EBay Makes a Comeback

EBay

Today’s world is primarily driven by the internet, including e-commerce. This does not come to the surprise of EBay CEO, John Donahoe. Technology has driven scale and automation and our shopping experiences have become less dependent on human interaction and more dependent on a steady WiFi connection. Donahoe says, “these changes in the commercial landscape tend to be ‘phrased in zero-sum terms: big retailers versus the little guy. Local versus global. ‘”

While EBay is a major contributor in this landscape, its biggest competition is Amazon. Amazon is known for driving retailers out of business, especially with its most recent proposition to deliver packages with drones. One thing that stands out about Amazon is the idea of “showrooming.” Amazon’s mobile application will allow you to scan a barcode of any item in a store and it will show comparable items with competitive pricing. You can essentially buy the item in a few clicks while still in the store.

EBay is initially thought of as an auction website. However, “since Donahoe took over in 2008, he has slowly moved the company beyond auctions, developing technology partnerships with big retailers like Home Depot, Macy’s, Toys ‘‘R’’ Us and Target and expanding eBay’s online marketplace to include reliable, returnable goods at fixed prices.” This is EBay’s process strategy that will revolutionize the e-commerce world, and to Donahoe’s hope, take on Amazon.

In our Management of Operations course, we have talked about the idea of a “process strategy.” The objective is to create a process to produce products that meets customer requirements within cost and other managerial constraints. EBay is taking on a “mass customization” approach to its process strategy. It is the rapid, low-cost production of goods and service to satisfy increasingly unique customer desires. EBay is creating a “process redesign.” It is the fundamental thinking of business processes to bring about dramatic improvements in performance. We learned that changing processes like this can be difficult and expensive. EBay did not acquire all of its retailers for cheap, they had to put in an investment in order to create profitability which is what is needed in a process redesign.

EBay wants to push the concept of a “digital wallet.” While other digital payment options exist, like Google Wallet and Apple Pay, EBay wants to expand it. In 2002, EBay bought PayPal as a way to safely transfer money between people who don’t know each other. EBay has also been experimenting with a concept it calls Connected Glass, an interactive glass that may one day create a “smart” mirror in a store that can take measurements and allow you to try on outfits virtually.

While Donahoe doesn’t know exactly where all of his technological efforts will lead him and EBay, he says, ‘‘I would say everything we’re doing is just enabling the future.’’

Do you think the PayPal Digital Wallet is going to take off? Or will it be forced to the side by Apple Pay and other digital wallets?

Read the article here

Preventive Vs. Corrective

pillsWhile flipping through Pharmaceutical Manufacturing magazine at work, I found an article about what pharmaceutical companies are doing in order to improve quality. The author, Doug Bartholomew, gives reasons why he believes pharmaceutical manufacturing companies are resistant to making changes in the article, “Proactive Compliance: Putting the “P” in CAPA”. CAPA is short for corrective and preventive action, the different processes and systems that are used in the pharmaceutical manufacturing industry in order to ensure quality by providing basic guidelines on identifying, fixing, and preventing the problem in the future..

A lot of the topics that are covered in the article are related to what we have gone over in class. Continuous improvement is difficult for pharma manufacturing companies because of the regulations that are to assure quality. Just like it is time consuming and expensive to be certified, or registered, to meet one of the quality systems we have learned about in class, the same applies to the different quality standards that are set up in the pharmaceutical manufacturing industry. Pharma manufactures shy away from making changed to their processes because every little change that is made has to be re-certified.

Over the past decades, pharma manufacturing companies have started to realize the importance of continuous improvement. Bartholomew quotes K.R. Karu, who is the industry solutions director at the quality management and CAPA system distributer, Sparta Systems; on what the manufacturing companies need to do to ensure high quality levels. One of Karu’s suggestions was to consider Juran’s quality thinking of having quality already built in to the process. Since quality is already built into the process, companies only need to monitor the process. Through inspection manufacturers should be able to find or come up with possible problems, and make changes to prevent them from ever happening.

The definition on CAPA is not completely understood the some throughout the industry. Every company interprets the guidelines differently. Preventative measures would be easier to accomplish if there were more guidelines were more descriptive. In the article it says that the problem is the “preventative” measures have all come about because of a “corrective” actions.  A pure example of a preventative measure that is given is the installation of  “state of the art” production line equipment so the number of errors can be reduced. A corrective action would be to update, and/or repair, older equipment after a problem arises, in order to reduce the number of manufacturing errors.  They are working on coming up with preventative measures that are truly preventative, making sure something that is unforeseen does not go wrong.

 

What are some ideas that you have that could improve the confusion between “corrective” verses “preventing” for CAPA?

http://www.pharmamanufacturing.com/articles/2013/1305_Proactive_Compliance.html#

Retail to E-tail

There are a lot of pros and cons to doing online shopping as opposed to in-store shopping. Online shopping seems like it only affects consumers by giving them a different medium to make their purchases but we fail to realize that it affects the sellers as well. Through online purchases, businesses gather a lot of data about consumers. Sellers can track which sections of items are the most popular, which products are the most viewed and for how long, and which products are most browsed at but not bought. This gives online sellers a competitive advantage over in-store sellers as they know more about their customers. And everyone knows that the understanding your customer is one of the most important factors in having a successful business. This is empowering in-store sellers to seek e-commerce level data.

The article talks about one company that brings customer tracking data to in-store businesses. This is in hopes of slowly bridging the competitive gap between in-store purchases and online purchases. How can they possibly get consumer data without changing the in-store purchase process? By simply observing the customers! Prism Skylabs specializes in in-store surveillance equipment that tracks customer movement. Prism installs special cameras that captures everything in the store and then is sent to the store’s computers where it is processed by Prism’s special software. The images of the actual shoppers are cut out to respect their privacy.

What is so different about Prism’s techniques than regular surveillance cameras? Prism’s software allows them to “look at which products are hot, which are being moved around and touched, and all kinds of data that allow merchandise teams to understand what is going on across a wide range of stores”. This allows the sellers to get information that the type of information that online sellers use to enhance their systems to get more purchases.

Who is using Prism? Right now, Prism has partnered up with 30 retailers. Retailers that Prism is working with include T-Mobile and Famous Footwear. Does it actually work?  A candy store in Oklahoma City was using Prism in their stores and after close observation they changed their premium display to low-selling seasonal candy rather than their famous candies that buyers usually take the time to look through the store to buy. This allowed the store to quantify the customer’s thoughts and make an effective decision in their operations.

Moreover, Prism is not the only data providing company that is emerging. Other companies are picking up on the importance and building unique strategies and techniques to sell to businesses. For example, Shopkick is an app which personalizes deals for a customer in real time as they walk through the store.

Is it worth it to sellers to invest in these data gathering companies?

How do you feel as a consumer towards this type of innovation? Do you feel that you will be making more beneficial purchases or do you feel manipulated by the sellers to buy their preferred products?

Link:http://www.businessweek.com/articles/2013-04-25/to-catch-up-with-e-tail-tools-to-track-shoppers-in-the-store

Need a New Heart? Let Me Print One for You

It is amazing to live in a generation where technology is advancing because we get to witness life-changing events right before our eyes. Recently, there has been a substantial amount of conversation about three-dimensional printing and how it will change the future because we will be able to print objects instead of psychically manufacturing them. Lately, scientists have been experimenting on printing out anything they could think of, ranging from things such as adjustable wrenches to human organs. Yes that ‘s right, a human organ. You are probably wondering how that is possible. Well you are not alone because when I first heard about 3D printing, I thought to myself, “How in the world is that possible? I can’t even imagine that.”  Then I heard about how 3-D printing had saved a baby’s life and I thought to myself, “Okay, now this is a joke.” Well, it’s not.

3D Printed Wrench

At six weeks old, a baby boy named Kaiba had stopped breathing because of a rare obstruction in his lungs called bronchial malacia; this is a condition where the cartilage in the walls of the bronchial tubes are weakened. After being revived and taken home, Kaiba’s breathing had failed on him day after day causing his parents to constantly perform CPR on him. With the hopes of Kiaba’s survival diminishing, doctors didn’t know what else to do except perform a medical experimental technique equivalent of a “Hail Mary” pass, 3-D Printing.

3d-printed-gears

I can see 3-D printing becoming a process strategy within the mere future because it will be a production process that meets customer requirements and product specifications within a certain cost. In Kaiba’s case, it already has saved his life. Doctor’s had taken an x-ray of his lungs and transferred the picture to a 3-D printer to successfully duplicate a splint measuring “a few centimeters by eight millimeters.” Specifically, this would be considered a process focus strategy because creating one customized, artificial support to be surgically attached into a human requires the ability to be able to produce in low volume. Because of the low volume, doctors can then focus on producing a high variety of customized products for their customers.

 

Having a high degree of product flexibility and a team of experts to meet your specifications and produce your product sounds like an excellent strategy for any ordinary individual; however, one thing some people might not realize are the costs associated with it all. Creating an object that saved Kiaba’s life is a phenomenal occurrence; however, the bill following the surgery is probably not.

 

Do you think 3-D printing will one day become a Repetitive Focus strategy, or maybe even Product Focus Strategy?

Is this a product that meets and exceeds customer requirements, costs and managerial goals?

What do you think are the long term effects 3D printing has on efficiency, production flexibility and quality?

 

http://www.cnn.com/2013/05/22/health/baby-surgery/index.html?npt=NP1

Grubhub Grabs Profit by the Seams

GrubHub and Seamless have now merged into one company. Last year alone they collectively earned over $870 Million dollars in profit. GrubHub has Chicago origins while Seamless started in New York.  Mike Evans the co-founder of GrubHub and the newly combined companies COO said, “I’m excited about the expanded restaurant network that our diners will be able to use.”

The merge initially has many benefits, but over time there are very important executive decisions to make in order to optimize all dimensions of a quality service. One benefit is that combined they will operate in over 500 cities in the United States. They also decided to keep all 650 full-time employees. The former CEO of GrubHub Matt Maloney will remain CEO while the former CEO of Seamless Jonathan Zabusky will be president.  Both former companies have merged with much smaller organizations in the past. For example in 2011 GrubHub bought Dotmenu which gave them an extra 250,000 menu listings at different restaurants around the nation.

The company still has many decisions to make. One decision the company has yet to make is the name of the new brand. Perception is reality, and they should take very careful consideration of how to name the new brand. They have been heavy competitors in cities like Chicago for many years, and they have both built their own brands into what they are today. GrubHub did have more profit, and therefore it would be advantageous to keep that name over Seamless. Changing the name entirely is also an option. Since there whole process is derived from online use it is unlikely they will create a new name. For example if a family uses GrubHub or Seamless on a nightly basis, they will likely have the URL memorized or saved in their favorites. This means the new company needs to be very transparent and loud with their changes in order to retain the brand loyal consumers from both companies.  I have one recommendation if they decide to change the name of the company, and that is to buy a new website with the company name. Then link both former websites to the new website which on the surface seems like it would satisfice all the consumers. From there the new company needs to internally improve their servicing process.

After the merged company has chosen a conforming brand they should also merge the processes to optimize reliability. They can assume they will have a large impact in the market for online food ordering because separately they held large portions of the market share. It is likely that both former organizations had their own unique processes, but one standardized process would be most financially beneficial.

Do you think the new company should change their name? Or should they use GrubHub or Seamless as the new company name? Do you think they should standardize their processing systems? Overall do you think this merge is beneficial to the owners?

 Sources:

http://www.chicagotribune.com/business/breaking/chi-grubhub-seamless-20130520,0,4610644.story

Patience is a Virtue. Not in the Sky though.

epa03584133 US Airways and American Airlines jets sit at the terminal after the airlines announced the merger of the two airlines created the worlds largest airline company at the Dallas/Fort Worth international airport in Ft. Worth, Texas, USA 14 February 2013.  EPA/RALPH LAUER

American Airlines have been in the news lately about the merger with US Airways. Now that they are being a huge powerhouse in the airline market, they are trying to do everything to make things go smoothly.

What is the hardest part about flying? Most people will agree it is the long waits or sitting for a long time. What if an airline is willing to change what they are doing in order to cut down on the time.  American Airlines is now trying to implement a new system that will shorten boarding times.

This relates to class when we discussed about bottleneck analysis. Bottleneck analysis is the part of the process that is lacking the most and has the lowest effective capacity in the system. Usually in order to increase efficiency, this is generally the first thing that is shortened. That is exactly what American Airlines is trying to do. They found the process that was the longest and try to cut it down. They did it by first finding the process that they can actually control and not things such as security or the actual time it takes to get from one destination to another.

American Airlines intends on improving on on-time performance. “American’s new method involves allowing passengers who are traveling light, with only a carry-on item that fits under the seat in front of them, to board early, before the second group” (Forbes). Basically, the order of the boarding schedule is now changed. This process did not take anything out but simply was an order change. By changing the order, the time is now reduced by two minutes. It does not seem like two minutes is a big deal but when there are 3,000 flights a day, which saves a lot of time.

Virgin Airlines did do something similar to this but decided to stop the program in 2011. Some of the problems they faced was the debate about how big an item would have to be in order to qualify for an carry on or people being dishonest about putting their bags in the overhead compartment. They personally thought that it would be better off not doing the program anymore. American Airlines so far in the tests have not ran to any of those problems. Soon this will be implemented in all American Airline flights.

Do you think American Airlines will run in to a similar problems Virgin had when they do it on a nationwide scale? What do you think the extra time will do on the performance of the flights? Will this plan help American Airlines to gain more market share and become the top airline?

 

http://www.forbes.com/sites/tedreed/2013/05/18/will-americans-new-boarding-process-work-it-failed-at-virgin-america/

http://www.nydailynews.com/news/national/american-airlines-airways-merge-article-1.1264739

 

Two minutes, does add up

This past week American Airlines learned that the more suitcases are hauled onto the cabin, the longer it takes to get people on board.  Passengers boarding with American Airlines with items small enough to store on the floor will now be allowed to board before passengers with large suitcases. This in turn will help reduce all the traffic of roller bags down the aisle of planes. This new change in process should help planes depart gates faster along with improve on-time arrival rate.

DownloadedFile

Before implementing this new change, American Airlines more than likely came up with a type of process improvement model like Deming Cycle, PDCA. Plan, is the first step on the cycle, where the airline had to describe the process, define customer expectations, identify causes of problems, develop potential solutions, and finally select the most promising solution. In this case, customer expectations probably included on time arrivals to destinations.

 

The second step to the Deming Cycle requires a pilot study to test the potential solution. In the article, it is mentioned that American Airlines conducted a four-week test demonstrating the new boarding procedure and proved to cut off an average of two minutes of flight loading time. Two minutes may not sound like a lot, but as Daniel Bellavigna, supervisor of continuous improvement, says “it adds up”.

 

The third step of PDCA, check, means examining the results of the study and determining if the new process performance has improved. In American Airlines case, their four-week pilot study performance did improve. It reduced boarding time by two minutes.

 

Act, is the last step of Deming’s Cycle. In this phase, the best solution is implemented with a process to monitor process performance. The airline company implemented the new way for boarding, passengers with small carry ons to board before those with suitcases, this past Thursday, May 16.

 

Along with the PDCA cycle, the company probably also came up with a process flow diagram in order to understand their process better and to help simplify and redesign the process. This process mapping most likely helped to come to their conclusion.

 

A cause and effect diagram could have also helped American Airlines. The effect being, late arrival flights, and one of the causes being, too much time spent on boarding passengers onto the plane.

 

In March, about 20 percent of U.S. airline flights were delayed, and about 7 percent of these delays were due to late-arriving aircraft. With American Airlines new boarding plan, it is hoped to bring down the percent of delayed flights.

 

With their new boarding plan, American Airlines is making passengers with lots of luggage pay, but not only in money but also in the amount of time spent in line waiting to get on board. They hope with this new plan, passengers start to carry less in their carry ons and that other airlines start to adopt the same procedures. What other ideas would you recommend for airlines to improve on time arrivals.?

 

 

http://www.businessweek.com/articles/2013-05-17/american-airlines-doesnt-want-your-bags-in-the-cabin#r=nav-r-story

Yahoo Or Google, Will Tumblr Change Which Website You Visit?

Screen Shot 2013-05-19 at 4.23.13 PMScreen Shot 2013-05-19 at 4.22.48 PM

 

For the past few years Yahoo.com has struggled to keep its website and affiliates at par with its competitors, which include Google, Ask, and Bing. Yahoo has relentlessly tried to modify its site to meet the demands of its customers, as well as retain new users to visit the once sensational site. Three years ago Yahoo completely changed its design capacity for the site, going from a search engine with many links, to a website that prioritized news feed. This new integration has helped the site reach new heights, but has still left them in the dust compared to its main competitor, Google. Around the same time as Yahoo’s new design, which helped utilization and efficiency for the website, Google purchased an even bigger venture, known as YouTube. This astounding company has helped Google become a giant in their industry. In addition, Google recently has increased its stock share to over $900 per share, making it one of the highest growing stocks of this year. Yet Yahoo is still at a measly $26 per share, but has been increasing for the better part of six months. Why has Yahoo’s stock been increasing when Google has completely overwhelmed all of its competitors?

Today the answer to that question was given. According to CNN, Yahoo has purchased Tumblr for a record $1.1 billion. Clearly Yahoo is not afraid to spend money, as a famous person once said, “you need to spend money to earn it.” By purchasing Tumblr, Yahoo hopes to compete with Google at a much more even playing field. According to Wikipedia, Tumblr “is a microblogging platform and social networking website,” which “allows users to post multimedia and other content to a short-form blog. Users can follow other users’ blogs, as well as make their blogs private.” Moreover, when Google purchased YouTube, Yahoo’s usage rate fell dramatically, and today they purchased Tumblr in hopes to change that. In addition, according to the CEO of Yahoo, Marissa Mayer, Tumblr “would allow the search engine to tap into a young, active online user base at the social network.” She goes on to say that our goal is to “engage Internet users and get them excited about using Yahoo again.”

I firmly believe that Google will always hold a slight edge over Yahoo, mainly because of its simplistic search engine. However, I do consider that this new business enterprise will dramatically increase user traffic on Yahoo’s website.  Do you think that Yahoo will finally be at par with Google, or will they continue to be an after thought in the search engine industry? Moreover, do you use Tumblr, and if so do you think this will prompt you to use Yahoo more often? These are questions I am very curious about, as I believe Yahoo will become a giant along side Google moving forward.

http://money.cnn.com/2013/05/19/technology/yahoo-tumblr/index.html

For GE: old school is new school

 

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General Electric (Ticker “GE”) Fortune Magazine World’s Most Admired Companies at rank 11.  GE is the single surviving company from the 1896 Dow Jones Industrial Index and currently has  roughly 305,000 employees and over 140 billion dollars in revenue last year [GE 10-K for the year ending March 31, 2013].  I believe it is safe to say these guys know what they are doing.  They are in the business of designing and manufacturing appliances plus energy, health, aviation, and transportation equipment in addition to operating a financial services company.

Due to GE’s aggressive and hard pressed past, there are very few companies with the same or even similar brand recognition, especially as they have had such a long standing track record.

Though a mammoth company, GE too had troubles fighting down turns in 2008.  GE’s financial services wing, GE Capital, found itself holding just about half of GE’s profits.  GE Capital was having difficulties and thus GE had to cut its dividend which was a huge blow to its image.  All of this finance/business aspect of the company then affected how GE would then change its ways operationally.  GE realized it needed to simplify, and was most definitely a task involving and most reliant on its operations management team.

Most interesting for me was the refocus on a portfolio of the company to refocus on its traditional core industries.  That is, they are now going to focus and dominate at what they are good at.  For example, in 2012 GE began to make water heaters which was its first new product in 50 years.  The site that it was built on was named Appliance Park, KY (notice any connection?) though this site had been used less and less due to favorable overseas factories which were much cheaper.  Interestingly, in 2009 GE shifted toward moving those overseas jobs back into the domestic light.  This process is just being finalized and in full swing.

The result?  A cheaper and much more rapid production thanks to an efficient domestic supply chain perfected by the company.

Another interesting note about this company’s changes: GE is spending money on investments in the “industrial internet” in order to take hold of ‘big data’ to make more efficient machines.

Things to think about:

-How do you think GE asses’ its ‘utilization’ and ‘efficiency’ for its production facilities now that there is a fully implemented shift into domestic production for this large company.

-We discussed in our course lecture the concept of ‘planning over a time horizon’.  How do you think GE will have to change the way it plans its capacity or the upper limit or ceiling on the load that an operating unit can handle?

-We have seen virtually all large companies using automation and focusing on capacity.  We just discussed this in the course lecture last week.  How do you think GE’s focus on investing in the “industrial internet” will change the efficiency of their production machines?  Do you think this will be a drastic change? Something they won’t see for a long period of time?

Link to this CNN Money Article: http://money.cnn.com/2013/05/06/leadership/general-electric-industry.pr.fortune/index.html

Can the Cruise Industry Stay Afloat?

It’s been a nightmare at sea for this seasons start to the 2013 Cruise Season. From passengers going overboard, crew members dying and of course the horrific Carnival cruise ship that suffered a mass power outage that left over 4200 passengers stranded in the Mexican Gulf, the industry has been hit with new challenges.

Although, Carnival Cruise line has been getting the blunt of the bad media coverage for several equipment failures, the whole industry of cruise ships still have been affected. The Cruise Industry is now facing challenges of attracting new passengers due to recent events coupled with the old challenge of increasing operational costs and competition.

With high fuel costs, expensive airfare, and a rougher economy, almost every cruise line has been forced to cut costs while still trying to attract consumers. The Carnival Cruise ships have been proof that cutting costs in procedures, maintenance and quality crew members in order to provide over the top amenities and attractive destinations at reasonable costs to passengers have major consequences.

The challenge is not just picking attractive destinations and providing better service and perks then the next cruise ship.

All cruise lines have been optimistic in light of the horrific at-sea events, through the release of big upgrades, innovations and reengineered cruise ships in attempt to save the industry and their images. Cruise lines are taking on the challenge by restructuring ships to be the destination. An editor of cruisecritic.com , Caroyln Spencer Brown believes that “When you start focusing on shiny new ships with funky, fun, new amenities and features, the market comes back.” Or at least that is their hope.

The Royal Caribbean will release more thrill seeking attractions like bumper cars and simulated skydiving, while the Disney Cruise line will be redesigning their old ship to mimic the Marvel Comic Superhero theme. Several other major attractions like water parks, state of the art dining , world class exercise classes are all features that are changing the cruise line industry; it’s no longer just about the port destinations, its the ship itself that delivers the true experience.

While other cruise lines are adding over-the-top products and services to their ships, Carnival Cruise is sticking to product improvement. They have cancelled several cruises and spent over $300 million on safety upgrades and emergency generators to enhance their dependability and prevent anymore-technical nightmares.

Although, the thrill of walking on a plank, ice bars, eccentric food from Food Network Chefs, themes and celebrity shows sound enticing…I think there is a point where safety should not be forfeited. Also, is it really right for Cruise Lines to believe the ship “experience” outshines the actual destinations?

 

Ice Bar in Norwegian Cruise Ship

Observatory 300 feet above Sea Level

Would you pick a cruise based on it’s innovative amenities or on the basis of the trips destinations?

What dimension of quality do you think is most important for Cruise Lines to focus on?  Aesthetics? Service? Reliability etc..?

 

http://www.newsday.com/travel/cruises-get-good-buzz-from-new-ships-overhauls-1.5279922

http://abcnews.go.com/Travel/carnival-cruise-lines-cancels-dozen-trips/story?id=18771670#.UZf8Eyv5l9k