TAMPERE UNIVERSITY OF TECHNOLOGY

Faculty of Business and Built Environment

ARTUR NIKITIN

FULLY FUNCTIONAL MOCK-UPS AS A TOOL FOR COST REDUCTION

IN THE PRODUCTION PROCESS

Seminar Report

ii

Nikitin, A.

ABSTRACT

Nowadays, companies are trying to get competitive advantage. To achieve it,

companies, among other things, want to have cheaper products than competitor.

Thus they use product development processes to create new products. Companies

also are using prototypes during this process to estimate potential cost of a product

and.

The objective of this paper is to introduce fully functional mock-ups as a tool for

cost reduction of an existing product by the improvement of a production process.

This paper is trying to show the importance of early feedback which fully

functional mock-ups provide in case of improvement of production process.

The final outcome of the paper shows that fully functional mock-ups are an

efficient tool for a cost reduction of a lunched product. Moreover, the potential

impact of these reductions is analyzed.

iii

Nikitin, A.

PREFACE

Paper discusses types of prototypes, product development process and applying

fully functional prototypes to improve production.

I would like to thank Dr. Jouni Lyly-Yrjänäinen for his advices and ideas according

to this paper.

Tampere, December 2015

Artur Nikitin

iv

Nikitin, A.

TABLE OF CONTENTS

ABSTRACT ______________________________________________________ ii

PREFACE _______________________________________________________ iii

1 INTRODUCTION ____________________________________________ 1

1.1 Background __________________________________________________ 1

1.2 Objective of the Paper __________________________________________ 1

2 PROTOTYPES AND MOCK-UPS ______________________________ 3

2.1 Definition of a Prototype ________________________________________ 3

2.2 Different Types of Prototypes ____________________________________ 3

2.3 Mock-ups ____________________________________________________ 5

3 COST IMPLICATIONS OF PRODUCT DEVELOPMENT _________ 7

3.1 Product Development __________________________________________ 7

3.2 Cost Implication _______________________________________________ 8

3.3 Importance of Early Feedback ___________________________________ 9

4 MOCKUPS AS TOOLS IN PROCESS DEVELOPMENT __________ 11

4.1 Fully Functional Mock-ups _____________________________________ 11

4.2 Not Committed Cost __________________________________________ 12

4.3 Impact of Early Feedback ______________________________________ 13

5 CONCLUSIONS ____________________________________________ 15

REFERENCES __________________________________________________ 16

Nikitin, A.

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1 INTRODUCTION

1.1 BACKGROUND

Nowadays, it is highly important to make products as efficient as possible. This

includes quality, satisfaction of customers’ needs and of course cost level of a

product. However, there is small opportunity to reduce cost level of existing

product.

New requirements force manufacturing companies to undergo a revolution in the

way they are doing things. One of the biggest changes is related to the process

development, which is most important in terms of long range competitiveness in

the market (Atkinson et al., 2004). However sometimes process development takes

enormous period of time and huge investments, and all of a sudden managers

realize that this innovation, for example, in the manufacturing process, does not

work properly. Thus, to make sure that the innovation will work in a right way,

managers could build prototypes or mock-ups. Moreover, these tests help to

understand how this innovation could be improved.

Mock-ups are the initial prototypes of a product and their aim is to understand the

functionality of the final design. A mock-up is designed and produced in order to

test a product without building or buying it. There are various reasons to start with

mockups while implementing a process innovation. These are generally: (1) mock-

ups are economically cheap, (2) generally easy to produce and (3) give the close

results with the real products. Therefore, a considerable amount of money and time

can be saved with mock-ups. (Smith, 1999; Treder, 2012)

Moreover, Karimian (2013) introduced fully functional mock-ups. They are more

complicated than simple mock-ups and copy all functions of a product. However,

they are still cheaper than prototypes.

1.2 OBJECTIVE OF THE PAPER

Prototypes and mock-ups play a huge role in the product development process and

a make serious impact on costs. However, it also could be possible to reduce cost

of a production process. Therefore the objective of the paper is…

… is to introduce fully functional mock-ups as a tool for cost reduction of

the production process

Nikitin, A.

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The second chapter aims to present definitions as well as a process of prototyping

and introduces mock-ups. In third chapter, product development and cost

implication are explained. Finally, the fourth chapter provides benefits of using

fully functional mock-ups for reduction costs by improving production of a

product.

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2 PROTOTYPES AND MOCK-UPS

2.1 DEFINITION OF A PROTOTYPE

According to Ulrich and Eppinger (2012) prototypes are an approach to the final

product along with one or more range interests. They also say that it could be a

drawing, computer or plastic model, or it could also be almost a copy of the final

with all functions and features. Hence, a prototype could be made from substitute

materials or material close to the final version.

A prototype is a physical instantiation of a product used to help to find and solve

possible problems during the product development (Otto and Wood, 2001). Thus,

prototypes mostly are used in product development process.

There are two most important reasons which motivate companies to use prototypes.

First, prototyping is good to understand is new product or innovation works in a

proper way and how it could be improved. Second, completed prototype could be

used to present a product (Yang and El-Haik, 2009).

Moreover, prototyping provides advantages through reducing costs and saving

time, because creating a prototype is always faster than making a fully working

product (Smith, 1999). Although sometimes prototypes in the latest stages could be

expensive, in a long run they reduce the cost of a final product (Szczecinki, 2013).

2.2 DIFFERENT TYPES OF PROTOTYPES

In the 1970s and early 1980s, the demand to prototypes was quite high and thereby

using them in all stages of product development lead to higher cost (Otto & Wood,

2001). Thus, there was a need to have different types of prototypes to apply them in

different situations. According to Ulrich and Eppinger (2012) prototypes can be

classified into two dimensions. The first dimension according to Dutson & Wood

(2005) is that prototypes are divided into analytical and physical prototypes with

own advantages and disadvantages. Therefore, tests of a development can be done

through a combination of both virtual and physical prototypes.

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Figure 1. Prototyping Categorization (Adapted from Yang & El-Haik, 2003).

According to Otto and Wood (2001), generally, a physical prototype is a

simplification of a product concept. They also claim that the most usable types are

experimental, alpha, beta, and pre-production prototypes. Experimental prototypes

should be made as simply, cheaply, and quick as possible, since the focus is aimed

to copy general ideas of the product. Materials and geometry could be similar to the

final product. However, alpha prototypes are fabricated from the materials and with

shapes which designers considered good after doing experimental prototypes and

which might be used for the final product. Alphas also usually include some

functional features for testing and measurement of the product as a system. On the

other hand beta prototypes are the full-scale functional prototypes of a product

which was made with the same materials and look the same, although they are not

necessarily constructed using the same production process. In the end,

preproduction prototypes are the final class of physical models. These prototypes

are used to show the final version of a product, which is done with actual

production line. On the other side, analytical prototypes represent a product via

intangible, usually mathematical or visual, manner. Here features of a product are

mostly analyzed, rather than built.

The second dimension is the degree to which a prototype could be comprehensive

or focused. A comprehensive prototype represents most or all of the attributes of a

product while focused prototypes implement one or a few of the features of a

product (Ulrich and Eppinger, 2012).

Since there are different types of prototypes, they are used in different situations

and to solve different issues, according to Ulrich and Eppinger (2012) there are

three main goals why prototypes are used: learning, communication and

integration. They mentioned that prototypes are used to understand will the product

work and how well it meets the customer needs. Hence it is learning goal. The

Nikitin, A.

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second goal is communication; prototypes help to communicate to top managers,

partners or team members. The last one is integration. It is used to ensure that

components of a prototype are working properly together and to present the

prototype.

It is evident, that each type of a prototype is better for one goal while other is more

appropriate for another. Moreover, some prototypes could achieve several goals.

Figure shows the types of prototypes and their goals.

Figure 2. Appropriateness of different types of prototypes for different purposes

(Adapted from Ulrich and Eppinger, 2012).

Thus, when prototypes become more complicated, they could serve for more goals.

While simple prototypes such as paper or mathematical could achieve only leanring

goal. Alpha and more complicated physical prototypes are widely applicable.

2.3 MOCK-UPS

Mock-up is a slightly different term than prototype. Mock-up is usually a visual

design that represents the structure of information, visualizes the contents, and

demonstrates the basic functionalities; aim is to encourage people to review the

visual side of the projects. (Treder, 2012)

Prototypes are more commonly used for testing, while mock-ups are usually

designed for feedback from stakeholders. However, depending on the industry or

product, mock-ups can be considered and used as prototypes.

Communication Integration Learning

Focused analytical

Focused physical

Comprehensive physical

More appropriate

Less appropriate

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When considered in general, there are four major benefits of using mock-ups for

product development. These are:

Faster process (Smith, 1999; Deflorin et al., 2012)

Cheap process (Smith, 1999; Deflorin et al., 2012)

Ease of implementation (Smith, 1999)

Ability to notice flaws beforehand (Chaffee, 2012)

First, mock-ups are fast processes when the whole process or product development

is considered. Since mock-ups should not be the fully functional copy of the final

product, it can be much simpler. Second, mock-ups are cheap because there is no

need to create them from the same material as the final product, for instance it

could be build from wood or even from lego, since the idea of using mock-ups is to

understand basic principles of the innovation and visualize it. Third, the ease of

implementation is another benefit of mock-ups. Since a mock-up is not a copy of a

final version, it should not be complicated than rather just a simple model. Finally,

mock-ups enable designers to notice their flaws in the logic of designing and fixing

them. When the prototyping begins, it will be more difficult hence costly to notice

and fix these flaws (Chaffee, 2012). According to these, it is possible to estimate

which goals mock-ups could satisfy in the best way. This is illustrated in the figure

below.

Figure 3. Appropriateness of different types of mock-ups.

It is evident that mock-ups close to experimental prototypes, since they have

similar goals. Thus, they could be applied in the same cases.

Communication Integration Learning

Mock-ups

More appropriate

Less appropriate

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3 COST IMPLICATIONS OF PRODUCT DEVELOPMENT

3.1 PRODUCT DEVELOPMENT

Nowadays in the world of high competitiveness it is extremely important for

companies to make their product as efficient as possible. Thereby, companies focus

on their product development. According to Ulrich & Eppinger (2012), product

development is the set of activities starting with the idea or opportunity and ending

in the production or sale of a product. Furthermore, Otto & Wood (2001) add that

this set includes also business case analysis, marketing efforts and technical

engineering design activities. They also claim that development process include

manufacturing process, when the product are physically made.

However, many companies have failed in their product development, because of a

wrong sequence of actions (Cooper, 2008). Thus, a simple guidebook was

suggested and developed mainly by Robert Cooper, which consists of several steps

aiming to increase the efficiency of the product development process (Gadegaard,

2010). Cooper (2008) explains that in the Stage-gate model (Figure 4).

Figure 4. Stage-gate model (Adapted from Cooper, 2008).

According to the figure, stage-gate model consists of 5 stages and 5 gates and the

post launch review in the end. Each gate is needed to estimate information collected

during the previous stages and to make new ideas which could be applied in future.

The first stage is scoping. Generally small groups of people with some technical

and marketing knowledge begin the research with estimating of preliminary market

situation, technical and business ideas. The second stage is focused on deeper

research which leads to building a business case. This stage consists of a more

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detailed analysis including market research, technical and manufacturing

assessment, study of financial and business aspects. Usually in this stage more

competent team is required.

The third stage is development. During this stage plans from previous steps are

executed. Usually there could be some simple test with customers using prototypes.

Moreover, this stage includes creating a marketing plan. The fourth stage is testing

and validation. This phase consists of several tests which aim to find issues with a

new product, furthermore, some marketing and sales trials. As a result the product

is absolutely validated and ready for production. The final stage consists of full

production and market launch.

3.2 COST IMPLICATION

One of the main goals of product development, except the creation of a useful

product which satisfies customers’ needs is to create this product as cheap as

possible according to chosen quality. It is important since, according to Turney

(1991), 60-80% of costs are already locked in by the time the product design is

completed. Moreover, Figure 5 illustrate that, by the time the design of the

production process is completed, these numbers increase to 90%.

Figure 5. The critical role of design (Adapted from Turney, 1991).

According to Atkinson et al. (2004), committed costs are those that a company

knows it will have to incur in a future date. Thus, during process development, the

opportunity for cost reduction is huge (Turney, 1991). Belay (2009) also supports

the idea that 80 percent of the costs are usually determined before the design stage

of a product is finished. Moreover, he claims that the impact of cost improvement

activities becomes insignificant in later stages of product development. It is

supposed that the cost impact of design stage could be ten times more effective

than during the manufacturing stage. Applying Turney’s idea to the stage-gates

model (Figure 6) it is evident which stages have more impact on cost.

Process design

Product design

0% 100%

Committed cost

Not committed cost

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Figure 6. Stage-gate model and committed cost.

According to the figure first two stages have the biggest impact on committed cost.

Thus, companies should pay more attention in early stages of product development,

on the other hand, it should not be forgotten that in the latest stages there are also

opportunities for cost reduction.

3.3 IMPORTANCE OF EARLY FEEDBACK

According to Atkinson et al., (2004) committed costs accumulate in early stage of

product development. Figure 7 shows an example of cost behavior during the

product development process.

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Figure 7. Committed cost through the product development process (Adapted from

Atkinson et al., 2004).

Thus, the decisions which were made in the first stages have huge impact on costs.

According to Ulrich & Eppinger (2012) one of the most challenging things in

product development is to recognize, understand and manage trade-off such as

increase quality of the product by using more expensive material or use the cheaper

one. They also claim that these difficulties would be easier to manage if there wes

plenty of time, however, product development decisions are made quickly and

without full information.

Moreover, according to Turney (1991) cost information is usually reported too late,

hence it cannot impact on reduction of committed costs. Furthermore, companies

typically test their product too late and too little, thus, they do not have enough

information to estimate real cost and decide is it approximate level for them (Loch

and Kavadias, 2011). Hence, there is a need of early feedback, which could help

product development team to estimate potential costs or realize issues which the

product might have. This feedback might be from customers of this product or from

any type of prototype which product development team could make or from the top

managers of a company. Each type of feedback could bring different useful

information and will have positive impact on quality or cost, depends the goals of

the product development team.

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4 MOCKUPS AS TOOLS IN PROCESS DEVELOPMENT

4.1 FULLY FUNCTIONAL MOCK-UPS

It was discussed in previous chapters that prototypes divided in physical and

analytical prototypes, however in categorization madden by Yang & El-Haik

(2003) there is a gap between experimental and alpha prototypes. Sometimes it is

not possible to estimate all functionality of a product using experimental prototype

and on the other hand it is difficult and too expensive to build alpha prototype,

thus, according to Karimian (2013) fully functional mock-ups should be used.

Because they could show almost whole functionality of the finished product and

they could be made of a cheap material. In Figure 8 the position of fully functional

mock-ups is shown.

Figure 8. Positioning of fully functional mock-ups (Karimian, 2013).

Thus, using fully functional mock-ups it is possible to achieve more goals then

with usual mock-ups. It is shown in Figure 9, that fully functional mock-ups could

be uses as comprehensive prototypes.

.

Figure 9. Appropriateness of fully functional mock-ups.

Introducing fully functional mock-ups Karmian (2013) claims that they should be

used in the second stage of product development process, since they are fast and

cost efficient solution for testing different types of product, however they are also

Communication Integration Learning

Fully functional mock-ups

Prototypes

Pre-production

Beta

Alpha

Experimental

Physical

Fully

Functional

mock-up

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comprehensive enough to estimate future costs. Thus, among other positive

moments, fully functional mock-ups provide early understanding of product cost or

in other words they provide early feedback of future committed costs and hence

companies have opportunities to reduce them. However they also could be used in

any other development process. For instance, Hatmann and Klemmer (2006) claims

that prototyping is the core activity innovation, collaboration and creativity in any

design.

4.2 NOT COMMITTED COST

However, sometimes companies underestimate the cost saving of early testing and

evaluation, and when they try to solve issues of the product in late stages of the

development process it costs 100 times more than in the early stage (Thomle,

2003). Although, it is important to remember that even the product is already

designed and the production line is designed to according to Turney (1991) there is

steal opportunities for cost reduction, since 10% of cost are not committed yet.

Because changes in the product are impossible or quite expensive the best way to

decrease cost is to make the production process more efficient (Belay, 2009).

According to the Figure 10 the impact on the cost is indeed small, however, even

this could bring the potential advantage against the competitors, and since they may

have the same product and production process even 5% reduction of the product

cost is important.

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Figure 10. Committed and incurred cost on product life phase (Belay, 2009).

In figure below it is shown, that actions that may reduce this 10% could be done in

latest stage of product development process or even after product has been

launched. Thus in Figure 11 not committed costs are shown.

Figure 11. Not committed cost in the end of product development process.

On the other side, it is evident that it might take a lot of investment to improve

production, thereby companies and managers often do not try to find tools which

would have influence on this 10%. Moreover, most of the existing literature of

prototypes and mock-ups are focused on cost reduction of product during early

stages of product development, however fully functional mock-ups excellent fit for

this role.

4.3 IMPACT OF EARLY FEEDBACK

It was previously discussed that fully functional mock-ups provides different

benefits for the product development process such as early feedback and costs

estimations. These benefits are highly important in case if fully functional mock-

ups are used for improving exciting production. Also, since it is not relevant to

invest huge money for making a research to find the way for improvement

production, cheap cost of mock-ups is crucial.

First goal of mock-ups is learning, so if there is an idea for an improvement in

production mock-ups are the best tool to understand cheap and fast ‘Will it work or

not’. Second is integration helps managers estimate how much money will this

innovation cost, it should not be forgotten, that the costs reduction will not be huge,

thus estimation of the cost shows is it relevant to invest in this improvement or not.

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Third is communication. It is also important, since managers could influence on

people who decide in company their invest money, that invention is working well

and do not requires huge investments. Thus, using fully functional mock-ups to

improve production is an effective tool and could potentially impact on cost of

already launched product up to 10%.

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5 CONCLUSIONS

In today’s business market competition becomes fierce and companies to stay in

business need to develop product which will be not only satisfies customer needs,

however also would be cost efficient. Using prototypes during product

development process could have positive impact on costs, however, companies

often do not realize that there are opportunities for cost reduction in late stages of

product development or even after a product has been launched.

The objective of the paper was to introduce fully functional mock-ups as a tool for

cost reduction of an existing product by improvement of production process. For

this purpose the types of prototypes were discussed. Then, product development

with its processes was explained and the behavior of cost during stages of

production process was analyzed. In last chapter, fully functional mock-ups were

introduced and their application for improvement production of a product was

discussed.

The key findings of the paper show that companies are able to reduce cost of

development process of already launched product by using fully functional mock-

ups. The most valuable benefit of fully functional mock-ups is that they allow

receiving feedback fast and cheap.

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