Introduction to operations and supply chain management 3e bozarth chapter 15

Developing Products and Services
Chapter 15


Chapter Objectives
Be able to:

Explain why product design is important to the success of a business.
Describe the six dimensions of product design that are of particular interest to
operations and supply chain managers.
Describe the five phases of product and service development and explain the
difference between sequential development and concurrent engineering.
Discuss the different roles played by areas such as engineering and accounting
during the development process.
Describe some of the most common approaches to improving product and
service designs, including the Define-Measure-Analyze-Design-Verify (DMADV)
process, quality function deployment (QFD), design for manufacturability
(DFM), and target costing.

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Product Design and
Development
 Product Design – The characteristics or features of a
product or service that determine its ability to meet
the needs of the user.
 Product Development Process– The overall process
of strategy, organization, concept generation,

product and marketing plan creation and
evaluation, and commercialization of a new
product. © Product Development and Management Association
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Four Reasons for Developing
New Products and Services
 New products or services can give firms a
competitive advantage in the marketplace.
 New products or services provide benefits to the
firm.
 Companies develop new products or services to
exploit existing capabilities.
 Companies can use new product development to
block out competitors.
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Product Design Dimensions
 Repeatability
 Testability
 Serviceability
 Product volumes
 Product costs
 Match between the design and existing capabilities

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Product Design Dimensions
 Repeatability
 Consistent production
 Tolerance to manufacturing variations (robustness)

 Testability
 Ease with which critical components or functions can be
tested during production

 Serviceability
 Ease of repair, service, and evaluation

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Product Design Dimensions
 Product Volumes
 Expanding firm’s operations by building facilities, hiring
workers, buying new equipment, or planning with key
suppliers

 Product Costs
 Obvious costs – Easiest to see and manage

 Hidden costs – Not easy to track but can have a major impact
• Number of parts in a product
• Engineering changes
• Transportation costs

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Product Design Dimensions
 Match with Existing Capabilities
 Product design flexibility
• Easy to add features?
• Easy to upgrade?
 Process flexibility
• Share processes / parts?
• Will upgrades make current operations obsolete?

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Development Process
 Concept development phase – The company
identifies ideas for new or revised products and
services.
 Planning phase – The company begins to address
the feasibility of a product or service.

 Design and development phase – The company
starts to invest heavily in the development effort
and builds and evaluates prototypes.

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Development Process
 Commercial preparation phase – The firms start to
invest heavily in the operations and supply chain
resources needed to support the new product or
service.
 Launch phase – For products, this means “filling up”
the supply chain with products. For services, it
means making the services available to the target
marketplace.
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Development Process Phases

Table 15.1
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Sequential Development
vs. Concurrent Engineering
 Sequential development – A process in which a
product or service idea must clear specific hurdles
before it can go on to the next development phase.
 Concurrent engineering – A process where activities
in different development stages are allowed to
overlap with one another, shortening the total
development time.

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Concurrent Engineering

Figure 15.1

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Organizational Roles
Engineering – Provide the expertise.
Marketing – Understanding the marketplace.
Accounting – Play the role of “scorekeeper.”
Finance – Judge the financial impact and determine how to

acquire the needed capital.
 Designers – Handle product design and create “identities” for
companies, environments, and service experiences.
 Purchasing – Identify the best suppliers and sign them up
early in the process. Act as a consultant for materials.
 Suppliers – Bring opportunities for improvement, reduce
financial risks, save time in development.





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DMADV
 Steps:
 Define – Measure – Analyze – Design – Verify
• Define the project goals and customer deliverables
• Measure and determine customer needs and
specifications
• Analyze the product or process options to meet the
customer needs
• Design the product or process
• Verify the results

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Quality Function Deployment
 Quality function deployment – A graphical tool used
to help organizations move from vague notions of
what customers want to specific engineering and
operational requirements
 Also called the House of Quality

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Quality Function Deployment
 QFD Matrix:
 Left side: Shows customer requirements and their relative
importance to target customers.
 Along the top: Lists specific product characteristics.
 Main body: Shows how each of the product characteristics
does or does not support the customer requirements.
 Roof: Shows synergies between some of the features.

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Quality Function Deployment

QFD Matrix
for a Cell
Phone

Figure 15.2

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Quality Function Deployment
Using QFD
Matrices to
move from
Customer
Requirements
to Process
Specifications.

Figure 15.3

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Computer-Aided Systems
 Computer-aided design (CAD) – An information

system that allows engineers to develop, modify,
share, and even test designs in a virtual world.
 Computer-aided design/computer-aided
manufacturing system (CAD/CAM) – An extension of
CAD where CAD-based designs are translated into
machine instructions, which are then fed
automatically into computer-controlled
manufacturing equipment.
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Design for… Approaches
 Design for manufacturability (DFM)
 Considering manufacturing issues in design and
development.
• Parts standardization, modular architecture.

 Design for maintainability (DFMt) –
 Considering maintainability issues over the product’s
projected life cycle during the design and development
process.

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Design for… Approaches

 Design for Six Sigma (DFSS)

 Considering achieving Six Sigma quality levels in
product and process design.

 Design for the environment (DFE)
 Considering environmental, safety, and health issues over
the product’s projected life cycle during the design and
development process.

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Target Costing and
Value Analysis
 Target costing – The process of designing a product to meet a
specific cost objective.
 Setting the planned selling price and subtracting the
desired profit as well as marketing and distribution costs.

 Value analysis – The process of examining all elements of a
component, an assembly, an end product, or a service to
make sure it fulfills its intended function at the lowest total
cost.
 Value = function/cost
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Developing Products and Services
Case Study
Design for Supply Chain
Programs

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otherwise, without the prior written permission of the publisher.
Printed in the United States of America.

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