AMITY GLOBAL BUSINESS SCHOOL
Bangalore
1
MBA, Semester 2
Operations Management
Module 2 : Strategic Decisions Ms. Aarti Mehta Sharma
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
Module II
2
PRODUCT / service product life cycle product design & planning Process Design
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
Product
“thing produced by labor or effort" or the "result of an act or a process"
3
A product is anything that can be offered to a market that might satisfy a want or need.
Products are purchased as raw materials and sold as finished goods.
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
Product Life Cycle
• Every product has a certain marketable life period. • Depending upon the product life span will vary
4
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
– PLC determines revenue earned and capacity planning – Contributes to strategic marketing planning – May help the firm to identify when a product needs support, redesign, reinvigorating, withdrawal, etc. – May help in new product development planning – May help in forecasting and managing cash flow
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AMITY GLOBAL BUSINESS SCHOOL
Product Life Cycle Analysis
Saturation
Bangalore
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Maturity
Deman d
Decline Growth
Introduction
Time
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
7
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
• Introduction – sales begin, production and mktg are developing and profits are negative - Third generation mobile phones - E-conferencing - iris-based personal identity cards
8
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
• Growth – sales grow, mktg intensifies, production concentrates on expanding capacity fast enough to keep up with the demand, profits begin - Portable DVD Players - Email - Smart cards
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AMITY GLOBAL BUSINESS SCHOOL
Bangalore
• Maturity – production concentrates on high volume, efficiency and low costs; mktg shifts to competitive sales promotion or maintaining market share - Personal Computers - Faxes - Cotton t-shirts - Credit cards
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AMITY GLOBAL BUSINESS SCHOOL
Bangalore
• Decline - Sales and profits start to decline, the organisation may try to change their pricing strategy to stimulate growth, however the product will either have to be re-modified, or replaced within the market. - Typewriters - Handwritten letters - Cheque books
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AMITY GLOBAL BUSINESS SCHOOL
Bangalore
SPAN
• The cycle may vary from as little as 90 days, as in the case of “Krissh” products • Shortened PLC?s (computers) • As long as 100 or more years, as for gasoline-powered automobiles.
12
AMITY GLOBAL Why is Product BUSINESS SCHOOL
DevelopmentBangalore Important?
13
1. To satisfy consumers (Demand) - Product items, no matter how successful have a certain lifespan (product mortality) - Replacement products need to be constantly planned - True across all industries especially IT eg Microsoft?s new versions, Window?s XP, PS-2 etc)
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
2.To create new jobs (Irish Economy) 3.To maintain margins (Market share) 4.Government Directives 5.To expand the business (Growth)
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AMITY GLOBAL BUSINESS SCHOOL
Bangalore
different kinds of new products
• Generic – mkt opp - sporting, furniture, tools • Technology Push – new tech, finds mkt – gore-tex(artificial veins) • Platform products ( estd product line ) – consumer electronics • Process intensive = foods, chemicals
15
AMITY GLOBAL BUSINESS SCHOOL
Product design
Bangalore
• New product • Improve existing one
16
AMITY GLOBAL BUSINESS SCHOOL
Service design
Bangalore
Service design is the activity of planning and organizing people, infrastructure, communication and material components of a service in order to improve its quality and the interaction between service provider and customers.
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AMITY GLOBAL BUSINESS SCHOOL
Bangalore
The purpose of service design methodologies is to design according to the needs of customers or participants, so that the service is user-friendly, competitive and relevant to the customers. The backbone of this process is to understand the behavior of the customers, their needs and motivations
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AMITY GLOBAL BUSINESS SCHOOL
Bangalore
Phases • Idea Generation / Idea Screening • Concept Testing • Business Analysis • Product Development ( concurrent engg ? ) • Test Marketing • Production Ramp up • Introduction to market • Customer feedback
New Product/ Service Development Process
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AMITY GLOBAL BUSINESS SCHOOL
Design
Bangalore
21st century demands : New innovative products & services / improving existing products & s/ designing products & services for ease of prod - Flexible production Systems ( lean/ assembly lines/ cellular)
20
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
Innovation
• • Customers, marketing, production Basic research / applied research Technical and economic feasibility studies Protoype design Performance testing Market testing Design for mfg Market, performance, process testing, and economic evaluation of model - Continual modification of production model
21
AMITY GLOBAL getting new BUSINESS SCHOOL
products to market Bangalore faster
22
• Use Autonomous design and development teams (GM, IBM, Motorola, GE, Nissan…) • CAD / CAM • Concurrent Engg - design the product and the accompanying production process simultaneously ( No throwing over the wall…)
AMITY GLOBAL BUSINESS SCHOOL
Boeing 787- Feb 2012
Bangalore
23
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
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AMITY GLOBAL BUSINESS SCHOOL
Bangalore
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AMITY GLOBAL BUSINESS SCHOOL
Bangalore
boeing …
• Computer simulation • Different groups of engrs design diff parts(plumbing, air circulation systems) • Software reads all files simultaneously; combines them 3 dimensionally; • Thus, designers of one system can check for design interference with other systems • Speeds up product development, reduces design and developmental cost
26
AMITY GLOBAL improving BUSINESS SCHOOL
the design of existing products
Bangalore
• Modifying and improving existing products • Improve performance, quality and cost in order to maintain or improve mkt share of maturing products • For eg : At Toyota, improvements were made - Taillights hooked up with single connector instead of two; savings = $ 0.42 - Underside coated only where needed; savings= $2 Continuous design improvements (value analysis)
27
AMITY GLOBAL BUSINESS SCHOOL
Ferrari --- limousine
Bangalore
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AMITY GLOBAL BUSINESS SCHOOL
Bangalore
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AMITY GLOBAL BUSINESS SCHOOL
Bangalore
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AMITY GLOBAL BUSINESS SCHOOL
Bangalore
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AMITY GLOBAL BUSINESS SCHOOL
Bangalore
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AMITY GLOBAL BUSINESS SCHOOL
Bangalore
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AMITY GLOBAL BUSINESS SCHOOL
Bangalore
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AMITY GLOBAL BUSINESS SCHOOL
Bangalore
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AMITY GLOBAL Designing BUSINESS SCHOOL
for production
Bangalore
• Specifications : Detailed descriptions of material, or part, physical descriptions • Tolerances : a minimum and maximum of each product; eg :4 ± 0.001 inch • Standardization : reduces variety among a group of products or parts -- higher volume • Simplification :is the elimination of complex features for higher customer satisfaction / reduced costs
36
AMITY GLOBAL BUSINESS SCHOOL
Designing for Quality
Bangalore
Products of superior quality • TQM • Costs Of Quality • Detecting Defects • Preventing Defects • Toyota, Intel, Motorola(6?)
37
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
contract manufacturers
• Companies that manufacture for others Automobile industry – interiors, taillights, GPS systems Pharma – clinical trials
38
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
Product Failure
The failure rate of new products remains high despite product-planning processes • A recent survey of industrial and consumer goods? firms revealed a failure rate of 35%
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Product Failure can be defined in two ways: • Absolute Failure occurs if a company incurs a financial loss • Relative Failure occurs if a company makes a profit but does not attain profits or image objectives
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
Why New Products Fail
There are several reasons for absolute or relative new-product failure, including – Lack of differential advantage – Poor planning – Poor timing – Unrealistic expectations and enthusiasm by product sponsor
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AMITY GLOBAL BUSINESS SCHOOL
Bangalore
New Products/Services
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AMITY GLOBAL BUSINESS SCHOOL
Identify
Bangalore
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AMITY GLOBAL BUSINESS SCHOOL
Bangalore
services revisited
• Intangible items that cannot be inventoried • Close customer contact • Short lead times • High labor costs relative to capital costs • Subjectively determined quality • Great diversity in service jobs • 5: 1 • 2: 1 (non retail : retail ) AT& T, Wal Mart, ICICI, Fullerton ….
43
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
design
• Quasi Mfg : prodn occurs; - back room operations at banks, aircraft maintenance etc • Customer as participant : customer involvement is high – retailing • Customer as product : medical clinics, beauty parlors Not mutually exclusive – Mc Donalds, Air India
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AMITY GLOBAL BUSINESS SCHOOL
Bangalore
scheduling..
• Services are produced and delivered by people • Demand is non uniform ( non peak incentives, advance appointments,,waiting lines, part time personnel ) Taco Bell – computer simulation programme- how many employees are needed in a day
45
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
Activity
• Organise into groups • Choose one of these industries : generate an idea for a new product / service (feasible) – name the product - mobile phones - education - travel - textiles - restaurant - movie promotions
46
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
• Make a role play / presentation to bring out all the steps involved in new product development ( 20 mins).
47
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
Product design – the process of defining all of the companies product characteristics
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Product design must support product manufacturability (the ease with which a product can be made)
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
Product design defines a product?s characteristics of:
49
•appearance, •materials, •dimensions,
•tolerances, and •performance •standards.
Process Selection – the development of the process necessary to produce the designed product
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
• Product design and process selection are directly linked • Type of product selected defines type of operation required • Type of operation available defines broader organizational aspects such as
– Equipment required – Facility arrangement – Organizational structure
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AMITY GLOBAL BUSINESS SCHOOL
Service design
Bangalore
• Service design is unique in that the service and entire service concept are being designed
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– must define both the service and concept - Physical elements, aesthetic & psychological benefits e.g. promptness, friendliness, ambiance – Product and service design must match the needs and preferences of the targeted customer group
AMITY GLOBAL BUSINESS SCHOOL
Process
Bangalore
A process is any part of an organization that takes inputs and transforms them into outputs, that is of greater value than the inputs. • Inputs • Outputs • Resources • Activities
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AMITY GLOBAL BUSINESS SCHOOL
Bangalore
Types of processes
• Process focussed • Product Focussed - continuous - discrete / assembly line / production line / Repetitive Focussed / • Cellular processes
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AMITY GLOBAL BUSINESS SCHOOL
Bangalore
Factors affecting Process
• Expected demand • No. of different products to be made • Made to stock / order
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AMITY GLOBAL BUSINESS SCHOOL
Process Focus
Bangalore
• Facilities are organized by process • Similar processes are together
– Example: All drill presses are together
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• Low volume, high variety products • „Jumbled? flow Product A
• Other names
Operation
1 – Intermittent process/batch shop – Job shop Product B
2
3
– Example : machine, print, carpentry
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
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AMITY GLOBAL BUSINESS SCHOOL
Process-Focused - Examples Bangalore
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Bank
Hospital
Machine Shop
© 1995 Corel Corp.
© 1995 Corel Corp.
© 1995 Corel Corp.
AMITY GLOBAL BUSINESS SCHOOL
Operations of a Health Center
Bangalore
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D
T
D: R: T: B: P:
R
B
P
Doctor (examination rooms) Radiology (X-ray) Triage (assess severity of illness) Blood (lab test) Pharmacy (fill prescriptions)
AMITY GLOBAL BUSINESS SCHOOL
Health Center - Physical Exam
Bangalore
Physical exam
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Physical exam
D
T
D: R: T: B: P:
R
B
P
Doctor (examination rooms) Radiology (X-ray) Triage (assess severity of illness) Blood (lab test) Pharmacy (fill prescriptions)
AMITY GLOBAL BUSINESS SCHOOL
Health Center - Broken Arm
60
Bangalore
Physical exam Physical exam Broken arm
D
T
D: R: T: B: P:
R
B
P
Broken arm
Doctor (examination rooms) Radiology (X-ray) Triage (assess severity of illness) Blood (lab test) Pharmacy (fill prescriptions)
AMITY GLOBAL BUSINESS SCHOOL
Health Center - Flu
Flu
Bangalore
Physical exam
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Physical exam Broken arm
D
T
R
B
P
Broken arm
Flu D: R: T: B: P: Doctor (examination rooms) Radiology (X-ray) Triage (assess severity of illness) Blood (lab test) Pharmacy (fill prescriptions)
AMITY GLOBAL BUSINESS SCHOOL
Pros & Cons
Bangalore
• Advantages
– Greater product flexibility – More general purpose equipment – Lower initial capital investment
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• Disadvantages
– More highly trained personnel – More difficult production planning & control – Low equipment utilization (5% to 25%)
AMITY GLOBAL Product Focussed BUSINESS SCHOOL
- RepetitiveBangalore / Discrete
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• Facilities often organized by assembly lines • Characterized by modules
– Parts & assemblies made previously
• Modules combined for many output options • Other names
– Assembly line – Production line
AMITY GLOBAL BUSINESS SCHOOL
• More structured than process-focused, less structured than product focused • Enables quasi-customization • Using modules, it enjoys economic advantage of continuous process, and custom advantage of low-volume, highvariety model • Example : autos, motorcycles - Harley Davidson
Repetitive Focused Strategy Bangalore Considerations
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AMITY GLOBAL BUSINESS SCHOOL
Repetitive-Focused Strategy Bangalore Examples
Clothes Dryer
McDonald’s
over 95 billion served
Fast 65 Food
Truck
© 1995 Corel Corp.
© 1984-1994 T/Maker Co.
© 1995 Corel Corp.
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
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AMITY GLOBAL BUSINESS SCHOOL
Bangalore
Automobiles, toys, computers Repetitive (discrete) flow – products are discrete
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AMITY GLOBAL Product-Focused BUSINESS SCHOOL
Strategy - Continuous
Bangalore
• Facilities are organized by product • High volume, low variety products • Example : commercial baked goods, steel, glass - Tata Steel
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• Other names
– Line flow production – Continuous production
Products A & B 1 2 3 Operation
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
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AMITY GLOBAL BUSINESS SCHOOL
Bangalore
Operations of an Automobile Assembly Plant
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A
H
F
S
A: Front-end body-tochassis assembly H: Hood attachment F: Fluid filling S: Start-up testing
AMITY GLOBAL BUSINESS SCHOOL AAP
- Mid-sized 6 cylinder
Bangalore
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A
H
F
S
A: Front-end body-tochassis assembly H: Hood attachment F: Fluid filling S: Start-up testing
AMITY GLOBAL BUSINESS SCHOOL AAP
Bangalore - Compact 4 cylinder
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A
H
F
S
A: Front-end body-tochassis assembly H: Hood attachment F: Fluid filling S: Start-up testing
AMITY GLOBAL BUSINESS SCHOOL
Product-Focused Strategy - Pros & Cons
Bangalore
• Advantages
– – – – Lower variable cost per unit Lower but more specialized labor skills Easier production planning and control Higher equipment utilization (70% to 90%)
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• Disadvantages
– Lower product flexibility – More specialized equipment – Usually higher capital investment
AMITY GLOBAL BUSINESS SCHOOL
Product-Focused Examples Bangalore
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Soft Drinks (Continuous, then Discrete)
© 1995 Corel Corp.
Paper (Continuous)
© 1984-1994 T/Maker Co.
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
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AMITY GLOBAL BUSINESS SCHOOL
Bangalore
Process Focus Repetitive Focus Continuous Focus
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1. Product: Small quantity, large variety 2. Equipment: General purpose 3. Operators broadly skilled
1. Product: Long runs, usually standardized 2. Equipment: Special; assembly line 3. Employees modestly trained
1. Product: Large quantities, small variety 2. Equipment: Special-purpose 3. Operators less broadly skilled
4. Many job instructions
4. Repetitive operations
4. Few work orders and job instructions; standardization
AMITY GLOBAL BUSINESS SCHOOL
Mass Customization
Bangalore
• Using technology and imagination to rapidly mass-produce products that cater to sundry 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.
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AMITY GLOBAL BUSINESS SCHOOL
Cellular Bangalore Manufacturing / Group Technology
_ Parts with similar characteristics are grouped into part families
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– Parts in a part family are typically made on the same machines with similar tooling – Each part produced receives a multi-digit code that describes the physical characteristics of the part.
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
– Some part families (those requiring significant batch sizes) can be assigned to manufacturing cells. – The organization of the shop floor into cells is referred to as cellular manufacturing. – Flow of parts within cells tend to be more like product-focused systems
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AMITY GLOBAL BUSINESS SCHOOLAdvantages
Bangalore
– – – – – –
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Process changeovers simplified Variability of tasks reduced (less training needed) More direct routes through the system Quality control is improved Production planning and control simpler Automation simpler
AMITY GLOBAL BUSINESS SCHOOLDisadvantages
Bangalore
– Duplication of equipment – Under-utilization of facilities – Processing of items that do not fit into a family may be inefficient
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AMITY GLOBAL BUSINESS SCHOOL
Bangalore
RepetitiveFocused
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ProcessFocused Continuum
ProductFocused
AMITY GLOBAL Product BUSINESS SCHOOL
Process Matrix
Bangalore
Product structure Product Life Cycle Process Low vol Multipl Few maj Hi structure – low prods,l prods,hig vol,hi stdardn ow vol her vol std Job shop Comm printer, french rest
Batch Assembl y Line Continuo us Heavy eqpt
Effective ness measure Flex high, unit cost-high
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Automobile, mc donalds Sugar Flexrefinery low unit cost -lo
AMITY GLOBAL BUSINESS SCHOOL
Process chart
Bangalore
• • • • •
State exact materials Time required at every step Spatial movement patterns Transformations – input --- output Conformance standards( rejection / acceptance) • Applicable for services & mfg
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doc_707673045.ppt
Bangalore
1
MBA, Semester 2
Operations Management
Module 2 : Strategic Decisions Ms. Aarti Mehta Sharma
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
Module II
2
PRODUCT / service product life cycle product design & planning Process Design
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
Product
“thing produced by labor or effort" or the "result of an act or a process"
3
A product is anything that can be offered to a market that might satisfy a want or need.
Products are purchased as raw materials and sold as finished goods.
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
Product Life Cycle
• Every product has a certain marketable life period. • Depending upon the product life span will vary
4
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
– PLC determines revenue earned and capacity planning – Contributes to strategic marketing planning – May help the firm to identify when a product needs support, redesign, reinvigorating, withdrawal, etc. – May help in new product development planning – May help in forecasting and managing cash flow
5
AMITY GLOBAL BUSINESS SCHOOL
Product Life Cycle Analysis
Saturation
Bangalore
6
Maturity
Deman d
Decline Growth
Introduction
Time
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
7
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
• Introduction – sales begin, production and mktg are developing and profits are negative - Third generation mobile phones - E-conferencing - iris-based personal identity cards
8
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
• Growth – sales grow, mktg intensifies, production concentrates on expanding capacity fast enough to keep up with the demand, profits begin - Portable DVD Players - Email - Smart cards
9
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
• Maturity – production concentrates on high volume, efficiency and low costs; mktg shifts to competitive sales promotion or maintaining market share - Personal Computers - Faxes - Cotton t-shirts - Credit cards
10
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
• Decline - Sales and profits start to decline, the organisation may try to change their pricing strategy to stimulate growth, however the product will either have to be re-modified, or replaced within the market. - Typewriters - Handwritten letters - Cheque books
11
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
SPAN
• The cycle may vary from as little as 90 days, as in the case of “Krissh” products • Shortened PLC?s (computers) • As long as 100 or more years, as for gasoline-powered automobiles.
12
AMITY GLOBAL Why is Product BUSINESS SCHOOL
DevelopmentBangalore Important?
13
1. To satisfy consumers (Demand) - Product items, no matter how successful have a certain lifespan (product mortality) - Replacement products need to be constantly planned - True across all industries especially IT eg Microsoft?s new versions, Window?s XP, PS-2 etc)
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
2.To create new jobs (Irish Economy) 3.To maintain margins (Market share) 4.Government Directives 5.To expand the business (Growth)
14
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
different kinds of new products
• Generic – mkt opp - sporting, furniture, tools • Technology Push – new tech, finds mkt – gore-tex(artificial veins) • Platform products ( estd product line ) – consumer electronics • Process intensive = foods, chemicals
15
AMITY GLOBAL BUSINESS SCHOOL
Product design
Bangalore
• New product • Improve existing one
16
AMITY GLOBAL BUSINESS SCHOOL
Service design
Bangalore
Service design is the activity of planning and organizing people, infrastructure, communication and material components of a service in order to improve its quality and the interaction between service provider and customers.
17
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
The purpose of service design methodologies is to design according to the needs of customers or participants, so that the service is user-friendly, competitive and relevant to the customers. The backbone of this process is to understand the behavior of the customers, their needs and motivations
18
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
Phases • Idea Generation / Idea Screening • Concept Testing • Business Analysis • Product Development ( concurrent engg ? ) • Test Marketing • Production Ramp up • Introduction to market • Customer feedback
New Product/ Service Development Process
19
AMITY GLOBAL BUSINESS SCHOOL
Design
Bangalore
21st century demands : New innovative products & services / improving existing products & s/ designing products & services for ease of prod - Flexible production Systems ( lean/ assembly lines/ cellular)
20
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
Innovation
• • Customers, marketing, production Basic research / applied research Technical and economic feasibility studies Protoype design Performance testing Market testing Design for mfg Market, performance, process testing, and economic evaluation of model - Continual modification of production model
21
AMITY GLOBAL getting new BUSINESS SCHOOL
products to market Bangalore faster
22
• Use Autonomous design and development teams (GM, IBM, Motorola, GE, Nissan…) • CAD / CAM • Concurrent Engg - design the product and the accompanying production process simultaneously ( No throwing over the wall…)
AMITY GLOBAL BUSINESS SCHOOL
Boeing 787- Feb 2012
Bangalore
23
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
24
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
25
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
boeing …
• Computer simulation • Different groups of engrs design diff parts(plumbing, air circulation systems) • Software reads all files simultaneously; combines them 3 dimensionally; • Thus, designers of one system can check for design interference with other systems • Speeds up product development, reduces design and developmental cost
26
AMITY GLOBAL improving BUSINESS SCHOOL
the design of existing products
Bangalore
• Modifying and improving existing products • Improve performance, quality and cost in order to maintain or improve mkt share of maturing products • For eg : At Toyota, improvements were made - Taillights hooked up with single connector instead of two; savings = $ 0.42 - Underside coated only where needed; savings= $2 Continuous design improvements (value analysis)
27
AMITY GLOBAL BUSINESS SCHOOL
Ferrari --- limousine
Bangalore
28
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
29
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
30
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
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AMITY GLOBAL BUSINESS SCHOOL
Bangalore
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AMITY GLOBAL BUSINESS SCHOOL
Bangalore
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AMITY GLOBAL BUSINESS SCHOOL
Bangalore
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AMITY GLOBAL BUSINESS SCHOOL
Bangalore
35
AMITY GLOBAL Designing BUSINESS SCHOOL
for production
Bangalore
• Specifications : Detailed descriptions of material, or part, physical descriptions • Tolerances : a minimum and maximum of each product; eg :4 ± 0.001 inch • Standardization : reduces variety among a group of products or parts -- higher volume • Simplification :is the elimination of complex features for higher customer satisfaction / reduced costs
36
AMITY GLOBAL BUSINESS SCHOOL
Designing for Quality
Bangalore
Products of superior quality • TQM • Costs Of Quality • Detecting Defects • Preventing Defects • Toyota, Intel, Motorola(6?)
37
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
contract manufacturers
• Companies that manufacture for others Automobile industry – interiors, taillights, GPS systems Pharma – clinical trials
38
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
Product Failure
The failure rate of new products remains high despite product-planning processes • A recent survey of industrial and consumer goods? firms revealed a failure rate of 35%
39
Product Failure can be defined in two ways: • Absolute Failure occurs if a company incurs a financial loss • Relative Failure occurs if a company makes a profit but does not attain profits or image objectives
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
Why New Products Fail
There are several reasons for absolute or relative new-product failure, including – Lack of differential advantage – Poor planning – Poor timing – Unrealistic expectations and enthusiasm by product sponsor
40
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
New Products/Services
41
AMITY GLOBAL BUSINESS SCHOOL
Identify
Bangalore
42
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
services revisited
• Intangible items that cannot be inventoried • Close customer contact • Short lead times • High labor costs relative to capital costs • Subjectively determined quality • Great diversity in service jobs • 5: 1 • 2: 1 (non retail : retail ) AT& T, Wal Mart, ICICI, Fullerton ….
43
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
design
• Quasi Mfg : prodn occurs; - back room operations at banks, aircraft maintenance etc • Customer as participant : customer involvement is high – retailing • Customer as product : medical clinics, beauty parlors Not mutually exclusive – Mc Donalds, Air India
44
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
scheduling..
• Services are produced and delivered by people • Demand is non uniform ( non peak incentives, advance appointments,,waiting lines, part time personnel ) Taco Bell – computer simulation programme- how many employees are needed in a day
45
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
Activity
• Organise into groups • Choose one of these industries : generate an idea for a new product / service (feasible) – name the product - mobile phones - education - travel - textiles - restaurant - movie promotions
46
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
• Make a role play / presentation to bring out all the steps involved in new product development ( 20 mins).
47
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
Product design – the process of defining all of the companies product characteristics
48
Product design must support product manufacturability (the ease with which a product can be made)
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
Product design defines a product?s characteristics of:
49
•appearance, •materials, •dimensions,
•tolerances, and •performance •standards.
Process Selection – the development of the process necessary to produce the designed product
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
• Product design and process selection are directly linked • Type of product selected defines type of operation required • Type of operation available defines broader organizational aspects such as
– Equipment required – Facility arrangement – Organizational structure
50
AMITY GLOBAL BUSINESS SCHOOL
Service design
Bangalore
• Service design is unique in that the service and entire service concept are being designed
51
– must define both the service and concept - Physical elements, aesthetic & psychological benefits e.g. promptness, friendliness, ambiance – Product and service design must match the needs and preferences of the targeted customer group
AMITY GLOBAL BUSINESS SCHOOL
Process
Bangalore
A process is any part of an organization that takes inputs and transforms them into outputs, that is of greater value than the inputs. • Inputs • Outputs • Resources • Activities
52
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
Types of processes
• Process focussed • Product Focussed - continuous - discrete / assembly line / production line / Repetitive Focussed / • Cellular processes
53
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
Factors affecting Process
• Expected demand • No. of different products to be made • Made to stock / order
54
AMITY GLOBAL BUSINESS SCHOOL
Process Focus
Bangalore
• Facilities are organized by process • Similar processes are together
– Example: All drill presses are together
55
• Low volume, high variety products • „Jumbled? flow Product A
• Other names
Operation
1 – Intermittent process/batch shop – Job shop Product B
2
3
– Example : machine, print, carpentry
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
56
AMITY GLOBAL BUSINESS SCHOOL
Process-Focused - Examples Bangalore
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Bank
Hospital
Machine Shop
© 1995 Corel Corp.
© 1995 Corel Corp.
© 1995 Corel Corp.
AMITY GLOBAL BUSINESS SCHOOL
Operations of a Health Center
Bangalore
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D
T
D: R: T: B: P:
R
B
P
Doctor (examination rooms) Radiology (X-ray) Triage (assess severity of illness) Blood (lab test) Pharmacy (fill prescriptions)
AMITY GLOBAL BUSINESS SCHOOL
Health Center - Physical Exam
Bangalore
Physical exam
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Physical exam
D
T
D: R: T: B: P:
R
B
P
Doctor (examination rooms) Radiology (X-ray) Triage (assess severity of illness) Blood (lab test) Pharmacy (fill prescriptions)
AMITY GLOBAL BUSINESS SCHOOL
Health Center - Broken Arm
60
Bangalore
Physical exam Physical exam Broken arm
D
T
D: R: T: B: P:
R
B
P
Broken arm
Doctor (examination rooms) Radiology (X-ray) Triage (assess severity of illness) Blood (lab test) Pharmacy (fill prescriptions)
AMITY GLOBAL BUSINESS SCHOOL
Health Center - Flu
Flu
Bangalore
Physical exam
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Physical exam Broken arm
D
T
R
B
P
Broken arm
Flu D: R: T: B: P: Doctor (examination rooms) Radiology (X-ray) Triage (assess severity of illness) Blood (lab test) Pharmacy (fill prescriptions)
AMITY GLOBAL BUSINESS SCHOOL
Pros & Cons
Bangalore
• Advantages
– Greater product flexibility – More general purpose equipment – Lower initial capital investment
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• Disadvantages
– More highly trained personnel – More difficult production planning & control – Low equipment utilization (5% to 25%)
AMITY GLOBAL Product Focussed BUSINESS SCHOOL
- RepetitiveBangalore / Discrete
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• Facilities often organized by assembly lines • Characterized by modules
– Parts & assemblies made previously
• Modules combined for many output options • Other names
– Assembly line – Production line
AMITY GLOBAL BUSINESS SCHOOL
• More structured than process-focused, less structured than product focused • Enables quasi-customization • Using modules, it enjoys economic advantage of continuous process, and custom advantage of low-volume, highvariety model • Example : autos, motorcycles - Harley Davidson
Repetitive Focused Strategy Bangalore Considerations
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AMITY GLOBAL BUSINESS SCHOOL
Repetitive-Focused Strategy Bangalore Examples
Clothes Dryer
McDonald’s
over 95 billion served
Fast 65 Food
Truck
© 1995 Corel Corp.
© 1984-1994 T/Maker Co.
© 1995 Corel Corp.
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
66
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
Automobiles, toys, computers Repetitive (discrete) flow – products are discrete
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AMITY GLOBAL Product-Focused BUSINESS SCHOOL
Strategy - Continuous
Bangalore
• Facilities are organized by product • High volume, low variety products • Example : commercial baked goods, steel, glass - Tata Steel
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• Other names
– Line flow production – Continuous production
Products A & B 1 2 3 Operation
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
69
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
Operations of an Automobile Assembly Plant
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A
H
F
S
A: Front-end body-tochassis assembly H: Hood attachment F: Fluid filling S: Start-up testing
AMITY GLOBAL BUSINESS SCHOOL AAP
- Mid-sized 6 cylinder
Bangalore
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A
H
F
S
A: Front-end body-tochassis assembly H: Hood attachment F: Fluid filling S: Start-up testing
AMITY GLOBAL BUSINESS SCHOOL AAP
Bangalore - Compact 4 cylinder
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A
H
F
S
A: Front-end body-tochassis assembly H: Hood attachment F: Fluid filling S: Start-up testing
AMITY GLOBAL BUSINESS SCHOOL
Product-Focused Strategy - Pros & Cons
Bangalore
• Advantages
– – – – Lower variable cost per unit Lower but more specialized labor skills Easier production planning and control Higher equipment utilization (70% to 90%)
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• Disadvantages
– Lower product flexibility – More specialized equipment – Usually higher capital investment
AMITY GLOBAL BUSINESS SCHOOL
Product-Focused Examples Bangalore
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Soft Drinks (Continuous, then Discrete)
© 1995 Corel Corp.
Paper (Continuous)
© 1984-1994 T/Maker Co.
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
75
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
Process Focus Repetitive Focus Continuous Focus
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1. Product: Small quantity, large variety 2. Equipment: General purpose 3. Operators broadly skilled
1. Product: Long runs, usually standardized 2. Equipment: Special; assembly line 3. Employees modestly trained
1. Product: Large quantities, small variety 2. Equipment: Special-purpose 3. Operators less broadly skilled
4. Many job instructions
4. Repetitive operations
4. Few work orders and job instructions; standardization
AMITY GLOBAL BUSINESS SCHOOL
Mass Customization
Bangalore
• Using technology and imagination to rapidly mass-produce products that cater to sundry 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.
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AMITY GLOBAL BUSINESS SCHOOL
Cellular Bangalore Manufacturing / Group Technology
_ Parts with similar characteristics are grouped into part families
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– Parts in a part family are typically made on the same machines with similar tooling – Each part produced receives a multi-digit code that describes the physical characteristics of the part.
AMITY GLOBAL BUSINESS SCHOOL
Bangalore
– Some part families (those requiring significant batch sizes) can be assigned to manufacturing cells. – The organization of the shop floor into cells is referred to as cellular manufacturing. – Flow of parts within cells tend to be more like product-focused systems
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AMITY GLOBAL BUSINESS SCHOOLAdvantages
Bangalore
– – – – – –
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Process changeovers simplified Variability of tasks reduced (less training needed) More direct routes through the system Quality control is improved Production planning and control simpler Automation simpler
AMITY GLOBAL BUSINESS SCHOOLDisadvantages
Bangalore
– Duplication of equipment – Under-utilization of facilities – Processing of items that do not fit into a family may be inefficient
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AMITY GLOBAL BUSINESS SCHOOL
Bangalore
RepetitiveFocused
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ProcessFocused Continuum
ProductFocused
AMITY GLOBAL Product BUSINESS SCHOOL
Process Matrix
Bangalore
Product structure Product Life Cycle Process Low vol Multipl Few maj Hi structure – low prods,l prods,hig vol,hi stdardn ow vol her vol std Job shop Comm printer, french rest
Batch Assembl y Line Continuo us Heavy eqpt
Effective ness measure Flex high, unit cost-high
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Automobile, mc donalds Sugar Flexrefinery low unit cost -lo
AMITY GLOBAL BUSINESS SCHOOL
Process chart
Bangalore
• • • • •
State exact materials Time required at every step Spatial movement patterns Transformations – input --- output Conformance standards( rejection / acceptance) • Applicable for services & mfg
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