Operations Management / Supply Chain Management

Module 04.01 Key Concept: Product Life Cycle Managment and Quality Function Deployment

Product Life Cycles can be any length – from a few days to decades depending on the product or service.  Think about products or services you have purchased.  How much change has happened there?  Look at the electronics industry vs. the diaper industry vs. the electric utility business.  Are there differences Life Cycles?

Any distinct Life Cycle goes through 4 general phases: Introduction, Growth, Maturity, and Decline.  Each one has different issues to consider.

  • Introductory Phase: Fine tuning may warrant unusual expenses for: Research, Product development, Process modification and enhancement, Supplier development.
  • Growth Phase: Product design begins to stabilize and effective forecasting of capacity becomes necessary as adding or enhancing capacity may be necessary.
  • Maturity Phase: Competitors are now likely established.  High volume, innovative production may be needed.  Improved cost control, reduction in options, and paring down of the product line will likely be required.
  • Decline Phase: Unless product makes a special contribution to the organization, there should be a plan to terminate the offering.

There are therefore different operational change and cost implications at each Phase.

A Product by Value Analysis can be useful / required to drive strategic product development, promotion and withdraw decisions.  In this process company analysts lists products in descending order of their individual dollar contribution to the firm as well as the total annual dollar contribution of the product.  This information can be used to helps management evaluate alternative strategies and prioritize actions going forward.

We already reviewed the importance of creating products and services that meet customer needs.   In general this requires excellent understanding of the customer as well as all the changes happening in the business / industry and external environment such as: Economic change, Sociological and demographic change, Technological change, Political and legal change, Market practice, professional standards, suppliers, distributors.

Basic Product Development project move through many different stages.  Requirements will of course vary by product / service segment and industry but all follow a general framework presented in the text.

This process can often be complex and have a long realization time frame from idea creation to product / service launch (market realization).  Formalized approaches are need to manage costs, expedite time to market and manage costs.  Quality Function Deployment is one of these processes.

Quality Function Deployment (QFD) is  methodology designed to ensure that all the major requirements of the customer are identified and subsequently met or exceeded through the resulting product design process   QFD tries to
eliminate the gap between what the customer wants in a new product and what the product is capable of delivering.   In general, the process is designed to ensure that Products and Services are defined and developed so that customer needs will be met with quality products / services at lowest cost.  The basic process uses a series of seven steps.  Each one is framed as a Matrix and connected they create what is referred to as the “House of Quality”.

  • Identify customer wants
  • Identify how the good/service will satisfy customer wants
  • Relate customer wants to product hows
  • Identify relationships between the firm’s hows
  • Develop customer importance ratings
  • Evaluate competing products
  • Compare performance to desirable technical attributes

The text provides an example for the design of a new camera and goes through the process in excellent detail.   The final outcome (House of Quality) of the camera is presented quite clearly.
Imagine what the House of Quality might look like for a new automobile or a Cruise Ship or a Computer, or a new Soft Drink.  You may need to “Paper” the auditorium with sticky notes and flip chart sheets 🙂
The QFD Process ensures that resources are fully allocated and deployed throughout the organization in response to Customer requirements.
In a traditional approach, new product / service development occurs sequentially within distinct departments.  Specific duties and responsibilities are defined.  It is difficult to foster forward thinking.  A Champion / Product manager drives the product through the product development system and related organizations.
A Team / Concurrent engineering approach can be much more effective.  Cross functional teams are created with representatives from all disciplines or functions.  Some examples are: Product development teams, design for manufacturability teams, value engineering teams.  Japanese company go beyond the Team to a “whole organization” approach.  Here there are no organizational divisions.  The benefits of a Team approach that focuses on Manufacturability and Value Engineering are well documented:
  • Reduced complexity of the product / service
  • Reduction of environmental impact
  • Additional standardization of components
  • Improvement of functional aspects of the product
  • Improved job design and job safety
  • Improved maintainability (serviceability) of the product
  • Robust design
Several key issues should be considered in product design:
  • Robust design
  • Modular design
  • Computer-aided design (CAD)
  • Computer-aided manufacturing (CAM)
  • Virtual reality technology
  • Value analysis
  • Sustainability and Life Cycle Assessment (LCA)

Robust Design: Product is designed so that small variations in production or assembly do not adversely affect the product.  Typically this results in lower cost and higher quality.

Modular Design: Products are designed in easily segmented components.  This adds flexibility to both production and marketing with the ultimate benefit of improved ability to satisfy customer requirements.

Computer Aided Design (CAD): Involves the use of computers to design products and prepare engineering documentation.  This results in shorter development cycles, improved accuracy and lower cost.  Information and designs can be deployed worldwide.

Computer Aided Manufacturing (CAM): Involves the use of  specialized computers and programs to control manufacturing equipment.  It is often driven by the CAD system (CAD/CAM).   The use of CAD and CAM can result in the following benefits: higher product quality; shorter design time; production cost reductions; better database availability and a new range of capabilities.

Virtual Reality Technology: represents computer technology used to develop an interactive, 3-D model of a product from the basic CAD data.  It allows people to ‘see’ the finished design before a physical model is built.  This approach is very effective in large-scale designs such as a plant layout.

Value Analysis: focuses on design improvement during production.  It seeks improvements leading either to a better product or a product which can be produced more economically with less environmental impact.

Sustainability and Life Cycle Assessment (LCA): Sustainability means meeting the needs of the present without compromising the ability of future generations to meet their needs.  LCA is a formal evaluation of the environmental impact of a product.

Product life cycles are becoming shorter and the rate of technological change is increasing.  Developing new products faster can result in a competitive advantage.  This frames the basic premise for Time-Based Competition.
Different approaches can be applied to what is referred to a Product Development Continuum.
Purchasing technology by acquiring a firm can speeds development but may present issues concern the fit between the acquired organization and product and the host.
Joint Ventures can enhance the learning of both firms and result in shared risk to both organizations.
Alliances involve cooperative agreements between independent organizations.  This approach is useful when technology is newly developing.  As with Joint Ventures this approach results in reduced risks.