Malawi University of Science and

Technology
Strategic Product and Service Design

OPERATIONS MANAGEMENT SESSION THREE

Issa J. Edward BBA MBA

Department of Applied Sciences
The Malawi Institute of Technology
The Malawi University of Science and Technology
The Cold Hard Facts
As businesses continue to reduce costs to achieve competitive advantage, design
issues are becoming increasingly important aspects of business strategy.

Because product and service design touches every part of a business organization,
from operations and supply chains to finance, marketing, accounting, and information
systems, design decisions have far-reaching implications for the organization and its
success in the marketplace.

Product and service innovation is becoming a key avenue in pursuing a competitive

edge, and sustainability issues are being given increasing importance in business
decisions.

Stevenson (2013)
Learning Objectives

You should be able to:

 Explain the strategic importance of product and service
design
 Identify some key reasons for design or redesign
 Recognize the key questions of product and service
design
 List some of the main sources of design ideas a
 Discuss the importance of legal, ethical, and
sustainability considerations in product and service
design
 Explain the phrase “the 3 Rs”
 List the characteristics of well-designed service systems
 Assess some of the challenges of service design
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Product and Service Design
The strategic Importance
 The essence of a business organization is the products and services it offers, and every aspect
of the organization and its supply chain are structured around those products and services.
 It therefore follows that organizations that have well-designed products or services are more
likely to realize their goals than those with poorly designed products or services. Hence,
organizations have a strategic interest in product and service design.
 Product or service design should be closely tied to an organization’s strategy. It is a major factor
in cost, quality, time-to-market, customer satisfaction, and competitive advantage.
 Consequently, marketing, finance, operations, accounting, IT, and HR need to be involved.
Demand forecasts and projected costs are important, as is the expected impact on the supply
chain.
 It is significant to note that an important cause of operations failures can be traced to faulty
design.
 Designs that have not been well thought out, or incorrectly implemented, or instructions for
assembly or usage that are wrong or unclear, can be the cause of product and service failures,
leading to lawsuits, injuries and deaths, product recalls, and damaged reputations.
What Does Product and Service Design Do?
1. Translate customer wants and needs into product and service
requirements. (marketing, operations)
2. Refine existing products and services. (marketing)
3. Develop new products and/or services. (marketing, operations)
4. Formulate quality goals. (marketing, operations)
5. Formulate cost targets. (accounting, finance, operations)
6. Construct and test prototypes. (operations, marketing, engineering)
7. Document specifications.
8. Translate product and service specifications into process
specifications. (engineering, operations)
 Product and service design involves or affects nearly every
functional area of an organization. (Involve Inter-functional
Collaboration)
 However, marketing and operations have major involvement.
Reasons for Product Design or Re-Design
 Organizations become involved in product and service design or redesign for a variety of
reasons.
 The main forces that initiate design or redesign are market opportunities and threats.
 The factors that give rise to market opportunities and threats can be one or more
changes:
 Economic (e.g., low demand, excessive warranty claims, the need to reduce costs).
 Social and demographic (e.g., aging baby boomers, population shifts).
 Political, liability, or legal (e.g., government changes, safety issues, new
regulations).
 Competitive (e.g., new or changed products or services, new
advertising/promotions).
 Cost or availability (e.g., of raw materials, components, labor, water, energy).
 Technological (e.g., in product components, processes).

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Key Questions in Product Design
1. Is there a demand for it?
 Market size
 Demand profile
2. Can we do it?
 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
 Fit with current offering
4. Does it make sense from an economic standpoint?
 Liability issues, ethical considerations, sustainability issues, costs and profits
Idea Generation
 Ideas for new or redesigned products or services can come from a
variety of sources, including customers, the supply chain, competitors,
employees, and research.
Idea Generation - Supply-Chain Based

 Ideas can come from anywhere in the supply chain:

 Customers

 Suppliers

 Distributors

 Employees

 Maintenance and repair personnel

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Idea Generation - 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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Idea Generation - 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.

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Design Considerations - Legal
 Legal Considerations
 Product liability
 The responsibility a manufacturer has for any injuries or damages caused by as faulty
product
 Some of the concomitant costs
 Litigation
 Legal and insurance costs
 Settlement costs
 Costly product recalls
 Reputation effects
 Uniform Commercial Code
 Under the UCC, products carry an implication of merchantability and fitness - a product
must be usable for its intended purposes.
 it is extremely important to design products that are reasonably free of hazards.
 When hazards do exist, it is necessary to install safety guards or other devices for reducing
accident potential, and to provide adequate warning notices of risks
Design Considerations - Ethics
 Designers are often under pressure to
 Speed up the design process
 Cut costs
 These pressures force trade-off decisions
 What if a product has bugs?
 Release the product and risk damage to your reputation
 Work out the bugs and forego revenue
 Organizations generally want designers to adhere to guidelines such as the
following:
1. Produce designs that are consistent with the goals of the organization. For
instance if the company has a goal of high quality, don’t cut corners to save
cost, even in areas where it won’t be apparent to the customer.
2. Give customers the value they expect.
3. Make health and safety a primary concern.
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Design Considerations – Human Factors
 Human considerations
 safety

 Reliability

 creeping featurism = too much of a good thing

leading to complexity and affecting ease of use

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Design Considerations – Cultural Factors
 Product designers in companies that operate globally also
must take into account any cultural differences of different
countries or regions related to the product.
 This can result in different designs for different countries or
regions

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Design Considerations - Sustainability

 Sustainability
 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
 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
 Globalwarming
 Smog formation
 Oxygen depletion
 Solid
waste generation
 LCA procedures are part of the ISO 14000 environmental
management procedures

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End-of-Life (EOL) Programs
 EOL programs deal with products (business and consumer) that have
reached the end of their useful lives
 The purpose of these programs is to reduce the dumping of
products, particularly electronic equipment, in landfills or third-
world countries, as has been the common practice, or incineration,
which converts materials into hazardous air and water emissions
and generates toxic ash.
 Although the programs are not limited to electronic equipment, that
equipment poses problems because the equipment typically contains
toxic materials such as lead, cadmium, chromium, and other heavy
metals.
 IBM provides a good example of the potential of EOL programs.
Over the last 15 years, it has collected about 2 billion pounds of
product and product waste.
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The 3Rs: Reduce, Reuse, and Recycle

 Designers often reflect on three particular aspects of potential cost

saving and reducing environmental impact

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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?
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Re-Use: Remanufacturing
 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 so that used products can be easily taken apart
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 Recycle

 Recycling
 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 4-22
Other Design Considerations

 Aside from legal, ethical, environmental, and human

considerations designers must also take into account:

 Product or service life stages

 Degree of Standardization
 Product or service reliability
 Product or service robustness
 Degree of newness

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Phases in Design & Development
1. Feasibility analysis
2. Product specifications
3. Process specifications
4. Prototype development
5. Design review
6. Market test
7. Product introduction
8. Follow-up evaluation

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Designing for Production
 Although the ability of the product or service to meet and fulfil
customer needs is a major factor in design, there is greater need to
ensure that the product designed can be produced easily and at
low cost.
 There are different design techniques that have greater
applicability for the design of products than the design of services
and these include the following:
 Concurrent engineering
 Computer-assisted design
 Production requirements
 Component commonality

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Concurrent Engineering
 Traditionally, designers developed a new product without any input
from manufacturing, and then turned over the design to manufacturing,
which would then have to develop a process for making the new
product.
 To achieve a smoother transition from product design to production,
and to decrease product development time, many companies are using
simultaneous development, or concurrent engineering
 Concurrent engineering entails 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
 Viewsof suppliers and customers may also be sought
 The purpose is to achieve product designs that reflect customer
wants as well as manufacturing capabilities 4-26
Production Requirements
 Designers must take into account and deeply understand
production capabilities
 Equipment; Skills; Types of materials; Schedules; Technologies;
Special abilities
 This helps in choosing designs that match capabilities. –because
when opportunities and capabilities do not match, management
must consider the potential for expanding or changing
capabilities to take advantage of those opportunities.

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Design for Manufacture (DFM)
 This is a design concept which provides guidelines on how to achieve product
design easily and at low cost using such techniques as simplification,
standardization and modularization.
 It involves the designing of products that are compatible with an organization’s
abilities
 Simplification involves a reduction in the number of components in the design
in order to reduce costs and increase reliability (also called design for assembly-
DFA). The focus is to reduce the number of parts in a product and on assembly
methods and sequence
 Standardization iinvolves using components that can be used in a number of
products again reducing costs through economies of scale and minimizing
inventory
 Modularization entails using modules or blocks of components that are
standard across products. Again costs are reduced and reliability increased - For
example, car manufacturers employ this tactic by using internal components
such as water pumps, engines, and transmissions on several automobile
nameplates.

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Designing for Service Delivery
Service Definitions
 Service
Something that is done to, or for, a customer
 Service delivery system
The facilities, processes, and skills needed to provide a service
 Product bundle
The combination of goods and services provided to a customer Many services are
not pure services, but part of a product bundle-
 Service package
The physical resources needed to perform the service, accompanying goods, and
the explicit (core features) and implicit (ancillary features) services included
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Designing for Service Delivery
With regard to services, system design involves development or refinement of
the overall service package which includes:
1. The physical resources needed to deliver the service e.g. facilities.
2. The accompanying goods that are purchased or consumed by the customer,
or provided with the service for example a cheque book for your current
account.
3. Explicit services (the essential/core features of a service, such as tax
preparation).
4. Implicit services (ancillary/extra features, such as friendliness, courtesy).- the
hair saloon example

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 Key Issues in Service Design
 Service design begins with a choice of service strategy, which determines the
nature and focus of the service, and the target market
 Key issues in service design
 Degree of variation in service requirements
 Degree of customer contact and involvement
 The lower the degree of customer contact and service requirement variability,
the more standardized the service can be. Service design with no contact and
little or no processing variability is very much like product design.
 Conversely, high variability and high customer contact generally mean the
service must be highly customized

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 Service and Product Design: Differences
1. Products are generally tangible, services intangible
2. Services are created and delivered at the same time
3. Services cannot be inventoried
4. Services are highly visible to consumers
5. Some services have low barriers to entry and exit
6. Location is often important to service design, with convenience as a major factor
7. Service systems range from those with little or no customer contact to those that
have a very high degree of customer contact
8. Demand variability alternately creates waiting lines or idle service resources

Instructor Slides 4-32

Phases in the Service Design Process
 Conceptualize.
1. Idea generation
2. Assessment of customer wants/needs (marketing)
3. Assessment of demand potential (marketing)
 Identify service package components needed (operations and marketing).
 Determine performance specifications (operations and marketing).
 Translate performance specifications into design specifications.

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Service Blueprint
 A useful tool for conceptualizing a service delivery system is the
service blueprint , which is a method for describing and analyzing a
service process.
 A service blueprint is much like an architectural drawing, but instead
of showing building dimensions and other construction features, a
service blueprint shows the basic customer and service actions
involved in a service operation.

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Service Blueprint for a restaurant

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Service Blueprinting Steps
 Establish boundaries for the service and decide on the level of
detail needed.
 Identify and determine the sequence of customer and service
actions and interactions. A flowchart can be a useful tool for this.
 Develop time estimates for each phase of the process, as well as
time variability.
 Identify potential failure points and develop a plan to prevent or
minimize them, as well as a plan to respond to service errors.

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Characteristics of Well-Designed Service Systems
 Being consistent with the organization’s mission.
 Being user-friendly.
 Being robust if variability is a factor.
 Being easy to sustain.
 Being cost-effective.
 Having value that is obvious to customers.
 Having effective linkages between back-of-the-house operations (i.e., no
contact with the customer) and front-of-the-house operations (i.e., direct
contact with customers)
 Having a single, unifying theme, such as convenience or speed.
 Having design features and checks that will ensure service that is reliable and
of high quality.

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Challenges of Service Design

 Variability is a major concern in most aspects of business

operations, and it is particularly so in the design of service
systems
 Because services generally cannot be stored, there is the
additional challenge of balancing supply and demand.
 Services can be difficult to describe precisely and are dynamic
in nature, especially when there is a direct encounter with the
customer (e.g., personal services), due to the large number of
variables.

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Guidelines for Successful Service Design
 Define the service package in detail. A service blueprint may be helpful for this.
 Focus on the operation from the customer’s perspective. Consider how customer
expectations and perceptions are managed during and after the service
 Consider the image that the service package will present both to customers and to
prospective customers.
 Recognize that designers’ familiarity with the system may give them a quite different
perspective than that of the customer, and take steps to overcome this.
 Make sure that managers are involved and will support the design once it is
implemented.
 Define quality for both tangibles and intangibles. Intangible standards are more difficult
to define, but they must be addressed.
 Make sure that recruitment, training, and reward policies are consistent with service
expectations.
 Establish procedures to handle both predictable and unpredictable events.
 Establish systems to monitor, maintain, and improve service.

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