The formula for the moving average is:Major factors in design strategy

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Production and Operations Management MGT613

Lesson 11

Product and Service Design together form the very basis of design aspect of operations. If SUPARCO

today decides to send a person to space, it would not only develop and construct a rocket or spaceship

but would also provide services in the training of the astronaut. The fact is that we cannot leave out

services from products or exclude products from service. They both complement and supplement each

other. We have to respect this concept and pay attention in identifying how products and services are

present in tandem everywhere. A cardiologist carrying out angioplasty may be providing services but its

unheard of today at least, that the patient would be carrying with him the spare valves for the heart, so

those valves also from the same person who is providing those services. If we go to the bank for some

financial services, we end up making use of a cheque (product). Similarly if Virtual University is

providing students with an education service, it also supplements the services side by providing

products like books, compact discs, handouts, and power point slides. The point we are trying to focus

upon is that products and services are found in combination and a service organization can also provide

products or a manufacturing organization can also provide a service, like the example we discussed in

class about an automobile manufacturer providing after sales service.

From this lecture onwards, we will be embarking on the journey to learn about Design of Productive

Systems. This journey would require us to complete various milestones like product and service design,

capacity planning, Facilities Layout, Design of Work systems and Locations. Please pay special

attention to all those examples you have already covered through your lectures. And try to keep two

important things in mind:-

Design aspect requires strategic planning and may fall under the domain of Organizational

strategy and senior management, also

Design aspect requires the existing system to be improved or replaced by a better system

for this you should always focus on the word Productive. This word reflects the idea of

adding value either to the manufacturing or the services System or to be more precise

improving the operation system.

Introduction

After completing lectures on product and service design we will be able to understand the importance of

product and service design. We will also try to grasp the various important aspects of the design process

in detail. We will cover the concept of standardization and advantages and disadvantages. We should be

able to appreciate the contribution of R&D to the product service design. And last but not the least; we

will focus on the concept of Reliability in order to learn in what possible ways we can aid our

organization to improve its product or service's reliability.

Importance of Product/Service Design

Product/Service design plays a strategic role in helping an organization achieve its goals. A good

product/service design can ensure customer satisfaction, quality and production costs. On the other

hand, If an organization is offering poor product or service, customer's feedback in the form of lack of

interest will result in poor sales. Also Quality and production costs are affected by poor design of the

product or service. The importance is also often looked, as Pakistani organizations have not yet learnt to

pay attention to safe operations of their products or services. A poor product or service can endanger

the customers or consumers life. For this it is necessary for us as Operations Manager to question the

safe operations of the product or service, our organization offers to its customers and thus safe guard our

organization from product or service liability.

Major factors in design strategy

Production and Operations Management MGT613

When we discussed organizational and operation strategy concepts we did set a boundary line for our

organizations effective, smooth, reliable and safe operations. When we will design a product or service,

we need to consider the following facts in our design strategy.

Cost

Quality

Time-to-market

Customer satisfaction

Competitive advantage

A good product or service can be produced or delivered at an economical cost with increased quality,

with a less time to market provided the organization is willing to aim for customer satisfaction and this

most of the time results in competitive advantage as well increase in revenues.

Product or Service Design Activities

When an organization decides to design its new product or service or refine its existing product or

service, it is suppose to follow certain activities religiously and diligently. The following activities are

necessary:-

Translate customer wants and needs into product and service requirements

Refine existing products and services

Develop new products and services

Formulate quality goals

Formulate cost targets

Construct and test prototypes

Document specifications

An organization can initiate a product or service design if it is able to understand what the customer

actually wants in the product or service being offered, say for example a customer wants a fuel efficient

car and if the automobile manufacturing organization is able to refine its existing product, with the

objective of improving quality and reducing costs, it can gain competitive advantage and profits.

However this requires the organization to not only construct a prototype automobile but also evaluate its

performance for robustness and then the design side should document the specifications in detail, along

with test results and performance evaluations, so only that product may be introduced which is able to

full fill its intended use throughout the country. A CNG fitted car should function effectively in Karachi

as well as Lahore or Islamabad or hilly areas of the northern part of the country.

Reasons for Product or Service Design

An organization takes into account both external and internal reasons in order to design a new product

or service or redesign an existing product or service. The reasons listed below have often been the

primary reason for the design process.

1. Economic

2. Social and demographic

3. Political, liability, or legal

4. Competitive

5. Technological

What is important is to realize that whether it's a single reason or multiple reasons for a design strategy,

the end result should always be an improved, safe and reliable product which should bring revenue and

competitive advantage to the organization.

Objectives of Product and Service Design

The primary focus for designing a new product or service is Customer satisfaction along with the

secondary focus being an improved function of product/service, increase in revenues/profits, Quality

along with reduction in costs.

Production and Operations Management MGT613

The current trend for designing a new product is to pay special attention to the product or

services visual appearance, the ease of production/assembly along with the ease of maintenance/service.

However, the design department of the organization should take into account the capabilities of the

organization in designing goods and services

Steps in the Design Process

Most of the organizations follow the design process with the following steps not necessarily in the same

order to achieve improvement in the performance of the system and adding value.

1. Motivation: refers to the achievement of the goals for the organization, for mature and existing

organizations the motivation also includes government regulations (provides new incentives, tax

free zones), competitive process, customer needs and appearance of new technologies that have

product or service applications.

2. Customers: The design process would never be complete without the valuable inputs of the

customers. Any organization that fails to satisfy and meet customer requirements loose ground

to their competitors.

3. R&D: refers to the Research and Development departments or divisions which generate new

ideas for the existing products or services or simply new ideas for new products or services.

Mostly the activities are ITERATIVE and employ the feedback of customer as well as

operations side.

4. Competitors: The design process often compels a company to dismantle and inspect a

competitor's product. Yes we call it REVERSE ENGINEERING. This helps the organization to

improve its own product. Quite often companies get the blame that they improved incrementally

their competitors products design or certain features to win the competition.

5. Forecast Demand: refers to the demand for the company's new product or service.

6. Manufacturability means the ease of fabrication or assembly of a product as it directly affects

cost, quality and productivity.

7. General considerations: The design process requires design, production/operations and

marketing departments to work closely together. This would mean sharing customer feedback,

quality issues, and operations bottlenecks. In addition legal or regulatory issues and Product

Life Cycle Issues must be addressed as a part of design function.

Legal, Ethical, and Environmental Issues

Organizations whether manufacturing a product or delivering a service are made to operate in a three

dimensional frame work of legal, ethical and environmental boundaries.

Legal. Operations Managers should be able to understand the legal environment in which

their organizations are functioning, not only there are governmental (federal, provincial or

district) regulations but also industrial or service sector obligations. These obligations are

guidelines which need to be followed and if the designers can adhere to them, they only

make life easy for themselves as well as for the organization.

FDA, OSHA, CRS. There are legal issues in which even the CEO can be implicated if

there are violations with respect to pollution. FDA as the name indicates refers to

Federal Drug Agency, OSHA refers to Occupational Safety Hygiene Administration,

and CBR denotes Center Board of Revenue, which monitors the organizations taxable

income.

Product liability refers to a manufacturer being liable in case of an injury or damages

caused by a faulty product.

Uniform commercial code. Products carry an implication of merchantability and fitness,

which is a product, must be usable for the intended purpose. An organization should

strictly follow a uniform commercial code; imagine if a manufacturer of electricity

cable manufactures a non uniform product that can lead to electric shock to the end

user.

Ethical. Operations Manager should understand that he is under

Production and Operations Management MGT613

Contractual agreement not to exhibit unethical behavior. Releasing products with defects

should be informed to the customers. This is a golden practice amongst Muslims from the

days of Holy Prophet (PBUH) and its heartening to see the same being employed here in the

field of International Business

Environmental. Operations Manager should also work with in the same

Environmental laws as his organization. EPA is active in all countries including Pakistan

and even a CEO can be jailed if there is a failure to comply with the Environment laws. It is

the responsibility of the design side to ensure that no design would be finalized that can

seriously jeopardize the organizations standing towards environment.

Designers of Product/Service should adhere to Guidelines

The design side needs to adhere to certain guidelines which can ensure that the organization is able to

achieve its organizational strategy. These guidelines are often form the vary basis of an organizations

design strategy and indicates the importance of standardization in the design of a product or service.

1. Produce designs that are consistent with the goals of the company. An economical upscale model

automobile design if replaced with a luxurious model can invite a small number of customers and

may loose the existing stronger customer base.

2. Give customers the value they expect .Reliability, safety, endurance, aesthetic and quality

dimensions are what the customers are looking for.

3. Make health and safety a primary concern .Green Rickshaws seen functioning on the roads these

days are a result of taking care of health and safety of the users as well as those who operate them.

4. Consider potential harm to the environment .A new product should be as a primary guideline should

be better than the existing one and should aid in the protection of environment. A number of

automobile manufacturers are using hybrid models or cars where as its expected that steam operated

cars may be available in 5 years.

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