Product/Service Design

Product/service design directly affects:

Product/service quality Production/delivery cost Customer satisfaction

Product/Service Design and Development

Sources of Product Innovation Developing New Products/Services Getting Them to Market Faster Improving Current Products/Services Designing for Ease of Production Designing for Quality Designing and Developing New Services

Sources of Product/Service Innovation

Customers Managers Marketing Operations Engineering Research and Development (R&D)

Basic research
Applied research

Steps in Developing New Products

1. 2. 3. 4.

Technical and economic feasibility studies Prototype design Performance testing of prototype Market sensing/evaluation and economic evaluation of the prototype 5. Design of production model 6. Market/performance/process testing and economic evaluation of production model 7. Continuous modification of production model

Steps in Developing New Products

1. Technical and Economic Feasibility Studies
Determine the advisability of establishing a

project for developing the product If initial feasibility studies are favorable, engineers prepare an initial prototype design

Steps in Developing New Products

2. Prototype Design
This design should exhibit the basic form, fit,

and function of the final product It will not necessarily be identical to the production model

Steps in Developing New Products

3. Performance Testing of Prototype
Performance testing and redesign of the

prototype continues until this design-testredesign process produces a satisfactorily performing prototype

Steps in Developing New Products

4. Market Sensing/Evaluation and Economic Evaluation of the Prototype
Accomplished by demonstrations to

potential customers, market test, or market surveys If the response to the prototype is favorable, economic evaluation of the prototype is performed to estimate production volume, costs, and profits If the economic evaluation is favorable, the project enters the production design phase.

Steps in Developing New Products

5. Design of Production Model
The initial design of the production model

will not be the final design; the model will evolve

Steps in Developing New Products

6. Market/Performance/Process Testing and Economic Evaluation of Production Model
The production model should exhibit: low cost reliable quality superior performance the ability to be produced in the desired quantities on the intended equipment

Steps in Developing New Products

7. Continuous Modification of Production Model
Production designs are continuously

modified to:
Adapt to changing market conditions
Adapt to changing production technology Allow for manufacturing improvements

Improving the Design of Existing Products/Services

Focus is improving performance, quality, and cost Objective is maintaining or improving market share of maturing products/services Little changes can be significant Small, steady (continuous) improvements can add up to huge long-term improvements Value analysis is practiced, meaning design features are examined in terms of their cost/benefit (value).

Designing for Ease of Production

Ease of Production (Manufacturability)

Specifications - Precise information about the

characteristics of the product Tolerances - Minimum & maximum limits on a dimension that allows the item to function as designed Standardization - Reduce variety among a group of products or parts Simplification - Reduce or eliminate the complexity of a part or product

Designing for Quality

Crucial element of product design is its impact on quality Quality is determined by the customers perception of the degree of excellence of the product/services characteristics Chapter 7 covers the principles of designing products/services for quality

Designing and Developing New Services

basically the same for all customers?

Three general dimensions of service design are: Degree of Standardization of the Service
Custom-fashioned for particular customers or

Degree of Customer Contact in Delivering the Service

High level of contact (dress boutique) or low level

(fast-food restaurant)?

Mix of Physical Goods and Intangible Services

Mix dominated by physical goods (tailors shop) or

by intangible services (university)?

Designing and Developing New Services

Differences Between New Service and New Product Development

Unless services are dominated by physical

goods, their development usually does not require engineering, testing, and prototype building. Because many service businesses involve intangible services, market sensing tends to be more by surveys rather than by market tests and demonstrations.

What is a Process?

A process is any part of an organization that takes inputs and transforms them into outputs that ,it is hoped, are of greater value to the organization than the original inputs.

Process Selection

It refers to the strategic decisions of selecting which kind of production process to have in the manufacturing plant.

Process Planning and Design System

Inputs: Product/Service Information Production System Information Operations Strategy Process Planning & Design: Process-Type Selection Vertical Integration Studies Process/Product Studies Equipment Studies Production Procedures Studies Facilities Studies

Outputs: Process Technology Facilities Personnel Estimates

Major Factors Affecting Process Designs

Nature of product/service demand Degree of vertical integration Production flexibility Degree of automation Product/Service quality

Product/Service Quality
Old viewpoint high-quality products must be made in small quantities by expert craftsmen New viewpoint high-quality products can be mass-produced using automated machinery Automated machinery can produce products of incredible uniformity The choice of design of production processes is affected by the need for superior quality.

Types of Process Designs

Product-Focused Process-Focused Group Technology/Cellular Manufacturing

Product-Focused
Processes (conversions) are arranged based on the sequence of operations required to produce a product or provide a service Also called Production Line or Assembly Line Two general forms

Discrete unit automobiles, dishwashers Process (Continuous) petrochemicals,

paper

Product-Focused
Raw Material
2

Components
4

Assemblies
1 3 5 7

Fin. Goods

Raw Material

Components

Subassem. Purchased
6

1 Product/Material Flow

Production Operation

Components, Subassemblies

Product-Focused

Advantages

Lower labor-skill requirements Reduced worker training Reduced supervision Ease of planning and controlling production

Disadvantages
Higher initial investment level Relatively low product flexibility

Process-Focused
Processes (conversions) are arranged based on the type of process, i.e., similar processes are grouped together Products/services (jobs) move from department (process group) to department based on that particular jobs processing requirements Also called Job Shop or Intermittent Production Examples

Auto body repair Custom woodworking shop

Process-Focused
Custom Woodworking Shop
Cutting Planing Shaping Assembly Sanding Finishing
1 2 2 3 3 4 5 6 7

Job A Job B 1

Drilling Turning

Process-Focused

Advantages
High product flexibility Lower initial investment level

Disadvantages

Higher labor-skill requirements More worker training More supervision More complex production planning and controlling

Group Technology/Cellular Manufacturing

Group Technology
Each part produced receives a multi-digit

code that describes the physical characteristics of the part. Parts with similar characteristics are grouped into part families Parts in a part family are typically made on the same machines with similar tooling

Process Design in Services

Some of the factors important in process design for products are also important in services:
Nature (level and pattern) of customer

demand Degree of vertical integration Production flexibility Degree of automation Service quality

Process Design in Services

Three schemes for producing and delivering services

Quasi-Manufacturing Customer-as-Participant

Customer-as-Product

Process Design in Services

Quasi-Manufacturing
Physical goods are dominant over intangible

service Production of goods takes place along a production line Operations can be highly automated Almost no customer interaction Little regard for customer relations Example banks checking encoding operation

Process Design in Services

Customer-as-Participant
Physical goods may be a significant part of

the service Services may be either standardized or custom High degree of customer involvement in the process Examples: ATM, self-service gas station

Process Design in Services

Customer-as-Product
Service is provided through personal

attention to the customer Customized service on the customer High degree of customer contact There is a perception of high quality Customer becomes the central focus of the process design Examples: medical clinic, hair salon

Large

Process Design Depends on Product Diversity and Batch Size Product

Batch Size
Focused, Dedicated Systems Product Focused, Batch System Cellular Manufacturing Process-Focused, Job Shop Few

Small

Number of Product Designs

Many

Process selection is based on three considerations

The first consideration is variety, or how much the product changes from customer to customer.

The second consideration is volume of demand. the flexibility of the equipment used to create the product, is determined by the product being created and is often determined by the first two.

Types of Process
1. 2. 3. 4.

CONVERSION PROCESS FABRICATION PROCESS ASSEMBLY PROCESS TESTING PROCESS

Process Flow Structure

It refer to how a factory organizes material flow one or more of the process technologies.

Flow Structures
1. 2. 3. 4.

Job shop Batch shop Assembly line Continuous flow

Job shop Production of small batches of a large number

of different products, most of which require a

different set or sequence of processing steps.

Batch shop
It is generally employed when a business has a

relatively stable line of products, each of which is

produced in periodic batches, either to customer

order or for inventory

Assembly line Production of discrete parts moving from workstation

to workstation at a controlled rate, following the

sequence needed to build the product.

Continuous flow
Conversion or further processing of undifferentiated

materials such as petroleum, chemicals etc. Production

follows a predetermined sequence of steps, but the flow is continuous rather than discrete.

Product Process matrix

The relationship between process structures and volume requirements is often depicted on a product process matrix.

As volume increases and the product line narrows, specialized equipment's and standardized materials flows become economically feasible

Product Development Process

Major decision variables in equipment selection

Decision variable initial investment Factors to consider Price Manufacturer Availability of use models Space requirements Support equipment Actual vs rated capacity Consistency in meeting specs Scrap rate, ease of use, safety, human facts

Output rate

Output quality Operating requirements

Labour requirements Flexibilty

Setup requirements

Maintenance

Obsolescence

Direct to indirect ratio Skills and training General vs special purpose equipment Special tooling Complexity Change over speed Complexity Frequency Availability of parts State of the art Modification for use in other situation

Manufacturing Process Flow Design

It is a method to evaluate the specific process that raw materials, parts, and subassemblies follow as they move through the plant

Tools in process flow

Assembly drawings Assembly charts Route sheets Process flow charts

Assembly drawing
It is simply an explode view of the product

showing its component parts

Assembly chart It uses the information presented in the assembly

drawing and defines how parts go together, their order

of assembly, and often the overall material flow pattern.

Route sheet It specifies operations and process routing for

a particular part. It conveys such information as the type of equipment, tooling, and operation required to complete the part

Process flow chart It denotes what happens to the product as it

progresses to the productive facility

SERVICE

A type of economic activity that is intangible, is not stored and does not result in ownership. A service is consumed at the point of sale. Services are one of the two key components of economics, the other being goods

CHARACTERISTICS OF SERVICES
The services have unique characteristics which make them different from that of goods. The most common characteristics of services are:

Intangibility. Inseparability. Variability

CHARACTERISTICS OF SERVICES

Intangibility Services are activities performed by the provider, unlike physical products they cannot be seen, tasted, felt, heard or smelt before they are consumed

Inseparability Services are typically produced and consumed simultaneously. Incase of physical goods, they are manufactured into products, distributed through multiple resellers, and consumed later

CHARACTERISTICS OF SERVICES

Variability Services are highly variable, as they depend on the service provider, and where

and when they are provided

CUSTOMER SERVICE STRATEGIES

CUSTOMER SERVICE STRATEGIES

Each dimension must reflect the important needs and wants of the customer.

The line linking customer to people shows that the people are extremely important in producing and delivering service to the customer.

The customer to system link shows that the service operations should also be designed with the customer in mind.

CUSTOMER SERVICE STRATEGIES

Strategy to system means that the systems and procedures should follow from the service strategy. Strategy to people means that all the service providers should be well aware of the organization's strategy The system to people means that the service operations system and procedures should be people-friendly

Facility Location

The problem of facility location is faced by both new and existing businesses, its solution is critical to a companys success. An important element in designing a companys supply chain is the location of it facilities.

Facility location

Facility location is the process of determining geographic sites for a firms operations. Location decisions affect processes throughout the organization.
Marketing must assess how the location will appeal to

customers; possibly opening new markets.

Human Resources must be attuned to the firms hiring and

training needs.
Accounting and Finance must evaluate costing.

Operations needs to be able to meet current customer

demand and provide the right amount of customer contact.

Factors Affecting Location Decisions

Managers must weigh many factors when assessing the desirability of particular locations. The factor must be sensitive to location. The factor must have a high impact on the companys ability to meet its goals.

Geographical Information Systems and Location Decisions

Geographical information system (GIS) is a system of computer software, hardware, and data that the firms personnel can use to manipulate, analyze, and present information relevant to a location decision. It can be used to:
Store databases Display maps Create models that can take information from existing

datasets, apply analytic functions, and write results into new derived datasets.

Together, these three functionalities of data storage, map displays, and modeling are critical parts of an intelligent GIS, used to a varying extent in all GIS applications.

List of Factors Affecting Location Decisions

Proximity to raw materials sources Cost and availability of energy/utilities Cost, availability, skill and productivity of labor Government regulations at the federal, state, country and local levels Taxes at the federal, state, county and local levels Insurance Construction costs, land price

List of Factors Affecting Location Decisions Cont...

Government and political stability Exchange rate fluctuation Export, import regulations, duties, and tariffs Transportation system Technical expertise Environmental regulations at the federal, state, county and local levels Support services

Issues In Facility Location

Proximity to Customers: Size of the customers, potential needs of the customers.

Business Climate: Includes the presence of similar-sized business, presence of companies in the same industry etc..

Total costs: The objective is to select the site with the lowest cost. These include certain regional costs as well as some hidden costs. Infrastructure: Adequate road, rail, air and sea transportation are vital. Energy and telecommunication needs should also be met.

Quality of Labor: The Educational and skill level of the labor pool must watch the companys needs. Must stress on the ability and willingness to learn. Suppliers: A high-quality and competitive supplier base makes a given location suitable. The proximity of important suppliers plants also supports lean production methods.

Other Facilities: The location of other plants or distribution centers of the same company may influence a new facilitys location in the network. Free Trade Zones: A foreign trade zone or a free trade zone is a closed facility into which foreign goods can be brought without being subject to normal customs department.

Political Risk: Political risk in both the country of location and the host country influence location decisions.

Government Barriers: Barriers to enter and locate in many countries are being removed today trough legislations. Many non legislative and cultural barriers should be considered in location planning.

Facility Location Methods

The Process required to narrow down to a particular area can vary significantly depending on the type of business we are in and competitive pressures that must be considered.

There are three different types of techniques that have proven to be very useful:
Factor Rating systems Transportation Method Centroid Method

Factor Rating Systems

It allows us to consider many different types of criteria using simple point-rating scales. It is the most widely used of the

general location techniques because they

provide a mechanism to combine diverse

factors in an easy-to-understand format.

Each alternative location will then be rated based on these factor weights. The most weighted alternative is selected as the best alternative.

Example
A refinery assigned the following range of point values to major factors affecting a set of possible sites:
RANGE Fuels in region Power availability and reliability Labor climate Living conditions 0 to 330 0 t0 220 0 to 100 0 to 100

Transportation
Water supply Climate

0 to 50
0 to 50 0 to 50

Each site was then rate against each factor, and the point value was selected from its assigned range. The sums of assigned points for each site were then compared. The site with points most points was selected.

Transportation Method

The transportation method is a special linear programming method. It gets its name from application of problems involving transporting products from several sources of several destinations. Two common objectives of such problems are either
Minimize the cost of shipping Maximize the profit of shipping

(n units to m destinations).

Example: RESPECTIVE FURNACE SHIPPING COSTS FOR EACH DESTINATION

SHIPPING ROUTE AF

Centroid Method

Its as technique for locating single facilities that considers

Existing facilities
Distance between them and The volumes of goods to be shipped.

Often used to locate intermediate or distribution

warehouses.

In simplest form this method assumes than inbound and outbound transportation costs are equal, and it does not include shipping costs for less than full loads.

It begins by placing the existing locations on a coordinate grid system.

The choice of coordinate systems is entirely arbitrary.

Purpose is to establish relative distances between locations.

The centroid method is found by calculating the X and Y coordinates that result in the minimal transportation cost. We use the formulas

Where, Cx = X coordinate of the centroid

Cy = Y coordinate of the centroid Dix = X coordinate of the ith location Diy = Y coordinate of the ith location Vi = Volume of goods moved to or from the ith location

LAYOUT PLANNING
Planning that involves decisions about the physical arrangement of economic activity centers needed by a facilitys various processes.

Four questions that must be addressed..

What centers should the Layout include? How much space and capacity does each center need?

How should each centers space be configured?

Where should each center be located?

BASIC LAYOUT TYPES

Flexible-Flow Layouts Line-Flow Layouts Hybrid layouts Fixed Position Layout

Flexible-Flow Layouts

This is typical type of production where the equipment performing similar operations is grouped together.

Such a layout is particularly useful where the volume of manufacture is low and the variety of jobs is great.

The sequence of operation for one job is different from that of another job,hence the layout should be flexible.

Line-Flow Layouts

The equipment is laid out according to the sequence in which it is used for making the product.

The utilization of the equipment's is high;

the volume of the production is large and

the variety of products should be low

Hybrid Layouts

Some

portions

of

the

facility

are

arranged in a flexible-flow layout and others are arranged in a line-flow layout.

Fixed Position Layout

The material remains in a fixed position,but the machinery,tools,workmen, etc. are brought to the material.

This is preferred when the equipment and the machinery is small in number and size and the workmen are highly skilled to perform the various small jobs on the product.

Eg:Ship building.

LINE BALANCING

The total work to be performed at a workstation is equal to the sum of the tasks assigned to that workstation

The line balancing problem is one of assigning all the tasks to series of workstation so that each workstation has no more than can be done in the workstation cycle time and so that the unassigned time across all workstation is minimized

Steps..
1.

Specify the sequential relationship among tasks using a

precedence diagram which consists of circles and arrows

2.

Determine the required workstation cycle time(C) C=production time per day required output per day

3.Determine the theoretical minimum number of workstations(N1), required to satisfy wsct constraint

N=sum of task times(T)

cycle time(C)

4.Select a primary rule by which tasks are to be assigned to

workstations, and a secondary rule to break ties

5.Assign tasks, one at a time to the first workstation until the sum of the task time is equal to the workstation cycle time.

6.Evaluate the efficiency of the balance derived sum of task times

Efficiency=
actual no of workstations(Na)*(*C)

Load Distance Method

LOAD DISTANCE METHOD

Load distance method is a mathematical model used to evaluate locations based on proximity factors .

The objective is to select a location that

minimizes the total weighted loads moving into

and out of the facility.

The distance between two points is expressed by assigning the points to grid coordinates on a map.

A load may be shipments from suppliers, shipments between plants or to customers, or it may be customers or employees traveling to or from the facility. The firm seeks to minimize its loaddistance (ld) score, generally by choosing a location, so that large loads go short distances.

Distance Measures
Mainly two type of distance measures are used:

Euclidean : Euclidean distance is the

straight-line distance, or shortest possible

path, between two points.

Dab= (xa-xb)2 + (ya-yb)2

D ab = distance between point a and b. Xa Ya Xb Yb = x- coordinate of point a. = y- coordinate of point a. = x- coordinate of point b. = y- coordinate of point b.

Rectilinear distance measures

Rectilinear distance measures distance between two points with a series of 90 turns as city blocks.

This distance is the sum of the two dashed lines representing the base and side of the triangle.

The distance traveled in the x-direction is the absolute value of the difference in xcoordinates.

Adding this result to the absolute value of the difference in the y-coordinates gives
DAB = |XA-XB| + |YA-YB|

Calculating load distance score

To calculate a load-distance for any potential location, we use either of the distance measures and simply multiply the loads flowing to and from the facility by the distances travelled . These loads may be expressed as tones or number of trips per week . The firm seeks to minimize its loaddistance, generally by choosing a location so that large loads go short distances .

Aalogistics Co. has just signed a contract to deliver products to three locations, and they are trying to decide where to put their new warehouse. The three delivery locations are Chicago, Kansas City, and Memphis. The two potential sites for the warehouse are Peoria and St. Louis. The x, y coordinates for the delivery locations and warehouses are as follows: Location x coordinate y coordinate Chicago 92 42 Kansas City 85 39 Memphis 90 35 Warehouses Peoria 90 41 St. Louis 90 39 The total quantity to be delivered to each destination is: 400 to Chicago, 150 to Kansas City, and 100 to Memphis.

Calculate the total load-distance value from each potential warehouse location.
Locate in: A. Peoria B. St. Louis

Peoria Chicago Kansas Memphis

distance 2+1=3 5+2=7 0+6=6

load 400 = 1200 150 = 1050 100 = 600 total=2850

400 = 2000 150 = 750 100 = 400 total=3150

St Louis Chicago Kansas Memphis

2+3=5 0+5=5 0+4=4