CHAPTER FIVE

SYSTEM DESIGN

Introduction

In this chapter you will gain different reasons for product and
service design, as well as key questions that management should address,
such as how to translate customers’ wants and needs into a product and/or
services, redesigning the existing products and services, the need for the
development of new products and services, formulating the quality goals, as
well as cost targets, testing the system design, and lastly in documenting
specifications.

As discussed in Chapter two under Competitiveness and Productivity,

one of the important factors of operations management is product and
services design. It is necessary to understand what should be done on this
stage. The question is what are the responsibilities and activities under this
area of operations? Generally, these are the following responsibilities and
activities under product and service design:

1. It is important that marketing and operation works together in

order to translate customers’ needs and wants into a certain
product or service desires.
2. Marketing should enhance existing products and services.
3. Operations and marketing will closely work together in order to
formulate new products and services.
4. Operations and marketing department will develop quality goals.
5. Finance, accounting, and operations will work hand in hand in order
to formulate cost targets.
6. Operations, marketing and engineering will then coordinate with
one another to design prototypes and eventually test it.
7. Preparation of document specifications is a necessity.
8. Operations and engineering will then translate the product and
service specifications into process specifications.
 Product and service design comprises and affects normally of
functional areas of business organization. Nonetheless, marketing and
operations are the closely involve and has a major role on this area.

There are key questions that need to consider in product and

service design, in the point of view of the customer, there are two variables
that greatly affects their purchasing decision which involves: one is cost and
the other one is quality or performance. There are customers that are price
sensitive or price insensitive, it depends on the value they perceived in the
products or services. On the other hand, they tend to choose products and
services with a great value or high quality. From the firms’ point of view,
these are the following questions that need to consider:

1. Is there a demand for these products and services? What are the
potentials of the market and what is the expected demand for it.

2. Will the organization be able to do the products and services? Do

they have necessary skills and knowledge, capacity, equipment, and
supply chain capabilities? For products is it manufacturability? And
for services is it serviceability? Manufacturability is the capacity of
the organization to produce a product on a reasonable price and
suitable profit. Serviceability is the capacity of the organization to
give service on an acceptable price and reasonable profit.

3. What level of quality is applicable? What do the expectation of the

customer? What is the level of quality of the offering of competitor
with similar products and services? Is it fit with the current offerings
of the organization?

4. Does it make sense from an economic position? What are the

possible issues, ethical considerations, sustainability problems, cost
and profit?

Various Reasons for Products and Services Design and Redesign

Product and services design is generally a type of strategy that will

help the organization to be successful or to meet its prosperity. Moreover, it
will give impactful on future endeavor of the firm. In addition, decision
making is a fundamental factor on this area of operations. There is variety of
reasons on why there’s a need for products and services design or redesign.
The main reason for this is for the future market opportunities and threats
of other competitors. It can be in the form of changes in one or two of the
following variable:

1. Economic – low demand, disproportionate security claims, and the

need for the reduction of cost.

2. Social and Demographic – the increase of the new generation and

aging of baby boomers.

3. Political, Liability, or legal – change in regulations, safety issues and

government policies.

4. Competitiveness – the emergence of new products and services as

well as marketing efforts such as advertising and promotions.

5. Cost or availability – availability of raw materials need for the new

products or services, labor cost and other cost in utilities.

6. Technological – changes in technology for process improvement

and product components.

Idea Generation

As we consider the changes of the following variables mentioned

above, the needs for customer inputs are also important. There is various
ways on how you can gather information from customers that eventually
help for improving the products and services as well as redesigning it. These
are in the form of:

1. Customer survey
2. Focus group discussion
3. Complaints
4. Unsolicited suggestions
Further, the need for the input from suppliers, distributors and employees,
this can be obtained through:

1. Interviews
2. Direct and indirect suggestions
3. Complaints

One of the best motivations for redesigning or generating new

products and services is through the competitions. The presence of the
competitors makes the organization to improve their products and services.
Organization should also need to study on how the competitors operate
such as in the activities of:

1. Pricing Strategies
2. Return policies
3. Warranties
4. Location Strategies
5. Added value services
6. Other processes and policies

Some of the companies tend to buy competitors’ products in order

for them to examine and dismantle it and eventually searching for new
ways to improve the said product. It is called reverse engineering.
Research is also another source of new ideas for improving
products and services or innovating new one. Research and Development is
a systematized effort to increase technical knowledge for product
innovation.

Figure 5.1 Components Research and

Development
Development

Research and
Development

138
Basic Applied
Research Research
 Research and development efforts come with different components
as seen in Figure 5.1.

Basic Research – its objective is for advancing the formal of understanding

about a subject, with any near-term anticipations or commercial claims.

Applied Research – its objective is to have commercial applications.

Development – it aims to translate the result of the applied research into a

commercial application.

There are certain benefit for the success of research and

development. Normally, successful R&D can give the organization to patent
their products or to have its own license and royalties.

Legal and Ethical Considerations

Products and Services designers must take into consideration legal

and ethical implications. Many industries are subject for government
policies and regulate them. For instance, for those who are producing
medical and food products there are food and drug administration that are
regulating them. It is also important to know that every raw materials
needed to produce something is regulated by certain agency of the
government. Product Liability is one of the consideration and important
factor in this legal and ethical implication. It is the responsibility of the
manufacturer for any injuries due to faulty products. Many companies
faced lawsuit because of some legal and ethical issues, for instance, the
Sanofi Pasteur due to the Dengvaxia controversy. Manufacturers are also
bounded by warranty policies created by law. Legal liabilities are then to
have increased legal and insurance costs, and affluent settlements.
Organizations normally want all their designers to adhere on certain
standards such as:

1. Produce design in line with the goals of the organizations.

2. Produce the value expected by the customers.
 3. Make health and safety as primary concern in producing the
products.

Human Factors

Human factors issues also often arise in creating products and

services or even redesigning the existing ones. Two factors that need to
consider is the safety and liability. Another issue for designers is to add
features on a certain products and services. They seek it as a competitive
advantage if they can add features on products and services. However,
there are times that too much features gives the customer dissatisfaction.
Added features tend to give the customer the feeling of difficulty in using
the products.

Cultural Factors

Product designers in an organization that are operating in a global

scale need to take into account any cultural differences of different
countries. For instance, there are different product offerings of McDonald’s
from Singapore as compared to the Philippines. This makes designer to
redesign products or offerings to their target market.

McDonald’s Around the World

Since the first time the owner of McDonald’s open their first
restaurant in the US in 1955, they begin to penetrate around the world.

“We know our U.S. customers are curious about McDonald’s

international menu items. Because we are always innovating our menu, we
are thrilled to leverage our global scale and offer popular flavors from
around the world next month,” said Linda VanGosen, McDonald’s Vice
President of Menu Innovation. “We are committed to creating everyday feel-
good moments for customers no matter what McDonald’s restaurant they
walk into anywhere in the world.”

Source: https://news.mcdonalds.com/stories/our-food details/worldwide-

favorites-menu/
 They are innovating their products depending on the available
resources and the taste that the market they want. Cultural differences tend
to give them in redesigning or introducing products that will suit to their
international markets.

Global Product and Service Design

Generally, product designers have been working in one location in

order to design new products or redesign the existing product. But in the
view that the organization is working globally, the advantage to have a
product team designer designated in different location, country or
continent is a great advantage. The emergence of virtual team gives the
organization to have a collective mind that can be a powerful competitive
advantage than the competitors. The use of global team members can also
give a faster customer assessment that will be done in more than one
country which opportunities, constraints and resources are taken into
account. Global product design can further give increase of marketability
and utilization of product. Diversity in the workforce can give different point
of views that can help in designing products. However, it is important to
manage the diversity in the workplace because; if this is mismanaged it can
lead to conflicts, and miscommunication. Advances of technology can also
give the team a good advantage and play a vital role in the capability of
global product design teams to continue in communicating and share the
design progress.

Environmental Factors: Sustainability

Product and service design plays a key point in the pursuit of

sustainability. Key aspects include:

1. Cradle-to-Grave Assessment
2. End-to-Life Programs
3. Reduction of Costs and Material used
4. Reuse of Parts of Returned Products
5. Recycling
Cradle-to-Grave Assessment – this pertains to the valuation of the
environmental influence of a product or service throughout its useful life.
The goal of this assessment is to choose products or services that have less
environmental impact while taking into account the economic value or
consideration.

End-of-Life Programs – These programs deal with the usefulness of the

products which already reached its useful lives. The primary purpose of the
program is to reduce dumping of products, and incineration.

Reduction: Value Analysis – one of the three Rs of environmental factors.

Value Analysis pertains to the investigation of the purpose of parts and
materials in an effort to reduce cost and/or improve product performance.

Reuse: Remanufacturing – the developing concept in the manufacturing is

remanufacturing of products. Remanufacturing pertains to the restoring
used products by substituting worn-out or faulty components.

Recycle – pertains to the recuperating materials for future use. This implies
not only to factory-made parts but also includes materials used during the
production. Companies recycle for various reasons including:

1. Cost Savings
2. Environmental Concerns
3. Environmental Regulations

Other Design Considerations

Aside from legal and ethical, human, cultural, and environmental

factors there are other factors to consider such as:
 1. Product and Service Life Cycles
2. Standardization to Incorporate
3. Product and Service Reliability
4. Range of Operating Conditions

Product and Service Life Cycles

Products and services have a series of life stages which is

demonstrated in Figure 5.2. In product and service introductory stage
normally pertains to the curiosity item. Overtime, when the demand
increases its yield for reliability and lower cost, it will lead to growth in
demand. Hence it is important to acquire accurate projections on the
growth rate of the demand and how long the product will persist in the
market. In the next stage, the product design will reach its maturity and the
demand will soon to be off. In this stage the need for changes in demand is
inevitable.

Figure 5.2 Product Life Cycle

In the decline stage, it is important to have a decision if the product

or service will be continue, or need to redesign those, or even abandon the
market, or maybe identify new users of the product and shift with its target
market.

Degree of Standardization

A significant issue that often arises in both products and services

design and process design is the degree of standardization. Standardization
is the extent to which a product, service, even process lacks variation. There
are various advantages and disadvantages of standardization.

Advantages

1. Less part to compact with in inventory and in manufacturing.

2. Reduced preparation costs and time.
3. More predictable procuring, handling, and examination procedures.
4. Orders fillable from account.
5. Opportunities for extensive production runs and computerization.
6. Requisite for lesser parts justify increased expenditures on
completing designs and refining quality control processes.

Disadvantages

1. Designs may be unmoving with too much defectiveness remaining.

2. Great cost of design deviations increases opposition to

improvements.

3. Reduced variation results in less consumer application.

Mass Customization - A strategy of manufacturing fundamentally

standardized goods but integrating some degree of customization.

Delayed Differentiation – The method of creating but not fairly finishing a

product or service until customer preferences are known.
Modular Design - A form of standardization in which constituent parts are
grouped into modules that are easily replaced or switched.

Robust Design - Design that results in products or services that can function
over a wide range of settings.

Taguchi’s Approach – a Japanese

engineer Genichi Taguchi’s
approach is based on robust
design. His principle is that it is
easier to design a product that is
insensitive to environmental
influences, either in
manufacturing or in use, than to
control the environmental aspects.

Degree of Newness

Product and service design change can range from modification an existing
product or service to entirely making new product or service:

1. Modification of an existing product or service

2. Development of an existing product or service
3. Emulation of a competitor’s product or service
4. New product or service

The degree of changes affects the newness of the product or service

into the organization as well as in the market place. For the organization, a
low level of newness can mean a justly fast and easy shift to producing the
new product, while a high level of newness would likely mean a gentler and
tougher, and consequently more costly, transition. For the market, a low
level of newness would mean little struggle with market recognition, but
possibly low profit impending. Even in instances of low profit potential,
organizations might use this strategy to uphold market share. A high level of
newness, on the other hand, might mean more struggles with recognition, or it
might mean a fast gain in market share with a high possible for profits.

Quality Function Deployment

It is an approach that participates the “voice of the customer” into

both product and service expansion. This approach can be based on
matrices with their conforming technical requirements.

According to NPD Solutions QFD is a structured approach to

defining customer needs or requirements and translating them into specific
plans to produce products to meet those needs.

Figure 5.3 QFD Matrix

Source: www.npd-solutions.com/qfd.html

There are four phases of QFD approach which are presented in Figure 5.3
The Kano Model

The Kano Model of product development and customer satisfaction

was published in 1984 by Dr Noriaki Kano, professor of quality management
at the Tokyo University of Science. Kano says that a product or service is
about much more than just functionality. It is also about customers'
emotions. For example, all customers who buy a new car expect it to stop
when they hit the brakes, but many will be delighted by its voice-activated
parking-assist system. (www.mindtools.com)

The model assigns three types of attributes to products and services:

1. Threshold Attributes (Basics) – these are the basic features that the
customers expect in a product and service.
2. Performance Attributes (Satisfiers) – this makes the customer
increase their enjoyment to the product or service.
3. Excitement Attributes (Delighters) – these are the surprise or
supplementary elements that give your product or service more
competitive edge than competitors.

Figure 5.4 The Kano Model

Source: www.mindtools.com
 As seen in the Figure 5.4, if a product's features don't encounter a
customer's Threshold Attributes, his or her satisfaction levels will be
relatively low. However, even if you fully carry on these, you won't influence
customers that much. Most products strive on Performance Attributes,
where a customer weighs up one product in contradiction of another and
judges’ satisfaction by the obtainability of various features. But she may
determine an Excitement Attribute that really demands to her, and gives
her extraordinary satisfaction, even if it isn't flawlessly implemented.

Phases in Product Design and Development

Product design and development have different phases that need to be
followed:

Feasibility Product
Analysis Specifications

Prototype Process
Development Specification

Design Review Market test

Follow-up Product
evaluation Introduction

Figure 5.5 Phases in Product Design and Development

Feasibility analysis. Feasibility analysis involves market analysis, economic
analysis, and technical analysis Also, it is essential to answer the question;
does it fit with the mission? It requires collaboration among marketing,
finance, accounting, engineering, and operations.

Product specifications. This includes detailed imageries of what is desired to

meet (or exceed) customer wants, and requires partnership between legal,
marketing, and operations.

Process specifications. Once product specifications have been agreed,

attention turns to specifications for the process that will be needed to
produce the product. Replacements must be weighed in terms of cost,
accessibility of resources, profit potential, and quality. This involves
cooperation between accounting and operations.

Prototype development. With product and process specifications complete,

one (or a few) units are made to see if there are any glitches with the
product or process specifications.

Design review. At this phase, any essential changes are made or the project
is abandoned. Marketing, finance, engineering, design, and operations
cooperate to regulate whether to continue or abandon.

Market test. A market test is used to define the degree of consumer

recognition. If ineffective, the products go back to the design review phase.
This stage is handled by marketing.

Product introduction. The new product is endorsed. This period is handled

by marketing.

Follow-up evaluation. Based on user response, variations may be made or

forecasts developed. This stage is handled by marketing.

Designing for Production

There are different design techniques that have better applicability for the
product design than that on service design.
Concurrent Engineering - Bringing engineering design and manufacturing
personnel together early in the design phase. There are various advantages
and disadvantages of this approach.

Advantage

1. Manufacturing workforces are able to recognize production

capabilities and capacities. Very often, they have some freedom in
design in terms of choosing appropriate materials and processes.
Familiarity of production capabilities can help in the selection
process. In addition, cost and quality considerations can be greatly
swayed by design, and conflicts during production can be greatly
reduced.

2. Policy or obtaining of critical tooling, some of which might have

extended lead times, can occur early in the process. This can result
in a major restriction of the product progress process, which could
be a key reasonable advantage.

3. The technical probability of a particular design or a portion of a

design can be assessed early on. Once more, this can avoid severe
problems during production.

4. The emphasis can be on difficult resolution instead of conflict

resolution.

Disadvantage

1. Old limitations among design and manufacturing can be challenging

to overcome. Simply conveying a group of people together and
thinking that they will be able to work together effectively is
probably naive.
 2. There must be additional communication and tractability if the
process is to work, and these can be difficult to attain.

Computer-Aid Design – because of the emergence of computer, many

designer use computers to design products. They can modify an existing
product design or create a new one on a computer.

Production Requirements

There are factors to consider in the production of a requirement which

includes:

1. Design for Manufacturing (DFM)

2. Design for Assembly (DFA)
3. Manufacturability

Design for Manufacturability – Designing of products that are well-matched

with an organization’s competences.

Design for Assembly – Design that emphasis on decreasing the number of

parts in a product and on assembly procedures and arrangement.

Manufacturability – The affluence of fabrication and/or assembly.

Service Design

There are many resemblances between product and service design.

Despite the fact that there are similarities, there are some important
differences as well, because of the nature of services. One major variance is
that unlike manufacturing, where production and delivery are usually
separated in time, services are usually produced and brought
simultaneously. There are various key terms that need to remember in
Service design such as:

Service – it is an act of doing something that is done to or for a customer.

Service delivery system – The skills, processes and facilities needed to
provide the service.

Product bundle – it is a combination of product and services provided to the

customer.

Service package – the physical resources needed to perform the service, the
supplementary goods, and the explicit and implicit services included.

Overview of Service Design

Service design arises with the selection of a service strategy, which

regulates the nature and focus of the service, and the target market. Two
key issues in service design are the amount of variation in service
requirements and the amount of customer contact and customer
participation in the delivery system.

Difference between Service Design and Product Design

1. Products are generally tangible; services are generally intangible.

Therefore, service design often emphases more on intangible
factors (e.g., peace of mind, ambiance) than does product design.

2. In many occurrences services are created and delivered at the same

time (e.g., a haircut, a car wash). In such instances there is less
leeway in discovering and amending errors before the customer has
a chance to discover them. Thus, training, process design, and
customer relations are predominantly important.

3. Services cannot be inventoried. This poses limitations on flexibility

and makes capacity issues very vital.

4. Services are highly noticeable to consumers and must be designed

with that in mind; this adds an extra measurement to process
design, one that frequently is not present in product design.
 5. Some services have low barriers to entry and exit. This places
supplementary pressures on service design to be innovative and
cost-effective.

6. Location is often imperative to service design, with accessibility as a

major factor. Hence, design of services and choice of location are
often closely linked.

7. Service systems range from those with little or no customer contact

to those that have a very high degree of customer contact. Here are
some examples of those different types: Insulated technical core;
little or no customer contact (e.g., software development).
Production line; little or no customer contact (e.g., automatic car
wash). Personalized service (e.g., haircut, medical service).
Consumer participation (e.g., diet program, dance lessons). Self-
service (e.g., supermarket). If there is little or no customer contact,
service system design is like product system design.

8. Demand inconsistency alternately creates waiting lines or idle

service resources.

Phases in Service Design

1st Phase
Conceptualization 2nd Phase
Service Package 3rd Phase
Components
Determine 4th Phase
Performance
Specification Translate 5th Phase
performance
specification into Translate desgin
design specification specification into
delivery specification
Figure 5.6 Phases in Service Design
 Design objectives based on customers perspective requires an
understanding of customers’ expectation and experiences in order to satisfy
the customers.

In the phase of service design, in conceptualizing service, it is

important to have a blueprint wherein it is a method for describing and
analyzing a service process. The major steps in blueprinting service are as
follows:

1. Establishing boundaries for the service and decide the level of

details that are needed.
2. Identify the sequence of customer and service actions and
interactions. Flowcharting is an important tool for this step.
3. Developing time estimation for each phase of the process and
delivery of the service.
4. Identifying potential failure point and identify how to minimize or
mitigate it.

Characteristics of a Well-Designed Service Systems

1. Consistency of the Service Design into the Organization Mission

2. Service Design should be user-friendly
3. Vigorous if inconsistency is a factory
4. Easily to sustain
5. Cost-efficiency
6. Customer perceived value
7. Having an effective linkage between the back-office operation and
the front-office operation.
8. Single and unified theme of the service
9. Reliability and High Quality

Guidelines for Successful Service Design

1. Define the service package in detail.

2. Focus on the operation in customers’ perspective.
3. Considering the image of service package
 4. Recognizing the designers’ familiarity with the system
5. Making sure that the manager is involved in the system design and
its implementation
6. Defining quality for both tangibles and intangibles.
7. Make sure the recruiting, training as well as reward policies are
consistent with the service expectations.
8. Establish procedures for both fortunate and unfortunate events.
9. Establishing monitoring and control, improvement of the service.

Operations Strategy for Product and Service Design

1. Packaging products and supplementary services to increase sales.

2. Using multiple-use platforms
3. Implementing tactics that will ensure high volume of demand while
satisfying customers wants and needs.
4. Continue to monitor product and service for improvements.
5. Shorten the time in order to take new or redesign products and
services.
6. Using standardized components in creating new and redesign
product and service.
7. Using technology in designing new or redesign existing product and
service.
8. Concurrent engineering and shorten engineering time.

Capacity Planning for Products and Services

Capacity planning is one of the key strategic in designing a system. It

involves many basic decisions with long-range impact to the organization.
There are activities that needs to give a concrete answers. Here are the
following questions that need to consider in capacity planning:

1. What kind of capacity is needed?

2. How much is needed to match the demand?
3. When it will be needed?

In deciding of what kind of capacity and how much is needed to match the
demand it should also consider the following:
 1. Cost
2. Expected Return
3. Benefits and Risks
4. Sustainability Issues
5. Supply Chain requirements

Capacity Decisions are Strategic

For numerous reason capacity decisions are considered as strategic

for the company, in fact it is critical for the company to have a good capacity
decisions.

1. Capacity decisions have a real impact on the organizations’ ability to

meet the demand in the future for products and services.
2. Capacity decisions affects costs, at it may implies losses if not
manage correctly.
3. Capacity is initially the basis of initial costing.
4. Capacity decisions normally involved long-range commitment to
resources, and will definitely affect the organization if there are
mishandling or failed decision making. It will incur major costs for
the organization.
5. Capacity decision can directly impact the competitiveness of the
organization.
6. Capacity affects the ease in management.
7. Globalization has increased the importance of capacity decisions.
8. Capacity planning normally involves financial resources; the
decisions should come in advance.

Defining and Measuring Capacity

Design Capacity – the maximum output rate or service capacity an

operation, process, or facility is designed for.

Effective Capacity – design capacity minus allowances and personal time, as

well as maintenance.

These are the following measurement capacity in terms of efficiency

and utilization:
 Effi Act
cie x 100%
ual
ncy
Outp
=
ut
Effec
tive
capa
city
Act
Utili x 100%
zati ual
on Outp
= ut
Desi
gn
Capa
city
Example:

Design Capacity = 100 bags of tapioca per day

Effective Capacity = 80 bags of tapioca per day

Actual Output = 75 bags of tapioca per day

75
Efficiency = x 100% = 93.75%
80

Ut 75
ili x 100% = 75%
100
za
tio
n
=
Determinant of Effective Capacity

1. Facility – the key for effective capacity is the size and provision for
expansion of the facility. Further, location, transportation cost and
how far the facility in the market, energy sources and labor forces is
also important.

2. Product and Service Factors – product and service design has greatly
affecting capacity planning. The ability to produce the item is
important. For instance, in a restaurant who have limited menu, the
possibility to deliver the service is much faster than those who have
numerous items in the menu. Further, if the dimension or the size
of a particular product or output is the same, it is easier to
standardize the process, methods and materials.

3. Process Factors – the quantity capacity of process is an apparent

factor of capacity. Another determinant is the quality of output.
 Process improvement can help to increase quantity as well as its
quality.

4. Human Factors – it includes the tasks, training, and skills of the

manpower as well as their experiences. Absenteeism, compensation
and turnover rate will also affect the operation having greatly
impacted the capacity planning.

5. Policy Factors – management policy has greatly impact the capacity

planning by allowing or not allowing overtime and shifting
schedules.

6. Operational Factors – Scheduling, equipment capabilities as well as

inventory stocking decision affects the capacity planning.

7. Supply Chain Factors – Changes in suppliers, warehousing,

transportation and distribution will then affect the capacity
planning.

8. External Factors – Regulations of the government, product

standards, safety regulations, as well as Unions and environmental
standards can also be considered in capacity planning.

Strategy Formulation

Generally, organization bases their capacity strategy with the following

factors:

1. Long term demand pattern

2. Technology changes
3. Behavior of the competitors
These factors typically involve the following:

1. Growth rate and variability of Demand

2. Cost of building and facilities
3. Rate and direction of technological advancement
4. Likely behavior of competitors
5. Availability of capital and other inputs

Steps in Capacity Planning

1. Estimation of Capacity Requirements in the Future

2. Evaluate existing capacity and facilities then identify the gaps.
3. Identification of alternatives in meeting capacity requirements.
4. Conduct financial analyses of the alternatives.
5. Assess key quality issues of each alternative.
6. Selection of best alternative.
7. Implementation of selected alternative.
8. Monitoring of results.

Once capacity requirements has been identified, the firm must

decide if they are going to produce the goods or they are going to
outsourced it from other organization. Some of the organization nowadays
buys parts or raw materials from other organization by these reasons:

1. Available capacity – outsourcing can increase capacity.

2. Expertise – if the level of expertise in the organization is not that

much to have a job to be satisfactory, outsourcing it is a good
alternative.

3. Quality considerations – quality requirement might be produced by

other organizations that are expert in producing it.

4. Nature of Demand – when demand is higher, organization tend to

do the work and output, but in the occasion for small orders, it is
important to see to outsource it or to handle it by specialist.
 5. Cost – outsourcing can help the organization to incur fixed costs.

6. Risks - Buying goods or services may involve substantial risks. Loss

of direct mechanism over operations, knowledge sharing, and the
possible need to reveal exclusive information is three risks.

Developing Capacity Planning Strategy

1. Design Flexibility to the System

2. Take advantage of life cycle into account
3. Take a big-picture approach to capacity changes
4. Prepare to deal with capacity “chunks”
5. Attempt to smooth out capacity requirements
6. Identify the optimal operating level

Process Selection and Facility Layout

Process Selection refers to determining on the way production of

goods or services will be controlled. It has key associations for capacity
planning, layout of facilities, equipment, and design of work systems.
Process strategy then is important for this area. These are the key aspects of
process strategy:

1. Capital intensity – this is the mixture of labor and equipment that

will be used by the organization.
2. Process flexibility – the degree to which process can adapt to
changes due to some factors such as product and service design,
volume processing, and change in technology.

Process Type

1. Job Shop – usually it operate in relatively small scale of process. It is

use when the volume of requirements is low.
2. Batch – it is use when operating in relatively moderate volume of
goods and services. Further, it will be use when you are working
with moderately-variety of goods and services.
 3. Repetitive – it is use for high volume requirements and often a
standardized products and services.
4. Continuous – it is use for very high volume and high standardized
products and services.

High Moderate Low Very Low

Low or very Job Shop
low volume Repair shop
Emergency
room

Moderate Batch
Volume Commercial
bakery
Classroom
lecture
High Repetitive
Volume Assembly line
Automatic car
was

Very High Continuous flow

Volume Petroleum
refining

Figure 5.7 Products or Services and Flexibility, Variety

Product and Service Profiling

It is a process of linking key product or service requirement to

process capabilities.

Work Design and Measurement

One of the important factors that need to consider in work design is

the working condition. Working condition is composing of physical factors
such as temperature, humidity, illumination, ventilation, and noise that is
significantly affecting the performance of the worker.
Compensation

It is significantly part of design for work system. Organization used

variety of approaches such as:

Time-based system – compensation based on time

Output-based system – compensation based on the amount of output

delivered by the workers.

Knowledge-based system – it is a concept of compensation based on

individual employee’s ability to improved their education to increase their
salary.

Job Design

The act of specifying the content and method of the job.

Specialization

Work that concentrate on some aspects of a product or service.

Behavioral Approach in Job Design

In an effort to make job interesting and engaging to the workers,

organization often used behavioral approaches such as:

Job Enlargement – giving a worker a larger portion of the total task, by

horizontal loading.

Job rotation – workers periodically changes jobs.

Job enrichment – increasing responsibility for planning and coordinating
tasks by vertical loading.

Motivation

Motivation is a key factor in any working environment and also with

employees’ life. They tend to do more if they are motivated

Method Analysis

It is a process of analyzing how the job is being done. The need for
method analysis can come from numerous sources:

1. Change in tools and equipment.

2. Change in product design or designing new product.
3. Change in material or procedures.
4. Government Regulation
5. Other factors such as accident and quality problems.

Motion Study

It is a systematic study of human motions used to perform an

operation. The most used techniques are:

1. Motion Study Principle – Guidelines for designing motion-efficient

work procedures.

2. Therbligs – Basic element motions that make up a job.

3. Micromotion study – used of motion pictures and slow motion to

study motions that otherwise would be too rapid to analyze.

4. Chart
Location Planning and Analysis

Location decisions for many types of organization are made

occasionally, however; they have significant impact to organization. There is
a strategic importance for location decision such as:

1. Location choices can impact capacity and flexibility

2. Location decisions are strategically important for other reasons such
as long-term commitment, investment requirements, operating
costs and revenues, and operation itself.

Location Options

1. Expand an existing facilities

2. Add new locations while retaining the old one.
3. Shutdown at one location and move to other one.
4. Do nothing

Global Location

Globalization give us a wider market and expanding horizons for

business. Operating globally can also mean a strategic location for
manufacturing and service operations. There are facilitating factors for
globalization:

1. Trade Agreement
2. Technology

Benefits of Globalization

1. Markets. Companies often pursue prospects for increasing markets

for their goods and services, as well as better serving current
customers by being more agreed to local needs and having a
quicker response time when problems occur.
2. Cost savings. Among the areas for potential cost saving are
transportation costs, labor costs, raw material costs, and taxes. High
production costs in Germany have contributed to a number of
 German companies locating some of their production facilities in
lower cost countries.

3. Legal and regulatory. There may be more promising obligation and

labor laws, and less restrictive environmental and other regulations.

4. Financial. Companies can avoid the impact of currency changes that

can occur when goods are produced in one country and sold in
other countries. Also, a variety of incentives may be offered by
national, regional, or local governments to attract businesses that
will create jobs and boost the local economy.

5. Other. Globalization may provide new sources of ideas for products

and services, new perspectives on operations, and solutions to
problems.

Disadvantage

1. Transportation Cost
2. Security Cost
3. Unskilled Labor
4. Import Restrictions
5. Criticisms

Risk

1. Political
2. Terrorism
3. Economic
4. Legal
5. Ethical
6. Cultural
General Procedures for Making Location Decisions

1. Decide on the criteria to use in choosing location

2. Identify important factors such as locations of markets and raw
materials as well as accessibility.
3. Develop location alternatives.
4. Evaluate the alternatives and make a selection.
 CHAPTER QUIZ NO. FIVE

SYSTEM DESIGN

NAME DATE
SECTION SCORE

PART 1. IDENTIFICATION

Instruction. Identify the following by writing the correct answer in the space
provided.

1. It is one of the consideration and important

factor in this legal and ethical implication. It is the responsibility of the
manufacturer for any injuries due to faulty products.

2. This pertains to the valuation of the

environmental influence of a product or service throughout its useful life.
The goal of this assessment is to choose products or services that have less
environmental impact while taking into account the economic value or
consideration.

3. These programs deals with the usefulness of

the products which already reached its useful lives. The primary purpose of
the program is to reduce dumping of products, and incineration.
 4. It pertains to the investigation of the
purpose of parts and materials in an effort to reduce cost and/or improve
product performance.

5. It pertains to the restoring used products by

substituting worn-out or faulty components.

6. It pertains to the recuperating materials for

future use. This implies not only to factory-made parts but also includes
materials used during the production.

7. It is the extent to which a product, service,

even process lacks variation. There are various advantages and
disadvantages of standardization.

8. A strategy of manufacturing fundamentally

standardized goods but integrating some degree of customization.

9. The method of creating but not fairly finishing

a product or service until customer preferences are known.

10. A form of standardization in which constituent

parts are grouped into modules that are easily replaced or switched.

11. It is design that results in products or services

that can function over a wide range of settings.
 12. It is an approach that participates the “voice of
the customer” into both product and service expansion. This approach can
be based on matrices with their conforming technical requirements.

13. It was published in 1984 by Dr Noriaki Kano,

professor of quality management at the Tokyo University of Science. Kano
says that a product or service is about much more than just functionality. It
is also about customers' emotions. For example, all customers who buy a
new car expect it to stop when they hit the brakes, but many will be
delighted by its voice-activated parking-assist system.

14. These are the basic features that the customers

expect in a product and service.

15. These are the surprise or supplementary

elements that give your product or service more competitive edge than
competitors.

PART 2. EXPLAINING CONCEPT

Instruction: Explain the following concept briefly

1. Product Life-Cycle
2. The Kano Model

3. Phases of Product Design and Development

4. Phases of Service Design

5. Characteristics of Well-Designed Service System

6. Guidelines for Successful Service Design

7. Quality Function Deployment

8. Degree of Newness
 9. Taguchi’s Approach

10. Degree of Standardization

PART 3. ESSAY

Instructions. Answer the following guide questions in 5-6 sentences.

1. What do you think is the importance of Environmental
Factors/Sustainability in Product Design?

2. Explain why there’s a need for innovation of product and services

when doing or penetrating the global market?

3. Discussed why human factors and cultural factors play a vital role in
product and service design or redesign?
4. Why there’s a need to consider legal and ethical factors in product
and service designing and redesigning?

5. Discuss the components of Research and Development

6. How and where you can generate ideas for product and service
design?

7. What are the several of reasons why there is need for product and
service design and redesign?
8. What are the important questions that need to be answered in
considering product and service design and/or redesign?

9. What are the different activities under the stage of operations

particularly in product and service design?
 10. What can you recommendation for operations strategy in product and service design?

Part 4. Concept Application

Look for a company with an existing product and service and try to redesign their products
and/or services. Provide the following on a separate sheet of papers:

1. Name of the company

2. Mission and Vision Statement
3. Existing Products and/or Services
4. Suggested Products and/or Service Design with prototype and process improvements.
5. References