PRODUCT AND SERVICE DESIGN

STEVEN CO JR., CIE, AAE

 GOODS AND SERVICES SELECTION

• ORGANIZATIONS EXIST TO PROVIDE GOODS OR SERVICES TO SOCIETY

• GREAT PRODUCTS ARE THE KEY TO SUCCESS
• TOP ORGANIZATIONS TYPICALLY FOCUS ON CORE PRODUCTS
• CUSTOMERS BUY SATISFACTION, NOT JUST A PHYSICAL GOOD OR PARTICULAR SERVICE
• FUNDAMENTAL TO AN ORGANIZATION’S STRATEGY WITH IMPLICATIONS THROUGHOUT THE OPERATIONS FUNCTION
• LIMITED AND PREDICABLE LIFE CYCLES REQUIRES CONSTANTLY LOOKING FOR, DESIGNING, AND DEVELOPING NEW
PRODUCTS
• UTILIZE STRONG COMMUNICATION AMONG CUSTOMER, PRODUCT, PROCESSES, AND SUPPLIERS
• NEW PRODUCTS GENERATE SUBSTANTIAL REVENUE
 GOODS AND SERVICES SELECTION

• THE HIGHER THE PERCENTAGE OF SALES FROM THE LAST 5 YEARS, THE MORE LIKELY THE FIRM IS TO
BE A LEADER.
 PRODUCT DECISION

• THE OBJECTIVE OF THE PRODUCT DECISION IS TO DEVELOP AND IMPLEMENT A PRODUCT STRATEGY
THAT MEETS THE DEMANDS OF THE MARKETPLACE WITH A COMPETITIVE ADVANTAGE
• PRODUCT STRATEGY OPTIONS:
• DIFFERENTIATION
• LOW COST
• RAPID RESPONSE
 PRODUCT LIFE CYCLES

• MAY BE ANY LENGTH FROM A FEW DAYS TO DECADES

• THE OPERATIONS FUNCTION MUST BE ABLE TO INTRODUCE NEW PRODUCTS SUCCESSFULLY
 PRODUCT LIFE CYCLES

• INTRODUCTORY PHASE
• FINE TUNING MAY WARRANT UNUSUAL EXPENSES FOR:
• RESEARCH
• PRODUCT DEVELOPMENT
• PROCESS MODIFICATION AND ENHANCEMENT
• SUPPLIER DEVELOPMENT

• GROWTH PHASE
• PRODUCT DESIGN BEGINS TO STABILIZE
• EFFECTIVE FORECASTING OF CAPACITY BECOMES NECESSARY
• ADDING OR ENHANCING CAPACITY MAY BE NECESSARY
 PRODUCT LIFE CYCLES

• MATURITY PHASE
• COMPETITORS NOW ESTABLISHED
• HIGH VOLUME, INNOVATIVE PRODUCTION MAY BE NEEDED
• IMPROVED COST CONTROL, REDUCTION IN OPTIONS, PARING DOWN OF PRODUCT LINE

• DECLINE PHASE
• UNLESS PRODUCT MAKES A SPECIAL CONTRIBUTION TO THE ORGANIZATION, MUST PLAN TO TERMINATE
OFFERING
PRODUCT LIFE CYCLES COSTS
 PRODUCT-BY-VALUE ANALYSIS

• LISTS PRODUCTS IN DESCENDING ORDER OF THEIR INDIVIDUAL DOLLAR CONTRIBUTION TO THE FIRM
• LISTS THE TOTAL ANNUAL DOLLAR CONTRIBUTION OF THE PRODUCT
• HELPS MANAGEMENT EVALUATE ALTERNATIVE STRATEGIES
 GENERATING NEW PRODUCTS

• UNDERSTANDING THE CUSTOMER

• ECONOMIC CHANGE
• SOCIOLOGICAL AND DEMOGRAPHIC CHANGE
• TECHNOLOGICAL CHANGE
• POLITICAL AND LEGAL CHANGE
• MARKET PRACTICE, PROFESSIONAL STANDARDS, SUPPLIERS, DISTRIBUTORS
PRODUCT DEVELOPMENT STAGES
 QUALITY FUNCTION DEPLOYMENT

• QUALITY FUNCTION DEPLOYMENT (QFD)

• DETERMINE WHAT WILL SATISFY THE CUSTOMER
• TRANSLATE THOSE CUSTOMER DESIRES INTO THE TARGET DESIGN

• HOUSE OF QUALITY
• UTILIZE A PLANNING MATRIX TO RELATE CUSTOMER WANTS TO HOW THE FIRM IS GOING TO MEET
THOSE WANTS
 Identify
• Identify customer wants

Identify
• Identify how the good/service will satisfy customer wants

• Relate customer wants to product how’s

QUALITY Relate

FUNCTION • Identify relationships between the firm’s how’s

DEPLOYMENT Identify

Develop
• Develop our importance ratings

Evaluate
• Evaluate competing products

Compare
• Compare performance to desirable technical attributes
HOUSE OF QUALITY
 HOUSE OF QUALITY

• SAMPLE:
• YOUR TEAM HAS BEEN CHARGED WITH DESIGNING A NEW CAMERA FOR GREAT CAMERAS, INC.
THE FIRST ACTION IS TO CONSTRUCT A HOUSE OF QUALITY.
HOUSE OF QUALITY
HOUSE OF QUALITY
HOUSE OF QUALITY

*Assign scores to
each relationship:
High = 5
Medium = 3
Low = 1
HOUSE OF QUALITY
HOUSE OF QUALITY
HOUSE OF QUALITY
HOUSE OF QUALITY
HOUSE OF QUALITY
 HOUSE OF QUALITY SEQUENCE

• DEPLOYING RESOURCES THROUGH THE ORGANIZATION IN RESPONSE TO CUSTOMER

REQUIREMENTS
• HOUSE OF QUALITY SEQUENCE INDICATES HOW TO DEPLOY RESOURCES TO ACHIEVE
CUSTOMER REQUIREMENTS
 ORGANIZING FOR PRODUCT DEVELOPMENT

• TRADITIONALLY – DISTINCT DEPARTMENTS

• DUTIES AND RESPONSIBILITIES ARE DEFINED
• DIFFICULT TO FOSTER FORWARD THINKING

• CHAMPIONS
• PRODUCT MANAGER DRIVES THE PRODUCT THROUGH THE PRODUCT DEVELOPMENT SYSTEM AND
RELATED ORGANIZATIONS
 ORGANIZING FOR PRODUCT DEVELOPMENT

• TEAM APPROACH
• CROSS FUNCTIONAL – REPRESENTATIVES FROM ALL DISCIPLINES OR FUNCTIONS
• PRODUCT DEVELOPMENT TEAMS, DESIGN FOR MANUFACTURABILITY TEAMS, VALUE ENGINEERING
TEAMS

• JAPANESE “WHOLE ORGANIZATION” APPROACH

• NO ORGANIZATIONAL DIVISIONS
 ORGANIZING FOR PRODUCT DEVELOPMENT

• PRODUCT DEVELOPMENT TEAMS

• MARKET REQUIREMENTS TO PRODUCT SUCCESS
• CROSS FUNCTIONAL TEAMS OFTEN INVOLVING VENDORS
• OPEN, HIGHLY PARTICIPATIVE ENVIRONMENT

• CONCURRENT ENGINEERING
• SIMULTANEOUS PERFORMANCE OF PRODUCT DEVELOPMENT STAGES
 MANUFACTURABILITY AND VALUE ENGINEERING

• BENEFITS:
• REDUCED COMPLEXITY OF THE PRODUCT
• REDUCTION OF ENVIRONMENTAL IMPACT
• ADDITIONAL STANDARDIZATION OF COMPONENTS
• IMPROVEMENT OF FUNCTIONAL ASPECTS OF THE PRODUCT
• IMPROVED JOB DESIGN AND JOB SAFETY
• IMPROVED MAINTAINABILITY (SERVICEABILITY) OF THE PRODUCT
• ROBUST DESIGN
 ADDRESSING ISSUES FOR PRODUCT DESIGN

• ROBUST DESIGN
• MODULAR DESIGN
• COMPUTER-AIDED DESIGN (CAD)
• COMPUTER-AIDED MANUFACTURING (CAM)
• VIRTUAL REALITY TECHNOLOGY
• VALUE ANALYSIS
• SUSTAINABILITY AND LIFE CYCLE ASSESSMENT (LCA)
 ADDRESSING ISSUES FOR PRODUCT DESIGN

• ROBUST DESIGN
• PRODUCT IS DESIGNED SO THAT SMALL VARIATIONS IN PRODUCTION OR ASSEMBLY DO NOT
ADVERSELY AFFECT THE PRODUCT
• TYPICALLY RESULTS IN LOWER COST AND HIGHER QUALITY

• MODULAR DESIGN
• PRODUCTS DESIGNED IN EASILY SEGMENTED COMPONENTS
• ADDS FLEXIBILITY TO BOTH PRODUCTION AND MARKETING
• IMPROVED ABILITY TO SATISFY CUSTOMER REQUIREMENTS
 ADDRESSING ISSUES FOR PRODUCT DESIGN

• COMPUTER-AIDED DESIGN (CAD)

• USING COMPUTERS TO DESIGN PRODUCTS AND PREPARE ENGINEERING DOCUMENTATION
• SHORTER DEVELOPMENT CYCLES, IMPROVED ACCURACY, LOWER COST
• INFORMATION AND DESIGNS CAN BE DEPLOYED WORLDWIDE3-D OBJECT MODELING
• SMALL PROTOTYPE DEVELOPMENT
• DESIGN FOR MANUFACTURING AND ASSEMBLY (DFMA)
• SOLVE MANUFACTURING PROBLEMS DURING THE DESIGN STAGE
• CAD THROUGH THE INTERNET
• INTERNATIONAL DATA EXCHANGE THROUGH STEP
• 3-D PRINTING
 ADDRESSING ISSUES FOR PRODUCT DESIGN

• COMPUTER-AIDED MANUFACTURING (CAM)

• UTILIZING SPECIALIZED COMPUTERS AND PROGRAM TO CONTROL MANUFACTURING EQUIPMENT
• OFTEN DRIVEN BY THE CAD SYSTEM (CAD/CAM)
• BENEFITS OF CAD/CAM:
• PRODUCT QUALITY
• SHORTER DESIGN TIME
• PRODUCTION COST REDUCTIONS
• DATABASE AVAILABILITY
• NEW RANGE OF CAPABILITIES
 ADDRESSING ISSUES FOR PRODUCT DESIGN

• VIRTUAL REALITY TECHNOLOGY

• COMPUTER TECHNOLOGY USED TO DEVELOP AN INTERACTIVE, 3-D MODEL OF A PRODUCT FROM
THE BASIC CAD DATA
• ALLOWS PEOPLE TO ‘SEE’ THE FINISHED DESIGN BEFORE A PHYSICAL MODEL IS BUILT
• VERY EFFECTIVE IN LARGE-SCALE DESIGNS SUCH AS PLANT LAYOUT
• VALUE ANALYSIS
• FOCUSES ON DESIGN IMPROVEMENT DURING PRODUCTION
• SEEKS IMPROVEMENTS LEADING EITHER TO A BETTER PRODUCT OR A PRODUCT WHICH CAN BE
PRODUCED MORE ECONOMICALLY WITH LESS ENVIRONMENTAL IMPACT
 ADDRESSING ISSUES FOR PRODUCT DESIGN

• SUSTAINABILITY AND LIFE CYCLE ASSESSMENT (LCA)

• SUSTAINABILITY MEANS MEETING THE NEEDS OF THE PRESENT WITHOUT COMPROMISING THE
ABILITY OF FUTURE GENERATIONS TO MEET THEIR NEEDS
• LCA IS A FORMAL EVALUATION OF THE ENVIRONMENTAL IMPACT OF A PRODUCT
 PRODUCT DEVELOPMENT CONTINUUM

• PRODUCT LIFE CYCLES ARE BECOMING SHORTER AND THE RATE OF TECHNOLOGICAL CHANGE
IS INCREASING
• DEVELOPING NEW PRODUCTS FASTER CAN RESULT IN A COMPETITIVE ADVANTAGE
• TIME-BASED COMPETITION
 PRODUCT DEVELOPMENT CONTINUUM

• PURCHASING TECHNOLOGY BY ACQUIRING A FIRM

• SPEEDS DEVELOPMENT
• ISSUES CONCERN THE FIT BETWEEN THE ACQUIRED ORGANIZATION AND PRODUCT AND THE HOST
• JOINT VENTURES
• BOTH ORGANIZATIONS LEARN
• RISKS ARE SHARED
• ALLIANCES
• COOPERATIVE AGREEMENTS BETWEEN INDEPENDENT ORGANIZATIONS
• USEFUL WHEN TECHNOLOGY IS DEVELOPING
• REDUCES RISKS
 DEFINING A PRODUCT

• FIRST DEFINITION IS IN TERMS OF FUNCTIONS

• RIGOROUS SPECIFICATIONS ARE DEVELOPED DURING THE DESIGN PHASE
• MANUFACTURED PRODUCTS WILL HAVE AN ENGINEERING DRAWING
• BILL OF MATERIAL (BOM) LISTS THE COMPONENTS OF A PRODUCT
 PRODUCT DOCUMENTS

• ENGINEERING DRAWING
• SHOWS DIMENSIONS, TOLERANCES, AND MATERIALS
• SHOWS CODES FOR GROUP TECHNOLOGY

• BILL OF MATERIAL
• LISTS COMPONENTS, QUANTITIES AND WHERE USED
• SHOWS PRODUCT STRUCTURE
ENGINEERING DRAWINGS
BILL OF MATERIAL
 MAKE-OR-BUY DECISIONS

• PRODUCE COMPONENTS THEMSELVES OR BUY FROM AN OUTSIDE SOURCE

• VARIATIONS IN
• QUALITY
• COST
• DELIVERY SCHEDULES

• CRITICAL TO PRODUCT DEFINITION

 GROUP TECHNOLOGY

• PARTS GROUPED INTO FAMILIES WITH SIMILAR CHARACTERISTICS

• CODING SYSTEM DESCRIBES PROCESSING AND PHYSICAL CHARACTERISTICS
• PART FAMILIES CAN BE PRODUCED IN DEDICATED MANUFACTURING CELLS
GROUP TECHNOLOGY
 GROUP TECHNOLOGY

• BENEFITS:
• IMPROVED DESIGN
• REDUCED RAW MATERIAL AND PURCHASES
• SIMPLIFIED PRODUCTION PLANNING AND CONTROL
• IMPROVED LAYOUT, ROUTING, AND MACHINE LOADING
• REDUCED TOOLING SETUP TIME, WORK-IN-PROCESS, AND PRODUCTION TIME
 DOCUMENTS FOR PRODUCTION

• ASSEMBLY DRAWING
• ASSEMBLY CHART
• ROUTE SHEET
• WORK ORDER
• ENGINEERING CHANGE NOTICES (ECN)
 DOCUMENTS FOR PRODUCTION

• ASSEMBLY DRAWING
• SHOWS EXPLODED VIEW OF PRODUCT
• DETAILS RELATIVE LOCATIONS TO SHOW HOW TO
ASSEMBLE THE PRODUCT
 DOCUMENTS FOR PRODUCTION

• ASSEMBLY CHART
• IDENTIFIES THE POINT OF PRODUCTION WHERE
COMPONENTS FLOW INTO SUBASSEMBLIES AND
ULTIMATELY INTO THE FINAL PRODUCT
 DOCUMENTS FOR PRODUCTION

• ROUTE SHEET
• LISTS THE OPERATIONS AND TIMES REQUIRED TO PRODUCE A COMPONENT
 DOCUMENTS FOR PRODUCTION

• WORK ORDER
• INSTRUCTIONS TO PRODUCE A GIVEN QUANTITY OF A PARTICULAR ITEM, USUALLY TO A SCHEDULE
 DOCUMENTS FOR PRODUCTION

• ENGINEERING CHANGE NOTICE (ECN)

• A CORRECTION OR MODIFICATION TO A PRODUCT’S DEFINITION OR DOCUMENTATION
• ENGINEERING DRAWINGS
• BILL OF MATERIAL
• QUITE COMMON WITH LONG PRODUCT LIFE CYCLES, LONG MANUFACTURING LEAD TIMES, OR
RAPIDLY CHANGING TECHNOLOGIES.
 CONFIGURATION MANAGEMENT

• THE NEED TO MANAGE ECN’S HAS LED TO THE DEVELOPMENT OF CONFIGURATION

MANAGEMENT SYSTEMS
• A PRODUCT’S PLANNED AND CHANGING COMPONENTS ARE ACCURATELY IDENTIFIED
• CONTROL AND ACCOUNTABILITY FOR CHANGE ARE IDENTIFIED AND MAINTAINED
 PRODUCT LIFE-CYCLE MANAGEMENT (PLM)

• INTEGRATED SOFTWARE THAT BRINGS TOGETHER MOST, IF NOT ALL, ELEMENTS OF PRODUCT
DESIGN AND MANUFACTURE
• PRODUCT DESIGN
• CAD/CAM
• DFMA
• PRODUCT ROUTING
• MATERIALS
• LAYOUT
• ASSEMBLY
• MAINTENANCE
• ENVIRONMENTAL
 SERVICE DESIGN

• SERVICE TYPICALLY INCLUDES DIRECT INTERACTION WITH THE CUSTOMER

• PROCESS-CHAIN-NETWORK (PCN) ANALYSIS FOCUSES ON THE WAYS IN WHICH PROCESSES
CAN BE DESIGNED TO OPTIMIZE INTERACTION BETWEEN FIRMS AND THEIR CUSTOMERS
 PCN ANALYSIS
• CUSTOMER INTERACTION IS A STRATEGIC CHOICE
 PCN ANALYSIS
• DIRECT INTERACTION REGION INCLUDES PROCESS STEPS THAT INVOLVE INTERACTION
BETWEEN PARTICIPANTS
• THE SURROGATE (SUBSTITUTE) INTERACTION REGION INCLUDES PROCESS STEPS IN WHICH
ONE PARTICIPANT IS ACTING ON ANOTHER PARTICIPANT’S RESOURCES
• THE INDEPENDENT PROCESSING REGION INCLUDES STEPS IN WHICH THE SUPPLIER AND/OR
THE CUSTOMER IS ACTING ON RESOURCES WHERE EACH HAS MAXIMUM CONTROL
• ALL THREE REGIONS HAVE SIMILAR OPERATING ISSUES BUT THE APPROPRIATE WAY OF
HANDLING THE ISSUES DIFFERS ACROSS REGIONS – SERVICE OPERATIONS EXIST ONLY WITHIN
THE AREA OF DIRECT AND SURROGATE INTERACTION
• P C N ANALYSIS PROVIDES INSIGHT TO AID IN POSITIONING AND DESIGNING PROCESSES
THAT CAN ACHIEVE STRATEGIC OBJECTIVES
 ADDING SERVICE EFFICIENCY

• SERVICE PRODUCTIVITY IS NOTORIOUSLY LOW PARTIALLY BECAUSE OF CUSTOMER

INVOLVEMENT IN THE DESIGN OR DELIVERY OF THE SERVICE, OR BOTH
• COMPLICATES PRODUCT DESIGN
 ADDING SERVICE EFFICIENCY

• LIMIT THE OPTIONS

• IMPROVES EFFICIENCY AND ABILITY TO MEET CUSTOMER EXPECTATIONS

• DELAY CUSTOMIZATION
• MODULARIZATION
• EASES CUSTOMIZATION OF A SERVICE
 ADDING SERVICE EFFICIENCY

• AUTOMATION
• REDUCES COST, INCREASES CUSTOMER SERVICE

• MOMENT OF TRUTH
• CRITICAL MOMENTS BETWEEN THE CUSTOMER AND THE ORGANIZATION THAT DETERMINE
CUSTOMER SATISFACTION
 DOCUMENTS FOR SERVICES

• HIGH LEVELS OF CUSTOMER INTERACTION NECESSITATES DIFFERENT DOCUMENTATION

• OFTEN EXPLICIT JOB INSTRUCTIONS
• SCRIPTS AND STORYBOARDS ARE OTHER TECHNIQUES
 APPLICATION OF DECISION TREES TO PRODUCT
DESIGN
• PARTICULARLY USEFUL WHEN THERE ARE A SERIES OF DECISIONS AND OUTCOMES THAT LEAD
TO OTHER DECISIONS AND OUTCOMES
 APPLICATION OF DECISION TREES TO PRODUCT
DESIGN
• PROCEDURE:
• INCLUDE ALL POSSIBLE ALTERNATIVES AND STATES OF NATURE – INCLUDING “DOING NOTHING”
• ENTER PAYOFFS AT END OF BRANCH
• DETERMINE THE EXPECTED VALUE OF EACH BRANCH AND “PRUNE” THE TREE TO FIND THE
ALTERNATIVE WITH THE BEST EXPECTED VALUE
 DECISION TREE EXAMPLE

SILICON, INC., A SEMICONDUCTOR MANUFACTURER, IS INVESTIGATING THE POSSIBILITY OF PRODUCING AND

MARKETING A MICROPROCESSOR. UNDERTAKING THIS PROJECT WILL REQUIRE EITHER PURCHASING A
SOPHISTICATED CAD SYSTEM OR HIRING AND TRAINING SEVERAL ADDITIONAL ENGINEERS. THE MARKET FOR THE
PRODUCT COULD BE EITHER FAVORABLE OR UNFAVORABLE. SILICON, INC., OF COURSE, HAS THE OPTION OF
NOT DEVELOPING THE NEW PRODUCT AT ALL. WITH FAVORABLE ACCEPTANCE BY THE MARKET, SALES WOULD
BE 25,000 PROCESSORS SELLING FOR $100 EACH.
WITH UNFAVORABLE ACCEPTANCE, SALES WOULD BE ONLY 8,000 PROCESSORS SELLING FOR $100 EACH. THE
COST OF CAD EQUIPMENT IS $500,000, BUT THAT OF HIRING AND TRAINING THREE NEW ENGINEERS IS ONLY
$375,000. HOWEVER, MANUFACTURING COSTS SHOULD DROP FROM $50 EACH WHEN MANUFACTURING
WITHOUT CAD TO $40 EACH WHEN MANUFACTURING WITH CAD. THE PROBABILITY OF FAVORABLE
ACCEPTANCE OF THE NEW MICROPROCESSOR IS 0.40; THE PROBABILITY OF UNFAVORABLE ACCEPTANCE IS 0.60.
DECISION TREE EXAMPLE
DECISION TREE EXAMPLE
DECISION TREE EXAMPLE
DECISION TREE EXAMPLE
 TRANSITION TO PRODUCTION
• KNOW WHEN TO MOVE TO PRODUCTION
• PRODUCT DEVELOPMENT CAN BE VIEWED AS EVOLUTIONARY AND NEVER COMPLETE
• PRODUCT MUST MOVE FROM DESIGN TO PRODUCTION IN A TIMELY MANNER

• MOST PRODUCTS HAVE A TRIAL PRODUCTION PERIOD TO INSURE PRODUCIBILITY

• DEVELOP TOOLING, QUALITY CONTROL, TRAINING
• ENSURES SUCCESSFUL PRODUCTION

• RESPONSIBILITY MUST ALSO TRANSITION AS THE PRODUCT MOVES THROUGH ITS LIFE CYCLE
• LINE MANAGEMENT TAKES OVER FROM DESIGN

• THREE COMMON APPROACHES TO MANAGING TRANSITION

• PROJECT MANAGERS
• PRODUCT DEVELOPMENT TEAMS
• INTEGRATE PRODUCT DEVELOPMENT AND MANUFACTURING ORGANIZATIONS
 PROCESS STRATEGY

• THE OBJECTIVE IS TO CREATE A PROCESS TO PRODUCE OFFERINGS THAT MEET CUSTOMER

REQUIREMENTS WITHIN COST AND OTHER MANAGERIAL CONSTRAINTS
• HOW TO PRODUCE A PRODUCT OR PROVIDE A SERVICE THAT
• MEETS OR EXCEEDS CUSTOMER REQUIREMENTS
• MEETS COST AND MANAGERIAL GOALS

• HAS LONG TERM EFFECTS ON

• EFFICIENCY AND PRODUCTION FLEXIBILITY
• COSTS AND QUALITY
PROCESS SELECTED MUST FIT WITH VOLUME AND
VARIETY
 PROCESS STRATEGIES

Four basic
strategies

Process focus Repetitive Product focus Mass

focus customization
 PROCESS FOCUS

• FACILITIES ARE ORGANIZED AROUND SPECIFIC ACTIVITIES OR PROCESSES

• GENERAL PURPOSE EQUIPMENT AND SKILLED PERSONNEL
• HIGH DEGREE OF PRODUCT FLEXIBILITY
• TYPICALLY HIGH COSTS AND LOW EQUIPMENT UTILIZATION
• PRODUCT FLOWS MAY VARY CONSIDERABLY MAKING PLANNING AND SCHEDULING A
CHALLENGE
PROCESS FOCUS
 REPETITIVE FOCUS

• FACILITIES OFTEN ORGANIZED AS ASSEMBLY LINES

• CHARACTERIZED BY MODULES WITH PARTS AND ASSEMBLIES MADE PREVIOUSLY
• MODULES MAY BE COMBINED FOR MANY OUTPUT OPTIONS
• LESS FLEXIBILITY THAN PROCESS- FOCUSED FACILITIES BUT MORE EFFICIENT
REPETITIVE FOCUS
 PRODUCT FOCUS

• FACILITIES ARE ORGANIZED BY PRODUCT

• HIGH VOLUME BUT LOW VARIETY OF PRODUCTS
• LONG, CONTINUOUS PRODUCTION RUNS ENABLE EFFICIENT PROCESSES
• TYPICALLY HIGH FIXED COST BUT LOW VARIABLE COST
• GENERALLY LESS SKILLED LABOR
PRODUCT FOCUS
 MASS CUSTOMIZATION

• THE RAPID, LOW-COST PRODUCTION OF GOODS AND SERVICE TO SATISFY INCREASINGLY

UNIQUE CUSTOMER DESIRES
• COMBINES THE FLEXIBILITY OF A PROCESS FOCUS WITH THE EFFICIENCY OF A PRODUCT
FOCUS
MASS CUSTOMIZATION
 COMPARISON OF PROCESS
Process Focus Repetitive Focus Product Focus Mass Customization
(Low-volume, (Modular) (High-volume, (High-volume, High-
High-variety) Low-variety) variety)

1. Small quantity and 1. Long runs, a 1. Large quantity and 1. Large quantity and large
large variety of standardized small variety of variety of products
products product from products
modules

2. Broadly skilled 2. Moderately trained 2. Less broadly 2. Flexible operators

operators employees skilled operators
 COMPARISON OF PROCESS
Process Focus Repetitive Focus Product Focus Mass Customization
(Low-volume, (Modular) (High-volume, (High-volume, High-
High-variety) Low-variety) variety)

3. Instructions for 3. Few changes in the 3. Standardized job 3. Custom orders requiring
each job instructions instructions many job instructions

4. High inventory 4. Low inventory 4. Low inventory 4. Low inventory relative to

the value of the product

5. Finished goods are 5. Finished goods are made 5. Finished goods are 5. Finished goods are build-
made to order and not to frequent forecasts made to a forecast to-order (BTO)
stored and stored
 COMPARISON OF PROCESS
Process Focus Repetitive Focus Product Focus Mass Customization
(Low-volume, (Modular) (High-volume, (High-volume, High-
High-variety) Low-variety) variety)

6. Scheduling is 6. Scheduling is 6. Scheduling is 6. Sophisticated

complex routine routine scheduling
accommodates
custom orders

7. Fixed costs are low 7. Fixed costs are 7. Fixed costs are high 7. Fixed costs tend to be
and variable costs dependent on and variable costs low high and variable costs
high flexibility of the low
facility
 CROSSOVER CHART
• EVALUATE THREE DIFFERENT ACCOUNTING SOFTWARE PRODUCTS
• CALCULATE CROSSOVER POINTS BETWEEN SOFTWARE A AND B AND BETWEEN SOFTWARE B
AND C
Total Fixed Dollars
Cost Required Per
Accounting
Report
Software $200,000 $60
A
Software $300,000 $25
B
Software $400,000 $10
C
 CROSSOVER CHART
• SOFTWARE A IS MOST ECONOMICAL FROM 0 TO 2,857 REPORTS

300,000 + (25 )V2 = 400,000 + (10 )V2

15V2 =100,000
V2 = 6,666
• SOFTWARE B IS MOST ECONOMICAL FROM 2,857 TO 6,666 REPORTS
CROSSOVER CHART
 FOCUSED PROCESSES

• FOCUS BRINGS EFFICIENCY

• FOCUS ON DEPTH OF PRODUCT LINE RATHER THAN BREADTH
• FOCUS CAN BE:
• CUSTOMERS
• PRODUCTS
• SERVICE
• TECHNOLOGY
 SELECTION OF EQUIPMENT

• DECISIONS CAN BE COMPLEX AS ALTERNATE METHODS MAY BE AVAILABLE

• IMPORTANT FACTORS MAY BE:
• COST
• CASH FLOW
• MARKET STABILITY
• QUALITY
• CAPACITY
• FLEXIBILITY
 FLEXIBILITY

• FLEXIBILITY IS THE ABILITY TO RESPOND WITH LITTLE PENALTY IN TIME, COST, OR CUSTOMER
VALUE
• MAY BE A COMPETITIVE ADVANTAGE
• MAY BE DIFFICULT AND EXPENSIVE
• WITHOUT IT, CHANGE MAY MEAN STARTING OVER
 PROCESS ANALYSIS AND DESIGN

• IS THE PROCESS DESIGNED TO ACHIEVE A COMPETITIVE ADVANTAGE?

• DOES THE PROCESS ELIMINATE STEPS THAT DO NOT ADD VALUE?
• DOES THE PROCESS MAXIMIZE CUSTOMER VALUE?
• WILL THE PROCESS WIN ORDERS?
 PROCESS ANALYSIS AND DESIGN

• FLOWCHART
• SHOWS THE MOVEMENT OF MATERIALS

• TIME-FUNCTION MAPPING
• SHOWS FLOWS AND TIME FRAME
TIME-FUNCTION MAP (BASELINE)
TIME-FUNCTION MAP (TARGET)
PROCESS CHART
 PROCESS ANALYSIS AND DESIGN

• VALUE-STREAM MAPPING (VSM)

• WHERE VALUE IS ADDED IN THE ENTIRE PRODUCTION PROCESS, INCLUDING THE SUPPLY CHAIN
• EXTENDS FROM THE CUSTOMER BACK TO THE SUPPLIERS
 VALUE STREAM MAPPING

• BEGIN WITH SYMBOLS FOR CUSTOMER, SUPPLIER, AND PRODUCTION TO ENSURE THE BIG PICTURE
• ENTER CUSTOMER ORDER REQUIREMENTS
• CALCULATE THE DAILY PRODUCTION REQUIREMENTS
• ENTER THE OUTBOUND SHIPPING REQUIREMENTS AND DELIVERY FREQUENCY
• DETERMINE INBOUND SHIPPING METHOD AND DELIVERY FREQUENCY
• ADD THE PROCESS STEPS (I.E., MACHINE, ASSEMBLE) IN SEQUENCE, LEFT TO RIGHT
• ADD COMMUNICATION METHODS, ADD THEIR FREQUENCY, AND SHOW THE DIRECTION WITH ARROWS
• ADD INVENTORY QUANTITIES BETWEEN EVERY STEP OF THE ENTIRE FLOW
• DETERMINE TOTAL WORKING TIME (VALUE-ADDED TIME) AND DELAY (NON- VALUE-ADDED TIME)
VALUE STREAM MAPPING
 SERVICE BLUEPRINTING

• FOCUSES ON THE CUSTOMER AND PROVIDER INTERACTION

• DEFINES THREE LEVELS OF INTERACTION
• EACH LEVEL HAS DIFFERENT MANAGEMENT ISSUES
• IDENTIFIES POTENTIAL FAILURE POINTS
SERVICE BLUEPRINTING
 SPECIAL CONSIDERATIONS FOR SERVICE PROCESS
DESIGN
• SOME INTERACTION WITH CUSTOMER IS NECESSARY, BUT THIS OFTEN AFFECTS
PERFORMANCE ADVERSELY
• THE BETTER THESE INTERACTIONS ARE ACCOMMODATED IN THE PROCESS DESIGN, THE MORE
EFFICIENT AND EFFECTIVE THE PROCESS
• FIND THE RIGHT COMBINATION OF COST AND CUSTOMER INTERACTION
SERVICE PROCESS MATRIX
 SERVICE PROCESS MATRIX

MASS SERVICE AND

PROFESSIONAL SERVICE
• LABOR INVOLVEMENT IS
HIGH
• FOCUS ON HUMAN
RESOURCES
• SELECTION AND TRAINING
HIGHLY IMPORTANT
• PERSONALIZED SERVICES
 SERVICE PROCESS MATRIX
SERVICE FACTORY AND
SERVICE SHOP
• AUTOMATION OF
STANDARDIZED SERVICES
• RESTRICTED OFFERINGS
• LOW LABOR INTENSITY
RESPONDS WELL TO
PROCESS TECHNOLOGY
AND SCHEDULING
• TIGHT CONTROL REQUIRED
TO MAINTAIN STANDARDS
 IMPROVING SERVICE PRODUCTIVITY
Strategy Technique Example
Separation Structuring service so customers Bank customers go to a manager to open
must go where the service is a new account, to loan officers for loans,
offered and to tellers for deposits

Self- service Self-service so customers examine, Supermarkets and department

compare, and evaluate at their stores Internet ordering
own pace

Postponement Customizing at Customizing vans at delivery rather

delivery than at production

Focus Restricting the offerings Limited-menu restaurant

 IMPROVING SERVICE PRODUCTIVITY
Strategy Technique Example
Modules Modular selection of service Investment and insurance selection
Modular production Prepackaged food modules in
restaurants

Automation Separating services that may Automatic teller machines

lend themselves to some type of
automation

Scheduling Precise personnel Scheduling ticket counter personnel at

scheduling 15-minute intervals at airlines

Training Clarifying the service options Investment counselor,

Explaining how to avoid funeral directors After-sale
problems maintenance personnel
 PRODUCTION TECHNOLOGY

• MACHINE TECHNOLOGY
• AUTOMATIC IDENTIFICATION SYSTEMS (AISS)
• PROCESS CONTROL
• VISION SYSTEMS
• ROBOTS
• AUTOMATED STORAGE AND RETRIEVAL SYSTEMS (ASRSS)
• AUTOMATED GUIDED VEHICLES (AGVS)
• FLEXIBLE MANUFACTURING SYSTEMS (FMSS)
• COMPUTER- INTEGRATED MANUFACTURING (CIM)
 MACHINE TECHNOLOGY

• INCREASED PRECISION, PRODUCTIVITY, AND FLEXIBILITY

• REDUCED ENVIRONMENTAL IMPACT
• ADDITIVE MANUFACTURING PRODUCES PRODUCTS BY ADDING MATERIAL, NOT REMOVING IT
• SUPPORTS INNOVATIVE PRODUCT DESIGN, MINIMAL CUSTOM TOOLING REQUIRED, MINIMAL
ASSEMBLY TIME, LOW INVENTORY, AND REDUCED TIME TO MARKET
• COMPUTER NUMERICAL CONTROL (CNC)
 AUTOMATIC IDENTIFICATION SYSTEMS (AISS) AND
RFID
• IMPROVED DATA ACQUISITION
• REDUCED DATA ENTRY ERRORS
• INCREASED SPEED
• INCREASED SCOPE OF PROCESS AUTOMATION
 PROCESS CONTROL

• REAL-TIME MONITORING AND CONTROL OF PROCESSES

• SENSORS COLLECT DATA
• DEVICES READ DATA ON PERIODIC BASIS
• MEASUREMENTS TRANSLATED INTO DIGITAL SIGNALS THEN SENT TO A COMPUTER
• COMPUTER PROGRAMS ANALYZE THE DATA
• RESULTING OUTPUT MAY TAKE NUMEROUS FORMS
 VISION SYSTEMS

• PARTICULAR AID TO INSPECTION

• CONSISTENTLY ACCURATE
• NEVER BORED
• MODEST COST
• SUPERIOR TO INDIVIDUALS PERFORMING THE SAME TASKS
 ROBOTS

• PERFORM MONOTONOUS OR DANGEROUS TASKS

• PERFORM TASKS REQUIRING SIGNIFICANT STRENGTH OR ENDURANCE
• GENERALLY ENHANCED CONSISTENCY AND ACCURACY
 AUTOMATED STORAGE AND RETRIEVAL SYSTEMS
(ASRS)
• AUTOMATED PLACEMENT AND WITHDRAWAL OF PARTS AND PRODUCTS
• REDUCED ERRORS AND LABOR
• PARTICULARLY USEFUL IN INVENTORY AND TEST AREAS OF MANUFACTURING FIRMS
 AUTOMATED GUIDED VEHICLE (AGV)

• ELECTRONICALLY GUIDED AND CONTROLLED CARTS

• USED FOR MOVEMENT OF PRODUCTS AND/OR INDIVIDUALS
 FLEXIBLE MANUFACTURING SYSTEMS (FMS)

• COMPUTER CONTROLS BOTH THE WORKSTATION AND THE MATERIAL HANDLING

EQUIPMENT
• ENHANCE FLEXIBILITY AND REDUCED WASTE
• CAN ECONOMICALLY PRODUCE LOW VOLUME BUT HIGH VARIETY
• REDUCED CHANGEOVER TIME AND INCREASED UTILIZATION
• STRINGENT COMMUNICATION REQUIREMENT BETWEEN COMPONENTS
 COMPUTER-INTEGRATED MANUFACTURING (CIM)

• EXTEND FLEXIBLE MANUFACTURING

• BACKWARD TO ENGINEERING AND INVENTORY CONTROL
• FORWARD INTO WAREHOUSING AND SHIPPING
• CAN ALSO INCLUDE FINANCIAL AND CUSTOMER SERVICE AREAS
• REDUCING THE DISTINCTION BETWEEN LOW-VOLUME/HIGH-VARIETY, AND HIGH-VOLUME/LOW-
VARIETY PRODUCTION
 PROCESS REDESIGN

• THE FUNDAMENTAL RETHINKING OF BUSINESS PROCESSES TO BRING ABOUT DRAMATIC

IMPROVEMENTS IN PERFORMANCE
• RELIES ON REEVALUATING THE PURPOSE OF THE PROCESS AND QUESTIONING BOTH THE
PURPOSE AND THE UNDERLYING ASSUMPTIONS
• REQUIRES REEXAMINATION OF THE BASIC PROCESS AND ITS OBJECTIVES
• FOCUSES ON ACTIVITIES THAT CROSS FUNCTIONAL LINES
• ANY PROCESS IS A CANDIDATE FOR REDESIGN