Summary: Product and Service Design

Design of Goods and Services

Product Decision: Companies must constantly design and develop new products due to the limited life cycles of most products. This decision includes the selection, definition, and design of products.
Organizational Strategy: Organizations exist to provide goods or services to society, and great products are key to success. Top organizations focus on core products, understanding that customers buy satisfaction, not just a physical good or service.
Product Life Cycles: Limited and predictable life cycles require continuous innovation. Strong communication among customers, product teams, processes, and suppliers is essential. New products generate substantial revenue.

Differentiation: Offering unique product features or services that set a company apart. Example: Warby Parker in the USA.
Low Cost: Providing products or services at the lowest possible price. Example: Kudu in KSA.
Rapid Response: Quickly delivering products or services to meet customer demands. Example: Toyota in Japan.
**Implications for Operations: Product decisions have major implications throughout the operations function, influencing everything from supply chain management to production processes.

Introductory Phase: Fine-tuning may warrant unusual expenses for research, product development, process modification, and supplier development.
Growth Phase: Product design begins to stabilize, and effective forecasting of capacity becomes necessary. Adding or enhancing capacity may be required.
Maturity Phase: Competitors are now established. High-volume, innovative production may be needed. Improved cost control and reduction in options are crucial.
Decline Phase: Unless the product makes a special contribution to the organization, management must plan to terminate the offering.

Dollar Contribution: Lists products in descending order of their individual dollar contribution to the firm.
Total Annual Contribution: Lists the total annual dollar contribution of the product.
Strategic Evaluation: Helps management evaluate alternative strategies based on the financial impact of each product.

Understanding the Customer: Identifying customer needs and preferences.
Economic Change: Adapting to shifts in the economic landscape.
Sociological and Demographic Change: Responding to changes in society and population.
Technological Change: Leveraging new technologies for product development.
Political and Legal Change: Complying with new regulations and policies.
Market Practice: Aligning with professional standards and supplier capabilities.

Traditionally: Distinct departments with defined duties and responsibilities, which can be difficult to foster forward thinking.
A Champion: A product manager drives the product through the development system and related organizations.
Team Approach: Cross-functional teams with representatives from all disciplines or functions.
Japanese “Whole Organization” Approach: No organizational divisions, fostering collaboration across the entire company.

Robust Design: Designing products so that small variations in production or assembly do not adversely affect the product.
Modular Design: Products designed in easily segmented components, adding flexibility to both production and marketing.
Computer-Aided Design (CAD): Using computers to design products and prepare engineering documentation, shortening development cycles and improving accuracy.
Virtual Reality Technology: A visual form of communication in which images substitute for reality, allowing users to respond interactively and see the finished design before a physical model is built.
Value Analysis: Focuses on design improvement during production, seeking improvements leading either to a better product or a product that can be produced more economically with less environmental impact.
Sustainability and Life Cycle Assessment (LCA): Sustainability means meeting the needs of the present without compromising the ability of future generations to meet their needs. LCA is a formal evaluation of the environmental impact of a product.

CAD: Using computers to design products and prepare engineering documentation.
CAM: Utilizing specialized computers and programs to control manufacturing equipment.
Benefits of CAD/CAM: Product quality, shorter design time, production cost reductions, database availability, and new range of capabilities.

Sustainability: Meeting the needs of the present without compromising the ability of future generations to meet their needs.
LCA: A formal evaluation of the environmental impact of a product.

Limit the Options: Improves efficiency and the ability to meet customer expectations.
Delay Customization: Allows efficient standardized procedures to be applied to all customers first.
Modularization: Eases customization of a service.
Automation: Reduces cost and increases customer satisfaction.
Moment of Truth: Critical moments between the customer and the organization that determine customer satisfaction.

Timing: Know when to move to production; product development can be viewed as evolutionary and never complete.
Trial Production: Most products have a trial production period to ensure producibility.
Responsibility: Responsibility must also transition as the product moves through its life cycle.