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What should modern manufacturing look like?

There’s a lot of ways of thinking about that but I think that few would argue that information should be exchanged digitally. In a world in which products are designed and optimized in a computer, it is hard to see why diagrams and blueprints should  have to be printed out. Except as Marketplace reports, not everyone is necessarily ready for a digital world (Legacy equipment still hinders digital manufacturing, Jan 28).

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The last few years have been rather rough on Takata. Once the firm could accurately have been described as a fairly anonymous auto parts supplier. Your car may have contained some components made by Takata, but you were likely unaware of just what they were. That has changed rather significantly has it has come to light that the firm has produced a large number of defective airbags. Defective in the sense that they explode and send shrapnel into the car as opposed to inflating. To date, numerous automakers have recalled over 24 million vehicles in the US. To put that number in perspective, total car sales in the US set a record at 17.5 million last year.

As you might expect, the firm has been involved in the requisite activities of apologizing and ass-covering. As part of the latter, they commissioned a committee led by a former transportation secretary to review how the firm has managed. The resulting report doesn’t pick a particularly nice picture (Takata Lacks Processes for Tackling Air-Bag Defects, Panel Says, Wall St. Journal, Feb 2).

Takata Corp., the supplier behind defective air bags in millions of recalled vehicles, lacks clear processes for tackling potential safety defects and needs improved manufacturing methods, an outside panel the company commissioned found.

Takata employees tasked with raising safety concerns don’t have well-defined roles and rely on reports from auto makers about quality problems instead of ferreting out problems themselves, according to the report from the panel led by Samuel Skinner, the former transportation secretary under President George H.W. Bush.

The report found Takata lacked its own program for spotting defects in air bags once they’re installed in vehicles that now typically stay on U.S. roads for more than a decade.

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I have been teaching the MBA core operations class this quarter. This week we just wrapped up talking about bottlenecks and capacity. I consequently found an article in The Guardian rather timely (The tube at a standstill: why TfL stopped people walking up the escalators, Jan 16). TfL in the article title refers to “Transport for London” which runs the Underground. The article reports on an experiment run at their Holborn station.

The experiment in question gets to a bit of escalator etiquette. Specifically, when using an escalator, should people stand to one side so those in a hurry (or in need of a work out) can walk up the escalator or should people patiently stand two abreast? Now if you prefer to chug up the stairs, you clearly lose under the second scenario. However, can it be the case that accommodating the walkers cost the system as a whole an unacceptable amount of capacity?

It’s all very well keeping one side of the escalator clear for people in a rush, but in stations with long, steep walkways, only a small proportion are likely to be willing to climb. In lots of places, with short escalators or minimal congestion, this doesn’t much matter. But a 2002 study of escalator capacity on the Underground found that on machines such as those at Holborn, with a vertical height of 24 metres, only 40% would even contemplate it. By encouraging their preference, TfL effectively halves the capacity of the escalator in question, and creates significantly more crowding below, slowing everyone down.

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Last week, we had a post on how the rise of e-commerce was messing with college dorms. Now the Wall Street Journal is reporting that the influx of package deliveries is also causing headaches at apartment complexes across the country (Web-Shopping Deluge Boxes In Landlords, Oct 20).

The onslaught has turned management offices of apartment buildings into de facto receiving centers as landlords grapple with recording packages, tracking tenants down to pick them up and finding places to store the parcels.

Camden Property Trust, the 14th-largest U.S. apartment operator by number of units, stopped accepting parcels at all of its 169 properties nationwide this year. Executives said the Houston-based landlord, which has roughly 59,000 units in 10 states and the District of Columbia, had received almost a million packages in 2014, and the rate was increasing by 50% a year. …

Each package results in about 10 minutes of lost productivity, Camden executives estimated. At a rate of $20 an hour for employee wages, that amounts to about $3.3 million a year, they said.

Beyond the staff costs, there are a number of other complications. For example, having the office at a complex open normal business hours may suffice for most things, but if residents leave for work before 8:00AM and don’t get home before 6:00PM, coordinating pick up can be a hassle for both the landlord and the resident. There is also a question of liability. If the office signs for a package as a courtesy for a resident, who is on the hook when it somehow goes missing? Given that these problem scale with more delivery, I can understand the desire to refuse to accept packages. Of course, that decision is not terribly popular with many renters. The article has multiple quotes from people who now have packages delivered to a relative’s house or who are just itching for their lease to be done so they can move to a more accommodating complex. Continue Reading »

The big news in the restaurant world this past week is that Danny Meyer, one of New York City’s most prominent restaurateurs, is going to be abolishing tipping at all his establishments. He discussed the move on CBS.

(He also had an interview on CNBC that covered a lot of the same ground plus a few other points that I will mention below.)

Tipping — at restaurants and in hotels — is something we have covered before. As much as I like the idea of linking pay to performance, I think that tipping is a pretty miserable custom. Meyer touches on some of these points in explaining why he is banning the pourboire. But he also highlights a completely different issue: Attracting and retaining talent.

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Many years ago, I worked as an office assistant in my college dorm. One of the responsibilities was letting residents know if they had received a UPS package. Anything sent via regular mail went to the campus post office where we were all assigned a box. Since UPS couldn’t deliver to the post office box, it came to the dorm where someone would get around to writing out a paper form so the student could be notified. It wasn’t a particularly efficient process, but once you got past the start of the school year, there weren’t too many packages to deal with.

But times have changed! The Daily Campus (of the University of Connecticut) reports that UConn’s mailrooms are getting overwhelmed (Mailroom backup continues as officials search for solutions, Oct 5).

The number of packages received by the university for residential students has been increasing drastically in recent years, in large part due to the rise in online purchases, Assistant Director of Building Services Tracy, told The Daily Campus in an earlier article. As a result, there is a growing need to find long-term solutions beyond hiring more staff.

According to Cree, more than 100 student workers are involved in work related to the residential mailrooms.

In order to fix some immediate problems, plans have been made to modify existing mailrooms in the next few weeks. These alterations are intended to allow packages to be processed much more efficiently. …

In addition to these immediate changes that are to be put in place, UConn is also considering other ways to efficiently deal with the influx of packages and alter the current infrastructure to better reflect the needs of students. …

“We have been discussing the possibility of creating central locations for sorting, but also discussing distribution systems to get the packages delivered sooner,” [executive director of Building Services Logan] Trimble said.

The earlier article referenced above claims that UConn is receiving 3,000 packages per day. The Business Insider article on UConn’s mailroom woes notes that the school has about 31,000 students. Some of those presumably live off campus and have their Amazon sent to their apartments so we are probably looking at over 10% of on-campus students getting packages every day. I am glad my dorm assistant days are behind.

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Call center agents often sound robotic — and that may well be by design. Having agents follow a script helps keep service times predictable, supports delivering consistent service, and possibly reduces training costs. The same logic holds for other forms of electronic customer service interactions — be they chat sessions, emails, or Facebook posts.

But not every firm follows this model, relying instead on unscripted interactions to build relationships with customers. Among these is Dollar Shave Club, a subscription razor service with 2.2 million members (Why Dollar Shave Club invests in unscripted customer service, Los Angeles Times, Sep 26).

The company employs about three dozen member service agents who answer phones and emails, conduct online chats and reply to queries on social media — all while channeling the brand’s distinctly playful and irreverent tone.

The strategy isn’t easy. Training takes weeks. Finding the right personalities is challenging. It would be cheaper and less hassle to contract with a third-party customer service firm, which Dollar Shave Club does to complement its in-house team.

But online retailers, including pioneers Zappos and Bonobos, have found the investment in unscripted customer service worthwhile. The interactions, they say, feel more authentic and help humanize e-commerce brands that are, by their very nature, faceless.

So when does a scriptless approach pay off? Continue Reading »

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