GOODS AND SERVICE

DESiGN

Joshua Reuben Leonares, BSActy4

A. DESIGNING GOODS AND
SERVICES

To design and improve goods and

services, most companies use
some type of structured process.
Steps 1 and 2
Strategic Mission, Analysis, and Competitive Priorities

• These steps require a significant amount of research and

innovation
• marketing, engineering, operations, and sales function, and
should involve customers, suppliers, and employees throughout
the value chain.

Step 3
Customer Benefit Package (CBP) Design and Configuration
1. Time
2. Place
3. Information
4. Entertainment
5. Exchange
6. Form
 Step 4
Detailed Goods, Services, and Process Design
• If a proposal survives the concept stage- and many do not-
each good or service in the CBP, as well as the process that
creates it, must be designed in more detail.
• This is where the designs of goods and services differ, as
suggested by the alternate paths.
• The design of a manufactured goods focuses on its physical
characteristics-dimensions, material, color, and so on.
.
 Prototype Testing

is the process by which a model (real or stimulated) is

constructed to test the product’s performance under actual
operation conditions, as well as consumer reactions to the
prototypes
Step 5
Market Introduction/Deployment
● CBP is advertised, marketed, and offered to customers.

Step 6
Marketplace Evaluation
● The marketplace is a graveyard of missed opportunities: poorly designed goods and
services and failed execution resulting from ineffective operations.
B. CUSTOMER-
FOCUSED DESIGN
● Should reflect customer wants and needs, which are often termed customer
requirements.
● Customer requirements are called the voice of the customer.
● Must translate the voice of the customer into specific technical features that
characterize a design and provide the “blueprint” for manufacturing or service
delivery.
● An effective approach for doing this is called quality function deployment (QFD).
● It is an approach to guide the design, creation, and marketing of goods and
services by integrating the voice of the customer into all the decisions.
● identifying the voice of the
customer and technical
features of the design (Left
room and Center)
● interrelationships between
any pair of technical features,
and these relationships help
in answering questions (Roof)
● assessment of the
importance of each customer
requirement and how
competitors’ products
compare (Right room)
● identify those technical
features that have the
strongest relationships to
customer requirements (Base)
C. Designing
Management
Goods
Designing Manufactured Goods

For a manufactured good such as

automobile, computer, or
textbook,design involves
determining technical
specifications such as dimensions,
tolerances, materials, and
purchased components: or choice
of fonts and page layout for a text
book.
Tolerance Design and Taguchi Loss Function

Ø Target Dimension - Nominal

Ø Range of permissible variation -Tolerance

The nominal dimension is 0.500cm but may vary anywhere in
the range 0.480 to 0.520cm. This is sometimes called the goal-
post model
Narrow tolerances
improve product functionality and perfomance, but tend to raise
manufacturing costs because they usually require higher
precision techology.

Wide tolerances
reduce costs, but may have a negative impact on product
performance.
 A Japanese engineer, maintained
that the traditional practice of setting
design specifications is inherently flawed.
The goal-post model assumes that any
value within the tolerance range is
acceptable, but those outside: are not.
Taguchi argued that the smaller the
variation from the nominal specification,
the better the quality. In turn, products are
more consistent and fail less frequently,
and thus are less costly in the long run.
Taguchi measured quality as the variation from the target value of a
design specification and then translated that variation into an
economic "loss function". This approach can be applied to both
goods and Services. Taguchi proposed measuring the loss resulting
from the deviation from the target by a quadratic function so that
larger deviations cause increasingly larger losses.

The loss function is

L(x) = k (x - T )2
L x( ) is the monetary value of the loss
associated with deviating from the
target, T;
x is the actual value of the dimension;
and
k is a constant that translates the
deviation into dollars.
Design for
Design for Reliability

Reliability is the probability that a

manufactured good, piece of
equipment, or system performs
its intended function for a stated
period of time under specified
operating conditions.
Reliability
● is a probability, that is, a value between O and 1.
● For example, a reliability of 0.9 indicates that, on
average, 97 out of 100 times the item will perform its
function for a given period of time under specified
operating conditions
● expressed as a percentage simply to be more
descriptive (97% reliable).
● Reliability can be improved by using better
components or by adding redundant components. In
either case, costs increase thus, trade-offs must be
made.
 If one component or process step fails, the entire system
fails. If we know the individual reliability, pj, for each
component, j, we can compute the total reliability of an n-
component series system, Rs. If the individual reliabilities are
denoted by , , , p p 1 2 ... pn and the system reliability is
denoted by Rs, then

Rs=(p1)(p2)(p3)...(pn)
 The entire system will fail only if all components fail; this
is an example of redundancy. The system reliability of an n-
component parallel system is
computed as

Rp = 1 - (1-p1)(1-p2)(1-p3) ... (1-pn)

Design for
Many aspects of product design
can adversely affect
manufacturability and, hence,
quality. Some parts may be
designed with features difficult
to fabricate repeatedly or with
unnecessarily tight tolerances.
● Some parts may lack details for self-alignment or features
for correct insertion.
● parts so fragile or so susceptible to corrosion or
contamination may be damaged in shipping or by internal
handling.
● Sometimes a design simply has more parts than are
needed to perform the desired functions, which increases
the chance of assembly error.
● Thus. problems of poor design may show
up as errors, poor yield, damage, or
functional failure in fabrication, assembly,
test, transport, and end use.
Design for
manufacturability (DFM)
is the process of designing a product for
efficient production at the highest level of
quality.

Product simplification
is the process of trying to simplify designs to
reduce complexity and costs and thus improve
productiv ity, quality, flexibility, and customer
satisfaction.
 The simpler the design, the fewer
opportunities for error, the faster the
flow time, the better the chance of high
process efficiency, and the more reliable
the manufactured good or service
process.
● Environmental concerns are placing increased
pressure on design.
● Pressures from mental groups clamoring for
"socially responsible" designs, states and
municipalities that are running out of space for
landfills, and consumers who want the most for
their money have caused designers and managers
to look carefully at the concept of Design
Environment.
Design for Environment (DfE)
is the explicit consideration of
environmental concerns during the
design of goods, services, and
processes, and includes such
practices as designing for recycling
and disassembly.
D. Service-Delivery System Design
Design of
services

Service Delivery Service Encounter

system
Service-delivery
system design
● Facility location and layout,
● Servicescape,
● Service process,
● Job design,
● Technology and,
● Information support
 Facility Location and Layout

• Location affects a customer's travel time and is an

important competitive priority in a service business.
• Health clinics, Rental car firms, Post offices, Health clubs,
branch banks, libraries,hotels, emergeney service facilities,
retail stores, and many other types of service facilities
depend on good location decisions.
• The layout of a facility affects process flow, costs, and
customer perception and satistaction.
 Servicescape

• The physical evidence a customer might use to form an impression.

• The servicescape also provides the behavioral setting where service
encounters take place.
• The standardization and integration of theservicescape and service
processes enhance efficiency.
 Servicescape

Ambient conditions
made manifest by sight, sound, smell, touch, and
temperature.These aredesigned into a service scape to please the
five human senses.

Spatial layout and functionality

how furniture,equipment, and office spaces are arranged.
Thisincludes building footprints and facades, streets and parking
lots.

Signs, symbols, and artifacts

the more explicit signals that communicate an image about a firm.
 Servicescape

Some servicescapes, termed lean servicescape

environments, are very simple. Online ticket outlets
and Federal Express drop-off kiosks would
qualify as lean servicescape environments. both
provide service from one simple design. More
complicated designs and service systems are
termed elaborate servicescape environments.
Examples include hospitals, airports, and
universities.
 Service Process and Job Design

Is the activity of developing efficient sequece of activities to

satisfy both internal and external customer requirements.

Service process designers must concentrate on developing

procedures to ensure that things are done right the first time, that
interactions between customers and service providers are simple and
quick, and that human error is avoided.
 Service Process and Job Design

● In many services, the customer and service provider

coproduce the service.
● For example, customers can slow down or upset service
providers and other customers at any time.
● Therefore, managers need to anticipate potential service
upsets-including those caused by customers-and develop
appropriate responses such as providing extra capacity,
training service providers on proper behavior, and
empowering them to deal with problems when they occur.
● Superior service management training is critical for excellent
service process and job design.
Technology and information Support
Systems
● Hard and soft technologies are important factors in designing
services to ensure speed accuracy, customization, and
flexibility.
● Nurses, airline flight attendants, bank tellers. police insurance
claims processors, dentists, auto mechanics and service-
counter personnel, engineers, hotel room maids, financial
portfolio managers, purchasing buyers, and waiters.
E. Service-
Encounter Design
- interaction between the
serive provider and the
customer.

- Perceptions of the firm, its

goods and services are
created.
 Principal Elements of Service-Encounter design

Customer-contact Recognition and

behavior and skills Reward

Service provider
selection, development Service recovery and
and empowerment guarantees
Customer-contact behavior and skills
Customer contact
• refers to the 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 – high customer contact

Low-contact systems – low customer contact
Customer-contact behavior and skills
Customer-contact requirements:

1. Measurable performance levels or

expectations the quality of customer contact
with representatives
2. Rresponse time, service management skills
and behavioral requirements
 Service provider selection,
development and empowerment
- carefully selecting, training well, and empowering employees to
meet and exceed customer expectations.

• Recruiting – selecting those that show the ability and desire

to develop good customer relationships.

• Empowerment – giving people authority to make decisions

based on what they feel is right, to have control over their work,
to take risks, and learn from mistakes and promote change.
 Recognition and reward
Key motivational factors
• Recognition
• Advancement
• Achievement
• Nature of the work

Good compensation system – attract, retain and motivate employees

 Service recovery and guarantees
“ unhappy customers”

Service upset – any problem a customer has with the service delivery
system

Service guarantee – promise to reward and compensate customer if a

service upset occurs (explicit and implicit)

Objectives: setting customer expectations prior to experiencing the service,

forcing operational improvement, building customer loyalty and brand
image and increasing sales.
 Service recovery and guarantees
Good service guarantee – determined services, procedures for customers
and best payout amount.
Service recovery – correcting a service upset and satisfying the customer

What employees do:

Use service-recovery processes
Determine customer’s feelings and respond sympathetically
Make effort to resolve the problem
F. An Integrative Case
Study of LensCrafters
Eyeglass provider “in about an hour”
 Step 1 and 2. Strategic
Mission, Market Analysis, and
Competitive Priorities
LensCrafter’s Mission Statement

• Creating customers for life by

delivering legendary customer service;
• Developing and energizing associates
and leaders in the world’s best
workplace;
• Crafting perfect-quality eyewear in
about an hour; and
• Delivering superior overall value to
meet each customer’s individual
needs.
Step 3. Customer Benefit
Package Design and
Configuration

Exhibit 4.11. LensCrafter’s

Customer Benefit Package
Step 4a and b. Manufactured
Good Design and Product Selection
Other issues LensCrafters
would need to consider:

• Materials
• Inventory
• Equipment
• Production procedures and
Quality checking
Step 4c. Service-Delivery
System Design
LensCrafters are located in high-
traffic areas.

Exhibit 4.12. A Schematic

View of a Typical
LensCrafter’s Store Layout
Step 4d. Service Encounter Design
Each job at LensCrafters requires both
technical skills and service management skills.

Key issues that managers need to consider:

• Human resource management

• Service upsets and recovery Service guarantee design
• Grooming and appearance standards
• Behavioral standards Unconditional
• Employee performance comprehensive 90-day
• “One-hour” Service CBP
Steps 5 and 6. Market
Introduction/Development and
Evaluation
• replicating design concept in
new location

• develop processes to introduce

change in all existing locations

• LensCrafter’s manufacturing
and service design depends on
a variety of operation
management concepts.
Thanks!
Do you have any questions?

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