Quality and Organization (Product and service
development and improvement) Speed
Flexibility
Cost
Resource Usage
M
Decision areas
Issues covered in this chapter
Capacity Supply Network TechnologyProcess
Issues include:
• Relating product and process development
• Managing product/ service development as a process
• Meeting market requirements for new products and services
Increased competitiveness
Shortened life-cycles
Fragmented markets Rapid
technology change Means of
building capabilities
Involves all parts of the
business
The increasing strategic importance of product and
service development
OPERATIONS
RESOURCES REQUIREMENTSMARKET
Development of the Service
Development of the Process Development
of the Product
Development of the Process
In most service operations the overlap between service and process development is
implicit in the nature of service
In manufacturing operations overlapping the activities of
Products and services should be developed in such a way that they can be
created effectively
Processes should be developed in such a way that
they can create all products and services which the operation is likely to introduce
Decisions taken during the development of the product or service will have an impact on the decisions taken during the development of the
process which produces the product or service or vice versa Developing the
Product or Service
Developing the Process which Produces the
Product or Service
Product/service development is itself a process
TRANSFORMED RESOURCES Technical information
Market information Time information
TRANSFORMING RESOURCES Test and design
equipment
Design and technical staff
INPUTS
THE
DEVELOPMENT
ACTIVITY
OUPUT
FINISHED
Introducing ……… the Ballpoint Pen
1939 Hungarian brothers Ladislao and Georg Biro file patent and in 1944 produce first commercial ballpoint pen.
Eversharp buy US distribution rights.
Before first shipment, Milton Reynolds’ copy product on sale in US (also retractable).
Legal wrangles unearth Biro brothers’ 1939 patent preceded 50 years earlier!
Reynold enjoyed early success but quality problems undermine market image.
Both Eversharp and Reynolds go bust.
Parker introduce reengineered product to overcome some reliability problems.
Parker reasonably successful with mid-price product.
French company Bic make further product modifications and overcome mass production problems.
Product/service and process development - the Ballpoint pen
New Core Process
Next Generation
Process
Redesigned Processes
Minor Modifications
Add-ons and Enhancements
Extension of Product/ Service Range
Next Generation Product/Service
New Core Product/ Service
Degree of Product/Service Change
D
‘Pioneer’ Process
Developments to Process
Extension to Processes
Modifications to Process
Modification to product/service
Extension to
product/service Development of product/service
‘Pioneer’ product/service
The link between product/service and process development can be
closer in service industries
D
Research and advanced development
Internet banking service
Call-center banking
service
Branch banking
service
Degree of Product/Service Change
Research and Advanced Development
Internet banking service
Call-center banking
service
Branch banking
service
Boundary for service operations
Boundary for manufacturing
operations New Core
Process
Next Generation
Process
Redesigned Processes
Minor Modifications
Add-ons and Enhancements
Extension of Product/ Service Range
Next Generation Product/Service
Quality - Error free designs which fulfil market requirements
Speed - Fast development from concept to launch
Dependability -
Designs delivered to schedule
Flexibility - Designs which include latest ideas
Cost - Designs produced without consuming
excessive cost
Capacity
-Amount of development resource matched to demand over time
Supply Network - Relationships with outside sources of development knowledge
Process Technology - Provision of design technology (CAD), expert systems, etc.
Development and Organization
-Organization of development resources and improvement strategy.
Resource Usage
Operations strategy for
the product and service
development operations
Concept generation
Concept screening
Preliminary design
Design evaluation and improvement
Prototyping and final design
Developing the operations process
Reliable/resilient Accurate
Fast
Responsive Secure
Remote links Connectivity Scalability
Absolute importance Relative importance Technical difficulty
Im
1Competitive score2 3 4 5
1
1st 7th 4th 5th 8th 2nd 5th 3rd
4 3 2 2 1 5 4 3 1 = easy, 5 = difficult
Strong relationship Medium relationship Weak relationship
9 3 1 WHATs vs HOWs
Strong positive Positive Negative Strong negative HOWs vs HOWs
Design characteristics
Relationship matrix
Component characteristics
Relationship matrix
Process characteristics
Relationship matrix
Individual activities
Relationship matrix
Component deployment
Process planning
Activity planning
Uncertainty Regarding the
Final Design
Certainty Regarding the Final Design
T
IM
E
Product/service development involves progressively
reducing the number of possibilities until the final design is
reached
Choice and
evaluation
"Screens"
CONCEPT
FINAL DESIGN SPECIFICATION
Large Number of
Design options
Many concepts enter the development process
One ‘best’ design emerges
Customer’s original specification
One recycle
(sometimes) Discussions
with customer
Expansion of original
idea
Narrowing of options for
customer
Mutually agreed development specification
Development of agreed design (a)
(b)
Delay in breakeven
Time
Cash Sales Revenue
Cumulative cash flow
Sales revenue (delayed launch)
Cumulative cash flow (delayed launch)
Delay in launch
Confirmed development need only in the short-term
Reluctant to invest in long-term development
resources
So in the short-term the project runs into problems because it
is under-resourced Lose business
opportunities
In-house design
capability Outsourced
design capability
Close, but loose
Distant, through contracts
Control of resource
Strong Weak in the short-term, potentially
stronger in the long-term Familiarity
High Accessibility Low/limited
Fixed Cost Variable
Small Great
(Potentially) Risk of knowledge leakage
RESIDENT CUSTOMER ENGINEER
Focus – helping suppliers to develop their products at supplier’s sites, to meet customer needs
GUEST DESIGN ENGINEER
Focus – helping the product design effort at the
customer’s site by bringing supplier product and process knowledge
SUPPLIER DEVELOPMENT ENGINEER
Focus – helping suppliers at their site to improve
production methods
RESIDENT PRODUCTION ENGINEER
Focus – helping the manufacture of customer’s products through knowledge of, and
changes in, supplier products Supplier located
(employee of customer)
Customer located (employee of supplier)
Largely concerned with product development
Largely concerned with process development
© Nigel Slack and Michael Lewis 2003
INCREASING PROJECT ORIENTATION
Balanced matrix
Project matrix Project
2 Project
3
Project team (‘Tiger’ teams)
Function Function Function Function Functional organization
A B C D
Project 1
Functional matrix
(Lightweight project managers)
Project
Function Function Function Function
A B C D
Function Function Function Function
A B C D
Function Function Function Function
A B C D
Safety
Resource Usage
Decision areas
Operations strategy matrix for Project Orlando
* * *
Size of team?
Supply Network
Subcontract any development?
Process Technology
Build pilot plant?
Development and organisation
Dedicated team? No significant
relationship.
Is the company willing to subcontract
any responsibility for safety?
Pilot plant may enable potential hazard to be detected.
Dedicated team may help reinforce safety objective. No significant
relationship. Strict quality standards need to be communicated to any subcontractor.
Pilot plant may enable better quality learning.
Dedicated team may help to reinforce quality objective. Need to have
development capacity to respond quickly to accelerated
development needs.
Does subcontractor development imply reduced flexibility?
Pilot plant would be dedicated so
increase flexibility, but may have scale-up problems.
Dedicated team likely to be more flexible if all necessary skills are represented in it. Very significant, the
larger the
development team the higher the cost of development.
Subcontracting development to specialists may reduce total development cost.
Pilot plant is likely to be more expensive that using partners’ capacity.
