Chapter 3

Product and Service

Design
Subjects:
Designing Goods
Product and Process Design in
Manufacturing
Service Delivery System Design

© 2008 Prentice Hall, Inc. 5–1

 Strategic Product and Service Design

• The essence of an organization is the

goods and services it offers
– Every aspect of the organization is
structured around them
• Product and service design – or redesign
– should be closely tied to an
organization’s strategy
• Major factors in design strategy: Cost,
Quality, Time-to-market, Customer
satisfaction, Competitive advantage

© 2008 Prentice Hall, Inc. 5–2

 Product or Service Design Activities
1.Translates customer wants and needs into product and
service requirements
2.Refines existing products and services
3.Develops new products and services
4.Formulates quality goals
5.Formulates cost targets
6.Constructs and tests prototypes
7.Documents specifications
8.Translates product and service specifications into process
specifications. Involves Inter-functional Collaboration
Reasons for Product or Service Design
1)Economic; 2)Social and demographic; 3)Political, liability, or legal; 4)
Competitive; 5) Cost or availability; 6)Technological.
© 2008 Prentice Hall, Inc. 5–3
 Considerations in Product or Service Design
 Legal and Ethical Considerations
 Sustainability
 Strategies for product or service life cycle
 Degree of standardization
 Designing for mass customization
 Reliability
 Robust Design
 Degree of newness
 Human factors
 Cultural differences
 Global product design
 Modular Design
 Computer-Aided Design (CAD)
 Computer-Aided Manufacturing (CAM)
 Virtual Reality Technology
 Value Analysis
 Environmental friendly design

© 2008 Prentice Hall, Inc. 5–4

 Legal and Ethical Considerations
 Designers are often under pressure to
-Speed up the design process
-Cut costs
 These pressures force trade-off decisions
-What if a product has bugs/defects?
• Release the product and risk damage to your
reputation
• Work out the bugs and forego revenue
-Product Liability - A manufacturer is liable for any injuries or
damages caused by a faulty product.
-Uniform Commercial Code – Says that products carry an
implication of merchantability and fitness; i.e., a product must
be usable for its intended purpose.

© 2008 Prentice Hall, Inc. 5–5

 Designers Adhere to Guidelines
• Produce designs that are consistent with the
goals of the company
• Give customers the value they expect
• Make health and safety a primary concern
• Consider potential harm to the environment

© 2008 Prentice Hall, Inc. 5–6

 Life Cycles of Products or Services

© 2008 Prentice Hall, Inc. 5–7

 Product Life Cycle
Sales and
Profits ($)

Sales

Profits

Time
Product Introduction Growth Maturity Decline
Develop-
ment

Losses/
Investments ($)
 Introduction Stage of the PLC

Sales
Sales Low
Low sales
sales

Costs
Costs High
High cost
cost per
per customer
customer

Profits
Profits Negative
Negative
Create
Create product
product awareness
awareness
Marketing
Marketing Objectives
Objectives and
and trial
trial
Product
Product Offer
Offer aa basic
basic product
product

Price
Price Use
Use cost-plus
cost-plus

Distribution
Distribution Build
Build selective
selective distribution
distribution

Advertising Build
Build product
product awareness
awareness among
among early
early
Advertising adopters
adopters and
and dealers
dealers
Growth
Growth Stage
Stage of
of the
the PLC
PLC

Sales
Sales Rapidly
Rapidly rising
rising sales
sales

Costs
Costs Average
Average cost
cost per
per customer
customer

Profits
Profits Rising
Rising profits
profits

Marketing
Marketing Objectives
Objectives Maximize
Maximize market
market share
share
Offer
Offer product
product extensions,
extensions, service,
Product
Product warranty
service,
warranty
Price
Price Price
Price to
to penetrate
penetrate market
market

Distribution
Distribution Build
Build intensive
intensive distribution
distribution

Advertising Build
Build awareness
awareness and
and interest
interest in
in the
the
Advertising mass
mass market
market
Maturity
Maturity Stage
Stage of
of the
the PLC
PLC

Sales
Sales Peak
Peak sales
sales

Costs
Costs Low
Low cost
cost per
per customer
customer

Profits
Profits High
High profits
profits

Marketing Maximize
Maximize profit
profit while
while defending
defending
Marketing Objectives
Objectives market
market share
share
Product
Product Diversify
Diversify brand
brand and
and models
models

Price
Price Price
Price to
to match
match or
or best
best competitors
competitors

Distribution
Distribution Build
Build more
more intensive
intensive distribution
distribution

Advertising
Advertising Stress
Stress brand
brand differences
differences and
and benefits
benefits
Decline
Decline Stage
Stage of
of the
the PLC
PLC

Sales
Sales Declining
Declining sales
sales

Costs
Costs Low
Low cost
cost per
per customer
customer

Profits
Profits Declining
Declining profits
profits

Marketing
Marketing Objectives
Objectives Reduce
Reduce expenditure
expenditure and
and milk
milk the
the brand
brand

Product
Product Phase
Phase out
out weak
weak items
items

Price
Price Cut
Cut price
price
Go
Go selective:
selective: phase
phase out
out unprofitable
unprofitable
Distribution
Distribution outlets
outlets
Advertising
Advertising Reduce
Reduce to
to level
level needed
needed toto retain
retain
hard-core
hard-core loyal
loyal customers
customers
 Degree of Standardization
 Standardization: Extent to which there is an absence of variety in a product, service
or process
 Standardized products are immediately available to customers
Advantages of Standardization
 Fewer parts to deal with in inventory & manufacturing
 Design costs are generally lower
 Reduced training costs and time
 More routine purchasing, handling, and inspection procedures
 Orders fillable from inventory
 Opportunities for long production runs and automation
 Need for fewer parts justifies increased expenditures on perfecting designs and
improving quality control procedures.
Disadvantages of standardization
 Designs may be frozen with too many imperfections remaining.
 High cost of design changes increases resistance to improvements.
© 2008Decreased
Prentice Hall, Inc. variety results in less consumer appeal. 5 – 13
 Mass Customization
•Mass customization:
-A strategy of producing standardized goods or services, but
incorporating some degree of customization
-Delayed differentiation
-Modular design
Delayed differentiation: is a postponement tactic
Producing but not quite completing a product or service until
customer preferences or specifications are known.
Modular Design: is a form of standardization in which
component parts are subdivided into modules that are easily
segmented, 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, improved
ability to satisfy customer requirements.

© 2008 Prentice Hall, Inc. 5 – 14

 Reliability
• Reliability: The ability of a product, part, or system to perform its intended
function under a prescribed set of conditions
• Failure: Situation in which a product, part, or system does not perform as
intended
• Normal operating conditions: The set of conditions under which an item’s
reliability is specified
Improving Reliability
• Improve component design
• Improve production/assembly techniques
• Improve testing
• Use redundancy/backup
• Improve preventive maintenance procedures
• Improve user education
• Improve system design

© 2008 Prentice Hall, Inc. 5 – 15

 Robust Design
Robust Design: Design that results in products or services that
can function over a broad range of conditions. 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.
Taguchi Approach Robust Design
Design a robust product
• Insensitive to environmental factors either in
manufacturing or in use.
Central feature is Parameter Design.
Determines:
• factors that are controllable and those not controllable
• their optimal levels relative to major product advances

© 2008 Prentice Hall, Inc. 5 – 16

 Degree of Newness
1. Modification of an existing product/service
2. Expansion of an existing product/service
3. Clone/near copy of a competitor’s product/service
4. New product/service
Degree of Design Change

Type of Design Newness of the Newness to the

Change organization market
Modification Low Low

Expansion Low Low

Clone/copy High Low

New High High

© 2008 Prentice Hall, Inc. 5 – 17
 Value Analysis
 Focuses on design improvement during production
 Examination of the function of parts and materials in an effort to reduce cost
and/or improve product performance
 Seeks improvements leading either to a better product or a product which can be
produced more economically

© 2008 Prentice Hall, Inc. 5 – 18

 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 worldwide
 Design for Manufacturing and
Assembly (DFMA)
 Solve manufacturing problems during the
design stage
 3-D Object Modeling
 Small prototype
development
 CAD through the
internet
 Computer-Aided Design (CAD) is product design using computer graphics.
 increases productivity of designers, 3 to 10 times
 creates a database for manufacturing information on product specifications
 provides possibility of engineering and cost analysis on proposed designs

© 2008 Prentice Hall, Inc. 5 – 19

 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
1. Product quality
2. Shorter design time
3. Production cost reductions
4. Database availability
5. New range of capabilities
© 2008 Prentice Hall, Inc. 5 – 20
 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

© 2008 Prentice Hall, Inc. 5 – 21

 Designing for Manufacturing(DFM)

 The design of products that are compatible with an organization’s

capabilities.
 The more general term design for operations encompasses services
as well as manufacturing

 Design for assembly (DFA): design that focuses on reducing the

number of parts in a product and on assembly methods and
sequences.

© 2008 Prentice Hall, Inc. 5 – 22

 Concurrent Engineering
Concurrent engineering: is bringing together of engineering design and
manufacturing personnel early in the design phase.

Old “over-the-wall” sequential design process

should not be used

 Each function did its work and passed it to

the next function

Replace with a Concurrent Engineering process

 All functions form a design team that

develops specifications, involves
customers early, solves potential
problems, reduces costs, & shortens time
to market

23
 Phases in Product Development
Process
1. Idea generation
2. Feasibility analysis
3. Product specifications
4. Process specifications
5. Prototype development
6. Design review
7. Market test
8. Product introduction
9. Follow-up evaluation
© 2008 Prentice Hall, Inc. 5 – 24
 1. Idea Generation: comes from
various sources
Supply chain based
Ideas Competitor based

Research based
Reverse engineering is the dismantling and inspecting of a competitor’s product to
discover product improvements.
Research & Development (R&D)

© 2008 Prentice Hall, Inc. 5 – 25

 2. Feasibility Analysis
•Market analysis (demand)
•Economic analysis (development cost and production cost, profit potential)
•Technical analysis (capacity requirements and availability, & skills needed)
•Requires collaboration among marketing, finance, accounting, engineering
and operations
3. Product Specification
•Detailed descriptions of what is needed to meet (exceed) customer wants
and requires collaboration among legal, marketing and operations
4. Process Specification
•Alternative process specifications must be weighed in terms of cost,
availability of resources, profit potential and quality.
•Involves collaboration between accounting and operations.

© 2008 Prentice Hall, Inc. 5 – 26

 5. Prototype Development
•One (few) units are made to see if there are any problems with the product
or process specifications.
6. Design Review
•Make any necessary changes or abandon
•Involves collaboration among marketing, finance, engineering, design and
operations
7. Market Test
•Used to determine the extent of consumer acceptance
•If un successful, return to the design review phase; this phase is handled by
marketing
8. Product Introduction
•Promote the product; Handled by marketing
9. Follow-up Evaluation
•Determines if changes are needed & refine forecasts; handled by marketing.

© 2008 Prentice Hall, Inc. 5 – 27

 Service Design
 Service is an act
 Service delivery system
 Facilities
 Processes
 Skills
 Many services are bundled with products
 Service design involves
o The physical resources needed
o The goods that are purchased or consumed by the customer
o Explicit services
o Implicit services
 Service
 Something that is done to or for a customer
 Service delivery system
 The facilities, processes, and skills needed to provide a service
 Product bundle
 The combination of goods and services provided to a customer
 Service package
 The physical resources needed to perform the service
© 2008 Prentice Hall, Inc. 5 – 28
 Phases in Service Design
1. Conceptualize: Idea generation, assessment of
customer wants /needs, assessment of demand
potential
2. Identify service package components
3. Determine performance specifications
4. Translate performance specifications into design
specifications
5. Translate design specifications into delivery
specifications

© 2008 Prentice Hall, Inc. 5 – 29

 Service Blueprinting
• Service blueprinting
– A method used in service design to describe and
analyze a proposed service
• A useful tool for conceptualizing a service delivery
system
Major Steps in Service Blueprinting
1. Establish boundaries
2. Identify steps involved
3. Prepare a flowchart
4. Identify potential failure points
5. Establish a time frame
6. Analyze profitability
© 2008 Prentice Hall, Inc. 5 – 30
 Characteristics of Well Designed
Service Systems

1. Consistent with the organization mission

2. User friendly
3. Robust
4. Easy to sustain
5. Cost effective
6. Value to customers
7. Effective linkages between back operations
8. Single unifying theme
9. Ensure reliability and high quality
© 2008 Prentice Hall, Inc. 5 – 31
 Challenges of Service Design

Variable requirements
Difficult to describe
High customer contact
Service – customer encounter(confrontation )

© 2008 Prentice Hall, Inc. 5 – 32

 Quality Function Deployment (QFD)
• QFD
– An approach that integrates the “voice of the customer” into both
product and service development
– Also known as the “house of quality” because of its appearance
– Identify customer wants
– Identify how the good/service will satisfy customer wants
– Relate customer wants to product how's
– Identify relationships between the firm’s how's
– Develop importance ratings
– Evaluate competing products
– Compare performance to desirable technical attributes

© 2008 Prentice Hall, Inc. 5 – 33

 The House of Quality
A part of the QFD process that utilizes a planning matrix to relate
customer “wants” to “how” the company is going to meet those
“wants”.

Correlation
matrix

Design
requirements

Customer
require- Relationship Competitive
assessment
ments matrix

Specifications
or
target values
© 2008 Prentice Hall, Inc. 5 – 34
 QFD House of Quality
Interrelationships
Customer
importance
How to satisfy
ratings
customer wants

assessment
Competitive
What the Relationship
customer matrix
wants

Target values Weighted

rating
Technical
evaluation
 House of Quality Example 1
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 Example
Interrelationships

How to Satisfy
Customer Wants
What the
customer wants

Competitors
Analysis of
What the
Relationship
Customer
Matrix
Wants

Technical
Customer
Attributes and
Evaluation
importance
rating
(5 = highest)
Lightweight 3
Easy to use 4
Reliable 5
Easy to hold steady 2
Color correction 1
 House of Quality Example
Interrelationships

How to Satisfy
Customer Wants

Competito
Analysis
What the
Relationship

rs
of
Customer
Matrix
Wants

Technical
Attributes and
Evaluation
Low electricity requirements

Aluminum components

Ergonomic design How to Satisfy

Customer Wants
Auto exposure

Paint pallet
Auto focus
 House of Quality Example
Interrelationships

How to Satisfy
High relationship Customer Wants

Competitors
Analysis of
What the
Relationship
Customer
Matrix
Medium relationship Wants

Low relationship Technical

Attributes and
Evaluation

Lightweight 3
Easy to use 4
Reliable 5
Easy to hold steady 2
Color corrections 1

Relationship matrix
 House of Quality Example Interrelationships

How to Satisfy
Customer Wants

Competitors
Analysis of
What the
Relationship
Customer
Matrix
Wants

Technical
Attributes and
Evaluation

Relationships between
the things we can do
Low electricity requirements

Aluminum components

Ergonomic design
Auto exposure

Paint pallet
Auto focus
 House of Quality Example 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
Color corrections 1

Our importance ratings 22 9 27 27 32 25

Weighted rating
 House of Quality Example
Interrelationships

How to Satisfy
Customer Wants

Competitors
Analysis of
What the
Relationship
Customer
Matrix
Wants

Company A

Company B
How well do competing Technical
Attributes and
products meet customer wants Evaluation

Lightweight 3 G P
Easy to use 4 G P
Reliable 5 F G
Easy to hold steady 2 G P
Color corrections 1 P P

Our importance ratings 22 5

 House of Quality Example
Interrelationships

How to Satisfy
Customer Wants
Competitors
Analysis of

Relationship

Failure 1 per 10,000

Matrix

Technical

Panel ranking
Attributes and
Evaluation
Target values
(Technical

2 circuits
attributes)

2’ to ∞
0.5 A

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

Low electricity requirements

Aluminum components

Ergonomic design
Auto exposure

Company A

Company B
Paint pallet
Auto focus
Completed
House of Lightweight
Easy to use
3
4
G P
G P

Quality Reliable
Easy to hold steady
5
2
F G
G P
Color correction 1 P P
Our importance ratings 22 9 27 27 32 25

Failure 1 per 10,000

Target values

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
 The House of Quality Example 2
Correlation:
X Strong positive
Positive
X X
X
X Negative
X
* Strong negative

Water resistance
Im

Accoust. Trans.
Energy needed
Energy needed
po Engineering

to close door

to open door
rta

Check force
Competitive evaluation

resistance
Door seal
nc Characteristics
X = Us
et

Window
on level
ground
A = Comp. A
oC B = Comp. B
Customer us (5 is best)
Requirements t. 1 2 3 4 5

X AB
Easy to close 7
Stays open on a hill 5 X AB

Easy to open 3 XAB

A XB
Doesn’t leak in rain 3
No road noise 2 X A B

Importance weighting 63 63 45 27 6 27 Relationships:

level to 7.5 ft/lb

Strong = 9
Reduce energy

Reduce energy
Reduce force
current level

current level
current level
to 7.5 ft/lb.
Medium = 3
Target values
Maintain

Maintain
Maintain
Small = 1
to 9 lb.

5 B
BA BA
B B BXA X
Technical evaluation 4
A
X
A X
3
(5 is best) 2
X
X A
1

© 2008 Prentice Hall, Inc. 5 – 45

 House of Quality 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

© 2008 Prentice Hall, Inc. 5 – 46

 The Kano Model
Kano
KanoModel
Model
atisfaction
erSSatisfaction

Excitement
Excitement
Expected
Expected
Customer

Must
MustHave
Have
Custom

Customer
CustomerNeeds
Needs

The Kano model is a theory for product development and

customer satisfaction developed in the 1980s by Professor
Noriaki Kano
© 2008 Prentice Hall, Inc. 5 – 47
 Operations Strategy
 Effective product and service design can help the
organization achieve competitive advantage:
1. Increase emphasis on component commonality
2. Package products and services
3. Use multiple-use platforms
4. Consider tactics for mass customization
5. Look for continual improvement
6. Shorten time to market

© 2008 Prentice Hall, Inc. 5 – 48

 Shorten Time to Market
1. Use standardized components
2. Use technology
3. Use concurrent engineering

© 2008 Prentice Hall, Inc. 5 – 49

 Ethics and Environmentally
Friendly Designs

It is possible to enhance productivity, drive

down costs, and preserve resources

Effective at any stage of the product life cycle

 Design
 Production
 Destruction

© 2008 Prentice Hall, Inc. 5 – 50

 Goals for Ethical and
Environmentally Friendly Designs
1. Develop safe and more environmentally sound products
2. Minimize waste of raw materials and energy
3. Reduce environmental liabilities
4. Increase cost-effectiveness of complying with environmental
regulations
5. Be recognized as a good corporate citizen

© 2008 Prentice Hall, Inc. 5 – 51

 Guidelines for Environmentally Friendly
Designs
1. Make products recyclable
2. Use recycled materials
3. Use less harmful ingredients
4. Use lighter components
5. Use less energy
6. Use less material

© 2008 Prentice Hall, Inc. 5 – 52

 Legal and Industry Standards
For Design …international
 Federal Drug Administration
 Consumer Products Safety Commission
 National Highway Safety Administration
 Children’s Product Safety Act
For Legal and Industry Standards….Ethiopia
 Food, Medicine and Health Care Administration
and Control Authority
 Ethiopian Standard Agency
 Quality and Standards Authority of Ethiopia (QSAE)
© 2008 Prentice Hall, Inc. 5 – 53
 Legal and Industry Standards
For Manufacture/Assembly …
Occupational Safety and Health Administration
Environmental Protection Agency
Professional Ergonomic Standards
State and local laws dealing with employment standards,
discrimination, etc.
Ergonomics-the
Ergonomics- study of how a workplace and the
equipment used there can best be designed for comfort,
efficiency, safety, and productivity.
For Disassembly/Disposal …
Vehicle Recycling Partnership
Increasingly rigid laws worldwide

© 2008 Prentice Hall, Inc. 5 – 54

 Time-Based Competition

 Product life cycles are becoming

shorter and the rate of technological
change is increasing
 Developing new products faster can
result in a competitive advantage

© 2008 Prentice Hall, Inc. 5 – 55

 Acquiring Technology
 By Purchasing a Firm
 Speeds development
 Issues concern the fit between the acquired
organization and product and the host
 Through Joint Ventures
 Both organizations learn
 Risks are shared
 Through Alliances
 Cooperative agreements between independent
organizations

© 2008 Prentice Hall, Inc. 5 – 56

 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
© 2008 Prentice Hall, Inc. 5 – 57
 Service Design
(a) Customer participation in design
 Service typically includes direct such as pre-arranged funeral services
or cosmetic surgery
interaction with the customer
 Increased opportunity for customization
 Reduced productivity
(b) Customer participation in
delivery such as stress test for
 Cost and quality are still determined at cardiac exam or delivery of a
baby
the design stage
 Delay customization
(c) Customer participation in design and
delivery such as counseling, college
 Modularization education, financial management of
personal affairs, or interior decorating
 Reduce customer interaction, often
through automation Figure 5.12
© 2008 Prentice Hall, Inc. 5 – 58
 END

© 2008 Prentice Hall, Inc. 5 – 59