7 Process Analysis

Differentiating through the Demand of Dogs

Posted on by spr1321rdickey

 

DirectTV is catering to not only humans, but to dogs as well. My dog would be thrilled! How about yours? The only option available to my pup right now is the Puppy Bowl, which we have to record so he can watch all year long. Today, dogs have their own parks, Facebook pages, stores, so why not a TV channel as well?  DirectTV is not only catering to the dogs but also providing help for the families they belong to. The new DogTV will keep these puppies occupied while moms, dads, or children can keep up with their daily tasks without any barking or begging. DirectTV is definitely differentiating from other cable providers with this strategy.

In class, we discussed the strategy of competing through differentiation. I have learned about differentiation in the past, but it is always interesting to see examples of companies using the concept to their competitive advantage. Through their new channel, DirectTV is now implementing this concept and can be seen through the Chicago Tribune’s article, “DirectTV to broadcast channel for dogs.” Differentiating, as discussed is the advantage of being better or different in regards to a company’s product or service. No company wants to be like another so, differentiating is the concept designed to compete through uniqueness.

As mentioned in the article, DogTV is currently only available through online streaming or for select subscribers in California. Is DirectTV testing out their new channel in case it fails to provide the benefits that it hopes for? As one of the larger cable providers, this could solely be a test run for all the other companies as well. If DogTV were to fail, other companies such as WOW or AT&T Uverse will be able to see if there is a demand for this type of channel without hurting their company. But, if DogTV does in fact succeed, these similar companies may need to expand on their differentiation strategies in order to remain in the competition. While it is hard to believe that a channel for dogs could change the face of cable television, DirectTV is currently taking a big risk with this target in either helping or hurting those other companies within the market. Once or if available nationwide, will this create a demand for DirectTV as households’ main cable provider? Through reading the article and understanding the new concept, I thought about whether or not DirectTV is trying to create a higher demand for their service through creating a demand for dogs. This idea may seem silly but could also provide success. We will find out this coming fall when the company is supposedly launching the availability for this channel nationwide. Again, further information on this topic can be found here.

 

Six Sigma is SO 2007.

Posted on by f1223cmandoza

 

This is an article that focuses on Six Sigma and the fact that many companies view it as an outdated certification. While there are some very credible benefits in being Six Sigma certified, there are some major costs as well. According to the article it was a way to improve quality, but the major reason it gained so much popularity was because of its ability to cut costs and increase profitability. However, there were two standout problems with Six Sigma.

First, having such a process oriented company reduced morale. Employees were being evaluated so much on process that they were not being recognized for their hard work or outstanding customer service. Their employee results were just based on numbers. The second problem was that customer sentiment dropped. As a process focused company, the bottom line is to produce as much as possible with as little defects as possible. This may be great for a manufacturing plant, but for a company that works in customer service, it is ignoring a very important factor, the customers. Often times how a customer is treated will weigh more heavily on their decision to come back than the speed of their purchase.

Furthermore, the article goes on to state process is key, but they also need to focus on things such as innovation and creativity to keep a company moving forward. A company can be an outstanding process performer but if they are behind the times with their products or customer service, then having an excellent process doesn’t mean a lot.

In fact, Home Depot, which was a company mentioned in the article, dropped from first to worst among major retailers on the American Customer Satisfaction Index in 2005. This was a company that was Six Sigma certified and had a CEO who placed a very high value and emphasis on Six Sigma. Another example, which was meant to be an example supporting Six Sigma certification, was the desire by financial institutions to be Six Sigma certified. One of the banks mentioned was Bank of America, and we all know what has been happening with them in the recent news…

In conclusion, as we learned in our class, Six Sigma is an outstanding certification to have. It shows that a company is operating at a capacity with an extremely low rate of defect. However, in my opinion, in the case of the article, it sights that there may be more to a company’s success than excellence process. I tend to go with the belief similar to one mentioned in the article, that Process management is a good thing but it must be leavened a bit with a focus on innovation and customer relationships.

 

With the article in mind, I have a couple of questions I’d like to open up to the class.

First, would you go out of your way to be a customer of a Six Sigma company?

Second, what is more important to you, a customer connection or Six Sigma certification?

 

Article Site: http://www.businessweek.com/stories/2007-06-10/six-sigma-so-yesterday

Yellow Belt in college?

Posted on by johnl301s12

Over the past week we talked a lot about six sigma and how it can drastically improve the way a company does its day to day tasks. One article that sparked my interest was about how a college is going to offer a “Lean Manufacturing” course in which students would have the knowledge to pass the first exam and receive the rank of a Yellow Belt. This of course is if the material sticks and the students show interest in six sigma, but I felt this class was very similar to ours and wondered how a class like this has yet to be offered by DePaul, such as a MGT398 special topics course. One quote that I wanted to touch on is “Lean is not about making people work faster or harder; people are not waste. It’s about how you make those people more effective. It’s about establishing a system so that products or information can flow through processes at the pace of customer demand,” said Merrell. This is a very important point because a lot of people such as in the article about Starbucks believe it is going to turn companies to run more like a factory.  Becoming more and more efficient is a must for companies in this economy and companies will constantly keep changing as need be.

1.Do you think you would enroll in a class where you would obtain the knowledge to get your Yellow Belt for Six Sigma?

2.Would this be of benefit to you for your current or future job?

 

Source: http://www.salisburypost.com/News/102512-edu-RCCC-lean

 

-John

Is “Lean Government” the Solution to Economic Problems?

Posted on by f1211kdebiase

In the last class, we learned about Six Sigma, a methodology that is used to eliminate waste from business activities, while benefiting a company’s financial performance. Six Sigma uses the idea that all activities are processes that can be evaluated with the DMAIC process (define, measure, analyze, improve, and control). By using data analysis methods and focusing on customer knowledge and core processes, companies can reduce defects significantly, with the ideal target being 3.4 defects per million opportunities.

Private companies have been successfully using Six Sigma to improve their methods and reduce costs for years, and even service sector companies, like hospitals, are using Six Sigma to analyze their processes for areas of improvement and greatly reducing treatment times for patients. In class, we discussed Motorola’s introduction of the Six Sigma process and saw examples of how companies like Caterpillar have used Six Sigma to reduce defects and costs. Forbes.com ran an article a few months ago about the expanding types of organizations that are bettering their operations through Six Sigma, such as the Department of Defense and even Iowa’s state government. Looking at these cases, author Kellan Giuda, questions why top government is ignoring the proposition of using Six Sigma to reduce the national deficit in his article “Lean Government Six Sigma? Why Do Politicians Ignore it?”

As everyone is aware, the economic crisis in 2007 and 2008 has caused a lot of criticism on how the U.S. government functions. Because of this many advocacy groups, specifically seen when Newt Gingrich was running for candidacy, are arguing for higher-tier adoption of this system in order to reduce debt. The argument behind this movement is the $2.45 billion saved by the U.S. Military after introducing Six Sigma in 2008 and the Department of Defense’s integration of the system into their operations. Giuda believes that these cases prove that Six Sigma can be beneficial to organizations outside of the private sector, such as government agencies. He argues that this would provide an opportunity for top government officials to undertake the public debt problem head-on and that Lean Six Sigma is a viable solution for the problems the U.S. government faces.

Thousands of companies worldwide embrace Six Sigma as a tactical improvement system and seeing the various types of organizations that are implementing it shows the transferability of the system. Do you think that using Six Sigma would reduce costs in a national government? Would it be difficult to implement?

http://www.forbes.com/sites/realspin/2012/09/09/lean-government-six-sigma-why-do-politicians-ignore-it/

http://www.isixsigma.com/new-to-six-sigma/getting-started/what-six-sigma/

Millions of Patients Given Wrong Medication/Dosage Could Prove Deadly

Posted on by f1231wanton

Do you ever wonder how nurses can keep each patient’s prescription straight?  How about the dosage?  Or when the patient needs his or her medication?  Allergies?  This system is dated, inefficient, and flat-out dangerous.  According to a government study in 2011, roughly 1.9 million patients in U.S. hospitals were given the wrong drug or dosage.  Luckily, PatientSafe Solutions, Inc. has stepped in to address this horrifying health hazard and have provided a great solution.

The San Diego company has made a splash, as it ranks 24th on the Wall Street Journal’s “Next Big Thing” list.  The device that they hope will eliminate prescription drug handling problems is a handheld scanner, which allows nurses and other authorized hospital staff to quickly learn “information such as their diagnoses, vital signs, allergies, scheduled medications and food intake” by simply scanning a barcode.  Furthermore, hospital workers can scan medicine vials to ensure that the patient actually needs that medication.  One might think this is far-fetched, and that a nurse or doctor would not mix up medicines between there patients, but it happens.  1.9 million times in 2011 to be exact.

As someone who has been admitted at the hospital on several occasions, this product is not only smart, but it ensures quality.  Instead of the nurse or doctor coming in and asking what medication I am on, they can just scan the barcode on my wristband, and all questions are answered.  However, I am able to respond and give staff the information they need, so it is no a big problem.  The problem lies with an older patient.  Maybe they do not remember what they are taking or what their allergies are.  That is why this technology is long overdue, and will definitely prove to be effective.  In fact, Joe Condurso, President and Chief of PatientSafe Solutions, notes obvious benefits that come along with this technology: “[PatientSafe] increases quality and reduces cost” for hospitals and patients.  Customer quality cannot be overstressed, especially at a hospital with a hundreds of lives on the line at all times.

Currently, 70 hospitals use the PatientSafes’ technology, and that will surely continue to grow.  Both the process and quality of prescription drug handling and distribution will be exponentially increased the moment a hospital implements this technology.  But it does beg the question, if a study showed that 1.9 million patients received the wrong drug or dosage in 2011, then why isn’t it mandatory to have a system like this in each hospital?  People’s lives are at stake because of the poor processes that are put in place at these facilities.  Where is the quality management?

What do you think are the pros and cons of using technology like PatientSafe Solutions?  Do you think it is cost-effective and quality assuring?

Article: http://online.wsj.com/article/SB10000872396390443916104578022871900234326.html?mod=WSJ_SmallBusiness_LEFTTopStories

Shop Like It’s 1999!

Posted on by f1223jkundrat

In a time when pennies count, retailers are looking for any competitive advantage they can find. One way which is starting to make a comeback is the layaway program. By allowing customers the opportunity to put items on hold for a set number of weeks, it gives the consumer who may not be able to afford a purchase right now the opportunity to lock in their price. These programs have several different structures, some charge upfront fees at the beginning of the layaway period, and additionally some of which accrue interest charges.

This philosophy is nothing new in the retail world, but has seen a renaissance over the past few years, with many large retailers such as Sears, Kmart, and Toys ‘R Us pushing the programs. By offering layaway, retailers hope to boost early sales and beat their forecasts for the holiday season. Layaway does, however, have its downsides for companies since many have waived their service fees if consumers do not follow through with their purchase. This leaves merchandisers holding onto the extra inventory. Also with this new push to increase sales, retailers are adding many new items eligible for layaway. This move could prove to be both a positive and a negative. While on one hand it will bring in more shoppers to put things on layaway. If enough consumers do not follow through on their contracts and the stores took precious items off the sales floor, the results could prove costly.

By offering layaway financing through the stores themselves, it gives consumers who do not have, or might not want to use their credit cards. By allowing these consumers who might not have purchased the item otherwise to purchase from your company, it opens your profit potential that much more. Because it entails more planning on behalf of the merchandising crew, and all of the other aspects listed above, the decision on whether the layaway program is beneficial to each individual company is something that is up for debate.

Question: If you had a retail company, do you believe implementing a layaway program would be a good idea? What are some other benefits and consequences in addition to the ones mentioned that might come about due to a layaway program?

http://www.cnbc.com/id/49302750

http://chainstoreage.com/article/sears-kmart-jump-layaway-bandwagon-waiving-fees

 

Drug Dealers Beware!

Posted on by f1213spalreddy

 

How can improved quality control and diminishing quality control both work to save lives?

 

In the world of quality assurance, it is a rare thing to talk about quality within the public sector.  The public assumes that quality exists but nothing is ever thought of in regards to the measures are needed to make sure things are done correctly.  While reading this you will find two sides of the FDA.  One side of the FDA ensures the safety of people through increased quality control measures.  The other side of the FDA is hoping to remove some quality control measures in hopes of saving lives.

 

The FDA has begun rigorous efforts to take counterfeit and harmful drugs off of the internet.  http://www.reuters.com/article/2012/10/04/us-fda-baddrugs-idUSBRE8930SN20121004

 

In a time of rising health care costs and pricey prescriptions, consumers have looked to various other sources to save money.  A great source to purchase prescription medication is online.  However, many of these online retailers are distributing “counterfeit and illegal” medicine.   The FDA has joined forces with international regulatory and law enforcement agencies in an effort to take some of these dangerous drugs off the market.    18,000 online pharmacies have been shut down in the matter of just one week starting September 25th.    This is essentially a form of quality checking within the public sector.  The FDA is hoping to make sure that the medicines available to the public have gone through the testing process.  All of these regulatory agencies are working towards a pharmaceutical industry with high standards of quality.

 

In contrast, the FDA is also working to remove some of the quality processes associated with the drug approval process.  This comes mainly from a Republican push hoping to remove regulations across the board.  These deregulations are not meant to send harmful drugs out on the market prematurely.  This measure is hoping to assist immediately ill individuals that cannot wait through the testing process.  The FDA has been doing this since the 1990’s.  Currently patients within this characterization include aids and cancer patients.  However, the FDA is hoping to include various other threatening diseases/conditions to this “accelerated approval” process.  “Of 35 medicines termed innovative by the FDA and approved during fiscal 2011, 16 have some sort of shortened review or expedited approval” (Burton 2012).  The key is that people with “life threatening” conditions are more willing to try riskier drugs.  These people do not have the luxury of time to wait through the quality assurance process.

 

The point of this shows how quality assurance is paramount in some regards and in other circumstances it serves as handcuffs for progress.  The latter tends to be rare but it does point out that too many regulations have harmful effects.  We can clearly relate this to the upcoming elections as republicans and democrats battle over the topic of increased regulations.  There are clear positives for both sides.  Too many regulations impede progress and at times create a feeling of too much governmental control.  Not enough regulations also have catastrophic results.  Going back to the initial topic, if the FDA did not thoroughly check items that came through their department, people’s lives would be in danger.   People would not be aware of the harmful side effects of the things they are ingesting.  The perfect middle ground is a difficult thing to find and seems to be an ongoing battle within our society.

 

Sources:

http://online.wsj.com/article/SB10000872396390444083304578018790623838634.html

http://www.reuters.com/article/2012/10/04/us-fda-baddrugs-idUSBRE8930SN20121004

What does Finance know about project management?

Posted on by owenl598

       Being the Finance Manager for a company that does rollouts and installs of POS and Voice systems for major retailers, I really get to see the impact of project management on the companies’ bottom line, be it positive or negative.  We quote our projects between a 30 and 40 percent margin, but in 2011 we saw projects running anywhere between 65 and negative 25 percent.  Our CEO estimated that 80% of the variability was due to our own operational inefficiency, while only 20% was due to factors beyond our control.  While the wide range and inconsistencies of our project margins were troubling, the biggest issue was that overall the margins were down, with over 75% of our projects coming in under quote.  At the beginning of 2012, my boss and I were assigned to investigate what was causing the lower margins, and to come up with a plan to turn it around.  It may seem strange that Finance was assigned this task, but our CEO’s reasoning wass was that we are the ones who look at projects on a macro level and are responsible for explaining the margin variation, while every other department is only focused on their one piece (i.e Sales, Logistics, AR, etc.).

       After spending two months auditing our operations, talking with people in Sales Engineering (quoting), Sales, Operations, Logistics, and AR, we identified many problems contributing to the lower margins, but the overall problem that we identified was a lack of a clearly defined process for our projects.  While every project is different in terms of the scope of work at the site and the deliverables that the customer expects, if the administration of a project on our end is done consistently, many of the problems we run into could be eliminated. 

       Some examples of simple steps that have been skipped leading to a hit in our margins are: 1) final revisions to quotes not being authorized by the customer, 2) sales not reviewing the first invoices that are sent to the customer, 3) work orders not being created in time so that contracting has to rush to contract the labor and has to pay premium rates, 4) AR not putting job notes on the invoice, 5) Logistics shipping the wrong equipment to the site, and 6) work being approved without a customer PO.

       To control the problems and get all the departments on the same page when it comes to our project management, we developed a project checklist and worked with IT to implement this checklist into the current PM software we are using. With this checklist, every adminitration step has a due date, a responsibility assigned, and needs to be checked off before moving on. The benefits of this include increased organization, increased accountability, and better communication. Since we implemented this new checklist, we have seen an increase in our margins each month in the last 3 months, as well as increased cash flow by ensuring we are collecting the revenue quicker from our customers.  It’s amazing to see what an impact the simple step of creating a comprehensive checklist can make to the bottom line.

Here is an excel copy of out Project Accountability Checklist for anyone interested.

What do your companies do to keep projects organized on the back-end? Do you have any kind of defined project process or checklist?

Bandals Footwear: Innovators of Design and Strategy

Posted on by michaelm301s12

Shortly after the economic downfall in 2008 began, Tom Sesti started Bandals, a new footwear company through which he introduced a line of women’s sandals with interchangeable  multi-colored tops – their slogan being “Changeable by design.” The sandals were an instant classic and the five employee company was suddenly facing manufacturing and raw materials cost increases of 15-30%. Sesti knew he needed to figure out a strategy to deal with this issue – and two strategies he came up with involved moving the company overseas or introducing a new product.

Tom Seski took a look at how to improve the quality of his product and the strategy of where to locate his business. He gave a lot of thought about how to penetrate new markets. He realized if he could take something like sandals, which are sold mainly in warm months, and make them something one can wear year round, then they wont only sell for one season. Two ways he did this were by adding jewelry that could be taken off and used with other shoes such as boots in the winter, and also expanding his company to new countries where the weather was warm year round.

It took a lot of hard work and research, but Testi was able to figure out how to effectively manufacture his product as well as expand it to multiple countries. He estimated the cost of making his jewelry in China, the cost of promoting strategies, and assessed how many items he could sell and determined it was possible to break even in a year. He also estimated the costs of expanding his company to 15 countries overseas. These strategies had a high chance of being successful, so he decided to go about implementing them.

Tom Sesti’s operation strategies proved to be successful. Through the use of focus groups, multiple designs, bio-mechanicals, market research, marketing campaigns, location strategies, and design of goods and services, Bandals was able to improve revenues by 250 percent and more than triple annual profits. Sesti figured out cost effective strategies that addressed two major obstacles he saw within the seasonal footwear industry and made the right decisions on how to put his plans to action.

http://www.nytimes.com/2012/05/10/business/smallbusiness/how-some-companies-expand-even-in-a-stalled-economy.html?_r=1&ref=smallbusiness

http://bandals.com/pages/about_us.html

Marketing Driving Quality Control

Posted on by johnd301s1

While it’s true that upper and lower boundaries for SPC charts can be set by using some measure of central tendency and typical variation, there are sometimes other factors that will be used to determine process control limits. At Dremel, a power tool company owned by Bosch Power Tools, we heavily monitor and control our manufacturing processes. Dremel makes a line of light-duty power tools aimed at the DIY homeowner and craft/hobbyists markets. Many of their applications necessitate some degree of tool precision (of cut width, straightness, depth, smoothness, etc.) and so our processes are designed to achieve that end. Specifically, our manufacturing process controls for the presence of runout (misalignment between the tool axis and the cutting surface) and tests to look for excessive misalignment.

The interesting thing about our particular operation, though, is that the upper boundary for acceptable misalignment is not a function of the standard deviation of our process. Sure, it can be defined that way, but the number itself wasn’t selected using a statistical model. Rather, it was a marketing driven decision. Our product marketing group did extensive consumer insight research to determine what level of precision mattered for the types of projects our customers undertake. After determining that they were happy so long as the tools were at least some level of precise, the team reworked the manufacturing operation around achieving those numbers.

Of course Dremel uses some of the SPC tools we discussed in class to control its operations. For example, we track the number of defects and percent defective. It’s just that SPC isn’t the only framework in controlling our manufacturing process. Marketing, logistics, and other business functions also get involved and have a stake in making sure the products get made a certain way and according to a certain procedure. The manufacturing unit has to be responsive on all those fronts.

The point of bringing all of this up is two-fold. First, I wanted to highlight that in industry, while many of the operations management tools discussed in class are used, they are not applied in a vacuum and might be modified for a firm’s unique needs. Second, I wanted to encourage thinking about areas where  business functions begin to overlap. Where disciplines begin to intermingle, we need to have some way of making decisions about which framework (or frameworks) ought to take precedent. We need to really understand the goal being pursued and select the most appropriate bits from marketing, finance, accounting, operations, etc., to maximize success.

Are there any instances from your experience where one discipline seemed to be calling the shots in another’s area of expertise? (Exs. Did marketing ever drive finance? Did operations ever affect accounting?)