Chapter 2

Product Design
and
Process Selection
2.1 Product Design
• The essence of a business organization is the products and services it offers, and
every aspect of the organization and its supply chain are structured around those
products and services.

• Organizations that have well-designed products or services are more likely to

realize their goals than those with poorly designed products or services.

• Hence, organizations have a strategic interest in product and service design.

• Product or service design should be closely tied to an organization’s strategy.

• Product design is a major factor in cost, quality, time-to-market, customer satisfaction,
and competitive advantage.

• Consequently, marketing, finance, operations, accounting, IT, and HR need to be

involved.

• Operations failures can be traced to faulty design.

• Designs that have not been well thought out, or are incorrectly implemented, or
instructions for assembly or usage that are wrong or unclear, can be the cause of
product and service failures, leading to lawsuits, injuries and deaths, product recalls, and
damaged reputations.

• As businesses continue to reduce costs to achieve competitive advantage, design issues

• Because product and service design touches every part of a business
organization, from operations and supply chains to finance, marketing,
accounting, and information systems, design decisions have far-reaching
implications for the organization and its success in the marketplace.

• Product and service innovation is becoming a key avenue in pursuing a

competitive edge, and sustainability issues are being given increasing importance
in business decisions.
 Why is product design so important?
• Product design satisfies customers, communicates the purpose of the product or
service to its market and brings financial rewards to the business.

• The objective of product design, is to satisfy customers by meeting their actual or

anticipated needs and expectations.

• This, in turn, enhances the competitiveness of the organization.

• Product design, therefore, can be seen as starting and ending with the customer.

• So, the design activity has one overriding objective: to provide products, services
and processes which will satisfy the operation’s customers.
• Product designers try to achieve aesthetically pleasing designs which meet or
exceed customers’ expectations.
• They:
try to design a product which performs well and is reliable during its lifetime,
design the product so that it can be manufactured easily and quickly,
design the product in a way that meets, or even exceeds, customer
expectations, and
design the product that is within the capabilities of the operation and be
delivered at reasonable cost.
 What is designed in a product or service?

All products and services can be considered as having three aspects:

1) Concept: the understanding of the nature, use and value of the product;

2) Package: the component of the product that provide those benefits defined in
the concept; and

3) Process: which defines the way in which the product component will be
created and delivered.
 What does product design do?
• The primary focus of product design should be on customer satisfaction.
• The various activities and responsibilities of product design are:
1. Translate customer needs and wants into product requirements (marketing,
operations)
2. Refine existing products (marketing)
3. Develop new products (marketing, operations)
4. Formulate quality goals (marketing, operations)
5. Formulate cost targets (accounting, finance, operations)
6. Construct and test prototypes (operations, marketing, engineering)
7. Document specifications
8. Translate product specifications into process specifications (engineering,
operations)
 Objectives of Product Design
• Primary consideration: Customer satisfaction.
• Secondary considerations: Cost or profit, quality, ability to produce a product or
provide a service, ethics/safety, and sustainability.
Key Questions
• From a buyer’s standpoint, most purchasing decisions entail two fundamental
considerations: cost and quality/performance.
• From the organization’s standpoint, the key questions are:
1. Is there demand for the product/service?
2. Can we do it? (manufacturability and serviceability)
3. What level of quality is appropriate?
4. Does it make sense from an economic standpoint? (ethics/safety, and
sustainability)
 Reasons for Product Design or Redesign
• Product design typically has strategic implications for the success and prosperity of
an organization.

• Consequently, decisions in this area are some of the most fundamental that
managers must make.

• Product design or redesign should be closely tied to an organization’s strategy.

• The main forces that initiate product design or redesign are market opportunities
and threats.

• The factors that give rise to market opportunities and threats can be one or more of
• Economic (e.g., low demand, excessive warranty claims, the need to reduce
costs)

• Social and demographic (e.g., population shifts)

• Political or legal (e.g., government changes, safety issues, new regulations)

• Competitive (e.g., new or changed products, new promotions)

• Cost or availability (e.g., raw materials availability, components, labor, water,

energy)

• Technological (e.g., product components, processes)

 2.1.1 Design of Goods vs Services
• Goods design is primarily concerned with solving real problems through
functionality, not just what a product looks and feels like.

• Service design focuses on the organization and planning of people and

communication to create optimal service quality.

• At the heart of both goods and service design is the desire to create the best
possible user experience.

• They are each user-centered and keep customers at the heart of their decision
making.
 2.1.2 The Product design process

The product design process involves the steps of generating ideas, product
screening, preliminary design and testing, and final design.
I. Generating ideas

• Ideas for new or redesigned products can come from a variety of sources,
including customers, the supply chain, competitors, employees, and research.

• Customer input can come from surveys, focus groups, complaints, and unsolicited
suggestions for improvement.

• Input from suppliers, distributors, and employees can be obtained from

interviews, direct or indirect suggestions, and complaints.
II. Product screening

The screening process consists of marketing analysis, economic analysis, and

technical analysis.

a) Marketing Analysis

• Market analysis consists of evaluating the product concept with potential

customers through interviews, focus groups and other data collection methods.

• The physical product may be tested by supplying a sample for customer

evaluation.

• The market analysis should identify whether sufficient demand for the proposed
b) Economic Analysis

• It consists of developing estimates of production and demand costs and comparing

them with estimates of demand.

• The analysis requires an accurate estimate of demand as possible derived from

statistical forecasts of industry sales and estimates of market share in the sector
the product is competing.

• These estimates will be based on a predicted price range for the product which is
compatible with the position of the new product in the market.

• To assess the feasibility of the projected estimates of product costs in terms of such
c) Technical Analysis

• It consists of determining whether there is technical capability to

manufacture the product or not.

• This covers such issues as ensuring materials are available to make the
product to the specification required, and ensuring the appropriate
machinery and skills are available to work with these materials.

• The analysis must consider the target market and so product designers have
to consider the costs of manufacturing and distributing the product to ensure
it can be sold at a competitive price.
III. Preliminary Design and Testing

• Once a product idea has passed the screening stage, it is time to begin preliminary
design and testing.

• At this stage, design engineers translate general performance specifications into

technical specifications.

• Prototypes (i.e., the first version of the product) are built and tested.

• Changes are made based on test results, and the process of revising, rebuilding a
prototype, and testing continues.

• For service companies this may entail testing the offering on a small scale and
IV. Final Design

• Following extensive design testing, the product moves to the final design stage.

• This is where final product specifications are drawn up.

• The final specifications are then translated into specific processing instructions to
manufacture the product, which include selecting equipment, outlining jobs that
need to be performed, identifying specific materials needed and suppliers that
will be used, and all the other aspects of organizing the process of product
production.
 2.1.3 Factors Impacting Product Design
Some of the major factors that have impact on product design are:

1) Legal and ethical considerations

2) Human factors

3) Cultural factors

4) Environmental factors: sustainability

5) Strategies for product life cycle stages

6) Designing for mass customization

7) Quality function deployment

1) Legal and ethical considerations

• Designers must be careful to take into account a wide array of legal and ethical
considerations.

• Product liability can be a strong incentive for design improvements.

• Product liability is the responsibility of a manufacturer for any injuries or damages

caused by a faulty product because of poor workmanship or design.

• Organizations generally want designers to adhere to guidelines such as the following:

produce designs that are consistent with the goals of the organization,
give customers the value they expect, and
make health and safety a primary concern.
2) Human Factors
• Human factor issues often arise in the design of consumer products.
• Safety and liability are two critical issues in many instances, and they must be
carefully considered.
• Another issue for designers to take into account is adding new features to their
products or services.
• Companies in certain businesses may seek a competitive edge by adding new
features.
• Although this can have obvious benefits, it can sometimes be “too much of a
good thing,” and be a source of customer dissatisfaction.
• This “creeping featurism” is particularly evident in electronic products such as
handheld devices that continue to offer new features, and more complexity, even
while they are shrinking in size.
• This may result in low consumer ratings in terms of “ease of use.”
3) Cultural Factors

• Product designers in companies that operate globally also must take into account
any cultural differences of different countries or regions related to the product.

• This can result in different designs for different countries or regions.

4) Environmental Factors: Sustainability

• Product and service design is a focal point in the quest for sustainability.

• Key aspects include:

cradle-to-grave assessment,

end-of-life programs,

reduction of costs and materials used,

reuse of parts of returned products, and

recycling.
5) Strategies for Product or Service Life Stages

• Most, but not all, products and services go through a series of stages over their
useful life, sometimes referred to as their life cycle.

• Demand typically varies by phase. Different phases call for different strategies.

• In every phase, forecasts of demand and cash flow are key inputs for strategy.
6) Degree of Standardization
• An important issue that often arises in both product/service design and process design is the degree
of standardization.

• Standardization refers to the extent to which there is absence of variety in a product, service, or
process.

• Standardized products are made in large quantities of identical items (e.g. calculators and computers).

• Standardized service implies that every customer or item processed receives essentially the same
service.

• An automatic car wash is a good example; each car, regardless of how clean or dirty it is, receives the
same service.

• Standardized processes deliver standardized service or produce standardized goods.

• Standardized products are immediately available to customers.

• Standardized products mean interchangeable parts, which greatly lower the cost
of production while increasing productivity and making replacement or repair
relatively easy compared with that of customized parts.

• Design costs are generally lower.

7) Designing for Mass Customization

• Companies like standardization because it enables them to produce high volumes

of relatively low-cost products, albeit products with little variety.
• Customers, on the other hand, typically prefer more variety, although they like
the low cost.
• The question for producers is how to resolve these issues without
(1) losing the benefits of standardization and
(2) incurring a host of problems that are often linked to variety.
• These include:
• increasing the resources needed to achieve design variety;
• increasing variety in the production process, which would add to the skills necessary to
produce products, causing a decrease in productivity;
• creating an additional inventory burden during and after production, by having to carry
replacement parts for the increased variety of parts; and
• adding to the difficulty of diagnosing and repairing product failures.
• The answer, at least for some companies, is mass customization, a strategy of producing
standardized goods or services, but incorporating some degree of customization in the final
product or service.

• Several tactics make this possible, namely: delayed differentiation and modular design.

• Delayed differentiation: The process of producing, but not quite completing, a product or service
until customer preferences are known.

• For example, furniture makers can produce dining room sets, but not apply color, allowing
customers a choice of colors.

• Modular design: A form of standardization in which component parts are grouped into modules
that are easily replaced or interchanged.

• One familiar example of modular design is computers, which have modular parts that can be
8) Quality Function Deployment

• Obtaining input from customers is essential to assure that they will want what is
offered for sale.

• Although obtaining input can be informal through discussions with customers,

there is a formal way to document customer wants.

• Quality function deployment (QFD) is a structured approach for integrating the

“voice of the customer” into both the product and service development process.

• The purpose is to ensure that customer requirements are factored into every
aspect of the process.
9) The Kano Model

• The Kano model offered a perspective on customer perceptions of quality different from the
traditional view that “more is better.”

• The model employs three definitions of quality: basic, performance, and excitement.

1) Basic quality refers to customer requirements that have only a limited effect on customer
satisfaction if present, but lead to dissatisfaction if not present.

2) Performance quality refers to customer requirements that generate satisfaction or dissatisfaction in

proportion to their level of functionality and appeal.

3) Excitement quality refers to a feature or attribute that was unexpected by the customer and causes
excitement (the “wow” factor).

• Over time, features that excited become performance features, and performance features soon
2.2 PROCESS SELECTION

• Process selection refers to deciding on the way the production of goods or

services will be organized.

• It has major implications for capacity planning, layout of facilities, equipment,

and design of work systems.

• Process selection occurs as a matter of course when new products or services

are being planned.

• However, it also occurs periodically due to technological changes in products or

equipment, as well as competitive pressures.
• Process choice is demand-driven.

• The two key questions in process selection are:

1. How much variety will the process need to be able to handle?

2. How much volume will the process need to be able to handle?

• Answers to these questions will serve as a guide to selecting an appropriate process.

• Usually, volume and variety are inversely related; a higher level of one means a lower level of
the other.

• However, the need for flexibility of personnel and equipment is directly related to the level of
variety the process will need to handle:

• The lower the variety, the less the need for flexibility, while the higher the variety, the
 2.2.1 Process Types
There are five basic process types:

1) Job Shop Process ,

2) Batch Process,

3) Repetitive/Assembly Process,

4) Continuous Process, and

5) Project.
1) Job Shop Process
• A job shop usually operates on a relatively small scale.

• It is used when a low volume of high-variety goods or services will be needed.

• Processing is intermittent; work includes small jobs, each with somewhat different
processing requirements.

• High flexibility using general-purpose equipment and skilled workers are important
characteristics of a job shop.

• A manufacturing example of a job shop is a tool and die shop that is able to produce one-
of-a-kind tools.

• A service example is a veterinarian’s office, which is able to process many types of animals
A Job Shop Process: Diagnostic Procedure
2) Batch Process
• Batch processing is used when a moderate volume of goods or services is desired, and it can handle a
moderate variety in products or services.

• The equipment need not be as flexible as in a job shop, but processing is still intermittent.

• The skill level of workers doesn’t need to be as high as in a job shop because there is less variety in the
jobs being processed.

• Examples of batch systems include bakeries, which make bread, cakes, or cookies in batches; movie
theaters, which show movies to groups (batches) of people; and airlines, which carry planeloads (batches)
of people from airport to airport.

• Other examples of products that lend themselves to batch production are paint, soft drinks, beer,
magazines, and books.

• Other examples of services include plays, concerts, music videos, radio and television programs, and public
3) Repetitive/Assembly Process
• When higher volumes of more standardized goods or services are needed, repetitive
processing is used.

• The standardized output means only slight flexibility of equipment is needed.

• Skill of workers is generally low.

• Examples of this type of system include production lines and assembly lines.

• Familiar products made by these systems include automobiles, television sets,

smartphones, and computers.

• An example of a service system is an automatic carwash, cafeteria lines and ticket

collectors at sports events and concerts.
4) Continuous Process
• When a very high volume of non-discrete, highly standardized output is desired, a
continuous system is used.

• These systems have almost no variety in output and, no need for equipment flexibility.

• Workers’ skill requirements can range from low to high, depending on the complexity
of the system and the expertise that workers need.

• Generally, if the equipment is highly specialized, worker skills can be lower.

• Examples of non-discrete products made in continuous systems include petroleum

products, steel, sugar, flour, and salt.

• Continuous services include supplying electricity to homes and businesses, and the
5) Project

• A project is used for work that is non-routine, with a unique set of objectives to
be accomplished in a limited time frame.

• Examples range from simple to complicated, including such things as putting on a

play, consulting, making a motion picture, launching a new product or service,
publishing a book, building a dam, and building a bridge.

• Equipment flexibility and worker skills can range from low to high.
2.2.2 Product and Service Profiling
• Process selection can involve substantial investment in equipment and have a
very specific influence on the layout of facilities, which also require heavy
investment.

• Moreover, mismatches between operations capabilities and market demand and

pricing or cost strategies can have a significant negative impact on the ability of
the organization to compete or to effectively service clients.

• Therefore, it is highly desirable to assess the degree of correlation between

various process choices and market conditions before making process choices in
order to achieve an appropriate matching.
• Product or service profiling can be used to avoid any inconsistencies by
identifying key product or service dimensions and then selecting appropriate
processes.

• Key dimensions often relate to:

• the range of products or services that will be processed,
• expected order sizes,
• Pricing strategies,
• expected frequency of schedule changes, and
• order-winning requirements.
2.2.3 Sustainable Production of Goods and Services
• Business organizations are facing increasing pressure from a variety of sources to
operate sustainable production processes.

• According to the Lowell Center for Sustainable Production

(http://sustainableproduction.org ),

“Sustainable Production is the creation of goods and services using processes and
systems that are: non-polluting; conserving of energy and natural resources;
economically efficient; safe and healthful for workers, communities, and
consumers; and socially and creatively rewarding for all working people.”
The Center advocates designing and operating processes in ways that:

“wastes and ecologically incompatible byproducts are reduced, eliminated or

recycled on-site; chemical substances or physical agents and conditions that
present hazards to human health or the environment are eliminated; energy and
materials are conserved, and the forms of energy and materials used are most
appropriate for the desired ends; and work spaces are designed to minimize or
eliminate chemical, ergonomic and physical hazard.”
2.2.4 Lean Process Design

• One principle of particular interest here is waste reduction, which relates to

sustainability objectives.

• Lean design also focuses on variance reduction in workload over the entire
process to achieve level production and thereby improve process flow.

• Successful lean design results in:

reduced inventory and floor space;
quicker response times and shorter lead times;
reduced defects, rework, and scrap; and
2.2.5 Technology
• Technology and technological innovation often have a major influence on business
processes.

• Technological innovation refers to the discovery and development of new or improved

products, services, or processes for producing or providing them.

• Technology refers to applications of scientific discoveries to the development and

improvement of goods and services and/or the processes that produce or provide them.

• It can involve such factors as knowledge, materials, methods, and equipment.

• The term high technology refers to the most advanced and developed equipment and
methods.
• Process technology and information technology can have a major impact on costs, productivity,
and competitiveness.

• Process technology includes methods, procedures, and equipment used to produce goods and
provide services.

• This not only involves processes within an organization, it also extends to supply chain processes.

• Information technology (IT) is the science and use of computers and other electronic equipment
to store, process, and send information.

• IT is heavily ingrained in today’s business operations.

• This includes electronic data processing, the use of bar codes and radio frequency tags to identify
and track goods, devices used to obtain point-of-sale information, data transmission, the
Internet, e-commerce, e-mail, and more.
• Technological innovation in processing technology can produce tremendous
benefits for organizations by increasing quality, lowering costs, increasing
productivity, and expanding processing capabilities.

• Among the examples are advances in medical diagnostic equipment, high-speed

Internet connections, high-definition television, online banking, information
retrieval systems, and high-speed search engines.

• Processing technologies often come through acquisition rather than through the
internal efforts of an organization.
• While process technology can have enormous benefits, it also carries substantial
risk unless a significant effort is made to fully understand both the downside as
well as the upside of a particular technology.

• It is essential to understand what the technology will and won’t do.

• There are also economic considerations (initial cost, space, cash flow,
maintenance, consultants), integration considerations (cost, time, resources), and
human considerations (training, safety, job loss).
2.2.6 Automation

• A key question in process design is whether to automate.

• Automation is machinery that has sensing and control devices that enable it to operate automatically.

• If a company decides to automate, the next question is how much.

• Automation can range from factories that are completely automated to a single automated
operation.

• Although not as plentiful as in manufacturing, automated services are becoming increasingly

important.

• Examples range from automated teller machines (ATMs) to automated heating and air conditioning,
and include automated inspection, automated storage and retrieval systems, package sorting, mail
processing, e-mail, and online banking.
2.2.7 Computer-Aided Manufacturing (CAM)
• Computer-aided manufacturing (CAM) refers to the use of computers in process control, ranging from
robots to automated quality control.

• Numerically controlled (N/C) machines are programmed to follow a set of processing instructions
based on mathematical relationships that tell the machine the details of the operations to be
performed.

• The instructions are stored on a device such as a microprocessor. Although N/C machines have been
used for many years, they are an important part of new approaches to manufacturing.

• Individual machines often have their own computer; this is referred to as computerized numerical
control (CNC).

• Or one computer may control a number of N/C machines, which is referred to as direct numerical
2.2.8 Process Strategy

• In operations management, the importance of flexibility as a competitive

strategy is stressed.

• However, flexibility does not always offer the best choice in processing
decisions.

• Flexible systems and equipment are often more expensive and not as efficient
as less flexible alternatives.

• In certain instances, flexibility is unnecessary because products are in mature

stages, requiring few design changes, and there is a steady volume of output.
• Ordinarily, this type of situation calls for specialized processing equipment, with
no need for flexibility.

• The implication is clear: Flexibility should be adopted with great care; its
applications should be matched with situations in which a need for flexibility
clearly exists.

• In practice, decision makers choose flexible systems for either of two reasons:
Demand variety or uncertainty exists about demand.

• The second reason can be overcome through improved forecasting.

Chapter End