Product design is cross-functional, knowledgeintensive

work that has become increasingly important

in today’s fast-paced, globally competitive
environment. It is a key strategic activity in many
firms because new products contribute significantly
to sales revenue. When firms are able to develop distinctive
products, they have opportunities to command
premium pricing. Product design is a critical
factor in organizational success because it sets the
characteristics, features, and performance of the service
or good that consumers demand. The objective of
product design is to create a good or service with
excellent functional utility and sales appeal at an
acceptable cost and within a reasonable time. The
product should be produced using high-quality, lowcost
materials and methods. It should be produced on
equipment that is or will be available when production
begins. The resulting product should be competitive
with or better than similar products on the
market in terms of quality, appearance, performance,
service life, and price.
THE INCREASING IMPORTANCE
OF PRODUCT DESIGN
Product design is more important than ever
because customers are demanding greater product
variety and are switching more quickly to products
with state-of-the-art technology. The impacts of
greater product variety and shorter product life cycles
have a multiplicative effect on the number of new
products and derivative products that need to be
designed. For example, just a few years ago, a firm
may have produced four different products and each
product may have had a product life cycle of ten years.
In this case, the firm must design four new products
every ten years. Today, in order to be competitive, this
firm may produce eight different products with a life
cycle of only five years; this firm must introduce eight
new products in five years. That represents sixteen
new products in ten years or one product every seven
and one-half months. In this fast-paced environment,
product design ceases to be an ad hoc, intermittent
activity and becomes a regular and routine action. For
an organization, delays, problems, and confusion in
product design shift from being an annoyance to being
life threatening.
PRODUCT DESIGN AND SUPPLY
CHAIN MANAGEMENT
Product design can also be an important mechanism
for coordinating the activities of key supply
chain participants. As organizations outsource the production
of sub-assemblies and components, they also
may be asking suppliers to participate in product
design. As they outsource design capabilities it is
essential that they manage and coordinate the flow of
information among the supply chain participants. This
can be especially important as firms outsource components
to two or more suppliers. Now, there may be
important design interfaces among two, three, or more
suppliers. These interfaces must be properly managed
to ensure cost effective and timely designs. Clearly,
information and communication technologies become
important parts of this effort.

PRODUCT DESIGN: A KEY

TO ORGANIZATIONAL SUCCESS
Product design is an essential activity for firms
competing in a global environment. Product design
drives organizational success because it directly and significantly
impacts nearly all of the critical determinants
for success. Customers demand greater product variety
and are quick to shift to new, innovative, full-featured
products. In addition, customers make purchase decisions
based on a growing list of factors that are affected
by product design. Previously, customers made purchase
decisions based primarily on product price and/or quality.
While these factors are still important, customers are
adding other dimensions such as customizability, orderto-
delivery time, product safety, and ease and cost of
maintenance. Environmental concerns are expanding to
include impacts during production, during the product’s
operating life, and at the end of its life (recycle-ability).
In addition, customers demand greater protection from
defective products, which leads to lower product liability
losses. Safer and longer lasting products lead to
enhanced warrantee provision, which, in turn, impact
customer satisfaction and warrantee repair costs.
Programs and activities are being put in place so
organizations can cope with these dimensions. Organizations
are embracing concepts such as mass customization,
design for manufacturing and assembly,
product disposal, quality function deployment, and
time-based competition. They are using technology
such as rapid prototyping and computer-aided design
to examine how products function, how much they
may cost to produce, and how they may impact the
environment. Firms are searching for and implementing
new technologies to determine ways to design
better products. They are examining legal and ethical
issues in product design as well as the impact of product
design on the environment.
MASS CUSTOMIZATION
Mass customization is the low-cost, high-quality,
large volume delivery of individually customized products.
It is the ability to quickly design and produce customized
products on a large scale at a cost comparable
to non-customized products. Customization, cost
effectiveness is the ability to produce highly differentiated
products without increasing costs, significantly.
Consumers expect to receive customized products at
close to mass-production prices. Customization volume
effectiveness is the ability to increase product variety
without diminishing production volume. As markets
become more and more segmented and aggregate
demand remains constant or increases, firms must continue
to design and produce high volumes across the
same fixed asset base. Customization responsiveness
is the ability to reduce the time required to deliver
customized products and to reorganize design and production
processes quickly in response to customer
requests. It would be counter-productive to pursue
mass customization if a customized product takes too
long to produce. Speed in product design and production
is an indispensable criterion for evaluating an
organization’s mass customization capability.
DESIGN FOR MANUFACTURING
AND ASSEMBLY
Improving manufacturability is an important goal
for product design. A systems approach to product
design that was developed by two researchers from
England, Geoffrey Boothroyd and Peter Dewhurst, is
called design for manufacturability and assembly
(DFMA). It can be a powerful tool to improve product
quality and lower manufacturing cost. The approach
focuses on manufacturing issues during product
design. DFMA is implemented through computer software
that identifies designs concepts that would be easy
to build by focusing on the economic implications of
design decisions. These decisions are critical even
though design is a small part of the overall cost of a
product because design decisions fix 70 to 90 percent of
the manufacturing costs. In application, DFMA has had
some startling successes. With the DFMA software,
Texas Instruments reduced assembly time for an infrared
sighting mechanism from 129 minutes to 20 minutes.
IBM sliced assembly time for its printers from thirty
minutes to three minutes.
Firms are recognizing that the concept behind
DFMA can also be extended beyond cost control to
design products that are easy to service and maintain.
To do this effectively, service and maintenance issues
should be considered at the earliest stages of the design.
Also, firms will be required to examine disposal during
product design as they become liable for recycling the
products they make. It can be easier to recycle products
if those factors are part of the product design paradigm.
DISPOSAL AND PRODUCT DESIGN
Disposal is becoming an increasingly important
part of product design. The European Union is taking
the lead by requiring that most of an automobile is
recycled by the year 2010. This requirement has a
major impact on product design. The most obvious
effect is to change the notion that a consumer is the
final owner for a product. With this approach, the
product returns to the manufacturer to be recycled and
the recycling process should begin in product design.
Vehicles should be designed so they can be disassembled
and recycled easily. The designers should avoid
exotic materials that are difficulty to recycle. For
example, parts that have plastic and metal fused

together should not be used in applications where they

are difficult to separate. The designers should determine
which parts will be designed to be refurbished
and reused, and which will be designed to be discarded,
broken down, and recycled. All this should be
done without adding costs or reducing product quality.
QUALITY AND QUALITY
FUNCTION DEPLOYMENT
Product design shapes the product’s quality. It
defines the way that good and service functions.
Quality has at least two components. First, the product
must be designed to function with a high probability of
success, or reliability; that is, it will perform a specific
function without failure under given conditions. When
product reliability increases, the firm can extend the
product’s warrantee without increasing customer
claims for repairs or returns. Warrantees for complex
and expensive items such as appliances are important
selling points for customers. Second, quality improves
when operating or performance characteristics improve
even though reliability does not. The goals of product
design should be greater performance, greater reliability,
and lower total production and operating costs. Quality
and costs should not be viewed as a trade-off because
improvements in product and process technologies can
enhance quality and lower costs.
Quality function deployment is being used by
organizations to translate customer wants into working
products. Sometimes referred to as the house of
quality, quality function deployment (QFD) is a set of
planning and communication routines that focus and
coordinate actions and skills within an organization.
The foundation of the house of quality is the belief
that a product should be designed to reflect customers’
desires and tastes. The house of quality is a framework
that provides the means for inter-functional planning
and communications. Through this framework, people
facing different problems and responsibilities can discuss
various design priorities.
PROTOTYPING
Engineering and operations combine to develop
models of products called prototypes. These may be
working models, models reduced in scale, or mock-ups
of the products. Where traditional prototype development
often takes weeks or months, the technology for
rapid prototyping has become available. Some companies
are using the same technology that creates virtual
reality to develop three-dimensional prototypes. Other
firms employ lasers to make prototypes by solidifying
plastic in only a few minutes; this process can produce
prototypes with complex shapes. Prototyping should
increase customer satisfaction and improve design
stability, product effectiveness, and the predictability
of final product cost and performance.
COMPUTER-AIDED DESIGN
Currently, business managers and engineers perceive
computer-aided design (CAD) as a tool to assist
engineers in designing goods. CAD uses computer
technology and a graphic display to represent physical
shapes in the same way that engineering drawings have
in the past. It is used in the metalworking industry to
display component parts, to illustrate size and shape, to
show possible relationships to other parts, and to indicate
component deformation under specified loads.
After the design has been completed, the engineer can
examine many different views or sections of the part
and finally send it to a plotter to prepare drawings. This
capability greatly reduces engineering time and avoids
routine mistakes made in analysis and drawing. It significantly
increases productivity and reduces design
time, which allows faster delivery.
Applications of CAD systems are not limited to
producing goods. While it’s true that services do not
have physical dimensions, the equipment and facilities
used to produce services do. For example, the
service stalls in an automotive center or rooms in an
emergency medical center have physical characteristics
that can be represented by the interactive graphics
capabilities of a CAD system.
LEGAL AND ETHICAL ISSUES
IN PRODUCT DESIGN
What is the responsibility of an organization and
its managers to see that the goods and services they produce
do not harm consumers? Legally, it is very clear
that organizations are responsible for the design and
safe use of their products. Consumers who believe they
have been damaged by a poorly designed good or service
have legal recourse under both civil and criminal
statutes. Often, however, only the most serious and
obvious offenses are settled in this way. More difficult
ethical issues in product design result when the evidence
is not as clear. For example, what responsibilities
does a power tool manufacturer have with respect to
product safety? Does a power saw manufacturer have
the responsibility to design its product so that it is difficult
for a child to operate? Suppose a parent is using a
power saw and is called away to the telephone for a few
minutes. A ten-year old may wander over, press the trigger
and be seriously injured. Designing the saw so it has
a simple and inexpensive lockout switch that would
have to be pressed simultaneously when the trigger is
pressed would make it more difficult for the accident to
happen. What is the responsibility of the parent? What
is the responsibility of the company?

PRODUCT DESIGN
AND THE ENVIRONMENT
Organizations consider product design a critical
activity to the production of environmentally friendly
products. Organizations increasingly recognize that
being good corporate citizens increases sales. Fastfood
restaurants have begun recycling programs and
redesigned packaging materials and systems in response
to customer concerns. In other cases, being a good
corporate citizen and protecting a company’s renewable
resources go well together; there are win-win
opportunities where an organization can actually
design products and processes that cut costs and
increase profits by recapturing pollutants and reducing
solid waste.
OVERVIEW OF PRODUCT
DESIGN PROCESS
Product design time can be reduced by using a
team approach and the early involvement of key participants
including marketing, research and development,
engineering, operations, and suppliers. Early
involvement is an approach to managing people and
processes. It involves an upstream investment in time
that facilitates the identification and solution of downstream
problems that would otherwise increase product
design and production costs, decrease quality, and
delay product introduction.
Time-based competitors are discovering that
reducing product design time improves the productivity
of product design teams. To reduce time, firms are
reorganizing product design from an “over-the-wall”
process to a team-based concurrent process. Over-thewall
means to proceed sequentially with the limited
exchange of information and ideas. When this
approach is used, problems are often discovered late
because late-stage participants are excluded from
decisions made early in the process. As a result, poor
decisions are often made.
Product design is a labor-intensive process that
requires the contribution of highly trained specialists.
By using teams of specialists, communications are
enhanced, wait time between decisions is reduced, and
productivity is improved. Participants in this teambased
process make better decisions faster because they
are building a shared knowledge base that enhances
learning and eases decision-making. By sharing development
activities, design decisions that involve interdependencies
between functional specialists can be made
more quickly and more effectively. This reorganized
process creates a timely response to customer needs, a
more cost-effective product design process, and higherquality
products at an affordable price.
There are several reasons why early involvement
and concurrent activities bring about these improvements.
First, product design shifts from sequential,
with feedback loops that occur whenever a problem is
encountered, to concurrent, where problems are recognized
early and resolved. The ability to overlap
activities reduces product design time. Second, when
a team of functional specialists works concurrently on
product design, the participants learn from each other
and their knowledge base expands. People are better
able to anticipate conflicts and can more easily arrive
at solutions. As a result, the time it takes to complete
an activity should decline. Third, fewer changes later
in the process results in faster and less expensive
product design. When problems are discovered late,
they take more time and money to solve.
Product design requires the expertise and decision-
making skills of all parts of the organization.
Marketing, engineering, operations, finance, accounting,
and information systems all have important roles.
Marketing’s role is to evaluate consumer needs, determine
potential impact of competitive pressure, and
measure the external environment. Engineering’s role
is to shape the product through design, determine the
process by which the product will be made, and consider
the interface between the product and the people.
Operations’ role is to ensure that the product can be
produced in full-scale production. Finance’s role is to
develop plans for raising the capital to support the
product in full-scale production and to assist in the
evaluation of the product’s profit potential. Accounting
and information systems provide access to information
for decision making. Cross-functional teamwork and
knowledge sharing are thus keys to success.
SEE ALSO: Computer-Aided Design and Manufacturing; Pricing
Policy and Strategy; Product Life Cycle and Industry
Life Cycle; Product-Process Matrix; Quality and
Total Quality Management; Reverse Supply Chain
Logistics; Supply Chain Management
Mark Vonderembse
FURTHER READING:
Corswant, F, and C. Tunälv. “Coordinating Customers and
Proactive Suppliers: A Case Study of Supplier Collaboration in
Product Development.” Journal of Engineering and Technology
Management 19, no. 3-4 (2002): 249–261.
Droge, C., J. Jayaram, and S. Vickery. “The Ability to Minimize
the Timing of New Product Development and Introduction: An
Examination of Antecedent Factors in the North American
Automobile Supplier Industry.” Journal of Product Innovation
Management 17 (2000): 24–40.
Gerwin, D., and N.J. Barrowman. “An Evaluation of Research
on Integrated Product Development.” Management Science 48,
no. 7 (2002): 938–953.
Hong, S.K., and M.J. Schniederjans. “Balancing Concurrent
Engineering Environmental Factors for Improved Product
Development Performance.” International Journal of Production
Research 38, no. 8 (2000): 1779–1800.