Chapter II

Design of the operation system

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 Strategic Product and Service Design

• The essence/sprit of an organization is the goods and services it

offers
 B/C there is a direct link between the design of products and
services and the success of the organization .
• Product and service design or redesign should be closely tied to
an organization’s strategy.
• So product and service design plays a strategic role in the degree
to which an organization is able to achieve its goals.

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• Product selection is a strategic decision for any
organization.
• What products to produce in what form and with what
features is very important because :
the technology used,
the capacity of the productive system,
the location of the production facilities,
the organization of the production function,
the planning and control systems, etc. are dependent
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 • The competitiveness and profitability of a firm depend on:
 design and quality of the products and services that it
produces, and
on the cost of production.

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2.1.1 PRODUCT DESIGN

What is product design?

• It is the process of deciding on the unique characteristics
and features of the company’s product.
•  it is the structuring of component parts or activities to
provide a specified value.
• On engineering function, it entails preparing detailed
drawing or specifications that give dimensions, weights,
colors, and other physical
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characteristics.
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• In service industries, product specification describes
what service employees will provide for their clients.
• The specification may include an environmental
requirement, such as a
- a procedure for service delivery, such as the steps
for admitting a patient to a hospital

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• Product design and process selection affect
 product quality,
 product cost, and
 customer satisfaction.

• if a product is amid to achieve customer satisfaction,

 it must have the combined characteristics of good design,
 competitive pricing, and
 the ability to fill a market need.

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 Product design Vs service design
Good design Service

 defines appearance of product  specifies what physical items and

 sets standards for performance benefits customer is to receive from
service

 specifies which materials are to be  depends on trained personnel

used  defines environment in which service

will take place
 determines dimensions
designed in market ( with customer)
 often standardized
environment.
 often designed in industry
 quality inherent in process( a function
environment
of Personnel)
 Quality inherent in product
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 Reasons for product or service design

Organizations become involved in product or service

design for a variety of reasons
to be competitive by offering new products or
services.
to make the business grow and increase profits

to develop new products or services as an alternative

to downsizing
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 Due to Increased emphasis in customer satisfaction and pressure
from competitors.
 Sometimes product or service design is actually redesign. Due to
customer complaints,
accidents or injuries,

excessive warranty claims or low demand.

The desire to achieve cost reductions in labor or materials

can also be a motivating factor.

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 Objectives of Product and Service Design

• Main focus
– Customer satisfaction
• Secondary focus
– Function of product/service, Cost/profit, Quality,
Appearance, Ease of production/assembly, Ease of
maintenance/service

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 Factors to be considered when designing a product

There are many product features which can be affected by product

design.
1. Manufacturing facility: Product design should appropriate with the
facilities available in the factory regarding to equipment, labor &
layout
2. Function: the new design must properly meet the recipients need and
perform the function for which it is designed.
3. Cost: the total cost incurred in producing the new design should not
be excessive; else that will affect its demand.

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 4. Quality: the quality of the new design should be as high as
possible, within the constraints of the cost.

 Quality can cost money and excessive quality will increase

the cost and reduce demand, whereas inadequate quality
will affect the performance and lead to complaints and fall
in demand.

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5. Aesthetic: The product should be good in appearance
and should have attractive colors.
6. Reliability: the new design should function normally
without failures for the expected duration. It is the
ability of a product, part, or system to perform its
intended function under a prescribed set of
conditions.

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7. Environmental Impact: the new design should not degrade the
environment.

8. Product Safety: the new design should not pose a hazard to the
recipient.
9. Productivity: the new design should be producible with ease
and speed.
10. Designing For Operations: taking into account the
capabilities of the organization in designing goods and
services

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11. Ergonomics – it should be easy to use, operate and should cause
minimum possible fatigue and provide comfort.

12. Maintenance- should easily be maintained and serviced

13. Legal
– Product liability: A manufacturer is liable for any injuries or
damages caused by a faulty product.
– Uniform commercial code: Products carry an implication of
merchantability and fitness.
14. Ethical-

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 Product or Service Design Activities

 Translate customer wants and needs into product and service

requirements
 Refine existing products and services
 Develop new products and services

 Formulate quality goals

 Formulate cost targets
 Construct and test prototypes
 Document specifications

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 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

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 Phases in Product Development Process
(from marketing view point)

1. Idea generation
2. Feasibility analysis( idea screening)
3. Product specifications
4. Process specifications
5. Prototype development
6. Design review
7. Market test
8. Product introduction
9. Follow-up evaluation

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 Phases in Product Development Process
(from OM view)

1. Idea generation

2. Product Screening
3. Preliminary(Concept) Design and Testing
4. Final product Design

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 Idea generation
Product Idea generation
•  New product ideas may come from inside and outside sources.
• Outside sources
• Customers
• Foreign product
• Competitive products
• Advertising , distributing agencies
•  Inside sources
– Sales personnel
– Marketing research
– Research and development
– Company executives
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1. The first sources of ideas are customers
• Marketing is a vital link between customers
and product design.
• Market researchers collect customer
information by studying customer buying
pattern and using tools such as customer
surveys and focus groups.
• Management may love an idea, but if market
analysis shows that customers do not like it,
the idea is not viable.
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2. Competitors are another source of ideas.
• A company learns by observing its competitors’ products and their
success rate.
• This includes looking at product design, pricing strategy, and
other aspects of the operation.
• Studying the practices of companies considered “best in class”
and comparing the performance of our company against theirs is
called benchmarking.
• Reverse Engineering Another way of using competitors’ ideas is
to buy a competitor’s new product and study its design features.

3. a company’s R & D department, whose role is to develop product

and process innovation.

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4. Unscrupulous/dishonest firms even engage in
“industrial espionage/intelligence ” to steal ideas before
they are marketed.
5. Suppliers are another source of product design ideas.
• Suppliers participate in a program called early supplier
involvement (ESI) where suppliers are involved in the
early stages of product design.

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 Stage 2. Product Screening
• After a product idea has been developed, it is
evaluated to determine its likelihood of success.
This is called product(idea) screening.
• executives from each function area may explore
issues such as the following:

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• Operations
- What are the production needs of the proposed new product and how
do they match our existing resources?
- Will we need new facilities and equipment?
- Do we have the labor skills to make the product?
- Can the material for production be easily obtained?
• Marketing
- What is the potential size of the market for the proposed new product?
- How much effort will be needed to develop a market for the product and
what is the long-term product potential?
• Finance
- What is the proposed new product’s financial potential,
cost, and return on investment?

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 Stage 3. Preliminary Design and Testing

• At this stage, design engineers translate general

performance specifications into technical specifications.
• Prototypes are built and tested.

• Changes are made based on test results, and the process of

revising, rebuilding a prototype, and testing continues.

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 Stage 4.Final product Design
• This is where final product specifications are drawn up.
• The final specifications are then translated into specific processing
instructions to manufacture the product, which include
- selecting equipment,
- outlining jobs that need to be performed,
- identifying specific materials needed and suppliers that will
be used, and
- all the other aspects of organizing the process of product
production.
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 Other Issues in Product and Service Design
• Product/service life cycles
• How much standardization
• Designing for mass customization
• Product/service reliability
• Range of operating conditions

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 1. Product Life Cycle
 There are typically four stages of the product
life cycle:
 Introduction,
 Growth,
 Maturity, and
 Decline.

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 Introduction phase
 Demand is low;
 Warrant unusual expenditures for research, product
devolvement & process modification
 The product must be brought to the notice of the customer.

 It must be available at the distribution outlets

 at this stage, considerable amount of funds are being devoted to
promotional expenses with a view to generate sales while the
volume of the sales is low .

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 Growth phase
 Demand grows because of awareness of the product;

 Product design has begun to stabilize;

 Effective forecasting of capacity requirements is necessary.

 In case the product launched is successful, the sales must start picking up or rise more

rapidly.

 Here the sales would climb up fast and profit picture will also improve considerably.

 As the volume of production is increased, the manufacturing cost per unit tends to

decline.

 Thus, from the point of view of product strategy, this is a very critical stage.

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 Maturity phase
• Product is mature;

• Competitor are established;

• High volume,
• innovative production may be appropriate;
• Improved cost control,
•  At this stage, it is more likely that the competitors
become more active.
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 Decline stage
• Sales shows down ward shift
• Profit eroded
• Shutting down (closing) firm is a better
action

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 2. Design standardization
 Extent to which there is an absence of variety in a product,
service or process
 Refers to the use of common and interchangeable parts.
 It involves producing items to a commonly accepted standard to
assure the interchangeability and the quality level of the products.
 Standardization makes both mass production and maintenance
much easier.
 However, standardization limits the options available to
customers.

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 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

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 Disadvantages of Standardization

• High cost of design changes increases resistance

to improvements.

• Decreased variety results in less consumer

appeal.

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 3. Designing for Mass Customization

• Mass customization:

– A strategy of producing standardized

goods or services, but incorporating some
degree of customization
– E.g Delayed Differentiation

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 Delayed Differentiation

• Delayed differentiation is a postponement

tactic
– Producing but not quite completing a
product or service until customer
preferences or specifications are known

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5. Design for Manufacture (DFM)
 When we think of product design we generally first think of how
to please the customer.
 How ever in new product design we need to consider how easy or
difficult it is to manufacture the product.
 The designers’ must consider the organization’s manufacturing
capabilities when designing a product.
 Design for manufacture (DFM) is a series of guidelines that we
should follow to produce a product easily and profitably.

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a) Value Analysis (engineering)

 examination of the function of parts and materials in an effort to reduce cost or

improve product performance

 An attempt to see if any materials or components can be substituted or redesigned

in such a way as to continue to perform the desired function, but at a lower cost.

 Typical questions that would be asked as part of the analysis includes:

could a cheaper part or material be used?

Is the function necessary?

Can the function of two or more parts or components be performed by a single part for a

lower cost?

Can a part be simplified?

Could a product specifications be relaxed and would this result in a lower price
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 b. Design simplification means reducing the
number of parts and features of the product
whenever possible. (e.g. reducing the number
of color choices).
• A simpler product is easier to make, costs less,
and gives us higher quality.

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 6. Designing for assembly (DFA)

Design for disassembly- is the ease

with which product’s component/parts
can be dismantled or disassembled.

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 Designing Techniques

• Concurrent engineering

• Computer-assisted design
• Robust design
• Modular design
• Component commonality/group technology
design
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 A. Concurrent Engineering
• Concurrent engineering is the bringing together of
engineering design and manufacturing personnel early
in the design phase to simultaneously develop the
product and the process for producing the product.
• Concurrent engineering is an approach that brings
many people together in the early phase of product
design in order to simultaneously design the product
and the process.
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 To decrease product development time companies use
concurrent engineering
 It includes manufacturing personnel and marketing
and purchasing personnel in loosely integrated
functional team.
 In addition the views of suppliers and customers are
frequently sought because to achieve product design
that reflect customer wants and manufacturing
capabilities.
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 Advantages concurrent Engineering

1. Manufacturing personnel are able to identify production

capabilities and capacities
2. Early opportunities for design or procurement of critical
tooling some of which have long lead times
3. Early considerations of technical feasibility of a particular
design or portion of a design.
4. More effective resource allocation is possible

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B. 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

C. Robust Design: Design that results in products or services that can

function over a broad range of conditions.

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 D. Modular design
 It is a form of standardization in which component parts are
subdivided into modules that are easily replaced or
interchanged.
 Modules represent grouping of component parts in to sub
assemblies.

 It allows:
– easier diagnosis and remedy of failures
– easier repair and replacement
– simplification of manufacturing and assembly
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 E. Group Technology (GT)Is a method of

grouping similar parts or products in to

families to facilitate both design and

manufacturing activities.

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 2.2 Service Design
• Service is an act of some thing that is done to or for customer
• Many services are not pure service but bundled with products
(part of product bundle)

• Service design involves development or refinement of the overall

service package. That means:
– The physical resources needed

– The goods that are purchased or consumed by the customer

– Explicit services and Implicit services

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 Differences Between Product and Service
Design

• Tangible – intangible

• Services created and delivered at the same

time
• Services cannot be inventoried

• Location is important to service

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 Phases in Service Design
1. Conceptualize (idea generation, assessment of customer

wants/needs/ marketing, assessment of demand potential)

2. Identify service package components (operations and marketing)

3. Determine performance specifications (operations and

marketing)

4. Translate performance specifications into design specifications

5. Translate design specifications into delivery specifications

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 Service Blueprinting

It is :
• A method used in service design to describe and analyze
a proposed service
• A useful tool for conceptualizing a service delivery
system,
• Is much like an architectural drawing but it shows the
basic customer and service actions involved in a service
operation.
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 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

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 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. Ensure reliability and high quality etc……..

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 Challenges of Service Design

• Variable requirements
• Difficult to describe
• High customer contact

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 Process selections

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