PRODUCT

DESIGN AND
PROCESS
SELECTION (2)
Operations Management (TQM)3
REVIEW:
 Product design is the process of deciding on the unique
characteristics and features of a company’s product.
 Process selection, on the other hand, is the development of
the process necessary to produce the product being
designed.
 Product design is a big strategic decision for a company,
because the design of the product defines who the
company’s customers will be, as well as the company’s
image, its competition, and its overall future growth.
STEPS IN PRODUCT DESIGN
1. idea generation
2. product screening
3. preliminary design and testing
4. final design
BREAK-EVEN ANALYSIS
Break-even analysis is a
technique used to compute the
amount of goods that have to be
sold just to cover costs.
TWO BROAD CATEGORIES OF
PRODUCTION PROCESSES:
1. Intermittent operations are used when
products with different characteristics are
being produced in smaller volumes.
 Intermittent operations provide great
flexibility but have high material handling
costs and challenge scheduling resources.
EXAMPLE:
Coleen has a catering business. Whenever she
gets orders from the customers, she cooks food
on her own and runs the business.
Justine runs a jewelry shop and the specialty
of his business is custom-made designs.
2. Repetitive operations are used when one or
a few similar products are produced in high
volume.
These operations arrange resources in sequence
to allow for an efficient buildup of the product.
Repetitive operations are highly efficient but
inflexible.
EXAMPLE
Product design and process selection
decisions are linked. The type of operation
a company has in place is defined by the
product the company produces. The type of
operation then affects other organizational
decisions, such as 1.competitive priorities,
2.facility layout, and 3.degree of vertical
integration.
 A process flowchart is used
for viewing the flow of the
processes involved in producing the
product. It is a very useful tool for
seeing the totality of the operation
and for identifying potential
problem areas. There is no exact
format for designing the chart. The
flowchart can be very simple or
very detailed.
TECHNOLOGY
DECISIONS
1. INFORMATION
TECHNOLOGY
 Information technology (IT) is technology that enables storage,
processing, and communication of information within and between firms.
It is also used to organize information to help managers with decision
making.
 One type of information technology we are all familiar with is the
Internet, which has had the greatest impact on the way companies
conduct business.
 Enterprise software is another powerful information technology, such as
enterprise resource planning (ERP).
 Other examples of IT include wireless communication technologies.
These technologies can also significantly improve business operations.
2.GLOBAL POSITIONING
SYSTEMS (GPS)
 comprise another type of wireless technology that uses
satellite transmission to communicate exact locations
 GPS was originally developed by the Department of
Defense in 1978 in order to help coordinate U.S. military
operations.
 Today GPS has numerous business and individual
applications.
3. RADIO FREQUENCY
IDENTIFICATION (RFID)
 is another wireless technology that promises to
dramatically change business operations
 uses memory chips equipped with tiny radio antennas that
can be attached to objects to transmit streams of data about
the object.
 RFID has the potential to become the backbone of an
infrastructure that can identify and track billions of
individual objects all over the world, in real time.
4. AUTOMATION
 is the use of machinery able to perform work without human
operators and can involve a single machine or an entire factory.
 Automation has the advantage of product consistency and ability to
efficiently produce large volumes of product.
 Because automation brings consistency, quality tends to be higher
and easier to monitor.
 Production can flow uninterrupted throughout the day, without
breaks for lunch, and there is no fatigue factor.
DISADVANTAGES OF
AUTOMATION:
Automation is typically very costly.
Automation is typically not flexible in
accommodating product and process changes.
Automation would probably not be good for
products in the early stages of their life cycle or for
products with short life cycles.
Automation needs to be viewed as another capital
investment decision: financial payback is critical.
5. AUTOMATED MATERIAL
HANDLING
Automated Guided Vehicle (AGV), a small
battery-driven truck that moves materials from one
location to the other. The AGV is not operated by a
human and takes its directions from either an
onboard or central computer.
Automated Storage and Retrieval Systems
(AS/RSs), which are basically automated
warehouses
6. FLEXIBLE
MANUFACTURING SYSTEMS
(FMS)
 A flexible manufacturing system (FMS) is a type of
automation system that combines the flexibility of
intermittent operations with the efficiency of repetitive
operations.
 An FMS consists of groups of computer-controlled
machines and/or robots, automated handling devices for
moving, loading, and unloading, and a computer-control
center.
7.ROBOTICS
 A robot in manufacturing is usually nothing more than a
mechanical arm with a power supply and a computer-control
mechanism that controls the movements of the arm.
 Robots vary in their degree of sophistication. Some robots are fairly
simple and follow a repetitive set of instructions. Other robots
follow complex instructions, and some can be programmed to
recognize objects and even make simple decisions.
 Numerically Controlled (NC) machines- are controlled by a
computer and can do a variety of tasks such as drilling, boring, or
turning parts of different sizes and shapes
8. E-MANUFACTURING
1. Computer-aided design (CAD) is a system that uses
computer graphics to design new products. Gone are the
days of drafting designs by hand.
2. Computer-integrated manufacturing (CIM) is a term
used to describe the integration of product design,
process planning, and manufacturing using an integrated
computer system
DESIGNING
SERVICES
Designing services have more complexities
than manufacturing because services produce
an intangible product and typically have a high
degree of customer contact.
 Different service designs include:
1.substituting technology for people, 2.getting
the customer involved, and 3.paying great
attention to the customer.
HOW ARE
SERVICES
DIFFERENT FROM
MANUFACTURING
?
1. INTANGIBLE PRODUCT
Service organizations produce an intangible product,
which cannot be touched or seen. It cannot be stored
in inventory for later use or traded in for another
model. The service produced is experienced by the
customer. The design of the service needs to specify
exactly what the customer is supposed to experience.
2. HIGH DEGREE OF
CUSTOMER CONTACT
Contact Service organizations typically have a high degree

of customer contact. The customer is often present while
the service is being delivered, such as at a theater,
restaurant, or bank. Also, the contact between the customer
and service provider is often the service itself, such as
what you experience at a doctor’s office. For a service to
be successful, this contact needs to be a positive
experience for the customer, and this depends greatly on
the service provider.
HOW ARE SERVICES
CLASSIFIED?
 Services with low customer contact are called “quasi-manufacturing.”
These firms have a high degree of service standardization, have higher sales
volumes, and are typically less labor intensive. These firms have almost no
face-to-face contact with customers and are in many ways similar to
manufacturing operations. Examples include warehouses, distribution
centers, environmental testing laboratories, and back-office operations.
 Services with high customer contact are called “pure services.” These firms
have high face-to-face contact and are highly labor intensive. Examples
include hospitals, restaurants, barber shops, and beauty salons.
 Services that combine elements of both of these extremes are called “mixed
services.” Some parts of their operation have face-to-face customer contact,
though others do not. Examples include offices, banks, and insurance
firms.
THE SERVICE PACKAGE
The service package is a grouping of features that
are purchased together as part of the service.
There are three elements of the service package:
(1) the physical goods
(2) the sensual benefits
(3) the psychological benefits
DIFFERING SERVICE DESIGNS
There is no one model of successful service
design. The design selected should support the
company’s service concept and provide the
features of the service package that the target
customers want. Different service designs have
proved successful in different environments.
THREE DIFFERENT
SERVICE DESIGNS
1. SUBSTITUTE TECHNOLOGY
FOR PEOPLE
 Substituting technology for people is an approach to service
design that was advocated some years ago by Theodore
Levitt.
 Levitt argued that one way to reduce the uncertainty of
service delivery is to use technology to develop a
production-line approach to services.
 One of the most successful companies to use this approach
is McDonald’s. Technology has been substituted wherever
possible to provide product consistency and take the
guesswork away from employees.
EXAMPLES:
 Buzzers and lights are used to signal cooking time for frying perfect
french fries.
 The size of the french fryer is designed to produce the correct amount
of fries.
 The french fry scoop is the perfect size to fill an order.
 “Raw materials” are received in usable form (e.g., hamburger patties are
premade; pickles and tomatoes are presliced; french fries are precut).
 There are 49 steps for producing perfect french fries.
 Steps for producing the perfect hamburger are detailed and specific.
 Products have different-colored wrappings for easy identification.
2. GET THE CUSTOMER
INVOLVED
A different approach to service design was proposed

by C. H. Lovelock and R. F. Young.
Their idea was to take advantage of the customer’s
presence during the delivery of the service and have
him or her become an active participant.
Lovelock and Young proposed that since the
customers are already there, “get them involved.”
ADVANTAGES OF SELF-
SERVICE:
1. It takes a large burden away from the service
provider. The delivery of the service is made faster,
and costs are reduced due to lowered staffing
requirements.
2. Empowers customers and gives them a greater sense
of control in terms of getting what they want, which
provides a great deal of customer convenience and
increases satisfaction.
3. HIGH CUSTOMER ATTENTION
APPROACH
It is based on customizing the service to the
needs unique to each customer and having the
customer be the passive and pampered
recipient of the service.
This approach relies on developing a personal
relationship with each customer and giving the
customer precisely what he or she wants.
PRODUCT DESIGN
AND PROCESS
SELECTION ACROSS
THE ORGANIZATION
MARKETING :
 is impacted by product design issues because they determine
the types of products that will be produced and affect
marketing’s ability to sell them.
 Marketing’s input is critical at this stage because
marketing is the function that interfaces with customers
and understands the types of product characteristics customers
want.
 Process selection decisions impact marketing as well.
 Process decisions affect the types of future products that the
company can produce.
FINANCE
 plays an integral role in product design and process selection
issues because these decisions require large financial outlays.
 Finance needs to be a part of these decisions to evaluate the
financial impact on the company.
 Process selection decisions should be viewed as any other
financial investment, with risks and rewards.
 Finance must ensure that the trade-off between the risks and
rewards is acceptable. Also, it is up to finance to provide the
capital needed for this investment and to balance that against
future capital requirements.
INFORMATION SYSTEMS
needs to be part of the process selection decisions.
Operations decisions, such as forecasting, purchasing,
scheduling, and inventory control, differ based on the
type of operation the company has.
Information systems will be quite different for
intermittent versus continuous operations. Therefore, the
information system has to be developed to match the
needs of the production process being planned.
HUMAN RESOURCES
 provides important input to process selection decisions because it is
the function directly responsible for hiring employees. If special
labor skills are needed in the process of production, human resources
needs to be able to provide information on the available labor pool.
 The two types of operations discussed, intermittent and continuous,
typically require very different labor skills. Intermittent operations
usually require higher-skilled labor than continuous
operations.Human resources needs to understand the specific skills
that are needed.