FILLED NOTES FOR CHAPTER 4: PRODUCT AND SERVICE DESIGN

Key Concepts:
In planning the production system, major decisions are made concerning the design of the product or
services as well as the design of the production processes. Entrepreneurs usually formulate new
businesses based on a unique product or a service idea. In existing firms, new products or services are
introduced when the competition for existing products increases or as existing products approach the end
of their product life cycle. Even after a few new products are launched, and even if these products are
successful, since they have limited life cycles, companies always seek and consider new product
possibilities. If a company continuously monitors new product possibilities, and if there is a product
failure among the current products, or if there is a significant change in the product market, then the
company can still be in position to release a new product to fill the void. This chapter focuses on the
design of the products and services. The main topics in this chapter include:
1.

The reasons, trends, and objectives of Product and Service Design.

2.

The Design Process (Designing for mass customization, reliability, robust design, etc.).

3.

Research and Development.

4.

Standardization.

5.

Product Design (concurrent engineering, computer aided design, remanufacturing).

6.

Service Design.

7.

Quality Function Deployment.

8.

Operations Strategy.

There arent many things more important to an organization than its products and/or services and there is
a rather obvious connection between the design of those products and/or services and the organizations
success. Consequently, organizations are vitally concerned about achieving outstanding product and
service design so they can compete in todays global marketplace.

Answers to Discussion and Review Questions

1.

Organizations redesign their products and services for a variety of reasons. Among them are
customer dissatisfaction, government regulation, competition, liability claims, technological
innovation (products and methods) and changes in costs and availability of such inputs as
materials, labor and energy.

2.

Applied research is research with a specific commercial application goal; basic research is
intended to increase knowledge about a subject or area.

3.

CAD refers to computer-aided design: computer graphics used for product design. A designer
can easily modify an existing design or create a new one. The designer can readily obtain a
variety of different perspectives as well as other pertinent information that speeds the process and
frees the designer to concentrate on creative aspects of design.

4.

The main advantages of standardization are:

a. Less variety of parts to deal with.

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b. Permits standardized training, purchasing, inspection and material handling. It may also
permit automation.
c. Enables production to stock, which allows filling orders from inventory, and potentially long
production runs.
Among the main disadvantages of standardization are the following:
a. Designs may be frozen with too many imperfections remaining.
b. The high cost of design changes increases resistance to improvement.
c. Decreased variety may lessen consumer appeal.
5.

Modular design refers to viewing a product (and sometimes a service) as being composed of a
number of chunks or sections instead of a collection of individual parts. In effect, it is one form
of standardization. Among the advantages of modular design are ease of diagnosis and repair of
failures, standardization of manufacturing, more routine purchasing, inventory control and
training. The disadvantages of modular design include a decrease in possible variety of the
product, the possibility of not being able to disassemble a module to replace a faulty part, and
possible resistance to design improvements, particularly minor ones, if they cannot be readily
incorporated into an existing configuration.

6.

Product designers must take into consideration the organizations manufacturing capabilities to
produce a particular product. Operations people should be involved early in the design process to
ensure that the design will be compatible with the organizations capabilities. Production/
Operations people can provide the necessary input that make things apparent before problems
arise in production. Marketing people should also be involved to ensure that customer
requirements will be given proper consideration.

7.

Some of the competitive advantages of concurrent engineering are:

a. Manufacturing personnel are able to identify production capabilities and capacities. Very
often, they have some latitude in design in terms of selecting suitable materials and processes.
Knowledge of production capabilities can help in the selection process. In addition, cost and
quality considerations can be greatly influenced by design, and conflicts during production
can be greatly reduced.
b. Early opportunities for design or procurement of critical tooling, some of which might have a
long lead time. This can result in a major shortening of the product development process,
which could be a key competitive advantage.
c. Early consideration of the technical feasibility of a particular design or a portion of a design.
Again, this can avoid serious problems during production.
d. More effective resource allocation.
e. The emphasis can be on problem resolution instead of conflict resolution.

8.

Remanufacturing involves removing some of the parts and components of old products and
reusing them in new products. The advantages of remanufacturing include the following:
a. Remanufactured products are cheaper to make than new products.
b. Remanufactured products require less skilled workers than new products.
c. There will be less depletion of natural resources.

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9.

The term life cycle refers to a sequence of stages of demand that products or services go
through. A typical sequence consists of incubation, growth, maturity, saturation and decline.
Efforts to improve design may depend on the stage of the life cycle: In the early stages, there is a
greater potential for returns than in later stages. Moreover, many design changes can be
anticipated early during the life cycle as familiarity with the product or service increases.

10.

Research and development can contribute to productivity by helping to uncover new and better
ways for designing, fabrication, and assembly of products and new ways of providing services.
R&D is a key factor because it can be directed towards productivity improvements, as opposed to
achieving improvements as a by-product of operations through trial and error, for example.

11.

Mass customization is a strategy of producing standardized goods or services while incorporating

a certain degree of customization in the final product or service. Mass customization can be
achieved using a couple of different tactics. These tactics are delayed differentiation and modular
design.
Delayed differentiation involves postponing completion of the service or the product until
obtaining specific information about customer preferences and specifications. Once the company
has knowledge about specific customer preferences, the customized specifications are
incorporated on almost-completed units. This approach reduces product or service delivery lead
times while reducing costs and improving the efficiency due to standardization.
Mass customization can also be achieved through modular design. Modular design is a form of
product standardization in which components are classified into modules that are easily replaced,
interchanged, assembled or disassembled. Advantages and disadvantages of modular design are
discussed in the answer to discussion question five.

12.

Differences between service design and product design:

a. Products are generally tangible; services are generally intangible. Consequently, service
design often focuses more on intangible factors (e.g., peace of mind, ambiance) than does
product design.
b. Services are often produced and received at the same time (e.g. a haircut, a car wash). Thus,
there is less latitude in finding and correcting errors before the customer has a chance to
discover them. Consequently, training, process design, and customer relations are
particularly important.
c. Services cannot be inventoried. This poses restrictions on flexibility and makes capacity
design very important.
d. Services are highly visible to consumers and must be designed with that in mind; this adds an
extra dimension to process design, one that usually is not present in product design.
e. Some services have low barriers to entry and exit. This places additional burden on service
design to be innovative and cost-effective.
f.

Location is often important to service design, with convenience as a major factor. Hence,
design of services and choice of location are often closely linked.

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13.

Robust design is a design that results in products or services that can function over a broad range
of conditions. The more robust a product the less likely it will fail due to a change in the
environment in which it is used. The more designers can build robustness into the product, the
better it should hold up, resulting in a higher level of customer satisfaction. It does not mean just
making products heavier and bigger because these may not be attributes customers desire in a
product. They may want a robust design that is lighter and compact.

14.

Quality function deployment (QFD) is a structures approach for integrating the voice of the
consumer into the product development process. The purpose is to ensure that customer
requirements are factored into every aspect of the process from product planning to the
production floor. Listening to and understanding the customer is the central feature of QFD.

15.

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

16.

Value analysis is the examination of the function of parts and materials in a product for the
purpose of reducing costs and/or improving product performance.

17.

Life cycle assessment, also known as life cycle analysis, is the assessment of the environmental
impact of a product or service throughout its useful life. For products, this cradle to grave
analysis takes into account impacts in every phase of a products life cycle, from raw material
extraction from the earth, or the growing and harvesting of plant materials, through fabrication of
parts and assembly operations, or other processes used to create products, as well as the use or
consumption of the product, and final disposal at the end of a products useful life. It also
considers energy consumption, pollution and waste, and transportation in all phases. Although
services generally involve less use of materials, life cycle assessment of services is nonetheless
important, because services consume energy and involve many of the same or similar processes
that products involve.
The goal of life cycle assessment is to choose products and services that have the least
environmental impact while still taking into account economic considerations.

18. The 3 Rs are re-use, remanufacture, and recycle. They relate to sustainability by avoiding or
reducing the impact on the environment that would accompany new production or, in the case of
recycling, a reduction in the waste stream.

Solutions to Problems

3.a. Make a savings deposit using a teller.

Customer
actions

Arrive and
Fill out deposit
ticket.

Wait in line if
necessary

Hand teller cash

or check and
deposit ticket

Receive
receipt

line of
information

Contact
Person(s)

Teller greets
customer.

Teller checks
cash or check
and enters
amount.

line of visibility

4-4

Teller prints
out receipt
and hands to
customer

Leave

Account is
automatically
updated.

Backstage
contacts
line of internal
interaction

Support

Lunch and rest

breaks are
managed based
on waiting lines.

Cash is
counted and
reconciled
with
transactions

4-5

Schedules
are set
weekly.

Employees
are paid.

3.b. Apply for a home equity loan.

Customer
actions

Arrive and
wait in line if
necessary

Greets service
rep and follows
to cubicle.

Tells service rep

type of loan
wanted.

Customer
signs for
loan.

Customer
leaves.

line of
information

Contact
persons

Service rep
greets customer
and leads to
cubicle.

Customer rep
asks for
necessary
documents and
checks to see if
customer
qualifies.

Service rep
fills out
necessary
paperwork.

Service
rep
indicates
approval
date.

Service rep
forwards
application
to loan
committee

line of visibility
Loan
committee
evaluate
application
and makes a
decision to
approves or
not approve
loan.

Backstage
contacts

line of internal
interaction
Forms are
ordered
periodically.

Support

4-6

Loan
committee
meetings
are
scheduled

Loan rates
are updated
weekly.

Customer
is
informed
of
decision.

4.a. Buy stamps from a machine.

Customer
actions

Arrive and
Wait in line if
necessary

Insert cash.

Make a
selection

Receive
stamps and
any change.

Count
change

Leave

line of
information
Receive and
record cash
amount

Contact
(machine)

Verify cost does

not exceed
recorded cash
amount.

Dispense
stamps

line of visibility

Backstage
contacts
line of internal
interaction
Replenish
stamps
periodically

Support

Periodically
perform
routine
maintenance.

4.b. Buy stamps from a postal clerk.

Customer
actions

Arrive and
Wait in line if
necessary

Customer
approaches clerk

Customer
requests
stamps

Customer
pays for
stamps

Clerk greets
customer

Clerk fills
order or
suggests
alternative if
out of
requested
stamps.

Clerk gives
customer
the stamps
and collect
money.

Schedules are
made

Stamps are
reordered as
needed.

Cash and
stamps are
reconciled.

Leaves

line of
information

Contact
Person(s)

Clerk calls next

in line

line of visibility

Backstage
contacts
line of internal
interaction

Support

4-7

Clerks are
paid.

5.

a.

Steps for Self-Service

1. Customer Selects Station
2. Select Octane Level
3. Customer Pumps Desired Amount of Gas and Performs Other Services
4. Pay Cashier for Gas and Other Products (Cash) Inside Station
5. Return to Auto and Drive Off

b. Steps for Full Service

1. Customer Selects Station
2. Tell Attendant Type and Amount of Gas and Services Desired
3. Attendant Pumps Desired Amount of Gas and Performs Other Services
4. Pay Attendant Cash for Gas and Other Services
5. Drive Off
6.

Steps for Making Cash Withdrawal from an ATM

1. Insert Card: Magnetic Strip Should be Facing Down
2. Watch Screen for Instructions
3. Select Transaction Options:
1) Deposit
2) Withdrawal
3) Transfer
4) Other
4. Enter Information:
1) PIN Number
2) Select a Transaction and Account
3) Enter Amount of Transaction
5. Deposit/Withdrawal:
1) Depositplace in an envelope (which youll find near or in the ATM) and insert it into
the deposit slot
2) Withdrawallift the Withdrawal Door, being careful to remove all cash
6. Remove card and receipt (which serves as the transaction record)

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7.

a. Roll Roundness and Tensile Strength

b.

Technical
Requirements
Customer Requirements

Type of
Paper

Internal
Paper
Feed

Paper doesnt wrinkle

Prints cleanly

Easy to use

Type of
Paper

Internal
Paper
Feed

Technical
Requirements
Customer Requirements

Print
Element

Print
Element

Paper doesnt wrinkle

Prints cleanly
.

Easy to use
8.
Technical
Requirements
Customer Requirements

Ingredients

Taste

Appearance

Texture/consistency

4-9

Handling

Preparation