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Process Selection
Part 1
Content
Part 1:
Define product design and explain its strategic impact on the organization.
Part 2:
How to use process performance metrics.
product design.
Issues of designing service operations.
Product & Service Design
Most of us might think that the design of a product is not that
interesting. After all, it probably involves materials, measurements,
dimensions, and blueprints.
. .
As Engineering
As Operations made it.
designed it.
.
.
Product & Service Design
Product design is the process of defining all the features
and characteristics of just about anything you can think
of:
art directors,
sales forecasters,
engineers,
Processes should be
Products and services Product / service designed so they can
should be designed in design has an create all products
such a way that they impact on the and services which
can be created process design and the operation is likely
effectively vice versa to introduce
Service design
The process of establishing all the characteristics of the service,
including physical, sensual, and psychological benefits.
For service industries, where the product is intangible, the design
If not, the company will lose its customer base and its market
position will erode
Suppliers
Competitors
Benchmarking
Studying “best in class” companies from your industry or others
and comparing their practices & performance to your own
We can benchmark against a company in a completely different
line of business and still learn from some aspect of that
company’s operation.
1. Idea Development
Reverse engineering also called back engineering
Disassembling a competitor’s product & analyzing its design
When evaluating an idea for a new product, it is helpful to compute its break-
even quantity.
F = fixed cost
VC = variable cost per unit
Q = number of units sold
Break-Even Analysis
Break-Even Analysis
Total cost = fixed costs + variable costs (quantity):
TC F VC Q
Revenue = selling price (quantity)
R SP Q
Break-even point is where total costs = revenue:
TC R or F VC Q SP Q
F
or Q
SP VC
Break-Even Analysis Example
A firm estimates that the fixed cost of producing a line of footwear is
$52,000 with a $9 variable cost for each pair produced. They want to
know:
If each pair sells for $25, how many pairs must they sell to break-
even?
If they sell 4000 pairs at $25 each, how much money will they make
(profit)?
Example Solved
Break-even point:
F $52,000
Q 3250 pairs
SP VC $25 $9
Profit = total revenue – total costs
P SP Q F VC Q
$25 4000 $52,000 $9 4000
$12,000
Example
Question: Joe Jenkins, owner of Jenkins Manufacturing, is considering
whether to produce a new product. Joe estimates the fixed costs per year
to be $40,000 and variable costs for each unit produced to be $50.
If Joe sells the product at a price of $70, how many units of product does
he have to sell in order to break even? Use both the algebraic and
graphical approaches.
If Joe sells 3000 units at the product price of $70, what will be his
contribution to profit?
3. Preliminary Design & Testing
Once a product idea has passed the screening stage, it is time to
begin preliminary design and testing.
Changes are made based on test results, and the process of revising,
rebuilding a prototype
3. Preliminary Design & Testing
Testing continues for service companies this may entail testing the
offering on a small scale and working with customers to refine the service
offering.
Fast-food restaurants are known for this type of testing, where a new
menu item may be tested in only one particular geographic area.
However, rushing creates the risk that all the “bugs” have not been
worked out, which can prove very costly.
4. Final Design
Following extensive design testing, the product moves to the final
design stage. This is where final product specifications are drawn
up
production.
Factors Impacting Product Design
Design for Manufacture
Concurrent Engineering
Design for Manufacture (DMF)
Design for manufacture (DFM) is a series of guidelines that
we should follow to produce a product easily and profitably.
Minimize parts
Design parts for multiply
applications
Use modular design
Avoid tools
Simplify operations
DFM Benefits
Lower costs:
Lower inventories (fewer, standardized components)
Higher quality:
Simple, easy-to-make products means fewer
maturity, and
decline.
Product life cycle
Products in the introductory stage are not well defined, and neither is
their market. Often all the “bugs” have not been worked out, and
customers are uncertain about the product.
In the growth stage, the product takes hold and both product and market
continue to be refined.
The third stage is that of maturity, where demand levels off and there are
usually no design changes: the product is predictable at this stage and so
is its market. Many products, such as toothpaste, can stay in this stage for
many years.
Finally, there is a decline in demand, because of new technology, better
product design, or market saturation.
The first two stages of the life cycle can collectively be called the early
stages because the product is still being improved and refined and the
market is still in the process of being developed.
The last two stages of the life cycle can be referred to as the later
stages because here both the product and market are well defined.
Slow down in
Rapid
sales and Sales fall off and
Sales starts to grow market
profits level off profits drop
and profits are acceptance
nonexistent or decline
and profits
Sales are zero are starting
and investment to increase
costs are mount
Concurrent Engineering
A design approach that uses multifunctional teams to simultaneously
design the product & process
For example, there may be certain aspects of the product that are not
critical for product success but are costly or difficult to manufacture,
such as a dye color that is difficult to achieve.
when product and process design are done together, much of the work is
done in parallel rather than in sequence.
They may eventually get a great product, but by then the market may not
be there!
Concurrent Engineering
The third problem is that the old approach does not create a team
atmosphere, which is important in today’s work environment.
With the old approach, when the designers were finished with the designs,
they considered their job done.
2. Repetitive operations:
Capable of producing one (or a few) standardized
Designing a
custom-made cake is an
example of an intermittent
operation.
Repetitive Operations
Repetitive operations are used to produce one or a few standardized
products in high volume.
Examples are a typical assembly line, cafeteria, or automatic car
wash.
Differences between Intermittent and
Repetitive Operations
These processes are used when there is high customization and low
product volume, because each product is different.
They are also known as job shops. The volumes of each product
produced are still small, and there can still be a high degree of
customization.
They usually have a single input and a limited number of outputs. Also,
these facilities are usually highly capital intensive and automated.
Continuum of Process Types
Designing Processes
Process flow analysis is a technique used for evaluating a process in
terms of the sequence of steps from inputs to outputs with the goal of
improving its design.
It is useful for seeing the totality of the operation and for identifying
potential problem areas.
There is no exact format for
designing a flowchart. It can
be very simple or
highly detailed.
arrows :flows
triangles :decision points
inverted triangles:storage of
goods
rectangles: tasks