Operations Management Design of Goods and Services

1. Operations ManagementDesign of Goods and Services

2. As the customer wanted it As Marketing interpreted it © 1984-1994 T/Maker Co. © 1984-1994 T/Maker Co. As Operations made it As Engineering designed it © 1984-1994 T/Maker Co. © 1984-1994 T/Maker Co. Humor in Product Design

3. Product Development System • Idea generation • Assessment of firm’s ability to carry out • Customer Requirements • Functional Specification • Product Specifications • Design Review • Test Market • Introduction to Market • Evaluation

4. Quality Function Deployment • Determines what will satisfy the customer • Translates those desires into specific product characteristics • Product design process using cross-functional teams • Marketing, engineering, manufacturing • “House of quality” tool used

5. Manufacturability and Value Engineering Help improve pdt’s design, pdn, maintainability & use • Benefits: • reduced complexity of products • additional standardization of products • improved functional aspects of product • improved job design and job safety • improved maintainability of the product • Best cost-avoidance technique • Focus on achieving functional specs in the most optimal manner

6. Cost Reduction of a Bracket via Value Engineering

7. Issues for Product Development • Robust design • Modular design • Computer-aided design – DFMA; 3D object modeling • Computer-aided manufacturing • Virtual Reality Technology • Value analysis • Environmentally friendly design

8. Robust Design • Product is designed so that small variations in production or assembly do not adversely affect the quality of the product e.g IC amplifier developed in AT&T

9. Modular Design • Products designed in easily segmented components. • Adds flexibility to both production and marketing • Customization possible through modularity • E.g. high-fidelity stereos, Harley Davidson, McDonalds, Dell Computers, etc

10. Interactively designing & documenting products at a computer terminal or work station Computer Aided Design (CAD) • Design engineer develops rough sketch of product • Uses computer to draw product • Often used with CAM © 1995 Corel Corp.

11. Benefits of CAD • Shorter development cycles • Better products • Accurate flow of info to other departments • Helpful for tool-designers and programmers of CAM • Cost effective method for making design changes

12. Design for Manufacturing and Assembly (DFMA) 3-D Object Modeling CAD/CAM – CAD info is translated into machine control instructions (CAM) Extensions of CAD © 1995 Corel Corp.

13. Use of specialized computer programs to direct and control manufacturing equipment CAD/CAM often used together Computer Aided Manufacturing (CAM) © 1995 Corel Corp.

14. Benefits of CAD/CAM • Production Flexibility • Product Quality • Shorter design time • Database availability • New capabilities • Example: rotate and depict objects in 3D form • Reduced production costs

15. Virtual Reality • Computer technology used to develop an interactive, 3-D model of a product with the help of images • Especially helpful in design of layouts (factory, store, home, office)

16. Environmentally Friendly Designs • Goals include • Developing safe and environmentally sound products • Minimizing waste of raw materials and energy • Differentiating product from competitors • Reducing environmental liabilities

17. “Green” Manufacturing Making environmentally sound products through efficient processes • Make products recyclable e.g. Tuborg • Use recycled materials e.g. Scotch-Brite • Use less harmful ingredients • Use less energy • Use less material

18. Product Development Continuum External Development Strategies Alliances Joint Ventures Purchase Technology or Expertise by Acquiring the Developer Internal Development Strategies Migrations of Existing Products Enhancement to Existing Products New Internally Developed Products Internal----------------Cost of Product Development-------------------------Shared Lengthy ---------------Speed of Product Development-----Rapid and/orExisting High --------------------- Risk of Product Development ------------------------Shared

19. Engineering drawing Shows dimensions, tolerances, & materials Shows codes for Group Technology Bill of Material Lists components, quantities & where used Shows product structure Product Definition

20. Group Technology Characteristics • Parts grouped into families • Similar, more standardized parts • Uses coding system • Describes processing & physical characteristics • Part families produced in manufacturing cells • Mini-assembly lines © 1984-1994 T/Maker Co.

21. 4mm x 45° chamfer 80mm 60mm 112mm Group Technology Code Example Round Rod Product Code: 1 5 3 1 Part function (round rod) Material (steel) Max. length (50 < L < 150) Primary machine (lathe)

22. Group Technology Schemes Enable Grouping of Parts

23. Moment-of-Truth at a Computer Company Experience Enhancers The operator was sincerely concerned and apologetic about my problem He asked intelligent questions that allowed me to feel confident in his abilities The operator offered various times to have work done, to suit my schedule Ways to avoid future problems were suggested Experience Detractors I had to call more than once to get through. A recording spoke to me rather than a person While on hold, I get silence,and wonder if I am disconnected. The operator sounded like he was reading a form of routine questions. The operator sounded uninterested I felt the operator rushed me. Standard Expectations Only one local number needs to be dialed I never get a busy signal I get a human being to answer my call quickly and he or she is pleasant and responsive to my problem A timely resolution to my problem is offered The operator is able to explain to me what I can expect to take place

24. Application of Decision Trees to Product Design • Particularly useful when there are a series of decisions and outcomes which lead to other decisions and outcomes. • Considerations: • Include all possible alternatives and states of nature - including “doing nothing” • Enter payoffs at end of branch • Approach determining expected values by “pruning” tree

25. Operations ManagementProcess Strategy

26. Process Strategies Involves determining how to produce a good or provide a service within constraints Objective Meet or exceed customer requirements Meet cost & managerial goals Has long-run effects Production efficiency Product & volume flexibility Cost & quality

27. Fit of Process, Volume, and Variety Repetitive Process (Modular) Low-Volume (Intermittent) High-Volume (Continuous) Process focus projects, job shop, (print, carpentry) Standard Register High Variety One or few units per run, high variety (allows customization) Mass Customization (difficult to achieve, but huge rewards) Dell Computer Co., Levis Jeans Repetitive (autos, motorcycles) Harley Davidson Changes in modules Modest runs, standardized modules Product focus (commercial baked goods, steel, glass) Steel, Cement Low Variety; Changes in attributes (such as grade, quality, size, thickness, etc.) Long runs only

28. Process-Focused Strategy Product A Operation 1 2 3 Product B • Facilities are organized by process • Similar processes are together • Example: All drill presses are together • Low volume, high variety products • ‘Jumbled’ flow • Other names • Job shop

29. Process-Focused Example Custom Woodworking Shop Cutting Planing Shaping Assembly Sanding Finishing 1 2 6 7 5 3 Job A 2 Drilling Turning 4 Job B 3 6 1 4 5

30. Process Focus - Pros & Cons Advantages Greater product flexibility More general purpose equipment – equipments not dedicated to one product Disadvantages High production cost per unit More difficult production planning & control Low equipment utilization (5% to 25%)

31. Process-Focus Examples Bank Hospital Machine Shop

32. Repetitive Focused Strategy Facilities often organized by assembly lines Characterized by modules Parts & assemblies made in modules Modules combined for many output options Other names Assembly line Production line E.g. auto-manufacturing, pc’s, house-hold appliances, etc

33. Assembly Line Example Raw Material Components 4 2 Subassem. Components. Assemblies Fin. Goods 1 3 5 7 Raw Material Components Subassem. Product/Material Flow Production Operation

34. Repetitive Focus - Considerations Product focused process that uses modules More structured than process-focused, less structured than product focused Enables semi-customization Using modules, it enjoys economic advantage of continuous process, and custom advantage of low-volume, moderately high-variety model

35. Repetitive Focus - Examples McDonald’sover 95 billion served Fast Food Clothes Dryer Truck

36. Repetitive Focus

37. Product-Focused Strategy • Facilities are organized by product • High volume, low variety • Conversion or further processing of undifferentiated materials such as petroleum, chemicals, or beer • Follows a predetermined sequence of steps, but flow is continuous rather than discrete – highly standardized • Other names • Line flow production • Continuous production

38. Production Process at NUCOR Steel

39. Product Focus - Pros & Cons Advantages Lower production cost per unit Lower but more specialized labor skills Easier production planning and control Higher equipment utilization (70% to 90%) Disadvantages Lower product flexibility More specialized equipment

40. Product-Focused Examples Soft Drinks (Continuous, then Discrete) Paper (Continuous)

41. Mass Customization Using technology and imagination to rapidly mass-produce products that cater to unique customer desires Under mass customization the three process models become so flexible that distinctions between them blur, making variety and volume issues less significant