PRODUCT AND SERVICE DESIGN Operations and Supply Strategy Framework 2 2 UNDERSTANDING PRODUCTIVITY Productivity is a common measure on how well resources are being used In the broadest sense it can be defined as the following ratio ID: 748750
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OPERATIONS MANAGEMENT
MODULE- II
PRODUCT AND SERVICE DESIGNSlide2
Operations and Supply Strategy Framework
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2Slide3
UNDERSTANDING PRODUCTIVITY
Productivity
is a common measure on how well resources are being used. In the broadest sense, it can be defined as the following ratio:
Outputs
Inputs
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3Slide4
Total Measure Productivity
Total Measure Productivity =
Outputs
Inputs
or
=
Goods and services produced All resources used
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4Slide5
Partial Measures of Productivity
Partial measures of productivity =
Output
or
Output
or
Output
or
Output
Labor Capital Materials Energy
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Multifactor Measures of Productivity
Multifactor measures of productivity =
Output
Labor + Capital + Energy
or
Output
Labor + Capital + Materials
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Exercise on Productivity Measurement
You have just determined that your service employees have used a total of 2400 hours of labor this week to process 560 insurance forms. Last week the same crew used only 2000 hours of labor to process 480 forms.
Which productivity measure should be used?
Is productivity increasing or decreasing?
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Exercise on Productivity Measurement (Solution)
You have just determined that your service employees have used a total of 2400 hours of labor this week to process 560 insurance forms. Last week the same crew used only 2000 hours of labor to process 480 forms.
Which productivity measure should be used?
Answer: Could be classified as a Total Measure or Partial Measure.
Is productivity increasing or decreasing?
Answer: Last week’s productivity = 480/2000 = 0.24, and this week’s productivity is = 560/2400 = 0.23. So, productivity is decreasing slightly.
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CASE: IKEA: Design And PricingSlide10
What are IKEA”s competitive priorities?
IKEA’s Corporate Mantra: “ LOW PRICE WITH MEANING”
MAXIMIZE VALUE at LOW COST
Make the Product Offerings LESS EXPENSIVE but NOT CHEAPSlide11
Describe IKEA’s process for
Developing a New Product.
Five Stages:
Pick a price.
Choose a manufacturer.
(3) Design the product.
(4) Ship it. (5) Sell it.Slide12
IKEA’s process for Developing a New Product.
Pick a price. :
Low Price begins at the Drawing Board
Cross Functional Team comprising: Design, Product Development & Purchase
Deptts
.
All components of costing such as, Basic Material, Size, Features, Colour,Packing, Shipping etc. discussed for low cost operation Exp: Green/ Yellow/ White instead of RedSlide13
IKEA’s process for Developing a New Product.
Key Points:
Lighter color: Green/ Yellow/ White instead of Red
Environment friendly, free from Lead & Cadmium
IKEA Code of Conduct banning Child Labor, Health & Safety at work place
Quality Control & Audits by External AgenciesSlide14
IKEA’s process for Developing a New Product.
Key Points:
Internal Competition to select the best design
Competitors given brief about Key functions, materials , manufacturing and the price
Best design is the one which provides maximum functionality at indicated price like the Swiss Army Knives
Size and handles of Mugs redesigned shorter to accommodate 2024 mugs on each pallet
Transportation cost optimised by increasing number to 2024Slide15
IKEA’s process for Developing a New Product.
Key Points:
IKEA practices the concept of FLAT for packing products
Learnt concept in 1956 from a customer carrying table dissembled flat
Bulky
furnitures
packed in rectangular flat cartons with detailed assembly drawings with required bolts/ nuts . Clamps and screws In IKEA, waste is a sin. Employees wage a war against waste at all fronts.Waste of Space in packing is avoided. They don’t want to ship airTransportation & self assembly of furniture by customers contribute to Low cost Operations.Slide16
IKEA’s process for Developing a New Product.
Key Points:
Child Care, Food court, Information Kiosks for guidance on home décor, color coordination etc. and Display of yellow tagged Low Priced products ( BTI: Breath Taking Items) are special features.
Store Layout Guides customers through pre-determined path which augments shopping of related items before the customer arrives Billing counter
IKEA educates customers ‘How to live a modern living without expensive buying’
Collecting big flat pickings from Bins, carrying them on trolleys to the check out point, transporting them home in SUVs, assembling them according to the drawings in their chosen home settings, make millions of customers happy all over the world.Slide17
DESIGNING SEVICE OPERATIONSSlide18
Process Design in Service Operations
Three
types of Service Operations:
Quasi-Manufacturing
Customer-as-Participant
Customer-as-ProductSlide19
Process Design in Service Operations
Quasi-Manufacturing ( similar to manufacturing)
Tangible outcome receives priority over intangible
Operation takes
place
according to pre designed process flow like a manufacturing line operation
Operations could be highly automated, which may not visible to customers
Little or almost
no customer interaction
Little regard for customer relations
Example –
Kitchen of a Hotel or a restaurant
Back end office operations of a call centerPathological Lab testsSlide20
Process Design in Service Operations
Customer-as-Participant
Physical
product
may be a significant part of the
service outcome
Requires high degree of customer involvement in the processService Products may be either standardized or customized to needs of the customerExamples: ATM
,
Self-service petrol pumpsSlide21
Process Design in Service Operations
Customer-as-Product
Service outcome (Product) is the customer himself
Requires customized
service
on the customer
Deserves personal attention to customer needsInvolves high degree of customer contactQuality depends upon customer perception
Examples
:
Hair cutting Salon or a Beauty
Parlour
Doctor’s clinic
Teaching & TrainingSlide22
Copyright 2009 John Wiley & Sons, Inc.
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Service Design ProcessSlide23
Copyright 2009 John Wiley & Sons, Inc.
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23
Service concept
purpose of a service; it defines target
market and the extent of customer experience to be provided
Service packagemix
of
physical products
, experiential
and psychological
satisfaction
Service specificationsperformance specificationsdesign specifications delivery and after sales serviceProcess Design in Service OperationsSlide24
Copyright 2009 John Wiley & Sons, Inc.
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Service Process MatrixSlide25
Market
Operations
Narrow range of services
Service concept
Focused operations for a narrow marketSlide26
Market
Operations
Narrow range of services
Service concept
Focused operations for a wide marketSlide27
Market
Operations
Wide range of services
Service concept
Unfocused operations for a narrow marketSlide28
Market
Operations
Wide range of services
Service concept
Unfocused operations for a wide marketSlide29
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Characteristics of Well Designed
Service Systems
Consistent with the organization mission
User friendly
Robust
Easy to sustain
Cost effective
Effective
linkages between
back end operations
Single unifying
theme: Deliver value to customerEnsure visibility of Quality and ReliabilitySlide30
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Guidelines for Successful Service Design
Define the service package
Focus on customer’s perspective
Make
sure that managers are involved
Define quality for tangible and intangibles
Make sure that recruitment, training and rewards are consistent with service expectations
Establish procedures to handle exceptions
Establish systems to monitor serviceSlide31
Copyright 2009 John Wiley & Sons, Inc.
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Mapping
Process Flow
Any
manufacturing or service operation comprises of two broad set of activities, namely:Activities related to main production or service operation
Activities related to support functions, such as: Inspection & quality control
, Storage & movement, Supply & distribution and other Process delaysSlide32
Copyright 2009 John Wiley & Sons, Inc.
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Process Flowchart Symbols
Operations
Inspection
Transportation
Delay
StorageSlide33
W
F
S
S
S
S
S
B
C
F
K
I
T
MCDONALD SERVICE FLOW CHART
C: Customer- B: Billing- K: Kitchen- W: Waiting- I: Inspection – T:Tray- F: Fries-F: Fill Slide34
Designing for Ease of Production
Ease of Production
(
Manufacturability
)
Specifications - Precise information about the characteristics of the productTolerances - Minimum & maximum limits on a dimension that allows the item to function as designedStandardization - Reduce variety among a group of products or partsSimplification - Reduce or eliminate the complexity of a part or product Slide35
Case:
Narayan
Hridayalaya
Vision and Values
Make Heart Surgery affordable to poor & common man
Grow exponentially from 5000 Bed Hospital to 30000 Beds in 5 years
No poor and children would be denied medical care for lack of money
“ Hands which help are better than the lips that pray”: Mother Teresa
“
When you do your work without expecting anything in return,
just for the joy of bringing happiness to others, that’s when, you realize it is not your hands, which do the job, it is the hands of God.”: Driving Motivation of Dr Devy Shetty “ Slide36
Case: Narayan
Hridayalaya
Business Model:
Seed money from philanthropist Father-in-law
Adopting Business Model of Wal-Mart :Economy of scale is the main Mantra
Strategic Plans to grow from 5000 Beds to 50000 in 5 years
24 Operation Theatres and other infrastructure support to enable 50 major heart surgeries daily
Large number of pathological tests per day per machine brings down unit cost of the test
Machines for tests hired on long term lease: suppliers are happy with the revenue earned on Reagents sale
Dedicated team of Doctors willing to work on even half the normal salary
Dr
Shetty himself provides consultations to at least 2 patients every five minutesLean Staffing brings down costs as well as corrupt practicesSlide37
Case: Narayan
Hridayalaya
Strategies for making the enterprise Cost Effective:
Collaborations:
ISRO providing Satellite Service Links to smaller HospitalsTelemedicine made available to remote locationsAnesthetics in US provide support in surgery on infants
Biocon
developing new drugs which are considerably cheaper than conventional ones
Karnataka Govt. support through Micro Health Scheme called ‘
Yashaswini
’ on small premium of Rs 10 for farmers
Dedicated team of Doctors working at half the salary to pursue service to humanity (Self actualization needs)