CHAPTER 4

Product and
Service Design
PRESENTED BY: GROUP 1
4 .1 INTRODUCTION
Product and service design encompasses the creation and development of the core
offerings of a business organization, serving as the foundation around which all
aspects of the organization and its supply chain are structured. The strategic
importance of product and service design is evident as it significantly influences
cost, quality, time-to-market, customer satisfaction, and competitive advantage.
Well-designed products and services increase the likelihood of achieving
organizational goals. Key functional areas such as marketing, finance, operations,
accounting, IT, and HR must collaborate closely, considering aspects like demand
forecasts, projected costs, and supply chain impact.
4 .1 INTRODUCTION
Poorly thought-out or incorrectly implemented designs can lead to operational
failures, resulting in lawsuits, injuries, product recalls, and damaged reputations.
Introduction of new products or service changes can have ripple effects
throughout the organization and supply chain, necessitating process adjustments,
new supplier and distributor integration, and evaluation of financial, marketing,
and distribution implications. A holistic, systems-based approach, involving
various departments, is essential from the outset to anticipate and manage
potential implications, costs, and timelines effectively in product and service
design.
What Does Product and Service Design Do?

1. Translate customer wants and needs into product and service requirements. (marketing, operations)
2. Refine existing products and services. (marketing)
3. Develop new products and/or services. (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 and service specifications into process specifications. (engineering,
operations)

Product and service design involves or affects nearly every functional area of an organization. However,
marketing and operations have major involvement.
Key Questions:
From a buyer’s standpoint, most purchasing decisions entail two fundamental considerations; one is cost and the
other is quality or performance. From the organization’s standpoint, the key questions are:

1. Is there demand for it? What is the potential size of the market, and what is the expected demand profile (will
demand be long term or short term, will it grow slowly or quickly)?

2. Can we do it? Do we have the necessary knowledge, skills, equipment, capacity, and
supply chain capability? For products, this is known as manufacturability ; for services,
this is known as serviceability . Also, is outsourcing some or all of the work an option?

3. What level of quality is appropriate? What do customers expect? What level of quality
do competitors provide for similar items? How would it fit with our current offerings?

4. Does it make sense from an economic standpoint? What are the potential liability
issues, ethical considerations, sustainability issues, costs, and profits? For nonprofits, is
the cost within budget?
 Manufacturability
The capability of an organization to
produce an item at an acceptable profit.

Serviceability
The capability of an organization to
provide a service at an acceptable cost or
profit.
Reasons for Product and Service
Design or Redesign
Product and service design has typically had strategic implications for the success and prosperity of an
organization. Furthermore, it has an impact on future activities. Consequently, decisions in this area are some
of the most fundamental that managers must make.

• Economic (e.g., low demand, excessive warranty claims, the need to reduce costs).
• Social and demographic (e.g., aging baby boomers, population shifts).
• Political, liability, or legal (e.g., government changes, safety issues, new regulations).
• Competitive (e.g., new or changed products or services, new advertising/promotions).
• Cost or availability (e.g., of raw materials, components, labor, water, energy).
• Technological (e.g., in product components, processes).
 Summary of the readings:
A recent study challenges the belief that sending production overseas, especially
to China, is the best way for U.S. manufacturers to cut costs. Instead, it suggests
that redesigning products to be more cost-efficient can often save more money.
The study emphasizes the need for careful cost analysis during product design.
Redesigning products and manufacturing them in the U.S. can be a better
financial choice in many cases. The study points out two important design
principles: reducing the number of parts and considering all additional costs
related to overseas manufacturing. It encourages U.S. manufacturers to prioritize
cost analysis in product design before considering outsourcing.
4.2 IDEA GENERATION

Ideas for new or redesigned products or services 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.
4.2 IDEA GENERATION
One of the strongest motivators for new and improved products or services is competitors’ products
and services. By studying a competitor’s products or services and how the competitor operates
(pricing policies, return policies, warranties, location strategies, etc.), an organization can glean many
ideas. Beyond that, some companies purchase a competitor’s product and then carefully dismantle and
inspect it, searching for ways to improve their own product. This is called reverse engineering . The
Ford Motor Company used this tactic in developing its highly successful Taurus model: It examined
competitors’ automobiles, searching for best-in-class components (e.g., best hood release, best
dashboard display, best door handle). Sometimes reverse engineering can enable a company to
leapfrog the competition by developing an even better product. Suppliers are still another source of
ideas, and with increased emphasis on supply chains and supplier partnerships, suppliers are
becoming an important source of ideas.
4.2 IDEA GENERATION

Research is another source of ideas for new or improved products or services. Research and
development (R&D) refers to organized efforts that are directed toward increasing scientific
knowledge and product or process innovation. Most of the advances in semiconductors, medicine,
communications, and space technology can be attributed to R&D efforts at colleges and universities,
research foundations, government agencies, and private enterprises. R&D efforts may involve basic
research, applied research, or development.

• Basic research has the objective of advancing the state of knowledge about a subject, without any
near-term expectation of commercial applications.
• Applied research has the objective of achieving commercial applications.
• Development converts the results of applied research into useful commercial applications.
 Summary of the readings:
Frank Meczkowski's ambitious plan to create an oversized pickle slice for hamburgers faced skepticism, reminiscent of Guinness
World Records. Operating under the code name Frisbee, Meczkowski and his Vlasic Foods International team dedicated four years
to cultivating a jumbo cucumber with the ideal taste and shape for a perfect pickle. Manufactured solely at their Millsboro plant,
these monster-sized slices have become Vlasic's best-selling products, successfully reversing a three-year decline in pickle
consumption. Hamburger Stackers, around ten times larger than traditional pickle chips, are available in dill and bread-and-butter
varieties. Despite doubts, Meczkowski's innovation significantly impacted Vlasic's standing in the pickle market, surpassing
competitors like Claussen, Heinz, and Peter Piper's. The company's extensive efforts led to a patented cucumber variety with the
ideal taste, crunch, and size for their Hamburger Stackers, contributing to their success. Vlasic officials located a now-patented
cucumber that grows 3.25 inches in diameter, easily reaches 12 to 16 inches in length, and weighs about five pounds. The challenge
was to grow these cucumbers in fields rather than greenhouses, and they were handpicked due to their size in Florida. Post-harvest,
the cucumbers were transported to Vlasic's plant in Sussex County, where a specialized production line handled these jumbo
cucumbers. The process involved washing, slicing, sizing, and packing into jars with a mix of automation and human intervention.
The jars were filled with a mixture of water, vinegar, salt, and flavorings before being labeled and packed for distribution. Vlasic's
Hamburger Stackers garnered approximately $13 million in sales within the first five months of introduction, and the company
remains optimistic about its continued popularity among U.S. consumers.
4.3 LEGAL AND ETHICAL CONSIDERATIONS
Designers must carefully consider an extensive range of legal and ethical factors,
which are typically obligatory. Environmental impact is a significant concern.
Numerous government agencies, such as the Food and Drug Administration and the
Environmental Protection Agency, regulate organizations, making compliance
essential. Bans on harmful substances have prompted designers to create alternative,
safe designs. Automotive design has been significantly influenced by pollution
standards and safety features. Toy design also focuses on safety, aiming to eliminate
potential hazards. Government regulations extend to construction, encompassing
aspects like lead-free paint, safety glass, and accessibility for individuals with
disabilities.
 4.3 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. Many business firms have faced
lawsuits related to their products, including Firestone Tire & Rubber, Ford Motor
Company, General Motors, tobacco companies, and toy manufacturers.

Manufacturers also are faced with the implied warranties created by state laws under
the Uniform Commercial Code , which says that products carry an implication of
merchantability and fitness; that is, a product must be usable for its intended purposes.
 4.3 LEGAL AND ETHICAL CONSIDERATIONS
Ethical issues often arise in the design of products and services; it is important for
managers to be aware of these issues and for designers to adhere to ethical standards.
Designers are often under pressure to speed up the design process and to cut costs.
These pressures often require them to make trade-off decisions, many of which
involve ethical considerations. One example of what can happen is “vaporware,” when
a software company doesn’t issue a release of software as scheduled as it struggles
with production problems or bugs in the software. The company faces the dilemma of
releasing the software right away or waiting until most of the bugs have been removed
—knowing that the longer it waits, the more time will be needed before it receives
revenues and the greater the risk of damage to its reputation.
4.4 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. For example, the crashworthiness of vehicles is of much interest to
consumers, insurance companies, automobile producers, and the government.
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."
4.5 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.

John Kelly
Since the first McDonald's opened in the United States in 1955, the fast food restaurant
has spread around the world. The company now has locations in 121 countries. In fact, of
the 30,000 McDonald's restaurants scattered around the globe, there are more in foreign
countries (17,000) than in the good old United States (13,000).The food you can order at
many of these Mickey D's is different from what you'll find at the one down the street.
Here's a sample of some of the treats that await you should you pull up to the drive-
through window in some faraway places
4.6 GLOBAL PRODUCT AND SERVICE DESIGN

Traditionally, product design has been conducted by members of the design team who are
located in one facility or a few nearby facilities. However, organizations that operate globally
are discovering advantages in global product design, which uses the combined efforts of a
team of designers who work in different countries and even on different conti-nents. Such
virtual teams can provide a range of comparative advantages over traditional teams such as
engaging the best human resources from around the world without the need to assemble them
all in one place, and operating on a 24-hour basis, thereby decreasing
 4.7 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
Cradle-to-Grave Assessment. Cradle-to-grave assessment , also known as life cycle analysis, is the
assessment of the environmental impact of a product or service throughout its useful life, focusing
on such factors as global warming (the amount of carbon dioxide released into the atmosphere),
smog formation, oxygen depletion, and solid waste generation.

For products, cradle-to-grave analysis takes into account impacts in every phase of
a product’s 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
product’s useful life.It also considers energy consumption, pollution

The goal of cradle-to-grave assessment is to choose products and services that have the least
environmental impact while still taking into account economic considerations. The procedures of
cradle-to-grave assessment are part of the ISO 1400 environmental management standards, which
are discussed in Chapter 9.
It also considers energy consumption, pollution The goal of cradle-to-grave assessment is to
choose products and services that have the least environmental impact while still taking into
account economic considerations. The procedures of cradle-to-grave assessment are part of the ISO
1400 environmental management standards, which are discussed in Chapter 9.

End-of-Life Programs. End-of-life (EOL) programs deal with products that have reached the end
of their useful lives. The products include both consumer products and business equipment.

The purpose of these programs is to reduce the dumping of products, particularly electronic
equipment, in landfills or third-world countries, as has been the common practice, or incineration,
which converts materials into hazardous air and water emissions and generates toxic ash.

Although the programs are not limited to electronic equipment, that equipment poses problems
because the equipment typically contains toxic materials such as lead, cadmium, chromium, and
other heavy metals. IBM provides a good example of the potential of EOL programs. Over the last
15 years, it has collected about 2 billion pounds of product and product waste.
The Three R's: Reduce, Reuse, Recycle. Designers often reflect on three particular aspects of
potential cost saving and reducing environmental impact: reducing the use of materials through
value analysis; refurbishing and then reselling returned goods that are deemed to have additional
useful life, which is referred to as remanufacturing; and reclaiming parts of unusable products for
recycling.
Reduce: Value Analysis. Value analysis refers to an examination of the function of parts and
materials in an effort to reduce the cost and/or improve the performance of a product.
Typical questions that would be asked as part of the analysis include:
• Could a cheaper part or material be used? Is the function necessary?
• Can the function of two or more parts or components be performed by a single part for a lower
cost?
• Can a part be simplified?
• Could product specifications be relaxed, and would this result in a lower price?
• Could standard parts be substituted for nonstandard parts?
Table 4.1 provides a checklist of questions that can guide a value analysis. The following reading
describes how Kraft Foods is working to reduce water and energy use, CO 2 and plant waste, and
packaging.
Reuse: Remanufacturing.
An emerging concept in manufacturing And in the global market, European lawmakers
is the remanufacturing of products. are increasingly requiring manufacturers to take
back used products, because this means fewer
Remanufacturing. Refers to refurbishing used products end up in landfills and there is less
products by replacing worn-out or defective depletion of natural resources such as raw
components, and reselling the products. This materials and fuel.
can be done by the original manufacturer, or
another company.
Among the products that have Designing products so that they can be more
remanufactured components are automobiles, easily taken apart has given rise to yet another
printers, copiers, cameras, computers, and design consideration: Design for disassembly
telephones. (DFD).
There are a number of important reasons for
doing this. One is that a remanufactured
product can be sold for about 50 percent of
the cost of a new product. Another is that the
process requires mostly unskilled and
semiskilled workers.
Recycle Recycling is sometimes an important consideration for designers.
Recycling means recovering materials for future use. This applies not only to manufactured parts but
also to materials used during production, such as lubricants and solvents. Reclaimed metal or plastic
parts may be melted down and used to make different products.

Companies recycle for a variety of

Table 4.1 Overview of value analysis reasons, including:
1. Cost savings.
2. Environment concerns.
3. Environmental regulations.

An interesting note:
Companies that want to do business in the
European Union must show that a specified
proportion of their products are recyclable.
The pressure to recycle has given rise to the term
Design for recycling (DFR) , referring to product
design that takes into account the ability to
disassemble a used product to recover the
recyclable parts.
4.8 OTHER DESIGN CONSIDERATION
Aside from legal, ethical, environmental, and human considerations designers must also take into
account product or service life cycles, how much standardization to incorporate, product or service
reliability, and the range of operating conditions under which a product or service must function.
These topics are discussed in this section. We begin with life cycles.

Strategies for Product or Service Life Stages. Product and service life cycles are a series of stages
that vary in demand and require different strategies. Companies must balance initial demand with
the need for a competitive edge. During the growth phase, design improvements and increasing
demand lead to higher reliability and lower costs. The maturity phase sees product or service reach
maturity, with low costs and high productivity. In the decline phase, decisions must be made on
discontinuing or finding new uses. Product life cycles can vary, depending on basic needs and
technological change rates.
Degree of Standardization. Standardization is a crucial aspect of product/service and process
design, ensuring the absence of variation in products, services, or processes. Standardized products
are made in large quantities, service is essentially the same, and processes produce standardized
goods. Standardization offers benefits such as immediate availability, interchangeable parts, lower
production costs, and lower design costs. It also reduces variety, saves time and money, and
increases product quality and reliability.

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
(2) incurring a host of problems that are often linked to variety.
Reliability. is a measure of the ability of a product, a part, a service, or an entire system to perform
its intended function under a prescribed set of conditions.
Improving Reliability. Reliability can be improved in a number of ways, some of which
are listed in Table 4.3.
-Because overall system reliability is a function of the reliability of individual components,
improvements in their reliability can increase system reliability. Unfortunately, inadequate
production or assembly procedures can negate even the best of designs, and this is often a source of
failures.
Robust Design. Some products or services will function as designed only within a narrow range of
conditions,while others will perform as designed over a much broader range of conditions.The
latter have robust design.
Taguchi’s Approach. is based on the concept of robust design. His premise is that it is often easier
to design a product that is insensitive to environmental factors, either in manufacturing or in use,
than to control the environmental factors.
Degree of Newness. Product or service design change can range from the modification of an
existing product or service to an entirely new product or service:
1. Modification of an existing product or service.
2. Expansion of an existing product line or service offering.
3. Clone of a competitor’s product or service.
4. New product or service.
The degree of change affects the newness to the organization and the newness to the market. For
the organization, a low level of newness can mean a fairly quick and easy transitionto producing the
new product, while a high level of newness would likely mean a slowerand more difficult, and
therefore more costly, transition.
Quality Function Deployment. Quality function deployment (QFD) is a structured approach for
integrating the “voice of the customer” into both the product and service development process.
a quality plan. The sequence is illustrated in Figure 4.5 .
Although the details of each house are beyond the scope
of this text, Figure 4.5 provides a conceptual
understanding of the progression involved.
The Kano Model. is a theory of product and service design developed by Dr. Noriaki Kano, a
Japanese professor, who offered a perspective on customer perceptions of quality different from the
traditional view that “more is better.” Instead, he proposed different categories of quality and
posited that understanding them would better position designers to assess and address quality
needs. His model provides insights into the attributes that are perceived to be important to
customers.
4.9 PHASES IN PRODUCT DESIGN AND DEVELOPMENT

Feasibility analysis. Feasibility analysis entails market analysis, economic

analysis, and technical analysis. Also, it is necessary to answer the
question, Does it fit with the mission? It requires collaboration among
marketing, finance, accounting, engineering, and operations.
Product specifications. This involves detailed descriptions of what is
needed to meet (or exceed) customer wants, and requires collaboration
between legal, marketing and operations.
Process specifications. Once product specifications have been set, attention
turns to specifications for the process that will be needed to produce the
product. Alternatives must be weighed in terms of cost, availability of
resources, profit potential, and quality. This involves collaboration
between accounting and operations.
Prototype development. With product and process specifications complete,
one (or a few) units are made to see if there are any problems with the
product or process specifications.
 4.10 DESIGNING FOR
Design review. At this stage, any necessary
changes are made or the project is abandoned. PRODUCTION
Marketing, finance, engineering, design, and
operations collaborate to determinewhether to
proceed or abandon.
• Concurrent Engineering
Market test. A market test is used to • Computer-Aided Design
determine the extent of consumer acceptance.
If unsuccessful, the product returns to the (CAD)
design review phase. This phase is handled by • Production Requirements
marketing.
• Product and Service Design
Product introduction. The new product is
promoted. This phase is handled by marketing • Component Commonality
Follow-up evaluation. Based on user
feedback, changes may be made or forecasts
refined. This phase is handled by marketing
 CONCURRENT ENGINEERING
Concurrent engineering aims to streamline the transition from product design to production,
reducing product development time. It involves bringing design and manufacturing teams
together early in the design phase to develop both the product and its production processes
simultaneously. This approach has evolved to include cross-functional teams with
manufacturing, materials, marketing, and purchasing personnel, often seeking input from
suppliers and customers. The goal is to create designs that align with customer preferences and
manufacturing capabilities.
Traditionally, product design and manufacturing were separate, leading to challenges and
conflicts. Concurrent engineering addresses this with several advantages:
1. Manufacturing personnel are able to identify production capabilities and capacities.
2. Design or procurement of critical tooling, some of which might have long lead times.
3. The technical feasibility of a particular design or a portion of a design can be assessed early
on. Again, this can avoid serious problems during production
4. The emphasis can be on problem resolution instead of conflict resolution
 COMPUTER-AIDED DESIGN (CAD)
Computer-aided design (CAD) is increasingly used for product design.
Designers can create or modify designs on a computer monitor using various
input devices. CAD allows for easy manipulation of designs, such as rotating,
splitting, and enlarging, providing different perspectives. The completed design
can be printed and stored electronically for easy access. This approach is
employed for designing a wide range of products, from transformers to
integrated circuits and electric motors.
CAD significantly boosts designer productivity by eliminating the need for labor-
intensive mechanical drawings and frequent revisions. It can increase designer
productivity by a factor of 3 to 10. Another key advantage is the creation of a
manufacturing database, providing essential information on product
specifications, dimensions, materials, and more. However, it's important to
acknowledge that establishing and maintaining this database requires a substantial
effort for CAD to operate effectively.
Some CAD systems offer engineering and cost
analysis for proposed designs. This includes
determining part weight, volume, and stress analysis.
CAD can rapidly evaluate multiple design options to
identify the best one according to the designer's
criteria. CAD with finite element analysis (FEA) can
significantly reduce the time to market for new
products, as it facilitates simulations in design,
analysis, and product development. Industries like
aeronautics, biomechanics, and automotive use FEA
for design purposes.
 PRODUCTION REQUIREMENTS
As noted earlier in the chapter, designers must take into
account production capabilities Design needs to clearly
understand the capabilities of production (e.g., equipment,
skills, types of materials, schedules, technologies, special
abilities). This helps in choosing designs that match
capabilities. When opportunities and capabilities do not match,
management must consider the potential for expanding or
changing capabilities to take advantage of those opportunities.

Forecasts of future demand can be very useful, supplying

information on the timing and volume of demand, and
information on demands for new products and services
 PRODUCT AND SERVICE DESIGN
Manufacturability is a key concern for manufactured goods: Ease of
fabrication and/or assembly is important for cost, productivity, and quality.
With services, ease of providing the service, cost, productivity, and quality
are of great concern.
The term design for manufacturing (DFM) is used to indicate the designing of
products that are compatible with an organization's capabilities. A related
concept in manufacturing is design for assembly (DFA). A good design must
take into account not only how a product will be fabricated, but also how it
will be assembled. Design for assembly focuses on reducing Design for
assembly (DEA) the number of parts in an assembly, as well as on the
assembly methods and sequence that will be employed. Another, more general
term, manufacturability, is sometimes used when referring to the case with
which products can be fabricated and/or assembled.
 COMPONENT COMMONALITY
Companies often have multiple products or services with similar
features and components. This applies to product families and
services. This commonality allows companies to benefit from design
time savings, standard assembly training, bulk purchasing
advantages, and reduced parts inventory. Car manufacturers, for
instance, use shared components like water pumps, engines, and
transmissions across various car models. These advantages extend to
services such as automobile and appliance repair, financial, and
medical services. Even in computer software, shared modules save
time and cost in coding. Tool manufacturers use a design that allows
different tools to connect to a common power source, and Hewlett-
Packard offers a universal power source compatible with various
computer hardware.
 4.11 SERVICE DESIGN Service - Something that is done to or for a
customer.
There are many similarities
between product and service Service delivery system - The
design.However,there are some facilities,processes,and skills needed to
important differences as well, provide a service.
owing to the nature of services. One
major difference is that unlike Product bundle - The combination of goods
manufacturing,where production and services provided to a customer.
and delivery are usually separated
in time,services are usually created Service package - The physical resources
and delivered simultaneously. needed to perform the service,the
accompanying goods, and the explicit and
implicit services included.
Service - refers to an act, something that is System design involves development or
done to or for a customer refinement of the overall service package:
(client,patient,etc).It is provided by a
service delivery system,which includes the 1. The physical resources needed.
facilities,processes,and skills needed to
provide the service. Many services are not 2.The accompanying goods that are
pure services, but part of a product bundle, purchased or consumed by the customer, or
the combination of goods and services provided with the service.
provided to a customer. The service
component in products is increasing. The 3.Explicit services(the essential/core
ability to create and deliver reliable features of a service, such as tax
customer oriented service is often a key preparation).
competitive differentiator. Successful
companies combine customer oriented 4. Implicit services(ancillary/extra
service with their products. features,such as friendliness,courtesy).
Overview of Service Design
Service design involves selecting a service strategy that defines the service's
nature, focus, and target market, with a focus on market potential and
profitability. Key considerations include assessing the organization's capability to
deliver the service. After determining the service's focus and target market,
understanding customer requirements and expectations is crucial.
Two pivotal factors in service design are the level of service requirement
variation and the extent of customer contact and involvement in the delivery
system. These factors influence the degree of service standardization or
customization. Lower service requirement variability and limited customer
contact favor standardization, resembling product design. In contrast, high
variability and extensive customer contact necessitate high customization.
Additionally, the level of customer contact impacts selling opportunities, with
greater contact offering more selling possibilities.
Differences between Service Design and Product
Design:
5. Some services have low barriers to
1. Services are often intangible, emphasizing factors entry and exit, putting pressure on
like peace of mind and ambiance. innovation and cost-effectiveness.

2. Many services are created and delivered 6. Location plays a significant role in
simultaneously, leaving less room for error correction, service design, closely linked to
making training, process design, and customer convenience.
relations crucial.
7. Service systems vary from low to high
3. Services cannot be inventoried, which impacts customer contact, each requiring a
flexibility and highlights the importance of capacity different design approach.
management.
8. Demand variability can lead to waiting
4. Services are highly visible to consumers, requiring lines or idle service resources,
a different approach to process design. necessitating efficient management.
Phases in the Service Design Process

Service Blueprinting

A useful tool for

conceptualizing a service
delivery system is the service
blueprint. which is a method for
describing and analyzing a
service process. A service
blueprint is much like an
architectural drawing, but
instead of showing building
dimensions and other
construction features, a service
blueprint shows the basic
customer and service actions
involved in a service operation.
The major steps in service
blueprinting are as follows: Characteristics of Well-Designed Service Systems:

1. Establish boundaries for the 1. Being consistent with the organization's mission.
service and decide on the level of 2. Being user-friendly.
detail needed. 3. Being robust if variability is a factor.
4. Being easy to sustain.
2. Identify and determine the 5. Being cost-effective.
sequence of customer and service 6. Having value that is obvious to customers.
actions and interactions.A flowchart 7.Having effective link ages between back-of-the-house
can be a useful tool for this. operations (i.e., no contact with the customer) and front-
of-the-house operations (i.e., direct contact with
3. Develop time estimates for each customers).Front operations should focus on customer
phase of the process, as well as time service, while back operations should focus on speed and
variability. efficiency.
8.Having a single, unifying theme, such as convenience or
4. Identify potential failure points and speed.
develop a plan to prevent or 9. Having design features and checks that will ensure
minimize them, as well as a plan to service that is reliable and of high quality.
respond to service errors.
 Guidelines for Successful Service Design
Challenges of Service Design
1. Define the service package in detail. A service blueprint
Variability poses a significant may be helpful for this.
challenge in service system 2. Focus on the operation from the customer's
design, where requirements and perspective.Consider how customer expectations and
perceptions are managed during and after the service.
customer requests can differ in 3.Consider the image that the service package will present
both content and timing. The both to customers and to prospective customers.
inability to store services adds 4.Recognize that designers' familiarity with the system may
complexity to balancing supply give them a quite different perspective than that of the
and demand, especially in customer, and take steps to overcome this.
unscheduled situations like 5.Make sure that managers are involved and will support the
design once it is implemented.
emergency room visits. Services 6.Define quality for both tangibles and intangibles. Intangible
can be intricate to describe and standards are more difficult to define, but they must be
are dynamic, particularly in addressed.
direct customer encounters, due 7.Make sure that recruitment,training,and reward policies are
to numerous variables. consistent with service expectations.
8. Establish procedures to handle both predictable and
unpredictable events.
9. Establish systems to monitor, maintain, and improve
service.
4.12 OPERATIONS STRATEGY
Product and service design is a fertile area for achieving competitive advantage and/or increasing customer satisfaction.
Potential sources of such benefits include the following:

• Packaging products and ancillary services to increase sales, such as selling PCs at a discount when bundled with a two-
year Internet access subscription, extended warranties, installation, and software training.

• Employing multi-use platforms, where auto manufacturers utilize a common chassis for multiple nameplates, and in the
realm of computers, there are two primary platforms, PC and Mac, each with various computer variations adhering to
that platform.

• Implementing tactics that will achieve the benefits of high volume while satisfying cus-
tomer needs for variety, such as mass customization.

• Continually monitoring products and services for small improvements rather than the
“big bang” approach. Often the “little” things can have a positive, long-lasting effect on
consumer attitudes and buying behavior.

• Shortening the time it takes to get new or redesigned goods and services to market.
4.12 OPERATIONS STRATEGY

A key competitive advantage of some companies is their ability to bring new products to
market more quickly than their competitors. Companies using this “first-to-market” approach are able to
enter markets ahead of their competitors, allowing them to set higher selling prices

than otherwise due to absence of competition. Such a strategy is also a defense against competition from
cheaper “clones” because the competitors always have to play
“catch up.”
Summary:
Product and service design is a key factor in satisfying the customer. To be succesful in product and service design,
organizations must be continually aware of what customers want, what the competition is doing, what government
regulations are, and what new technologies are available.

The design process involves motivation, improvement ideas, organizational capabilities, and forecasting, considering
factors like product life cycles, legal, environmental, and ethical concerns. Achieving designs that meet customer
expectations, stay within budget, and align with operations' capabilities is a core goal. While product and service
design share similarities, there are crucial differences. Successful design principles include starting with customer
needs, minimizing parts or service steps, standardization, and robust design. Trade-offs in development, cost,
features, and complexity are common. Research and development, often expensive, are vital for innovation. Product
or service reliability is a key customer concern, and quality function deployment aids in obtaining customer input.