Part 2
PRODUCT DEVELOPMENT PROCESS
Product Development Process (PDP)
Outline
- Product Development Process
- Factors for Success
- Product and Process Cycles
- Organization for Design and PD
- Markets and Marketing
- Technological Innovation
Product Development Process
Phase 0
Planning
Phase 1
Phase 2
Concept
Development
Phase 3
System
Level
Design
Detail
Design
Phase 4
Phase 5
Testing &
Refinement
Fig. 2.1 Product development in stage-gate format
Production
Ramp-up
Phase 0 PLANNING
Product planning in two steps :
1. Preliminary assesment : Determine possible market
potential of product for the firm, technical and
manufacturing feasibility (at most 1 month)
2. Detailed investigation, business plans, detailed market
survey, design concepts and financial analysis, if (+)
form team, go to the next phase
Phase 1 CONCEPT DEVELOPMENT
Conceptual design is the heart of the product
development process
Determine the needs of the customer
Use tools such as surveys, focus groups,
benchmarking and quality function deployment (QFD)
End up with a small set of feasible concepts,
By using selection methods one product concept is determined
Benchmarking and QFD
Benchmarking is a way to learn from other businesses through an
exchange of information
Benchmarking requires good contacts and offering information from
your own company
QFD is a planning and team problem solving tool for multiple stages of
the design process
QFD is a graphical method that aids a design team in systematically
identifying all of the elements in the PDP and creating matrices
beween key parameters at each step of the process
Phase 2 SYSTEM-LEVEL DESIGN
Forms and features of the product begin to shape
Product is divided into subsystems, interfaces are
identified
Selections are made for materials and
manufacturing processes
Critical parts may be built by rapid prototyping
Check for patent licensing issues
System Level Design Design Robustness
At this stage, subsystems whose function is critical to
quality are identified, and given special analysis to
ensure design robustness
Design robustness means :
a design whose performance is insensitive to the
variations introduced in manufacturing, or by the
environment in which the product operates
Phase 3 DETAIL DESIGN
Product description - such as forms, dimensions,
tolerances, surface properties, materials and
manufacturing of each part is finalized
Output of detail design phase is the control
documentation for the product
CAD files for the product assembly, for each part
and its tooling
Phase 4 TESTING & REFINEMENT
Preproduction of first (alpha) prototypes
Purpose of alpha test is :
- whether the product will actually work as designed,
- whether it will satisfy the customer needs
Also beta tests from parts made by actual production
processes and tooling
Purpose of beta test is :
- whether the product is performing well and reliable,
and if necessary make changes (fine tuning )
Phase 5 PRODUCTION RAMP-UP
Manufacturing operation begins
Workout any production yield and quality problems
Gradually increase production , reach full production and
launch the product
After 6-12 months of production, make a final major
review, and develop expertise on product and next
design
Factors for Success
Cost and price are distinctly different concepts
Product Cost : Cost of materials, components,
manufacturing and assembly
Product Price : Amount of money that a customer is
willing to pay to buy the product
Factors for Success
Most Fundamental Equation in Engineering
PROFIT = Product PRICE Product COST
Factors for Success
Factors for successful product
- Quality, performance and price
- Cost to manufacture over its life cycle
- Cost of product development
- Time needed to bring to the market
Factors for Success
PROFIT = Product PRICE Product COST
Two ways of increasing profit :
1. Increase the products price by adding new features, or
improving quality,
2. Reduce the products cost by improvements in
the production process (more likely : requires
talented people, time, and money)
Factors for Success
Product development time : kickoff (phase 0)
to product release date
Product release date v.important due to :
- Products life is extended
- Products market share is increased
- Products profit is higher
Factors for Success Increased Sales, Larger Market Share
Fig. Increased sales revenue due to extended product life
and larger market share
Higher Profit Margins and Learning Curve
Fig. First product in the market : initial price advantage, cost
advantages from manufacturing efficiencies
Development Costs
Development cost of a new automobile
is estimated as 1 Billion $
Developments costs : team salaries,
money paid to subcontractors,
preproduction tooling costs,
cost of supplies and materials
Additional investment for tooling
required for high-volume production :
0.5 0.7 Billion $
Static versus Dynamic Products
Static products : Technology is mature and stable,
emphasis is more on manufacturing research, instead of
product design research. e.g. automobiles, refrigerators,
dishwashers
Dynamic products : Technology is dynamic, emphasis is
more market and product research instead of
manufacturing research
e.g. cell phones, digital video recorders and players
GROWTH
High consumer
acceptance,
INTRO custom tailoring
and accessories
New
product,
and Low
consumer
acceptance
MATURITY
Widely accepted,
Sales are stable,
considerable competition
Fig. Product life cycle
DECLINE
Decrease in sales,
entrance of better
product to the market
Product Development Cycle - Phases
Fig. Expanded view of product development cycle
Technology Development and Insertion Cycle
Fig. (a) Simplified technology development cycle,
(b) Transferring form one technology growth curve (A) to another
developing technology
Organization for Design & Product Development
A business can be organized in two fundamental ways :
1. Organization with regard to FUNCTIONS :
- Each function is a column
- Each individual has one boss
2. Organization with respect to PROJECTS
- Each development team reports to a project manager
- More interaction between team members, decision
making becoming faster
Fig. Spectrum of engineering functions
Fig. A functional organization
Fig. A simplified project organization
Hybrid (or Matrix) Organizations
Each individual has two supervisors :
functional manager and project manager
In the lightweight project organization project links is
weaker than functional links
In the heavyweight project organization project links is
stronger than functional links
In both cases, it is important that the product team must
clearly understand the boundaries on its authority
Functional Project Organization
Works well in a stable business
environment , product predominates
in its market
Functional managers : budgets,
personnel matters, performance
evaluations
Project managers : scheduling,
coordination and arrangement
of meetings
A Heavyweight Project Organization
Advantages in introducing new
products where speed is important
Project managers : budgets,
resource allocation decisions,
strong role in personnel evaluation
Functional managers : little
authority and control over project
decisions
Concurrent Engineering
Systematic approach where product developers consider
all aspects of the product life cycle, from concept to
disposal, including quality, cost schedule and user
requirements
Concurrent Engineering
Has three main elements :
- Cross-functional teams : Quick, easy decision
making
- Simultaneous engineering : Each functional area
involved in the process in the earliest possible time
- Supplier partnering : Reduces amount of in-house
component design
Markets and Marketing
The market is an economic construct to identify those
persons or organizations that have an interest in
purchasing or selling a particular product
At the beginning of the Industrial Revolution markets
were mainly LOCAL
With the development of transportation and
telecommunication markets NATIONAL,
With the increase in production capacities and all means
of communication, markets become GLOBAL
Market Segmentation
It is the attempt to divide the market into groups so that
there is common charateristics of each group
According to Cooper (2001), there are 4 variables in
market segmentation :
- State of being (age, income, occupation, )
- State of mind (attitudes, values, life-styles, )
- Product usage (how the product is bought and sold)
- Benefit segmentation (important when introducing
a new product
Type of product
market
Examples
Degree of Engineering
Involvement with Customer
Large one-off design
Petrochemical Plant
Heavy
Small batch
Typically 10-100 items,
Machine tools
Moderate : based on specs
developed with customer
Raw materials
Ores, oil, agriculture
Low
Processed materials
Steel, polymer resin
Low
High-volume
engineered products
Motors, microprocessors,
bearings, pumps, springs
Low : vendors engineers
design parts for customer
Custom-made parts
Made for specific design
Moderate
High volume consumer
products
Automobiles, computers,
eletronic products, food
Heavy in best companies
Luxury consumer
goods
Rolex watch, Harley
Davidson
Heavy,
depending on product
Maintenance & repair
Replacement parts
Moderate
Engineering Services
Specialized consultant
firms
Heavy : Engineers sell as
well as do technical work
Marketing Department - Functions
Marketing does not make sales
It makes assesment of market, shares, potentials and
competition and also detailed market study
It also assists introducing the product to the market
Technological Innovation
Milestones in technology explosion in 20th century,
1940s invention of transistor, digital computer
1950s - 1970s transistor evolved into
micro-integrated circuits which led to desktop
computers in the 1980s
Computers optical communication systems,
development of Internet in the 1990s,
2000s Digital revolution in computing and
communication
Invention, Innovation and Diffusion
Advancement of technology occurs by :
Invention : Creative act, an idea is conceived,
articulated, and recorded
Innovation : The process by which an invention
or an idea is brought into successful practice and is
utilized by the economy
Diffusion : The successive and widespread
implementation and adoption of successful
innovations
Invention, Innovation and Diffusion
Innovation is the most critical and most difficult of the
three stages
Development of an idea identifying market
needs hard work and skills successful product
Ability to introduce and manage technological
innovation is a major factor in raising the standart of
living
Charateristics of Innovative People
Idea generator : creative individual
Entrepreneur : person who carries the ball and
takes the risks
Gatekeepers : people who provide technical
communication
Program manager : the person who manages
Sponsor : the person who provides financial and
moral support often senior manager
Types of Technology Innovation
Need-driven innovation small improvements in a
time scale leading to a major progress
Development team seeks to fill an identified gap in
performance or product cost (technology pull)
Radical innovation based on a breakthrough idea
Arises from basic research, it leads to widespread
change and a whole new technology (technology push)
