CHAPTER 4: PRODUCT AND SERVICE DESIGN

OPMG 3201 “Operations for Sustainable Advantage” | Spring 2025 | Lecture 8

Dr. Yasmine El-Henawy

School of Business
Department of Management
 • The essence of an organization is
the goods and services it offers
Strategic Product • Every aspect of the
and Service organization is structured
around them
Design
• Product and service design – or
redesign – should be closely tied
to an organization’s strategy
 What Does Product &
Service Design Do?

1. Translate customer wants and needs into product and

service requirements
2. Refine existing products and services
3. Develop an idea for a new product or service
4. Formulate quality goals
5. Formulate cost targets
6. Construct and test prototypes
7. Document specifications
8. Translate product and service specifications into
process specifications
Involve Inter-functional Collaboration
 1. Is there a demand for it?
• Market size
• Demand profile

2. Can we do it?
Key Questions • Manufacturability - the capability of
an organization to produce an item
at an acceptable profit
• Serviceability - the capability of an
organization to provide a service at
an acceptable cost or profit
 3. What level of quality is appropriate?
• Customer expectations
• Competitor quality
Key Questions • Fit with current offering

(contd.) 4. Does it make sense from an economic

standpoint?
• Liability issues, ethical considerations,
sustainability issues, costs and profits
 Reasons to Design or Re-
Design
• The driving forces for product and service
design or redesign are market
opportunities or threats:
• Economic
• Social and Demographic
• Political, Liability, or Legal
• Competitive
• Cost or Availability
• Technological
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Idea Generation

• Supply-chain based
• Competitor based
• Research based

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Supply-Chain Based

• Ideas can come from anywhere in the

supply chain:

• Suppliers
• Distributors
• Employees
• Maintenance and repair
personnel
 Competitor-Based

• By studying how a competitor operates

and its products and services, many
useful ideas can be generated
• Reverse engineering
• Dismantling and inspecting a
competitor’s product to discover
product improvements

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 Research Based
• Research and Development (R&D)
• Organized efforts to increase scientific
knowledge or product innovation
• Basic research
• Has the objective of advancing the state of
knowledge about a subject without any near-
term expectation of commercial
applications
• Applied research
• Has the objective of achieving commercial
applications
• Development
• Converts the results of applied research into
useful commercial applications.
 • Product liability
• The responsibility a manufacturer
has for any injuries or damages
caused by a faulty product
Legal • Some of the associated costs
Considerations • Litigation
• Legal and insurance costs
• Settlement costs
• Costly product recalls
• Reputation effects
 • Designers are often under
pressure to
• Speed up the design process
• Cut costs
• These pressures force trade-off
Ethical decisions
• What if a product has bugs?
Considerations • Release the product and
risk damage to your
reputation
• Work out the bugs and
forego revenue
 • Using resources in ways that do not
harm ecological systems that
support human existence
• Key aspects of designing for
sustainability
• Cradle-to-grave assessment (Life-
Cycle assessment)
• End-of-life programs
Sustainability • The 3-Rs
• Reduction of costs and
materials used
• Re-using parts of returned
products
• Recycling

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 Cradle-to-Grave
Assessment
• Cradle-to-Grave Assessment
• aka Life-Cycle Assessment (LCA)
• The assessment of the environmental
impact of a product or service throughout
its useful life
• Focuses on such factors as
• Global warming
• Smog formation
• Oxygen depletion
• Solid waste generation
• LCA procedures are part of the ISO
14000 environmental management
procedures
 Reduce: Costs and
Materials

• Value analysis
• Examination of the function of parts and materials in an
effort to reduce the cost and/or improve the performance
of a product

• Common questions used in value analysis

• Is the item necessary; does it have value; could it be
eliminated?
• Are there alternative sources for the item?
• Could another material, part, or service be used
instead?
• Can two or more parts be combined?
• Can specifications be less stringent to save time or
money?
• Do suppliers/providers have suggestions for
improvements?
• Can packaging be improved or made less costly?
Re-Use: Remanufacturing

• Refurbishing used products by replacing

worn-out or defective components
• Can be performed by the original
manufacturer or another company
• Reasons to remanufacture:
• Remanufactured products can be
sold for about 50% of the cost of a
new product
• The process requires mostly unskilled
and semi-skilled workers
• In the global market, European
lawmakers are increasingly requiring
manufacturers to take back used
products
• Design for disassembly (DFD)
• Designing a product to that used
products can be easily taken apart
Recycle
• Recovering materials for future use
• Applies to manufactured parts
• Also applies to materials used during
production
• Why recycle?
• Cost savings
• Environmental concerns
• Environmental regulations
• Companies doing business in the EU must show
that a specified proportion of their products are
recyclable
• Design for recycling (DFR)
• Product design that takes into account the
ability to disassemble a used product to
recover the recyclable parts
Product or service life stages
Standardization

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

process
• Products are made in large quantities of identical items
• Every customer or item processed receives essentially the same
service

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Designing for Mass Customization

• A strategy of producing basically standardized goods or services, but

incorporating some degree of customization in the final product or
service

• Facilitating Techniques
• Delayed differentiation
• Modular design
Delayed Differentiation

• The process of producing, but not quite

completing, a product or service until
customer preferences are known
• It is a postponement tactic
• Produce a piece of furniture, but do
not stain it; the customer chooses
the stain
Modular Design

A form of standardization in which component parts

are grouped into modules that are easily replaced or
interchanged
• Advantages
• easier diagnosis and remedy of failures
• easier repair and replacement
• simplification of manufacturing and
assembly
• training costs are relatively low
• Disadvantages
• Limited number of possible product
configurations
• Limited ability to repair a faulty module;
the entire module must often be
scrapped
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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
• Reliabilities are always specified with respect
to certain conditions
• Normal operating conditions
• The set of conditions under which an
item’s reliability is specified
Robust Design
• A design that results in products or services that can
function over a broad range of conditions
• The more robust a product or service, the less
likely it will fail due to a change in the environment
in which it is used or in which it is performed

• Pertains to product as well as process design

• Consider the following examples:
• Timberland safety shoes
• SHEIN trendy heels
• Which is design is more robust?
 Degree of Newness

• Product or service design changes:

• Modification of an existing product or

service
• Expansion of an existing product line or
service offering
• Clone of a competitor’s product or
service
• New product or service

• The degree of change affects the newness of

the product or service to the market and to the
organization
• Risks and benefits?
Quality Function Deployment

An approach that integrates the “voice of the customer” into both

product and service development
• The purpose is to ensure that customer requirements are
factored into every aspect of the process

• Listening to and understanding the customer is the central

feature of QFD
 Kano Model

Basic quality Performance quality Excitement quality

Refers to customer requirements Refers to customer requirements Refers to a feature or attribute that
that have only limited effect on that generate satisfaction or was unexpected by the customer
customer satisfaction if present, dissatisfaction in proportion to and causes excitement
but lead to dissatisfaction if absent their level of functionality and
appeal
 Concurrent Engineering

• Bringing engineering design and manufacturing

personnel together early in the design phase
• Also, may involve manufacturing, marketing
and purchasing personnel in loosely
integrated cross-functional teams
• Views of suppliers and customers may also
be sought
• The purpose is to achieve product designs that
reflect customer wants as well as manufacturing
capabilities
 Computer-Aided
Design (CAD)

• Product design using computer graphics

• Advantages
• increases productivity of designers, 3 to 10
times
• creates a database for manufacturing
information and product specifications
• provides possibility of engineering and cost
analysis on proposed designs
• CAD that includes finite element analysis (FEA)
can significantly reduce time to market
• Enables developers to perform simulations
that aid in the design, analysis, and
commercialization of new products
Production Requirements

• Designers must take into account production capabilities

• Equipment
• Skills
• Types of materials
• Schedules
• Technologies
• Special abilities
Component Commonality

• When products have a high degree of

similarity in features and components, a part
can be used in multiple products
• Benefits:
• Savings in design time
• Standard training for assembly and
installation
• Opportunities to buy in bulk from
suppliers
• Commonality of parts for repair
• Fewer inventory items must be handled
 • Begins with a choice of service strategy, which
determines the nature and focus of the service, and the
Service target market

Design • Key issues in service design

• Degree of variation in service requirements
• Degree of customer contact and involvement

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Differences between Service
and Product Design

Products are generally Services are created and Services cannot be

tangible, services intangible delivered at the same time inventoried

Location is often important to

Services are highly visible to Some services have low
service design, with
consumers barriers to entry and exit
convenience as a major factor

Service systems range from

those with little or no Demand variability alternately
customer contact to those creates waiting lines or idle
that have a very high degree of service resources
customer contact
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The Well-Designed Service System

• Being consistent with the organization mission

• Being user-friendly
• Being robust if variability is a factor
• Being easy to sustain
• Being cost-effective
• Having value that is obvious to the customer
• Having effective linkages between back- and front-of-the-house operations
• Having a single, unifying theme
• Having design features and checks that will ensure service that is reliable and of high
quality
Successful Service Design
Recognize that designers’
Consider the image that familiarity with the system
Focus on the operation the service package will may give them a quite
Define the service
from the customer’s present both to different perspective than
package in detail
perspective customers and to that of the customer, and
prospective customers take steps to overcome
this

Make sure that

Make sure that managers
recruitment, training, and Establish procedures to
are involved and will Define quality for both
reward policies are handle both predictable
support the design once it tangibles and intangibles
consistent with service and unpredictable events
is implemented
expectations

Establish system to
monitor, maintain, and
improve service