Supply Chain Application

Goods & Services

Design
Khawaja Ayaz Ahmad
ayaz.ahmad@lbs.uol.edu.pk
Week 3

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Outline
Product Decision
Product Life Cycles
New Product Opportunities
Quality Function Deployment
Issues for Product Development
Guidelines for Environmentally
Friendly Designs
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1.Product Decision
The good or service the organization provides
society
Top organizations typically focus on core products
Customers buy satisfaction, not just a physical
good or particular service
Fundamental to an organization's strategy with
implications throughout the operations function
Product Strategy Options
1. Differentiation
2. Low cost
3. Rapid response
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Sales, cost, and cash flow

2.Product Life Cycles

Cost of development and production
Sales revenue
Net revenue (profit)
Cash
flow
Negative
cash flow

Introduction
2008 Prentice Hall, Inc.

Loss

Growth

Maturity

Decline

Figure 5.1
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2.Product Life Cycles

May be any length from a few hours
to decades
The operations function must be
able to introduce new products
successfully

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OM Strategy/Issues

2.Product Life Cycle

Introduction

Growth

Maturity

Decline

Product design
and
development
critical
Frequent
product and
process design
changes
Short production
runs
High production
costs
Limited models

Forecasting
critical
Product and
process
reliability
Competitive
product
improvements
and options
Increase capacity

Standardization
Less rapid
product changes
more minor
changes
Optimum
capacity
Increasing
stability of
process
Long production
runs
Product
improvement and
cost cutting

Little product
differentiation
Cost
minimization
Overcapacity
in the
industry
Prune line to
eliminate
items not
returning
good margin
Reduce
capacity

Attention to
quality

Shift toward
product focus
Enhance
distribution

Figure 2.5
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3.New Product Opportunities

1. Understanding the
customer
2. Economic change
3. Sociological and
demographic change
4. Technological change
5. Political/legal change

g
n
i
m
r
o
t
s
n
i
a
l
o
Br
o
t
l
fu
e
s
u
is a

6. Market practice, professional

standards, suppliers, distributors
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3.1.Product Development
System
Ideas
Figure 5.3

Ability
Customer Requirements
Functional Specifications
Scope of
product
development
team

Product Specifications Scope for

design and
Design Review
engineering
teams
Test Market
Introduction
Evaluation

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4.Quality Function
Deployment
Identify customer wants
Identify how the good/service will satisfy
customer wants
Relate customer wants to product hows
Identify relationships between the firms hows
Develop importance ratings
Evaluate competing products
Compare performance to desirable technical
attributes
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5.Issues for Product

Development
Robust design: Product is designed so that small

variations in production or assembly do not adversely

affect the product

Modular design: easily segmented components

Computer-aided design (CAD)

Computer-aided manufacturing (CAM)

Virtual reality technology: 3-D model by CAD data
Value analysis: Focuses on design improvement
during production

Environmentally friendly design

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6.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
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7.Legal and Industry

Standards
For Design
Federal Drug Administration
Consumer Products Safety Commission
Childrens Product Safety Act
For Manufacture/Assembly
Occupational Safety and Health Administration
Environmental Protection Agency
State and local laws dealing with employment standards,
discrimination, etc.
For Disassembly/Disposal
Vehicle Recycling Partnership
Increasingly rigid laws worldwide

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8.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
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9.Product Development
Continuum
External Development Strategies
Alliances

Figure 5.6

Joint ventures
Purchase technology or expertise
by acquiring the developer
Internal Development Strategies
Migrations of existing products
Enhancements to existing products
New internally developed products
Internal
Lengthy
High
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Cost of product development

Speed of product development
Risk of product development

Shared
Rapid and/
or Existing
Shared
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10.Product Documents
Engineering drawing
Shows dimensions, tolerances, and
materials
Shows codes for Group Technology
Bill of Material
Lists components, quantities and
where used
Shows product structure
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Engineering Drawings

Figure 5.8
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Bills of Material
BOM for Panel Weldment

2008 Prentice Hall, Inc.

NUMBER

DESCRIPTION

QTY

A 60-71

PANEL WELDMT

A 60-7
R 60-17
R 60-428
P 60-2

LOWER ROLLER ASSM.

ROLLER
PIN
LOCKNUT

1
1
1
1

A 60-72
R 60-57-1
A 60-4
02-50-1150

GUIDE ASSM. REAR

SUPPORT ANGLE
ROLLER ASSM.
BOLT

1
1
1
1

A 60-73
A 60-74
R 60-99
02-50-1150

GUIDE ASSM. FRONT

SUPPORT WELDMT
WEAR PLATE
BOLT

1
1
1
1

Figure 5.9 (a)

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Bills of Material
Hard Rock
Cafes Hickory
BBQ Bacon
Cheeseburger

DESCRIPTION

QTY

Bun
Hamburger patty
Cheddar cheese
Bacon
BBQ onions
Hickory BBQ sauce
Burger set
Lettuce
Tomato
Red onion
Pickle
French fries
Seasoned salt
11-inch plate
HRC flag

1
8 oz.
2 slices
2 strips
1/2 cup
1 oz.
1 leaf
1 slice
4 rings
1 slice
5 oz.
1 tsp.
1
1

Figure 5.9 (b)

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10.1.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 Chart
1
2
3
4
5
6
7
8
9
10

R 209 Angle
R 207 Angle
Bolts w/nuts (2)

Left
bracket
SA
A1
1 assembly

R 209 Angle
R 207 Angle
Bolts w/nuts (2)

Right
bracket
SA
A2
2 assembly

Bolt w/nut
R 404 Roller

A3

Lock washer
Part number tag

Identifies the point

of production
where components
flow into
subassemblies and
ultimately into the
final product
Poka-yoke
inspection

A4

Box w/packing material

11
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A5

Figure 5.11 (b)

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Route Sheet
Lists the operations and times required
to produce a component
Process

Machine

Operations

Auto Insert 2

2
3

Manual
Insert 1
Wave Solder

Test 4

Insert Component
Set 56
Insert Component
Set 12C
Solder all
components
to board
Circuit integrity
test 4GY

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Setup
Time

Operation
Time/Unit

1.5

.4

.5

2.3

1.5

4.1

.25

.5

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Work Order
Instructions to produce a given quantity
of a particular item, usually to a schedule
Work Order

2008 Prentice Hall, Inc.

Item

Quantity

Start Date

Due Date

157C

125

5/2/08

5/4/08

Production
Dept

Delivery
Location

F32

Dept K11
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Engineering Change Notice

(ECN)
A correction or modification to a
products definition or
documentation
Engineering drawings
Bill of material

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11.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
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11.Service Design
(a) Customer participation in design
such as pre-arranged funeral services
or cosmetic surgery

Service typically includes direct

interaction with the customer

Increased opportunity for customization

Reduced productivity

(b) Customer participation in

delivery such as stress test for
cardiac exam or delivery of a
baby

Cost and quality are still determined at

the design stage
Delay customization
(c) Customer participation in design and
Modularization

delivery such as counseling, college

education, financial management of
personal affairs, or interior decorating

Reduce customer interaction, often

Figure 5.12
through automation
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12.Documents for Services

High levels of customer interaction
necessitates different documentation
Often explicit job instructions for
moments-of-truth (Critical moments
between the customer and the
organization that determine customer
satisfaction)
Scripts and storyboards are other
techniques
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Reference
Operations Management (10th Edition) by Heizer and
Render, Prentice Hall, 2009

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