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)