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Chapter 4. Product and Service Design. Trends in Product & Service Design. Customer satisfaction Designing products & services that are “user friendly” User friendly software Reducing time to introduce/produce new product or service PhD degree in 6 months

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Chapter 4

Chapter 4

Product and Service Design

Trends in product service design
Trends in Product & Service Design

  • Customer satisfaction

    • Designing products & services that are “user friendly”

      • User friendly software

  • Reducing time to introduce/produce new product or service

    • PhD degree in 6 months

  • The organization’s capabilities to produce or deliver the right item on time

    • Compaq could not deliver enough laptops in mid 90s

  • Environmental concerns

    • Designing products that use less material

      • Toyota Prius

  • Product and service design

    Product and Service Design

    • Major factors in design strategy

      • Cost

      • Quality

      • Time-to-market

      • Customer satisfaction

      • Competitive advantage

    Product and service design – or redesign – should be

    closely tied to an organization’s strategy

    Activities of product or service design
    Activities of Product or Service Design

    • Translate customer wants and needs into product and service requirements

    • Refine existing products and services

    • Develop new products and services

    • Formulate

      • quality goals

      • cost targets

    • Construct and test prototypes

    • Document specifications

    Reasons for product or service design
    Reasons for Product or Service Design

    • Economic

      • Low demand, excessive warranty claims

        • SUVs easily topple over and have high warranty claims

  • Social and demographic

    • Changing tastes, aging population

      • SUVs for generation X people who age but want to stay dynamic

  • Political, liability, or legal

    • Safety issues, new regulations, government changes

      • SUVs easily topple over and manufacturers are sued

  • Competitive

    • New products and services in the market, promotions

      • SUV sales are increased with promotions.

      • The profit margins on SUVs are huge so a lot of room for promotions

  • Cost or availability

    • Raw materials, components, labor

  • Technological

    • Components, production processes

  • Objectives of product and service design
    Objectives of Product and Service Design

    • Main focus

      • Customer satisfaction

    • Secondary focus

      • Function of product/service

      • Cost/profit

      • Quality

      • Appearance

      • Ease of production/assembly

      • Ease of maintenance/service

    Design for operations
    Design For Operations

    • Taking into account the capabilities of the organization in designing goods and services

      • Location of facilities

      • Suppliers

      • Transportation fleet

      • Current workforce

      • Current technology

      • Standing contracts

    • All can all limit the implementation of a new design

    Legal ethical and environmental issues
    Legal, Ethical, and Environmental Issues

    • Legal

      • IRS, FDA, OSHA

      • Product liability: A manufacturer is liable for any injuries or damages caused by a faulty product.

      • Uniform commercial code: Products carry an implication of merchantability and fitness

    • Ethical

      • Releasing products with defects

        • Releasing Software with bugs

        • Sending genetically altered food to nations suffering food shortages

    • Environmental

      • EPA

    Designers adhere to guidelines
    Designers Adhere to Guidelines

    • Produce designs that are consistent with the goals of the company

    • Give customers the value they expect

    • Make health and safety a primary concern

    • Consider potential harm to the environment

    Forthcoming aspects of product design
    Forthcoming Aspects of Product Design

    • Product Life Cycles

    • Standardization

    • Mass Customization

    • Modular Design

    • Robust Design

    • Concurrent Engineering

    • Computer-Aided Design

    Other issues in product and service design
    Other Issues in Product and Service Design

    • Product/service life cycles

    • How much standardization

    • Product/service reliability

    • Range of operating conditions

    Life cycles of products or services








    Life Cycles of Products or Services


    Compact discs

    Design for low volume

    Flash memory


    • Standardization

      • Extent to which there is an absence of variety in a product, service or process

    • The degree of Standardization?

    • Standardized products are immediately available to customers

      Calculators & car wash

    Advantages of standardization
    Advantages of Standardization

    • Fewer parts to deal with in inventory & manufacturing

      • Less costly to fill orders from inventory

    • Reduced training costs and time

    • More routine purchasing, handling, and inspection procedures

    • Opportunities for long production runs, automation

    • Need for fewer parts justifies increased expenditures on perfecting designs and improving quality control procedures.

    Disadvantages of standardization
    Disadvantages of Standardization

    • Decreased variety results in less consumer appeal.

    • Designs may be frozen with too many imperfections remaining.

    • High cost of design changes increases resistance to improvements

      • Who likes optimal Keyboards?

    • Standard systems are more vulnerable to failure

      • Epidemics: People with non-standard immune system stop the plagues.

      • Computer security: Computers with non-standard software stop the dissemination of viruses.

    Mass customization
    Mass Customization

    Mass customization:

    • A strategy of producing standardized goods or services, but incorporating some degree of customization

    • Modular design

    • Delayed differentiation

    Mass customization i customize services around standardized products





    Mass Customization I: Customize Services Around Standardized Products

    Warranty for contact lenses:

    Source: B. Joseph Pine

    Deliver customized services as

    well as standardized products

    and services

    Market customized services with standardized

    products or services

    Continue producing standardized products or services

    Continue developing standardized products or services

    Mass customization ii create customizable products and services





    Mass Customization II: Create Customizable Products and Services

    Gillette sensor adjusting to the contours of the face:

    Deliver standard (but

    customizable) products

    or services

    Market customizable products or services

    Produce standard (but customizable) products or services

    Develop customizable products or services

    Mass customization iii provide quick response throughout supply chain





    Mass Customization III: Provide Quick Response Throughout Supply Chain

    Skiing parkas manufactured abroad vs in USA

    Reduce Delivery Cycle Times

    Reduce selection and order processing cycle


    Reduce Production cycle time

    Reduce development cycle time

    Mass customization iv provide point of delivery customization





    Mass Customization IV: Provide Point of Delivery Customization

    Paint mixing:

    Point of delivery


    Deliver standardize portion

    Market customized products or services

    Produce standardized portion centrally

    Develop products where point of delivery customization is feasible

    Delayed differentiation
    Delayed Differentiation

    • Delayed differentiation is a postponement tactic

      • Producing but not quite completing a product or service until customer preferences or specifications are known

    • Postponing the completion until customer specification are known

    • Examples: Wheeled loaders

    Postponement case study hewlett packard
    Postponement Case Study: Hewlett & Packard

    • H&P produces printers for Europe market. Product manuals (different languages), labels and power supplies (plugs are different for UK, Continental EU and US) were used to be packaged along with printers in US.

    • HP postpones commitment of a printer to a certain geographic market by producing universal printers and then applying power supplies and labels (the parts that differentiate printers for local markets) at the last stage once demand is more certain

    • Packaging was postponed to local distribution centers in each European country. Packaging is closer to demand (in location and time) so H&P can respond faster and redistribute the supply:

      • Ireland has 1600 with demand 1100

      • Portugal has 800 with demand 1000

      • Send 200 from Ireland to Portugal

    • For more read: H.L. Lee and C. Billington, "Evolution of Supply Chain Management Models and Practice at Hewlett-Packard Company," Interfaces, 25, 5, 1995: 42-63.

    Delayed differentiation postponement
    Delayed Differentiation=Postponement

    • Postponement is delaying customization step as much as possible. Producing but not quite completing a product or service until customer preferences or specifications are known.

      • (Salad) + (Dressings ={1000 Islands, Vinaigrette, …})

  • Need:

    • Indistinguishable products before customization

    • Customization step is high value added

    • Unpredictable, negatively correlated demand for finished products

    • Flexible processes to allow for postponement

  • Modular design
    Modular Design

    Modular design is a form of standardization in which component parts are subdivided into modules that are easily replaced or interchanged. It allows:

    • easier diagnosis and remedy of failures

    • easier repair and replacement

    • simplification of manufacturing and assembly

    Disadvantage: variety decreases

    Modular design1
    Modular Design

    Modular designis a form of standardization in which component parts are subdivided into modules that are easily replaced or interchanged.

    • A bad example: Earlier Ford SUVs shared the lower body with Ford cars

      Due to standardization, it allows:

    • easier diagnosis and remedy of failures

    • easier repair and replacement

    • simplification of manufacturing and assembly

    Types of modularity for mass customization
    Types of Modularity for Mass Customization

    Component Sharing Modularity, Dell

    Cut-to-Fit Modularity,

    Gutters that do not require seams

    Bus Modularity, E-books



    Mix Modularity, Paints

    Sectional Modularity, LEGO

    Mass customization v modularize components to customize end products





    Mass Customization V: Modularize Components to Customize End Products

    Computer industry, Dell computers:

    Deliver customized product

    Market customized products or services

    Produce modularized components

    Develop modularized products


    • Reliability: The ability of a product, part, or system to perform its intended function under a prescribed set of conditions

    • Failure: Situation in which a product, part, or system does not perform as intended

    • Normal operating conditions: The set of conditions under which an item’s reliability is specified

      • A regular car is not to be driven at 200 mph

      • A bed is not to be used as a trampoline

    Product and service design

    Improving Reliability

    • Good component design improve system reliability

    • Production/assembly techniques

    • Testing

      • To figure out defectives / weak units

      • Dell tests each computer’s electric circuitry after the assembly

    • Redundancy/backup

      • Exactly why your car has a spare tire

    • Preventive maintenance procedures

      • Medical check-ups to discover potential diseases

    • User education

    • System design

    Product and service design

    Robust Design

    Design that can function over a broadrange of conditions

    Taguchi’s Approach:

    • Design a robust product

      • Insensitive to environmental factors either in manufacturing or in use.

        • Columbia parkas with fleece inside

          • For skiing and rainy weather: Take out the fleece use the outer shell

          • For dry cold air: Wear the fleece without the outer shell

          • For a snow storm: Wear the fleece with the shell

          • When you put on weight: Ease the belts for a relaxed fit

          • When you are sweating: Open air ducts for breathing your body

    • Central feature is Parameter Design. How to set design parameters?

      • Design of experiments – a Statistics concept

    • Determines:

      • factors that are controllable and those not controllable

      • their optimal levels relative for good product performance

    Phases in product development process
    Phases in Product Development Process

    • Idea generation

    • Feasibility analysis (Demand, cost/profit, capacity)

    • Product specifications (customer requirement)

    • Process specifications (produce in economic way)

    • Prototype development

    • Design review

    • Market test

    • Product introduction (promotion)

    • Follow-up evaluation

    Idea generation


    Idea Generation

    Supply chain based

    Competitor based

    Research based

    Sources of ideas for products and services
    Sources of Ideas for Products and Services

    • Internal

      • Employees

      • Marketing department

      • R&D department

    • External

      • Customers, sometimes misleading

      • Competitors

        • Reverse engineering is thedismantling and inspecting of a competitor’s product to discover product improvements.

        • Benchmarking is comparing and contrasting product and process characteristics against those of competitors

        • Both can be classified as environmental scanning activity

      • Suppliers & Customers,

        • Ford helps its suppliers in designing components

    Research development r d
    Research & Development (R&D)

    • Organized efforts to increase scientific knowledge or product innovation & may involve:

      • Basic Research advances

        • Universities, IBM research centers

      • Applied Research

        • Motorola, Alcatel

      • Development

        • All companies


    • Manufacturability is the ease of fabrication and/or assembly which is important for the following aspects:

      • Cost

      • Productivity

      • Quality

    Design for manufacturing
    Design for Manufacturing

    Beyond the overall objective to achieve customer satisfaction while making a reasonable profit is:

    Design for Manufacturing (DFM) : The designers’ consideration of the organization’s manufacturing capabilities when designing a product.

    The more general term design for operationsencompasses transportation, services as well as manufacturing

    Over the wall approach vs concurrent engineering





    “Over the Wall” Approach vsConcurrent Engineering

    Concurrent engineering
    Concurrent Engineering

    Concurrent engineering: Bringing engineering design and manufacturing personnel together early in the design phase.

    • Manufacturing personnel helps to identify production capabilities, selecting suitable materials and process, the conflicts during production can be reduced.

    • Early consideration of technical feasibility.

    • Shortening the product development process.

    Product design
    Product design

    • Design for manufacturing (DFM)

    • Design for assembly (DFA)

      number of parts, methods, sequence.

    • Design for recycling (DFR)

    • Remanufacturing

    • Design for disassembly (DFD)

    Computer aided design
    Computer-Aided Design

    • Computer-Aided Design (CAD)is product design using computer graphics.

      • increases productivity of designers, 3 to 10 times

      • creates a database for manufacturing information on product specifications

      • Simplifies communication of a design. Design teams at various locations can work together.

      • provides possibility of engineering and cost analysis on proposed designs

  • Transonic Systems Inc. manufactures customized medical devices; pomps, blood vessel, blood pressure measurement equipment.

    • Design to manufacturing was long, problematic, designers and manufacturing engineers could not work on designs simultaneously, some of the previous designs were lost (talking of knowledge management).

    • Savior: CAD

  • Product and service design


    • Recycling: recovering materials for future use

    • Recycling reasons

      • Cost savings

      • Environment concerns

      • Environment regulations

    • Remanufacturing: replacing worn out parts in used products

      • Kodak cameras

    • Design for disassembly is considering ease of disassembly while designing a product

    • Reverse supply chains

    Quality function deployment
    Quality Function Deployment

    • Quality Function Deployment

      • Voice of the customer

      • House of quality

    QFD: An approach that integrates the “voice of the customer” into the product and service development process.

    The house of quality














    target values

    The House of Quality

    Quality function deployment1
    Quality Function Deployment

    A structured and disciplined process that provides a means to identify and carry the voice of the customer through each stage of product or service development and implementation

    QFD is for:

    • Communication

    • Documentation

    • Analysis

    • Prioritization


    Product and service design


    Strong positive









    Strong negative


    Engineering Characteristics

    Competitive evaluation

    Check force on level ground

    Energy needed

    to close door

    Energy needed

    to open door

    Accoust. Trans.


    Door seal


    X = Us

    Water resistance

    A = Comp. A

    Importance to Cust.

    B = Comp. B



    (5 is best)

    1 2 3 4 5



    Easy to close


    X AB

    Stays open on a hill


    Easy to open



    A X B

    Doesn’t leak in rain








    No road noise


    X A


    Importance weighting


    Strong = 9

    Medium = 3

    Target values

    Reduce energy

    level to 7.5 ft/lb

    Reduce energy

    to 7.5 ft/lb.

    Reduce force

    to 9 lb.


    current level


    current level


    current level

    Small = 1








    Technical evaluation

    (5 is best)













    House of Quality Example for a Car Door

    The qfd and kano model
    The QFD and Kano Model

    Japanese QFD Results

    • Design time reduced by ¼ to ½

    • Problems with initial quality decreased

    • Comparison and analysis of competitive products became possible

    • Communication between divisions improved

      The Kano Model

  • Product Characteristics:

    • Must have = Order qualifiers

    • Expected = Order qualifiers, winners

    • Excitement = Order winners

  • Make sure that you have the order qualifiers

  • Determine the level of order winners with a cost/benefit analysis

  • Service design
    Service Design

    • Service is an act

    • Service delivery system

      • Facilities

      • Processes

      • Skills

    • Explicit services

      • Core of the service: Hair styling

    • Implicit services

      • Excitement characteristics: Courtesy

    • Many services are bundled with products

      • Maintenance services

      • Conecpt of selling solutions: Products and Services

        • E.g. IBM

    Phases in service design
    Phases in Service Design

    • Conceptualize

    • Identify service components

    • Determine performance specifications

    • Translate performance specifications into design specifications

    • Translate design specifications into delivery specifications

    Service blueprinting
    Service Blueprinting

    • Service blueprinting: A method used in service design to describe and analyze a proposed service

    • A useful tool for conceptualizing a service delivery system

    • Major Steps in Service Blueprinting

      • Establish boundaries

      • Identify steps involved

      • Prepare a flowchart, see the next page, source in justice-flowchart.pdf

      • Identify potential failure points

      • Establish a time frame

      • Analyze profitability

    Characteristics of well designed service systems
    Characteristics of Well Designed Service Systems

    You be the judge for

    the justice system

    How do you rate the

    system in terms of












    • Consistent with the organization mission

    • User friendly: Do we understand it?

    • Robust: Can it function under various conditions?

    • Easy to sustain: Requires to much effort?

    • Cost effective: Does it cost too much?

    • Value to customers: Who are the customers?

    • Effective linkages between back-office operations

    • Single unifying theme: What does the justice system do?

    • Ensure reliability and high quality

    • Consistency.

    • Up-to-date: Does it evolve?

    Challenges of service design
    Challenges of Service Design

    • Variable requirements

      • Criminals and the cases are different

    • Difficult to describe

      • How do you describe a criminal action?

      • We need the court system.

        • Descriptions are not exact because they are based on words.

        • This is exactly why lawyers make a living; or perhaps more.

    • High customer contact

      • Service cannot be inventoried

    • Service – customer encounter

    Product and service design

    Differences Between Product and Service Design

    Most often product and services are provided together.

    Products vs. Services are

    • Tangible – intangible

    • Services created and delivered at the same time

    • Services cannot be inventoried

    • Services highly visible to customers

    • Services have low barrier to entry

    • Location important to service

      • Ambiance

      • Convenience

    Service variability customer influence service design




    Dept. StorePurchase









    Service Variability & Customer Influence Service Design

    Figure 4-3


    in Service


    Degree of Contact with Customer

    Where are medical services, internet law consultants?

    Product and service design

    Operations Strategy

    • Shorten time-to-market

    • Package products and services

      • Sell “solutions” not products

    • Increase emphasis on component commonality

    • Use multiple-use platforms

    • Consider tactics for mass customization

    • Look for continual improvement

    Summary product design
    Summary: Product design

    • Remanufacturing-recycling

    • Robust design

    • Design for manufacturing (DFM)

    • Design for assembly (DFA)

    • Design for disassembly (DFD)

    • Design for recycling (DFR)

    • Reliability

    Practice questions
    Practice Questions

    • True/ False:

    • 1.One of the main advantages of standardization is that it increases the potential variety of products.

    • 2. Product failures can be easier to remedy with modular design.

    • 3. Quality function deployment (QFD) is based on a set of standards which relate customer requirements to company capabilities.

    1.Answer: False Page: 127

    2.Answer: True Page: 129

    3.Answer: False Page: 143

    Practice question
    Practice Question

    • Multiple-Choice:

    • 4. The term standardization is closely associated with:

    • A) customization

    • B) high cost

    • C) longer lead times

    • D) variety

    • E) interchangeability

    • Answer: E Page: 127

    Practice question1
    Practice Question

    • 4. A formal way to document customer requirements is:

    • A) consumer surveys

    • B) quality function deployment (QFD)

    • C) focus groups

    • D) Delphi technique

    • E) sales/marketing matrix

    Answer: B Page: 142

    Practice question2
    Practice Question

    • 6. The stage in a product or service life cycle where some firms adopt a defensive research posture is:

    • A) incubation

    • B) growth

    • C) maturity

    • D) saturation

    • E) decline

    Answer: E Page: 126


    • Reliability: The ability of a product, part, or system to perform its intended function under a prescribed set of conditions

    • Failure: Situation in which a product, part, or system does not perform as intended

    • Normal operating conditions: The set of conditions under which an item’s reliability is specified

    • Reliability is a Probability, that the product or system will:

      • Function when activated

      • Function for a given length of time

    • Independent events

    • Redundancy; Why to have spare tires on the car?

    Parallel vs serial components
    Parallel vs Serial Components

    A product is composed of several components. Suppose components fail/work independently.

    If all components must function for the product to function, components are serial. Example: Laptop and projector.



    Water flowing from left to right analogy. P(System works)=P(A works) P(B works)

    If at least one component must function for the product to function, components are parallel. Example: Two batteries of a laptop.

    P(System fails)=P(A fails) P(B fails)



    Example reliability diagram
    Example: Reliability Diagram

    Determine the reliability of the system shown






    Compare this diagram to that of Example S-1





    0.98 x 0.99 x 0.996


    The system can be reduced to a series of three components

    By collapsing parallel components

    Failure rate personal life expectancy strike life expectancy



    Failures due

    to wear-out

    Few (random) failures

    Time, T

    Failure Rate: Personal life expectancy – Strike life expectancy

    Figure 4S-1

    Exponential distribution for life x

    pdf f(x)


    cdf F(T)=P(X<T)



    Exponential Distribution for Life X

    Use exponential distribution to model lifetime
    Use Exponential Distribution to Model Lifetime

    • Exponential distribution is a simple density used to model lifetimes

    • Its failure rate is constant

      • So does not apply to human life. Insurers use more complicated densities.

    • The reliability of each part in a system

      Reliability=P(Part works at T)=1-F(T)

    • Once reliabilities are computed for all parts, combine parts according to whether serial or parallel

    Product and service design

    Improving Reliability

    • Component design

    • Production/assembly techniques

    • Testing

    • Redundancy/backup

    • Preventive maintenance procedures

    • User education

    • System design

    • How much of reliability is good? Cost-benefit analysis.