Operations Management

Roger Bradburn

Learning Objectives
By the end of this session students should be able to: Critically review the product and service design process. Understand the challenges of product and service design. Review how the design process fits into the other aspects of operations management, such as process design and quality management.

Required Reading
Slack et al (2007) Operations Management, Fifth edition Pearson Prentice Hall. Part 2 Chapter 5

Operations Management Week Two

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Last week we looked at how operations fits into the overall strategy of the business. There are four main ways of looking at an operations strategy:

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1. 2. 3. 4.

Top Down Bottom Up Market Requirements Operations Resources.

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Top Down Approaches Start with a broad mission. Review both external and internal environments. Operations are implemented from this.

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Bottom Up Approaches Problems are recognised on a day to day basis. Mistakes are noted. Strategy is essentially developed over time an emerging approach.

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Market Requirements. The market forces companies to change their strategy. In particular: Order winning factors things that will give us the edge. Order qualifying factors - The level that is required even to be considered by the customer.

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Clearly achieving competitive advantage will require strong product, service and process design. In this section we will consider product and service design and then move on to process design a little later.

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Most new products fail! There are many examples. Before moving on, consider why this might happen. Generally product and service design failures are down to poor planning.

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Lets consider products, services and design what are the differences?: Products are usually tangible, although in marketing discussions product can also mean the offer.

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Services Are any activity of benefit that one party can give to another. Services are intangible, inseparable, time-based and variable.

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Typical Services consist of:
Supporting facility physical resources. Facilitating goods the tangible elements given to the customer during the service. Explicit services the intrinsic benefits of the service. Implicit services the psychological benefits that the customer may only sense.

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What is design?: The activity of determining the physical form shape and composition of products, services and processes.

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What is designed in a product or service?
A concept the expected benefits that the customer is buying. A package of component products and services that provide those benefits defined in the concept. A process which defines the relationship between the component products and services.

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Example!
Concept a small 5 door hatch back with a novel arrangement that gives more space. Package- provided with a 5 year warranty, free insurance. Process the car can be serviced at any one of 50 service centres in the UK.

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As we said, the sad truth is that most new products (and services) fail. At the same time, shortening product life cycles and demanding customers has made NPD essential. NPD is a structured process which if followed will reduce the number of failures.

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New Product Development - Why do new products fail?
Product Development typically takes too long and product performance often falls short of objectives Core technology is often developed in parallel with the product itself

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Why do new products fail? Organisations are not focused on critical programs Functions and teams are not well integrated, and communications between the business leadership and project teams are ineffective

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The New Product Development Process Ideas generation. Typically these will be internally or externally generated.

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Internal generation: Ideas from staff Ideas from research and development. Reverse engineering taking a competitive product, taking it apart and improving it.

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External Generation Ideas from competition. Government funding. Idea generation processes there are many!

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Analogy comparing the product with something else perhaps in nature. Brainstorming generating ideas for later evaluation. Challenge provide products in a group and ask how they can be improved.

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Checklist Using a list to stimulate ideas. Delphi Method Exchanging ideas interactively to develop an accepted solution Lateral Thinking Thinking about problems from different perspectives. Morphological Analysis listing the attribute and then considering how each might be changed.

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Synetics essentially group based brain storming, also used in team building. Transfer- taking an attribute from one market and applying to another. Visualisation asking people to daydream ideas through relaxation.

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New Product Development The New Product Development Process Idea Screening

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Feasibility Study: Typically involves both secondary and primary market research. Parametric Analysis (comparing the parameters of the product on a positioning map) may be used.

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Marketing Research aims to: Consider the marketing channels to be used and the attitudes and perceptions of customers. Tries to explain these attitudes, perceptions and behaviours.

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Marketing Research aims to: Evaluates the cost effectiveness of any design. Predicts how trends might develop in the future.

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The Feasibility Study will also consider: Cost is it prohibitive? Technology can this actually be made into a working product? Logistics how long will it take to set up and deliver? Physical Constraints do we have the buildings/space? Compatibility does it fit with the current products?

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The Feasibility Study will also consider: Cost is it prohibitive? Technology can this actually be made into a working product? Logistics how long will it take to set up and deliver? Physical Constraints do we have the buildings/space? Compatibility does it fit with the current products?

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Design and Development Specifications. This is a complex process that covers a range of issues such as:

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Product Specifications. Manufacturing Drawings. List of Components. Manufacturing Process Data. List of Tools for Manufacture. Materials Specifications. Details of Equipment.

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Traditionally all of this was done on paper, but today CAD/CAM systems are used in most cases.

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Computer Aided Design (CAD) Allows you to store drawings and blueprints electronically. Allows you to make calculations such as how much a product might weigh. Can help you make calculations such as how much material do you need.

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CAD is usually associated with Computer Aided Manufacturing (CAM) CAD and CAM can work together so that a new product can be designed and manufactured entirely by computer.

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Services Design is a little different and has a range of steps such as: What are the requirements of the new service? What are the steps involved? We can then develop a flow chart of the new service noting the steps involved.

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Work out the time frames taking into account customer requirements. Consider the profitability issues. If the service takes too long it will annoy customers but also may well cost too much.

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Other factors that we may want to take into account are: Location where does it take place? Room requirements? Facilities Records Security Access 24 hour or not? Staff qualifications etc. Process and Customer

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Key things we might also want to think about for both products and services are: Reliability can this be maintained? Safety is it going to hurt anyone? Aesthetics how does it look? Maintainabilty can faults be corrected?

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Ergonomics how user friendly is it? Price

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Design Evaluation a key process. This is really about asking, is this any good? A range of concepts are discussed in the text book. We will just review them briefly here.

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Quality Function Deployment Developed by Toyota and other Japanese companies. It simply relates customer needs to design. We will discuss in class!

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Value Engineering. Essentially asks, is it worth it? Looks at the attributes of the design and relates them to the value given and aims to optimise the two.

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Taguchi Method. Dr Taguchi developed a range of very sophisticated statistical techniques that enabled engineers to predict potential problems at the design stage so called off line quality.

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Taguchi Method. Taguchi put forward the idea of Robust Design - the view that products and services should be designed to cope with a very wide range of variations. A good example of this are Jumbo Jets which have at least 3 levels of redundancy built in.

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Prototyping This is the production of a low volume version of the finished item to see how it performs in real life. Services are intangible which makes prototyping difficult. However, simulations can be developed.

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Virtual Reality Increasingly used to test customer situations such as a buying situation as well as some product ideas such as an Fighter Plane cockpit.

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Checklists/Dimensional Analysis Just listing the key parameters of the product what it does, why it does it can often show potential problems.

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Screening This is the process of deciding whether or not a product or service meets key criteria. There are long lists (!) in the manual but here are some ideas for now.

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Marketing Considerations. Does it fit in with our strategy? Is it our type of product? How does it relate to competition? Does it really meet customer need?

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Operational Conditions. Can we make it/deliver it? Is it compatible with our current processes remember learning curves! What capacity will it need? Do we need a new technology and if so, do we understand it?

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Financial Considerations How much investment do we need? Can we raise this? What are the financial risks sensitivity analysis may be important. What might the ROI be and how does this compare with our cost of capital?

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Environmental Considerations Does this new product or service work with current or future legislation?

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Production, Distribution and Customer Use. This is often called the commercialisation stage. Will be discussed more later!

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Two other things we need to consider are: Monitoring and Review is it working? Have we over-designed the product or service? Disposal Ultimately products at least have to be disposed of and we may have to consider that.

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The Difference with Service Design. We have already noted the differences between products and services. These differences will present challenges to us. We might also note that services are very human resource dependent.

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Specifying service parameters is difficult because each service experience may be different. Very often the support functions in the service are important, but these are often forgotten about.

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Conclusions Product and Services design is a critical aspect of operations management. It can often be the basis of success or failure in the organisation. It requires a clear management process. This process has to relate to other aspects of the operation a new product has to be capable of being made for example.