Chapter 4

The design of
products
and services

BY: Engr. Brenile C. Alcantara

Introduction
Products and services are often the first thing that customers see of a company, so
they should have an impact. And although operations managers may not have direct
responsibility for product and service design, they always have an indirect
responsibility to provide the information and advice upon which successful product or
service development depends. But increasingly operations managers are expected to
take a more active part in product and service design. Unless a product, however well
designed, can be produced to a high standard, and unless a service, however well
conceived, can be implemented, the design can never bring its full benefits.
Why is good design so important?
Good design satisfies customers, communicates the purpose of the product or service to its
market and brings financial rewards to the business. The objective of good design, whether of
products or services, is to satisfy customers by meeting their actual or anticipated needs and
expectations. This, in turn, enhances the competitiveness of the organization. Product and service
design, therefore, can be seen as starting and ending with the customer.

Design
Helps businesses connect strongly with their customers by anticipating their real needs. That in
turn gives them the ability to set themselves apart in increasingly tough markets. Furthermore, using
design both to generate new ideas and turn them into reality allows businesses to set the pace in their
markets and even create new ones rather than simply responding to the competition.
What is designed in a product or service?
All products and services can be considered as having three aspects:

- a concept, which is the understanding of the nature, use and value of the service or
product;

- a package of ‘component’ products and services that provide those benefits defined in
the concept;

- the process, which defines the way in which the component products and services will
be created and delivered.
 The stages of design – from concept to specification

Fully specified designs rarely spring, fully formed, from a designer’s imagination. To get to a final
design of a product or service, the design activity must pass through several key stages. These form an
approximate sequence, although in practice designers will often recycle or backtrack through the stages.
We will describe them in the order in which they usually occur, as shown in this Figure. First comes the
concept generation stage that develops the overall concept for the product or service. The concepts are
then screened to try to ensure that, in broad terms, they will be a sensible addition to its product/service
portfolio and meet the concept as defined. The agreed concept has then to be turned into a preliminary
design that then goes through a stage of evaluation and improvement to see whether the concept can be
served better, more cheaply or more easily. An agreed design may then be subjected to prototyping and
final design.
Business strategy
The strategic positioning of a business
in relation to its customers, markets and
competitors, a subset of corporate strategy.

Functional strategy
The overall direction and role of a
function within the business; a subset of
business strategy.

Emergent strategy
A strategy that is gradually shaped over
time and based on experience rather than
theoretical positioning.
Customer influence on
performance objectives

Operations seek to satisfy customers

through developing their five
performance objectives.
For example, if customers particularly
value low-priced products or services,
the operation will place emphasis on its
cost performance. Alternatively, a
customer emphasis on fast delivery will
make speed important to the operation,
and so on. These factors which define the
customers’ requirements are called
competitive factors.

Competitive factors The factors such

as delivery time, product or service
specification, price, etc. that define
customers’ requirements.
Order-winning and qualifying objectives

Order-winning factors
The arrangement of resources that are devoted to the production and delivery of products and services.
Qualifying factors
Aspects of competitiveness where the operation’s performance has to be above a particular level to be
considered by the customer.
Less important factors
Competitive factors that are neither order winning nor qualifying, performance in them does not
significantly affect the competitive position of an operation.
 Product/service life cycle
A generalized model of the behavior of both customers and competitors during the life of a
product or service; it is generally held to have four stages, introduction, growth, maturity and decline.

Introduction stage
When a product or service is introduced, it is likely to be offering something new in terms of
its design or performance, with few competitors offering the same product or service. The needs of
customers are unlikely to be well understood, so the operations management needs to develop the
flexibility to cope with any changes and be able to give the quality to maintain product/service
performance.
Growth stage
As volume grows, competitors may enter the growing market. Keeping up with demand
could prove to be the main operations preoccupation. Rapid and dependable response to demand will
help to keep demand buoyant, while quality levels must ensure that the company keeps its share of
the market as competition starts to increase.
Maturity stage
Demand starts to level off. Some early competitors may have left the market and the industry
will probably be dominated by a few larger companies. So operations will be expected to get the
costs down in order to maintain profits or to allow price cutting, or both. Because of this, cost and
productivity issues, together with dependable supply, are likely to be the operation’s main concerns.
Decline stage
After time, sales will decline, with more competitors dropping out of the market. There might be a
residual market, but unless a shortage of capacity develops the market will continue to be dominated by
price competition. Operations objectives continue to be dominated by cost.

Resource-based view (RBV)

The perspective on strategy that stresses the importance of capabilities (sometimes known as core
competences) in determining sustainable competitive advantage.
Intangible resources
The resources within an operation that are not immediately evident or tangible, such as relationships
with suppliers and customers, process knowledge, new product and service development.

Structural and infrastructural decisions

A distinction is often drawn between the strategic decisions which determine an operation’s
structure and those which determine its infrastructure. An operation’s structural decisions are those
which we have classed as primarily influencing design activities, while infrastructural decisions are those
which influence the workforce organization and the planning and control, and improvement activities.
This distinction in operations strategy has been compared to that between ‘hardware’ and ‘software’ in
computer systems.9 The hardware of a computer sets limits to what it can do. In a similar way, investing
in advanced technology and building more or better facilities can raise the potential of any type of
operation. Within the limits which are imposed by the hardware of a computer, the software governs
how effective the computer actually is in practice. The most powerful computer can work to its full
potential only if its software is capable of exploiting its potential. The same principle applies with
operations. The best and most costly facilities and technology will be effective only if the operation also
has an appropriate infrastructure which governs the way it will work on a day-to-day basis.
 Implementation
A large number of authors, writing about all forms of strategy, have discussed the importance
of effective implementation. This reflects an acceptance that no matter how sophisticated the intellectual
and analytical underpinnings of a strategy, it remains only a document until it has been implemented. Ken
Platts of Cambridge University has written10 about the nature of the operations strategy formulation
process. His generic description of the process is labelled the five Ps.

1 Purpose. As with any form of project management, the more clarity that exists around the
ultimate goal, the more likely it is that the goal will be achieved. In this context, a shared
understanding of the motivation, boundaries and context for developing the operations
strategy is crucial.
2 Point of entry. Linked with the above point, any analysis, formulation and implementation process is
potentially politically sensitive and the support that the process has from within the hierarchy of the
organization is central to implementation success.
3 Process. Any formulation process must be explicit. It is important that the managers who are engaged in
putting together operations strategies actively think about the process in which they are participating.
Indeed, the final section of the book describes our conceptualization of the operations strategy ‘process’.
The three levels of analysis that we propose (fit, sustainability and risk) are intended to provide a relatively
comprehensive coverage of the critical issues.
4 Project management. There is a cost associated with any strategy process. Indeed one of
the reasons why operations have traditionally not had explicit strategies relates to the
difficulty of releasing sufficient managerial time. The basic disciplines of project
management such as resource and time planning, controls, communication mechanisms,
reviews and so on should be in place.

5 Participation. Intimately linked with the above points, the selection of staff to participate
in the implementation process is also critical. So, for instance, the use of external consultants
can provide additional specialist expertise, the use of line managers (and indeed staff) can
provide ‘real-world’ experience and the inclusion of cross-functional managers (and
suppliers, etc.) can help to integrate the finished strategy.
 Agility
Judging operations in terms of their agility has become popular. Agility is really a combination of all
the five performance objectives but particularly flexibility and speed.

Flexibility inside the operation

Developing a flexible operation can also have advantages to the internal customers within the
operation.

Flexibility speeds up response

Fast service often depends on the operation being flexible. For example, if the hospital has to
cope with a sudden influx of patients from a road accident, it clearly needs to deal with injuries quickly.
Under such circumstances a flexible hospital which can speedily transfer extra skilled staff and equipment
to the Accident and Emergency department will provide the fast service which the patients need.

Flexibility saves time

In many parts of the hospital, staff have to treat a wide variety of complaints. Fractures, cuts or drug
overdoses do not come in batches. Each patient is an individual with individual needs. The hospital staff
cannot take time to ‘get into the routine’ of treating a particular complaint; they must have the flexibility to
adapt quickly. They must also have sufficiently flexible facilities and equipment so that time is not wasted
waiting for equipment to be brought to the patient. The time of the hospital’s resources is being saved
because they are flexible in ‘changing over’ from one task to the next.
 Chapter 4
Process design

BY: Engr. Brenile C. Alcantara

Introduction
Say you are a ‘designer’ and most people will assume that you are someone who is concerned with how
a product looks. But the design activity is much broader than that and while there is no universal recognized
definition of ‘design’, we take it to mean ‘the process by which some functional requirement of people is
satisfied through the shaping or configuration of the resources and/or activities that comprise a product, or a
service, or the transformation process that produces them’. All operations managers are designers. When they
purchase or rearrange the position of a piece of equipment, or when they change the way of working within a
process, it is a design decision because it affects the physical shape and nature of their processes. This
chapter examines the design of processes.
 This allows different operations to be compared excluding the effects of input costs. One operation
may have high total costs per car but high productivity in terms of number of cars per employee per year.
The difference between the two measures is explained in terms of the distinction between the cost of the
inputs to the operation and the way the operation is managed to convert inputs into outputs. Input costs
may be high, but the operation itself is good at converting them to goods and services. Single-factor
productivity can include the effects of input costs if the single input factor is expressed in cost terms, such
as ‘labor costs’. Total factor productivity is the measure that includes all input factors.
The design activity (Design happens before Construction)
To ‘design’ is to conceive the looks, arrangement and workings of something before it is
constructed. In that sense it is a conceptual exercise. Yet it is one which must deliver a solution that will
work in practice. Design is also an activity that can be approached at different levels of detail. One may
envisage the general shape and intention of something before getting down to defining its details. This is
certainly true for process design. At the start of the process design activity it is important to understand
the design objectives, especially at first, when the overall shape and nature of the process is being
decided. The most common way of doing this is by positioning it according to its volume and variety
characteristics. Eventually the details of the process must be analyzed to ensure that it fulfils its
objectives effectively. Yet it is often only through getting to grips with the detail of a design that the
feasibility of its overall shape can be assessed. But don’t think of this as a simple sequential process.
There may be aspects concerned with the objectives or the broad positioning of the process that
will need to be modified following its more detailed analysis.
 Process design and product/service design are interrelated
Often we will treat the design of products and services and the design of the processes which
make them as though they were separate activities. Yet they are clearly interrelated. It would be foolish
to commit to the detailed design of any product or service without some consideration of how it is to
be produced. Small changes in the design of products and services can have profound implications for
the way the operation eventually has to produce them.
Process design objectives
The whole point of process design is to make sure that the performance of the process is appropriate for
whatever it is trying to achieve. For example, if an operation competes primarily on its ability to respond
quickly to customer requests, its processes need to be designed to give fast throughput times. This would
minimize the time between customers requesting a product or service and them receiving it. Similarly, if an
operation competes on low price, cost-related objectives are likely to dominate its process design. Some kind
of logic should link what the operation as a whole is attempting to achieve and the performance
objectives of its individual processes.

Environmentally sensitive design

With the issues of environmental protection becoming more important, both process and
product/service designers have to take account of ‘green’ issues. In many developed countries, legislation has
already provided some basic standards which restrict the use of toxic materials, limit discharges to air and
water, and protect employees and the public from immediate and long-term harm. Interest has focused on
some fundamental issues:
• The sources of inputs to a product or service. (Will they damage rainforests? Will they use up scarce
minerals? Will they exploit the poor or use child labor?)

• Quantities and sources of energy consumed in the process. (Do plastic beverage bottles use more energy
than glass ones? Should waste heat be recovered and used in fish farming?)

• The amounts and type of waste material that are created in the manufacturing processes. (Can this waste
be recycled efficiently or must it be burned or buried in landfill sites? Will the waste have a long-term
impact on the environment as it decomposes and escapes?)

• The life of the product itself. It is argued that if a product has a useful life of, say, 20 years, it will consume
fewer resources than one that lasts only five years, which must therefore be replaced four times in the
same period. However, the long-life product may require more initial inputs and may prove to be inefficient
in the latter part of its use, when the latest products use less energy or maintenance to run.

• The end-of-life of the product. (Will the redundant product be difficult to dispose of in an environmentally
friendly way? Could it be recycled or used as a source of energy? Could it still be useful in third-world
conditions? Could it be used to benefit the environment, such as old cars being used to make artificial reefs
for sea life?)
Life cycle analysis
A technique that analyses all the production inputs, life cycle use of a product and its final
disposal in terms of total energy used and wastes emitted.

Process types
The position of a process on the volume–variety continuum shapes its overall design and the
general approach to managing its activities. These ‘general approaches’ to designing and managing
processes are called process types. Different terms are sometimes used to identify process types
depending on whether they are predominantly manufacturing or service processes, and there is some
variation in the terms used. For example, it is not uncommon to find the ‘manufacturing’ terms used
in service industries.

Project processes
Project processes are those which deal with discrete, usually highly customized products. Often
the timescale of making the product or service is relatively long, as is the interval between the
completion of each product or service. So low volume and high variety are characteristics of project
processes.
Life cycle analysis
A technique that analyses all the production inputs, life cycle use of a product and its final
disposal in terms of total energy used and wastes emitted.

Process types
The position of a process on the volume–variety continuum shapes its overall design and the
general approach to managing its activities. These ‘general approaches’ to designing and managing
processes are called process types. Different terms are sometimes used to identify process types
depending on whether they are predominantly manufacturing or service processes, and there is some
variation in the terms used. For example, it is not uncommon to find the ‘manufacturing’ terms used
in service industries.

Project processes
Project processes are those which deal with discrete, usually highly customized products. Often
the timescale of making the product or service is relatively long, as is the interval between the
completion of each product or service. So low volume and high variety are characteristics of project
processes.
Life cycle analysis
A technique that analyses all the production inputs, life cycle use of a product and its final
disposal in terms of total energy used and wastes emitted.

Process types
The position of a process on the volume–variety continuum shapes its overall design and the
general approach to managing its activities. These ‘general approaches’ to designing and managing
processes are called process types. Different terms are sometimes used to identify process types
depending on whether they are predominantly manufacturing or service processes, and there is some
variation in the terms used. For example, it is not uncommon to find the ‘manufacturing’ terms used
in service industries.

Project processes
Project processes are those which deal with discrete, usually highly customized products. Often
the timescale of making the product or service is relatively long, as is the interval between the
completion of each product or service. So low volume and high variety are characteristics of project
processes.
Life cycle analysis
A technique that analyses all the production inputs, life cycle use of a product and its final
disposal in terms of total energy used and wastes emitted.

Process types
The position of a process on the volume–variety continuum shapes its overall design and the
general approach to managing its activities. These ‘general approaches’ to designing and managing
processes are called process types. Different terms are sometimes used to identify process types
depending on whether they are predominantly manufacturing or service processes, and there is some
variation in the terms used. For example, it is not uncommon to find the ‘manufacturing’ terms used
in service industries.

Project processes
Project processes are those which deal with discrete, usually highly customized products. Often
the timescale of making the product or service is relatively long, as is the interval between the
completion of each product or service. So low volume and high variety are characteristics of project
processes.
Life cycle analysis
A technique that analyses all the production inputs, life cycle use of a product and its final
disposal in terms of total energy used and wastes emitted.

Process types
The position of a process on the volume–variety continuum shapes its overall design and the
general approach to managing its activities. These ‘general approaches’ to designing and managing
processes are called process types. Different terms are sometimes used to identify process types
depending on whether they are predominantly manufacturing or service processes, and there is some
variation in the terms used. For example, it is not uncommon to find the ‘manufacturing’ terms used
in service industries.

Project processes
Project processes are those which deal with discrete, usually highly customized products. Often
the timescale of making the product or service is relatively long, as is the interval between the
completion of each product or service. So low volume and high variety are characteristics of project
processes.
THANK YOU!