OPERATIONS MANAGEMENT

Course: OPERATIONS MANAGEMENT

Sub Code: 17IBP19
Programme: M.COM IB
Unit: II Hour
Topic: Designing a new product
Term: Academic Tear 2018-19 ; Odd Semester
Faculty: Mrs. S.Devi Kalyani

Sri Krishna Arts and Science College Department of Commerce

• Snap talk
• Current Affairs
 DESIGNING NEW PRODUCT
Designing new product and getting them to the market is the challenging job
faced by most of the manufacturers in this competitive market.
Customers demands are changing rapidly so it is the main responsibility of
manufacturers to add the customers’ specifications in the product and
deliver it to them in lowest cost.
The product development activity links customers needs and expectations to
the activities required to manufacturer the product.
How manufactured products are designed and how the process to produce
them is selected are the main concern of this topic.
 PRODUCT DESIGN - DEFINATION
Product design is concerned with form and functions of a product. It refers to
the arrangement of elements or parts that collectively form a product.
Although the potential opportunities to be realized in developing new products
are exciting. Making them happen is a demanding challenge.
Product design specifies which materials are to be
used, determines and tolerances, defines the appearance of the product and sets
standards for performance.
An organization can gain a competitive edge through designs that brings new
ideas to the market quickly, do a better job of satisfying customer needs, or are
easier to manufacture, use and repair the existing products.
 PRODUCT DESIGN – DEFINATION cont….
In any business venture, product design is the first step immediately after
accepting the concept of a product.
It has direct bearing on plant layout, and in process material flow. In
the process of product design, one has to critically analyze different
design features with relevance to places of use, substitute materials, and
carefully plan equipment alternatives for manufacturing the product.
Therefore, the purpose of product design is to determine and specify
products that will be profitable to manufacturers and distributors and will
give customers satisfaction.
 Various aspects in product design

The various aspects in product design are as follows:

Design for function: A product must perform the function which its customers
expects it to do. If a product is designed by taking its functional features in to
account, then it will create satisfied customers, and will further lead to having
more repeat customers. The factors which are to be considered for
functional design are strengths and wearbility of the product and its components.
 Various aspects in product design cont….
Design for making: A product design that solves the functional problem
smoothly, but is impossible to manufacture, is of no use. Attention must
be given to materials, fastening devices, etc., while designing a product.
The hardness of the material specified at the design stage must be within
the permitted range while machining.
Making use of standard parts in an important aspect of product design.
Also, operational convenience of the machineries must be taken into
account at the design stage.
Various aspects in product design cont….

Design for selling: A product that functions well and is easy to

make, but is wanted by no one in the market is of no avail.
It makes no differences whether the product is a per or aero
plane, it has to sell itself to the customers.
The features like, appearance and convenience, depending on
the customers needs, are to be considered.

So, engineers, designers, psychologist and workers need to work

together to design a better product and deliver it to the
market.
 The Product Design Process
Following are the phase of product design.
1. Concept development
 Product architecture
 Conceptual design
 Target market
2. Product planning
 Market building
 Small scale testing
 Investment / finance
3. Product /process engineering
 Detail design of product and tools/ equipments
 Building prototypes
4. Pilot production /Ramp up
 Volume production prove out
 Factory start up
 Volume increases to commercial targets
Process Planning
& Design
Process Design
 Process is that part of an I-P-O System, with a sequence of
activities that is intended to achieve some result (output) and/or
to add value for the output in tune with customers requirements.
A process converts inputs into output in a production system.
 To enable a better product design we necessarily require a
suitable process planning cum design to make the design aspects
reflect in the product.
 It is a known fact that process based design changes in a
production system are long lasting than the product based design
changes.
 Process Planning… for process Design &
Operations Design…
 Basically processes are classified as 1. Conversion Processes (RM to FG by
metallurgical, chemical process etc), 2. Manufacturing Processes ( Fabricating,
assembly , machining etc) and Testing Processes ( Inspection and testing for
quality, reliability etc)
 Process planning is concerned with planning for the most suitable conversion
process/es required to convert the RM in to FG. Process planning normally
consists of Process Design & Operations Design.
 Process Design: Involves with overall sequences of Operations required to
achieve the required product specifications. The sequence is determined by
Product Nature, RM used, Q &Q of Output required.
 Process Planning… Operations
Design…
 Operations Design: It is concerned with the design of the individual
manufacturing operations. It examines man-machine relationships, labour
requirements, machine time requirements etc.
 Thus the framework of Process design involves with:
 Expected volume of output & Quality level / standards

 Product characteristics as per customer need

 Kind of labour skill available

 Cost of PME &Tools, present availability status of

machinery and tools
 Make or Buy decisions

 Economical handling of materials required.

 Process Selection
 Process Selection: It refers to the way, in which the production of goods
and services are organized. It make the vital decisions such as
 Capacity Planning
 Facilities layout
 Equipments and design of work systems
 The primary questions to be addressed here are:
 How much variety of Products / Services will the system requires to
handle ?
 What degree of equipment flexibility is required?
 What is the Quality & Quantity level expected in the Output etc.
 Whether it is a New product or already established Product etc.
 Process Strategy:
 Process Strategy: It is a Firm‟s approach to process selection for the purpose
of transforming „resource inputs‟ into Goods & Services (Outputs)
 The objective is to meet the specification as well the customer requirements. Since
process strategy is having a long term effect on Cost, Product Quality, Flexibility
etc they are important aspects of production.
 A sound process strategy shall contain the following:
 Make or Buy decisions (In-house or outsourcing or both for RM, Process,

Technology etc. )
 Capital Intensity (a mix of equipment and labor used by the firm that bears a cost

to the firm)
 Process Flexibility ( the degree to which the process

system can adjust to changes in processing needs)

 “Make or Buy” Decision:
 Make or Buy decision is the first step in Process planning. It involves
considering whether to Make or Buy (outsource) some or all of a Product or
Service.
 Firm may purchase a few parts / components of a Product from others. Buy
decisions reduce the need for process selection.
 The Factors considered in Make or Buy decisions are:
 Available capacity / Resources, suppliers availability.
 Quality considerations & desired level
 Expertise (of R&D) and competency
 Nature of demand (if high better to make rather than
buy)
 Cost (of production) and Economic analysis.
 Process Strategies
 In general P/S are made, using variations of 3 following process strategies :
 Process Focus : It is based on ‘Low volume – high variety’ strategy
mostly used by Job Shop firms. They are process focused & designed to
perform variety of intermittent processes done by skilled operators. (E.g. Job
Shops, Painting / Printing shops)
 Repetitive Focus: It uses modules or Modular type of strategy where parts or
components are prepared often in a continuous or mass production process.
(E.g. Assembly lines used for automobile industry, Motor cycles etc)
 Product Focus: It is based on ‘High Volume – Low Variety’ strategy.
Also called ‘continuous process’ , it has very long continuous
production run . (E.g. Steel, Glass, Paper, Pharma products etc)
 Comparison
Process Focus
of the 3 Types
Repetitive Focus (Low volume
of
Product Focus (High
Process Startegies:
– High
Variety)
(Modular type ) Volume – Low
variety)
•Small Quantity & large Variety . • Special tools & trained •Large Quantity & small
Requires General M/C, tools, operators required for variety of products
Skilled operators assembly •special machinery used
•High WIP compared to output & • JIT production and by skilled people
slow work flow procurement technique •fast work flow
•FG made to order and usually used •Simple Prodn.
not stored. • Slow work flow Scheduling
• Low fixed costs and variable • Repetitive operations •FG are usually stored
control costs reduce job training •Fixed cost is tend to be
•High RM inventory is • FG are made to high and variable costs
maintained. frequent forecasts low.
•Prodn. scheduling is
complicated (Customer service
Vs Capacity)
 Process Management & Major
Process Decisions
 Process Mgt & Process decisions are concerned with Input selection,
Operations, work flows and process methods for conversion of RM to FG.
 These decisions are made when
o New products are offered & Quality need to be improved.

o Demand is increasing for the product

o Competitors are better equipped with new technology

 The five Major decisions commonly considered by

Operations Managers are:
1.Process Choice: Prodn. Managers to choose from five
basic processes say Job Shop, Batch
process, Repetitive, Continuous process or Projects.
 Major Process Decisions
2. Vertical Integration: Vertical Integration is the process by which Firms aims at owning
sizable amount of Production & Distribution chain. The 2 types are: Backward Integration
where Firms move upstream for owning sources of RM and parts (making its own RM and
sub-parts). Forward Integration is when Firms acquires the channel of
distribution downwards say such as building its own Warehouse, Retail outlets etc.
3. Resource Flexibility: It means flexibility in machines, equipments, facilities, and
employees. The Manager shall decide the flexibility limit and decide accordingly.
For e.g. when a firm‟s product has a shorter life cycle & high degree of customization
with a “low production volume” then the firm need to select flexible general purpose M/C
and equipments to cope up.
 Major Process Decisions
4. Customer Involvement: Some times the process is selected in such a
way that the customer‟s Product specifications & requirements are
met suitably. Firms allow customers to come up with their
specification requirements and consider them for process selection.
5. Capital Intensity: Process change means change in M/C, tools,
people etc. When advanced technology is opted cost factor is to be
considered. Increasing capital locking means more capital intensity.
The advantage is that it increases productivity & Quality but it is a
high investment on the other side.
Service Operations (Types,
Strategies, Scheduling)
 SERVICES & Operations….
The services domain also have competitive priorities to achieve low
product costs, timely delivery, service quality and visible /direct
customer service.
Types of service operations are:
Quasi-Manufacturing: Physical goods are more dominant here than the
services. Here the focus is more on Production costs, Technology, RM,
Product quality, delivery etc. There is little customer contact here. E.g.
Air craft maintenance & Industrial Heat treatment services.
Customer-as-participants: Involves, high degree of
customer involvement in service operations. Physical goods may or may
not be important here. For E.g. Retail trade.
 SERVICES & Operations…. The
strategies
Types of service operations (contd):
Customer-as-product: Here the service is actually performed on the customer. Physical
goods may or may not be an important part of the service. For E.g. Clinics, Hospitals &
Tailoring services.
 Strategies for Service Operations:
 Scheduling for Peak Demand
 Scheduling for chase demand
 Customer participation strategy
 Reservation Strategy
 Adjustable Capacity Strategy
 Cross Training strategy
 Sharing capacity strategy
 SERVICE Operations strategies
 Scheduling for Peak Demand: Building sufficient capacity to handle any kind of
larger demand. This affects efficiency.
 Scheduling for chase demand: Workforce can be varied based on demand. More
demand lead to more employees and lesser demand means lesser employees.
 Customer participation strategy: Here customers are made to involve in service
delivery.(E.g. self-service in Hotels)
 Reservation Strategy: Airlines, Hotels adopt this strategy where early bookings
means lesser cost and late booking means costlier services. It allows service
firms to determine the advance demand while limiting access to that service.
 Adjustable Capacity Strategy: This focus on using the available facilities for a
particular time period only. Few Hotels close their services for a few hours in a
day (3 to 5 PM) and use their workforce for other activities.
 SERVICE Operations strategies

 Cross Training strategy: It allows employees to be trained in all business aspects

& job profiles, to use them according to the demand. Hotels may use their workers for
food preparation & room services etc if trained.
 Sharing capacity strategy: Here different Firms/ departments with different demand
patterns, use the same facility. Many private Industries hire the
services of state owned bus services to transport their employees.
Scheduling for Service Operations:
1. Scheduling Multiple resources: In some firms like Hospitals and Educational Institutions
it is necessary to co-ordinate the use of > one resource. The complexity of scheduling
increases with that of the number of resources to be scheduled. For example, Hospitals
must schedule Drs, Nurses, Theatre staff, equipment etc. To tackle this, Hospitals use
First come first served system and Banks give cross training to their staff to utilize the
resources to the maximum.. Say ERP / EDP systems.
Next session