SUMMARY OF THEORETICAL READINGS
CHAPTER 5: Design of Goods and Services

BUS 502: Design of Goods and Service

Many companies create variety of efficient and competitive ideas about their products and services to meet changing customers demand or target specific customer niches. Companies quickly design and create new innovations or new models to appeal to a variety of market niches. They also use new strategies and production techniques to make their product and service more competitive and satisfying to the customers.
Product strategy defines the distance or length of the product line and links product decisions to investment and cash flow, market share and dynamics, product life cycle, and the organizations capabilities.
GOODS AND SERVICES SELECTION
Most companies concentrate or focus in selection of goods and services or product decision. They focus on creating a competitive advantage thru by differentiation in which companies’ can offer unique and high quality products, lower cost than their competitors, and rapid response to customers demand about executing rapid design and product development.
Most of the companies give more attention or focus on product life cycle and strategy. Strategies change as product move through their life cycle. Product strategy involves selecting the best strategy for each product based on its position in the life cycle while product life cycle can be divided into four phases. In the introductory phase, product expenses are mostly high for Research and Development, process modification and enhancement, and supplier development. During the growth phase, effective capacity forecasting is necessary. In maturity phase, high volume, low cost, and innovative production is appropriate because competitors have entered or are entering the market. At the decline phase, investment needs to be minimized and resources need to be redeployed.
For firms with many goods and services, a product-by-value analysis can help to identify the critical few products in which additional resources, development and techniques should be invested and the trivial many from which resources should be diverted.
GENERATING NEW PRODUCTS
As I have mentioned in the first topic, most products have a limited life cycle, and if the company is to survive, companies need a regular study, research, redesigning, new techniques, and generate new ideas to create new products which can satisfy and meet changing customers demand and bring new products to the market.
A lot of brainstorming or changing of ideas and techniques should be done to generate creative ideas in a particular product and this can be done by the using and understanding many factors. First, company need to understand that the customer is the primary issue in new-product development. Operations managers must pay attention to the market and needs and preferences of “leading edge” consumers. Second, economic factors, such as consumer incomes, are tied to product demand. Third, sociological and demographic change is also tied to product demand. Forth, technological change often drives product innovation. Fifth, political and legal change can also bring about business opportunities.
The need for companies to cultivate the ability to introduce new products cannot be overstated. Many successful companies rely on sales from products introduced within the past five years.

PRODUCT DEVELOPMENT
Product Development involves product development system, quality function deployment, organizing for product development, and manufacturability and value engineering. Each of this stage should have an accompanying review to determine whether to progress or not.
Product development system recall that product strategies link product decisions to cash flow, market dynamics, the production life cycle, and the organizations capabilities.
Quality function deployment describes as a process for determining what will satisfy or required by the customers and translates customer’s desires into a product design. These customers’s desire and a product relationship can be defined by a graphic technique which was called the house of quality were it is a part of quality function that utilizes a planning matrix to relate customer wants to how the firm is going to meet those wants. Building the house of quality involves six steps. First, to identify customer wants. Second, identify how the good or service satisfies customer wants. Third, relate customer wants to product hows. Forth, identify relationships between the firm’s hows. Fifth, develop importance ratings. Sixth, evaluate competing products.
Organizing for Product Development in the west, comprises three popular methods by which organizations undertake product development. First method, were an organization was divided into specific departments like research & development, design engineering, manufacturing engineering, and production departments. In this method, fixed duties exist, which can be an advantage, effective communication and coordination between separate departments can be problematic, and more common in large, bureaucratic companies and organizations. Second method was an operations manager is assigned as the product “champion” who takes the product through the organization from concept through production. Third method was product development is done by teams and this perhaps the most popular approach in the U.S. “Product development teams” are also sometimes called “design for manufacturability teams” or “value engineering teams.” Use of these teams is often called concurrent engineering.
Manufacturability and value engineering activities concern improvement of design and specifications at the research, development, design, and production stages of product development. The goals of manufacturability and value engineering are cost reduction, Reduced complexity of the product, Standardization of components, Improvement of functional aspects of the product, Improved job design and job safety, Improved maintainability (serviceability) of the product, and Robust design.