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Assessing the Importance of Design Through Product Archaeology

Author

Listed:
  • Karl T. Ulrich

    (The Wharton School, 1317 Steinberg Hall-Dietrich Hall, Philadelphia, Pennsylvania 19104)

  • Scott Pearson

    (MPM Corporation, 16 Forge Park, Franklin, Massachusetts 02038)

Abstract

This paper assesses the importance of design in determining product costs by measuring the variation in design performance among a set of competing design efforts. This assessment is completed for a set of functionally similar products in a single product category: automatic drip coffee makers. The approach of this study is to measure the manufacturing content---the attributes of the design that drive cost---through analysis of the physical products themselves, and to estimate how variation in manufacturing content relates to variation in cost in a hypothetical manufacturing setting. We call this approach product archaeology. For the domain of coffee makers, we find significant variation in manufacturing content. This variation in manufacturing content corresponds to a range of estimated manufacturing costs, for a hypothetical manufacturing system, of approximately 50 percent of the average manufacturing cost of the products. We also find that differences in capabilities among product development efforts are the most plausible explanation for the differences in manufacturing content.

Suggested Citation

  • Karl T. Ulrich & Scott Pearson, 1998. "Assessing the Importance of Design Through Product Archaeology," Management Science, INFORMS, vol. 44(3), pages 352-369, March.
    • Handle: RePEc:inm:ormnsc:v:44:y:1998:i:3:p:352-369
    DOI: 10.1287/mnsc.44.3.352
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    References listed on IDEAS

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    1. Sanderson, Susan & Uzumeri, Mustafa, 1995. "Managing product families: The case of the Sony Walkman," Research Policy, Elsevier, vol. 24(5), pages 761-782, September.
    2. Karl Ulrich & David Sartorius & Scott Pearson & Mark Jakiela, 1993. "Including the Value of Time in Design-for-Manufacturing Decision Making," Management Science, INFORMS, vol. 39(4), pages 429-447, April.
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    Citations

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    Cited by:

    1. V. Krishnan & Karl T. Ulrich, 2001. "Product Development Decisions: A Review of the Literature," Management Science, INFORMS, vol. 47(1), pages 1-21, January.
    2. Lan Luo & P. K. Kannan & Brian T. Ratchford, 2007. "New Product Development Under Channel Acceptance," Marketing Science, INFORMS, vol. 26(2), pages 149-163, 03-04.
    3. Glen M. Schmidt & Evan L. Porteus, 2000. "Sustaining Technology Leadership Can Require Both Cost Competence and Innovative Competence," Manufacturing & Service Operations Management, INFORMS, vol. 2(1), pages 1-18, March.
    4. Fay, Scott & Mitra, Deb & Wang, Qiong, 2009. "Ask or infer? Strategic implications of alternative learning approaches in customization," International Journal of Research in Marketing, Elsevier, vol. 26(2), pages 136-152.
    5. Akhilesh Bajaj & Sunder Kekre & Kannan Srinivasan, 2004. "Managing NPD: Cost and Schedule Performance in Design and Manufacturing," Management Science, INFORMS, vol. 50(4), pages 527-536, April.
    6. Yen Hsu, 2017. "Organizational Innovation, Design And Npd Performance: The Role Of Co-Creation Strategy," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 21(04), pages 1-19, May.
    7. Calonius, Mathias, 2002. "Findings about Design and the Economy," Discussion Papers 785, The Research Institute of the Finnish Economy.
    8. Marshall Fisher, 2007. "Strengthening the Empirical Base of Operations Management," Manufacturing & Service Operations Management, INFORMS, vol. 9(4), pages 368-382, December.
    9. Sanja Rocco & Aleksandra Pisnik, 2016. "Focusing on Customer: Relationships between Design and Market Orientation," International Journal of Innovation and Economic Development, Inovatus Services Ltd., vol. 2(4), pages 7-16, October.
    10. Philip Auerswald, 2010. "Entry and Schumpeterian profits," Journal of Evolutionary Economics, Springer, vol. 20(4), pages 553-582, August.
    11. Dahan, Ely & Srinivasan, V. Seenu, 2005. "The Impact of Unit Cost Reductions on Gross Profit: Increasing or Decreasing Returns?," Research Papers 1905, Stanford University, Graduate School of Business.
    12. Sandro Montresor & Antonio Vezzani, 2017. "Design, innovation and performance in European firms," JRC Working Papers on Corporate R&D and Innovation 2017-01, Joint Research Centre.
    13. Glen M. Schmidt & Evan L. Porteus, 2000. "The Impact of an Integrated Marketing and Manufacturing Innovation," Manufacturing & Service Operations Management, INFORMS, vol. 2(4), pages 317-336, April.
    14. Jürgen Mihm, 2010. "Incentives in New Product Development Projects and the Role of Target Costing," Management Science, INFORMS, vol. 56(8), pages 1324-1344, August.
    15. Philip Auerswald, 2008. "Entrepreneurship in the Theory of the Firm," Small Business Economics, Springer, vol. 30(2), pages 111-126, February.
    16. Don Taylor, G. & Love, Doug M. & Weaver, Miles W. & Stone, James, 2008. "Determining inventory service support levels in multi-national companies," International Journal of Production Economics, Elsevier, vol. 116(1), pages 1-11, November.
    17. Ely Dahan & Haim Mendelson, 2001. "An Extreme-Value Model of Concept Testing," Management Science, INFORMS, vol. 47(1), pages 102-116, January.

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