5 - 1© 2014 pearson education, inc. design of goods and services powerpoint presentation to...
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5 - 1© 2014 Pearson Education, Inc.
Design of Goods and Services
PowerPoint presentation to accompany Heizer and Render Operations Management, Eleventh EditionPrinciples of Operations Management, Ninth Edition
PowerPoint slides by Jeff Heyl
5
© 2014 Pearson Education, Inc.
5 - 2© 2014 Pearson Education, Inc.
Goods and Services Selection
Figure 5.1
The higher the percentage of sales from the last 5 years, the more likely the firm is to be a leader.
How many ideas does it take to get to a marketable product?
When do you decide to produce the product?
50% –
40% –
30% –
20% –
10% –
0% –Industry leader
Top third
Middle third
Bottom third
Position of firm in its industry
Per
cen
t o
f sa
les
fro
m
new
pro
du
cts
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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 Decision
Product strategy can be differentiation, Low Cost, Responsive
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Product Life Cycle
Negative cash flow
Introduction Growth Maturity Decline
Sal
es,
cost
, an
d ca
sh f
low Cost of development and production
Cash flow
Net revenue (profit)
Sales revenue
Loss
Figure 5.2Goal of the product mgr is to introduce new products successfully!
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Life Cycle and StrategyIntroductory Fine tuning may warrant unusual expenses for: Research,
Product development, Process modification and enhancement, Supplier development
Growth Product design begins to stabilize, Effective forecasting of capacity becomes necessary, Adding or enhancing capacity may be necessary
Maturity Competitors now established, High volume, innovative production may be needed, Improved cost control, reduction in options, paring down of product line
Decline Unless product makes a special contribution to the organization, must plan to terminate offering
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Product Life Cycle Costs
Costs incurred
Costs committed
Ease of change
Concept Detailed Manufacturing Distribution,design design service,
prototype and disposal
Per
cent
of t
otal
cos
t100 –
80 –
60 –
40 –
20 –
0 –
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Generating New Products
What opportunities exist that will help us come up with an idea for a product?
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Generating New Products
1. Understanding the customer
2. Economic change
3. Sociological and demographic change
4. Technological change
5. Political and legal change
6. Market practice, professional standards, suppliers, distributors
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Scope of product
development team
Product Development Stages
Scope for design and engineering
teams
Evaluation
Introduction
Test Market
Functional Specifications
Design Review
Product Specifications
Customer Requirements
Feasibility
Concept
Figure 5.3
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Quality Function Deployment
Process for turning “wants” into “hows”
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 customer importance ratings
6. Evaluate competing products
7. Compare performance to desirable technical attributes
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QFD House of Quality
Relationshipmatrix
How to satisfycustomer wants
Interrelationships
Com
petit
ive
asse
ssm
ent
Technicalevaluation
Target values
What the customer
wants
Customer importance
ratings
Weighted rating
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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
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House of Quality Example
Customerimportance
rating(5 = highest)
Lightweight 3
Easy to use 4
Reliable 5
Easy to hold steady 2
High resolution 1
What the customer wants
What the Customer
Wants
RelationshipMatrix
TechnicalAttributes and
Evaluation
How to SatisfyCustomer Wants
Interrelationships
An
alys
is o
fC
om
pet
ito
rs
5 - 14© 2014 Pearson Education, Inc.
House of Quality ExampleWhat the Customer
Wants
RelationshipMatrix
TechnicalAttributes and
Evaluation
How to SatisfyCustomer Wants
Interrelationships
An
alys
is o
fC
om
pet
ito
rs
Low
ele
ctric
ity r
equi
rem
ents
Alu
min
um c
ompo
nent
s
Aut
o fo
cus
Aut
o ex
posu
re
Hig
h nu
mbe
r of
pix
els
Erg
onom
ic d
esig
n
How to SatisfyCustomer Wants
5 - 15© 2014 Pearson Education, Inc.
Lightweight 3
Easy to use 4
Reliable 5
Easy to hold steady 2
High resolution 1
House of Quality ExampleWhat the Customer
Wants
RelationshipMatrix
TechnicalAttributes and
Evaluation
How to SatisfyCustomer Wants
Interrelationships
An
alys
is o
fC
om
pet
ito
rs
High relationship
Medium relationship
Low relationship
Relationship matrix
5 - 16© 2014 Pearson Education, Inc.
House of Quality Example
Low
ele
ctric
ity r
equi
rem
ents
Alu
min
um c
ompo
nent
s
Aut
o fo
cus
Aut
o ex
posu
re
Hig
h nu
mbe
r of
pix
els
Erg
onom
ic d
esig
n
Relationships between the things we can do
What the Customer
Wants
RelationshipMatrix
TechnicalAttributes and
Evaluation
How to SatisfyCustomer Wants
Interrelationships
An
alys
is o
fC
om
pet
ito
rs
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House of Quality Example
Weighted rating
Lightweight 3
Easy to use 4
Reliable 5
Easy to hold steady 2
High resolution 1
Our importance ratings 22 9 27 27 32 25
What the Customer
Wants
RelationshipMatrix
TechnicalAttributes and
Evaluation
How to SatisfyCustomer Wants
Interrelationships
An
alys
is o
fC
om
pet
ito
rs
5 - 18© 2014 Pearson Education, Inc.
House of Quality Example
Com
pany
A
Com
pany
B
G P
G P
F G
G P
P P
Lightweight 3
Easy to use 4
Reliable 5
Easy to hold steady 2
High resolution 1
Our importance ratings 22 5
How well do competing products meet customer wants
What the Customer
Wants
RelationshipMatrix
TechnicalAttributes and
Evaluation
How to SatisfyCustomer Wants
Interrelationships
An
alys
is o
fC
om
pet
ito
rs
5 - 19© 2014 Pearson Education, Inc.
House of Quality ExampleWhat the Customer
Wants
RelationshipMatrix
TechnicalAttributes and
Evaluation
How to SatisfyCustomer Wants
Interrelationships
An
alys
is o
fC
om
pet
ito
rsTarget values(Technical attributes)
Technical evaluation
Company A 0.7 60% yes 1 ok G
Company B 0.6 50% yes 2 ok F
Us 0.5 75% yes 2 ok G
2 ci
rcui
ts
Fai
lure
1 p
er 1
0,00
0
Pan
el r
anki
ng
0.5
A
75%
2’ t
o ∞
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House of Quality Example
Completed House of Quality
Low
ele
ctric
ity r
equi
rem
ents
Alu
min
um c
ompo
nent
s
Aut
o fo
cus
Aut
o ex
posu
re
Hig
h nu
mbe
r of
pix
els
Erg
onom
ic d
esig
n
Com
pany
A
Com
pany
B
Lightweight 3
Easy to use 4
Reliable 5
Easy to hold steady 2
High resolution 1
Our importance ratings
G P
G P
F G
G P
P P
Target values(Technical attributes)
Technical evaluation
Company A 0.7 60% yes 1 ok G
Company B 0.6 50% yes 2 ok F
Us 0.5 75% yes 2 ok G
0.5
A
75
%
2’ t
o ∞
2 c
ircu
its
Fa
ilure
1 p
er
10
,00
0
Pa
ne
l ra
nki
ng
22 9 27 27 32 25
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House of Quality Sequence
Figure 5.4
Deploying resources through the organization in response to customer requirements
Pro
duct
ion
proc
ess
Quality plan
House 4
Spe
cific
co
mpo
nent
s
Production process
House 3
Des
ign
char
acte
ristic
s
Specific components
House 2
Cus
tom
er
requ
irem
ents
Design characteristics
House 1
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Organizing for Product Development
► Traditionally – distinct departments► Duties and responsibilities are defined► Difficult to foster forward thinking
► A Champion► Product manager drives the product
through the product development system and related organizations
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Organizing for Product Development
► Team (project) 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
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Manufacturability and Value Engineering
► Concerned with improvement of product:1. Reduced complexity of the product
2. Reduction of environmental impact
3. Additional standardization of components
4. Improvement of functional aspects of the product
5. Improved job design and job safety
6. Improved maintainability (serviceability) of the product
7. Robust design
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Cost Reduction of a Bracket via Value Engineering
Figure 5.5
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Issues for Product Design► Robust design► Modular design
(http://www.youtube.com/watch?v=yEWOk-5qWRk)
► CAD/CAM► 3D modelling, 3D printing► Value analysis - QI► Sustainability and Life Cycle Assessment
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Product Development Continuum
Internal Cost of product development SharedLengthy Speed of product development Rapid and/
or ExistingHigh Risk of product development Shared
External Development StrategiesAlliances
Joint venturesPurchase technology or expertiseby acquiring the developer
Internal Development StrategiesMigrations of existing products
Enhancements to existing productsNew internally developed products
Figure 5.6
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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
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Monterey Jack Cheese(a) U.S. grade AA. Monterey cheese shall conform to the following
requirements:(1) Flavor. Is fine and highly pleasing, free from undesirable flavors and odors.
May possess a very slight acid or feed flavor.(2) Body and texture. A plug drawn from the cheese shall be reasonably firm.
It shall have numerous small mechanical openings evenly distributed throughout the plug. It shall not possess sweet holes, yeast holes, or other gas holes.
(3) Color. Shall have a natural, uniform, bright and attractive appearance.(4) Finish and appearance—bandaged and
paraffin-dipped. The rind shall be sound, firm, and smooth providing a good protection to the cheese.
Code of Federal Regulation, Parts 53 to 109, General Service Administration
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Engineering Drawings
Figure 5.8
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Bills of MaterialBOM for a Panel Weldment
NUMBER DESCRIPTION QTY
A 60-71 PANEL WELDM’T 1
A 60-7 LOWER ROLLER ASSM. 1R 60-17 ROLLER 1R 60-428 PIN 1P 60-2 LOCKNUT 1
A 60-72 GUIDE ASSM. REAR 1R 60-57-1 SUPPORT ANGLE 1A 60-4 ROLLER ASSM. 102-50-1150 BOLT 1
A 60-73 GUIDE ASSM. FRONT 1A 60-74 SUPPORT WELDM’T 1R 60-99 WEAR PLATE 102-50-1150 BOLT 1
Figure 5.9 (a)
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Bills of Material
Hard Rock Cafe’s Hickory BBQ Bacon Cheeseburger
DESCRIPTION QTY
Bun 1Hamburger patty 8 oz.Cheddar cheese 2 slicesBacon 2 stripsBBQ onions 1/2 cupHickory BBQ sauce 1 oz.Burger set Lettuce 1 leaf Tomato 1 slice Red onion 4 rings Pickle 1 sliceFrench fries 5 oz.Seasoned salt 1 tsp.11-inch plate 1HRC flag 1
Figure 5.9 (b)
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Group Technology Scheme
Figure 5.10
(a) Ungrouped Parts(b) Grouped Cylindrical Parts (families of parts)
Grooved Slotted Threaded Drilled Machined
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Documents for Production
► Assembly drawing► Assembly chart► Route sheet► Work order► Engineering change notices (ECNs)
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Assembly Drawing
► Shows exploded view of product
► Details relative locations to show how to assemble the product
Figure 5.11 (a)
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Assembly Chart1
2
3
4
5
6
7
8
9
10
11
R 209 Angle
R 207 Angle
Bolts w/nuts (2)
R 209 Angle
R 207 Angle
Bolt w/nut
R 404 Roller
Lock washer
Part number tag
Box w/packing material
Bolts w/nuts (2)
SA1
SA2
A1
A2
A3
A4
A5
Leftbracket
assembly
Rightbracket
assembly
Poka-yoke inspection
Figure 5.11 (b)
Identifies the point of production where components flow into subassemblies and ultimately into the final product
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Route SheetLists the operations and times required to produce a component
Setup OperationProcess Machine Operations Time Time/Unit
1 Auto Insert 2 Insert Component 1.5 .4 Set 562 Manual Insert Component .5 2.3
Insert 1 Set 12C3 Wave Solder Solder all 1.5 4.1
components to board
4 Test 4 Circuit integrity .25 .5test 4GY
5 - 38© 2014 Pearson Education, Inc.
Work Order
Instructions to produce a given quantity of a particular item, usually to a schedule
Work Order
Item Quantity Start Date Due Date
Production DeliveryDept Location
157C 125 5/2/08 5/4/08
F32 Dept K11
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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
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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
▶ In what ways can service delivery become more efficient?
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Adding Service Efficiency
▶Limit the options▶Improves efficiency and ability to meet
customer expectations
▶Delay customization
▶Modularization▶Eases customization of a service
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Adding Service Efficiency
▶Automation▶Reduces cost, increases customer
service
▶Moment of truth▶Critical moments between the customer
and the organization that determine customer satisfaction
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Documents for Services
► Scripts and Storyboards► Guidelines► Decision Trees► Procedure
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(.6)
Low sales
(.4)
High sales
(.6) Low sales
(.4)
High sales
Decision Tree Example
Purchase CAD$388,000
Hire and train engineers$365,000
Do nothing $0
$0 Net
$800,000 Revenue– 400,000 Mfg cost ($50 x 8,000)– 375,000 Hire and train cost
$25,000 Net
$2,500,000 Revenue– 1,250,000 Mfg cost ($50 x 25,000)
– 375,000 Hire and train cost$875,000 Net
$2,500,000 Revenue– 1,000,000 Mfg cost ($40 x 25,000)
– 500,000 CAD cost$1,000,000 Net
$800,000 Revenue– 320,000 Mfg cost ($40 x 8,000)– 500,000 CAD cost– $20,000 Net loss
Figure 5.13
5 - 45© 2014 Pearson Education, Inc.
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