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Lean Startup Approach on Product Design and Manufacture Facility

Planning in Uncertain Business Climate
To cite this article: W S Dewobroto and I A Marie 2020 IOP Conf. Ser.: Mater. Sci. Eng. 847 012083

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ISIEM 12 IOP Publishing
IOP Conf. Series: Materials Science and Engineering 847 (2020) 012083 doi:10.1088/1757-899X/847/1/012083

Lean Startup Approach on Product Design and Manufacture

Facility Planning in Uncertain Business Climate

W S Dewobroto1 and I A Marie2

1
Entrepreneurship Departement, Podomoro University, Jakarta, Indonesia
2
Industrial Engineering Departement, Trisakti University, Jakarta, Indonesia
1
wisnu.dewobroto@podomorouniversity.ac.id, 2 iveline.annemarie@trisakti.ac.id

Abstract– Successful companies can provide the products that suit to consumer desire. There are
two approaches in the product manufacturing process which are Product Development Process
and Lean Startup. This study aims to demonstrate the conception of Lean Startup and its
application in product design particularly in uncertain business climate. After comparing the two
methods, Lean Startup approach is appropriate since the validation process in each product
development process will certainly increase the possibility of products that suit to the consumer
desires and reduce the time needed starting from product design to the market. In order to support
Lean concept in the whole processes, there are two techniques that might be applied to support
lean operational system, which are the formation of one worker multiple machine (OWMM)
cells and Group Technology (GT) cells.
Keywords: Facility Planning, Flexible Business Model, Lean Startup, Product Design

1. Introduction
A company is categorized as successful if it performs the ability to provide products in accordance with
customer and consumer desire. In sustainable design process, there is a process known as Product
Development Process that focuses on the needs of users or consumers. As business conditions continue
to change, the Lean Startup approach adopted from the manufacturing approach has evolved and now it
is applied to every process in management and business, even new products. In terms of product
manufacturing, the Lean Startup approach emphasizes the process of building a business from a product,
and there is no fundamental detail regarding the product technical sides.
In the development of engineering and business science, many things have evolved following
consumer needs, national and global industries are adapting with current development. The development
of manufacturing system (extended manufacturing system) directs the actors in the manufacturing
system to move forward, make continuous improvements, adjust to the technological advancement and
the needs of modern industrial societies, and see the company as part of the other companies’ supply
chain.
This article will mainly discuss about the product design and manufacturing process by comparing
the two approaches; Product Development Process and Lean Startup. Then, the discussion continues
with the argumentation of the most suitable method, especially in uncertain business conditions,
followed by an impact on the design of facility. Because it is known that product design is influenced
by aesthetic, functional, and material considerations and impacts on the manufacturing process to meet
the values needed by consumers. Facility planning will determine how the activities of production
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ISIEM 12 IOP Publishing
IOP Conf. Series: Materials Science and Engineering 847 (2020) 012083 doi:10.1088/1757-899X/847/1/012083

facilities in an industry can be arranged in such way so that it can support the efforts to achieve the main
objectives effectively and efficiently.

2. Research Methodology
This article aims to explain Lean Startup method and its application in Product Design. Then, facility
planning techniques will be obtained to support the Lean Startup approach in the Product Design
process. The theory references obtained become the basis and main tool in this study.

3. Result and Discussion

Product design is the whole activities of product manufacturing started from observing market potential
to producing, selling, and delivering the products to customers. The good product design characteristics
are as following:
1. Prioritizing the quality measured from the products that suit to the consumer needs and
availability to buy the products.
2. Product manufacturing costs that meet the product value. Product manufacturing costs will
affect to the selling price and product profit.
3. Calculating a product quality dimensions which include [2]: Performance, Durability,
Conformance to Specification, Features, Reliability, Aesthetics, and Perceived Quality.
In the process of gaining a good product, there will be two approaches discussed; Product
Development Process and Lean Startup.

3.1 Product Development Process

Product development process is generally divided into some phases:
Phase 1 Phase 2 Phase 4 Phase 5
Phase 0 Phase 3
Concept System-Level Testing and Pruduction
Planning Detail Design
Development Design Refinement Ramp-Up

Figure 1. Product Development Process [12]

The process begins with a planning phase related to technology advancement and advanced research
activities. The output of planning phase is project mission statement, which is the input needed to start
the concept development phase and a guide for each development. The completion of product
development process is the product launching sent to the customers later.
Product development process consists of some significant activities, namely:
1. Identification of consumer need. This activity is designated to understand the consumer needs and
communicate them effectively to the development team.
2. Target specification. Specification is the translation of consumer needs into technical requirements.
3. Concept drafting. The product concept is the illustration or estimation of technology, working
principles, and product form.
4. Concept selection. Concept selection is an activity in which various concepts are analysed
successively, then eliminated to identify the most promising concepts.
5. Concept testing. One or more concepts are tested to find out whether the needs of consumers have
been recognized, estimate the market potential of the product, and identify some weaknesses that
must be fixed during the next development process.
6. Final specification decision. The target specifications set at the beginning of the process are
reviewed after the process is selected and tested.
7. Project planning. At the end of this concept development, the team formulates a detailed
development schedule, sets strategies to minimize development time, and identifies resources used
to finalize the project.

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IOP Conf. Series: Materials Science and Engineering 847 (2020) 012083 doi:10.1088/1757-899X/847/1/012083

8. Economic analysis. Economic analysis is used to ensure the continuation of the overall development
program and to solve specific bargaining, for example between manufacturing costs and
development costs.
9. Analysis of competing products. An understanding of the competing products is important for
successful new product positioning and can be a rich source of ideas for product design and
production processes.
10. Prototype making and modelling. Each stage in the concept development process involves many
forms of models and prototypes. This includes, among others, proof of concept models that will
assist the development team in demonstrating the feasibility of the model shown to the consumers
to evaluate their ergonomics and style, while the worksheet model is for technical choices.

3.2. Lean Startup

In principle, the Lean Startup process trains to reduce waste by increasing the contact frequency with
customers, to the extent that testing can be done, invalid market assumptions can be avoided as early as
possible, and finally a valid product can be acquired. The initial validation phase begins with the
hypothesis of who the prospective customers are, what they need, how many, and so on. The consumer
hypothesis is then validated directly to the potential customers to determine whether the product is
suitable to what is desired [1].
In a business, Lean Startup is the method that minimizes risk, especially by relying on iteration
(repetitive steps) from product to market to find quality feedback as quickly as possible and as often as
possible from the market [1].
Another important thing in the Lean Startup method is Validated Learning which can be defined as
the process of discovering relevant facts related to the design of a product. This process is initiated by
using assumptions / hypotheses which are later examined by field experiment to obtain responses from
the prospective customers whether the hypothesis is correct.

Figure 2. Lean Startup main process

The main cycle or process in Lean Startup is Build Measure and Learn. The purpose of Build-
Measure-Learn is to provide the facts needed in Validate Learning. The process of Build-Measure-Learn
is represented by these three repetitive phases as demonstrated below:
• Build: Create products based on the main hypotheses that have been examined with Validated
Learning. The first product made is Minimum Viable Product ("MVP"). MVP is a minimum product
that only has core features to further examine some hypotheses that have not been validated.
• Measure: Collect the responses, suggestions, input, and feedback from MVP users and measure the
results obtained with the aim of acquiring knowledge related to the tested hypothesis.
• Learn: Make conclusions from the Measure process results to find the validation of tested
hypothesis. The results from Learn stage are further used as the basis for product or strategy
improvements or changes.
The conclusion drawn from this process also decides whether the Startup Founder must
"Persevere" or "Pivot". Persevere is continuing the development process with the same strategy

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IOP Conf. Series: Materials Science and Engineering 847 (2020) 012083 doi:10.1088/1757-899X/847/1/012083

or product, while Pivot is making changes or replacing some parts or the whole strategy or
product.

3.3. The Comparison of Product Development and Lean Startup

From the discussion of the two methods in product design process, the main similarities and differences
in the process can be found below:
• Focus on Consumers. In term of consumer orientation, both methods have similarities. Users or
consumers are important and must be ensured that the process includes consumer need identification
in which it is hidden and unspoken like the explicit ones. Later, the identification becomes the basis
for compiling product specifications and developed by the development team.
• Design Process. When compared to the two methods, the product development process looks
meticulous and is done in more static context [12]. The process is started from market analysis,
resources needed, and ended with prototypes. The iteration or validation process is accomplished
after System-Level Design.

Figure 3. Product Development Process

Meanwhile, Lean Startup process is executed by the time of planning and forming product Value as
shown in Figure 4. The iteration is performed to the final stage quickly.

Figure 4. Iteration Process in Lean Startup

Changes (Pivot) can occur even during the planning stage to the end hence a valid product will be
certainly obtained at the end of the process. In other words, Lean Startup performs the process of
development and implementation in parallel, while in Product Development Process, the
implementation is executed after the design process is complete. When this is applied to companies,
especially in developing new products, it will certainly increase the possibility of products that suit to
consumer desires and also reduce the time needed from product design to the market. But good
communication is necessary in every part of the company, especially between designers and product
development teams who may have different perspectives and thinking.

3.4. An Uncertain Business Climate

A successful company is indicated by its ability to control all forms of uncertainty into competitive
advantages. It is undeniable that many companies expect a deterministic environment, such as constant
level of demand, delivery time from fixed suppliers, low price volatility of raw materials, small

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IOP Conf. Series: Materials Science and Engineering 847 (2020) 012083 doi:10.1088/1757-899X/847/1/012083

variability in production processes, and so forth. However, uncertainty is inevitable and the company
must live with it. Companies must have provisions to deal with uncertain conditions.
Uncertainty in the business world can occur because:
• Consumer demand rapidly changes both in volume and design variety
• Design and manufacturing capabilities of suppliers are always changing
• The use of new and various technology platform in industries
• Competitor behaviour

In this case, flexibility turns out to be important and interpreted as the company's ability to overcome
the overall uncertainties precisely and quickly [3]. In this case, there are three components that must be
assured to create a more-resistant-to-uncertainty company.
1. Product Development Flexibility. Companies must have the competence and capability in
developing flexible products. In a highly competitive market characterized by increasingly shorter
product life cycles, the company must be flexible in modifying product designs or even producing
new products altogether. In this case, a fast and valid product development process is needed. From
this, it can be said that the application of Lean Startup approach is appropriate for product
development process when business conditions are full of uncertainties. With the validation in each
process, it can be assured that each process has valid results or output.
It is known before the Learn Startup process, Value Proposition needs to be made as a basis for
validation of each product design process. Value Proposition is a method used in deciding how far
the product or service offered has a high value according to its target customers (Osterwalder and
Pigneur, 2010). In other words, it is about how a company can offer products or services that are
different from its competitors. Value Proposition has two focuses, customer segments and value.

Figure 5. Value Proposition Canvas

Value Proposition Canvas is a tool that will describe Customer Profile and Value map in detail.
On the Customer profile, market segments can be specifically seen and thus the target market and
the needs or expectations of target market will be more detailed. Customer Profile consists of three
parts including customer gain, customer pain, and customer jobs.
Besides, Value Map illustrates in detail the value of a product from the consumer’s point of view.
Value Map carries three parts, which are products and services, pain relievers, and gains creators.
The Value Proposition Canvas shows the details of the compatibility between two sides
(Consumer and Value) so that the pre-launch product holds a value that meets the consumer desires
and finds out solutions to the consumers’ problems. The three adjustments are Problem-Solution
Fit, Product-Market Fit, and Business Model Fit.
2. Manufacturing Flexibility. Companies are required to be flexible in producing various products
(Volume flexibility) and several types of products at once (mix flexibility). The challenge
companies must face is the fact that flexibility in producing goods is not something easy. A company
is said to be flexible if it has a flat average cost curve, meaning the companies can produce the
products in different quantities with the same average cost. Nevertheless, not as it seems, producing
a number of products per month will be cheaper than producing a number of fluctuating items.
Flexibility is not unlimited. The flexibility to produce more products, to a certain extent, can be

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IOP Conf. Series: Materials Science and Engineering 847 (2020) 012083 doi:10.1088/1757-899X/847/1/012083

achieved through a number of ways, such as machine flexibility, labour flexibility, routing
flexibility, and material handling flexibility.
The challenges faced by the manufacturing system are not merely about consumer demand change,
equipment design development, and global competition, but now also increasingly need to take into
account the lack of future energy resources and environmental responsibility. Manufacturing
companies are demanded to have high flexibility to deal with the current phenomena. Lean Startup
as an approach in product design, followed by the application of lean operating systems and lean
thinking processes in every operational activity of business organizations or companies, has become
a necessity to continuously excel in global competition.
3. Supply chain flexibility. In a strong supply chain, materials and information run smoothly without
obstacles, thus all forms of waste can be eliminated. Besides the aspect of efficiency, flexibility in
the supply chain is required to meet all consumer demands on time. Changes in products, services,
customers, markets, and business practices potentially direct the changes in industrial supply chain
network facilities. In supply chain management approach, the company tries to regulate the flow of
information via supply chain to obtain synchronization level so that the company can better respond
to customer needs while minimizing costs. The facility must assist business organizations to achieve
supply chain excellence with the objective of increasing ROA, increasing customer satisfaction,
reducing costs, and performing integrated supply chains. All facilities in the supply chain must be
characterized with flexibility, modularity, upgradability, adaptability, and selective operability [11].

From the three components mentioned above, companies today must have a flexible business model. In
other words, in addition to flexible product development, a flexible business model is needed to address
the business climate and uncertain product demand [6]. The intended business model is those which
concern on the network power pertaining products, manufacturing, and supply chain.

Figure 6. Flexible Business Model (Network focused approach)

3.5. Facility Design Techniques to support Flexibility in Product Development, Manufacturing, and
Supply Chain.
Facing the changing and developing era, shorter cycle, rapid information technology advancement, and
consumer trends disruption will affect the facility design layout on a production floor. Facilities Planning
is the process of analysing, conceptualizing, designing, and actualizing a system for the manufacture of
goods and services, generally represented as floor plan, or physical facility arrangement which includes:
equipment, land, buildings and other means to optimize relations between implementers, the flow of

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IOP Conf. Series: Materials Science and Engineering 847 (2020) 012083 doi:10.1088/1757-899X/847/1/012083

goods, the flow of information, and the procedures needed to achieve goals efficiently, economically,
and safely.
Facilities Planning scholarship continues to grow with the addition of quantitative approaches and
the principle optimization which are also supported by the availability of layout and simulation software
packages used to acquire facility layout design results that can optimize industrial activities. The facility
planning process will be strongly influenced by the strategic business plan and concepts, techniques and
technology to be the factor of consideration in manufacturing strategy and assembly.
It is known that the outputs from product design stages, design process, and design schedules become
the input in the design of a facility. Product design decisions, processes, schedules and facilities are
made in a sequential and mutually influential manner. A clear vision is needed regarding what to do and
how to do it (including concepts, techniques and technological considerations). In most cases, changes
in product design, design process, and design schedule of manufacturing facilities will require
modifications in layout, control, and storage facility.
Related to product design activities, a facility planner must be able to anticipate the level of
uncertainty that will occur, consider the mission of planned facility, implement specific activities, and
direct related activities. By considering the type of product that will be produced by the facility, the
business philosophy has to consider facilities and related external factors, such as the economy,
availability of labour, the level of competition, and other factors that may cause changes. If it is decided
that the facilities can accommodate changes related to the use of facility and its mission, then a design
with a high degree of flexibility and a very general area are needed. Conversely, if the product has high
level of trust, the facility can be designed to optimize the production [11]
As the need for more competitive design facilities among manufacturing companies becomes stricter
and borderless (global), every business organization must be able to create various strategic efforts to
respond to customer value needs by reducing waste and making creative and innovative efforts to get
smooth and efficient flow of material and information in the value chain. On the other hand, customer
needs are increasingly varied and unique, while manufacturing equipment is increasingly automated and
has integrated architectural design. It will be a significant challenge for manufacturing companies to
adjust their facility design to these changes.
There are two techniques that might be applied to support lean operational systems, namely the
formation of one worker multiple machine (OWMM) cells and Group Technology (GT) cells.

Figure 7. One Worker Multiple Machine (OWMM) Layout

Figure 7. illustrates five OWMM cell machines used by 1 operator in the middle (U-shape is the most
common form). Operators work by moving around in a circular area. In this layout, different parts or
products can be made by changing the engine setup.
Furthermore, the facility layout based on product group or product family or group technology layout
is a layout based on the grouping of products or components that are made, in this case the grouping is
not based on the similarity of the final product types but it is grouped based on the processing steps,
shapes, machines, or equipment used. In brief, the technology layout group is a combination of fixed

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IOP Conf. Series: Materials Science and Engineering 847 (2020) 012083 doi:10.1088/1757-899X/847/1/012083

and process layout. Group technology is a method for managing similar entities (components, processes,
tools, etc.) to reduce manufacturing complexity by dividing manufacturing systems into sub-
manufacturing cells.

4. Conclusion and Suggestion for Further Research

From the comparison results between two approaches in product design, it can be concluded that:
• Both Product Development Process approaches Lean Startup approach equally orient to consumers
as product users.
• To become a successful company that is able to control all forms of uncertainty to continue having
a competitive advantage, it requires a flexible, fast, and valid product development process. Hence,
Lean Startup approach is appropriate for the product development process when business conditions
are full of uncertainties. Involving validation in each process, valid results or output will be certainly
acquired.
• Lean Startup as an approach in product design, followed by the application of lean operating systems
and lean thinking processes in every operational activity of business organizations or companies has
become a necessity that must be done to be able to continue to excel in competition. There are two
techniques that might be applied to support lean operational systems, which are the formation of
one worker multiple machine (OWMM) cells and Group Technology (GT) cells.

5. References
[1] Blank, Steve and Bob Dorf 2012 The Startup Owner’s Manual. (California: K&S Ranch, Inc.)
[2] Chen, J 2015 The Role of Reward System in Product Innovations: an Examination of New Product
Development Projects, Project Management Journal.
[3] Febransyah, A 2009 Menikmati Ketidakpastian – Tahapan Kritis dalam mendesain kesuksesan,
(Jakarta: PT Gramedia Pustaka Utama).
[4] Henne, C 2012 The Industrial Designer’s role in Applying Lean Startup principles in IT Startups,
Journal of Product Design, Norwegian University of Science and Technology.
[5] Krajewski, L.J., Ritzman, L.P., and Malhotra, M.K. 2013 Operation Management: Processes and
Supply Chains, 10th Ed., Pearson Education Limited.
[6] Katy J. Mason, Steganos Mouzas 2012 Flexible Business Models. European Journal of Marketing.
[7] Lean Production for Competitive Advantage 2011 A Comprehensive Guide to Lean Methodologies
and Management Practices. John Nicholas. Taylor and Francis Group. USA.
[8] Osterwalder, Alexander and Pigneur, Yves 2010 Business Model Generation: A Handbook for
Visionaries, Game Changers, and Challengers. New Jersey: John Wiley & Sons, Inc.
[9] Osterwalder, Alexander, Pigneur, Yves, et al. 2014 Value Proposition Design. New Jersey: John
Wiley & Sons, Inc.
[10] Ries, Eric. 2011. The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to
Create Radically Successful Businesses. The New York Times Bestseller.
[11] Tompkins, J.A., White, J.A., Bozer, Y.A., and Tanchoco, J.M.A. 2003 Facilities Planning. 3rd Ed.,
John Wiley & Sons.
[12] Ulrich, K and Eppinger D, 2012 Product Design and Development, McGraw Hill.