Products and Processes

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					Designing Goods and Services
    and Process Selection

         Chapter 3
                             MGMT 326
 Foundations    Products &      Quality    Facilities,   Planning
of Operations   Processes      Assurance    & Work       & Control

  Strategy        Product

                    Designing Goods and Services

                       • Design and strategy
                       • Feasibility study
                       • Operations issues

  Service Design                         Designing Goods
• Service package
• Approaches to
                       Product                       Design Methods
  service design
                       Characteristics          • Design for manufacture
                       • Form design            • Concurrent engineering
                       • Functional design
                       • Learning from
                          other companies
        Brief Outline of Chapter

   Product design
   Process selection
     Traditional manufacturing processes
     Service processes
     Automation
         Strategy and Product Design

   The core product may be a good or a service
   Product design should support the business strategy
   Product design should meet the needs of a target
   Product design should give the company a
    competitive advantage.
                  Feasibility Study

   Purpose is to determine whether the company
    can make a product that
     Meets the needs of customers in a target market
     Can be made by the company with the required
      level of quality and delivery schedule
     Can be sold at a price that customers are willing to
     While allowing the company to meet its profit
      targets. This depends on costs estimated by
      Accounting and revenue estimated by Marketing
    Operations Issues in Product Design

   Product design and technology
      Product design is a joint responsibility of
       marketing, operations, engineering (in
       manufacturing) and Accounting/Finance
   Process technology (along with engineering)
   Would we need a new or modified facility?
   Can the firm make this product with consistent
   How many workers will we need?
      What skills will they need?
    Designing Services – Service Package

   Physical elements: facility, equipment
    and furnishings, inventories
   Sensory and aesthetic aspects
   Psychological benefits
   Quality standards
        Approaches to Service Design

   Design for efficiency:
       Compete on consistency, cost, speed
       High standardization
       Limited variety
       Automation may be used
       High-volume services purchase at low cost.
       Example: fast food
    Approaches to Service Design (2)

   Customer involvement in producing the
      The customer does part of the work
      Reduces costs and may allow the customer to
       do some customization
      Example: self-service salad bar
   Many services use both high efficiency and
    customer involvement
      Examples: ATM's, vending machines, self-
       checkouts in stores
    Approaches to Service Design (3)

   High customer attention
      Highly customized service, provided by
       highly trained people
      Used in professional services (medical
       care, legal services, high-end tax
       preparation services)
      Also used by luxury retailers, hotels,
              Designing Goods

   Form design: Sensory aspects of the
    product (aesthetics)
     Size, color, shape, sound
     "Look and feel"
     Form design contributes to customer's
      impressions of quality
   Functional design: how the product
Form Design: How the Product Looks, Etc.

Ipod Nano               Toyota Camry
Functional Design of Goods
  What the Product Does
    Functional Design of Goods (2)
      How the Product Performs

   Fitness for use: product performs as
   Durability: how long the product
   Reliability: consistent performance
   Maintainability: ease and cost of
    Learning from Other Companies

   Benchmarking: comparing your operations
    with those of a "best in class" firm
     Product benchmark – compare your product
      with competing products
     Process benchmark
        How competing products or services are
        How other companies perform business
     Cost benchmark – what your competitors spend
      to make comparable products
Learning from Other Companies (2)

   Reverse engineering: taking your
    competitor's products apart and
    figuring out how it is made
     Physical products
     Software
   Market research on competitor's
    products: customer needs and
           Design for Manufacture
   Value engineering: Eliminate product
    features that add cost but do not add value
    to the customer.
   Reduce the number of parts.
     Reduces the cost of ordering, purchasing, and
      storing parts.
     Reduces the space required to hold inventory
     Reduces the number of tools and operations
      required (by eliminating bolts, screws, etc.)
     Reduces the time required to make the product
   Design for Manufacture (2)

Example of reducing the number of parts,
operations, and tools.
       Design for Manufacture (3)

   Modular design: Design products to be
    assembled from standard components.
     Example: Dell buys standard video cards,
      processors, power supplies, hard drives, etc.,
      and assembles computers
   Use standard parts to reduce design costs
    and purchasing costs.
     Examples: Computer makers often buy standard
      power supplies.
Sequential vs. Concurrent Design
         Concurrent Engineering

   Design the product and the process at the
    same time.
   Use a design team that includes
    marketing, operations, engineering,
    operations, and suppliers.
     Stay in touch with customers during the design
   Requires good project management
    and coordination among all groups
    Advantages of Concurrent Engineering

    Increases the chances of a successful product.
    Shorter design time
       Shortens time to market.
       Reduces design costs
    Supplier expertise can help design a product that
     meets customer needs at lower cost
    Reduces the need to make expensive changes in
     the product and the process later
                           Process Selection

Process Types           Process                Automation
                      Design Tools
Intermittent        • Reengineering
                                       Advantages              Types of
• Project           • Flowcharts
                                           and               Automation
• Batch
                                      Disadvantages   •   Computer-aided
   Repetitive                                              design and
• Assembly line                                            engineering
• Continuous                                          •   Robots
                                                      •   Material handling
                                                      •   FMS
Impact of Process Type                                •   CIM
• Layout
• Inventory policy
• Costs
         Intermittent Operations

   Intermittent operations: processes used to
    produce a variety of products with different
    processing requirements at lower volumes
     Project processes: used to make one-of-a-kind
      items to customer specifications
     Batch processes: used to make small quantities
      of products in batches based on customer
      orders or specifications
         Also called job shops
           Repetitive Operations
   Repetitive operations: Processes used to make one
    product or a few standardized products in high
      Line process – also called an assembly line or
       flow shop
          May have assemble-to-order options
      Continuous process: operates continuously,
       produces a high volume of a fully standardized
   Some firms use more than one type of process
Underlying Process Relationship Between
      Volume and Standardization

                               processes are
                               usually more
                               than low-volume
Process Choice and Layout
              Intermittent operations usually
              use a process (department)
              layout: workers & equipment
              are grouped by function
              •Different products may take
              different paths through the
              production process
              Repetitive operations use a
              product layout: workers &
              equipment are grouped in the
              order in which they will be
              needed. The product passes
              from one work station to the
Process Choice and Inventory Policy
          Process Choice and Costs
   Intermittent processes
       Lower capital costs than repetitive processes
       Lower breakeven point than repetitive processes
       High variable cost per unit
       High total cost per unit
   Repetitive processes
       Higher capital costs than intermittent processes
       Higher breakeven point than intermittent processes
       Low variable cost per unit
       Low total cost per unit if volume is high
               Process Design Tools

   Process flow analysis is a tool used to analyze and
    document the sequence of steps within a total
    process. Usually first step in process reengineering.
   Process reengineering is the fundamental rethinking
    and radical redesign of a process to bring about
    dramatic improvements in performance
      Cost
      Quality
      Time
      Flexibility
           Process Design Tools (2)

   Both operations processes and business processes
    can be re-engineered.
   Re-engineer a process before you automate it or
    computerize it.
Process Flow in a Pizza Restaurant

   The use of equipment to perform work
    without human operators, at least for a
    period of time
     May involve a single machine, a group of
      machines, or an entire factory
     ATM’s and vending machines are examples of
      automation in services
                 Automation (2)

   Advantages
       Consistent quality
       Capacity to produce a large volume of goods
       Low variable costs
       Low total costs if volume is high
   Disadvantages
     Large-scale automation is not cost-justified
      unless volume is high
     Computer or equipment failure can shut down
     Expertise required to maintain equipment
    Computer-Aided Design & Engineering

   Computer-aided design (CAD): use of computer
    software to design products
      Similar software is used to make animated
   Computer-aided engineering (CAE): use of
    computer software to evaluate and improve
    product designs
   Specialized CAD/CAE software is used by
    architects and landscape architects
   Data Flow in Manufacturing Technology

Computer                Computer                   Final
aided                   aided                     design?
design                  engineering
(CAD)                   (CAE)

  Computer   Manufacturing    Computer
  aided      instructions     aided                    Finished
  process                     manufacturing            goods
  planning                    (CAM)
        Computer Aided Manufacturing (CAM)
                    and Robots

   CAM is the use of a computer to
    program and control
    manufacturing equipment
   A traditional robot is a
    mechanical arm with a power
    supply and a computer that
    controls the movements of the
                     Uses of Robots

   Uses of robots in processes
      Monotonous work, such as assembly line work
      Work that is hard or unhealthy for people, such as
       painting or nuclear plant cleanup
      Work that requires great precision
         Making integrated circuits
         Surgery – guided by a surgeon
   Uses of robots in products: Robot vacuum cleaners,
    lawn mowers, toys, assistive robots for disabled
        Automated Materials Handling
                                 Automated guided vehicle
   Conveyor belts are used
    in manufacturing &
   Robots move materials
    short distances
   Automated guided
    vehicles move materials
    longer distances in
    plants, offices, hospitals
     Flexible Manufacturing System

   System that links flexible manufacturing
    cells and/or robot assembly lines under
    control of a central computer
   Includes materials handling
   Usually includes automated inspection
     Flexible Manufacturing System

   System that links flexible manufacturing
    cells and/or robot assembly lines under
    control of a central computer
   Includes materials handling
   Usually includes automated inspection
        Flexible Manufacturing System
Tools       Computer control room       Tools
    Machine                      Machine

    Machine                       Machine

    Machine                       Machine

            Load              Unload   Finished
      Computer Integrated Manufacturing (CIM)

   CAD, CAE, and CAPP
   Flexible Manufacturing System
   Production planning and inventory management
   Purchasing
   Common databases and control systems for all these
   Provides product flexibility, cost savings, and short
    manufacturing lead times

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