Production and Operations Management Product and Service Design

Outline Explain the strategic importance of product and service design Describe what product and service design does Name the key questions of product and service design Identify some reasons for design or redesign List some of the main sources of design ideas

Outline Discuss the importance of legal, ethical, and sustainability considerations in product and service design Explain the purpose and goal of life cycle assessment Explain the phrase “the 3 Rs” Discuss several key issues in product or service design

Outline Discuss the two key issues in service design Name the phases in service design List the characteristics of well-designed service systems List some guidelines for successful service design

Strategic Product and Service Design The essence of an organization is the goods and services it offers Every aspect of the organization is structured around them Product and service design – or redesign – should be closely tied to an organization’s strategy

What Does Product & Service Design Do? 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

What Does Product & Service Design Do? Document specifications Translate product and service specifications into process specifications Involve inter-functional collaboration

Key Questions Is there a demand for it? Can we do it? Market size Demand profile Can we do it? 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

Key Questions (cont.) What level of quality is appropriate? Customer expectations Competitor quality Fit with current offering Does it make sense from an economic standpoint? Liability issues, ethical considerations, sustainability issues, costs and profits

Reasons to Design or Re-Design The driving forces for product and service design or redesign are market opportunities or threats: Economic Social and demographic Political, liability, or legal Competitive Cost or availability Technological

Idea Generation Supply-chain based Competitor based Research based

Supply-Chain Based Ideas can come from anywhere in the supply chain: Customers Suppliers Distributors Employees Maintenance and repair personnel

Competitor Based By studying how a competitor operates and its products and services, many useful ideas can be generated Reverse engineering Dismantling and inspecting a competitor’s product to discover product improvements

Research Based Research and development (R&D) Organized efforts to increase scientific knowledge or product innovation Basic research Has the objective of advancing the state of knowledge about a subject without any near-term expectation of commercial applications

Research Based Research and development (R&D) Development Applied research Has the objective of achieving commercial applications Development Converts the results of applied research into useful commercial applications.

Legal Considerations Legal considerations Product liability The responsibility a manufacturer has for any injuries or damages caused by as faulty product Some of the concomitant costs Litigation Legal and insurance costs Settlement costs Costly product recalls Reputation effects

Legal Considerations Legal considerations Uniform Commercial Code Under the UCC, products carry an implication of merchantability and fitness

Ethical Considerations Designers are often under pressure to Speed up the design process Cut costs These pressures force trade-off decisions What if a product has bugs? Release the product and risk damage to your reputation Work out the bugs and forego revenue

Sustainability Sustainability Using resources in ways that do not harm ecological systems that support human existence Key aspects of designing for sustainability Cradle-to-grave assessment (Life-Cycle assessment) End-of-life programs

Sustainability Key aspects of designing for sustainability The 3-Rs Reduction of costs and materials used Re-using parts of returned products Recycling

Cradle-to-Grave Assessment aka Life-Cycle Assessment (LCA) The assessment of the environmental impact of a product or service throughout its useful life Focuses on such factors as Global warming Smog formation Oxygen depletion Solid waste generation LCA procedures are part of the ISO 14000 environmental management procedures

Reduce: Costs and Materials Value analysis Examination of the function of parts and materials in an effort to reduce the cost and/or improve the performance of a product Common questions used in value analysis Is the item necessary; does it have value; could it be eliminated? Are there alternative sources for the item? Could another material, part, or service be used instead?

Reduce: Costs and Materials Value analysis Common questions used in value analysis Can two or more parts be combined? Can specifications be less stringent to save time or money? Do suppliers/providers have suggestions for improvements? Can packaging be improved or made less costly?

Re-Use: Remanufacturing Refurbishing used products by replacing worn-out or defective components Can be performed by the original manufacturer or another company Reasons to remanufacture: Remanufactured products can be sold for about 50% of the cost of a new product The process requires mostly unskilled and semi-skilled workers In the global market, European lawmakers are increasingly requiring manufacturers to take back used products

Re-Use: Remanufacturing Design for disassembly (DFD) Designing a product to that used products can be easily taken apart

Recycle Recycling Recovering materials for future use Why recycle? Applies to manufactured parts Also applies to materials used during production Why recycle? Cost savings Environmental concerns Environmental regulations Companies doing business in the EU must show that a specified proportion of their products are recyclable Design for recycling (DFR) Product design that takes into account the ability to disassemble a used product to recover the recyclable parts

Product or Service Life Stages

Standardization Standardization Extent to which there is an absence of variety in a product, service, or process Products are made in large quantities of identical items Every customer or item processed receives essentially the same service

Designing for Mass Customization A strategy of producing basically standardized goods or services, but incorporating some degree of customization in the final product or service Facilitating techniques Delayed differentiation Modular design

Delayed Differentiation The process of producing, but not quite completing, a product or service until customer preferences are known It is a postponement tactic Produce a piece of furniture, but do not stain it; the customer chooses the stain

Modular Design Modular design A form of standardization in which component parts are grouped into modules that are easily replaced or interchanged Advantages Easier diagnosis and remedy of failures Easier repair and replacement Simplification of manufacturing and assembly Training costs are relatively low

Modular Design Modular design A form of standardization in which component parts are grouped into modules that are easily replaced or interchanged Disadvantages Limited number of possible product configurations Limited ability to repair a faulty module; the entire module must often be scrapped

Reliability Reliability The ability of a product, part, or system to perform its intended function under a prescribed set of conditions Failure Situation in which a product, part, or system does not perform as intended Reliabilities are always specified with respect to certain conditions Normal operating conditions The set of conditions under which an item’s reliability is specified

Robust Design Robust design A design that results in products or services that can function over a broad range of conditions The more robust a product or service, the less likely it will fail due to a change in the environment in which it is used or in which it is performed Pertains to product as well as process design Consider the following automobiles: Ferrari Enzo Toyota Avalon Which is design is more robust?

Degree of Newness Product or service design changes: Modification of an existing product or service Expansion of an existing product line or service offering Clone of a competitor’s product or service New product or service

Degree of Newness The degree of change affects the newness of the product or service to the market and to the organization Risks and benefits?

Cultural Differences Multinational companies must take into account cultural differences related to the product design.

Global Product Design Virtual teams Uses combined efforts of a team of designers working in different countries Provides a range of comparative advantages over traditional teams such as: Engaging the best human resources around the world Possibly operating on a 24-hr basis Global customer needs assessment Global design can increase marketability

Global Product Design Original Equipment Manufacturer (OEM) Designs and manufactures a product based on its own specifications and sells to another company for branding and distribution Original Design Manufacturer (ODM) Designs and manufactures a product according to purchaser’s specifications Original Brand Manufacturer (OBM) Sells an entire product that is manufactured by a second company under its own brand

Quality Function Deployment Quality Function Deployment (QFD) An approach that integrates the “voice of the customer” into both product and service development The purpose is to ensure that customer requirements are factored into every aspect of the process Listening to and understanding the customer is the central feature of QFD

The House of Quality Sequence

QFD -- The House of Quality Correlation matrix Design requirements Customer require- ments Competitive assessment Relationship Specifications or target values

QFD -- The House of Quality on Example Customer Requirements Importance to Cust. Easy to close Stays open on a hill Easy to open Doesn’t leak in rain No road noise Importance weighting Engineering Characteristics Energy needed to close door Check force on level ground to open door Water resistance 27 59 45 4 7 5 3 2 X Correlation: Strong positive Positive Negative Strong negative * Competitive evaluation X = Us A = Comp. A B = Comp. B (5 is best) 1 2 3 4 5 AB X AB XAB A X B X A B Relationships: Strong = 9 Medium = 3 Small = 1 Target values Reduce energy level to 7.5 ft/lb Reduce force to 9 lb. to 7.5 ft/lb. current level Maintain Technical evaluation 1 A BA BXA Door seal resistance Accoust. Trans. Window

The Kano Model

Kano Model Basic quality Performance quality Refers to customer requirements that have only limited effect on customer satisfaction if present, but lead to dissatisfaction if absent Performance quality Refers to customer requirements that generate satisfaction or dissatisfaction in proportion to their level of functionality and appeal

Kano Model Excitement quality Refers to a feature or attribute that was unexpected by the customer and causes excitement

The Kano Model – As Time Passes

Concurrent Engineering Bringing engineering design and manufacturing personnel together early in the design phase Also may involve manufacturing, marketing and purchasing personnel in loosely integrated cross-functional teams Views of suppliers and customers may also be sought The purpose is to achieve product designs that reflect customer wants as well as manufacturing capabilities

Computer-Aided Design (CAD) Product design using computer graphics Advantages Increases productivity of designers, 3 to 10 times Creates a database for manufacturing information and product specifications Provides possibility of engineering and cost analysis on proposed designs CAD that includes finite element analysis (FEA) can significantly reduce time to market Enables developers to perform simulations that aid in the design, analysis, and commercialization of new products

Production Requirements Designers must take into account production capabilities Equipment Skills Types of materials Schedules Technologies Special abilities

Manufacturability Manufacturability Ease of fabrication and/or assembly It has important implications for Cost Productivity Quality

Component Commonality When products have a high degree of similarity in features and components, a part can be used in multiple products Benefits: Savings in design time Standard training for assembly and installation Opportunities to buy in bulk from suppliers Commonality of parts for repair Fewer inventory items must be handled

Service Design Begins with a choice of service strategy, which determines the nature and focus of the service, and the target market Key issues in service design Degree of variation in service requirements Degree of customer contact and involvement

Differences between Service and Product Design Products are generally tangible, services intangible Services are created and delivered at the same time Services cannot be inventoried Services are highly visible to consumers Some services have low barriers to entry and exit Location is often important to service design, with convenience as a major factor Service systems range from those with little or no customer contact to those that have a very high degree of customer contact Demand variability alternately creates waiting lines or idle service resources

The Well-Designed Service System Characteristics Being consistent with the organization mission Being user-friendly Being robust if variability is a factor Being easy to sustain Being cost-effective Having value that is obvious to the customer Having effective linkages between back- and front-of-the-house operations Having a single, unifying theme Having design features and checks that will ensure service that is reliable and of high quality

Successful Service Design Define the service package in detail Focus on the operation from the customer’s perspective Consider the image that the service package will present both to customers and to prospective customers Recognize that designers’ familiarity with the system may give them a quite different perspective than that of the customer, and take steps to overcome this Make sure that managers are involved and will support the design once it is implemented Define quality for both tangibles and intangibles Make sure that recruitment, training, and reward policies are consistent with service expectations Establish procedures to handle both predictable and unpredictable events Establish system to monitor, maintain, and improve service

服務藍圖 發展新服務以及改進目前的服務的主要困難：沒有能力在觀念發展、產品發展及市場測試等階段敘述和描繪服務。 將服務項目與顧客期望配合。 客觀的敘述重要的服務程序特徵。 描繪服務使員工、顧客及管理者同樣知道服務是什麼、能夠看到他們在服務傳遞中的角色、和了解服務程序中所包含的所有步驟與流程。

服務藍圖 探討服務藍圖，因應如何設計與說明無形服務程序。

什麼是服務藍圖？ 服務通常缺乏具體的細部說明書。 服務藍圖(Service Blueprint)是準確描繪服務系統的圖片或地圖，它使參與提供服務的不同個人，無論他們的角色或個人觀點為何，都能客觀的了解與處理服務。 藍圖在服務發展的設計及重新設計階段特別有用。

什麼是服務藍圖？ 服務藍圖藉由同時描繪服務傳遞過程、顧客接觸點、顧客與員工角色、以及服務上可見的要素，將服務以視覺方式呈現出來。 它提供一個將服務分解成邏輯要素的方法，並描繪過程中的步驟或工作、工作的執行方式、以及顧客經歷的服務證據。

服務藍圖的要素 顧客行動(Customer Actions)：包括顧客在過程中從事購買、消費和評估服務的步驟、選擇、活動及互動。 前場接觸員工行動(Onstage Employee Actions)：接觸人員所從事的步驟及活動能被顧客看見。

服務藍圖的要素 後場接觸員工行動(Backstage Employee Actions)：那些發生在現場後面用以支援前場活動的接觸人員行動。 支援過程(Support Process) ：涵蓋內部服務、步驟以及爲支援接觸員工傳遞服務所發生的互動。

Service Blueprint Components

服務藍圖三條水平線之含義 互動線 (Line of Interaction) ：表示顧客與組織間的直接互動。在任何時候當有一條垂直線跨越水平的互動線時，就表示顧客與組織間有一個直接的接觸發生。 可見線 (Line of Visibility) ：隔開了所有顧客看得見及看不見的活動。只需要簡單分析在可見線以上所發生的服務有多少，並比較該線以下的活動，就可以立即明白提供給消費者的可見服務證據有多少。

服務藍圖三條水平線之含義 內部互動線 (Line of Internal Interaction) ：分開了接觸人員的活動與其他的服務支援活動及人員。垂直線如果穿越內部互動線，代表內部服務接觸。 在藍圖最上面，有服務的實體表徵(Physical Evidence)。通常在每一個接觸點上面會列出實際的服務實體表徵。

Express Mail Delivery Service Truck Packaging Forms Hand-held Computer Uniform Truck Packaging Forms Hand-held Computer Uniform PHYSICAL EVIDENCE Customer Gives Package Receive Package Customer Calls CUSTOMER Driver Picks Up Pkg. (On Stage) Deliver Package CONTACT PERSON (Back Stage) Customer Service Order SUPPORT PROCESS Airport Receives & Loads Fly to Sort Center Dispatch Driver Sort Load On Truck Fly to Destination Load on Airplane Sort Packages

Overnight Hotel Stay Bill Desk Lobby Hotel Exterior Parking PHYSICAL EVIDENCE Hotel Exterior Parking Cart for Bags Desk Registration Papers Lobby Key Elevators Hallways Room Cart for Bags Room Amenities Bath Menu Delivery Tray Food Appearance Food Arrive at Hotel Give Bags to Bellperson Call Room Service Check out and Leave Go to Room Receive Bags Sleep Shower CUSTOMER Receive Food Check in Eat Greet and Take Bags (On Stage) Process Registration Deliver Bags Deliver Food Process Check Out CONTACT PERSON (Back Stage) Take Food Order Take Bags to Room Registration System Prepare Food Registration System SUPPORT PROCESS

閱讀與使用服務藍圖 依目的決定服務藍圖閱讀方式。 了解顧客對過程的看法﹕ 了解接觸員工的角色 了解服務過程中不同要素的整合情形 從左往右看，追蹤顧客行動區域內的事件 了解接觸員工的角色 藍圖從水平地看，但此次將焦點完全擺在可見線以上及以下的活動 了解服務過程中不同要素的整合情形 藍圖可以做垂直的分析

閱讀與使用服務藍圖 重新設計服務 藍圖整個來看以評估過程的複雜程度、能怎樣改變它、以及從顧客觀點所做的改變會如何影響接觸員工及其他內部程序，且反之如何？

建立藍圖的基本步驟 步驟一 ：指認預定繪製藍圖的服務過程 步驟二 ：指認經歷服務的顧客或顧客區隔 步驟三 ：從顧客觀點繪製服務過程 步驟四 ：繪製前場與後場的接觸員工行動 步驟五 ：連結顧客及接觸人員的活動到需 要的支援部門 步驟六 ：在每一個顧客行動步驟加入服務 證據

建立服務藍圖步驟 步驟1 步驟2 步驟3 步驟4 步驟5 步驟6 在每一 個顧客 行動 步驟 加入 服務證據 指認 顧客 或顧 客區 隔 從顧 客觀 點繪 製服 務 繪圖 前場 與後 場的 接觸 人員 連結 及接觸 人員的 活動到 需要支援 的部門 指認預定繪製藍圖的服務過程

Homework 服務藍圖分析 在你們的作業中，此部份請分析個案公司之服務藍圖: (1) 以顧客觀點分析在目前的營運流程上，哪些接處時點是非常重要的? 請說明理由 (2) 哪些流程的服務品質可再提升? (3) 以不同的商品來繪製此圖 (4) 以不同的顧客區隔來繪製此圖(如 VIP客戶與一般客戶)

Operations Strategy Effective product and service design can help the organization achieve competitive advantage: Packaging products and ancillary services to increase sales Using multiple-use platforms Implementing tactics that will achieve the benefits of high volume while satisfying customer needs for variety Continually monitoring products and services for small improvement opportunities Reducing the time it takes to get a new or redesigned product or service to the market