainty
– Capacity cushion = 100% -
utilization
– Capacity cushion strategy
o Organizations that have
greater demand uncertainty
typically have greater capacity
cushion
o Organizations that have
standard products and services
generally have smaller capacity
cushion
STEPS IN CAPACITY PLANNING
1. Estimate future capacity
requirements
2. Evaluate existing capacity and
facilities; identify gaps
3. Identify alternatives for meeting
requirements
4. Conduct financial analyses
5. Assess key qualitative issues
6. Select the best alternative for the
long term
7. Implement alternative chosen
8. Monitor results
FORECASTING CAPACITY REQUIREMENTS
• Long-term considerations relate to
overall level of capacity
requirements (facility size)
– Require forecasting demand over
a time horizon and converting
those needs into capacity
requirements
COMMON DEMAND PATTERNS
FORECASTING CAPACITY REQUIREMENT
• Short-term considerations relate to
probable variations in capacity
requirements
– Less concerned with cycles and
trends than with seasonal variations
and other variations from average
– Irregular variations are impossible
or difficult to predict
CALCULATING PROCESS REQUIREMENTS
• Calculating processing
requirements requires reasonably
accurate demand forecasts,
standard processing times, and
available work time
SERVICE CAPACITY PLANNING
• Service capacity planning can
present a number of challenges
related to:
– The need to be near customers
– The inability to store services
– The inability to store services
– The degree of demand volatility
DEMAND MANAGEMENT STRATEGIES
• Strategies used to offset capacity
limitations and that are intended to
achieve a closer match between
supply and demand
– Pricing
– Promotions
– Discounts
– Other tactics to shift demand from
peak periods into slow periods
IN-HOUSE OR OUTSOURCE?
• Once capacity requirements are
determined, the organization must
decide whether to produce a good
or service itself or outsource
• Factors to consider:
– Available capacity
– Expertise
– Quality considerations
– The nature of demand
– Cost
– Risks
DEVELOPING CAPACITY ALTERNATIVES
• Things that can be done to enhance
capacity management:
– Design flexibility into systems
– Take stage of life cycle into
account
– Prepare to deal with capacity
“chunks”
– Attempt to smooth capacity
requirements
– Identify the optimal operating
level
– Choose a strategy if expansion is
involved
BOTTLENECK OPERATION
• An operation in a sequence of
operations whose capacity is lower
than that of the other operations
ECONOMIES AND DISECONOMIES OF
SCALE
• Economies of scale
– If output rate is less than the
optimal level, increasing the output
rate results in decreasing average
per unit costs
• Diseconomies of scale
– If the output rate is more than the
optimal level, increasing the output
rate results in increasing average
per unit costs
CONSTRAINT MANAGEMENT
• Constraint
– Something that limits the
performance of a process or system
in achieving its goals
– Categories
o Market
o Resource
o Material
o Financial
o Knowledge or competency
o Policy
RESOLVING CONSTRAINT ISSUES
1. Identify the most pressing
constraint
2. Change the operation to achieve
maximum benefit, given the
constraint
3. Make sure other portions of the
process are supportive of the
constraint
4. Explore and evaluate ways to
overcome the constraint
5. Repeat the process until the
constraint levels are at acceptable
levels
EVALUATING ALTERNATIVES
• Alternatives should be evaluated
from varying perspectives
– Economic
o Is it economically feasible?
o How much will it cost?
o How soon can we have it?
o What will operating and
maintenance costs be?
o What will its useful life be?
o Will it be compatible with
present personnel and present
operations?
– Non-economic
o Public opinion
OPERATIONS STRATEGY
• Capacity planning impacts all areas
of the organization
– It determines the conditions under
which operations will have to
function
– Flexibility allows an organization to
be agile
o It reduces the organization’s
dependence on forecast
accuracy and reliability
o Many organizations utilize
capacity cushions to achieve
flexibility
– Bottleneck management is one
way by which organizations can
enhance their effective capacities
OPERATIONS STRATEGY

• Capacity expansion strategies are

important organizational
considerations
o Expand-early strategy
o Wait-and-see strategy
• Capacity contraction is sometimes
necessary
o Capacity disposal strategies
become important under
these conditions

PROCESS SELECTION
○ Refers to deciding on the way
production of goods or services will
be organized
○ It has major implications for
■ Capacity planning
■ Layout of facilities
■ Equipment
■ Design of work systems
PROCESS SELECTION AND SYSTEM
DESIGN
PROCESS STRATEGY
● Key aspects of process strategy:
○ Capital intensity
− The mix of equipment and
labor that will be used by
the organization
○ Process flexibility
− The degree to which the
system can be adjusted to
changes in processing
requirements due to such
factors as
- Product and service
design changes
- Volume changes
- Changes in technology
PROCESS SELECTION – KEY QUESTIONS
Two key questions in process selection:
1. How much variety will the process
need to be able to handle?
2. How much volume will the process
need to be able to handle?
● Job Shop
● Batch
● Repetitive
● Continuous
TYPES OF PROCESSING
SUSTAINABLE PRODUCTION OF GOODS
AND SERVICES
● There is increasing pressure for
organizations to operate sustainable
production processes
● According to the Lowell Center for
Sustainable Production:
○ “Sustainable Production is the
creation of goods and services
using processes and systems
that are: non-polluting;
conserving of energy and
natural resources; economically
efficient; safe and healthful for
workers, communities, and
consumers; and, socially and
creatively rewarding for all
working people.”
PROCESS AND INFORMATION
TECHNOLOGY
● Process and information technology
can have a major impact on costs,
productivity and competitiveness:
○ Process technology
■ Methods, procedures,
and equipment used
to produce goods and
provide services
○ Information technology
■ The science and use of
computers and other
electronic equipment
to store, process, and
send information
THE NEED TO MANAGE TECHNOLOGY
● Process technology and information
technology can have a profound
impact on:
○ Costs
○ Productivity
○ Competitiveness
AUTOMATION
• Machinery that has sensing and
control devices that enable it to
operate automatically
o Fixed automation
o Programmable automation
o Flexible automation
PROGRAMMABLE AUTOMATION
• Involves the use of high-cost,
general-purpose equipment
controlled by a computer program
that provides both the sequence of
operations and specific details
about each operation
o Computer-Aided
Manufacturing (CAM)
- The use of computers in
process control, ranging
from robots to automated
quality control
o Numerically Controlled (N/C)
Machines
- Machines that perform
operations by following
mathematical processing
instructions
o Robot
- A machine consisting of a
mechanical arm, a power
supply, and a controller
FLEXIBLE AUTOMATION
• Evolved from programmable
automation. It uses equipment that
is more customized than that of
programmable automation. A key
difference between the two is that
flexible automation requires
significantly less changeover time.
o FMS (Flexible Manufacturing
System)
– A group of machines
designed to handle
intermittent processing
requirements and
produce a variety of
similar products
o CIM (Computer Integrated
Manufacturing)
– A system for linking a
broad range of
manufacturing activities
through an integrated
computer system
FLEXIBLE MANUFACTURING SYSTEM
(FMS)
• A group of machines designed to
handle intermittent processing
requirements and produce a variety of
similar products
o Have some of the benefits of
automation and some of the
flexibility of individual, or stand-
alone, machines
o Includes supervisory computer
control, automatic material
handling, and robots or other
automated processing
equipment
COMPUTER INTEGRATED
MANUFACTURING (CIM)
• A system for linking a broad range of
manufacturing activities through an
integrated computer system
o Activities include
– Engineering design
– FMS
– Purchasing
– Order processing
– Production planning and
control
o The overall goal of CIM is to link
various parts of an organization
to achieve rapid response to
customer orders and/or product
changes, to allow rapid
production and to reduce
indirect labor costs
FACILITIES LAYOUT
• The configuration of departments,
work centers, and equipment, with
particular emphasis on movement of
work (customers or materials)
through the system
• Facilities layout decisions arise when:
o Designing new facilities
o Re-designing existing facilities
THE NEED FOR LAYOUT PLANNING
1. Inefficient operations
○ High cost
○ Bottlenecks
2. Accidents or safety hazards
3. Changes in product or service
design
 4. Introduction of new products or ● Established routing and scheduling
services
● Routine accounting, purchasing,
5. Changes in output volume or and inventory control
product mix
● Can handle a variety of processing
6. Changes in methods or equipment requirements

7. Changes in environmental or other ● Not particularly vulnerable to

legal requirements equipment failures

8. Morale problems ● General-purpose equipment is often

less costly and easier and less costly
LAYOUT DESIGN OBJECTIVES
to maintain
● Basic objective
● It is possible to use individual
○ Facilitate a smooth flow of incentive systems
work, material, and
PRODUCT LAYOUTS: DISADVANTAGES
information through the
system ● Creates dull, repetitive jobs

● Supporting objectives ● Poorly skilled workers may not

maintain equipment or quality of
2. Facilitate product or service quality
output
3. Use workers and space efficiently
● Fairly inflexible to changes in
4. Avoid bottlenecks volume or product or process
design
5. Minimize material handling costs
● Highly susceptible to shutdowns
6. Eliminate unnecessary movement
of workers or material ● Preventive maintenance, capacity
for quick repair and spare-parts
7. Minimize production time or inventories are necessary expenses
customer service time
● Individual incentive plans are
8. Design for safety impractical
BASIC LAYOUT TYPES ● In-process inventories can be high
● Product layouts ● Routing and scheduling pose
● Process layouts continual challenges

● Fixed-position layout ● Equipment utilization rates are low

● Combination layouts ● Material handling is slow and

inefficient
REPETITIVE PROCESSING: PRODUCT
LAYOUTS ● Reduced spans of supervision

• Layout that uses standardized ● Special attention necessary for each

processing operations to achieve product or customer
smooth, rapid, high-volume flow ● Accounting, inventory control, and
purchasing are more involved

NON-REPETITIVE PROCESSING: PROCESS

LAYOUTS

● Layouts that can handle varied

processing requirements
Used for Repetitive or Continuous Processing

PRODUCT LAYOUTS: ADVANTAGES

● High rate of output

● Low unit cost

● Labor specialization
Used for Intermittent processing Job Shop or Batch
● Low material handling cost per unit
FIXED POSITION LAYOUTS
● High utilization of labor and
● Layout in which the product or
equipment
project remains stationary, and
 workers, materials, and equipment
are moved as needed
COMBINATION LAYOUTS
● Some operational environments use
a combination of the three basic
layout types:
○ Hospitals
○ Supermarket
○ Shipyards
● Some organizations are moving
away from process layouts in an
effort to capture the benefits of
product layouts
○ Cellular manufacturing
○ Flexible manufacturing
systems
SERVICE LAYOUTS
● Service layouts can be categorized
as: product, process, or fixed
position
● Service layout requirements are
somewhat different due to such
factors as:
○ Degree of customer contact
○ Degree of customization
● Common service layouts:
○ Warehouse and storage
layouts
○ Retail layouts
○ Office layouts
● Two key factors:
○ Customer contact
○ Degree of customization
● Layouts:
○ Warehouse and storage
layouts
○ Retail layouts
○ Office layouts
CELLULAR LAYOUTS
• Layout in which workstations are
grouped into a cell that can process
items that have similar processing
requirements
o Groupings are determined by
the operations needed to
perform the work for a set of
similar items, part families,
that require similar
processing
o The cells become, in effect,
miniature versions of product
layouts
GROUP TECHNOLOGY
• The grouping into part families of
items with similar design or
manufacturing characteristics
o Design characteristics:
- Size
- Shape
- Function
o Manufacturing or processing
characteristics
- Type of operations
required
- Sequence of operations
required
• Requires a systematic analysis of
parts to identify the part families
DESIGNING PRODUCT LAYOUTS:
LINE BALANCING
● The goal of a product layout is to
arrange workers or machines in the
sequence that operations need to
be performed
LINE BALANCING
• The process of assigning tasks to
workstations in such a way that the
workstations have approximately
equal time requirements
• Goal:
o Obtain task grouping that
represent approximately
equal time requirements since
this minimizes idle time along
the line and results in a high
utilization of equipment and
labor
• Why is line balancing important?
1. It allows us to use labor and
equipment more efficiently
2. To avoid fairness issues that
arise when one workstation
must work harder than
another
CYCLE TIME
• The maximum time allowed at
each workstation to complete its
set of tasks on a unit
• Cycle time also establishes the
output rate of a line
 DESIGNING PROCESS LAYOUTS

● The main issue in designing process

layouts concerns the relative
HOW MANY WORKSTATIONS ARE
placement of the departments
NEEDED?
● Measuring effectiveness
● The required number of
workstations is a function of ○ A major objective in
designing process layouts is
○ Desired output rate
to minimize transportation
○ Our ability to combine tasks cost, distance, or time
into a workstation
INFORMATION REQUIREMENTS
● Theoretical minimum number of
● In designing process layouts, the
stations
following information is required:

1. A list of departments to be arranged

and their dimensions

2. A projection of future work flows

between the pairs of work centers

PRECEDENCE DIAGRAM 3. The distance between locations and

● A diagram that shows elemental
tasks and their precedence
requirements
the cost per unit of distance to
move loads between them
4. The amount of money to be
invested in the layout

5. A list of any special considerations

6. The location of key utilities, access

and exit points, etc.

PROCESS LAYOUT PROBLEM

Distance between locations in meters

ASSIGNING TASKS TO WORKSTATIONS

● Some heuristic (intuitive) rules:

○ Assign tasks in order of most

following tasks
- Count the number of
tasks that follow
Interdepartmental work flows (loads per
○ Assign tasks in order of day)
greatest positional weight
- Positional weight is the
sum of each task’s
time and the times of
all following tasks

MEASURING EFFECTIVENESS

● Balance delay (percentage of idle

time) PROCESS LAYOUT PROBLEM
○ Percentage of idle time of a
line

OVERVIEW OF ISO
• International standard setting body
composed of representatives from
various national organizations
• Promotes:
• Proprietary
• Industrial
• Commercial standards
• Set of international standards for
assessing a company’s performance
WHAT IS ISO?
• Founded in 1947
• Independent
• Non-governmental organization
• Global network of national standard
bodies
• 1 member per country (membership
organization)
• ISO membership comes with rights,
benefits, obligations and good
practices
ISO OVERVIEW
Different standards led to improve quality
and safety for different sectors such as:
• ISO 9000 – wide range of industry/
economic sectors and regulatory
areas
• Deals with management
systems to ensure quality in
design, production, delivery,
and support products.
• ISO 9001-2015 – important change
in Quality Management System
• Periodic surveillance – audit
• ISO 14000 – standard for
environment management system
• cGMP – current good manufacturing
practices
• AS9100 – standard quality
management system for the
aerospace industry
ISO 9000 QUALITY MANAGEMENT
SYSTEM STANDARD
• ISO 9000 is a family of standards for
a Quality Management System.
• ISO 9000 Family
• ISO 9000–Fundamental
concepts and road map
guideline standard 9000
• ISO 9001, ISO 9002, ISO 9003
– Three alternative
requirements standards for
quality assurance
• ISO 9004 – Quality
Management guideline
standard
• ISO 9001 is an internationally
recognized QMS standard which
acts as a quality benchmark when
evaluating organizations.
• ISO 9001 Certification means you
have a QMS in place to control your
processes and deliver consistent
results designed to meet the
customer’s requirements.
WHAT IS A QUALITY MANAGEMENT
SYSTEM?
• A quality management system
(QMS) is a set of policies, processes
and procedures required for
planning and execution in the core
business area of an organization.
(Good business practices)
• Core Areas – Areas that can
impact the organization’s
ability to meet stakeholders’
requirements:
• Quotations, Purchasing,
Production, Shipping,
etc.
• Quality: Must correct
errors to achieve
consistent results.
• ISO 9001:2015 is based on the idea
of continual improvement
• ISO 9001: 2015 is an example of a
Quality Management System.
ISO 9001
• Objective: Customer Satisfaction
• Is industry generic (anyone can use)
• Can be used by both manufacturing
and service industries.
• Only tells you WHAT to do, not HOW
to do it
• Is NOT a product standard – it
contains no product requirements
NEED TO REVISE FROM 2008 TO 2015?
• All ISO management system
standards are subject to a regular
review under the rules by which
they are written.
• ISO standards are reviewed every
five years and revised if needed.
• The challenges faced by businesses
and organizations today are very
 different from a few decades ago HOW RISK-BASED THINKING IS
and ISO 9001 has been updated to ADDRESSED IN ISO 9001: 2015
take this new environment into
account.

MAJOR DIFFERENCES IN TERMINOLOGY

DIFFERENCES IN PRINCIPLE

ISO 9001 STANDARD IS BASED ON PDCA

CONCEPT

DIFFERENCES IN CLAUSES

ISO 9001: 2015

CLAUSE 4: CONTEXT OF THE
ORGANIZATION

MAJOR REQUIREMENT CLAUSES OF ISO

9001

• Management Responsibility

• Commitment, Customer focus,

Policy, Planning, Responsibility,
Authority & Communication,
Review ISO 9001: 2015
CLAUSE 5: LEADERSHIP
• Resource Management

• Human Resources, Infrastructure,

Work Environment
• Product Realization
ISO 9001: 2015
• Customer Requirements, Design,
Purchasing, Operations, CLAUSE 6: PLANNING
Calibration
• Measurement and Analysis

• Customer Satisfaction, Audit,

Process/Product Control, Non- ISO 9001: 2015
conforming product, Data CLAUSE 7: SUPPORT
Analysis, Improvement
ISO 9001: 2015
CLAUSE 8: OPERATIONS
DISTINCTIONS BETWEEN
ORGANIZATIONAL PERFORMANCE
EXCELLENCE PROGRAMS AND ISO
STANDARDS
QUALITY MANAGEMENT AND QUALITY
ASSURANCE
QUALITY SYSTEM
CERTIFICATION/REGISTRATION
• Earliest users of quality assurance
requirements standards were large
customer organizations such as
electric power providers and
military organizations.
• Quality assurance requirements are
called up in a two party contract
• Providing organization
(supplier) - first party
• Customer organization -
second party
• Internal Audit sponsored by the
providing organization to verify that
its quality system meets the
contract requirements – these are
first party audits
• External Audit sponsored by the
customer organization to verify that
the supplier organization’s quality
system meets the contract
requirements – these are the second
party audits
• Internal and External audits have
become burdensome because the
audits become redundant as each
organization is audited multiple
times for the same requirement.
• Resulting to additional costs
for both parties
• To reduce the redundancy of the
audits, the development of quality
system certification
• A third party organization called a
certification body/ registrar
conducts a formal audit of a
supplier organization to assess
conformance to the appropriate
quality system standard (ISO 9001
or ISO 9002)
• Issues a certificate and
registers the organization’s
quality system
• To maintain the registered status,
the organization must pass periodic
surveillance audits.
STEPS TO ISO 9001 CERTIFICATION
Implementation plan should cover these
items:
• Learn and understand ISO 9001
• Review ISO 9001 Standard
and supporting materials
• Perform a Gap Analysis
• Evaluate current quality
system vs. ISO 9001
• Plan project and allocate resources
• People, Money, Time, etc.
• Training the organization
• Management Rep, Project
Team, Employees, etc.
Implementation plan should cover these
items:
• Create & Document a QMS
• Adding/revising processes
• Use and Improve QMS
• Execute normal
organizational activities
following the QMS
• Internal Audit for QMS to ensure
that objectives are met
• Corrective Action is taken in
addressing errors
• Certification Audit of your QMS (3
year Certification)
• Year 1 = Certification Audit
• Year 2 & 3 = Surveillance
Audits
REQUIRED QMS DOCUMENTATION

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