HO SPEOPMA-TE001 Lecture02 20180908 Product Design & Process Strategy PDF

DLSP-CSB SMIT Lecture02 Handout 20180908
SPEOPMA Product Design & Process Strategy Page 1 of 42
Topics Outline
Product and
Process Designs6
 Product Design
 Generating New Products
 Product Development
63(230$7(001
School of Management and IT  Issues for Product Design
DLSP-College of St. Benilde  Defining a Product
 Documents for Production
 Service Design
 Process Design
 Process Strategies
Ramon H. Enriquez RME, MIE&M
 Process Design Considerations
Management Consultant/ Prof. Lecturer
Member, Asso. for Supply Chain and  Capacity Planning
Operations Management (APICS)
1-1 1-3
10 Strategic Decision Areas

Regal Marine
1. Product
2. Quality
3. Process
 Global market
4. Location  3-dimensional CAD system
5. Layout  Reduced product development time
6. Human Resource  Reduced problems with tooling
7. Supply chain  Reduced problems in production
8. Inventory  Assembly line production
9. Scheduling  JIT
10. Maintenance
1-2 © 2011 Pearson Education 1-4
Prof. Ramon H. Enriquez RME, MIE&M 2018-09-07 1

Product Decision Product Life Cycles
The objective of the product decision  May be any length from a few
is to develop and implement a hours to decades
product strategy that meets the
demands of the marketplace with a  The operations function must
competitive advantage be able to introduce new
products successfully
1-5 1-7
Product Decision Product Life Cycles

 The good or service the organization
Sales, cost, and cash flow

Cost of development and production
provides society Sales revenue
Net revenue (profit)
 Top organizations typically focus on
core products
Cash
flow
 Customers buy satisfaction, not just a
physical good or particular service Negative
cash flow Loss
 Fundamental to an organization's
strategy with implications throughout the Introduction Growth Maturity Decline
operations function
1-6 1-8

Product-by-Value Analysis
Product Life Cycle Costs
Costs committed Sam’s Furniture Factory
100 –
Individual Total Annual

80 –
Contribution ($) Contribution ($)
Percent of total cost
60 – Love Seat $102 $36,720

Costs incurred
Arm Chair $87 $51,765
40 –
Foot Stool $12 $6,240
20 –
Ease of change Recliner $136 $51,000
0–
Concept Detailed Manufacturing Distribution,  For product-mix decision use Linear Programming
design design service, or equivalent tools.
prototype and disposal
1-9 1 - 11
Topics Outline
Product-by-Value Analysis
 Product Design
 Lists products in descending  Product Development
order of their individual dollar  Issues for Product Design
contribution to the firm  Defining a Product
 Lists the total annual dollar  Documents for Production
contribution of the product  Service Design
 Helps management evaluate  Process Design

alternative strategies  Process Strategies
 Capacity Planning
1 - 10 1 - 12

New Product Opportunities Importance of New Products

Percentage of Sales from New Products
1. Understanding the 50%
customer
40%
2. Economic change
30%
3. Sociological and
demographic change 20%
4. Technological change
10%
5. Political/legal change
6. Market practice, professional Industry Top Middle Bottom
standards, suppliers, distributors leader third third third
Position of Firm in Its Industry Figure 5.2a
1 - 13 1 - 15
Suggested Rules in
Brainstorming Topics Outline
 Product Design
 Issues for Product Design
 Defining a Product
 Service Design
 Process Design
1 - 14 1 - 16

Product Development System Steps in QFD

Ideas
Ability
1. Identify customer wants
2. Identify how the good/service will satisfy customer
Customer Requirements
wants
Functional Specifications 3. Relate customer wants to product hows
Product Specifications Scope for 4. Identify relationships between the firm’s hows
Scope of design and
product Design Review engineering 5. Develop importance ratings
development teams
team Test Market 6. Evaluate competing products
Introduction
7. Compare performance to desirable technical
attributes
Evaluation
1 - 17 1 - 19
Quality Function Deployment (QFD) QFD House of Quality

 Quality Function Deployment (QFD) is a Interrelationships
structured approach to defining customer Customer
importance
needs or requirements and translating them ratings
How to satisfy
customer wants
into specific plans to produce products to meet
those needs.
Competitive
assessment
What the
 The "voice of the customer" (VOC) is the term customer
Relationship
matrix
to describe these stated and unstated wants
customer needs or requirements.
 A.k.a. House of Quality (HOQ)
Target values Weighted
rating
Technical
evaluation
1 - 18 1 - 20

Interrelationships
House of Quality Example House of Quality Example How to Satisfy

Customer Wants
Competitors
Analysis of
What the
Relationship
Customer
Matrix
Wants
Your team has been charged with Technical
Low electricity requirements

Attributes and
Evaluation
designing a new camera for Great
Aluminum components
Cameras, Inc.
The first action is
Ergonomic design
to construct a
Auto exposure
How to Satisfy
House of Quality Customer Wants
Paint pallet
Auto focus
1 - 21 1 - 23
Interrelationships Interrelationships
House of Quality Example How to Satisfy

Customer Wants
Competitors

Customer Wants
Competitors
Analysis of
Analysis of
What the What the
Relationship Relationship
Customer Customer
Matrix Matrix
Wants Wants
What the
Technical
Attributes and
High relationship Technical
Attributes and
Evaluation Evaluation
customer Medium relationship

wants Customer Low relationship
importance
rating
(5 = highest) Lightweight 3
Lightweight 3 Easy to use 4
Easy to use 4 Reliable 5
Reliable 5 Easy to hold steady 2
Easy to hold steady 2 Color corrections 1
Color correction 1
Relationship matrix
1 - 22 1 - 24

Interrelationships
Interrelationships How to Satisfy

Customer Wants House of Quality Example
Customer Wants
Competitors
Analysis of
What the
Relationship
Competitors
Analysis of
Customer
What the Matrix
Relationship Wants
Customer
Matrix
Wants
Technical
Attributes and
Company B
Company A
Technical Evaluation
Attributes and
Evaluation

Relationships How well do
between the competing products
things we can do meet customer wants
Aluminum components
Lightweight 3 G P
Ergonomic design
Easy to use 4 G P
Auto exposure
Reliable 5 F G
Paint pallet
Auto focus
Easy to hold steady 2 G P
Color corrections 1 P P
Our importance ratings 22 5
1 - 25 1 - 27
Interrelationships
Interrelationships How to Satisfy

Customer Wants House of Quality Example
Customer Wants
Competitors
Analysis of
What the
Relationship
Competitors
Analysis of
Customer
What the Matrix
Relationship Wants
Customer
Matrix
Wants
Technical
Attributes and
Failure 1 per 10,000

Technical Evaluation
Attributes and
Evaluation
Lightweight 3
Panel ranking
Easy to use 4 Target
2 circuits
Reliable 5 values
(Technical
2’ to ∞
Easy to hold steady 2
0.5 A
attributes)
75%
Color corrections 1
Our importance ratings 22 9 27 27 32 25
Company A 0.7 60% yes 1 ok G
Technical
Weighted evaluation Company B 0.6 50% yes 2 ok F
rating Us 0.5 75% yes 2 ok G
1 - 26 1 - 28

QFD-Example for a Service

House of Quality Example
Aluminum components
Ergonomic design
Auto exposure
Company A
Company B
Paint pallet
Auto focus
Completed
Lightweight 3 G P
House of Easy to use 4 G P
Quality Reliable
Easy to hold steady 2
5 F G
G P
Color correction 1 P P
Our importance ratings 22 9 27 27 32 25
Failure 1 per 10,000

Panel ranking
Target values
(Technical
2 circuits
attributes)
2’ to ∞
0.5 A
75%
Company A 0.7 60% yes 1 ok G
Technical Company B 0.6 50% yes 2 ok F
evaluation
Us 0.5 75% yes 2 ok G
1 - 29 1 - 31
Topics Outline
House of Quality Sequence  Product Design
Deploying resources through the
organization in response to  Product Development
customer requirements  Issues for Product Design
Quality  Defining a Product
plan
Production
process  Documents for Production
Production
Specific
process
components House
Service Design
components
4 
Specific
Design House
characteristics
characteristics
3
House  Process Design
Design
requirements
2
Customer
House
1  Process Strategies
1 - 30 1 - 32

Organizing for Product Value Engineering (1/2)

Development (1/2)  Focuses on design improvement
during production
 Historically – distinct departments
 A systematic method to improve the
 Duties and responsibilities are defined "value" of goods or products and
 Difficult to foster forward thinking services by using an examination of
 A Champion function vis-à-vis its cost.
 Product manager drives the product  Value, as defined, is the ratio of function
through the product development to cost. Value can therefore be increased
system and related organizations by either improving the function or
reducing the cost.
 A.k.a. Value Analysis or, VA/ VE.
1 - 33 1 - 35
Organizing for Product Value Engineering (2/2)

Development (2/2)
 Team approach
 Cross functional – representatives from
all disciplines or functions
 Product development teams, design for
manufacturability teams, value
engineering teams
 Japanese “whole organization”
approach
 No organizational divisions
1 - 34 1 - 36

The Ethical Approach Guidelines for Environmen-

Friendly Designs
 View product
design from a
systems
1. Make products recyclable
perspective
 Inputs, 2. Use recycled materials
processes,
outputs 3. Use less harmful ingredients
 Costs to the 4. Use lighter components
firm/costs to
society 5. Use less energy
 Consider the 6. Use less material
entire life cycle
of the product
1 - 37 1 - 39
The Ethical Approach

Time-Based Competition
 Goals
1. Developing safe end environmentally  Product life cycles are becoming
sound practices shorter and the rate of technological
2. Minimizing waste of resources change is increasing
3. Reducing environmental liabilities  Developing new products faster can
4. Increasing cost-effectiveness of result in a competitive advantage.
complying with environmental  Normally achieved thru CAD.
regulations
5. Begin recognized as a good corporate
citizen
1 - 38 1 - 40

Acquiring Technology Topics Outline

 By Purchasing a Firm  Product Design
 Speeds development  Generating New Products
 Issues concern the fit between the acquired organization  Product Development
and product and the host
 Through Joint Ventures  Issues for Product Design
 Both organizations learn  Defining a Product
 Risks are shared  Documents for Production
 Through Alliances  Service Design
 Cooperative agreements between independent  Process Design
organizations
 Example: An airline alliance is an aviation industry  Process Strategies
arrangement between two or more airlines agreeing to
cooperate on a substantial level. Alliances may provide
marketing branding to facilitate travelers making inter-  Capacity Planning
airline codeshare connections within countries.
1 - 41 1 - 43
Defining The Product

 SkyTeam:
 SkyTeam transports more than 400 million passengers every year and serves about 845
 First definition is in terms of functions

destinations. Its members include Air Europa, Air France, Alitalia, Aeroflot, Aeromexico,
Continental Airlines, Czech Airlines, KLM, Delta Airlines, Korean Air and a few other carriers.
The alliance covers a large number of cities in every continent of the world.
 Star Alliance:
 Rigorous specifications are developed
 It serves more than 900 destinations and transports about 455 million passengers every year.
Among the members of this alliance are Air Canada, Air China, Austrian Airlines, BMI,
during the design phase
Lufthansa, South African Airways, Singapore Airlines, Swiss International airlines, Turkish
Airlines, US Airways and United Airlines. Star Alliance has reached destinations in US and
Canada, South America, Central America, Mexico, The Caribbean, Europe, Middle East and  Manufactured products will have an
Australia.
engineering drawing
 Oneworld:
 Transporting about 320 million passengers every year, this alliance has reached more than  Bill of material (BOM) lists the
600 destinations. The members of Oneworld include British Airways, American Airlines,
Cathay Pacific, Finnair, Iberia, LAN, Qantas, Japan Airlines, Malev and Royal Jordanian
Airlines. Oneworld serves destinations in US and Canada, Central America, South America,
components of a product
The Caribbean, Europe, Middle East, Asia, Africa and Australia.
1 - 42 1 - 44

Product Documents Bills of Material

BOM for Panel Weldment
 Engineering drawing NUMBER DESCRIPTION QTY
A 60-71 PANEL WELDM’T 1
 Shows dimensions, tolerances, and
A 60-7 LOWER ROLLER ASSM. 1
materials R 60-17 ROLLER 1
R 60-428 PIN 1
 Shows codes for Group Technology P 60-2 LOCKNUT 1
 Bill of Material A 60-72

R 60-57-1
GUIDE ASSM. REAR
SUPPORT ANGLE
1
1
A 60-4 ROLLER ASSM. 1
 Lists components, quantities and where 02-50-1150 BOLT 1
used A 60-73 GUIDE ASSM. FRONT 1
A 60-74 SUPPORT WELDM’T 1
 Shows product structure R 60-99 WEAR PLATE 1
02-50-1150 BOLT 1 Figure 5.9 (a)
1 - 45 1 - 47
Engineering Drawings Bills of Material

DESCRIPTION QTY
Hard Rock
Bun 1
Cafe’s Hickory Hamburger patty 8 oz.
BBQ Bacon Cheddar cheese 2 slices
Cheeseburger Bacon 2 strips
BBQ onions 1/2 cup
Hickory BBQ sauce 1 oz.
Burger set
Lettuce 1 leaf
Tomato 1 slice
Red onion 4 rings
Pickle 1 slice
French fries 5 oz.
Seasoned salt 1 tsp.
11-inch plate 1
Figure 5.8 HRC flag 1
1 - 46 1 - 48

Topics Outline Assembly Drawing

 Product Design
 Shows exploded
view of product
 Defining a Product  Details relative
 Documents for Production locations to
 Service Design
show how to
assemble the
 Process Design
product
1 - 49 1 - 51
Documents for Production Assembly Chart

R 209 Angle
1
Left
2
R 207 Angle SA bracket A1
1 assembly
Identifies the point of
 Assembly drawing 3
Bolts w/nuts (2) production where
R 209 Angle components flow into
 Assembly chart 4
Right subassemblies and
R 207 Angle SA bracket A2
5 2 assembly ultimately into the
 Route sheet 6
Bolts w/nuts (2) final product
Bolt w/nut
 Work order 7
R 404 Roller
8 A3
 Engineering change notices (ECNs) 9
Lock washer Poka-yoke
inspection
Part number tag
10 A4
Box w/packing material
11 A5
1 - 50 1 - 52

Route Sheet Engineering Change Notice

Lists the operations and times required (ECN)
to produce a component
 A correction or modification to a
Setup Operation
Process Machine Operations Time Time/Unit product’s definition or
1 Auto Insert 2 Insert Component 1.5 .4 documentation
Set 56
2 Manual Insert Component .5 2.3  Engineering drawings
Insert 1 Set 12C
3 Wave Solder Solder all 1.5 4.1
 Bill of material
components
to board Quite common with long product life
4 Test 4 Circuit integrity .25 .5 cycles, long manufacturing lead times, or
test 4GY
rapidly changing technologies
1 - 53 1 - 55
Work Order Configuration Management

Instructions to produce a given quantity
of a particular item, usually to a schedule  The need to manage ECNs has led to
the development of configuration
Work Order management systems
Item Quantity Start Date Due Date
 A product’s planned and changing
157C 125 5/2/08 5/4/08 components are accurately identified
and control and accountability for
Production Delivery
Dept Location change are identified and maintained
F32 Dept K11
1 - 54 1 - 56

Topics Outline Service Design

 Product Design
 Service Design
 Process Design
 Capacity Planning Figure 5.12
1 - 57 1 - 59
Service Design 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 Figure 5.12
1 - 58 1 - 60

Moments of Truth First Bank Corp. Drive-up

Teller Service Guidelines
 Concept created by Jan Carlzon of  Be especially discreet when talking to the customer
Scandinavian Airways through the microphone.
 Provide written instructions for customers who must fill out
 Critical moments between the forms you provide.
customer and the organization that  Mark lines to be completed or attach a note with
instructions.
determine customer satisfaction  Always say “please” and “thank you” when speaking
through the microphone.
 There may be many of these moments  Establish eye contact with the customer if the distance
 These are opportunities to gain or allows it.
 If a transaction requires that the customer park the car and
lose business come into the lobby, apologize for the inconvenience.
1 - 61 1 - 63
The Service Blueprint (1/3)

Documents for Services
 The service blueprint is a technique used
 High levels of customer for service innovation.
interaction necessitates
different documentation  The technique was first described by
Lynn Shostack, a bank executive, in the
 Often explicit job instructions Harvard Business Review in 1984.
for moments-of-truth
 The blueprint shows processes within the
 Scripts and storyboards are company, divided into different
other techniques components which are separated by
 Service Blueprints lines.
1 - 62 1 - 64

The Service Blueprint (2/3) Building a Service Blueprint

 The service blueprint defines: 1. The identification of the service process, that is
supposed to be blueprinted
 Customer Actions: The steps that customers take as
part of the service delivery process. 2. The identification of the customer segment or the
 Frontstage (Visible Contact Employee) Actions: customers that are supposed to experience the
This element is separated from the customer actions service
by a ‘line of interaction’. These actions are face-to- 3. Picturing the service from the customer’s perspective
face actions between employees and customers.
4. Picturing the actions of the contact employee
 Backstage (Invisible Contact Employee) Actions: (onstage and backstage), and/or technology actions
The ‘line of visibility’ separates the onstage from the
Backstage actions. Everything that appears above the 5. Linking the contact activities to the needed support
line of visibility can be seen by the customers, while functions
everything under the line of visibility is invisible for the
customers. e.g., a telephone call-an action between 6. Adding the evidence of service for every customer
an employee and a customer, but they don’t see each action step
other.
1 - 65 1 - 67
The Service Blueprint (3/3)

 Support Processes: The ‘internal line of interaction’
separates the contact employees from the support
processes. These are all the activities carried out by
individuals and units within the company who are not
contact employees. These activities need to happen in Service Blueprinting
order for the service to be delivered.
EXAMPLES
 Physical Evidence: For each customer action, and
every moment of truth, the physical evidence that
customers come in contact with is described at the
very top of the service blueprint. These are all the
tangibles that customers are exposed to that can
influence their quality perceptions.
1 - 66 1 - 68

Sample 1 Sample 3
1 - 69 1 - 71
Sample 2 Sample 4
1 - 70 1 - 72

Sample 5 Sample 7
1 - 73 1 - 75
Sample 6 Sample 8
1 - 74 1 - 76

Transition from Design 10 Strategic Decision Areas

to Production 1. Product
 Know when to move to production
 Product development can be viewed as evolutionary and never 2. Quality
complete
 Product must move from design to production in a timely 3. Process
manner
 Most products have a trial production period to insure 4. Location
producibility
 Develop tooling, quality control, training
5. Layout
 Ensures successful production 6. Human Resource
 Responsibility must also transition as the product moves
through its life cycle 7. Supply chain
 Line management takes over from design
 Three common approaches to managing transition
8. Inventory
 Project managers 9. Scheduling
 Product development teams
 Integrate product development and manufacturing
10. Maintenance
organizations 1 - 77 1 - 79
Topics Outline
Harley-Davidson
 Product Design
 Generating New Products Repetitive manufacturing works
 Issues for Product Design  The leading U.S. motorcycle company
 Defining a Product  Emphasizes quality and lean
 Documents for Production manufacturing
 Service Design  Materials as Needed system
 Process Design  Many variations possible
 Process Strategies  Tightly scheduled repetitive
 Process Design Considerations production line
1 - 78 1 - 80

Process Flow Diagram Process Strategies

Frame tube Frame-building Frame Hot-paint
bending work cells machining frame painting
THE ASSEMBLY LINE
TESTING
28 tests
Incoming parts
Engines and
transmissions
The objective of a process strategy is
From Milwaukee
on a JIT arrival
to build a production process that
Air cleaners Oil tank work cell schedule meets customer requirements and
Fluids and mufflers Shocks and forks product specifications within cost
Fuel tank work cell Handlebars and other managerial constraints
Wheel work cell Fender work cell
Roller testing
Crating
1 - 81 1 - 83
Topics Outline
Process Strategies
 Product Design
 How to produce a product or
provide a service that
 Meets or exceeds customer
requirements
 Meets cost and managerial goals
 Service Design
 Process Design  Has long term effects on
 Process Strategies  Efficiency and production flexibility
 Process Design Considerations  Costs and quality
1 - 82 1 - 84

Process Strategies Process Focus Many inputs

mapped aginst Volume, and Variety (surgeries, sick patients,
Volume baby deliveries, emergencies)
Figure 7.1
Low Repetitive High
Volume Process Volume
High Variety
one or few 1. Process Focus 4. Mass
units per run, projects, job shops Customization
(machine, print, (difficult to achieve,
hospitals, restaurants) but huge rewards)
Arnold Palmer Dell Computer
Hospital
(low volume, high variety,
Many departments and
intermittent processes) many routings
3. Repetitive
(autos, motorcycles, Arnold Palmer Hospital
home appliances)
Harley-Davidson
2. Product Focus
(commercial
Low Variety baked goods,
Many units per steel, glass, beer) Figure 7.2(a) Many different outputs
run, Frito-Lay (uniquely treated patients)
1 - 85 1 - 87
Process Focus Product Focus

 Facilities are organized around specific  Facilities are organized by product
activities or processes
 High volume but low variety of
 General purpose equipment and skilled
personnel products
 High degree of product flexibility  Long, continuous production runs
 Typically high costs and low equipment
enable efficient processes
utilization  Typically high fixed cost but low
 Product flows may vary considerably variable cost
making planning and scheduling a
challenge
 Generally less skilled labor
1 - 86 1 - 88

Product Focus Few Inputs

(corn, potatoes, water, Repetitive Focus
seasoning)
 Facilities often organized as

assembly lines
 Characterized by modules with parts
and assemblies made previously
(low-volume, high variety,
continuous process)  Modules may be combined for many
Frito-Lay output options
 Less flexibility than process-focused
Output variations in size,
shape, and packaging
facilities but more efficient
Figure 7.2(c)
(3-oz, 5-oz, 24-oz package
labeled for each material)
1 - 89 1 - 91
Raw materials and
Product Focus Repetitive module inputs

(multiple engine models,
D A Scrap
Focus wheel modules)
Nucor Steel Plant steel
Continuous caster
B
C Electric
Ladle of molten steel furnace
Few
Continuous cast steel modules
sheared into 24-ton slabs
Hot tunnel furnace - 300 ft
E F
(modular)
Hot mill for finishing, cooling, and coiling

Harley Davidson
H G
I
Figure 7.2(b) Modules combined for many
Output options
(many combinations of motorcycles)
1 - 90 1 - 92

Mass Many parts and

Mass Customization (1/5) Customization component inputs
(chips, hard drives,
software, cases)
(3/5)
 The rapid, low-cost production of
goods and service to satisfy
increasingly unique customer
desires
 Combines the Many modules
flexibility of a (high-volume, high-variety)

process focus Dell Computer
with the efficiency
of a product focus
Figure 7.2(d)
Many output versions
(custom PCs and notebooks)
1 - 93 1 - 95
Mass Customization (2/5) Mass Customization (4/5)

Repetitive Focus
Number of Choices Figure 7.3 Flexible people
Item 1970s 21st Century and equipment
Vehicle models 140 286 Modular
Vehicle types 18 1,212 techniques
Accommodating
Bicycle types 8 211,000 Product and Responsive
Process Design Supply Chains
Software titles 0 400,000 Mass Customization
Web sites 0 162,000,000
Movie releases per year 267 765 Rapid
throughput
New book titles 40,530 300,000 techniques
Effective
Houston TV channels 5 185 scheduling
Breakfast cereals 160 340 techniques
Items (SKUs) in 14,000 150,000 Process-Focused Product-Focused
supermarkets High variety, low volume Low variety, high volume
LCD TVs 0 102 Low utilization (5% to 25%) High utilization (70% to 90%)
General-purpose equipment Specialized equipment
Table 7.1
1 - 94 1 - 96

Mass Customization (5/5) Comparison of Processes (2/5)

Mass
Process Focus Repetitive Product Focus Customization
 Imaginative and fast product (low-volume,
high-variety)
Focus
(modular)
(high-volume,
low-variety)
(high-volume,
high-variety)
design
3. Operators 3. Employees 3. Operators 3. Flexible
 Rapid process design are broadly
skilled
are modestly
trained
are less
broadly
operators are
trained for the
skilled necessary
 Tightly controlled inventory customization
management 4. There are

many job
4. Repetitive
operations
4. Work orders
and job
4. Custom
orders require
instructions reduce instructions many job
 Tight schedules because
each job
training and
changes in
are few
because they
instructions
changes job are

 Responsive supply chain partners instructions standardized
1 - 97 Table 7.2 1 - 99
Comparison of Processes (1/5) Comparison of Processes (3/5)

Mass Mass
Process Focus Repetitive Product Focus Customization Process Focus Repetitive Product Focus Customization
(low-volume, Focus (high-volume, (high-volume, (low-volume, Focus (high-volume, (high-volume,
high-variety) (modular) low-variety) high-variety) high-variety) (modular) low-variety) high-variety)
1. Small 1. Long runs, 1. Large 1. Large quantity 5. Raw-material 5. JIT 5. Raw material 5. Raw
quantity and usually a quantity and and large inventories procurement inventories material
large variety standardized small variety variety of high relative techniques are low inventories
of products product with of products products are to the value are used relative to the are low
are produced options, are produced of the value of the relative to
produced produced product product the value
from of the
modules product
2. Equipment 2. Special 2. Equipment 2. Rapid 6. Work-in- 6. JIT inventory 6. Work-in- 6. Work-in-

used is equipment used is changeover on process is techniques process process
general aids in use of special flexible high are used inventory is inventory
purpose an assembly purpose equipment compared to low driven down
line output compared to by JIT,
output kanban, lean
production
Table 7.2 1 - 98 Table 7.2 1 - 100

Comparison of Processes (4/5) Crossover Charts

Variable
Mass costs
Process Focus Repetitive Product Focus Customization Variable Variable
(low-volume, Focus (high-volume, (high-volume, $ costs $ costs $
high-variety) (modular) low-variety) high-variety)
Fixed costs Fixed costs
7. Units move 7. Assembly is 7. Swift 7. Goods move Fixed costs
slowly measured in movement of swiftly
Low volume, high variety Repetitive High volume, low variety
through the hours and units through through the
Process A Process B Process C
facility days the facility is facility
typical
8. Finished 8. Finished 8. Finished 8. Finished

$
goods are goods made goods are goods are
usually made to frequent usually made often build-
to order and forecast to forecast to-order 400,000
not stored and stored (BTO) 300,000
200,000
Fixed cost Fixed cost Fixed cost
Process A Process B Process C
Figure 7.4 (2,857) V1 V2 (6,666) Volume
Table 7.2 1 - 101 1 - 103
Comparison of Processes (5/5) Topics Outline

 Product Design
Mass
Process Focus Repetitive Product Focus Customization  Generating New Products
(low-volume, Focus (high-volume, (high-volume,
high-variety) (modular) low-variety) high-variety)  Product Development
9. Scheduling 9. Scheduling 9. Scheduling 9. Sophisticated  Issues for Product Design
is complex, is based on is relatively scheduling is
concerned building simple, required to  Defining a Product
with trade- various concerned accommodate
offs between models from with custom orders
inventory, a variety of establishing
capacity, and modules to output rate
customer forecasts sufficient to  Service Design
service meet
forecasts  Process Design
10. Fixed costs 10. Fixed costs 10. Fixed costs 10. Fixed costs  Process Strategies
tend to be dependent tend to be tend to be
low and
variable
on flexibility
of the
high and
variable
high, variable
costs must be
costs high facility costs low low
Table 7.2 1 - 102 1 - 104

Process Analysis Tools Changing Processes

 Flowcharts provide a view of the
big picture
 Difficult and expensive
 Time-function mapping adds rigor
and a time element  May mean starting over
 Value-stream analysis extends to  Process strategy determines
customers and suppliers transformation strategy for an
extended period
 Process charts show detail
 Important to get it right
 Service blueprint focuses on
customer interaction
1 - 105 1 - 107
Focused Processes Process Analysis and Design

(1/5)
 Focus brings efficiency
 Focus on depth of product line  Is the process designed to achieve a
rather than breadth competitive advantage?
 Focus can be  Does the process eliminate steps that
do not add value?
 Customers
 Does the process maximize customer
 Products value?
 Service  Will the process win orders?
 Technology
1 - 106 1 - 108

“Target” Time-Function Map (4/5)

Process Analysis and Design
(2/5) Customer
Order
product
Receive
product
Process
Sales
 Flow Charts - Shows the movement of order
materials
Product
Order
Production
Wait
control
 Time-Function Mapping - Shows flows and
Order
WIP
time frame Plant Print Extrude
Product
Warehouse Wait
Product
Transport Move
1 day 2 days 1 day 1 day 1 day

6 days
Figure 7.5
1 - 109 1 - 111
“Baseline” Time-Function Map (3/5) Process Analysis and Design

Customer
Order Receive
(5/5)
product product
 Value-Stream Mapping - Shows flows and
Process
Sales order time and value added beyond the
immediate organization
Order
Production Wait
control
 Process Charts - Uses symbols to show
Product
Order
Plant A Print key activities

 Service Blueprinting - focuses on
Product
WIP
Warehouse Wait Wait Wait

customer/provider interaction
Product
WIP
WIP
WIP
Plant B Extrude
Transport Move Move
12 days 13 days 1 day 4 days 1 day 10 days 1 day 0 day 1 day

Figure 7.5
52 days
1 - 110 1 - 112

Value-Stream Mapping Special Considerations for

Service Process Design
 Some interaction with customer is
necessary, but this often affects
performance adversely
 The better these interactions are
accommodated in the process design,
the more efficient and effective the
process
 Find the right combination of cost and
customer interaction
Figure 7.6
1 - 113 1 - 115
Process Chart Service Blueprinting (1/2)
 Focuses on the customer and

provider interaction
 Defines three levels of interaction
 Each level has different
management issues
 Identifies potential failure points
Figure 7.7
1 - 114 1 - 116

Service Blueprinting (2/2) Service Process Matrix (2/3)

Personal Greeting Service Diagnosis Perform Service Friendly Close
Level Customer arrives

for service. Customer departs
#1
(3 min) Mass Service and Professional Service
F
Determine
specifics.
Notify Customer pays bill.
(4 min)
 Labor involvement is high
Warm greeting customer
(5 min)
 Selection and training highly
and obtain No and recommend
an alternative
F
service request.
(10 sec) provider.
Level
Standard
request.
Can
service be
(7min) F important
#2 (3 min) done and does Notify
Direct customer
to waiting room.
customer
approve?
No customer the
car is ready.
 Focus on human resources
(5 min) (3 min)
 Personalized services
F F F F
Yes Yes
Perform
Level required work. F Prepare invoice.
#3 (varies) (3 min)
Figure 7.8
1 - 117 1 - 119
Service Process Matrix (1/3) Service Process Matrix (3/3)

Degree of Customization
Low High
Mass Service Professional Service
Traditional
Private
banking orthodontics Service Factory and Service Shop
Commercial
banking
High
Full-service
General-
purpose law firms  Automation of standardized
stockbroker services
Degree of Labor
Digital
Boutiques orthodontics
Retailing  Low labor intensity responds well
Service Factory Law clinics Service Shop to process technology and
Limited-service Specialized
stockbroker hospitals scheduling
Warehouse and Fast-food Fine-dining
Low catalog stores restaurants restaurants Hospitals
 Tight control required to maintain
Airlines standards
No-frills
airlines
Figure 7.9
1 - 118 1 - 120

Improving Service Productivity Improving Service Productivity

(1/3) (3/3)
Strategy Technique Example
Automation Separating services Automatic teller
Separation Structure service so Bank customers go to
that may lend machines
customers must go a manager to open a
themselves to some
where the service is new account, to loan
type of automation
offered officers for loans, and
to tellers for deposits Scheduling Precise personnel Scheduling ticket
scheduling counter personnel at
Self-service Self-service so Supermarkets and
15-minute intervals at
customers examine, department stores
airlines
compare, and Internet ordering
evaluate at their own Training Clarifying the service Investment counselor,
pace options funeral directors
Explaining how to After-sale maintenance
avoid problems personnel
Table 7.3 Table 7.3
1 - 121 1 - 123
Improving Service Productivity

(2/3) Improving Service Processes
Postponement Customizing at Customizing vans at  Layout
delivery delivery rather than at
production  Product exposure, customer
Focus Restricting the Limited-menu education, product enhancement
offerings restaurant
 Human Resources
Modules Modular selection of Investment and
service insurance selection  Recruiting and training
Modular production Prepackaged food
modules in  Impact of flexibility
restaurants
Table 7.3
1 - 122 1 - 124

Equipment and Technology Machine Technology

 Increased precision
 Often complex decisions
 Increased productivity
 Possible competitive advantage
 Increased flexibility
 Flexibility
 Improved environmental impact
 Stable processes
 May allow enlarging the scope of  Reduced changeover time
the processes  Decreased size
 Reduced power requirements
1 - 125 1 - 127
Production Technology Automatic Identification

 Machine technology
Systems (AISs)
 Automatic identification
systems (AISs)  Improved data acquisition
 Process control  Reduced data entry errors
 Vision system
 Robot
 Increased speed
 Automated storage and retrieval systems  Increased scope
(ASRSs) of process
 Automated guided vehicles (AGVs) automation
 Flexible manufacturing systems (FMSs)
 Computer-integrated manufacturing (CIM) Example – Bar codes and RFID
1 - 126 1 - 128

Process Control Robots

 Real-time monitoring and control of
processes  Perform monotonous or dangerous
tasks
 Sensors collect data
 Devices read data  Perform tasks
on periodic basis requiring significant
 Measurements translated into digital
strength or
signals then sent to a computer endurance
 Computer programs analyze the data  Generally enhanced
 Resulting output may take numerous consistency and
forms accuracy
1 - 129 1 - 131
Vision Systems Automated Storage and

 Particular aid to inspection
Retrieval Systems (ASRSs)
 Consistently
accurate  Automated placement and
withdrawal of parts and products
 Never bored
 Reduced errors and labor
 Modest cost
 Particularly useful in inventory and
 Superior to test areas of manufacturing firms
individuals performing the same
tasks
1 - 130 1 - 132

Automated Guided Vehicle Computer-Integrated

(AGVs) Manufacturing (CIM)
 Extension of flexible manufacturing
 Electronically guided and systems
controlled carts  Backwards to engineering and inventory
control
 Used for movement of products  Forward into warehousing and shipping
and/or individuals  Can also include financial and customer
service areas
 Reducing the distinction between low-
volume/high-variety, and high-
volume/low-variety production
1 - 133 1 - 135
Flexible Manufacturing Computer-

Systems (FMSs) Integrated
Manufacturing
 Computer controls both the workstation (CIM)
and the material handling equipment
 Enhance flexibility and reduced waste
 Can economically produce low volume at
high quality
 Reduced changeover time and increased
utilization
 Stringent communication requirement
between components Figure 7.10
1 - 134 1 - 136

Technology in Services (1/2) Process Redesign

Service Industry Example  The fundamental rethinking of business
Financial Debit cards, electronic funds transfer, ATMs, processes to bring about dramatic
Services Internet stock trading, on-line banking via improvements in performance
cell phone
Education Electronic bulletin boards, on-line journals,
 Relies on reevaluating the purpose of the
WebCT, Blackboard and smart phones process and questioning both the
Utilities and Automated one-man garbage trucks, optical purpose and the underlying assumptions
government mail and bomb scanners, flood warning
systems, meters allowing homeowners to  Requires reexamination of the basic
control energy usage and costs process and its objectives
Restaurants and Wireless orders from waiters to kitchen,
foods robot butchering, transponders on cars that  Focuses on activities that cross
track sales at drive-throughs functional lines
Communications Interactive TV, ebooks via Kindle 2  Any process is a candidate for redesign
Table 7.4 1 - 137 1 - 139
Technology in Services (2/2) Sustainability

Service Industry Example
Hotels Electronic check-in/check-out, electronic  Sustainability in production
key/lock system, mobile web booking
processes
Wholesale/retail ATM-like kiosks, point-of-sale (POS)
trade terminals, e-commerce, electronic
communication between store and supplier,
1. Resources
bar coded data, RFID
2. Recycling
Transportation Automatic toll booths, satellite-directed
navigation systems, WiFi in automobile
3. Regulations
Health care Online patient-monitoring, online medical
information systems, robotic surgery 4. Reputation
Airlines Ticketless travel, scheduling, Internet
purchases, boarding passes two-
dimensional bar codes on smart phones
Table 7.4 1 - 138 1 - 140

Topics Outline
Sustainability (2/3)
 Product Design
 Resources
 Operations is primary user  Issues for Product Design
 Reducing use is win-win  Defining a Product
 Recycling  Documents for Production
 Service Design
 Burn, bury, or reuse waste
 Process Design
 Recycling begins at design
1 - 141 1 - 143
Sustainability (3/3) Capacity

 The throughput, or the number of
 Regulations
units a facility can hold, receive,
 Laws affect transportation, store, or produce in a period of time
waste, and noise
 Determines
 Increasing regulatory pressure
fixed costs
 Reputation
 Determines if
 Leadership may be rewarded demand will
 Bad reputation can have be satisfied
negative consequences
 Three time horizons
1 - 142 1 - 144

Planning Over a Time Horizon Utilization and Efficiency
Options for Adjusting Capacity Utilization is the percent of design capacity

Long-range Add facilities achieved
planning Add long lead time equipment *
Intermediate- Subcontract Add personnel Utilization = Actual output/Design capacity
range Add equipment Build or use inventory
planning Add shifts
Short-range
Schedule jobs Efficiency is the percent of effective capacity
planning
* Schedule personnel
Allocate machinery
achieved
Modify capacity Use capacity Efficiency = Actual output/Effective capacity
* Difficult to adjust capacity as limited options exist
1 - 145 1 - 147
Design and Effective Capacity Bakery Example
Actual production last week = 148,000 rolls

 Design capacity is the maximum Effective capacity = 175,000 rolls
theoretical output of a system Design capacity = 1,200 rolls per hour
Bakery operates 7 days/week, 3 - 8 hour shifts
 Normally expressed as a rate
 Effective capacity is the capacity a Design capacity = (7 x 3 x 8) x (1,200) = 201,600 rolls
firm expects to achieve given current
operating constraints
 Often lower than design capacity
1 - 146 1 - 148

Bakery Example Bakery Example
Actual production last week = 148,000 rolls Actual production last week = 148,000 rolls
Effective capacity = 175,000 rolls Effective capacity = 175,000 rolls
Design capacity = 1,200 rolls per hour Design capacity = 1,200 rolls per hour
Bakery operates 7 days/week, 3 - 8 hour shifts Bakery operates 7 days/week, 3 - 8 hour shifts
Design capacity = (7 x 3 x 8) x (1,200) = 201,600 rolls Design capacity = (7 x 3 x 8) x (1,200) = 201,600 rolls
Utilization = 148,000/201,600 = 73.4%
1 - 149 1 - 151
Design capacity = (7 x 3 x 8) x (1,200) = 201,600 rolls Design capacity = (7 x 3 x 8) x (1,200) = 201,600 rolls
Utilization = 148,000/201,600 = 73.4% Utilization = 148,000/201,600 = 73.4%
Efficiency = 148,000/175,000 = 84.6%
1 - 150 1 - 152

Efficiency = 84.6%
Efficiency of new line = 75%
Design capacity = (7 x 3 x 8) x (1,200) = 201,600 rolls
Expected Output = (Effective Capacity)(Efficiency)
Utilization = 148,000/201,600 = 73.4%
= (175,000)(.75) = 131,250 rolls
Efficiency = 148,000/175,000 = 84.6%
1 - 153 1 - 155
Bakery Example Capacity and Strategy
Actual production last week = 148,000 rolls  Capacity decisions impact all 10
Effective capacity = 175,000 rolls
Design capacity = 1,200 rolls per hour decisions of operations
Bakery operates 7 days/week, 3 - 8 hour shifts management as well as other
Efficiency = 84.6% functional areas of the organization
Efficiency of new line = 75%
 Capacity decisions must be
Expected Output = (Effective Capacity)(Efficiency) integrated into the organization’s
= (175,000)(.75) = 131,250 rolls mission and strategy
1 - 154 1 - 156

Capacity Considerations Managing Demand

 Demand exceeds capacity
1. Forecast demand accurately  Curtail demand by raising prices,
scheduling longer lead time
2. Understand the technology and
 Long term solution is to increase capacity
capacity increments
 Capacity exceeds demand
3. Find the optimum
 Stimulate market
operating level
 Product changes
(volume)
 Adjusting to seasonal demands
4. Build for change  Produce products with complementary
demand patterns
1 - 157 1 - 159
Economies and Diseconomies Complementary Demand

of Scale Patterns
(dollars per room per night)
Average unit cost
4,000 –
25 - room 75 - room
Sales in units
roadside motel 50 - room roadside motel
3,000 –
roadside motel
2,000 –
1,000 – Jet ski

engine
Economies Diseconomies sales
of scale of scale
JFMAMJJASONDJFMAMJJASONDJ
25 50 75
Number of Rooms Time (months)
Figure S7.2 Figure S7.3
1 - 158 1 - 160
© 2011 Pearson

Complementary Demand Tactics for Matching Capacity

Patterns to Demand
1. Making staffing changes
2. Adjusting equipment
4,000 –  Purchasing additional machinery
Sales in units
Snowmobile  Selling or leasing out existing equipment

3,000 – motor sales
3. Improving processes to increase throughput
2,000 –
4. Redesigning products to facilitate more
1,000 – Jet ski throughput
engine
sales 5. Adding process flexibility to meet changing
product preferences
Time (months) 6. Closing facilities
Figure S7.3
1 - 161 1 - 163
© 2011 Pearson
Complementary Demand Demand and Capacity

Patterns Management in the Service
Sector
Combining both
demand patterns
reduces the  Demand management
variation
4,000 –
 Appointment, reservations, FCFS rule
Sales in units
Snowmobile
3,000 – motor sales  Capacity
2,000 – management
1,000 – Jet ski  Full time,
engine
sales temporary,
part-time
Time (months) staff
Figure S7.3
1 - 162 1 - 164

End of Presentation
1 - 165
1 - 166

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SPEOPMA Product Design & Process Strategy Page 1 of 42

10 Strategic Decision Areas

Prof. Ramon H. Enriquez RME, MIE&M 2018-09-07 1

Product Decision Product Life Cycles

Product Decision Product Life Cycles

Sales, cost, and cash flow

Prof. Ramon H. Enriquez RME, MIE&M 2018-09-07 2

Individual Total Annual

60 – Love Seat $102 $36,720

 Helps management evaluate  Process Design

Prof. Ramon H. Enriquez RME, MIE&M 2018-09-07 3

New Product Opportunities Importance of New Products

Prof. Ramon H. Enriquez RME, MIE&M 2018-09-07 4

Product Development System Steps in QFD

Quality Function Deployment (QFD) QFD House of Quality

Prof. Ramon H. Enriquez RME, MIE&M 2018-09-07 5

House of Quality Example House of Quality Example How to Satisfy

Your team has been charged with Technical

Low electricity requirements

designing a new camera for Great

House of Quality Example How to Satisfy

House of Quality Example How to Satisfy

customer Medium relationship

Prof. Ramon H. Enriquez RME, MIE&M 2018-09-07 6

Interrelationships How to Satisfy

House of Quality Example How to Satisfy

Low electricity requirements

Interrelationships How to Satisfy

House of Quality Example How to Satisfy

Failure 1 per 10,000

Prof. Ramon H. Enriquez RME, MIE&M 2018-09-07 7

QFD-Example for a Service

Low electricity requirements

Failure 1 per 10,000

Prof. Ramon H. Enriquez RME, MIE&M 2018-09-07 8

Organizing for Product Value Engineering (1/2)

Organizing for Product Value Engineering (2/2)

Prof. Ramon H. Enriquez RME, MIE&M 2018-09-07 9

The Ethical Approach Guidelines for Environmen-

The Ethical Approach

Prof. Ramon H. Enriquez RME, MIE&M 2018-09-07 10

Acquiring Technology Topics Outline

Defining The Product

 First definition is in terms of functions

Prof. Ramon H. Enriquez RME, MIE&M 2018-09-07 11

Product Documents Bills of Material

 Bill of Material A 60-72

Engineering Drawings Bills of Material

Prof. Ramon H. Enriquez RME, MIE&M 2018-09-07 12

Topics Outline Assembly Drawing

Documents for Production Assembly Chart

Prof. Ramon H. Enriquez RME, MIE&M 2018-09-07 13

Route Sheet Engineering Change Notice

Work Order Configuration Management

Prof. Ramon H. Enriquez RME, MIE&M 2018-09-07 14

Topics Outline Service Design

Service Design Service Design

Prof. Ramon H. Enriquez RME, MIE&M 2018-09-07 15

Moments of Truth First Bank Corp. Drive-up

The Service Blueprint (1/3)

Prof. Ramon H. Enriquez RME, MIE&M 2018-09-07 16

The Service Blueprint (2/3) Building a Service Blueprint