27/3/2014 CGMS401, Module3- Learning Objectives
After completing this module, you should be able to:
List the steps involved in new product/service designs
Name some sources of ideas for new or revised designs
Discuss key issues in product and service design
Explain the importance of manufacturability
Name the advantages and disadvantages of standardization in product and service design
Discuss mass customization
Discuss special considerations for service design
Describe quality function deployment (QFD)
Products must be designed and redesigned to suit the ever-changing needs of a company’s customers.
Failure to do this in today’s dynamic environment can lead to the failure of a company whether it be a
manufacturer or service organization. It is imperative that a company address the product design process
Identifying key issues in their product design.
Managing the differences in the product design of services.
Translating the voice of the customer into design attributes using tools such as the Quality Function
Deployment - House of Quality diagram.
The text cites a number of other examples of how successful companies are doing this, particularly one with
which most Canadians are likely very familiar: McCain Foods of New Brunswick, the largest french fry producer
in the world.
Product Design Process
The four key elements of the product design process are:
A Product Approval Committee (PAC) – made up of senior decision makers
Core Teams – plan and lead the product design process and is made up of cross functional
members from a business group
Phase Reviews (stage-gates) - milestone decision points
Structured Development – project management techniques
The PAC should always be a top priority for the Core Team of a business group hoping to develop a new
product. Why? Because the PAC reviews many proposals from within the organization and it is therefore
essential that a Core Team that wants funding treat phase reviews as highly competitive and at each phase
put forward as sound a business case as possible. The PAC is going to be involved at all the phase reviews
and will expect to see a more refined business proposal at progressive phases of the Product Design
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Product Design Phases
Build a Business Case
Development – Translate voice of the customer
Testimony and Validation
The following diagram illustrates one process used to go through product design:
You will see that in this particular process there are five review points. These are points where you go through
the “gating process”, i.e., a go/no go decision. At each stage more information on cost, etc. is available to
revise/strengthen your business case. Timelines for the process are also critical particularly in the electronics
industry. Dell’s model in Figure 2-B on page118 shows critical activities in their process.
Think about it
The following link is a new technology (you may not believe this is real but it is) that is going to
help speed up the process at the prototype phase. We will talk more about the potential for this
technology as we go through the course. Where else do you think it could be used? What
influence could it have on customization of products?
Sources of Ideas
Here is an amusing and interesting video on ideas generation. How creative are you?
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Do you recognize the barriers to creativity that many of us have?
TED - Inspired talks by the world's greatest thinkers and doers
So where do the ideas come from? In short, everywhere.
Research and Development (R&D)
Surveys or Focus Groups
Reverse engineering (the dismantling and inspecting of a competitor’s product to discover
Suppliers provide valuable feedback as they have a broader view of the marketplace
The internal sources are employees, mainly from Marketing and R&D, but also through employee suggestions
Ideas can also come from your competitor’s products by reverse engineering, which is taking it apart to see
how it is made. Care must be taken when doing this so as not to use an idea that is patented or someone
else's intellectual property. This is particularly true in the software business where there might be software that
is licensed from another software company and embedded in the program you are taking apart.
Issues in Product Design
In the next part of the module the following issues, which need to be addressed by product designers, will be
Legal and Ethical Issues
Design for Environment
Computer-Aided Design (CAD)
Design for Manufacturing and Assembly
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Product “Life Cycles”
Such a topic is a main concept in a Business School marketing course but certainly the concept is equally
relevant to product and service design.
Figure 4-3 on page 121 in the text shows a typical product life cycle.
Incubation of product. Not known to many. Demand is low because it is unknown. Potential buyers
wary as the “bugs” have likely not been fully “worked out”.
Growth: demand is building because product is known to more potential purchasers. Product has likely
been improved in terms of quality and price has usually dropped.
Maturity: few design changes, much competition so demand may level off.
Decline: attempt to prolong product’s useful life by improving reliability, decreasing price.
Some products do not appear to exhibit “life cycles”. Typical items seem to have been around forever and
there is no evidence of decline. Wooden pencils and other examples are cited by the text. Can you think of
any not listed in the text?
Standardization is the extent to which there is an absence of variety in a product, service or process.
So the question is whether or not to standardize the product.
Looking at this from the perspective of a manufacturer: If the product is composed of “standard” parts or
components, what does this mean?
A typical example of a standardized product might be a ½ inch or say a 14mm opening mechanics wrench.
Such a wrench is made by dozens of companies. It will be very well made in most cases as it has been
perfected over hundreds of years of manufacture. Such a wrench made in 1904 versus 2004 will be virtually
identical in appearance and, without further more detailed examination, will for all intents and purposes be
completely interchangeable. In reality, the new wrench will be made to tighter tolerances because newer steel
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making technology will allow more precise manufacturing. In use the two wrenches will not be markedly
different. Given that such a wrench is substantially unchanged in hundreds of years there would have been
no research and development (R&D) expenses incurred in many, many years, high volumes of production of a
truly “standard” item, much competition and thus very competitive pricing.
“Standardized items” are, in summary, virtually identical products, made in high volumes and are
Examples are items such as AA, AAA, B,C, D, 9V batteries, 1% or 2% milk, paper, gasoline, etc.
A manufacturer of such products will attempt to differentiate their product by such approaches as trying to
convince buyers that their product is really not identical but is in fact superior. The hoped for result is both an
increased market share and higher profits. An example in the 2% milk category is Nestle’s “Natrel pur filtered"
milk. It carries a higher price because of the extra step in manufacturing of “filtering” the milk. Competitors may
or may not filter their product but Nestle touts their filtering as producing a superior product.
The advantages and disadvantages of standardization come down to the following:
Economies of scale reduce costs in production and purchasing
Design time spent on improvements
Reduced training costs and time
Limits range of consumer appeal
Designs frozen prematurely resist modifications
Designing for Mass Customization
Manufacturers like standardization - high volumes, low cost. Customers like variety but also like low cost.
Is there a solution? Can we have the advantages of standardization while solving the problems of variety?
The answer is yes - using a strategy of producing standardized goods or services, but incorporating some
degree of customization such as:
Delayed differentiation is producing but not quite completing a product or service until customer preferences
are known. It is a postponement tactic.
An example is a furniture maker who produces a dining room set but doesn’t apply colour stain until it is
specified by the consumer. Benefits are a standardized product with its economies of scale and customized for
the customer with a specified (by the customer) finish.
Think about it
Can you think of other example