Operations and

Supply Chain
Management
Lecture 5
Instructor: Hussnain Ali
 Goods and service selection refers to the process of deciding
which products (goods) and services a company will offer to meet

Goods and Services

customer needs. The goal is to choose products and services that
align with the company’s strategy, market demand, and
resources, ensuring competitive advantage and profitability in the
Selection marketplace.
 Product Decision refers to the process of selecting, defining and
designing of the product or service a company will offer to meet

Product Decision
customer demand and give the business a competitive edge. It
involves determining what features, qualities, and capabilities the
product should have, while ensuring it appeals to customers in a
way that stands out from competitors.

companies need a product strategy to meet what the market

wants and do so in a way that offers something better or different
from competitors.
 Product Strategy

A product strategy that is based on these three aspects ensures that a

company not only meets market needs but also gains an edge over
competitors.

•Differentiation: Offering unique features or quality that make a product

stand out from competitors. For example, Apple uses a differentiation
strategy by focusing on innovative design and advanced technology.

•Low-Cost Leadership: Competing on price by reducing costs and

offering products at a lower price point than competitors. Walmart is an
example of a company that follows a low-cost leadership strategy by
emphasizing cost efficiency and scale.

•Quick Response: Offering fast delivery or rapid product development to

meet customer needs quickly. For example, companies like Zara use
quick response strategies in fashion by getting new designs to the market
in record time.
Product Life-Cycle and Product Strategies

1. Introductory Stage
In the introductory phase of a product’s lifecycle, products are still
being fine-tuned for the market, as both the product itself and its
production techniques are evolving. At this stage, companies
often incur unusual expenditures for activities such as research,
product development, process modification and enhancement,
and supplier development to ensure the product fits market
needs. These efforts are crucial to establish the product and
improve its quality and production efficiency.
Product Life-Cycle and Product Strategies
2. Growth Stage
In the growth stage of the product lifecycle, product design has
begun to stabilize, meaning that the product no longer needs
significant changes and is becoming more standardized. At this
stage, demand for the product starts to increase rapidly, and
effective forecasting of capacity requirements becomes crucial to
meet this growing demand. Companies may need to add capacity
or enhance existing capacity to accommodate the rising demand
for the product. This could involve expanding production facilities,
improving efficiency, or increasing the workforce.
Product Life-Cycle and Product Strategies
3. Maturity Stage
In the maturity phase of the product life cycle, the strategy
focuses on maintaining profitability and competitiveness.
Companies aim for high-volume production to reduce costs
through economies of scale, while emphasizing cost control to
protect margins. They may streamline their product line by
reducing options to focus on the most profitable offerings. Efficient
production processes and refining the product to match market
demands are key. For example, Toyota, during this phase,
concentrates on producing large volumes of popular models like
the Corolla, ensuring innovation while controlling costs to stay
competitive.
Product Life-Cycle and Product Strategies
4. Decline Stage
In the decline stage of the product life cycle, the product strategy
in operations management shifts towards cost reduction. The
focus is on phasing out the product, minimizing costs, and
managing inventory to avoid excess. Operations may scale down
production, reduce the variety of offerings, and focus on
maintaining profitability by cutting non-essential expenses.
Companies may also decide whether to discontinue the product
or explore niche markets to extend its life. For example, when
DVD players started declining due to digital streaming,
manufacturers reduced production and focused on minimizing
costs while gradually exiting the market.
1. Introduction Stage
Product is unknow to customers
Hig Promotion

2. Growth Stage
Product is more widely known and consumed
The sales volume increases

3. Maturity Stage
Product is competing
Sales are at their peak

4. Decline Stage
Sales volume reduced
Price is likely to fall
 Product by value analysis is a method used to evaluate and
prioritize products based on their contribution to revenue and

Product-by-Value
profitability. It helps companies identify which products
generate the most value, either in terms of sales, profit or

Analysis
strategic importance. By examining the value that each
product provides to the company, managers can make
informed decisions about resource allocation, product
improvement, or discontinuation.
 Product Development

In operations management product development refers to the process of

designing, creating, and refining a product to meet customer needs and
market demands. Product development happens due to following reasons

1. Understanding the customer

2. Economic Changes
3. Sociological and Demographic changes
4. Technological Changes
5. Political and Legal Changes
6. Other Changes
1. Understanding the Customer:
Companies need to evolve their products based on changing customer needs,
preferences, and behaviors.
Example: Coca-Cola introduced Coca-Cola Zero to appeal to health-conscious
consumers who wanted a no-sugar option without compromising taste.

2. Economic Changes:
Fluctuations in the economy such as recessions or growth periods can lead to
product adaptations or innovations to suit the market.
Example: During the 2008 financial crisis, McDonald's promoted its Dollar Menu to
cater to budget-conscious customers, helping to maintain sales.

3. Sociological and Demographic Changes:

Changes in population trends, cultural shifts, or social norms can inspire product
development.
Example*: Nike expanded its product line to include more sustainable, eco-friendly
materials in response to growing concerns about environmental sustainability.
4. Technological Changes:
Advances in technology can drive companies to update their products or create
new ones.
Example: Apple’s development of the iPhone was driven by advances in mobile
technology, which allowed for a convergence of phone, internet, and media.

5. Political and Legal Changes: New laws, regulations, or political shifts can
necessitate changes to products to ensure compliance or appeal to new markets.
Example: The automotive industry has seen numerous innovations in electric
vehicles (like Tesla) due to increasing regulations on emissions and government
incentives for greener transportation.

6. Others (Market Practice, Professional Standards, Suppliers, Distributors):

Changes in the way industries operate or the relationships between companies
and suppliers/distributors can also trigger product development.
Example*: The move by Amazon to offer faster shipping (like Prime one-day
delivery) required the company to innovate its supply chain and product logistics
practices to stay competitive.
 A Product Development System is a structured process that
companies use to bring new products from concept to market. It

Product Development
involves several stages, from concept to evaluation. The system
ensures that products meet customer needs, align with company
objectives, and are efficiently produced while managing costs and
System time. It helps streamline the development process and reduce the
risk of failure.
 Quality Function Deployment

Quality Function Deployment (QFD) is a structured approach used in product

development to ensure that customer needs and expectations are fully understood
and translated into specific product features and design requirements. It uses a
tool called the "House of Quality," which helps prioritize these needs and align
them with the company’s capabilities, materials, and processes.

QFD helps companies focus on delivering quality by making sure that every stage
of development, from design to production, meets customer demands effectively. It
bridges the gap between customer desires and technical specifications, improving
product quality and customer satisfaction.

For example, when developing a new smartphone, QFD would ensure that
customer preferences like battery life, screen resolution, and durability are
considered during design and manufacturing processes.
 7 Steps to build the House of Quality
1. Identify Customer Requirements (Whats)
Gather and list customer needs or expectations, often referred to as
the Whats. This is the voice of the customer.
Example: In the case of designing a new smartphone, customer
requirements might include long battery life, a high-resolution
camera, fast performance, and durability.

2. Identify Technical Requirements (Hows)

Determine the technical features or specifications that will fulfill the
customer requirements. These are the "Hows."
Example: For the smartphone, the "Hows" could include battery
capacity (mAh), camera resolution (megapixels), processor speed
(GHz), and the material used for the casing.

3. Relate Customer Requirements to Technical Requirements

Establish relationships between the customer requirements and the
technical requirements. This step shows how well the technical
specifications address the customer needs.
Example: If a customer wants a long-lasting battery, this relates to
battery capacity. A high-resolution camera relates to the camera
sensor quality and lens specifications.
 7 Steps to build the House of Quality
4. Evaluate the Importance of Each Requirement
Prioritize customer requirements by assigning a weight or importance level to each
"What" based on customer feedback.
Example: In a smartphone, customers may rank "battery life" as the most important,
followed by "camera quality," while "design aesthetics" might have a lower priority.

5. Set Target Values for the Technical Requirements

Set measurable target values for each technical requirement to meet customer
expectations.
Example: If "battery life" is critical, the target for battery capacity might be set to 5000
mAh. For the camera, a target resolution of 108 megapixels might be set.

6. Analyze Competitive Products

Compare the product with competitor products to identify strengths and weaknesses.
This helps in understanding how the product stacks up against market competition.
Example: Compare the smartphone’s battery life and camera resolution to those of
competing brands like Apple or Samsung, identifying areas where improvements or
adjustments are needed.

7. Determine the Correlation Between Technical Requirements

Analyze how different technical requirements interact with each other, either positively
or negatively. This correlation is often displayed at the top of the "House of Quality."
Example: Increasing the camera resolution may require a more powerful processor,
which could impact battery life. The correlation shows whether improving one aspect
helps or hinders another.
Manufacturability and Value Engineering

Manufacturability and value engineering, refer to a unified process

where products are designed with a focus on ease of manufacturing,
while also ensuring that the product's value is optimized. This means
that during the design and production phases, efforts are made to
improve product quality and reduce costs by evaluating materials,
processes, and design features. The goal is to make the product as
efficient to produce as possible without compromising on quality, and
simultaneously ensuring that it provides maximum.

Benefits of manufacturability and value engineering:

1. Reduce Complexity of the Product
2. Reduction of Environmental Impact
3. Additional Standardization of components
4. Improvement of functional aspects of the product
5. Improved Job Design and Job Safety
6. Improved Maintainability
7. Robust Design
Sustainability and Life Cycle Assessment

Sustainability in operations management refers to practices that

meet the needs of the present without compromising the ability of
future generations to meet their own needs. It involves reducing
waste, using resources efficiently, and minimizing the environmental
impact of business operations. In essence, sustainability aims for a
balance between economic growth, environmental care, and social
well-being.

Life Cycle Assessment (LCA) is a method used to evaluate the

environmental impact of a product throughout its entire life cycle—
from raw material extraction (cradle) to disposal (grave). It assesses
every stage, including manufacturing, transportation, usage, and
disposal, to understand the total environmental cost of a product.
The goal is to identify areas where improvements can be made to
reduce the overall impact.
Thank You