Products and services are often the first thing that customers see of a company, so they should have

an impact.
Good design enhances profitability; it satisfies customers, communicates the purpose of the product or service to its market and brings financial
rewards to the business.
Design helps businesses connect strongly with their customers by anticipating their real needs.
Products and services three aspects:
1. concept, which is the understanding of the nature, use and value of the service or product;
2. package of ‘component’ products and services that provide those benefits defined in the concept;
3. process, which defines the way in which the component products and services will be created and delivered.
Concept generation A stage in the product and service design process that formalizes the underlying idea behind a product or service.
Transformed resources:
• technical information
• market information
• time information
Transforming resources:
• test and design equipment
• design and technical staff
Performance is measured by its:
• quality
• speed
• dependability
• flexibility
• cost
Marketing, the function generally responsible for identifying new product or service opportunities, may use many market research tools for
gathering data from customers in a formal and structured way, including questionnaires and interviews.
Focus groups, for example, are one formal but unstructured way of collecting ideas and suggestions from customers.
The stages of product/service design:
1. Concept generation
2. Concept screening
3. Preliminary design
4. Evaluation and improvement
5. Prototyping and final design
The stages of design – from concept to specification:
1. Ideas from customers
2. Listening to customers
3. Ideas from competitor activity
4. Ideas from staff
5. Ideas from research and development
Reverse engineering The taking apart or deconstruction of a product or service in order to understand how it has been produced (often by a
competing organization).
Research and development (R&D) The function in the organization that develops new knowledge and ideas and operationalizes the ideas to form
the underlying knowledge on which product, service and process design are based.
Three broad categories of design criteria:
1. Feasibility The ability of an operation to produce a process, product or service.
2. Acceptability The attractiveness to the operation of a process, product or service.
3. Vulnerability The risks taken by the operation in adopting a process, product or service.
Design funnel A model that depicts the design process as the progressive reduction of design options from many alternatives down to the final
design.
Creativity is a vital ingredient in effective design.
Component (or product) structure Diagram that shows the constituent component parts of a product or service package and the order in which the
component parts are brought together (often called components structure).
Three common approaches to complexity reduction:
1. Standardization The degree to which processes, products or services are prevented from varying over time.
2. Commonality The degree to which a range of products or services incorporate identical components (also called parts commonality).
3. Modularization The use of standardized sub-components of a product or service that can be put together in different ways to create a
high degree of variety
Three stage to evaluate and improve the preliminary design:
1. quality function deployment (QFD) A technique used to ensure that the eventual design of a product or service actually meets the needs
of its customers (sometimes called house of quality).
2. value engineering (VE) An approach to cost reduction in product design that examines the purpose of a product or service, its basic
functions and its secondary functions.
 3. taguchi methods A design technique that uses design combinations to test the robustness of a design.
Service designers need to plan for such contingencies:
1. foul weather – the need for bad-weather alternatives;
2. equipment failure – the provision of enough equipment to cover for maintenance;
3. staff shortages – flexible working to allow cover from one area to another;
4. accidents – the ability to deal with an accident without jeopardizing the other children in the group, with easily accessible first-aid
equipment, and using facilities and equipment that are easy to clean and unlikely to cause damage to children;
5. illness – the ability to deal with ill children who are unable to take part in an activity.
Virtual prototype A computer-based model of a product, process or service that can be tested for its characteristics before the actual process,
product or service is produced.
Computer-aided design (CAD) A system that provides the computer-ability to create and modify product, service or process drawings.
Interactive design The idea that the design of products and services on one hand, and the processes that create them on the other, should be
integrated; merging the design of products/services and the processes.
Time to market (TTM) Its benefits come from the reduction in the elapsed time for the whole design activity, from concept through to market
introduction.
Number of factors have been suggested which can significantly reduce time to market for a product or service:
1. simultaneous development of the various stages in the overall process;
2. an early resolution of design conflict and uncertainty;
3. an organizational structure which reflects the development project.
Simultaneous (or concurrent) engineering Overlapping these stages in the design process so that one stage in the design activity can start before
the preceding stage is finished, the intention being to shorten time to market and save design cost (also called simultaneous engineering or
concurrent engineering).
Supply network The network of supplier and customer operations that have relationships with an operation.
Supply side The chains of suppliers, suppliers’ suppliers,etc.that provide parts,information or services to an operation.
Demand side The chains of customers, customers’ customers,etc. that receive the products and services produced by an operation.
First-tier The description applied to suppliers and customers who are in immediate relationships with an operation with no intermediary operations.
Second-tier The description applied to suppliers and customers who are separated from the operation only by first-tier suppliers and customers.
Immediate supply network The suppliers and customers who have direct contact with an operation.
Total supply network All the suppliers and customers who are involved in supply chains that ‘pass through’ an operation.
Second-tier suppliers:
1. Chemical company
2. Paper and cardboard supplier
3. Ink supplier
4. Recruitment agency
5. Cleaning materials supplier
6. Equipment supplier
First-tier suppliers:
1. Plastic stockiest
2. Packaging supplier
3. Security services
4. Cleaning services
5. Maintenance services
First-tier customers:
1. Wholesaler
2. Retailers
Second-tier customers:
1. Retailer
2. Retail customers
Downstream The other operations in a supply chain between the operation being considered and the end customer.
Upstream The other operations in a supply chain that are towards the supply side of the operation.
There are three important reasons for taking a supply network perspective:
1. It helps an understanding of competitiveness
2. It helps identify significant links in the network.
3. It helps focus on long-term issues.
Outsourcing The practice of contracting out to a supplier work previously done within the operation.
Vertical integration The extent to which an operation chooses to own the network of processes that produce a product or service, the term is often
associated with the ‘do or buy’ decision.
Location The geographical position of an operation or process.
Long-term capacity management The set of decisions that determine the level of physical capacity of an operation in whatever the operation
considers to be long-term; this will vary between industries, but is usually in excess of one year.
Disintermediation The emergence of an operation in a supply network that separates two operations that were previously in direct contact.
Co-opetition All the players in the network, whether they are customers, suppliers, competitors or complementors, can be both friends and
enemies at different times.
Vertical integration can be defined in terms of three factors:
1. The direction of vertical integration should an operation expand by buying one of its suppliers or by buying one of its customers? The
strategy of expanding on the supply side of the network is sometimes called backward or upstream vertical integration
2. The extent of vertical integration how far should an operation take the extent of its vertical integration? Some organizations deliberately
choose not to integrate far, if at all, from their original part of the network.
3. The balance among stages is not strictly about the ownership of the network but rather the exclusivity of the relationship between
operations.
It was reputedly Lord Sieff, one-time boss of Marks & Spencer, the UK-based retail organization, who said, ‘There are three important things in
retailing:
1. Location
2. Location
3. Location
Two stimuli often cause organizations to change locations:
1. Changes in demand A change in location may be prompted by customer demand shifting.
2. Changes in supply The other stimulus for relocation is changes in the cost, or availability, of the supply of inputs to the operation.
The objectives of the location decision:
1. the spatially variable costs of the operation (spatially variable means that something changes with geographical location);
2. the service the operation is able to provide to its customers;
3. the revenue potential of the operation.
Supply-side factors:
1. labour costs
2. land costs
3. energy costs
4. transportation costs
5. community factors
Demand-side factors :
1. labour skills
2. suitability of site
3. image
4. convenience for customers
Community factors:
1. local tax rates;
2. capital movement restrictions;
3. government financial assistance;
4. government planning assistance;
5. political stability;
6. local attitudes to ‘inward investment’;
7. language;
8. local amenities (schools, theatres, shops, etc.);
9. availability of support services;
10. history of labour relations and behaviour;
11. environmental restrictions and waste disposal;
12. planning procedures and restrictions.
Location techniques:
1. Weighted-score method A technique for comparing the attractiveness of alternative locations that allocates a score to the factors that are
significant in the decision and weights each score by the significance of the factor.
2. Centre-of-gravity method A technique that uses the physical analogy of balance to determine the geographical location that balances the
weighted importance of the other operations with which the one being located has a direct relationship.
Fixed cost breaks The volumes of output at which it is necessary to invest in operations facilities that bear a fixed cost.
Economies of scale The manner in which the costs of running an operation decrease as it gets larger.
Diseconomies of scale A term used to describe the extra costs that are incurred in running an operation as it gets larger
Two extreme strategies:
1. capacity leads demand – timing the introduction of capacity in such a way that there is always sufficient capacity to meet forecast
demand; greater or equal to forecast demand.
2. capacity lags demand – timing the introduction of capacity so that demand is always equal to or greater than capacity; less than or equal
to forecast demand.
Fixed-cost breaks are important in determining break-even points.
Two main approaches to forecasting:
1. Qualitative forecasting Managers sometimes use qualitative methods based on opinions, past experience, even best guesses. There is
also a range of qualitative forecasting techniques available to help managers evaluate trends and causal relationships and make
predictions about the future.
2. Quantitative forecasting Used to model data. Although no approach or technique will result in an accurate forecast, a combination of
qualitative and quantitative approaches can be used to great effect by bringing together expert judgements and predictive models
Three several ways Qualitative can be done:
1. Panel approach Just as panels of football pundits gather to speculate about likely outcomes, so too do politicians, business leaders, stock
market analysts, banks and airlines.
2. Delphi method Perhaps the best-known approach to generating forecasts using experts
3. Scenario planning One method for dealing with situations of even greater uncertainty
Two main approaches to qualitative forecasting:
1. time series analysis examine the pattern of past behaviour of a single phenomenon over time
2. Causal modelling techniques approach which describes and evaluates the complex cause–effect relationships between the key variables
Two of the more common approaches to forecasting:
1. moving-average forecasting takes the previous n periods’ actual demand figures, calculates the average demand over the n periods and
uses this average as a forecast for the next period’s demand.
2. exponentially smoothed forecasting approach forecasts demand in the next period by taking into account the actual demand in the
current period and the forecast which was made previously for the current period.
Causal models often employ complex techniques to understand the strength of relationships between the network of variables and the impact they
have on each other.
Forecasting models are widely used in management decision making and indeed most decisions require a forecast of some kind.
Layout of an operation or process means how its transforming resources are positioned relative to each other and how its various tasks are
allocated to these transforming resources.
Layout decision is relatively infrequent but important.
General objectives which are relevant to all operations:
1. Inherent safety. All processes which might constitute a danger to either staff or customers should not be accessible to the unauthorized.
2. Length of flow. The flow of materials, information or customers should be channelled by the layout so as to be appropriate for the
objectives of the operation.
3. Clarity of flow. All flow of materials and customers should be well signposted, clear and evident to staff and customers alike.
4. Staff conditions. Staff should be located away from noisy or unpleasant parts of the opera tion.
5. Management coordination. Supervision and communication should be assisted by the location of staff and communication devices.
6. Accessibility. All machines, plant or equipment should be accessible to a degree which is sufficient for proper cleaning and maintenance.
7. Use of space. All layouts should achieve an appropriate use of space in the operation (including height as well as floor space).
8. Long-term flexibility. Layouts need to be changed periodically as the needs of the operation change.
Four basic layout types:
1. fixed-position layout Locating the position of a product or service such that it remains largely stationary, while transforming resources are
moved to and from it.
2. functional layout it conforms to the needs and convenience of the func tions performed by the transforming resources
3. cell layout Locating transforming resources with a common purpose such as processing the same types of product, serving similar types
of customer, etc., together in close proximity (a cell); transformed resources entering the operation are pre-selected.
 4. product layout Locating transforming resources in a sequence defined by the processing needs of a product or service.

Examples of functional layouts include the following:

1. Hospital
2. Machining the parts which go into aircraft engines
3. Supermarket
Examples of cell layouts:
1. Some computer component manufacture
2. Lunch products area in a supermarket
3. Maternity unit in a hospital
Shop-within-a-shop
An operations layout that groups facilities that have a common purpose together; the term was originally used in retail operations but is now
sometimes used in other industries, very similar to the idea of a cell layout.
Line layout A more descriptive term for what is technically a product layout.
Combinatorial complexity The idea that many different ways of processing products and services at many different locations or points in time
combine to result in an exceptionally large number of feasible options.
Flow record chart A diagram used in layout to record the flow of products or services between facilities.
Relationship chart A diagram used in layout to summarize the relative desirability of facilities to be close to each other.
Step 1 – Collect information
Step 2 – Draw schematic layout
Step 3 – Adjust the schematic layout
Step 4 – Draw the layout
Step 5 – Check by exchanging
Heuristic procedures Layout and design ‘Rules of thumb’ or simple reasoning short cuts that are developed to provide good but non-optimal
solutions, usually to operations decisions that involve combinatorial complexity.
CRAFT Computerized Relative Allocation of Facilities Technique, a heuristic technique for developing good, but non-optimal, solutions.
Cluster analysis A technique used in the design of cell layouts to find which process groups fit naturally together. Production flow analysis (PFA) A
technique that examines product requirements and process grouping simultaneously to allocate tasks and machines to cells in cell layout.
Remainder cell The cell that has to cope with all the products that do not conveniently fit into other cells
Cycle time The average time between units of output emerging from a process.
Total work content The total amount of work required to produce a unit of output, usually measured in standard times.
Line balancing The activity of attempting to equalize the load on each station or part of a line layout or mass process.
Balancing loss The quantification of the lack of balance in a production line, defined as the percentage of time not used for productive purposes
with the total time invested in making a product.
Long thin A process designed to have many sequential stages, each performing a relatively small part of the total task, the opposite of short fat
processes.
Short fat Processes designed with relatively few sequential stages, each of which performs a relatively large part of the total task, the opposite of
long thin processes.
Precedence diagram This is a representation of the ordering of the elements which comprise the total work content of the product or service.
The advantages of the long thin arrangement:
1. controlled flow of materials or customers
2. simple materials handling
3. lower capital requirements
4. more efficient operation
The advantages of the short fat arrangement:
1. higher mix flexibility
2. higher volume flexibility
3. higher robustness
4. less monotonous work
Process technology The machines and devices that create and/or deliver goods and services.
Indirect process technology assists in the management of processes rather than directly contributes to the creation of products and services, for
example, information technology that schedules activities.
Integrating technologies technologies with greater information-processing capability process combinations of materials, people and customers
Electronic point of sale (EPOS) Technology that records sales and payment transactions as and when they happen.
Computer numerically controlled machine tools (CNC) Machines that use a computer to control their activities, as opposed to those controlled
directly through human intervention; to control actions rather than control by human hand.
Robots Automatic manipulators of transformed resources whose movement can be programmed and reprogrammed; ‘automatic position-
controlled reprogrammable multi-function manipulators.
Automated guided vehicles (AGVs) Small, independently powered vehicles that move material to and from value adding operations.
Flexible manufacturing systems (FMS) Manufacturing systems that bring together several technologies into a coherent system, such as metal
cutting and material handling technologies; computer-controlled configurations of semi independent workstations connected by automated
material handling and machine loading’.
Computer-integrated manufacturing (CIM) the integration of computer-based monitoring and control of all aspects of a manufacturing process,
often using a common database and communicating via some form of computer network.
Information technology (IT) Any device, or collection of devices, that collects, manipulates ,stores or distributes information, nearly always used to
mean computer-based devices.
Distributed processing A term used in information technology to indicate the use of smaller computers distributed around an operation and linked
together.
Local area network (LAN) A communications network that operates, usually over a limited distance, to connect devices such as PCs, servers, etc.
Ethernet A technology that facilitates local area networks that allows any device attached to a single cable to communicate with any other devices
attached to the same cable.
World Wide Web (www) The protocols and standards that are used on the internet for formatting, retrieving, storing and displaying information.
Extranets Computer networks that link organizations together and connect with each organization’s internal network.
E-business The use of internet-based technologies either to support existing business processes or to create entirely new business opportunities.
E-commerce The use of the internet to facilitate buying and selling activities.
Reach (the number of customers who could be reached and the number of items they could be presented with)
Richness (the amount of detail which could be provided con cerning both the items on sale and customers’ behaviour in buying them)
M-business is the phrase now frequently used to cover applications that combine broadband internet and mobile telephony devices.
Management information systems (MIS) Information systems that manipulate information so that it can be used in managing an organization.
Decision support system (DSS) A management information system that aids or supports managerial decision making; it may include both databases
and sophisticated analytical models.
Expert systems (ES) Computer-based problem solving systems that, to some degree, mimic human problem-solving logic.
Bar code A unique product code that enables a part or product type to be identified when read by a bar code scanner.
Active interaction technology Customer processing technology with which a customer interacts directly, for example,cash machines.
Passive interactive technology Customer processing technology over which a customer has no, or very limited, control, for example, cinemas and
moving walkways.
Hidden technologies is for staff to track customers’ movements or transactions in an unobtrusive way.
Capital intensity ratio of technological to human effort it employs.
Scaleability The equivalent to scale for some types of information-processing technology.
Coupling means the linking together of separate activities within a single piece of process technology to form an interconnected processing system.
Market requirements evaluation:
1. Quality. The impact on quality could be the fact that the computerized system is not prone to human error, which may previously have
resulted in the wrong part being picked off the shelves.
2. Speed. The new system may be able to retrieve items from the shelves faster than human operators can do safely.
3. Dependability. This will depend on how reliable the new system is.
4. Flexibility. New service flexibility is not likely to be as good as the previous manual system.
5. Cost. The new system is certain to require fewer direct operatives to staff the warehouse.