What price Wi-Fi?

When I was in grad school in the early 90s, it was a big deal when the business school installed a mess of new pay phones — directly addressing a bottleneck that frustrated MBA students trying to contact would-be employers. Now, of course, that seems awfully quaint. But there is an interesting point of comparison to be made between pay phones and wireless internet access. Back in the day, no one expected a cafe or bar to have more than one pay phone. Only locations like airports and hotel lobbies had large banks of pay phones. And they were pay phones, i.e., they by definition weren’t free.

So why is there an expectation that a large range of service establishments offer Wi-Fi service gratis? A recent New York Times article doesn’t grapple with that question directly but it does document the difficulty that airlines, airports, and hotels are having in keeping up with the demand for internet access (Craving Wi-Fi, Preferably Free and Really Fast, Apr 30). One of the points the article makes is that it’s hard to get people to pay up for access on planes — only about 5 to 10% of passengers use the service. Now one can imagine several reasons for this. First, it can be relatively pricey to log on in the air (sometimes close to $20). Second, depending on the airline, availability can be spotty. If you are not sure whether you are going to be able to get on-line, you do the important stuff you have to get done before getting onboard. If Wi-Fi turns out to be available, you then have the prospect of having less important things to take care of but facing a stiff fee. Finally, the service on airplanes ain’t exactly blazing fast. It’s OK for sending an email but not so great for watching a movie.

Airlines aren’t the only one’s having a hard time getting customers to pony up for Wi-Fi access.

Airports and hotels are confronting a similar situation. Of the 10 busiest airports in the United States, those in Los Angeles, Dallas/Fort Worth, Denver, San Francisco, Las Vegas, Phoenix and Charlotte, N.C., offer at least some free Wi-Fi service.

But the trade-off can be overloaded networks that frustrate passengers, which is why Hartsfield-Jackson Atlanta International Airport — the busiest in the United States — is upgrading its infrastructure before switching to free Wi-Fi this year.

“Our system wasn’t built to accommodate the number of customers we expect to have with the free Wi-Fi,” said Myrna White, a spokeswoman for the airport, which dropped its Wi-Fi fee to $4.95 a day last fall.

It is the trade-off between price and congestion that I find most interesting.

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How late should a fast food restaurant stay open?

How long is long enough? That effectively is the question asked in a recent Wall Street Journal article with regard to quick service restaurant hours of operations (Will Longer Hours Boost Sales?, Apr 29). Here is the issue:

With a lean economy squeezing their sales, thousands of restaurants are extending their hours to try to get more people through the door. But franchisees are learning that it can take a lot of work to get the most out of off-hours snackers.

The basic problem: Restaurants need to shoulder more expenses to keep the lights on longer—but the crowds usually aren’t that big at odd hours, and customers don’t end up spending very much. In fact, franchisees and industry experts say, some markets may not have enough all-night types to make the concept work at all.

The drop off in traffic in the wee hours of the morning is illustrated here.

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Using technology to reduce queues

Long lines at check out can spoil a shopping trip just as a bad dessert can spoil an otherwise fine dinner. Either can, if you will, leave a bad taste in your mouth. So what can a retailer do besides throw (expensive) bodies at the problem?

As the Wall Street Journal tells it, there are quite a few options. A recent article discussed process changes and new technologies different firms are using to try and reduce customer waits (Retailers Wage War Against Long Lines, May 2). The most interesting to my mind was what supermarket chain Kroger is trying.

Supermarket giant Kroger Co. is winning the war against lengthy checkout lines with a powerful weapon: infrared cameras long used by the military and law-enforcement to track people.

These cameras, which detect body heat, sit at the entrances and above cash registers at most of Kroger’s roughly 2,400 stores. Paired with in-house software that determines the number of lanes that need to be open, the technology has reduced the customer’s average wait time to 26 seconds. That compares with an average of four minutes before Kroger began installing the cameras in 2010.

“The technology enabled us to execute at the front of the store without that additional (labor) expense,” said Marnette Perry, senior vice president of retail operations for Kroger.”It’s remarkable that we’ve been able to improve execution as much as we have without a big price tag.” …

The system includes software developed by Kroger’s IT department that predicts for each store how long those customers spend shopping based on the day and time. The system determines the number of lanes that need to be open in 30-minute increments, and displays the information on monitors above the lanes so supervisors can deploy cashiers accordingly.

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Charging queues

Automotive News recently had a report on driving a Tesla Model S electric car from Los Angeles to Las Vegas. You can find a video describing the drive here. What I found more interesting was the reporter’s description of stopping to charge up the car (A flaw in Tesla’s plan: It’s Chargie McVanish, Apr 8). In order to spur interest in its vehicles, Tesla is building out a network of solar-powered Supercharger charging stations. Their website says they currently have nine but plan to get to one hundred by 2015. One is in Barstow, perfectly positioned for a drive from LA to Vegas.

So what’s a reasonable wait to charge your Tesla?

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Big Data meets HR meets Call Center Management

We have already written in the past about the use of data analytics to best route customers to agents based on demographics and other characteristics.  The NY Times has an interesting article on the use of data analytics to improve retention and employee-employer relationships (“Big Data, Trying to Build Better Workers“)

The article discusses the broader appeal of these ideas, but focuses on applications to call centers. Why call centers? In contact centers, customer service agents, that are hourly workers handle a steady stream of calls under challenging conditions, yet their communication skills and learning capabilities play a crucial role in determining both the employee’s tenure and performance. The article discusses a new startup, Evolv, which helps firms find better-matched employees by using predictive analytics.

Transcom, a global operator of customer-service call centers, conducted a pilot project in the second half of 2012, using Evolv’s data analysis technology. To look for a trait like honesty, candidates might be asked how comfortable they are working on a personal computer and whether they know simple keyboard shortcuts for a cut-and-paste task. If they answer yes, the applicants will later be asked to perform that task.

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Waits at the Beijing airport

All this week I have been traveling in China with a group of Kellogg faculty. It has been a fascinating trip as we have met with officials from several government agencies, executives from a variety of companies, and colleagues from the Guanghua School of Management. I have never been to China before so I have been trying to take everything in as we have gone around Beijing and Shanghai. This sign caught my eye as we were going through the Beijing airport.
I like the way they have chosen to present the wait time information for clearing security. It got me wondering why American airports don’t try reporting similar information. If nothing else, being clear about the targets would help set expectations for how long passengers should expect to be in queue. Of course, in the US, the people running the airport do not control how TSA agents are scheduled. Nor do they determine how many officers are managing the immigration desks (another piece of data on the sign).

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Fallen Arches: Fixing service at McDonald’s

What counts as good service at a fast food restaurant? Speed obviously matters but what about staff interactions? No expects a quick service restaurant to have a Zagat’s rating (although some Chicago hot dog stands are graded) but can fast food service slip so much that customers notice?

Apparently the answer is yes, and furthermore McDonald’s hasn’t been doing so well in delivering service (McDonald’s Tackles Repair of ‘Broken’ Service, Apr 10).

But achieving speed and friendliness of service across the chain has been a particularly elusive goal, at least in part because about 90% of McDonald’s restaurants in the U.S. are owned by independent operators.

In QSR Magazine’s annual Drive-Thru Study, the only comprehensive industry comparison of customer service at fast-food chains, other restaurants have consistently outperformed McDonald’s in those areas. In last year’s study, the average service time at the McDonald’s drive-through studied was 188.83 seconds, compared with 129.75 for industry leader Wendy’s Co.  Chick-fil-A had the top friendliness ratings. Out of the seven major chains in the study, McDonald’s was second to last in the “very friendly” ranking, just above Burger King.

So what are the root causes of the problem and what can they do about it?

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Managing a harbor wait list

I live in Wilmette, the village just north of Evanston. It is a pleasant place if a little sleepy. However, we currently have a controversy brewing over Wilmette Harbor. The harbor is where the North Shore Sanitary Channel enters Lake Michigan. To quote Wikipedia, “The North Shore Channel is a drainage canal built between 1907 and 1910 to flush the sewage-filled North Branch of the Chicago River down the Chicago Sanitary and Ship Canal.” Of course, that quote doesn’t quite do justice to the harbor. Where the channel meets the lake, there is a lock that keeps the nasty stuff out.  Wilmette Harbor is actually a picturesque place with a Coast Guard station and space for 300 or so boats.

The kerfuffle is all about who will run the harbor. It is owned by the Metropolitan Water Reclamation District (MWRD), a regional government entity tasked with maintaining water quality, not accommodating boaters. Hence, they have outsourced the management of the harbor. For the last 75 years, the Wilmette Harbor Association has had the gig. The Wilmette Harbor Association’s lease has expired and they and other parties have bid to run the harbor, notably Wilmette Harbor Management. Following a murky process, the staff of the MWRD recommend the Wilmette Harbor Association’s bid be accepted even though it was lower than Wilmette Harbor Management’s. The MWRD’s commissioners voted against granting Wilmette Harbor Association the lease and now it is uncertain whether the harbor will be open this summer. For Chicago Tribune articles on this soap opera, see here and here.

I don’t own a boat so don’t have a whole lot at stake in this fight. However, there is an interesting operations question at the heart of the conflict. The Wilmette Harbor Association and Wilmette Harbor Management have very different ideas about how manage the queue for slips at the harbor.

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Those shelves won’t stock themselves

Another day, another Wal-Mart story. This one is from Businessweek and deals with troubles Wal-Mart is reportedly having getting goods on the shelves (Walmart Faces the Cost of Cost-Cutting: Empty Shelves, Mar 28).

Wal-Mart Stores (WMT) has been cutting staff since the recession—and pallets of merchandise are piling up in its stockrooms as shelves go unfilled. In the past five years the world’s largest retailer added 455 U.S. Walmart stores, a 13 percent increase, according to company filings in late January. In the same period its total U.S. workforce, which includes employees at its Sam’s Club warehouse stores, dropped by about 20,000, or 1.4 percent. …

At a Feb. 1 gathering of Walmart managers, U.S. Chief Executive Officer Bill Simon said Walmart was “getting worse” at stocking shelves, according to minutes of the meeting obtained by Bloomberg News. Simon said “self-inflicted wounds” were Walmart’s “biggest risk” and that an executive vice president had been appointed to fix the restocking problem, according to the minutes.

Note that this is not a supply chain issue. Rather it is a store operations problem. The goods are getting to the stores; they are just not getting out to the shelves.

At the Kenosha (Wis.) Walmart where Mary Pat Tifft has worked for nearly a quarter-century, merchandise ready for the sales floor remains on pallets and in steel bins lining the floor of the back room—an area so full that “no passable aisles” remain, she says. “There’s no manpower in the store to get the merchandise moving,” says Tifft, who oversees grocery deliveries and is a member of OUR Walmart, a union-backed group seeking to improve working conditions at the chain. “Customers come in, they can’t find what they’re looking for, and they’re leaving.”

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Managing multisite services

How do you grow a service business when growing means adding locations? That’s always been one of my favorite topics in service operations. It poses interesting challenges on what must be standardized and where flexibility should be maintained. The Globe and Mail has an interesting profile of  Toronto entrepreneur who has had to grapple with these issues as he has expanded his takeout restaurant from one location to four (Restaurateur creates winning recipe to manage multiple locations, Mar 8). They’ve gone the emphasize-standardization route.

Over the next seven years, Mr. Ross opened up three more Veda locations, two in buildings on the main University of Toronto campus, in 2007 and 2009, and one this past summer at University and Dundas, close to a group of hospitals. To manage across these locations, he pays close attention to as much standardizing as possible.

Since Mr. Ross believes food consistency to be critical, all the cooking is done in a central location. This means not only that food in all of Veda restaurants is cooked using the same recipes, but that it all comes from the same batch. The cooking takes place in the original, flagship Yorkville location and is distributed to the other locations each morning.

To ensure that the right food is at the right place at the right time, Mr. Ross needs to be able to estimate demand at each location on each day of the week. He has systems in place that allow him to predict that, and to tweak the prediction if there are events, such as large conferences, in the area. As well, he has a driver on call at all times who can deliver food to a location within 10 minutes if there is unexpected demand and something is running out.

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