In a perfect world, technology solves problems instead of creating them. Things don’t always go that way. Take, for example, Starbucks’ mobile ordering. This is, in theory, a convenience for users of their app. They can place an order before hitting the store, pay automatically, and get their drink and food without waiting in line.
Or at least that is the theory. The reality is that a surge in mobile orders has created a bunch of headaches for the coffee chain. Here are some details from when they announced their earnings at the end of January (Starbucks Tempers Revenue Forecast, Jan 26, Wall Street Journal).
Mobile order-and-pay represented 7% of U.S. company-operated transactions in the quarter, up from 3% in the prior year. The number of its highest-volume stores for mobile order-and-pay, where orders placed via the app account for more than 20% of transactions during peak hours, doubled to 1,200 stores over the prior quarter.
The high rate of mobile ordering was blamed by Starbucks for increased waits and with that lost customers. In the last quarter, dollar sales were up because the average purchase size outweighed a 2% decline in transaction.
But just how bad is the delay? That’s the subject of a recent Business Insider piece. The headline pretty much lays out the article’s agenda: We went to Starbucks every day for a week to see how the coffee giant is dealing with its biggest problem (March 19). Continue Reading »
Posted in Fast Food, Queue management, Restaurants, Services, Waiting | Tagged Queues, Restaurants, Waiting Time | 1 Comment »
Have you ever ordered a couch or arm-chair and waited an interminable amount of time for delivery? The usual reason why getting upholstered furniture often takes forever is the fabric. From the manufacturer’s point of view, the fabric is expensive, which would be tolerable if one could count on it moving through the process quickly. However, in the furniture world, you can’t count on that. Above a certain price point, nearly every manufacturer competes on offering lots of variety. Once you pick out a couch that’s the right size and sufficiently comfy, you get handed a book of fabric samples with literally hundreds of choices. Some — indeed, most — of those options are destined to be low runners, rarely chosen options that will appeal to only a very few customers. That creates problems for the manufacturer. Holding all of those options in inventory may just be too costly. A manufacturer may hold some of the more popular variants in inventory, but for the more esoteric choices, they will wait to order the fabric after getting an order for a couch.
But what if you could print the desired pattern for the couch on site?
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Posted in Customization, Operations Strategy, Postponement, product variety | Tagged Inventory, Manufacturing, Operations Strategy, postponement | 1 Comment »
This is, of course, the weekend of the Super Bowl. While other business sections might focus on advertisements, the Chicago Tribune takes a hometown angle and talks pigskin — or more accurately cowhides since that’s what footballs are, in fact, made of (Chicago’s in the Super Bowl: Local firms team up to make big game’s football, Feb 2). The footballs are made by Wilson, which is based in Chicago, but the balls are made at a factory in Ohio. The leather, however, all comes from Horween Leather which has processed hides in Chicago for over 100 years.
Here’s a description of just what they do for the leather:
For 24 hours, hides are treated with an acid solution that removes the hair. To make leather used in sporting goods, hides get a first round of tanning in large drums where fats and oils are stripped away and chrome is added to strengthen the material.
Employees then take the “wet blue” hides — named for their pre-dyed tint — and assess quality. Every hide will get another round of tanning, but the process depends on the final product. Football leather emerges with a grippable tackiness — part of the reason Nick Horween is irked when announcers blame flubbed passes on slippery balls.
Bone-colored football leather is dried in an oven on the tannery’s top floor, glued to glass plates to keep it from shrinking. A pebblelike texture — Wilson’s pattern includes tiny W’s — is stamped on with heated steel plates. The leather then is sprayed with dye until it’s that recognizable reddish-brown hue.
The whole article is worth checking out and features a video of the Horween plant.
Posted in Manufacturing | Tagged Manufacturing, Super Bowl | Leave a Comment »
This should not surprise you at all: Christmas is a big deal for Lego. According to the Financial Times, half of the company’s sales come in the month or so before the holiday (Lego makes push to avoid disappointments of Christmas past, Dec 22). But how do they gear up for that big peak in sales? Check out the video below:
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Posted in capacity management, Inventory, Operations Strategy, product variety, Supply Chain | Tagged capacity management, Inventory, Operations Strategy, Supply Chain | Leave a Comment »
As we have posted about before, retailers using store inventory to fulfill on-line orders is a thing. It is also a thing that raises an interesting question: At what level of store inventory should a retailer stop using store inventory to fulfill on-line orders? That is, should everything be available first-come, first served or should some store inventory be held back only for those customer that wander into the store? According to the Chicago Tribune, different chains are following different strategies on this (With Hatchimals scarce, who gets dibs — online shoppers, or those in the store?, Dec 13).
Target ships online orders from 1,000 of its stores, up from 460 last year. To avoid empty shelves, Target will turn off the order pickup or ship-from-store option on some items when a store’s stockpile falls below a certain threshold, said Target spokesman Eddie Baeb. Stores that ship also get extra inventory.
An online customer likely doesn’t care which store or warehouse handles their purchase. The shopper already walking the aisles does. Exactly how many items Target holds back depends on the product and how quickly it typically sells. …
Other retailers, like Toys R Us, don’t try to guess how many items to hold back for in-store customers.
Even on Christmas Eve, the retailer doesn’t bump back online orders to help procrastinating brick-and-mortar holiday shoppers. Purchases, whatever the format, are first-come, first-served, said Toys R Us spokeswoman Jessica Offerjost.
Continue Reading »
Posted in eCommerce, Logistics, Retail, Supply Chain | Tagged eCommerce, Logistics, Retailing, Supply Chain | Leave a Comment »
It’s the end of the year so it is clearly time to see what is up with how retailers are handling holiday logistics. A useful starting point is this graphic from the Wall Street Journal (As Web Sales Spike, Retailers Scramble to Ship From Stores, Dec 1).
This shows how Toys R Us fulfills its web orders. And, yes, that says that over 40% of the web sales were fulfilled from stores. (To put that total in perspective, the company’s revenue last year was $11.8 billion.) Continue Reading »
Posted in Automation, eCommerce, Logistics, Retail, Supply Chain | Tagged eCommerce, Logistics, Retailing, Supply Chain | 1 Comment »