6 Managing Quality

Perception is Reality…The Saga of Abercrombie & Fitch and CEO, Mike Jeffries

Posted on by spr1334staylordeaderick
http://girltalkhq.com/abercrombie-fitch-wont-make-clothes-for-fat-women-because-they-arent-cool/

When discussing quality and the various factors and dimensions that contribute to quality, we cannot overlook Dimension 9: Perception.  No matter how many of the dimensions of quality that a product or service may have, public/customer perception is inevitable and should be nurtured. It seems that the CEO of Abercrombie and Fitch, Mike Jefferies, may have forgotten this. In the year 2006, Mike Jefferies made very controversial (and exclusionary) comments about the brand’s target consumers. As stated by Jefferies…”In every school there are the cool and popular kids, and then there are the not-so-cool kids, “Candidly, we go after the cool kids. We go after the attractive all-American kid with a great attitude and a lot of friends. A lot of people don’t belong [in our clothes], and they can’t belong. Are we exclusionary? Absolutely.” The statement not only gives the perception that kids who do not wear or cannot fit the clothing are somewhat unworthy and not allowed to be in the “in crowd” but it is also hurtful.

Since the comments made by CEO, Mike Jefferies, surfaced, Abercrombie & Fitch has had to do some major damage control but for those customers who do not fit the mode of Abercrombie & Fitch or those who are simply against this exclusionary attitude, the damage is irreparable. The perception of quality for the brand Abercrombie will no doubt suffer. I have never been a consumer of Abercrombie & Fitch for personal fashion preferences but at this point, even considering this brand or recommending it to others will be a nonoccurrence. Look at that! … someone who did not necessarily have any hard feelings toward a brand now will not even consider recommending simply based of perception.  A negative attitude toward a brand can form very quickly and this happens all of the time because a company does not take the time to consider how it actions will look in the eyes of consumers. I have no doubt that Abercrombie & Fitch sells clothes that comply with other Dimension of Quality- Reliability, Durability, Aesthetics, etc.…but if the brand is perceived as hurtful and exclusionary to anyone who does not fit the mode, purchasing or any recommendation for others to purchase will not even be considered.

As stated before,  Abercrombie & Fitch has had to do some major damage control after the unapologetic comments that CEO, Mike Jefferies has made on behalf of the company; issuing a sincere apology to those who may have offended. The image of Abercrombie & Fitch itself should also be considered for revision. The images that the company releases for the purpose of advertising all portray a specific group of individuals, not leaving any room for interpretation. If Abercrombie changed that very influential aspect of the brand…things could change for the better, almost immediately.

What do you think about the comments made by CEO, Mike Jefferies?
Has something of this nature ever stopped you from supporting a company?

http://www.guardian.co.uk/commentisfree/2013/may/25/abercrombie-fitch-controversy-skinny-backlash

 

 

Nike Relationship with Livestrong Charity Dies!

Posted on by spr1331abarrios

A relationship that generated millions and branded Nike to what it is today has finally come to an end. After a nine year relationship, Nike is closing down its support with the Livestrong Foundation that former bicyclist Lance Armstrong has created to help cancer survivors.

Livestrong-Nike-Cancelled
NIKE LIVESTRONG DISCONTINUED

The footwear company is pulling the plug on all Livestrong merchandise off of store shelves. I know exactly what all of you are thinking, “Wait a Sec! That means no more yellow Livestrong wristbands?” Yes this is exactly what it means. They are discontinuing all footwear and clothing, so the shoes you just bought last week that retailed over $100 will now be worth nothing. Nike has generated over 100 million in funds to the foundation since 2004 and during the time accounted for about a quarter of Livestrong’s average yearly revenue.

The foundation said that change in its relationship will have no affect on the services it provided to cancer survivors. Nike said they would continue the support in other ways, but they weren’t able to provide specifics at the moment.

The company ended the sponsorship last October after becoming aware to the news of Lance Armstrong using performance-enhancing drugs and lied to Nike for over a decade. Mr. Armstrong is now resigned from chairman of the foundation and dissociated himself from Livestrong.

Stores like Dick’s Sporting Goods and Sport Authority are now severely hurting due to heavy inventory of Livestrong merchandise of exercise equipment and clothing that failed to sell. Consumers have already turned their back on the brand that was once so dominating and meant so much. The foundation that is based in East Austin, Texas, is looking for a new outlook and a way of rebuilding itself to what it used to be. A Spokesperson for the foundation said, “We want to steer a strong and independent course that ensures the long-term health and sustainability of the organization.”

The foundation has derived 1/3 of its budget from corporate and licensing sponsors, 1/3 from events, and 1/3 from general fundraising, according to chief executive Doug Ulman.

Livestrong still has some corporate sponsors, and still in the works for seeking more. “The foundation has taken other steps to reinvent itself, including moving its “call-to-action” day—which was celebrated on the anniversary of Mr. Armstrong’s cancer diagnosis—to May 17, the day that its yellow wristband was introduced.” The foundation has started new relay marathons all throughout Austin, while ending the sponsorship with the Austin Marathon in April after three years being the top sponsor. Nearly 500 runners associated with Livestrong have already raised $250,000 this year.

I just feel that after the foundation was basically led by an imposter is going to be really hard for the company to regain its trust in its consumers and hard to rebuild itself after an impact like this.

WILL THE FOUNDATION BE ABLE TO REBUILD THEMSELVES AFTER NIKE DROPPING THEM?

WILL THIS AFFECT THE QUALITY OF THE SERVICE THE FOUNDATION PROVIDES?

 

Sources:http://online.wsj.com/article/SB10001424127887323855804578511271244741516.html#articleTabs%3Darticle

 

Should GMO Foods be Labeled?

Posted on by spr1331tasafuadjaye

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People should know where there food comes from right? Or should they just accept the food that is given to them at their local grocery store or big chain store? I mean after all food is something that your body uses to provide nutrients to your body. Wouldn’t you want to know if the food you were used to was altered in any sort of way. With Monsanto and their GM Crops (Genetically Modified Crops) , which are crops that have been genetically altered by engineering techniques, such as corn or soybeans could be provided to you without you being aware that they are genetically altered and not the original crops that grow from the earth.

Monsanto claims that the Genetically Modified Crops are safe, but how are we to know for sure, but isn’t that what tobacco companies told us about cigarette smoking back in the 40’s and 50’s. Now after years of testing we know cigarette smoking is closely linked to forms of cancer especially of the lungs. Whose not to say in the future that GMO Crops will be closely linked to some disorder or disease. GMO’s have been around for about approxiametly 16 years, with heavy long term research being done mainly by Monsanto, whose research shows that they are safe.

There have been other research that says otherwise, such as research done by Michael Antoniou of Earth Open Source and Dr. Giles-Eric Seralini of the University of Caan in France.  Their research states that glyphosate and 2-4-D found in the GMO’s pesticides create  lots of health problems such as birth defects, neurological imbalances, cancers, embryonic deaths, and DNA damage.

Monsanto states they are opposed to current initiative to mandate labeling of ingredients developed from Genetically Modified seeds in the absence of any demonstrated risks because such mandatory labeling could imply that food products containing these ingredients are somehow inferior to their conventional or organic counterparts. Mandatory labeling of genetically engineered foods and organisms in the United States has been proposed but not been made into a bill or law on the national level. Many countries have actually banned Genetically Modified Organisms such as Austria, Bulgaria, Germany, Greece, Hungary, Ireland, Japan, Luxembourg, Madeira, New Zealand, Peru, and South Australia.

I mean what was wrong with the way these crops were naturally created in the first place. Either, consumers should have the option of knowing whether their crops were genetically modified or not, in the same way there are standards on whether stuff is organic or if an product doesn’t contain gluten.

So do you think that products should be labeled GMO or not? What are your thoughts about Genetically Modified Crops in general?

 

Sources:

http://www.ext.colostate.edu/pubs/foodnut/09371.html

http://www.monsanto.com/newsviews/Pages/food-labeling.aspx

http://www.naturalnews.com/038544_GMOs_solution_Monsanto.html

Price Menu in Hospitals?!

Posted on by spr1314mshah

Businesses try to implement various strategies such as differentiation, low price, and rapid response to stay ahead in competition and to attract more customers. But, when it comes to hospital industry, there is nothing much to do to increase profit other than improving internally such as adding new services, outsourcing some work, improve quality, increase profit margin etc. Most of the hospitals have successfully increase their revenue by charging higher amount to insurance holders and get away with it as not many people pay attention to it.

But, it may change soon. Steven Sonenreich, CEO of Mount Sinai Medical Center in Miami Beach, announced that he would bring transparency to industry by posting prices comparing to Blue Cross and Aetna. In early May, the center for Medicare and Medicaid Service released data from 3,000 hospitals that accept government insurance. According to this data, price of most of the treatments vary as much as by three times. And these hospitals get away with it because insurance companies have to pay that amount and patients pay fixed co-pay.

However, with increasing cost of Health care, insurance companies have changed co-payment plans from fixed co-pay to percentage of total billed amount. Therefore, patients will be more aware about how much they will be charged. Thus, availability of price information can benefit both hospitals and patients. After the announcement, Brian Keeley, CEO of Baptist Health in South Florida stated that the hospital industry is headed in that direction. Thus, in short time, all hospitals nationwide will follow the steps of Mount Sinai Medical center.

Now the question comes to mind is why Sonenreich wants to be first to be in industry where secrecy of price has been working out perfectly. If it were some other industry, being first to market would be smart move. Therefore, the reason for being first to market in my opinion is to build reputation and favorable word of mouth when every hospital at least in Florida has adopted this. Thus, their plan seems to attract more patients in long run.

Furthermore, as we have discussed in chapter one that measuring quality of services is much more difficult than physical products. And hospitals rely on attracting more customers by providing better quality services. Most consumers make purchases based on assumption that higher the prices better the quality, as we talked about in chapter 6. For example, more than 80% students chose Rolex as better quality where I think other watches were better quality for their price. Similarly, with availability of price information in hospitals, I think people with go to the hospitals that charges more. But, as Sonenreich stated that they are the lowest cost hospital in area, they might lose patients to competitors because of the price transparency. Thus, their decision of transparency might hurt them in long run.

Do you think the transparency in hospital cost will make us more conscious about where we go? And how will if affect the Mount Sinai Medical Center?

http://www.miamiherald.com/2013/05/14/v-fullstory/3397479/in-miami-more-hospital-prices.html

http://www.businessweek.com/articles/2013-05-20/a-hospital-ceo-promises-more-pricing-transparency-and-makes-rivals-squirm

Sweet Mandy B’s Sweet Success

Posted on by spr1323kpavich

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Most students at DePaul University have encountered the delicacy of Sweet Mandy B’s at some point during their college education, whether directly or indirectly. There are the die hards (as often as they can get there, they do), the excuse makers (I don’t want to write this paper anyways, so lets go get cupcakes), the “I earned it” girls (who can justify the indulgence since they worked out), the special occasions (birthdays, weddings, the works), and the rest have either simply tried Mandy B’s or heard other students discuss it.

The number of students that Sweet Mandy B’s draws in on a daily basis is astounding; and students are only a portion of their customer base. There are people all over Chicago who are willing to make the trip to Lincoln Park in order to get Mandy B’s. In food and confection related industries, the quality is top priority since that is what consumers are truly after when they go in for a treat. In order to sustain such high quality management and fresh cupcakes, cookies, and specialty foods, just in time inventory is a must. Nobody wants to walk all the way there to spend money on a cookie that is stale or doesn’t satisfy that sweet tooth. Managing the way that baked goods are created, decorated, and stored in order for maximum freshness for the maximum amount of time appears to be something that Sweet Mandy B’s management has mastered, from my experience at least.

Another aspect of operations that is essential to consider in this industry is capacity. When people place orders for cakes, it is typically for a special occasion, in which case they need the cake at a specific time on a specific day. Cake orders and order patterns must be closely analyzed in order to increase staff during busy ordering times such as holidays or time of large events like graduation. Space and oven scheduling is another consideration, for only so many cakes can be baked as there are ovens. Sweet Mandy B’s seems to have this under control as well, for the entire second half of their store is available should they need to utilize that space, yet the don’t waste money keeping it lit or stocked when they are able to limit baking to the main kitchen.

Location strategy is interesting in this case, for Sweet Mandy B’s does not follow the typical “Location is everything” mantra. Rather it makes a product that is too good to resist, and people have no problem travelling from all over the city to pick up their pre-ordered cakes or stop by for a snack. However, their location is, in fact, intelligently placed because many college students do not drive, and the proximity to campus is a major plus. Its convenience also encourages students to stop by when they probably would not have made the trip if they had to actually plan for it and catch a train. With its thriving success, is there anything that could drastically hurt Sweet Mandy B’s sales?

 

Quality vs. Price

Posted on by spr1313anasir

hAs a customer how do you measure quality? Would you settle for lower quality due to lower price? Does the economy hurt the companies that don’t lower price because people cannot afford the same quality with the reduced income? These questions are raised in the article “High Quality Products Is Key for Chicagoland’s DK Organics” on constructionequipmentguide.com. DK Organics emphasizes product quality over any other key factors such as price. Many businesses compete by lowering price for a product and then eventually which leads to lower quality. Many well established companies choose to not compete with lowering price or lowering quality but rather with adding features to their product to attract customers rather than losing their reputation. After all, a reputation lost takes a lot of time to gain back which some companies are smart not to lose.

However, it is independently determined if a company is willing to be known as a low price company that attracts most of the lower and middle class therefore does generate high profit. On the other side a company like DK Organics can still be stable in a bad economy with not changing their price but maintaining quality and continuing to stabilize their reputation as well. Measuring quality is different for each firm as discussed in class. Companies have to choose between value based quality to compete.

ISO 9000, quality system, requires the companies to focus on customer’s requirements, needs and expectations. ISO 9000 exists to guarantee equity in the marketplace. Reputation for companies are built through customer review and what type of customer’s shop at the stores builds the reputation for the companies. on DK Organics website it is stated on the home page that “Our material yard carries top quality mulches, composts, soils, stone and sand. “(dkorganics.com) Material yard is bold to emphasize quality regardless of the price. “high value experience every time!” (dkorganics.com) again refers to quality that the individuals will get out of the product which can be measured by customer’s satisfaction and the rich lasting result of the soil. DK Organics product can be purchased by individuals but it is usually provided through a contractor “a service” in order to receive the product, which could cost extra money but quality is still measured high.

When a product cannot be purchased by a customer by itself easily and needs a service provider to obtain the product also increases the value and quality of the product. This could be also considered a great marketing strategy to generate more revenue by adding a service to the product. DK Organics can be considered a great business because landscaping is very important and public places will always hire someone to do the job for them instead of doing it on their own, thus generating revenue for the company.

 

Sources: http://bit.ly/112Ni1p

KFC China: Straying too Far from Kentucky?

Posted on by spr1323amueller

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Bloomberg Business Week featured KFC, a Yum brand restaurant, in two recent articles focusing on the brands Chinese storefronts. KFC, a household name in US fast food chains, has been suffering in several different aspects. Originally tied with the name “Kentucky Fried Chicken”, KFC has evoked feelings of unhealthiness with US consumers for years, and has suffered sluggish sales. However, the chains crowning glory has been KFC China which has been a start for Yum brands and been increasingly profitable.

Recently, however, KFC China has suffered from image issues and quality problems, and therefore there sales in China have been dipping. For KFC in the past, unhealthiness was not as much of an issue for its Chinese counterpart, because it brought a unique competitive advantage: its traditional American menu. KFC China took a different approach that may have ruined that competitive advantage, by trying to adapt the menu to the Chinese audience and adding traditional Chinese fare. So far it appears that this was not a wise choice, and consumers are left wondering what happened to their beloved American food. KFC needs to reassess their product design to match the wants of the Chinese customer base.

On top of this reconstructed image issue for KFC China, what may have been even more damaging was quality control issues. A history of poor quality issues can be severely damaging to a brand, especially one associated with the food industry. Consumers take extra precautions with what they are putting into their bodies, so when news of KFC chicken containing “unacceptably high levels of antibiotics” the chain suffered. This on top of already high concerns dealing with avian flu, made Chinese consumers even more skeptical about consuming this product. This illustrates, how damaging a quality issue can be for a brand, as discussed in Chapter six.

KFC China had been so successful in the past, that Yum has considered completely selling the United States stores in order to focus on those abroad that were growing at a much faster rate. However, if they continue to have these image and quality issues in China, getting rid of US stores may be a poor choice.  If KFC abandons its US stores, does that destroy its image of being a classic American restaurant even further? Only time will tell what happens to this brand, but it is crucial that Yum and KFC managers assess this project.

What are your thoughts on KFC and KFC China?

Questions for discussion:

1. Should KFC focus on one brand or the other? Or continue with both?

2. How should a major fast food brand adapt to international markets? Maintain their original image, or add traditional food, specific to the location?

3. Where to you see Yum and KFC moving in the future?

Article Links:

http://www.businessweek.com/articles/2013-05-16/kfc-loses-its-touch-in-china-its-biggest-overseas-market

http://www.businessweek.com/articles/2013-05-14/should-kfc-rethink-its-china-strategy

 

Elimination of Enrollment Bottleneck: Graduates Who Don’t Do Science.

Posted on by Klaudia Obrzut
Bottleneck
Source: xda-developers.com

In class, we learned that a bottleneck is the longest activity that is the limiting factor in operations management. Managers want to match capacity and design while still maintaining the greatest efficiency possible.

Education is no different as it follows basic business rules. Schools increasingly want students to graduate, get jobs, and eventually donate back as alumni. Universities across the country have a problem with so called “bottleneck courses,” which prevent students from graduating. California State University (CSU) reports about 30 such courses that have a high rate of failure, including math, science, and history. Those courses distract students from their major studies and often cause failing or withdrawing, if not dropping out of college altogether.

science-lab
Source: brightlandcollege.in/

CSU wants to address the bottleneck courses by providing science labs online and moving away from traditional in-person classes, especially for students who do not major in science. CSU does not have sufficient capacity to match demand for bottleneck classes due to limited lab space. Virtual labs are a way of offering more lab sections and thus increasing enrollment and moving more students through the system (increasing the rate of graduation).

Low cost of such classes coupled with high demand means more money the school will earn and able to re-invest. However, CSU’s solution to bottleneck science courses raises concerns over the quality of education given. In-person classes are especially important for science labs; a biology department chair at CSU, Jeffrey Bell, says, “my biggest concern, especially with freshman classes is you don’t want students seeing reality as a video game—a key thing in science is we investigate reality.”

Before we can argue about the quality of such courses, let’s ask ourselves: “what is the real value of education?” The content that is learned in science classes is available online. Therefore, the content is not the sole value of education, but rather a college experience: the ability to interact with the professor and peers on one-to-one basis. But just how important is the experience for non-science majors who just want to pass the class to graduate?

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Source: biofluff.files.wordpress.com

CSU’s demand far exceeds school’s effective capacity, mainly due to struggling students repeating the class. School’s solution to increase the capacity through online sections to match enrollment demand is one way of managing the problem. School could also manage demand by increasing capacity—building new science labs and hiring more professors. This long-term solution would ensure that struggling students are offered adequate in-person help, rather than let them pass without a sufficient knowledge of science.

CSU’s tactic for managing bottleneck science lab courses is rather new, thus raises concerns about its quality, especially in the time when U.S. students lag behind in science and math compared to other countries. Is removing this bottleneck sacrificing or improving the quality of science lab courses? Will this decision eventually lead to graduates who do not have sufficient knowledge of science or scientific thinking? Can you think of other solution to tackle the bottleneck course problem?

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Source: www.scpr.org
Sources:

Spirit Airlines: We Know You Hate It, But We Don’t Care

Posted on by spr1313zmares

Spirit Airlines is an American airline company that is known for having low-cost flights. The company is more concerned about the prices they give out rather than the complaints they are receiving. Spirit has been acquring their fair share of criticism from customers and the media. A survey was made of some 16,000 customer ratings and Spirit Airlines was among the bottom of the list for flying in America. “That report did not ask the one big question of who offers the best prices. And hands down, the No. 1 thing we’re told by our customers is that the price matters,” says Spirit spokeswoman Misty Pinson. Let’s be honest, would you complain about a flight that is two and a half hours long and only cost 75 bucks?

Spirit AirlinesThe company strives to make the price for flights as low as possible. They have an average base price of only 79 dollars. One thing that customers hate about Spirit Airlines is the fact that they charge fees before and during the flights to passengers. These fees can add up to be 40 to 50 dollars for the majority of customers. Spirit Airlines does not even offer a free cup of water or have a video system while the passengers are in flight. There is not much leg room either so you are cramped, regardless of how short you are.

The airline company believes that is what the Spirit customers want when it comes to this airline business. Spirit believes they have travelers who would most likely be getting a bus seat if their airline service was not available. The Chief Executive Officer Ben Baldanza says, “Well, what we say is that we care about what our customers care about, which is price, and one of the things that Consumer Reports survey didn’t ask is where do you get the lowest fare? And so they asked about leg room, and they asked about check-in, and they asked about bag fees, and things like that. But the total price that customers pay on Spirit Airlines is less than they pay on anyone else, and that’s why they love us.”

Spirit Airline company should not be upset by all the criticism coming their way. Spirit is a very solid business as their sales rose 23 percent in just the past quarter. The planes are fuller than the rest of the other airline companies. The company has a rate of 85.1 percent in the first quarter  of 2013 when it comes to flights being full. That makes the company really profitable as they move forward.

The airline company still gets a lot of negative feedback from the press even when they are succeeding. So, is it fair that Spirit Airlines is getting this terrible assessment from the media when they are making profits and almost all of their flights are full? Does the base price really trump all the niceties that other airlines offer?Or should management try to improve their baggage fees and legroom in the flights in order to please the customers more?

Links:

http://www.businessweek.com/articles/2013-05-23/spirit-airlines-doesnt-care-if-you-hate-it

http://money.cnn.com/2012/05/03/news/companies/spirit-airlines-fees/index.htm

http://aviationblog.dallasnews.com/2013/05/spirit-airlines-ceo-we-have-the-lowest-prices-and-thats-what-customers-care-about.html/

Lego: Building on Product Quality, Brick by Brick

Posted on by spr1313krodriguez

When you were younger, did you ever try and build an entire house? Not to brag, but I certainly did at age five. When I was especially bored, I would try to construct a towering skyscraper. I would even go so far as to assemble a car for a building resident, whose smile seemed to imply complete satisfaction.

How did I accomplish such daunting tasks at a young age? With a little creativity…

…and a bunch of Lego bricks.lego-6

The Lego brand is known worldwide for its ingenious building sets and for fostering children’s imaginations, and it all starts with standardized blocks connected together by miniature knobs. Yet as simple as this may sound, a lot of work goes into ensuring that these small bricks are produced to the highest degree of quality.

According to the company’s profile, Lego bricks are manufactured through a molding process, where ABS plastic is heated and injected into standard molds and left to cool for about seven seconds. The molds are extremely accurate in that they only allow for a natural variation of 0.001 millimeters in each brick, to ensure connectivity. Nevertheless, the entire molding process itself is so precise that there are about 18 defective bricks in every million produced. And if you thought that was crazy, the company ensures that “all Lego elements are fully compatible, irrespective when they were made during the period from 1958 to the present or by which factory.” Talk about extreme quality control!

Forbes recently interviewed Lego’s Senior Vice President for Engineering and Quality, John Hansen. The interview provided insight into the company’s unequaled level of quality, which allowed them to increase brick production from 25 billion in 2008 to 45.7 billion in 2012.  “We have the same quality standards all over the globe,” he says, which explains their uniform and consistent products. Hansen also states that their production facilities put each element of a Lego set (from the bricks to the instruction manual) through rigorous tests to make sure that they follow company, consumer, and international standards. As if this weren’t enough, Lego also looks for new ways to improve their production process from both a business and environmental perspective. They are currently working on searching for new ecological raw materials and refining their product packaging to reduce waste.

I think that other toy companies need to take Lego’s quality standards into consideration in their operations. With product recalls or safety hazards being found in numerous toy products annually, it would not hurt for them to learn a thing or two from their design and production processes. It might even help to solve their product variation or defect problems given Lego’s track record; you don’t see many consistently produced superhero action figures as you do Lego bricks. Besides, why question a successful company whose motto is “The best is never too good”?

Do you think that other toy companies can follow Lego’s standards of uniform quality when it comes to manufacturing their products? Can they also be applied to other industries as well?

Links:

Lego Company Profile: http://cache.lego.com/upload/contentTemplating/AboutUsFactsAndFiguresContent/otherfiles/download98E142631E71927FDD52304C1C0F1685.pdf

Michael Venables, “How Lego Makes Safe, Quality, Diverse and Irresistible Toys Everyone Wants: Part Two” (Forbes): http://www.forbes.com/sites/michaelvenables/2013/04/20/how-lego-makes-the-safe-quality-diverse-and-irresistible-toys-we-all-want-part-two/