Design of Goods

5 and Services

PowerPoint presentation to accompany

Heizer and Render
Operations Management, 10e
Principles of Operations Management, 8e
PowerPoint slides by Jeff Heyl

© 2011 Pearson Education, Inc. publishing as Prentice Hall 5-1

 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

© 2011 Pearson Education, Inc. publishing as Prentice Hall 5-2

 Product Life Cycles
Cost of development and production
Sales, cost, and cash flow

Sales revenue
Net revenue (profit)

Cash
flow

Negative
cash flow Loss

Introduction Growth Maturity Decline

Figure 5.1

© 2011 Pearson Education, Inc. publishing as Prentice Hall 5-3

 Product Life Cycle
Introductory Phase
 Fine tuning may warrant
unusual expenses for
1. Research
2. Product development
3. Process modification and
enhancement
4. Supplier development

© 2011 Pearson Education, Inc. publishing as Prentice Hall 5-4

 Product Life Cycle

Growth Phase
 Product design begins to
stabilize
 Effective forecasting of
capacity becomes necessary
 Adding or enhancing capacity
may be necessary

© 2011 Pearson Education, Inc. publishing as Prentice Hall 5-5

 Product Life Cycle
Maturity Phase
 Competitors now established
 High volume, innovative
production may be needed
 Improved cost control,
reduction in options, paring
down of product line

© 2011 Pearson Education, Inc. publishing as Prentice Hall 5-6

 Product Life Cycle

Decline Phase
 Unless product makes a
special contribution to the
organization, must plan to
terminate offering

© 2011 Pearson Education, Inc. publishing as Prentice Hall 5-7

 Product Life Cycle Costs
Costs committed
100 –

80 –
Percent of total cost

60 – Costs incurred

40 –

20 – Ease of change

0–
Concept Detailed Manufacturing Distribution,
design design service,
prototype and disposal
© 2011 Pearson Education, Inc. publishing as Prentice Hall 5-8
 Product Development
Ideas
System
Ability Figure 5.3

Customer Requirements

Functional Specifications

Product Specifications Scope for

Scope of design and
product Design Review engineering
development teams
team Test Market

Introduction

Evaluation

© 2011 Pearson Education, Inc. publishing as Prentice Hall 5-9

 Quality Function
Deployment
1. Identify customer wants
2. Identify how the good/service will satisfy
customer wants
3. Relate customer wants to product hows
4. Identify relationships between the firm’s hows
5. Develop importance ratings
6. Evaluate competing products
7. Compare performance to desirable technical
attributes

© 2011 Pearson Education, Inc. publishing as Prentice Hall 5 - 10

QFD House of Quality
Interrelationships

How to Satisfy
Customer Wants

Competitors
Analysis of
What the
Customer Relationship
Wants Matrix

Technical
Attributes and
Evaluation
5 - 11
 House of Quality Example

Your team has been charged with

designing a new camera for Great
Cameras, Inc.
The first action is
to construct a
House of Quality

5 - 12
 Interrelationships

How to Satisfy
Customer Wants

Competitors
Analysis of
What the
Relationship
Customer
Matrix
Wants

What the
Technical
Attributes and
Evaluation

customer
wants Customer
importance
rating
(5 = highest)
Lightweight 3
Easy to use 4
Reliable 5
Easy to hold steady 2
No double exposures 1

5 - 13
 Interrelationships

How to Satisfy
Customer Wants

Competitors
Analysis of
What the
Relationship
Customer
Matrix
Wants

Technical
Attributes and
Evaluation
Low electricity requirements
Aluminum components

Ergonomic design
Auto film advance How to Satisfy
Auto exposure

Customer Wants
Auto focus

5 - 14
 Interrelationships

How to Satisfy
Customer Wants

Competitors
Analysis of
What the
Relationship
Customer
Matrix
Wants

High relationship Technical

Attributes and
Evaluation

Medium relationship
Low relationship

Lightweight 3
Easy to use 4
Reliable 5
Easy to hold steady 2
No double exposures 1

Relationship matrix
5 - 15
 Interrelationships

How to Satisfy
Customer Wants

Competitors
Analysis of
What the
Relationship
Customer
Matrix
Wants

Technical
Attributes and
Evaluation

Relationships
between the
Low electricity requirements
things we can do

Aluminum components

Ergonomic design
Auto film advance
Auto exposure
Auto focus

5 - 16
 Interrelationships

How to Satisfy
Customer Wants

Competitors
Analysis of
What the
Relationship
Customer
Matrix
Wants

Technical
Attributes and
Evaluation

Lightweight 3
Easy to use 4
Reliable 5
Easy to hold steady 2
No double exposures 1
Our importance ratings 22 9 27 27 32 25

Weighted
rating
5 - 17
 Interrelationships

How to Satisfy
Customer Wants

Competitors
Analysis of
What the
Relationship
Customer
Matrix
Wants

Technical
Attributes and

Company B
Company A
Evaluation

How well do competing

products meet
customer wants

Lightweight 3 G P
Easy to use 4 G P
Reliable 5 F G
Easy to hold steady 2 G P
No double exposures 1 P P
Our importance ratings 22 5
5 - 18
 Interrelationships

How to Satisfy
Customer Wants

Competitors
Analysis of
What the
Relationship
Customer
Matrix
Wants

Technical
Attributes and
Evaluation

Failure 1 per 10,000

Panel ranking
Technical
attributes

2 circuits
2’ to ∞
0.5 A

75%
Company A 0.7 60% yes 1 ok G
Technical
evaluation Company B 0.6 50% yes 2 ok F
Us 0.5 75% yes 2 ok G
5 - 19
Completed
House of
Quality

5 - 20
 HOQ Sequence
Deploying resources through the
organization in response to
customer requirements

Quality
plan
Production
process

Production
Specific
House

process
components

components
House 4

Specific
Design
characteristics
characteristics

3
House
Design

2
requirements
Customer

House
1

Figure 5.4

5 - 21
 Organizing for Product
Development
3) Team approach (Concurrent Engineering)
 Cross functional – representatives
from all disciplines or functions
 Product development teams, design
for manufacturability teams, value
engineering teams
Marketability, manufacturability, serviceability
4) Japanese “whole organization” approach
 No organizational divisions
5 - 22
 Service Design
 Service typically includes direct
interaction with the customer
 Increased opportunity for customization
 Reduced productivity
 Cost and quality are still determined at
the design stage
 Delay customization
 Modularization
 Reduce customer interaction, often
through automation
© 2011 Pearson Education, Inc. publishing as Prentice Hall 5 - 23
 Service Design

Figure 5.12
© 2011 Pearson Education, Inc. publishing as Prentice Hall 5 - 24
 Service Design

Figure 5.12
© 2011 Pearson Education, Inc. publishing as Prentice Hall 5 - 25
Service Mapping/Blueprinting
A tool for simultaneously depicting the
service process, the points of customer
contact, and the evidence of service from
the customer’s point of view.

Process

Service Points of Contact

Mappin
g Evidence

5 - 26
 Blueprint components
• Customer actions: it includes steps, choices,
activities and interactions that customer
performs in the process of purchasing,
consuming and evaluating the service
• Onstage employee actions: steps and activities
that the contact employees performs that are
visible to the customer.
• Backstage employee actions: steps and
activities that occur behind the scene to support
onstage activities.

5 - 27
 Blueprint components
• Support processes: covers the
internal services, steps and
interactions that take place to
support the contact employees in
delivering the service.

5 - 28
Service Blueprint Components
CUSTOMER ACTIONS
line of interaction

“ONSTAGE” CONTACT EMPLOYEE ACTIONS

line of visibility

“BACKSTAGE” CONTACT EMPLOYEE ACTIONS

line of internal interaction

SUPPORT PROCESSES

5 - 29
 Express Mail Delivery Service
Truck Truck
Packaging Packaging
Forms Forms
EVIDENCE
CONTACT PERSON CUSTOMEPHYSICAL

Hand-held Hand-held
Computer Computer
Uniform Uniform

Customer Customer Receive

Calls Gives Package
Package
(Back Stage) (On Stage) R

Driver
Picks Deliver
Up Pkg. Package

Customer
Service
Order

Airport Fly to
Dispatch
Receives Sort Unload Load
Driver Fly to
& Loads Center & On
Destinatio Sort
SUPPORT

Truck
PROCESS

Load on
Airplane
n

Sort
Packages

5 - 30
 Overnight Hotel Stay
Bill
EVIDENCE
CUSTOMER PHYSICAL

Desk
Hotel Cart for Desk Elevators Cart for Room Menu Delivery Food Lobby
Exterior Bags Registration Hallways Bags Amenities Tray Hotel
Parking Papers Room Bath Food Exterior
Lobby Appearance Parking
Key
Arrive Give Bags Call Check out
Go to Receive Sleep Receive
at to Check in Room Eat and
Room Bags Shower Food
Hotel Bellperson Service Leave
SUPPORT PROCESS (Back Stage) (On Stage)
CONTACT PERSON

Greet and
Process Deliver Deliver Process
Take
Registration Bags Food Check Out
Bags

Take
Take Bags Food
to Room Order

Registration Prepare Registration

System Food System

5 - 31
 Building a Service Blueprint

Step
Step11 Step
Step22 Step
Step33 Step
Step44 Step
Step55 Step
Step66
Map Map Add
Identify
Identifythe
the Identify
Identifythe
the Mapthethe Map Link
Link Add
process to customer process contact
contact customer evidence
evidence
process to customer process customer
from employee ofofservice
be
beblue-
blue- oror fromthe
the employee and
andcontact
contact service
printed. customer customer’s actions,
actions, person atateach
each
printed. customer customer’s person
point onstage customer
segment.
segment. pointofof onstage activities
activitiestoto customer
view. and
andback-
back- needed action
action
view. needed
stage.
stage. support step.
step.
support
functions.
functions.

5 - 32
 Service Blueprint of Presby Neuro
Clinic
PHYSICAL Front Waiting Front Waiting Front Hallway Exam MRI & Exam MRI & Door Tag Waiting Check-
out
EVIDENCE Desk Room Desk Room Desk Room Chart Room Chart Room Room
Sign In Wait Check-in Wait Responds Follow Wait Answer Wait Ask Retur Wait Check-
PATIENT
ACTIONS to in Question Question n Door out, Pay,
Exam Exam s s Tag & Leave
Rm Rm
Line of
Interacti
on
ONSTAG Call
Check
M eet
Escort Process
E Welcom Process Patient to Exam
Vitals &
Dr. & Check-
Ask
CONTAC e Rm Quest
Kassam out
T
PERSON
Line of
Visibility

BACKSTAG Get See Grab Check Place T See

See See
E CONTACT Patient
Other Other Door Other
Patient in ak Other
PERSON Chart Tag Location Kas sa
Patients Patients Patients e Patient
m Bin
A s
Brings Chart in Grab Kassam
Door To Be Chart Gets w
Tag S een from Quick ay
Back Bin Bin Review Ch
Chart Write Rm Check ar
Taken # on Patient t
Dictation
by Staff Schedul Location
e

Line of Internal
Interaction
Records/ Door Chart Records/
SUPPORT Debbie’s Database Tag Bin Schedul Storage Database
PROCESSES Chart System System System e System System
Cart System

Blueprints in Service Design

Source: Kipum Lee http://kipw
orks.com 5 - 33
If you go here
Source: thomas-merton
on Flickr 5 - 34
You expect
this
Source: kevinomara
on Flickr 5 - 35
If you expect this
Source: http://www.gigipad
ovani.it 5 - 36
Then too fast is a service failure
Source: stlbites on
Flickr5 - 37
Time information helps change perception
Source: jmpznz on
Flickr 5 - 38
 Blueprints Can Be Used By:
• Service Marketers
– creating realistic customer
expectations
• service system design
• promotion
• Operations Management
– rendering the service as
promised
• managing fail points
• training systems
• quality control
• Human Resources
– empowering the human element
• job descriptions
• selection criteria
• appraisal systems
• System Technology
– providing necessary tools:
• system specifications
• personal preference databases
5 - 39