Product Development

1
Product Development
2
Product Selection and Development Stages

• Figure 5.4, pg. 138

3
Quality Function Deployment (DFD)

• QFD The process of
• Determining what are the customer requirements
  / wants, and
• Translating those desires into the target product
  design.
• House of quality A graphic technique for
  defining the relationship between customer
  desires and the developed product (or service)
• (Discuss Example 1 pgs 139-140)

4
Deploying the Quality Effort

• Discuss Figure 5.5
• The final outcome Product Excellence, i.e.,
  determining what the customer wants and providing
  it!

5
Organizing the Product Development Effort

• The traditional US approach (department-based)
• Research Development gt Engineering gt
  Manufacturing gt
• Production
• Clear-cut responsibilities but lack of
  communication and forward thinking!
• The currently prevailing approach
  (cross-functional team-based)
• Product development (or design for
  manufacturability, or value engineering) teams
  Include representatives from
• Marketing
• Manufacturing
• Purchasing
• Quality assurance
• Field service
• (even from) vendors
• Concurrent engineering Less costly and more
  expedient product development

6
Manufacturability and Value Engineering

• Promote improved designs and product
  specifications through the RD, design and
  production stages of the product development, by
  seeking to
• Control the product complexity
• (further) standardize the employed components
• Improve job design and job safety
• Improve the product maintainability /
  serviceability
• promote robust design practices

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Some current issues in product design

• Robustness the insensitivity of the product
  performance to small variations in the production
  or assembly process gt ability to support product
  quality more reliably and cost-effectively.
• Modularity the structuring of the end product
  through easily segmented components that can also
  be easily interchanged or replaced gt ability to
  support flexible production and product
  customizationincreased product serviceability.
• Environmental friendliness
• Safe and environmentally sound products
• Minimizing waste of raw materials and energy
• Reducing environmental liabilities
• Increasing cost-effectiveness of complying with
  environmental regulations
• Being recognized as good corporate citizen.
• (example BMW-Figure of pg. 145)

8
The time factor Time-based competition

• Some advantages of getting first a new product to
  the market
• Setting the standard (higher market control)
• Larger market share
• Higher prices and profit margins
• Currently, product life cycles get shorter and
  product technological sophistication increases gt
  more money is funneled to the product development
  and the relative risks become higher.
• Product development strategies for time-based
  competition
• (Figure 5.7, pg. 147)

9
Documenting Product Designs

• Engineering Drawing a drawing that shows the
  dimensions, tolerances, materials and finishes of
  a component. (Fig. 5.9)
• Bill of Material (BOM) A listing of the
  components, their description and the quantity of
  each required to make a unit of a given product.
  (Fig. 5.10)
• Assembly drawing An exploded view of the
  product, usually via a three-dimensional or
  isometric drawing. (Fig. 5.12)
• Assembly chart A graphic means of identifying
  how components flow into subassemblies and
  ultimately into the final product. (Fig. 5.12)
• Route sheet A listing of the operations
  necessary to produce the component with the
  material specified in the bill of materials.
• Engineering change notice (ECN) a correction or
  modification of an engineering drawing or BOM.
• Configuration Management A system by which a
  products planned and changing components are
  accurately identified and for which control of
  accountability of change are maintained

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Documenting Product Designs (cont.)

• Work order An instruction to make a given
  quantity (known as production lot or batch) of a
  particular item, usually to a given schedule.
• Group technology A product and component coding
  system that specifies the type of processing and
  the involved parameters, allowing thus the
  identification of processing similarities and the
  systematic grouping/classification of similar
  products. Some efficiencies associated with group
  technology are
• Improved design (since the focus can be placed on
  a few critical components
• Reduced raw material and purchases
• Improved layout, routing and machine loading
• Reduced tooling setup time, work-in-process and
  production time
• Simplified production planning and control

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Make-or-buy decisions

• Deciding whether to produce a product component
  in-house, or purchase/procure it from an
  outside source.
• Issues to be considered while making this
  decision
• Quality of the externally procured part
• Reliability of the supplier in terms of both item
  quality and delivery times
• Criticality of the considered component for the
  performance/quality of the entire product
• Potential for development of new core
  competencies of strategic significance to the
  company
• Existing patents on this item
• Costs of deploying and operating the necessary
  infrastructure

12
A simple economic trade-off model for the Make
or Buy problem

• Model parameters
• c1 (/unit) cost per unit when item is
  outsourced (item price, ordering and receiving
  costs)
• C () required capital investment in order to
  support internal production
• c2 (/unit) variable production cost for
  internal production (materials, labor,variable
  overhead charges)
• Assume that c2 lt c1
• X total quantity of the item to be outsourced
  or produced internally

c1X
Total cost as a function of X
Cc2X
C
X
X0 C / (c1-c2)
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Example Introducing a new (stabilizing) bracket
for an existing product

• Machine capacity available
• Required infrastructure for in-house production
• new tooling 12,500
• Hiring and training an additional worker 1,000
• Internal variable production (raw material
  labor) cost 1.12 / unit
• Vendor-quoted price 1.55 / unit
• Forecasted demand 10,000 units/year for next 2
  years
• ?
• X0 (12,5001,000)/(1.55-1.12) 31,395 gt
  20,000
• ?
• Buy!

14
Evaluating Alternatives in Product Design through
Decision Trees

• Decision Trees A mechanism for systematically
  pricing all options / alternatives under
  consideration, while taking into account various
  uncertainties underlying the considered
  operational context.
• (Example 3)

15
The Silicon Inc. Example

• Developing and marketing a new microprocessor
• Company Options
• Purchase a sophisticated CAD system 500,000 gt
  manufacturing cost 40/unit
• Hiring and training three new engineers 375,000
  gt manufacturing cost 50/unit
• do nothing!
• Possible market responses
• Favorable 25,000 units sold at 100 each 40
  chances
• Unfavorable 8000 units sold at 100 each 60
  chances
• Pick an option that maximizes the expected
  monetary value (EMV)