Outsourcing of Public Security Service Operations to Private Firm G4S for London Olympics

G4S has been appointed the Official Security Service Provider for London 2012 Olympic and Paralympic Games.  In addition to much talk about social responsibility, the G4S website states:

We specialise in outsourced business processes and facilities in sectors where security and safety risks are considered a strategic threat, with expertise in the assessment and management of security and safety risks for buildings, infrastructure, materials, valuables and people.  G4S is the largest employer on the London Stock Exchange with over 657,000 employees.  We have operations in more than 125 countries.

G4S was contracted to provide 10,400 personnel but today Mr. Buckles, CEO of G4S, admitted in a grueling hearing at the British Parliament that G4S currently only had 4,200 security personnel at Olympic venues.   That’s right, only 40% of the promised service level!  And the shortfall is very unevenly distributed: only 30 out of a contracted 300 G4S personnel had arrived to provide security at the Olympic cycling event on Tuesday.  Moreover, the 51-year old Buckles also said that G4S “would provide a minimum 7,000” when the games begin.

A few comments on the operations strategy (outsourcing service ops and capacity planning) and management (execution): First on operations management: According to the New York Times,

Mr. Buckles said he learned of the looming crisis while he was on vacation in the United States on July 3, but the company informed the Olympic organizers only on July 11 that it could not meet its obligations.  He was forced to apologize, saying he was deeply sorry for the shortfall in security staff and blaming it on the failure of a scheduling system.

This is a failure of executive oversight of G4S’s highest profile project and a cheap blame.  Here we have a firm whose business is staffing and a project whose requirements were known years in advance and then blaming it on “a scheduling system?”  Your operations = Your firm.

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Boeing and Airbus: Outsourcing and Managing Visibility

The Wall Street Journal ran a series of articles on the challenges Airbus is facing. I will try to cover several of these, as each highlights a different issue, and I would like to begin with the one discussing the effort made by both Airbus and Boeing to fight the delays that plagued their operations during the last several years (“Hit by Delays, Airbus Tries New Way of Building Planes“.)

Both Boeing and Airbus have outsourced, during the last few years, not only their production, but also the design of the different parts, as well as the management of the suppliers’ sub-tiers. We have documented these in the past (“Boeing Delivers First Dreamliner“,) and the article, briefly mentions these. Manufacturing problems have left Boeing with more than 40 almost-completed Dreamliners awaiting fixes. Their main customers now expect to get their planes around four years late. The project has cost Boeing billions more than its initial $10 billion budge.  The reader must recall that Boeing has embarked on this ambitious outsourcing plan to reduce investment costs, and speed R&D and production. As we all know, things have not panned well for these two goals. What were the main reasons: loss of visibility of the progress of different suppliers, as well as incentive issues.  It took Boeing quite a while to figure it out, but they finally have:

In a major retreat, it has since bought up suppliers, brought work back in-house and integrated more closely with its remaining contractors.  “We gave away a lot of elements of work that we’d always done in the past, and then didn’t provide the kind of oversight necessary for some of the people that were doing work that they’d never done before,” said Boeing Executive Vice President Jim Albaugh, who ran its airplane division until June, at an investor conference last fall. To retrench, Boeing mobilized hundreds of engineers specialized in manufacturing and industrial issues, who have pored over every element of the program, including at suppliers. At its factory near Seattle, Boeing built a control room with video links to overseas suppliers, allowing its engineers to examine parts live on shop floors in Japan or Italy. For a second, larger version of the Dreamliner, Boeing opted to design many outsourced components itself, such as the plane’s rear section and tail wings.

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