OM 1 Ch 4 pages 121 126 Product and Service Design 1 Translate customer wants and needs into product 2 Refine existing products and services 3 Develop new products 4 Formulate quality goals 5 Formulate cost targets 6 Construct and test prototypes 7 Document specifications Reasons for Product or Service Design or Redesign Social and Demographic population shifts Political Liability or Legal new regulations Economic ex low demand Competitive new or changed products Cost or Availability raw mats labor Technological in product components TIVO and commercials Main focus of design and redesign 1 customer satisfaction must understand what the customer wants 2 make designs that are consistent with your organization s capabilities designing for operations taking into account the capabilities of the organization in designing goods and services Legal Ethical and Environmental issues product liability a manufacturer is liable for any injuries or damages caused by a faulty product strong incentive for design improvements Uniform Commercial Code Products carry an implication or merchantability and fitness must be useable for intended purposes o o Life Cycle Life cycle introduction demand is low capacity and processing designed for low volume growth higher demand b c of design improvements o o maturity demand levels off o LOOK AT DIAGRAM decline demand falls but firms can look for alt uses for product READING Product Development A Customer Driven Approach The Product Development Funnel SEE DIAGRAM Stage Gate Model Developed by Cooper Helps in the process by requiring a periodic systematic review of every project in the pipeline at multiple milestones in the development cycle compliments product development funnel by identifying a series of gates through which a new product must pass to come to market each Gate is a Go No Go decision o at each gate the project is compared to other projects in the companies development funnel that it is competing for resources with SEE DIAGRAM Why are Product Dev Funnel and Stage Gate Important 1 guides new team members through chaotic process of their first new product development process 2 easy management of multiple projects across a company in a changing environment makes it easier to allocate resources to a project 3 creates expectations to those that work in the new product dev process that not every idea succeeds Market Forecasting Pop based estimates Population usage based estimates Forecasting by analogy Forecasting by percentage of complimentary product sales Forecasting based on past competitor performance BASES lessons learned from this 1 estimating market potential is essential 2 be willing to challenge your own forecasts as well as those of your suppliers and customers 3 plan for contingencies if market sales is more less than expected 4 reduce cycle time of new product development Stake holders all groups with a stake in the development existence and obsolescence of a product heart monitors in hospitals In an ideal world all needs of stakeholders would be met In reality technological logistical and financial constraints usually demand that some tradeoffs and compromises be made in the design process Kano Method determines absolute value of each customer stakeholder need each need can be assigned a label o must have o linear satisfier delighter indifferent o o Quality Function Deployment uses various houses visually representing correlations among particular attributes Positioning Differentiation what how Segmentation for whom Conjoint Analysis pinpoints the relative value each customer places on different product attributes allows you to quantify market share that could be captured by alternative concepts early stages of new product development Prototype representations of all or a portion of a product used to meet the following goals 1 2 collect customer stakeholder feedback 3 communicate an idea test the feasibility of a concept Final 3 steps toward commercial production 1 Pilot production confirm the assembly test and other operational procedures used in full scale production gradual increase in production reveals problems that are generally caused by increased production 2 Ramp up 3 Market launch marketing plans executed so right product gets to right customers at right price After this is the post implementation review where success of the development process can be gauged OM 2 PRODUCT DESIGN Reading Control Tomorrow s Costs Through Today s Designs quality must be designed into products before they are manufactured Target Costing drives a product development strategy that focuses the design team on the ultimate customer and on the real opportunity in the market prevents senior management from launching low margin products that do not generate appropriate returns for the company ensures dev teams will bring profitable products to market with right level of quality functionality and price for the desired segment co reasons backwards from customer needs and willingness to pay to develop a product doesn t follow flawed practice of cost plus pricing o ultimate goal of target costing is to maximize a product s total profitability not minimize its cost companies must understand how their competitor s products will evolve over time task is to compute costs that must not be exceeded if acceptable margins from specific products at specific price points is guaranteed cardinal rule if you cannot meet the targets you cannot launch the product Cost discipline why now initial design fixes 70 80 of mfg costs important to spend a lot of time on design o being first to market is no longer as important less value to lead products o copycats come out faster target costing forestalls imitation Olympus SLR got competition by 1987 from compact cameras tried to regain market share by o o o advanced zoom improving quality already high reconciling production costs to a volatile market because of lower costs demands set by market used Kano method to see if features added outweighed their costs if target costs could not be met product was returned to research and development for redesign used life cycle analysis to calculate costs of new technologies incorporated in new product designs separated cost of a new technology into two components the costs of R D and the costs of production R D Production o o determine how long a camera family is to be on the market costs of new tech decrease with the purchase of new production programs that increase product quality Main