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Operations Management

Chapter III: Generating New Products OM Issues

New Product opportunities, Product Development Stages, QFD, Kano Model, Manufacturability and Value Engineering, Issues for Product Design Robust, Modular, CAD and CAM, VA


International Operational Strategies

Cost Reduction Considerations

Global Strategy Standardized Product Economies of Scale Cross Cultural Learning

Transnational Strategy Move resources, idea across national boundaries Economies of Scale Cross Cultural Learning EXAMPLES Nestle Coca Cola

EXAMPLES Mobile Phones TVs

International Strategy Import/export or license existing product EXAMPLES Harley Davidson Apple Products

Multi Domestic Strategy Use existing domestic model globally Franchise, JV, subsidiaries EXAMPLES MC Donald Cars

Low Local Responsiveness Considerations

(Quick Response and / or Differentiation)


Process Design


Variety of Products

Process-focused JOB SHOPS (Print shop, emergency room, machine shop, finedining restaurant)

Repetitive (modular) focus

Mass Customization Customization at high Volume (Dell Computers PC, cafeteria)


ASSEMBLY LINE (Cars, appliances, TVs, fast-food restaurants)

Product focused
CONTINUOUS (steel, beer, paper, bread, institutional kitchen)

Low Low Moderate Volume High

Product Decision
Good Operations Managers try to integrate and develop strong communication among customer, product, processes and suppliers that results in high success rate for their new products. An effective product strategy, links product decision with investment, market share, and product life cycle, and defines the breadth of the product line.

Objective of the Product Decision is to develop and implement a product strategy that meet the demands of the market place with a competitive advantage.

Humor in Product Design

As the customer wanted it. As Marketing interpreted it.

1984-1994 T/Maker Co.

1984-1994 T/Maker Co.

As Operations made it.

As Engineering designed it.

1984-1994 T/Maker Co.

1984-1994 T/Maker Co.

What Does Product and Service Design Do?

Translate customer wants and needs into product and service requirements

Refine existing products and services

Develop new products and or services

Formulate quality goals

Formulate cost targets

Construct and test prototypes

Document everything

Generating New Products New Product Opportunities PESTLE + Customer

Political Economical Technological Sociological and Demographic Legal Environmental Customer

Major Factors in Product / Service Design

Cost Quality Time-to-market Customer satisfaction Competitive advantage Value Analysis

Value Analysis
Is the item necessary? Does it add value? Are there any alternative sources? Is there any substitute at low cost but with same quality? Can two or more parts / assemblies be combines?

Objectives of Product and Service Design

Understand what the customer wants Profit Vs. Quality

Other factors to consider are,

Function Cost Appearance Volume Ease of Production Ease of assembly Ease of maintenance Ease of Services

Design for Operations Considering overall capabilities of the organization in designing goods and services.

Major Factors in Product / Service Design

1. 2. 3. 4. 5. Product Development System and Stages Product Liability and Uniform Commercial Code Product and Process Life Cycle (PPLC) Standardization and Interchangeability of parts Design for Mass Customization
a. Mass Customization b. Delayed Differentiation c. Modular Design

6. 7. 8. 9.

Reliability, Failure and Normal Operating Conditions Robust Design Degree of Newness Cultural Differences

Phases in Product Design and Development

An effective product strategy links product decisions with Cash Flow, Market Dynamics, PLC, and the organizations capabilities Optimum product development depends not only on support from other parts of the firm but also on the successful integration of all 10 OM decisions, from product design to maintenance.
Scope of product development team

Idea generation Assessment of firms ability to carry out Customer Requirements Functional Specification Scope of design for Product Specifications manufacturability and Design Review value engineering Test Market teams Introduction to Market Evaluation

Quality Function Deployment

QFD - A process for determining customer requirements (customer wants) and translating them into the attributes (the hows) that each functional area can understand and act on.
QFD, Is a Product Design Process using CFTs (Cross-Functional Teams) Marketing, engineering, manufacturing
Translates customer preferences into specific product characteristics Involves creating 4 tabular Matrices or Houses Breakdown product design into increasing levels of detail

QFD helps in, Determining what will satisfy the customer and where and how to deploy quality efforts.

The House of Quality

One of the tools of QFD is House of Quality
House of Quality is a graphic technique for defining the relationship between customer desires and product (or service)

Correlation matrix Design requirements

Customer requirements

Relationship matrix

Competitive assessment

Specifications or target values

QFD House of Quality Sequence indicates how to deploy resources to achieve customer requirements

Steps to build House of Quality

Identify customer wants Identify how the good / service will satisfy customer wants Relate customer wants to product hows Identify relationships between the firms hows Develop importance ratings Evaluate competing products Determine the desirable technical attributes, your performance, and the competitors performance against these attributes.

The House of Quality Example

Youve been assigned temporarily to a QFD team. The goal of the team is to develop a new camera design. Build a House of Quality.
1984-1994 T/Maker Co.

QFD House of Quality

QFD Another Example


X Water resistance

Strong positive Positive Negative Strong negative

Check force on level ground

Door seal resistance

Engineering Characteristics

Accoust. Trans. Window

Energy needed to close door

Energy needed to open door

Competitive evaluation
X = Us A = Comp. A B = Comp. B (5 is best) 1 2 3 4 5

Customer Requirements Easy to close Stays open on a hill Easy to open Doesnt leak in rain No road noise 7 5 3 3 2




Importance weighting

Reduce energy level to 7.5 ft/lb

Maintain current level

Reduce force to 9 lb.

Reduce energy to 7.5 ft/lb.

Maintain current level

Maintain current level

Strong = 9 Medium = 3

Target values

Small = 1

Technical evaluation (5 is best)

5 4 3 2 1







Kano Model
Kano Model

Customer Satisfaction

Excitement Expected Must Have

Customer Needs

III. Organizing for Product Development

Four Approaches
1. Traditional US Approach An Organization with distinct departments (R & D, Engineering, Manufacturing etc.) 2. Assigning the Product Manager: PM is assigned to champion the product through the product development system and related organizations.

3. Use of Teams: Product Development Teams, Design for Manufacturability Teams, Value Engineering Teams
1. Also called as Cross Functional Teams 2. Use of such teams is also called as Concurrent Engineering (Bringing together of engineering design and manufacturing personnel early in the design phase.)

4. Japanese Approach: Collegial model and less structured, no strict departmentalization.

IV. Manufacturability and Value Engineering

Manufacturability and Value Engineering activities are concerned with improvement of design and specifications at the Research, Development, Design and Production stages of product development. They provide immediate benefit of Cost Reduction

1. 2. 3. 4. 5. 6. Reduced complexity of the product Additional standardization of components: Improvement of functional aspects of the product: Improved Job Design and Job Safety Improved Maintainability (or Serviceability) of a product Robust Design


Issues for Product Design 1. Robust Design
2. Modular Design 3. Computer-Aided Design (CAD) 4. Computer-Aided Manufacturing (CAM)

Robust Design
The product is designed so that small variations in production or assembly do not adversely affect the product. A design that can be produced to requirements even with unfavorable conditions in the production process.

A Design that results in products or services that can function over a broad range of conditions.

Modular Design
Modular design is a form of standardization in which component parts are subdivided into modules that are easily replaced or interchanged.

It allows:

easier diagnosis and remedy of failures

easier repair and replacement

simplification of manufacturing and assembly Adds flexibility to both production and marketing Products designed in easily segmented components.

Computer Aided Design (CAD)

CAD is the use of computers to interactively design products and prepare engineering documentation. CAD allows designers to use 3 Dimensional drawings to save time and money. Design engineer develops rough sketch of product Uses computer to draw product Often used with CAM CAD and Internet and E-Commerce Design for Manufacture and Assembly (DFMA) Software Allows integration products designs before the product is manufactured 3-D Object Modeling Useful for small prototype development by rapidly building up a model in very thin layers of synthetic materials for evaluation. Standard for the Exchange of Product Data (STEP): Permits manufacturers to express 3-D product information in a standard format so it can be exchanged internationally, allowing geographically dispersed manufacturers to integrate design, manufacture, and support processes.

Computer Aided Manufacturing (CAM)

CAM refers to the use of specialized computer programs to direct and control manufacturing equipment.

Documents for Production

Assembly Drawing Assembly Chart Route Sheet Work Order

Documents for Production

Documents for Production

Documents for Production

Ethics and Environmentally Friendly Designs

1. At the Design Stage: 2. At the Production Stage: 3. At the Destruction Stage:

Ethical Approach:

View the products from the systems perspective Impact of product on the entire economy. Life cycle view of the product from design to disposition.

Ethics and Environmentally Friendly Designs

Make products recyclable Use recycled materials Use less harmful ingredients Use lighter components Use less energy Use less material

Global Product Design Virtual teams

Uses combined efforts of a team of designers working in different countries Provides a range of comparative advantages over traditional teams such as:
Engaging the best human resources around the world Possibly operating on a 24-hr basis Global customer needs assessment Global design can increase marketability

Reverse Engineering

The dismantling and inspecting of a competitors product to discover product improvements.

Thank You