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1 Adeng Pustikaningsih, M.Si. Dosen Jurusan Pendidikan Akuntansi Fakultas Ekonomi Universitas Negeri Yogyakarta CP: adengpustikaningsih@uny.ac.id

2 Operations Management Design of Goods and Services Chapter 5 5-2

3 Outline Global Company Profile: Regal Marine Goods and Services Selection Product Strategy Options Support Competitive Advantage Generation of New Product Opportunities Product Life Cycles Life Cycle and Strategy Product-by-value Analysis Product Development Product Development System Quality Function Deployment (QFD) Organizing for Product Development Manufacturability and Value Engineering 5-3

4 Outline - continued Issues for Product Design Robust Design Modular Design Computer-Aided Design (CAD) Value Analysis Environmentally Friendly Design Time-Based Competition Purchase of Technology by Acquiring Firm Joint Ventures Alliances 5-4

5 Outline - continued Defining the Product Make-or-buy Decisions Group Technology Documents for Production Service Design Documents for Service Application of Decision Trees to Product Design Transition to Production 5-5

6 Learning Objectives When you complete this chapter, you should be able to : Identify or Define: Product life cycle Product development team Manufacturabililty and value engineering Robust design Time-based competition Modular design Computer aided design Value analysis Group technology Configuration management 5-6

7 Learning Objectives continued When you complete this chapter, you should be able to: Explain: Alliances Concurrent engineering Product-by-value analysis Product documentation 5-7

8 Regal Marine Global market 3-dimensional CAD reduced product development time reduced problems with tooling reduced problems in production Assembly line JIT 5-8

9 Humor in Product Design As the customer wanted it. As Marketing interpreted it T/Maker Co. As Operations made it T/Maker Co. As Engineering designed it T/Maker Co T/Maker Co.

10 What is a Product? Need-satisfying offering of an organization Example P&G does not sell laundry detergent P&G sells the benefit of clean clothes Customers buy satisfaction, not parts May be a good or a service 5-10

11 Product Strategy Options Product differentiation Low cost Rapid response 5-11

12 Generation of New Product Opportunities Economic change Sociological and demographic change Technological change Political/legal change Changes in market practice professional standards suppliers and distributors 5-12

13 Product Components Product Brand (Name) Product Idea Package Physical Good Features Quality Level Service (Warranty) 5-13

14 Product Life Cycle Introduction Growth Maturity Decline 5-14

15 Product Life Cycle Introduction Fine tuning research product development process modification and enhancement supplier development 5-15

16 Product Life Cycle Growth Product design begins to stabilize Effective forecasting of capacity becomes necessary Adding or enhancing capacity may be necessary 5-16

17 Product Life Cycle Maturity Competitors now established High volume, innovative production may be needed Improved cost control, reduction in options, paring down of product line 5-17

18 Product Life Cycle Decline Unless product makes a special contribution, must plan to terminate offering 5-18

19 Sales, Cost & Profit. Product Life Cycle, Sales, Cost, and Profit Cost of Development & Manufacture Sales Revenue Profit Loss Cash flow Time Introduction Growth Maturity Decline 5-19

20 Percent of Sales From New Product 50% 40% 30% 20% 10% Industry Leader Top Third Middle Third Bottom Third 0% Position of Firm in Its Industry 5-20

21 Products in Various Stages of Life Cycle Sales Introduction Virtual Reality Growth Roller Blades Maturity Jet Ski Decline Boeing 727 Time 5-21

22 Few Successes Number Ideas 1750 Market requirement 1000 Functional specifications 500 Product specification 100 Development Stage Design review, Testing, Introduction 25 One success! 5-22

23 Product-by-Value Analysis Lists products in descending order of their individual dollar contribution to the firm. Helps management evaluate alternative strategies. 5-23

24 Scope of product development team Product Development Stages Idea generation Assessment of firm s ability to carry out Customer Requirements Functional Specification Product Specifications Design Review Test Market Introduction to Market Evaluation Scope of design for manufacturability and value engineering teams 5-24

25 Quality Function Deployment Identify customer wants Identify how the good/service will satisfy customer wants Relate customer wants to product hows Identify relationships between the firm s hows Develop importance ratings Evaluate competing products 5-25

26 Figure

27 Idea Generation Stage Provides basis for entry into market Sources of ideas Market need (60-80%); engineering & operations (20%); technology; competitors; inventions; employees Follows from marketing strategy Identifies, defines, & selects best market opportunities 5-27

28 Customer Requirements Stage Identifies & positions key product benefits Stated in core benefits proposition (CBP) Example: Long lasting with more power (Sears Die Hard Battery) Identifies detailed list of product attributes desired by customer Focus groups or 1-on-1 interviews Customer Requirements House of Quality Product Characteristics 5-28

Functional Specification Stage Defines product in terms of how the product would meet desired attributes Identifies product s engineering characteristics Example:

29 Functional Specification Stage Defines product in terms of how the product would meet desired attributes Identifies product s engineering characteristics Example: printer noise (db) Prioritizes engineering characteristics May rate product compared to competitors House of Quality Customer Requirements Product Characteristics 5-29

30 Product Specification Stage Determines how product will be made Gives product s physical specifications Example: Dimensions, material etc. Defined by engineering drawing Done often on computer Computer-Aided Design (CAD) Product Characteristics House of Quality Component Specifications 5-30

31 Quality Function Deployment Product design process using cross-functional teams Marketing, engineering, manufacturing Translates customer preferences into specific product characteristics Involves creating 4 tabular Matrices or Houses Breakdown product design into increasing levels of detail 5-31

32 To Build House of Quality Identify customer wants Identify how the good/service will satisfy customer wants. Relate the customer s wants to the product s hows. Identify relationships between the firm s hows. Develop importance ratings Evaluate competing products 5-32

33 Customer Requirements Design Characteristics Specific Components Production Process House of Quality Sequence Quality Plan Specific Components Production Process House 3 House 4 Design Characteristics House 2 House

34 House of Quality Example You ve been assigned temporarily to a QFD team. The goal of the team is to develop a new camera design. Build a House of Quality T/Maker Co. 5-34

35 House of Quality Example Customer Requirements Customer Importance Target Values High relationship Medium relationship Low Relationship 5-35

36 House of Quality Example What the customer desires ( wall ) Customer Requirements Light weight Easy to use Reliable Target Values Customer Importance Aluminum Parts Auto Focus Auto Exposure High relationship Medium relationship Low Relationship 5-36

37 House of Quality Example Average customer importance rating Customer Requirements Light weight Easy to use Reliable Target Values Customer Importance Aluminum Parts Auto Focus Auto Exposure High relationship Medium relationship Low Relationship 5-37

38 House of Quality Example Relationship between customer attributes & engineering characteristics ( rooms ) Customer Requirements Light weight Easy to use Reliable Target Values Customer Importance Aluminum Parts Auto Focus Auto Exposure High relationship Medium relationship Low Relationship 5-38

39 House of Quality Example Target values for engineering characteristics ( basement ); key output Customer Requirements Light weight Easy to use Reliable Target Values Customer Importance Aluminum Parts Auto Focus Auto Exposure High relationship Medium relationship Low Relationship

40 House of Quality Example Customer Requirements Light weight Easy to use Reliable Target Values Customer Importance Aluminum Parts Auto Focus Auto Exposure High relationship Medium relationship Low Relationship

41 Manufacturability and Value Engineering Benefits: reduced complexity of products additional standardization of products improved functional aspects of product improved job design and job safety improved maintainability of the product robust design 5-41

42 Cost Reduction of a Bracket via Value Engineering 5-42

43 Issues for Product Development Robust design Time-based competition Modular design Computer-aided design Value analysis Environmentally friendly design 5-43

44 Robust Design Product is designed so that small variations in production or assembly do not adversely affect the product 5-44

45 Modular Design Products designed in easily segmented components. Adds flexibility to both production and marketing 5-45

46 Computer Aided Design (CAD) Designing products at a computer terminal or work station Design engineer develops rough sketch of product Uses computer to draw product Often used with CAM Corel Corp.

47 Benefits of CAD/CAM Shorter design time Database availability New capabilities Example: Focus more on product ideas Improved product quality Reduced production costs 5-47

48 Value Analysis Focuses on design improvement during production Seeks improvements leading either to a better product or a product which can be more economically produced. 5-48

49 Environmentally Sound Strategy Benefits Safe and environmentally sound products Minimum raw material and energy waste Product differentiation Environmental liability reduction Cost effective compliance with environmental regulations Recognition as good corporate citizen 5-49

50 Environmentally Friendly Design Make products recyclable Use recycled materials Use less harmful ingredients Use lighter components Use less energy Use less material 5-50

51 Time-based Competition Product life cycles are becoming shorter. Faster developers of new products gain on slower developers and obtain a competitive advantage 5-51

52 Figure

53 Product Documents Engineering drawing Shows dimensions, tolerances, & materials Shows codes for Group Technology Bill of Material Lists components, quantities & where used Shows product structure T/Make

54 Monterey Jack (a) U.S. grade AA. Monterey cheese shall conform to the following requirements: (1)Flavor. Is fine and highly pleasing, free from undesirable flavors and odors. May possess a very slight acid or feed flavor. (2)Body and texture. A plug drawn from the cheese shall be reasonably firm. It shall have numerous small mechanical openings evenly distributed throughout the plug. It shall not possess sweet holes, yeast holes, or other gas holes (3)Color. Shall have a natural, uniform, bright and attractive appearance. (4)Finish and appearance - bandaged and paraffin-dipped. The rind shall be sound, firm, and smooth providing a good protection to the cheese Code of Federal Regulation, Parts 53 to 109,. Revised as of Jan. 1, 1985, General Service Administration 5-54

55 Engineering Drawing Example 13/16 diameter 1 2-1/2 13/32 diameter 1/4 R 2-1/ /16 3/8 1-5/8 13/16 5/16 Bracket Scale: FULL Drawn: J. Thomas A

56 Engineering Drawings - Show Dimensions, Tolerances, etc. 5-56

57 Bill of Material Example 1995 Corel Corp. Bill of Material P/N: 1000 Name: Bicycle P/N Desc Qty Units Level 1001 Handle Bars 1 Each Frame Assy 1 Each Wheels 2 Each Frame 1 Each

58 Examples of Bills of Materials 5-58

59 Make-or-Buy Decisions Decide whether or not you want (or need) to produce an item May be able to purchase the item as a standard item from another manufacturer 5-59

60 Group Technology Characteristics Parts grouped into families Similar, more standardized parts Uses coding system Describes processing & physical characteristics Part families produced in manufacturing cells Mini-assembly lines T/Maker Co.

61 Group Technology Code Example 4mm x 45 chamfer Round Rod 80mm 112mm 60mm Part function (round rod) Material (steel) Max. length (50 < L < 150) Primary machine (lathe) Product Code:

62 Group Technology Schemes Enable Grouping of Parts 5-62

63 Group Technology Benefits Improved product design Reduced purchases Reduced work-in-process inventory Improved routing & machine loading Reduced setup & production times Simplified production planning & control Simplified maintenance 5-63

64 Production Documents Assembly Drawings Assembly chart Route sheet Work order 5-64

65 Assembly Drawing Shows exploded view of product Head Neck Handle End Cap 5-65

66 Assembly Chart for A Tuna Sandwich 1 Tuna Fish 2 Mayonaise SA1 Tuna Assy A1 Sandwich FG 3 Bread A2 5-66

67 Assembly Drawing and Assembly Chart 5-67

68 Lists all operations Route Sheet Route Sheet for Bracket Sequence Machine Operation Setup Time Operation Time/Unit 1 Shear # 3 Shear to length 2 Shear # 3 Shear corners 3 Drill Drill both press holes 4 Brake press Bend

69 Work Order Authorizes producing a given item, usually to a schedule T/Maker Co. 5-69

70 Engineering Change Notice (ECN) A correction or modification of an engineering drawing or bill of material 5-70

71 Configuration Management A system by which a product s planned and changing components are accurately identified and for which control and accountability of change are maintained 5-71

72 Service Design - Nature of Customer Participation 5-72

73 Improving Customer Relations at a Drive-up Window Be especially discreet when talking with customer through the microphone Provide written instructions for customers who must fill out forms you provide Mark lines to be completed or attach a note with instructions Always say please and thank you Establish eye contact with the customer if the distance allows it If the transaction requires that the customer park the car and come into the lobby, apologize for the inconvenience. 5-73

74 Experience Detractors I had to call more than once to get through. A recording spoke to me rather than a person While on hold, I get silence,and wonder if I am disconnected. The operator sounded like he was reading a form routine questions. The operator sounded uninterested I felt the operator rushed me. Moment-of-Truth at GTE Standard Expectations Only one local number needs to be dialed I never get a busy signal I get a human being to answer my call quickly and he or she is pleasant and responsive to my problem A timely resolution to my problem is offered The operator is able to explain to me what I can expect to take place Experience Enhancers The operator was sincerely concerned and apologetic about my problem He asked intelligent questions that allowed me to feel confident in his abilities The operator offered various times to have work done, to suit my schedule Ways to avoid future problems were suggested 5-74

75 Application of Decision Trees to Product Design Particularly useful when there are a series of decisions and outcomes which lead to other decisions and outcomes. Considerations: Include all possible alternatives and states of nature - including doing nothing Enter payoffs at end of branch Approach determining expected values by pruning tree 5-75

76 Transition to Production First issue: knowing when to move to production! Second: must view product development as evolutionary, not responsibility of single individual/department Third: expect to need a trial production period to work the bugs out Fourth: recognize that responsibility must also transition 5-76

The Management and Control of Quality

The Management and Control of Quality Instructor: Dr. Victor L. Berardi Need satisfying offering of an organization P&G does not sell laundry detergent P&G sells the benefit of clean clothes Customers buy satisfaction, if i not parts May be