|
3.
|
Product
Design and Process Selection
New
product designs can provide a competitive edge by bringing new ideas to the
market quickly, doing a better job of satisfying customer needs, or being
easier to manufacture, use and repair (Russell and Taylor, 2009). The product
design process involves the steps of generating ideas, product screening,
preliminary design and final design
|
|
|
3.1.
|
Generating
Ideas
Ideas
for new products and services should be sought from a variety of sources
including market research, customer viewpoints, the organisation’s research
and development (R&D) department if one exists, competitors or relevant
developments in new technology. Competitors can provide a good source of
ideas and it is important that the organisation analyses any new products
they introduce to the market and make an appropriate response. Reverse
Engineering is a systematic approach to dismantling and inspecting a competitor’s
product to look for aspects of design that could be incorporated into the
organisation’s own product. This is especially prevalent when the product is
a complex assembly such as a car, were design choices are myriad.
Benchmarking compares a product against what is considered the best in that
market segment and the making recommendations on how the product can be
improved to meet that standard. Although a reactive strategy, benchmarking
can be useful to organisation’s who have lost ground to innovative
competitors.
|
|
|
3.2.
|
Product
Screening
The
screening process consists of market analysis, economic analysis and
technical analysis
|
|
|
3.3.
|
Market
analysis
Market
analysis consists of evaluating the product concept with potential customers
through interviews, focus groups and other data collection methods. The
physical product may be tested by supplying a sample for customer evaluation.
The market analysis should identify whether sufficient demand for the
proposed product exists and its fit with the existing marketing strategy. At
a strategic level the organisation can use the product life cycle to
determine the likely cost and volume characteristics of the product. The
product life cycle describes the product sales volume over time. In the early
introduction phase production costs are high and design changes may be
frequent. However there should be little or no competition for the new
product and so a premium price can be charged to customers attracted to
innovative products. The growth phase sees a rapid increase in volumes and
the possibility of competitors entering the market. At this stage it is
important to establish the product in the market as firmly as possible in
order to secure future sales. Production costs should be declining as process
improvements and standardisation takes place. In the mature phase competitive
pressures will increase and it is important that sales are secured through a
branded product to differentiate it from competitors and a competitive price.
There should be a continued effort at design improvement to both product and
process. Some products, such as consumer durables, may stay in the mature
phase almost indefinitely, and techniques such as advertising are used to
maintain interest and market share
|
|
|
|
3.2.1.
|
Market
analysis
Market
analysis consists of evaluating the product concept with potential customers
through interviews, focus groups and other data collection methods. The
physical product may be tested by supplying a sample for customer evaluation.
The market analysis should identify whether sufficient demand for the
proposed product exists and its fit with the existing marketing strategy. At
a strategic level the organisation can use the product life cycle to
determine the likely cost and volume characteristics of the product. The
product life cycle describes the product sales volume over time. In the early
introduction phase production costs are high and design changes may be
frequent. However there should be little or no competition for the new
product and so a premium price can be charged to customers attracted to
innovative products. The growth phase sees a rapid increase in volumes and
the possibility of competitors entering the market. At this stage it is
important to establish the product in the market as firmly as possible in
order to secure future sales. Production costs should be declining as process
improvements and standardisation takes place. In the mature phase competitive
pressures will increase and it is important that sales are secured through a
branded product to differentiate it from competitors and a competitive price.
There should be a continued effort at design improvement to both product and
process. Some products, such as consumer durables, may stay in the mature
phase almost indefinitely, and techniques such as advertising are used to
maintain interest and market share.
|
|
|
|
3.2.2.
|
Economic
Analysis
Economic
Analysis consists of developing estimates of production and demand costs and
comparing them with estimates of demand. In order to perform the analysis
requires an accurate estimate of demand as possible derived from statistical
forecasts of industry sales and estimates of market share in the sector the
product is competing in. These estimates will be based on a predicted price
range for the product which is compatible with the position of the new
product in the market. In order to assess the feasibility of the projected
estimates of product costs in terms of such factors as materials, equipment
and personnel must be estimated. Techniques such as cost/benefit analysis,
decision theory and accounting measures such as net present value (NPV) and
internal rate of return (IRR) may be used to calculate the profitability of a
product. Another tool that can be used is the cost-volume-profit model that
provides a simplified representation that can be used to estimate the profit
level generated by a product at a certain product volume.
Assuming
all products made are sold then the volume for a certain profit can be given
by the following formula :
(P + FC) X = ----------
(SP - VC)
Where
:
X = volume (units)
P = profit
FC
= fixed costs
SP
= selling price
VC
= variable costs
When
profit = 0 (i.e. selling costs = production costs) this is termed the
breakeven point and can be given by the following formula :
FC X = ---------
SP - VC
|
|
|
|
3.2.3.
|
Technical
analysis
consists
of determining whether technical capability to manufacture the product. This
covers such issues as ensuring materials are available to make the product to
the specification required, and ensuring the appropriate machinery and skills
are available to work with these materials. The technical analysis must take
into account the target market and so product designers have to consider the
costs of manufacturing and distributing the product in order to ensure it can
be sold at a competitive price. Strategic analysis involves ensuring that the
product provides a competitive edge for the organisation, drawing on its
competitive strengths and is compatible with the core business
|
|
|
|
3.2.4.
|
Preliminary
Design
Product
concepts that pass the feasibility stage enter preliminary design. The
specification of the components of the package requires a product /service
structure which describes the relationship between the components and a bill
of materials or list of component quantities derived from the product
structure. The process by which the package is created must also be specified
in terms of mapping out the sequence of activities which are undertaken. This
can be achieved with the aid of such devices as process flow charts.
|
|
|
3.4.
|
Final
Design
The
final design stage involves the use of a prototype to test the preliminary
design until a final design can be chosen. Computer Aided Design (CAD) and
Simulation Modelling can be used to construct a computer-based prototype of
the product design.
|
|
|
3.5.
|
Methods
for Improving Product Design
A
number of methods are available that help to improve the design process
|
|
|
|
3.5.1.
|
Design
for Manufacture (DFM)
Although
the ability of the product or service to fulfil customers needs is a major factor
in design there is also a need to ensure that the product designed can be
produced easily and at low cost. Design for Manufacture (DFM) is a concept
which provides guidelines on how this can be achieved using techniques such
as simplification, standardisation and modularization. Simplification
involves a reduction in the number of components in the design in order to
reduce cost and increase reliability. Standardisation involves using
components that can be used in a number of products again reducing costs
through economies of scale and minimising inventory. Modularisation means
using modules or blocks of components that are standard across products.
Again costs are reduced and reliability increased.
|
|
|
|
3.5.2.
|
Concurrent
Engineering
Concurrent
engineering is when contributors to the design effort provide work throughout
the design process as a team. This differs from the traditional design
process when work is undertaken separately within functional areas such as
engineering and operations. The problem with the traditional approach is the
cost and time involved in bringing the product to market. In a traditional
approach time is wasted when each stage in the design process waits for the
previous stage to finish completely before it can commence and their may be a
lack of communication between functional areas involved in the different
stages of design. This can lead to an attitude of “throwing the design over
the wall” without any consideration of problems that may be encountered by
later stages. An example of this is decisions made at the preliminary design
stage that adversely effect choices at the product build stage. This can
cause the design to be repeatedly passed between departments to satisfy
everyone’s needs, increasing time and costs. By facilitating communication
through the establishment of a project team problems of this type can be
reduced.
|
|
|
3.6.
|
Process
Selection
When
considering product design the issue of the design of the process that is
used to produce that design should be considered also. The design of
processes is different in all organisations and should be related to the
volume and variety of the demand for the product in the market. In order to
assist in selecting the appropriate process, process designs can be
categorised under four process types of project, jobbing, batch, mass and
continuous (Barnes, 2008). A description of each process type is followed by
some examples of where each process type might be used
|
|
|
|
3.6.1.
|
Project
Processes
that produce products of high variety and low volume are termed projects.
Project processes are used to make a one-off product to a customer
specification. Normally transforming resources such as staff and equipment
that make the product must move or be moved to the location of the product.
Other characteristics of projects are that they may require the coordination
of many individuals and activities, demand a problem-solving approach to
ensure they are completed on time and have a comparatively long duration of
manufacture. The timescale of the completion of the project is an important
performance measure. Because each project is unique it is likely that
transforming resources will comprise general purpose equipment which can be
used on a number of projects. Examples of the use of a project process
include building construction, interior design and custom-built furniture
|
|
|
|
3.6.2.
|
Jobbing
Jobbing
processes are used to make a one-off or low volume product to a customer
specification. A feature of a jobbing process is that the product moves to
the location of transforming resources such as equipment. Thus resources such
as staff and equipment can be shared between many products. Other
characteristics of jobbing processes are the use of skilled labour in order
to cope with the need for customisation (i.e. variety) and the use of general
purpose equipment which is shared between the products. There tends to be low
utilisation of equipment in jobbing processes due to the need to undertake
frequent setting up of the machinery when moving from processing one product
to another. Examples of the use of a jobbing process include bespoke tailors
and precision engineers.
|
|
|
|
3.6.3.
|
Batch
Processes
that produce products of medium variety and medium volume are termed batch
which denotes that the products are grouped as they move through the design
process. In a batch process the product moves to the location of transforming
resources such as equipment and so resources are shared between the batches.
Instead of setting up machinery between each product, as in a jobbing
process, setups occur between batches, leading to a higher utilisation of
equipment. Because of the relatively high volumes involved in batch it can be
cost-effective to use specialised labour and equipment dedicated to certain
product batches. A feature of batch processes is that, because it is
difficult to predict when a batch of work will arrive at a machine, a lack of
coordination can lead to many products waiting for that machine at any one
time. These queues of work may dramatically increase the time the product
takes to progress through the process. Examples of the use of a batch process
include book printing, university classes and clothing manufacture.
|
|
|
|
3.6.4.
|
Line
Processes
that produce products of high volume and low variety are termed line or mass
processes. Although there may be variants within the product design the
production process will essentially be the same for all the products. Because
of the high volumes of product it is cost effective to use specialised labour
and equipment. A feature of line processes is that the movement of the
product may be automated using a conveyor system and the production process
broken down into a number of small, simple tasks. In order to ensure a smooth
flow of product the process times per unit must be equalised at each stage of
production using a technique called line balancing. Because of the low
product variety, setting up of equipment is minimised and utilisation of
equipment is high. Examples of the use of a mass process include cars,
consumer durables such as televisions and food items.
|
|
|
|
3.6.5.
|
Continuous
Processes
that operate continually to produce a very high volume of a standard product
are termed continuous. The products produced by a continuous operation are
usually a continuous flow such as oil and gas. Continuous processes use a
large amount of equipment specialised and dedicated to producing a single
product (such as an oil refinery for example). To make this large investment
in dedicated equipment cost effective continuous processes are often in
constant operation, 24 hours a day. The role of labour in the operation of
the processes is mainly one of monitoring and control of the process
equipment with little contact with the product itself. Examples of a
continuous process include water treatment plants, electricity production and
steel making.
|
