304 305
HOW OPERATIONS AND PRODUCTION WORK
Product
DIFFERENT TYPES OF INNOVATION
Sustaining innovation Significantly
improving existing products, typically
through technology—for example,
more pixels in cameras, smaller and
more powerful laptops
Sustainable or eco-innovation
New product that has minimal
impact on the environment
Frugal innovation Low-cost
product for emerging mass market
Breakthrough innovation Product
or service that simultaneously shifts a
market and has significant outcomes
for the world at large, such as the
Fairtrade initiative
Disruptive innovation Displaces
established competitors or changes
the norm—for instance, the internet
or iPads
Intellectual property (IP) is the expression of an idea.
IP might be a design, an invention, or another type
of intellectual creation, and it can be protected by
law—for example, with a patent.
“Genius is
one per cent
inspiration,
and ninety-
nine per cent
perspiration.”
Thomas Edison
Product
The culture and processes of the
company have to be favorable for
testing the viability of ideas.
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Individuals and
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and mental space to
think originally.
Brainstorm
US_304-305_Innovation_And_Invention.indd 305 21/11/2014 16:29
How it works
The starting point for design is
an idea for a product that fulfills
a need, whether it is a specialty
item or something in day-to-day
use. The designer has to think of
ways in which a product can serve
its purpose and meet other criteria,
including aesthetics, cost,
durability, and environmental
considerations. The design may
be integral to the product, such as
Apple’s rectangular devices with
rounded corners, for which it
obtained a design patent. Some
designs are iconic, such as the
Coca-Cola bottle. Yet design is
more than just shape. As well as
functionality, it includes materials
and color, and extends from the
products to their packaging.
Any product has to be well designed to succeed. Excellent
designs for everyday items—from the Anglepoise lamp to
reflective road signs—have shaped our modern world.
Design
Explore concept
From scribbles on a piece of
paper, to computer-generated
image technology, it may help
to visualize options.
End product
The design of the final version
that goes on sale may look
very different from the
initial concept.
Functional Serves a purpose
Aesthetic Enjoyable to use
Innovative Different and
new, possibly using innovative
technology
Easy to use Understandable and
with useful features
Simple Unobtrusive, subtle
Long-lasting Sustainable, not
too fashion-sensitive
Environmentally friendly
Minimizes resources and pollution
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CONSIDERATIONS
FOR DESIGN SUCCESS
Product-design process
Designs for mass-produced items, such as
furniture, lighting, domestic appliances, and
communications technology, take a lot of hard
work. The process of creating a functional
design that looks good has several steps.
Redesign
Next year, the
product may
need revamping.
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US_306-307_Design.indd 306 21/11/2014 16:29
306 307
How operations and production work
Product
Develop concept
The design can be broken into components, such as
functional requirements and production options, and
each evaluated independently.
Make prototype
This might be a single
item or a series of
prototypes, to test and
refine the functionality.
Feedback
Now is the time to find
out what people think
of the product and how
it could be improved.
Design decisions
Before full-scale
production begins,
all decisions have
to be made and
paperwork, such as
intellectual property
rights, finalized.
10–18%
of the budget for bringing
a new product to market
is spent on design
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US_306-307_Design.indd 307 21/11/2014 16:29
306 307
How operations and production work
Product
Develop concept
The design can be broken into components, such as
functional requirements and production options, and
each evaluated independently.
Make prototype
This might be a single
item or a series of
prototypes, to test and
refine the functionality.
Feedback
Now is the time to find
out what people think
of the product and how
it could be improved.
Design decisions
Before full-scale
production begins,
all decisions have
to be made and
paperwork, such as
intellectual property
rights, finalized.
10–18%
of the budget for bringing
a new product to market
is spent on design
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US_306-307_Design.indd 307 21/11/2014 16:29
$
Cost of defeCt
Quality management
How it works
Many consumers might find it hard to define quality,
because it can be subjective, but they know it when
they see it. However, companies need to define
and measure it. They know that to build a good
reputation and thrive, they have to exceed customers’
expectations in terms of quality for both products and
For businesses, quality is not a vague term but a philosophy of
meeting or going beyond consumer expectations. Excellent quality
management can give a company a key competitive edge.
services. To do this, they have a number of standards
or key performance indicators (KPIs) for the
manufacturing process, and continually measure
themselves against these. Quality does not apply just
to the product or service itself; it ripples out to the
associated people and processes, and across the
organizational environment.
Before the 1970s, quality was seen
as something to be inspected and
corrected. Then US businesses
began to lose out to Japanese
companies—for example, Toyota
and Honda were able to produce
cars at lower cost and with a much
higher quality. The difference
was that quality had a strategic
meaning for Japanese firms—they
made the customer their priority
and were the first companies
to define quality as meeting or
exceeding customer expectations.
customer first
Quality management at
the product-design stage
is low-cost and integral to
the process because it
prevents issues farther
down the line.
ProduCt design ProduCtion
During production,
quality management
involves testing,
evaluating, and
inspecting quality.
Defective items may
be scrapped.
Cost of quality
Quality management is essential to ensure
that any defects are nipped in the bud, the
earlier the better, and definitely before they
become apparent to the consumer.
US_308-309_Quality_Management.indd 308 21/11/2014 16:41
308 309
$3.6 million
the annual saving Singapore
supermarket NTUC FairPrice
made by implementing ISO
quality standards, 1999–2009
ISO 9000 Set of international
quality standards and certification
demonstrating that companies
have met standards specified
Malcolm Baldrige National
Quality Award Annual award
given to US companies that
demonstrate quality excellence
and establish best-practice
standards in industry
Deming Prize Japanese award
given to companies to recognize
efforts in quality improvement
need to knoW
Manufacturing
industry
Conformity to
specifications/standards
Performance
Reliability
Functionality/features
Durability
Serviceability
Service industry
Getting the desired result
Consistency
Responsiveness to
customer needs
Courtesy/friendliness
Promptness
Psychological factors,
such as good atmosphere
What makes quality?
LOCATION OF DEFECT
PRODUCT WITH CUSTOMER
Once the product is with
the customer, a defect is
expensive. Financial cost
includes returns, repairs,
and recalls, but the
impact on the company’s
reputation may be even
more damaging.
how operations and production work
Product
US_308-309_Quality_Management.indd 309 21/11/2014 16:41
308 309
$3.6 million
the annual saving Singapore
supermarket NTUC FairPrice
made by implementing ISO
quality standards, 1999–2009
ISO 9000 Set of international
quality standards and certification
demonstrating that companies
have met standards specified
Malcolm Baldrige National
Quality Award Annual award
given to US companies that
demonstrate quality excellence
and establish best-practice
standards in industry
Deming Prize Japanese award
given to companies to recognize
efforts in quality improvement
need to knoW
Manufacturing
industry
Conformity to
specifications/standards
Performance
Reliability
Functionality/features
Durability
Serviceability
Service industry
Getting the desired result
Consistency
Responsiveness to
customer needs
Courtesy/friendliness
Promptness
Psychological factors,
such as good atmosphere
What makes quality?
LOCATION OF DEFECT
PRODUCT WITH CUSTOMER
Once the product is with
the customer, a defect is
expensive. Financial cost
includes returns, repairs,
and recalls, but the
impact on the company’s
reputation may be even
more damaging.
how operations and production work
Product
US_308-309_Quality_Management.indd 309 21/11/2014 16:41
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