3. Product Design & Development (1).pdf

3. Product Design & Development A B Raju, CEO www.biztrans.in www biztrans in  IDEO – Design firm  In I IDEO, IDEO workk isi play, l brainstorming b i t i iis a science and most important rule is to break...

3. Product Design & Development A B Raju, CEO www.biztrans.in www biztrans in  IDEO – Design firm  In I IDEO, IDEO workk isi play, l brainstorming b i t i iis a science and most important rule is to break the rules  IDEO’s novel design process has two activities  Brainstorming  R id prototyping: Rapid t t i 3R Rs – Rough, R h RRapid id and d Right www.biztrans.in Ideo’s designs www.biztrans.in IDEO’s designs www.biztrans.in  Product Design  Design has gained a lot of significance in the last few decades in every product from Pepsi/Bingo chips to Space Shuttles  This has led to  Contract manufacturing and Be it automobiles, garments, pharmaceuticals or electronic components p  Core competency Levi’s Brand Marketing Black & Decker’s technological competency in 200- 200-600 watt electric motors Dell excelling in make make--to to--order systems www.biztrans.in  Product Development p Process The generic PD process consists of following steps  Planning – target market, product, business goals, key assumptions and constraints  Concept development – identifying the needs of target market, alternate product concepts generation and evaluation  System level design – geometric layout of product, functional specifications of all sub- sub-systems and process flow diagram  Detail design – complete specifications f off geometry, materials and tolerances with production tooling  T i and Testing d refinement fi – Prototypes P are preparedd and d tested d to see whether the product works as per design or not  P d ti ramp- Production ramp-up – train t i ththe workforce kf and d iiron outt remaining i i problems www.biztrans.in  Product Development Process  Generic variants of products for designing  Generic / market pull – sports goods, furniture  Technology push products – Scented garments  Platform products – computers  Process intensive products – chemicals  Customised products – motors  High risk products – Drug formulations  Quick build products – Mobile phones  Complex products – Jet engines, space shuttles www.biztrans.in  New Service or Product D Development l P Process D i Design Development Service or strategy product not Idea generation and profitable screening Need to rethink the Service package or new offering or production product architecture formulation Analysis processes Production Post-launch feasibility Detailed review review of market Development potential and production costs Detailed Full Launch specifications Process design Marketing program Market design promotions Personnel training Sales personnel Testing and pilot briefed runs Distribution processes activated Old services or products withdrawn ithd Production of new offering and ramp-up QFD www.biztrans.in  QFD  Quality Function Deployment  This is the process of designing for the customer identifying the hows and whys of designing and producing a product product.  House of quality: The requirements of the customer are taken as the basis for designing www.biztrans.in  Quality Function Deployment (QFD)  Itis one of the techniques to document g logic. overall design g  QFD consists of a series of interlocking matrixes that translate customer needs into product and process characteristics.  List out various customer needs and corresponding process/product parameter and set target and tolerance values www.biztrans.in Quality Function Deployment (QFD)  Quality Function Deployment (QFD)  Describes a method for translating customer requirements into functional design.  Sometimes this process translation is referred to as the voice of the customer customer..  Designers need a means for implementing customer requirements into designs. The house of quality (QFD) is used to accomplish this. www.biztrans.in Quality Function Deployment (QFD) QFD Layout: Q you : Thee House ouse of o Quality Qu y www.biztrans.in  Correlation: X Strong positive Positive X X X Negative X X Designing * Strong negative Water resisstance Engineering Trans. Check forcce on Energy neeeded Energy neeeded Competitive evaluation for the to close dooor to open dooor level grounnd Characteristics resistancce Door seaal Accoust. T X = Us Window A = Comp. A Customer: Customer Requirements B = Comp. B (5 is best) 1 2 3 4 5 The House Easy to close 7 X AB of Quality Stays open on a hill 5 X AB Easy to open 3 XAB Customer A XB Doesn’t leak in rain 3 requirements information No road noise 2 X A B forms the Importance weighting 10 6 6 9 2 3 Relationships: Strong = 9 basis for this 5 ft/lb Reduce eneergy Reduce eneergy Medium = 3 Reduce forrce current level current level matrix used matrix, current leveel b. T Target t values l level to 7.5 to 7.5 ft/lb Small = 1 Maintain Maintain Maintain to 9 lb. to translate them into 5 BA BA B operating ti or Technical evaluation 4 A X B A X B BXA X 3 engineering (5 is best) 2 X A X www.biztrans.in 1 goals.  Steps in QFD Step p 1: Develop p a list of customer requirements. q Step 2: Develop a listing of technical design elements alongg the roof of the house. Step 3: Demonstrate the relationship between the customer requirements and technical design elements. Step 4: Identify the correlations between design elements l t in i the th rooff off the th house. h Step 5: Perform a competitive assessment of the customer requirements. requirements Step 6: Prioritize customer requirements. Step 7: Prioritize technical requirements. www.biztrans.in Step 8: Final Evaluation.  QFD - House of Quality Let us take an example of textile fabric C t Customer requirements i t T h i l requirements Technical i t 1. Fabric feel should be 1. Softner and finishing good d ((soft) ft) recipes i as per ffabric bi 2. Fabric should not 2. Tensile and tear t tear easily il strengths t th 3. Fabric colors should 3. Rubbing and nott bleed bl d / ffade d washing hi ffastness t easily 4. Fabric F b i llook k should h ld 4. Count and be rich construction www.biztrans.in Value Analysis / Value Engineering (VA/VE)  VA/VE tries t i to t achieve hi equivalent i l t or b better tt performance f at a lower cost while maintaining all functional requirements q defined by y the customer  Does the item have any design features that are not necessary?  Can two or more parts be combined into one?  How can we cut down the weight?  Are A there h nonstandard d d parts that h can b be eliminated? li i d?  V l A Value Analysis l i d deals l with ith products d t ththatt are already l d iin production typically to deal with cost reduction www.biztrans.in  Design for manufacturability  Traditional Approach  “We design g it,, you y build it” or “Over the wall”  Concurrent Engineering  “L t’ work “Let’s k together t th simultaneously” i lt l ” www.biztrans.in  Product Development p Pump 2.0 introduced in April of 2005 The original pump technology Reebok introduced in the 1980's eventually sold more than 20 million pairs Pump 2.0 needs no laces and inflates by itself www.biztrans.in  Product Development  Sh t Biotechnics Shanta Bi t h i Ltd., Ltd an IIndian di Bi Bio-tech Bio- t h company (in Pharmaceutical segment) produced Hepatitis- Hepatitis-B vaccine at a fraction of a typical MNC drug price.  No wonder this company was bought over by French MNC Sanofi Sanofi,, valuing it for over 550 Million Euros in 2009 www.biztrans.in www.biztrans.in www.biztrans.in www.biztrans.in A classic example of Product Innovation  Another one ?? www.biztrans.in  Case - IKEA  IKEA – The Sweedish household items company p y www.biztrans.in www.biztrans.in  Case - IKEA  IKEA – The Sweedish household items company known for its designer affordable products  How $0.50 Bang g mug g was designed g  Price was picked to start  Identifying the right supplier supplier, environmentally friendly yet cheaper materials – a long time Romanian associate  Actual design of the product – calling for various alternatives with clear cut specs.  Logistics: “Let’s not ship air” and “waste is deadly sin were the mottos. Design the product in such a way that maximum number of mugs are accommodated on a pallet – from 864 to1280 to 2204 on a pallet; design was modifiedf 3 times just to get to this result which in turn helps in reducing the carbon emissions and hence environmentally friendly  Sell it: Educate and convince the customer to buy www.biztrans.in  Cash Flows & NPV  A cell p phone manufacturer is developing p g a foldable phone and is concerned about market estimates of sales. The estimates of cost and sales are as given below Development cost: $2$2,000,000 000 000 for 2 years of Ramp-up cost $750,000 (only in 2nd Development time, Ramp- year), Marketing & support cost: $500,000/yr from 2nd to 5th year. Unit U it production d ti costt and d selling lli prices i are $75 and $135. Production & sales shall start from year 3 and the pprojected j p production & sales for yyear 3,4 , and 5 are 40,000, 50,000 and 40,000 units respectively a. Calculate yearly cash flows and present values of this project. What is NPV? b What is the impact if sales estimates are off by 20%? b. c. What is the impact if unit production cost is $85? www.biztrans.in  Solution - a Base case scenario (all figures in '000$ expect unit costs) Project schedule year 1 year 2 year 3 year 4 year 5 Development (1,000) (1,000) Rampup (750) Mktg & support (500) (500) (500) (500) Production units 40 50 40 Unit production cost (75) (75) (75) Production costs (3,000) (3,750) (3,000) Sales volume 40 50 40 Unit sale price 135 135 135 Sales revenue 5 400 5,400 6 750 6,750 5 400 5,400 Period cash flow (1,000) (2,250) 1,900 2,500 1,900 PV year 1 (1,000) (2,009) 1,515 1,779 1,207 Project NPV 1,493 www.biztrans.in Project schedule year 1 Solution -b year 2 year 3 (all figures in '000$ expect unit costs) year 4 year 5 Development (1 000) (1,000) (1 000) (1,000) Rampup (750) Mktg & support (500) (500) (500) (500) Production units 32 40 32 Unit production cost (75) (75) (75) Production costs (2,400) (3,000) (2,400) Sales volume 32 40 32 Unit sale price 135 135 135 Sales revenue 4,320 5,400 4,320 Period cash flow (1,000) (2,250) 1,420 1,900 1,420 PV year 1 (1,000) (2,009) 1,132 1,352 902 Project NPV 378 Production units 48 60 48 Unit production cost (75) (75) (75) Production costs (3,600) (4,500) (3,600) Sales volume 48 60 48 Unit sale price 135 135 135 Sales revenue 6,480 8,100 6,480 Period cash flow (1,000) (2,250) 2,380 3,100 2,380 PV year 1 (1,000) (2,009) 1,897 2,207 1,513 www.biztrans.in Project NPV 2,607  Solution - c Base case scenario ((all figures g in '000$ expect p unit costs)) Project schedule year 1 year 2 year 3 year 4 year 5 Development (1,000) (1,000) Rampup (750) Mktg & support (500) (500) (500) (500) Production units 40 50 40 Unit prod production ction cost (85) (85) (85) Production costs (3,400) (4,250) (3,400) Sales volume 40 50 40 Unit sale price 135 135 135 Sales revenue 5,400 6,750 5,400 Period cash flow (1,000) (2,250) 1,500 2,000 1,500 PV year 1 (1,000) (2,009) 1,196 1,424 953 Project NPV 564 www.biztrans.in