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The last couple of days have been a dream for sports enthusiasts: World Cup mania in Brazil, an epic Fedderer-Djokovic championship at Wimbledon, and the start of summer ritual with the most beautiful of all: the Tour de France (TdF).  And off course, behind every thing of beauty lurks a masterful operation.  Last year we talked about the project management process to schedule all pro-team Orica GreenEdge members over the course of a year around the globe.  (Like the traditional US defense strategy to support two simultaneous wars, pro-teams often participate in two races in different countries at the same time.)  Today we talk about tactical operational support during a stage race like the TdF.

Many people can imagine the support processes behind a football or basketball team, yet professional cycling has some interesting unique characteristics.   (more…)

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Four effective ways to improve peak throughput from this nice, concise blog:

http://qz.com/172900/how-chipotle-is-going-to-serve-burritos-faster-and-faster-and-faster/

 

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A Slate article asks a very simple question: “Ikea is so good at so many things. Why is it so bad at delivery?”

The author tells the story of an item that was purchased from Ikea and was supposed to be delivered by a third party. While Ikea claimed to ship the item, the third party claimed to never receive it. Since Ikea claimed the item was shipped, the order could not be cancelled without incurring a hefty cost. Apparently, this is not a unique experience:

The nightmare of Ikea delivery is a truth so universally acknowledged that even the company cops to it. Chief marketing officer Leontyne Green talked about her own “very frustrating” Ikea delivery experience in a December 2011 Ad Age profile, which stressed the firm’s ongoing efforts to improve delivery and overall customer service.

In trying to explain the above conundrum, the author recruits several of our colleagues from Dartmouth and Harvard:

“With sporadic orders over a wide geographic area, Ikea would need a fleet of trucks that might be idle one day and not able to handle the load the next,” says Robert Shumsky, a professor of operations management at the Tuck School of Business at Dartmouth.

We have discussed several times, albeit in the context of grocery delivery, the fact that one of the main cost drivers of delivery services is density. Since Ikea tends to be quite far from urban and dense areas, it is usually difficult to build density and thus difficult to offer a cost efficient services.  One may charge a high price for such a service, but given their target market, this may not be ideal. (more…)

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We have given considerable coverage to the attempts made by Macy’s and Nordstrom to virtually pool their inventory.  The idea is that while these firms need to carry inventory in a decentralized manner, in their brick and mortar stores as well as their main warehouses, they can still manage the inventory in a centralized manner. So, if an order is made online and the item is stocked out at the main warehouse, it can be sent to the customer from the nearby stores. The same idea applies when a customer places an order at a brick and mortar store that does not have a sufficient quantity.

During our penultimate class in the operations management course, I was discussing the benefits of such inventory pooling, and illustrating them using our recent posts. One of the students, Ryan Orr (h/t) mentioned that he recently placed an order at the Macy’s stores in Oakbrook for 10 identical ties for an important event. The store had only a limited number of ties, and agreed to order the rest of the quantity from nearby stores, and ship them directly to Ryan. As you see in the photo, Ryan got 10 ties, with 4 different patterns from 6 different stores (all in the Midwest). We blurred the receipt’s, but confirmed that all ties had the same UPC code, which means that this was not a mistake of the store in Oakbrook, the employee or the stores that the delivered the product. They all thought that they deliver the product that Ryan wanted.

Tiesblur1

Several explanations are possible:

(1) This is not a fast selling item (sorry Ryan), so over time the UPC number has transitioned from one pattern to another. Some stores carried the newer item, while other still carried the older one.

(2) It is possible that some of these stores were not originally Macy’s stores. It is possible that some of these were Marshal Field’s stores, for example, and still carried UPCs that were based on their legacy systems. We could not confirm this explanation.

(3) Loose quality control on Macy’s side. It is possible that someone accepted a shipment from a supplier to Macy’s without confirming that the shipment indeed included the right pattern.  All of these are green ties, but is it possible that someone did not notice the difference in patterns. Unlikely (?)

If anyone at Macy’s is reading and has a better (and maybe the right) explanation, we will be happy to post it.

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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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There is so much talk and doom about the “ending” of traditional education by the disruptive innovation of online learning and massively open online courses.  I can’t help but to think back to the end of the 1990s and the first boom & bust in ecommerce, as illustrated by Webvan delivering a pack of gum from Oakland to San Jose for less than $1…

When it comes to education, though, we must distinguish between learning and signaling.  All debate and hype is about the learning but I have not heard anything about the latter, which I believe is at least as important (for better of worse).  Just ask any parent (whose kid now just heard about college acceptance) about the strength of their desire to be admitted to certain institutions.  We seldom hear the point that their kid will learn more at that desirable institution; so what is its attraction? Signaling (as Nobel laureate Spence wrote about quite a while ago).

Admittedly, this distinction pertains mostly to top or “brand” schools, whose value proposition of the degree is signaling selectivity—that will not change by MOOCs or any online learning.  The desire to signal uniqueness and distinction (and to self-classify as the BCC wrote about recently in their study and poll of “class” in the UK) is so human it is timeless.  Add to that the desire to be surrounded by similar people or those one looks up to, and the opportunity to build lifelong relationships and networks, and to belong (to the club). Traditional US higher-ed is the best in the world to respond to these desires.

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One cannot discuss the Japanese automotive industry without mentioning the Car-Part Keiretsu.  The Wal Street Journal has an interesting article on the anti-trust investigations and lawsuits regarding these arrangements (“Japan Probe Pops Car-Part Keiretsu“)

 First: what’s a keiretsu? A keiretsu is a cluster of interlinked Japanese firms, usually centered on a large corporation that holds equity in the smaller firms.

Japanese auto makers have long seen keiretsu as a way to ensure quality over the long term by building trusted relationships with suppliers. The brand-name companies often own significant stakes in keiretsu parts makers and often enjoy the right of first refusal for newly developed technology. Typically, they work closely from the design stage onward, sharing proprietary technology.

By combining forces and coordinating their actions, these companies are able to reduce costs and risk, better facilitate communication, while building trust and reliability. The Toyota Group is considered to be the largest of the “vertically-integrated” keiretsu groups.  There were always discussions that the practice of such a scheme may lead to cartel-like behavior. Recently, due to changes in the Japanese automotive market, several investigations and law suits regarding illegal practices of these Keiretsus:

But there was a lot going on behind the scenes and some of it wasn’t legal. In fact, some areas of the Japanese auto-parts business were rife with bid rigging and collusion, according to confessions by companies and executives to antitrust officials around the globe that have produced multimillion-dollar fines and a dozen prison sentences.

(more…)

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