Talk 02. Goods and Services Design

Introduction to
Operations Management
Linh Phuc
Email: tgkhoafmt01@hanu.edu.vn
MSTeam: tgkhoafmt10@hanu.edu.vn
• Reading material: Chapter 4, Stevenson, W.J. (2021). Operations Management,
edition 14th. New York, USA: McGraw-Hill/Irwin.
• Case study: P. 220 – 222, Chapter 5, Jay Heizer, Barry Render (2020). Operations
Management, Sustainability and Supply chain management, edition 13th. Pearson.
Content
01 • Goods or services?
02 • Factors to be considered in designation
03 • Product Life Cycle
04 • Level of Standardization
05 • Product Development Stages
06 • Popular design software
1-3
01 Good or Service?
A. Definition and Characteristics
B. Goods-service Continuum
1-4
Goods are physical items that include raw materials, parts, subassemblies, and
final products (E.g: Automobile, Computer, Oven, Shampoo)
Services are activities that provide some combination of time, location, form or
psychological value (E.g: Air travel, Education, Haircut, Legal counsel)
1-5
B. Goods-service Continuum
1-6
Factors to be
02 considered in
designation
a) Legal
b) Ethical
c) Human factors
d) Cultural factors
e) Environmental factors
1-7
a) Legal Considerations
 Product Liability: A manufacturer is liable for any

injuries or damages caused by a faulty product.
b) Ethical Considerations
• Produce designs that are consistent with the goals of the organization. For instance, if
the company has a goal of high quality, don’t cut corners to save on costs, even in areas
where it won’t be apparent to the customer.
• Give customers the value they expect.
• Make health and safety a primary concern. At risk are employees who will produce
goods or deliver services, workers who will transport the products, customers who will
use the products or receive the services, and the general public, which might be
endangered by the products or services.
c) Human factors
 Safety
 Liability
 New features vs. ease of use

d) Cultural factors
e) Environmental factors: sustainability
 Cradle-to-grave assessment: The assessment of the
environmental impact of a good or service throughout its useful
life.
 3Rs:
Value analysis: Remanufacturing:

Examination of the Refurbishing used
function of parts and products by replacing
materials in an effort worn-out or defective
to reduce cost and/or components.
improve product
performance.
3Rs
Recycling: Recovering
materials for future
use.
e) Environmental factors: sustainability (cont. 1)
e) Environmental factors: sustainability (cont. 2)
03 Product Life Cycle
Definition: the length of time from a product first being introduced to

consumers until it is removed from the market.
1-15
Products are still Product design has Management may need
being “finetuned” By the time a
begun to stabilize, to be ruthless with those
for the market. product is mature,
and effective products whose life
Unusual competitors are
forecasting of cycle is at an end.
expenditures may established. So
capacity Dying products are
occur for high-volume,
requirements is typically poor products
(1) R&D innovative
necessary. Adding in which to invest
(2) Process production may be
capacity or resources and
modification appropriate.
enhancing managerial talent.
and Improved cost
existing capacity Unless dying products
enhancement control, reduction in
to accommodate make some unique
(3) Supplier options, and a
the increase in contribution to the
paring down of the
development. product demand firm’s reputation or its
product line may be
may be necessary. product line or can be
effective or
sold with an unusually
necessary for
high contribution, their
profitability and
production should be
market share.
terminated.
INTRODUCTION GROWTH MATURITY DECLINE
1-16
Level of
04 The extent to which a
Standardization product, service, or
process lacks variety.
a) Pros and Cons of Standardization

b) Mass Customization
• Delayed differentiation
• Modular design
1-17
a) Pros and Cons of Standardization
Pros Cons
+ Fewer parts to deal with in inventory - Designs may be frozen with too many
and in manufacturing. imperfections remaining.
+ Reduced training costs and time. - High cost of design changes increases
+ More routine purchasing, handling, and resistance to improvements.
inspection procedures. - Decreased variety results in less
+ Orders fillable from inventory. consumer appeal.
+ Opportunities for long production runs
and automation.
+ Need for fewer parts justifies increased
expenditures on perfecting designs and
improving quality control procedures.
b) Mass Customization
▪ Definition: a strategy of producing basically

standardized goods, but incorporating some
degree of customization.
▪ Notable tactics:
❖ Delayed differentiation
❖ Modular design
❖ Delayed Differentiation
• Delayed differentiation is a postponement tactic.
• Definition: the process of producing, but not quite completing, a product
or service, postponing completion until customer preferences or
specifications are known.
E.g: https://www.nike.com/vn/u/custom-nike-dunk-unlocked-by-you-
10001340/9060360994#Builder
❖ Modular Design
Definition: a form of standardization in which component
parts are grouped into modules that are easily replaced or
interchanged.
05 Product Development
Stages
1-22
Product concepts are
developed from a variety
of sources, both external
and internal to the firm.
Concepts that survive the
product idea stage
progress through various
stages, with nearly
constant review,
feedback, and evaluation
in a highly participative
environment to minimize
failure.
1-23
06 Popular design software
1-24

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Introduction to

02 • Factors to be considered in designation

03 • Product Life Cycle

05 • Product Development Stages

06 • Popular design software

 Product Liability: A manufacturer is liable for any

• Give customers the value they expect.

 New features vs. ease of use

Value analysis: Remanufacturing:

Definition: the length of time from a product first being introduced to

a) Pros and Cons of Standardization

▪ Definition: a strategy of producing basically

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