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Chapter 4

Chapter 4. Product/Service Design. Introduction. Progressive Corp. Prior to 1988, carved our profitable niche serving high-risk drivers In 1988 two major events occurred Allstate overtook it in high-risk niche California passed proposition 103

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Chapter 4

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  1. Chapter 4 Product/Service Design Chapter 4: Product/Service Design

  2. Introduction Chapter 4: Product/Service Design

  3. Progressive Corp. • Prior to 1988, carved our profitable niche serving high-risk drivers • In 1988 two major events occurred • Allstate overtook it in high-risk niche • California passed proposition 103 • Round-the-clock immediate response program adopted Chapter 4: Product/Service Design

  4. Progressive Corp. continued • Special vans equipped with air-conditioning, comfortable chairs, desk, and two cell phones. • Often settlement check offered on spot • 80% of accident victims contacted within 9 hours of learning of accident • 70% of vehicles inspected within one day • Typically claim wrapped up with a week Chapter 4: Product/Service Design

  5. Thermos • In 1992 had 25% share of $1 billion barbecue grill market • Product becoming a commodity • CEO believed consumers were too intelligent to be tricked by clever advertising and slick packaging • Survival dependent on constant innovation, high quality, at right price Chapter 4: Product/Service Design

  6. Thermos continued • Interdisciplinary team with representatives from marketing, manufacturing, engineering, and finance to design new grill • Team used to reduce project completion time • As example, initially designers opted for tapered legs Chapter 4: Product/Service Design

  7. Thermos continued • Manufacturing noted that tapered legs would have to be custom made • Design changed to straight legs • Under previous system, manufacturing would not have found out about legs until design completed Chapter 4: Product/Service Design

  8. Thermos continued • Team developed revolutionary electric grill • Technology used to give food barbecued taste • Burns cleaner than gas or charcoal • Grill won four design awards in its first year Chapter 4: Product/Service Design

  9. Caterpillar • Used virtual-reality system called CAVE (cave automatic virtual environment) to take large earthmoving equipment for test drive before it was actually built • Surround-screen and surround sound cube with 10-foot sides • Super-computer projects 3D graphics onto the walls Chapter 4: Product/Service Design

  10. Caterpillar continued • Inside CAVE, people can walk around and operate imaginary controls • System responds to movements • Provides many perspectives • Backhoe and wheel loader recently introduced incorporate visibility and performance improvements based on data collected from virtual test-drives Chapter 4: Product/Service Design

  11. Themes Illustrate in Examples • Two examples related to design of products and one to the design of a service • Importance of product and service design to an organization’s competitiveness • Progressive • Thermos Chapter 4: Product/Service Design

  12. Themes continued • Technology • In Progressive’s case, new technology such as cellular phones made new service possible • In Caterpillar’s case, new technology used to enhance design process • Design Teams Chapter 4: Product/Service Design

  13. Impacts of Selection/Design Decisions • Fit • Materials • Labor • Equipment • Process • Financing Chapter 4: Product/Service Design

  14. Three Stages inOutput Selection and Design • Selection stage • Idea generation • Screening and selection • Product and service design stage • Preliminary design • Prototype testing • Final design • Process design Chapter 4: Product/Service Design

  15. Steps in Product-Service Selection and Design Chapter 4: Product/Service Design

  16. The Selection Stage Chapter 4: Product/Service Design

  17. Generation of Ideas • Employees with customer contact play a key role in generating new ideas • Can imitate proven new idea • Purchase new idea • Marketing “pull” versus technology “push” • Product versus process research Chapter 4: Product/Service Design

  18. The Development Effort Chapter 4: Product/Service Design

  19. Mortality Curve of Chemical Product Ideas from Research to Commercialization Chapter 4: Product/Service Design

  20. Service Gap Identifier

  21. Product-Process Innovations Over Time Chapter 4: Product/Service Design

  22. Screening and Selection • Assessing technical feasibility • Determining up-front capital needs • Evaluation may include calculation of payback period, return on investment, or net present value Chapter 4: Product/Service Design

  23. Analysis of Organizational Fit • Experience with particular output • Experience with production system required for the output • Experience in providing an output to the same target recipients • Experience with the distribution system for the output Chapter 4: Product/Service Design

  24. Typical Checklist for Organizational Fit Chapter 4: Product/Service Design

  25. The Aggregate Project Plan • Project Portfolio • Derivative projects • Breakthrough projects • Platform projects • R&D projects Chapter 4: Product/Service Design

  26. The Aggregate Project Plan Chapter 4: Product/Service Design

  27. An Example AggregateProject Plan Chapter 4: Product/Service Design

  28. Using the AggregateProject Plan • Identify gaps in portfolio • Evaluate resource requirements • Employee development Chapter 4: Product/Service Design

  29. The Product/Service Design Stage Chapter 4: Product/Service Design

  30. The Product Design Stage • Preliminary Design • Prototype Testing • Final Design Chapter 4: Product/Service Design

  31. Preliminary Design • Tradeoff Analysis • Standardization • Modularity • Computer-Aided Design Chapter 4: Product/Service Design

  32. Function Cost Size and shape Appearance Quality Reliability Environmental impact Producability Timing Accessibility Recipient input requirements Tradeoff Analysis Factors to Consider Chapter 4: Product/Service Design

  33. Using QFD to link customers’ attributes to technical, component, and operation requirements Chapter 4: Product/Service Design

  34. The House of Qualityfor a Car Door Chapter 4: Product/Service Design

  35. Advantages of Standardization • Minimizes number of parts needed to stock • Minimizes number of equipment setups • Simplified operations procedures • Quantity discounts due to larger purchases • Minimized service and repair problems Chapter 4: Product/Service Design

  36. Disadvantages of Standardization • Possible lower quality because standard parts used rather than specially made parts • Inflexible production Chapter 4: Product/Service Design

  37. computer 5 choices for RAM 5 hard drive sizes 5 choices for CPU 4 modem choices 5 x 5 x 5 x 4 = 500 possible computer configurations with only 19 different parts Modularity Chapter 4: Product/Service Design

  38. Computer-Aided Design • Develop drawings on computer screen • Can retrieve old designs and changes as necessary rather than creating new designs from scratch • Computer-aided engineering (CAE) • Computer-aided process planning (CAPP) • Computer-aided manufacturing (CAM) Chapter 4: Product/Service Design

  39. Prototype Testing • Design concept developed in preliminary stage tested • Physical models • Computer simulation • Rapid prototyping (RP) • Actual product or service • Accept, extend, modify, or reject preliminary design Chapter 4: Product/Service Design

  40. Final Design • Simplification and value analysis • Safety and human factors • Reliability • Manufacturability Chapter 4: Product/Service Design

  41. Methods to Speed New Output Introduction • Contract R&D • Product/process teams • Overlap development stages • Combine/eliminate stages • Incremental emphasis • More extensive application • Use new technologies Chapter 4: Product/Service Design

  42. Commercialization Chapter 4: Product/Service Design

  43. Commercialization Process of moving an idea for a new product or service from concept to market Chapter 4: Product/Service Design

  44. History of the Typewriter • Mechanical typewriter dominated market for 25 years • Then the electromechanical typewriter dominated market for 15 years • Electric typewriter dominated for the next 7 years • First generation microprocessor based machines dominated for next 5 years Chapter 4: Product/Service Design

  45. Characteristics of Companies with Superior CommercializationCapabilities • Commercialize two to three times as many new products and processes as their competitors • Two to three times as many technologies incorporated into products • Get product to market in half time • Compete in twice as many product and geographic markets Chapter 4: Product/Service Design

  46. Example: Assume following applies to laser printer industry • Market growing 20% annually • Prices declining 12% annually • Five year life cycle As a project leader, would you choose between incurring a 30% cost overrun to finish project on schedule or miss deadline by six months? Chapter 4: Product/Service Design

  47. Laser Printer example continued • Incurring the 30% cost overrun will reduce cumulative profits by 2.3% • Launching printer six months late will reduce cumulative profits by 33% Chapter 4: Product/Service Design

  48. To Improve Commercialization Capability Must Measure It • Time to market • Range of markets • Number of markets • Breadth of technologies Chapter 4: Product/Service Design

  49. Improving Commercialization Capability • Make it a priority • Set goals and benchmarks • Build cross-functional teams • Promote hands-on management to speed actions and decisions Chapter 4: Product/Service Design

  50. Disruptive Technologies • Disruptive technologies • Sustaining technologies Chapter 4: Product/Service Design

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