DESIGNING GOODS

& SERVICES
OPERATIONS & TECHNOLOGY
MANAGEMENT

Learning Objectives

Explain the strategic importance

of product and service design.
List some key reasons for design
or redesign.
Identify the main objectives of
product and service design.
Discuss the importance of
standardization.

Learning Objectives

Briefly describe the phases in product

design and development.
Describe some of the main sources of
design ideas.
Name several key issues in
manufacturing design.
Name several key issues in service
design.
Name the phases in service design.
List the characteristics of well-designed
service systems.
Name some of the challenges of service
design

Product and Service

Important as it affects:
Design
Cost
Quality
Time-to-market
Customer satisfaction
Competitive advantage

Product and service designor redesign

should be
closely tied to an organizations strategy

Goods & Service

Design
goods and services an organization

What
chooses to offer depends greatly on the
organizations
operational
capability
to
produce and deliver them at the appropriate
cost and level of quality
The success of a firm is driven by the customer
benefit packages (CPBs) it offers and how
they address both order-qualifying and
order-winning criteria
DESIGNING GOODS & SERVICES IS VERY
CRITICAL TO MEET THE CUSTOMER WANTS & NEEDS

Reasons for Product or Service

Design
Economic
Social

and demographic

Political,

liability, or legal

Competitive
Cost

or availability

Technological

Product or Service Design

Activities
1.

2.
3.
4.
5.
6.
7.

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

Objectives of Product and Service

Design
Main

focus
Customer satisfaction
Understand what the customer wants
Secondary focus
Function of product/service
Cost/profit
Quality
Appearance
Ease of production/assembly
Ease of maintenance/service

Designing For Operations

Taking

into account the capabilities of

the organization in designing goods
and services.
Failure to take this into account can:

Reduce productivity
Reduce quality
Increase costs

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Legal, Ethical, and

Environmental Issues
Legal

Agri-Food and Veterinary Authority, Health

Sciences Authority (Singapore)
Product liability
Uniform commercial code

Ethical

Releasing products with defects

Environmental

Pollution
Toxic materials

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Regulations and Legal

Considerations

Product

Liability: A manufacturer is liable

for any injuries or damages caused by a
faulty product.

Uniform

Commercial Code: Products carry

an implication of merchantability and
fitness.

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Designers Adhere to Guidelines

Produce

designs that are consistent with

the goals of the company
Give customers the value they expect
Make health and safety a primary
concern
Consider potential harm to the
environment

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Other Issues in Product and

Service Design
Product/service

life cycles
Degree of standardization
Mass customization
Product/service reliability
Robustness of design
Degree of newness
Cultural differences
Global Product Design

Life Cycles of Products or Services

Saturation

Demand

Maturity
Decline
Growth

Introduction

Time

Standardization
Standardization

Extent to which there is an absence of variety

in a product, service, or process

Standardized

products are immediately

available to customers

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Advantages of
Standardization
Fewer parts to deal with in inventory and
manufacturing

Design

costs are generally lower

Reduced

training costs and time

More

routine purchasing, handling, and

inspection procedures

Quality

is more consistent

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Advantages of
Standardization

Orders

fillable from inventory

Opportunities

for long production runs

and automation

Need

for fewer parts justifies increased

expenditures on perfecting designs and
improving quality control procedures

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Disadvantages of
Standardization

Designs

may be frozen with too many

imperfections remaining

High

cost of design changes increases

resistance to improvements

Decreased

variety results in less

consumer appeal

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Mass Customization
Mass

customization:

A strategy of producing standardized goods

or services, but incorporating some degree
of customization
Delayed differentiation
Modular design

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Delayed Differentiation
Delayed

differentiation or
postponement

Producing but not quite completing a product

or service until customer preferences or
specifications are known

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Modular Design
Modular design is a form of standardization
in which component parts are subdivided
into modules that are easily replaced or
interchanged. It allows:

easier diagnosis and remedy of failures

easier repair and replacement

simplification of manufacturing and assembly

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Reliability
Reliability:

The ability of a product, part,

or system to perform its intended
function under a prescribed set of
conditions

Failure:

Situation in which a product,

part, or system does not perform as
intended

Normal

operating conditions: The set of

conditions under which an items
reliability is specified
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Robust Design
Robust design: Design that results in
products or services that can function
over a broad range of conditions

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Taguchis Approach
Design

a robust product

Insensitive to environmental factors either in

manufacturing or in use.

Central feature
Determines:

is Parameter Design.

factors that are controllable and those not

controllable
their optimal levels relative to major product
advances

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Robust Design and the Taguchi

Loss Function
Genichi Taguchi states that
instead of constantly directing
effort toward controlling a process
to assure consistent quality, design
the manufactured good to achieve
high quality despite the variations
that will occur in the production
line.

Degree of Newness
1.
2.
3.
4.

Modification of an existing
product/service
Expansion of an existing product/service
Clone of a competitors product/service
New product/service

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Phases in Product
Development Process
1.
2.
3.
4.
5.
6.
7.
8.
9.

Idea generation
Feasibility analysis
Product specifications
Process specifications
Prototype development
Design review
Market test
Product introduction
Follow-up evaluation
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Idea Generation
Supply-chain based

Ideas

Competitor based

Research based

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Reverse Engineering
Reverse engineering is the
dismantling and inspecting
of a competitors product to
discover product improvements.

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Designing for Manufacturing

Beyond the overall objective to achieve
customer satisfaction while making a
reasonable profit is:
Design for Manufacturing (DFM)
The designers consideration of the
organizations manufacturing capabilities
when designing a product.
The more general term design for
operations encompasses services as well
as manufacturing.
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Designing for Manufacturing

Concurrent

engineering

Computer-aided
Production

design

requirements

Recycling
Remanufacturing

Value analysis

Component

commonality
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Concurrent Engineering

Concurrent engineering
is the bringing together
of engineering design and
manufacturing personnel
early in the design phase.
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Computer-Aided Design
Computer-aided

design (CAD) is product

design using computer graphics.

increases productivity of designers 3 to 10

times

creates a database for manufacturing

information on product specifications

provides possibility of engineering and cost

analysis on proposed designs

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Production Requirements
Design

for manufacturing (DFM)

Design for assembly (DFA)
Design for recycling (DFR)
Design for disassembly (DFD)
Manufacturability

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Manufacturability
Manufacturability

is the ease of
fabrication and/or assembly, which
is important for:

Cost

Productivity

Quality

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Recycling
Recycling:

recovering materials for

future use
Recycling reasons

Cost savings
Environment concerns
Environment regulations

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Remanufacturing:

Refurbishing used
products by replacing worn-out or defective
components.

Remanufactured products can be sold for 50% of

the cost of a new producer
Remanufacturing can use unskilled labor
Some governments require manufacturers to take
back used products

Design

for Disassembly (DFD): Designing

products so that they can be easily taken
apart.

Remanufacturing
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Examination

of parts/materials to reduce cost

and improve product performance
Ask questions:
Cheaper parts/materials
Function necessary
Simplified part
Specifications relaxed
Substitution by non-standard parts

Value Analysis
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Multiple

products or product families that

have a high degree of similarity can share
components
Automakers using internal parts

Engines and transmissions

Water pumps
Etc.

Other

benefits

Reduced training for assemble and installation

Reduced repair time and costs

Component Commonality
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Quality Function Deployment

Quality

Function Deployment
Voice of the customer
House of quality

QFD:

An approach that integrates the voice of the

customer into the product and service development
process.

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The House of Quality

Correlation
matrix
Design
requirements

Customer
requirements

Relationship
matrix

Competitive
assessment

Specifications
or
target values
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House of Quality Example

Correlation:
X
X

Doesnt leak in rain

No road noise
Importance weighting

Water resistance

Accoust. Trans.
Window

AB

A XB
X A

10

Target values

Technical evaluation
(5 is best)

X = Us
A = Comp. A
B = Comp. B
(5 is best)
1 2 3 4

XAB

5
4
3
2
1

B
A
X

BA
X

B
A
X

B
X
A

BXA

3
Maintain
current level

Easy to open

Competitive evaluation

X AB

Maintain
current level

Reduce energy
to 7.5 ft/lb.

Stays open on a hill

Reduce force
to 9 lb.

Maintain
current level

Easy to close

Check force
on level
ground
Energy needed
to open door

oC
us
t.

Door seal
resistance

Energy needed
to close door

Customer
Requirements

ce
t

Engineering
Characteristics

Reduce energy
level to 7.5 ft/lb

Im
po
rta
n

Strong positive
Positive
Negative
Strong negative

BA
X

Relationships:
Strong = 9
Medium = 3
Small = 1

Service Design
Service

Something that is done to or for a

customer
Service delivery system
The facilities, processes, and skills
needed to provide a service
Product bundle
The combination of goods and services
provided to a customer
Service package
The physical resources needed to
perform the service

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Differences Between Product

and Service Design
Tangible

intangible
Services created and delivered at the same
time
Services cannot be inventoried
Services highly visible to customers
Services have low barrier to entry and exit
Location is important to service design
Range of service systems
Demand variability
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Service

systems range from those with

little or no customer contact to very high
degree of customer contact such as:
Insulated technical core (software
development)
Production line (automatic car wash)
Personalized service (hair cut, medical
service)
Consumer participation (diet program)
Self-service (supermarket)

Service Systems
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Demand

variability creates waiting lines and

idle service resources
Service design perspectives:
Cost and efficiency perspective
Customer perspective
Customer participation makes quality and
demand variability hard to manage
Attempts to achieve high efficiency may
depersonalize service and change customers
perception of quality

Service Demand Variability

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Characteristics of WellDesigned
Service
Systems
1. Consistent with the organization mission
2.
3.
4.
5.
6.
7.
8.
9.

User friendly
Robust
Easy to sustain
Cost-effective
Value to customers
Effective linkages between back
operations
Single unifying theme
Ensure reliability and high quality
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Phases in Service Design

1.
2.
3.
4.
5.

Conceptualize
Identify service package components
Determine performance specifications
Translate performance specifications
into design specifications
Translate design specifications into
delivery specifications

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Challenges of Service Design

1.
2.
3.
4.

Variable requirements
Difficult to describe
High customer contact
Service customer encounter

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