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Product and Service Design. Chapter 2 MBACOG6 Production Management Vanessa Q. Manansala. Points to Ponder. “Business lunch is not for lunch.” - DECIDE WHAT YOU WANT BEFORE YOU GET THERE!. Key Questions.
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Product and Service Design Chapter 2 MBACOG6 Production Management Vanessa Q. Manansala
Points to Ponder “Business lunch is not for lunch.” - DECIDE WHAT YOU WANT BEFORE YOU GET THERE!
Key Questions • Why is a good product or service design important? • What are the stages and techniques involved in product or service design? • How to improve the design?
Topic Outline • Product and Service Design • The Role of Operations in Product and Service (P/S) Design • The Product Life Cycle (PLC) • Product Development (PD) and Processes • Emerging Issues in Product Development (PD)
Product Design A process which: • Specifies materials • Determines dimensions and tolerances • Defines appearance • Sets performance standards
Product Development Model • Lofty Goals - to stay lit for a long time • Right to Left Process - pulled by the market • Structure - clear targets • Fluidity - driven by talent, not hierarchy (Thomas Alva Edison)
Service Design A process which specifies what the customer is to experience: • Physical Benefits – physiques • Sensual Benefits – good feeling • Psychological Benefits – entertainment • Physiological Benefits – health • Service Standards
FedEx Service Design A well-designed service system is… • Consistent with the firm’s focus • User friendly • Robust • Easy to sustain • Effectively linked between front and back office • Visible to customer Characteristics of services • Services are intangible • Service output is variable • Services have higher customer contact • Services are perishable • Service is inseparable from delivery • Tend to be decentralized and dispersed • Consumed more often than products • Services can be easily emulated
The Role of Operations in P/S Design An effective product development approach offers 3 key benefits: • Market Position - create an image or identity in the minds of the target market • Resource Utilization - a supply chain network uses resources of various kinds • Organization Renewal and Enhancement
The Product Life Cycle • Market Introduction Stage - costs are very high - slow sales volumes to start - little or no competition • Growth Stage - costs reduced due to economies of scale - sales volume increases significantly - profitability begins to rise
The Product Life Cycle • Maturity stage - costs are lowered as a result of production volumes increasing and experience curve effects - sales volume peaks and market saturation is reached - increase in competitors entering the market • Saturation and Decline Stage - costs becomes counter-optimal - sales volume decline or stabilize - prices, profitability diminish
Product Development (PD)Process A structured PD leads to a final product that is focused on: • Matches product/service characteristics with customer needs • Meets customer requirements in simplest, most cost-effective manner • Reduces time to market • Minimizes revisions
Product Development (PD)Process Idea Generation Concept Development Product/Service Development Manufacturing Process and Service Delivery Development Full Scale Production Market Introduction Market Evaluation
Product Development (PD)Process • Idea Generation - ideas for new products can be obtained from basic research using a SWOT analysis • Concept Development - develop the marketing and engineering details • P/S Development - What product features must the product incorporate? • Manufacturing Process and Service Delivery Development • Full Scale Production - using all resources • Market Introduction - market entry and user-trial by innovators • Market Evaluation - analysis of effectiveness and/or efficiency
Globalization • Globalization - growth to a worldwide scale
Internet & E-commerce • Internet and E-commerce - online shopping, online stores on World Wide Web
Supply Chain Cost Reduction • Supplychain cost reduction - Supply chain strategies require a total systems view of the linkages in the chain that work together efficiently to create customer satisfaction at the end point of delivery to the consumer