Operational management

1. Operational management Dr. Marc Poulin Contact details: Email: marc.poulin@yahoo.com e

2. Designing quality products and services

3. Agenda • Generating new products and services • Product life cycle • Product development process • Issues in product design • Defining a product and service • Documentation and information requirements • Quality in processes • Measuring approaches

4. Goods and Services Selection • Organizations exist to provide goods or services to society • Great products are the key to success • Top organizations typically focus on core products • Customers buy satisfaction, not just a physical good or particular service • Fundamental to an organization's strategy with implications throughout the operations function • Goods or services are the basis for an organization's existence • Limited and predicable life cycles requires constantly looking for, designing, and developing new products • New products generate substantial revenue

5. Product Life Cycle Cost of development and production Sales revenue Net revenue (profit) Sales, cost, and cash flow Cash flow Loss Introduction Growth Maturity Decline Negative cash flow

6. 100 – 80 – 60 – 40 – 20 – 0 – Costs committed Costs incurred Percent of total cost Ease of change Concept Detailed Manufacturing Distribution, design design service, prototype and disposal Product Life Cycle Costs

7. Product-by-Value Analysis How to evaluate which products and services to retain? • Lists products in descending order of their individual dollar contribution to the firm • Lists the total annual dollar contribution of the product • Helps management evaluate alternative strategies

8. Generating New Products Consider the following: Understanding the customer Economic change Sociological and demographic change Technological change Political and legal change Market practice, professional standards, suppliers, distributors

9. Quality Function Deployment (QFD) Links qualitative customer needs into quantitative production parameters. Steps: Identify customer wants Identify how the good/service will satisfy customer wants Relate customer wants to product hows Identify relationships between the firm’s hows Develop customer importance ratings Evaluate competing products Compare performance to desirable technical attributes

10. Concept Feasibility Customer Requirements Functional Specifications Product Specifications Scope for design and engineering teams Scope of product development team Design Review Test Market Introduction Evaluation Product Development Stages

11. QFD House of Quality Example for camera Linking customer wants to company capabilities Evolves over time

12. Organizing for Product Development • Traditionally – distinct departments • Duties and responsibilities are defined • Difficult to foster forward thinking • Linear process • A Champion • Product manager drives the product through the product development system and related organizations • Team approach • Cross functional – representatives from all disciplines or functions • Product development teams, design for manufacturability teams, value engineering teams • Japanese “whole organization” approach • No organizational divisions

13. Manufacturability and Value Engineering • Approach provides the following benefits: • Reduced complexity of the product • Reduction of environmental impact • Additional standardization of components • Improvement of functional aspects of the product • Improved job design and job safety • Improved maintainability (serviceability) of the product • Robust design

14. Issues for Product Design • Robust design • Modular design • Computer-aided design (CAD) • Computer-aided manufacturing (CAM) • Virtual reality technology • Value analysis • Sustainability and Life Cycle Assessment (LCA) • PLM software

15. Defining a Product • First definition is in terms of functions • Engineering drawing • Bill of material (BOM) • Group technology 1. 3. 2.

16. Documents for Production • Key information needed for process performance • Assembly drawing • Assembly chart • Route sheet • Work order • Engineering change notices (ECNs) 1 3 2 4

17. Service Design • Service typically includes direct interaction with the customer • Process – chain – network (PCN) analysis focuses on the ways in which processes can be designed to optimize interaction between firms and their customers • Service productivity is usually low partially because of customer involvement in the design or delivery of the service, or both

18. Adding Service Efficiency • Service productivity is usually low partially because of customer involvement in the design or delivery of the service, or both • Complicates service design • Options: • Limit options • Delay customization • Modularization • Automation • Moment of truth training • Provide documentation or guide

19. Sustainability • Meeting the needs of the present without compromising the ability of future generations to meet their needs • More than “going green”, includes: employees, customers, community, and company reputation • Adopt a systems view: from design to disposal • Design for 3Rs: reduce, reuse, recycle • ISO 14000

20. Role of Quality

21. Process Costs of Quality Prevention costs - reducing the potential for defects Appraisal costs - evaluating products, parts, and services Internal failure costs - producing defective parts or service before delivery External failure costs - defects discovered after delivery

22. Inspection operations At the supplier’s plant while the supplier is producing At your facility upon receipt of goods from your supplier Before costly or irreversible processes During the step-by-step production process When production or service is complete Before delivery to your customer At the point of customer contact

23. Service Industry Inspection

24. Measuring attributes versus variables To monitor a process, Statistical Process Control (SPC) methods exist. • SPC provides a signal when an unnatural cause is present • Monitoring assignable causes: Attributes • Items are either good or bad, acceptable or unacceptable • Does not address degree of failure • Monitoring assignable causes: Variables • Measures dimensions such as weight, speed, height, or strength • Falls within an acceptable range