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Chapter 4

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Global Management Studies
GMS 401
Wally Whistance- Smith

Chapter 4 – Product and Service Design Product Development: A process to generate concepts, designs, and plans for services and goods that an organization can provide to its customer. INTRODUCTION The essence of any organization is the products or services it offers. There is an obvious link between the design of those products/services and the success of the organization. The quality of the product/service is 80% determined during the design stage; hence organizations have a vital stake in achieving good product and service design. Product/service design directly affects: - Product/service quality - Production/delivery cost - Customer satisfaction Successful organizations use four elements to create new products or services and bring them to the consumer  Product approval committee, core teams, phase reviews, and structured development process The usual phases for product/service design are;  Idea Generation, Development, Production Process Design, and Launch 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 IDEAS FOR NEW OR REDESIGNED PRODUCTS/SERVICES - Customers – questioned/surveyed - Employees – those who make or deliver products/services - Managers - Marketing – ideas based on their studies of markets, buying patterns, and familiarity with demographics - Suppliers - Operations - Engineering - Research and Development - (Basic research and Applied research) - Competitors Products/Services – Reverse Engineering Research and Development: Organized efforts for product innovation Basic Research: advances knowledge about a subject without future expectations of commercial applications Applied Research: achieves commercial applications. Reverse Engineering: Dismantling and inspecting a competitor’s product to discover product improvements PRODUCT OR SERVICE DESIGN ACTIVTIES - 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 OTHER ISSUES IN PRODUCT/SERVICE DESIGN Life Cycle: Incubation, growth, maturity, saturation, and decline Wide variations exist in the amount of time a particular product/service takes to pass through the life cycle Standardization: Extent to which there is absence of variety in a part, product, or service These products are made in large quantities of identical items (gasoline, paper, 2% milk) Advantages: - They are interchangeable, which lowers the cost of product while increasing productivity - Fewer parts to deal with in inventory & manufacturing - Reduced time and cost to train employees, inventory, handling and purchasing activities become very routine - Opportunities for long production runs and automation - Need for fewer parts justifies increased expenses on perfecting designs & improving quality control Disadvantages: - Reduction in variety which limits the range of customers to whom a product/service appeals - Manufacturer may freeze (standardize) a design prematurely, and once frozen it many resist modification - High cost of design changes increases resistance to improvements. Designing for Mass Customization Though companies enjoy the ease of standardization, customers prefer variety, although they like the low cost. Customers needs are thus met through; Mass Customization: Producing basically standardized goods or services but incorporating some degree of customization. This is made possible through; Delayed Differentiation: Producing, but not quite completing, a product or service unit customer preferences are known. (A postponement tactic) Modular Design: parts are grouped into modules that are easily replaced or interchanged - Advantages: failures are often easier to diagnose and remedy b/c modules can be tested individually - Disadvantage: inability to disassemble some modules in order to replace a faulty part, the entire module must be scrapped Reliability: a measure of the ability of a product, a part, or an entire system to perform its intended function under normal conditions Failure: situation in which a product, part, or system does not perform as intended Robust Design: Design that results in products/services that can function over a broad range of conditions (ex. Rubber boots can be used in snow and mud) The more robust a product is, the less likely it is to fail due to a change in the environment in which it us used or in which it is performed Taguchis Approach: it is often easier to design a product that is insensitive to environmental factors. The central feature of his approach is parameter design. This determines factors that are controllable and those not controllable, and also their optimal levels relative to major product advances Legal and Ethical Issues Legal Ethical Environmental - FDA, OSHA, IRS - Releasing products with - EPA – Environment Protect - Product liability defects Act - Uniform commercial code Product liability: A manufacturer is liable for any injuries or damages caused by a faulty product Sale of Goods Act: Products carry an implication of merchantability and fitness Uniform Commercial Code: Products carry an implication of merchantability and fitness. STEPS IN DEVELOPING NEW PRODUCTS 1. Technical and economic feasibility studies 2. Prototype design 3. Performance testing of prototype 4. 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 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 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 3. Performance Testing of Prototype Performance testing and redesign of the prototype continues until this design-test-redesign process produces a satisfactorily performing prototype 4. Market Sensing/Evaluation and Economic Evaluation of the Prototype – Aaccomplished by demonstrations to potential customers, market test, or market surveys – If the response to the pr
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