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OM Goods and Service Design 6 COLLIER/EVANS 5 Copyright 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Slide 2 LEARNING OUTCOMES 2 Copyright 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH6 1Describe the steps involved in designing goods and services 2Explain the concept and application of quality function deployment 3Describe how the Taguchi loss function, reliability, design for manufacturability, and design for sustainability are used for designing manufactured goods Slide 3 3 Copyright 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH6 LEARNING OUTCOMES (continued) 4Explain the five elements of service delivery system design 5Describe the four elements of service encounter design 6Explain how goods and service design concepts are integrated at LensCrafters Slide 4 4 Copyright 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH6 Introduction Every design project is a series of trade-offs between: Technology and functionality Ambition and affordability Desires of the people creating the object and needs of the people using it Slide 5 5 Copyright 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH6 Steps Involved in Designing Goods and Services Strategic mission and vision Strategic and market analysis, and understanding competitive priorities Customer benefit package design and configuration Slide 6 6 Copyright 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH6 Steps Involved in Designing Goods and Services Detailed goods, service, and process design For manufactured goods -Manufactured design and development -Process selection and design For services -Service and service delivery design -Service encounter design Market introduction/deployment Marketplace evaluation Slide 7 7 Copyright 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH6 Customer-Focused Design Customer requirements - Wants and needs are reflected through the design of good or service Voice of the customer: Customer requirements, as expressed in the customers own terms Quality function deployment(QFD): Approach to guide the design, creation, and marketing of goods and services by: -Integrating the voice of the customer into all decisions Slide 8 8 Copyright 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH6 Building the House of Quality Determine customer requirements through the voice of the customer (VOC) Define technical requirements of the product Determine interrelationships between the technical requirements Slide 9 9 Copyright 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH6 Building the House of Quality Relationship matrix defines what technical requirements satisfy VOC needs Customer priorities and competitive evaluation help select which VOC requirements the product should focus on Slide 10 10 Copyright 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5| CH6 Exhibit 6.2 The House of Quality Slide 11 11 Copyright 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH6 Tolerance Design Determining the acceptable tolerance For manufactured goods, design blueprints specify a target dimension (nominal), along with a range of permissible variation (tolerance) Slide 12 12 Copyright 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5| CH6 Exhibit 6.3 Traditional Goal Post View of Conforming to Specifications Slide 13 13 Copyright 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH6 Taguchi Loss Function Genichi Taguchi, a Japanese engineer, maintained traditional practice of setting design specifications is flawed Argument The smaller the variation about the nominal specification, the better the quality In turn, products are more consistent, fail less frequently, and will be less costly in the long run Slide 14 14 Copyright 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH6 Taguchi Loss Function L(x) = k(x T )2 Where -L(x) - Monetary value of the loss associated with deviating from the target, T -x - Actual value of the dimension -k - Constant that translates the deviation into dollars Slide 15 15 Copyright 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5| CH6 Exhibit 6.4 Nominal-Is-Best Taguchi Loss Function Slide 16 16 Copyright 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH6 Design for Reliability Reliability: Probability that goods and services performs its intended function for stated period of time under specified operating conditions Probability - Value between 0 and 1 Slide 17 17 Copyright 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH6 Design for Reliability Series system - If one component fails, the entire system fails Reliability of a series system - Product of the individual probabilities of each process in a system -Rs = (p1)(p2)(p3)... (pn) Slide 18 18 Copyright 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5| CH6 Exhibit 6.7 Structure of a Serial System Slide 19 19 Copyright 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH6 Design for Reliability Parallel systems - Functions are independent and the entire system will fail only if all components fail Rp = 1 (1 p1)(1 p2)(1 p3)... (1 pn) Slide 20 20 Copyright 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5| CH6 Exhibit 6.8 Structure of a Parallel System Slide 21 21 Copyright 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH6 Design for Manufacturability (DFM) Process of designing a product for efficient production at the highest level of quality Product simplification: Process of trying to simplify designs to reduce complexity and costs -Improves: Productivity Quality Flexibility Customer satisfaction Slide 22 22 Copyright 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH6 Design for Sustainability Design for environment (DfE): Explicit consideration of environmental concerns during the design of goods, services, and processes Designing for recycling Disassembly Slide 23 23 Copyright 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH6 Service Delivery System Design Includes Facility location and layout Servicescape Process and job design Technology and information support systems Slide 24 24 Copyright 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH6 Facility Location and Layout Location affects a customers travel time Important competitive priority in a service business Layout affects process flow, costs, and customer perception and satisfaction Slide 25 25 Copyright 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH6 Servicescape Physical evidence that customer can use to form an impression Provides the behavioral setting where service encounters take place Standardization - Enhances efficiency, especially for multiple site organizations Slide 26 26 Copyright 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH6 Dimensions and Types of Servicescape Dimensions Ambient conditions Spatial layout and functionality Signs, symbols, and artifacts Types Lean servicescape environment: Provide service using simple designs Elaborate servicescape environment: Provide service using more complicated designs and service systems Slide 27 27 Copyright 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH6 Service Process Design Activity of developing an efficient sequence of activities to: Satisfy internal and external customer requirements Develop procedures to ensure that: Things are done right the first time Interactions between customers and service providers are simple and quick Human error is avoided Slide 28 28 Copyright 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH6 Technology and Information Support Systems Hard and soft technology is an important factor in designing services Ensure: Speed Accuracy Customization Flexibility Slide 29 29 Copyright 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH6 Service Encounter Design Focuses on the interaction, directly or indirectly, between the service provider and the customer Principal elements -Customer contact behavior and skills -Service provider selection, development, and empowerment -Recognition and reward -Service recovery and guarantees Slide 30 30 Copyright 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH6 Customer Contact Behavior Physical or virtual presence of the customer in the service delivery system during a service experience Measured by the percentage of time the customer must be in the system relative to the total time it takes to provide the service -High-contact systems -Low-contact systems Slide 31 31 Copyright 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH6 Customer Contact Requirements Measurable performance levels that define the quality of customer contact with representatives of an organization Technical requirements as response time Service management skills such as cross-selling other services Behavioral requirements Slide 32 32 Copyright 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH6 Service Provider Selection, Development, and Empowerment Recruit and train employees to exceed customer expectations Empowerment: Giving people authority to make decisions based on: Intuition Control over the work Taking risks and learning from mistakes Promoting change Slide 33 33 Copyright 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH6 Recognition and Reward Key motivational factors Recognition Advancement Achievement Nature of the work Good compensation system can help to attract, retain, and motivate employees Slide 34 34 Copyright 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH6 Service Guarantees Promise to reward and compensate a customer if a service upset occurs during the service experience Service upset: Problem that a customer has faced with the service delivery system Service failure Error Defect Mistake Crisis Slide 35 35 Copyright 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH6 Service Recovery Process of correcting a service upset and satisfying the customer Steps Begin immediately after a service upset Document the process and train employees Listen to the customer and respond sympathetically Resolve the problem quickly, provide an apology, offer compensation Slide 36 36 Copyright 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH6 An Integrative Case Study of LensCrafters Steps 1 and 2 - Strategic mission, market analysis and competitive priorities Step 3 - Customer benefit package design and configuration Steps 4a and b - Manufactured good design and process selection Step 4c - Service-delivery system design Slide 37 37 Copyright 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH6 An Integrative Case Study of LensCrafters Step 4d - Service encounter design Steps 5 and 6 - Market introduction/deployment and evaluation Slide 38 38 Copyright 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH6 An Integrative Case Study of LensCrafters Mission statement - Focused on being the best by: Creating customers for life by delivering legendary customer service Developing and energizing associates and leaders in the worlds best work place Crafting perfect quality in about an hour Delivering superior overall value to meet each customers individual needs Slide 39 39 Copyright 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5| CH6 Exhibit 6.11 One Example View of LensCrafters Customer Benefit Package Slide 40 40 Copyright 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH6 An Integrative Case Study of LensCrafters Manufactured good design and process selection Manufacturing process is integrated into the service facility to provide rapid order response, yet not sacrifice quality Equipment used in labs is technologically advanced in the industry Eyewear is manufactured to specifications in a clean, modern and professionally run facility Slide 41 41 Copyright 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5| CH6 Exhibit 6.12 A Schematic View of a Typical LensCrafters Store Layout Slide 42 42 Copyright 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH6 An Integrative Case Study of LensCrafters Service encounter design Each job requires both technical and service management skills Associates are well trained, friendly, and knowledgeable about their jobs Lab technicians are certified in all work tasks and processes Slide 43 43 Copyright 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH6 An Integrative Case Study of LensCrafters Market introduction/deployment and evaluation Develop processes to introduce changes into all existing locations -To maintain operational consistency and achieve its strategic objectives Slide 44 SUMMARY 44 Copyright 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH6 To design and improve goods and services, most companies use the steps involved in designing goods and services Taguchi loss function: L(x) = k(x T )2 Essential to know the elements of service delivery system design and elements of service encounter design LensCrafters manufacturing and service design depends on a variety of operations management concepts Slide 45 KEY TERMS 45 Copyright 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH6 Customer contact Design for environment (DfE) Design for manufacturability (DFM) Elaborate servicescape environment Empowerment High-contact systems Lean servicescape environment Low-contact systems Product simplification Prototype testing Slide 46 KEY TERMS 46 Copyright 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH6 Quality function deployment (QFD) Reliability Service delivery system design Service encounter design Service guarantee Service process design Service recovery Service upset Servicescape Voice of the customer Slide 47 47 Copyright 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. OM5 | CH6