1 MGT 301 – Autumn 2014

Inventory Control at a Private Restaurant

Posted on by maximilian30133f14

Learning about inventory control over this half of the quarter got me thinking and reflecting about when I worked as an assistant chef at a restaurant.  It was the first time that I got to learn about economic order quantity, safety stock, and reorder point. The managers running the restaurant had vast experience and I was lucky to learn how a private restaurants works. For the two months I worked there only one time did they run out of ingredients. There were times that the restaurant was fully packed. My bosses forecasted this and made sure that we would not run out of supplies until we are at the end of the night. This turned out to be the truth as we still had ingredients left over for the next day after our busiest day. As well there were some nights that there was only a few people that were ordering and my bosses had that under control too. I got to see how management works when there were times where the restaurant was packed and when it only had a few clients. I enjoyed working there and I got to learn even more from my responsibilities. The responsibilities I had were far and wide sometimes I would prepare food for the chef, sometimes I would clean, and sometimes I did some food runs. All this combined made my time there valuable.

One thing I recognized that good control of inventory and having a talented chef making food doesn’t necessarily mean the restaurant will be successful. We were open during the harshest time of last winter. But there were opportunities to attract more clients that weren’t taken advantage of. For example the door to enter wasn’t open and I saw people trying to figure out whether or not the restaurant was open due to the dark atmosphere. I learned that one of the most important components in creating a successful restaurant is you have to be able to sell your idea and show people that their product is delicious and worth buying. I am surprised how relevant our Operations Management class is and how many places it is applied too where I have had experience working.

 

Have you had a chance to apply inventory management in a work situation?

Have you had a chance to apply any concept we’ve learned in Operations Management?

Have you ever worked for a restaurant? If so what were your favorite perks?

Is Nadella worth all that Nutella?

Posted on by jay30131f14

Some investors will ask is the CEO worth all the money he is getting paid? Its common for every investor to know how much the board of the certain organization is getting paid. The controversy I came across was a huge new contract that my idol, Satya Nadella got a package of 91 million dollars for his new salary. Satya Nadella is an Indian American, he is the third CEO of Microsofts history, following Bill Gates and Steve. Stock holders may think that the amount of money he is getting paid might be overpaid, but also anything that happens to the company or the final choices to be made for billions of dollars including big time deals and goals he has to hit in order to keep that stock value alive and support the company is also a huge deal. “The controversy over excessive CEO pay this week hit Satya Nadella, Microsoft’s (MSFT) leader for the past nine months. Institutional Shareholder Services, a well known advisory firm, urged big investors to oppose

images

Nadella’s 2014 compensation package in a non-binding vote at Microsoft’s annual meeting next month.” Nadella, got a package of cash and restricted stock worth almost $91 million, according to Institutional Shareholder Services. Much of the stock won’t vest for at least five years, but ISS said the total was far more than CEOs of comparable companies earned and not tied closely enough to the performance of Microsoft’s stock. In the beginning stock holders might think that is a substantial amount to give to someone in their first year especially when he hasn’t proved anything or given a situation where he really had to make a tough choice. Seemingly it seems to be that name CEO, is just a money machine, but realistically it means to have a lot of patience, understanding, and extremely strong leadership. Microsoft defended the pay package, valuing Nadella’s compensation for the year at less than $12 million and noting that the stock awards ISS criticized would be deferred for five to seven years and would increase or decrease based on how well the company’s stock performed. Nadella would get 600,000 shares in 2019, 2020 and 2021, a total of 1.8 million shares, if Microsoft outperformed 60% of the stocks in the S&P 500 Index, for example. But if Microsoft only beat half in one of those years, the award for that year would drop to 450,000. And if it only beat 30% or fewer, Nadella would get 150,000 shares a year. After taking in that information, would you as a stock holder want to pay your CEO that much or not? 

 

Would you agree that a CEO would have to show he is worth that much before you pay him or would you give him that incentive to do something great?

 

 

 

Qdoba’s “Free” extras

Posted on by samar30133f14

I, like much of the market, has taken to these new age fast casual restaurants that are said to give you a quality product at a reasonable price. A couple examples of these are Qdoba, Chipotle, Moe’s, and Potbellys. All of these companies are taking advantage of the markets recent health craze and competing within. Qdoba recently released their new promotion to cut all the extra costs for additions to your meal and make everything under one price for their main menu items. This is something that none of their competitors currently do and has drawn some much needed attention to Qdoba to compete with Chipotle.

 

 

 

 

 

 

Chipotle has distinguished itself in the public light by highlighting their use of natural ingredients by not using chemicals like antibiotics and added hormones. Qdoba has always lived in their shadow and have finally found a small way to stand apart from the rest.

Qdoba also has a huge advantage compared to Chipotle in the way they receive their supplies(ingredients). Chipotle is forced to order from their locally sourced food. This can cause huge alterations if their suppliers have issues getting them their food. This actually occurred when there was a shortage of grass fed cattle which caused Chipotle to issue a statement that they had to obtain it from outside sources which does not look good or their public image.

Due to these gaps in Chipotle business structure, Qdoba decided to take to a new promotional scheme in order to give the customer exactly what they want for no increase in price. Since Qdoba can receive their ingredients from a wider variety of suppliers compared to Chipotle, it is much easier for them to take advantage of this opportunity. While at face value, this does seem like exactly what Qdoba needs, it actually ended up having a negative result to their customers. Qdobas menu now runs off two fixed costs that you can build your order off of, both of which are higher priced than before this promotion. The average trip to Qdoba is going to run you anywhere from $9.00-$11.00 which is quite high compared to the $8.00 burrito bowl at Chipotle. Not only that, but the burrito bowl at Chipotle still gives a substantial amount of more food than Qdoba.

As we have learned, quality is a subjective and this is no different. Quality is key when building any business and in that are the customer expectations which is composed of broken down and influenced by word of mouth, personal needs, and past experiences. By taking all three of these into account, Qdoba meets the word of mouth aspect of the customer with their product, but falls short in personal needs and past experiences. Past experience has proven that Chipotle offers a better tasting product, and personal needs points to Chipotle because they still offer an affordable, filling, and nutritious meal.

What kind of aspects do you take into account when choosing where to eat?

How have your experiences been with the fast casual restaurant chains? Which ones do you support?

What are some possible benefits of Qdoba’s new promotional scheme? What do you see as the pitfalls?

http://www.chipotle.com/en-us/fwi/fwi_facts/fwi_facts.aspx

http://www.qdoba.com/franchise

 

 

Manchester United: Not a team, but a business

Posted on by tom30133f14

Sports play a role in many different people’s lives. Soccer or Football depending on where you live, takes the cake as far as being the most popular sport in the world. Manchester United happen to be the world’s richest and most popular soccer team. Often criticized for their large amount of spending in order to acquire the world’s greatest talents in the sport, Manchester United has managed to win the most Premier League titles and 3 UEFA Champion’s League titles. Although, Manchester United has had a lot of success on the field, they have had even more when it comes to the business aspect.

Wall Street Valuation
From a financial standpoint, Wall Street has valued Manchester United as being the richest soccer club in the world. Mike Ozanian from Forbes states, “Wall Street now affords United an enterprise value of $3.6 billion. Math: market value ($3.05 billion) + long term debt ($613 million) – cash ($57 million).” This valuation is very impressive due to Manchester United having a poor season due to their shift in management after Sir Alex Ferguson retired last season. 

Manchester United and Adidas:
Recently, Manchester United ended their partnership with Nike and moved on to Adidas. Mike Ozanian from Forbes tells us, “English soccer team Manchester United and German sportswear maker Adidas have agreed to the richest uniform deal in the history of sports. Adidas will pay $1.3 billion over 10 years to United, or $130 million a year, beginning with the 2015-16 season.” You would think that 1.3 billion is enough, right? Not for Manchester United. Mike Ozanian also states, “But the Adidas kit deal, coming comes along with the team’s $559 million, seven-year shirt deal with Chevrolet (also the richest in sports) means it will continue to have the cash flow to turn an operating profit and sign elite players.”

hi-res-afe91e10675aad43b3dcf4438437a283_crop_north

Capacity and Inventory:
Since Manchester United are very popular, there will be a huge demand as soon as the new Adidas uniforms roll out. However, until then Manchester United will still have a lot of the Nike uniforms available. Manchester United will have to decrease their capacity slowly and lower the price of the Nike uniforms as the end of the season approaches. This will result in a decrease of the Nike inventory due to more sales, which is what they want as soon as they can start selling the new and highly anticipated Adidas uniforms.

Manchester-United-new-Kit

The Competition:
Manchester United may have the lead but other teams are getting closer. The two most popular teams in Spain would be Real Madrid and FC Barcelona. Forbes put a value of 3.44 billion for Real Madrid and a 3.22 billion valuation for FC Barcelona. Another advantage for these clubs is that they have the two best players in the world, Cristiano Ronaldo (Real Madrid) and Lionel Messi (FC Barcelona).

Questions:

  • Do you think that sports teams are nothing more than a business?
  • What are some good ways to sell inventory that consists of jerseys with decreasing demand?
  • Do you agree with Manchester United’s valuation?
  • Do you think it is fair to fans to constantly release new jerseys, which causes them to keep repurchasing?

Sources:

Valuations:
http://www.forbes.com/sites/mikeozanian/2014/07/15/wall-street-says-manchester-united-most-valuable-team-in-world-after-adidas-deal/

http://www.forbes.com/sites/mikeozanian/2014/07/14/manchester-united-and-adidas-agree-to-richest-uniform-deal-ever-in-sports/

Images:
http://img.bleacherreport.net/img/images/photos/003/038/545/hi-res-afe91e10675aad43b3dcf4438437a283_crop_north.jpg?w=630&h=420&q=75

http://i3.mirror.co.uk/incoming/article3823301.ece/alternates/s2197/Manchester-United-new-Kit.png

A tale of two companies

Posted on by michaelp30131f14

 

When people think about the biggest discount retail stores, they think about Wal-Mart or Target. For a while now those two stores have dominated the discount retail market. Yet, that was not always the case. From the 1960s to the 1990s the two stores that had the majority of the market share were Wal-Mart and Kmart. Both Wal-Mart and Kmart were founded in 1962 and focused on minimizing cost as their business strategy. From the 1960s to the early 1990s they both experienced a lot of growth and Wal-Mart and Kmart generated revenues of 15.96 billion and 25.63 billion respectively. As the 1990s continued the two companies headed into different directions. Wal-Mart became the behemoth that it is today while Kmart began to dwindle. One of the reasons that happened was because of how they developed or in Kmart’s case ignored supply chain management.

Kmart        walmart    Supply chain management is the integration ofactivities that procure materials and services, transform them into intermediate goods and the final product, and deliver them to customers. Competition is no longer between companies; It is between supply chains.

Wal-Mart was a leading pioneer in supply chain management in the discount retail store industry. Most of the concepts they introduced in the 1990s are still in use today by many discount retail stores. Some of the concepts that Wal-Mart introduced were bypassing the whole-sellers to replenish their stores, developing a network of regional and local distribution centers, cross-docking at the warehouses, owning a captive fleet for store delivery, investing in the data-link connecting stores to the headquarters so that demand can be communicated effectively and without delay, and actively collaboration with suppliers like P&G to share demand data. Wal-Mart saw their revenues soar because of the implementation of these concepts and broke away from the rest of the pack.

Instead of trying to develop their supply chain management and focusing on minimizing cost Kmart bought high end items to stock their shelves, going away from the strategy that made them successful in the first place. In the early 2000s they tried to revert back to their previous strategies but were too late and were heading towards bankruptcy. They merged with Sears and even with the help of Sears, Kmart stores have not been ale to regain their market share. Today very few Kmart’s exist and every week more and more Kmart’s close. The future of Kmart is cloudy. Supply chain management is an integral part of how businesses are ran and has the capability to determine whether businesses are successful.

 

Do you think Kmart can make a comeback and regain their market share? Or are they too far behind too catch up?

Do you know of any other instances where supply chain management had such a large impact in two or more competing companies? What were the results?

http://www.supplychainmusings.com/2012/06/business-strategy-must-drive-supply.html

Inventory too hot to hold

Posted on by nicholas30131f14

For companies inventory management is essential as their exists economic downturns and upturns. These trends in the economy can drastically effect company cost as holding onto inventory can become expensive. Demand is often a difficult thing to get correct. We see many companies looking to sell and reduce inventory as soon as predicted demand for goods do not pan out the way they suspected. Often times the ridding of inventory is a difficult task as the liquidity to react quickly historically is not there. Inventory can be stolen, it can become obsolete and it could be sold but many companies are now starting to believe dedicating money to inventory is a high risk with a high cost. What are the alternatives as the companies need to keep up with the demand by their clients as the cost of a shortage is even greater? Through problem solving initiatives like Six Sigma companies are more fit to react to customer demands. Theses investments in a higher level of inventory management rather than in inventory can be more competitive and eventually get more bang for the buck.  Companies, in order to remain competitive, have to reevaluate where their resources are being focused and the use of technology is a resource that would be very beneficial in their future. The Ford Motor Company reportedly saved $600 million by the implementation of a Six Sigma management system. In 1999 Ford started to train their top level management then the officer group, and then the leadership group. After a year and half Ford has reportedly spent $6 million in training their several levels of management in Six Sigma. Ford rates the level of training by way of colored belts like that of a karate dojo:

Green Belt: “They receive one week of training that includes a basic understanding of how Six Sigma works and an overview of the Black Belt tools. Green Belts learn to help Black Belts do projects faster. Green Belt training allows the people who are affected by the Six Sigma projects to be able to continue to monitor and control the improvement and to do their jobs better”

Black Belt: Process full time for two year. The training includes, “define-measure-analyze-improve-control cycle” , “mapping, cause-and-effect diagrams, failure mode and effects analysis, design of experiments, and mistake proofing”

Master Black Belts- Handpicked by upper management; describes duties are.. “My core job responsibility is to help Black Belts with the tools, eliminate road blocks and support them during the various phases of their projects”

Project Champion- Work alongside master black belts and provides them with necessary resources to complete tasks.

This sort of implementation depends on the companies dedication to customer service and by senior leadership. With such a large company as Ford Motor Company making a commitment to new, nimble approaches to inventory management there can be an example for companies of all sizes that there are very good alternatives to the negatives that come with projecting demand the traditional way.

How often do you believe companies tend to under estimate the demand in the market?

Do you feel that smaller companies have the chance to save proportionally the same level of capital a company like Ford did using something like Six Sigma?

 

http://www.forbes.com/sites/billconerly/2014/08/07/inventories-a-problem-for-economic-growth-and-individual-companies/

http://www.qualitydigest.com/sept01/html/ford.html

Porshe, the new image of hybrid?

Posted on by melissa30133f14

In the news, I saw that Porsche announced that they were planning on selling out of their most expensive model by December of this year. They made 918 of the 918 Spyder Hybrid model to create an exclusive and desirable sports car. Being priced at $845,000 makes this car the most expensive car that Porsche has ever made. Also, with the battery that it has, buyers could be elligable for a federal tax credit in the United States of about $3,666.

Porsche had actually planned on using the sales revenue from this model to help recover from recent expansions and new buildings. They also used this car to raise their sports car or sedan percentage, specifically in the United States. With the new Macan model and the multiple models, including a hybrid model, of the Cayenne, Porsche was selling mostly SUVs. They wanted to take their brand image back to the sports and speed aspect in which they were originally developed on.

However, when people think of Porsche, they do not think of hybrid. While it is a trend in the car industry to have at least one hybrid model, a car with the reputation that the 918 Spyder has is not one that should be made into a hybrid. Consumers think of speed and power, along with the aesthetic appeal that most Porsche cars have to offer.

Even while I believe that the 918 Spyder was not the correct model to make as their second hybrid car, the exclusivity that they added on to the idea of this car was a smart move. With the Cayennes and Macans hitting the market in America, Porsche was losing their prestige image to the brand. Pricing this new car where it is helped set the tone of how prestige and exclusive they want the brand to be.

Do you think exclusivity is a good enough way to set a prestige image to their brand?

http://news.yahoo.com/porsche-sell-priciest-ever-model-december-152657806–finance.html

From Grass to Ice: STX is Here to Stay

Posted on by Jon Claxton

 

Matt Moulson, STX Athlete

The world of sports has seen many brands come and go. Nike, Adidas, and Reebok are all names I am sure you all have heard of. Some other extremely popular brands that you may not of heard of are Sherwood, CCM, and Warrior. The reason you may of not heard of these is because they are big brands for sports that are not as popular in the the U.S.  The brands that were mentioned above make gear for hockey and lacrosse, both of which are not as popular than sports like football, basketball, or baseball. Making a name for yourself in such competitive markets like these is not easy. One up and coming brand, STX, is trying to do just that.

STX is a company that makes everything Lacrosse. From protective gear, to high end lacrosse sticks, to apparel, STX makes it all. They are one of the leaders in this industry and recently have started to expand their brand into other sports such as hockey. Hockey and lacrosse have their obvious differences such as hockey is played on ice with a puck, and lacrosse is played on  field with a ball. Looking past that, the sports are fairly similar in regards to gameplay and players’ gear. Even though the similarities are prevalent, not many brands exist that carry both lacrosse and hockey gear. STX might be the next big name in hockey.

STX is not the first brand to make this transition. Warrior is one of the leaders in hockey protective gear and actually got their start in lacrosse before transferring over. Warrior is still at the top of both branches and STX wants to do the same. STX has just released their first set of player sticks and gloves for hockey this past month. This small introduction into the hockey world could be the start of something big. The sticks and gloves are already being sold in hockey stores across the country and they have even picked up some NHL players to showcase their gear on the professional level. Another way how the brand is attempting to make a quick entry into the market is through discounted team sales. As part of the club hockey team at DePaul, I have seen this first hand. An STX representative came out to a team practice and let the entire team demo their new line of sticks. After practice we were given the option to buy one or more sticks at an extremely discounted price. These sticks are pro quality and are comparable to many of the sticks on the racks today. This marketing ploy is one way that STX is going to grow as a hockey brand. The best way to get noticed is by getting exposure. STX has made a strong entry and I am excited to see what they roll out next.

My question for you is what do you think the next decision for STX should be to compete with other hockey brands.

Also, what are other brands that have expanded into different sport and how/why were they successful.

 

Source

http://www.baltimoresun.com/business/consuming-interests-blog/bal-consuming-baltimore-based-stx-launches-line-of-hockey-gloves-and-sticks-in-stores-20141110-story.html

Dunkin’ into Success

Posted on by leonel30131f14

image.axd

 

I’m not an frequent coffee drinker, but I do find myself going to Dunkin’ Donuts for the occasional hot drink. What I do find particularly interesting about the franchise, is that almost every time I go, there seems to be little to no line. So what is it that keep’s its operations running smoothly and efficiently? Dunkin’ Donuts takes a disciplined approach that is able to balance consumer demand with operational execution. Its strategy of offering limited time offer deals has been among the best to work in the restaurant industry. Their strategy allows them to offer a differentiated menu to its wide array of customers. Through this method, Dunkin’ Donuts is able to introduce new products bringing in new customers. Setting themselves apart from its competitors is a key factor that has helped keep Dunkin’ Donuts a thriving business. Limited time offers allows Dunkin’ Donuts to explore new options, to get a feel for what customers want. Many times they find that customers really like a particular item, and they end up integrating it into their core menu.

Dunkin’ Donuts’ success comes from a vast and diverse pipeline that allows them to offer similar but different products engaging its customers to try new things, leading to increased sales. Customization is Dunkin’ Donuts’ core competency, not only does product quality matter, but its service as well.

Dunkin’ Donuts has a very low capital requirement relative to the rest of the coffee retail industry. This is due in part to its business model, centered around establishing franchises across the world. So what are some ways in which it keeps driving profits? One factor to consider is the flow of customers, something very important to managers at Dunkin’ Donuts. Being able to stay on top of demand, especially during peak hours, is an essential factor for their success. Dunkin’ Donuts usually offers little to no in-house dining space. Allowing them to reduce expense and continue to increase their contribution. They focus on giving the customer the convenience of getting an on the run breakfast and or coffee.

What is your opinion about Dunkin’ Donuts?

Do you believe their success is due to their diverse menu or more closely related to coffee demand?

Do you think that by offering quick service, Dunkin’ Donuts is neglecting product value?

Any good or bad experiences?

http://marketrealist.com/2014/02/dunkin-brands-unique-player-maturing-industry/

http://www.qsrweb.com/articles/how-dunkin-donuts-keeps-operations-simple-with-fast-lto-pace/

Played on Paper: Operations Management is Key to Sporting Success

Posted on by ryan30131f14
Brian Rea For ESPN
Brian Rea For ESPN

 

The world of sport changes every day, and so does the way we develop champions. Although fans may not realize it, operations management has as much on-field significance to their favorite sports teams as it does to their day-to-day jobs and businesses. On-field success in the modern sporting industry is far too valuable to rely on the subjective whims of coaches and scouts to find talent of a high enough caliber and develop it. According to Hamford Professor Jim Bamford, who has done extensive research for the World Academy of Sport and has partners in numerous different sports’ teams, it is important for owners not to neglect this by focusing on their bottom line only:  “There is a direct correlation between what happens on the pitch and the users’ experience. So the next stage is to see how we can use numbers, metrics and business analysis to improve the on-field performance. This should create a virtuous circle of improvement.” That is why the top organizations in the field of sports analyze performance metrics, stadium management, and organizational structures and practices to improve their return on investment and ultimately augment the profitability of the business. Although it is impossible to utilize theory to predict the actual demands in traditional business or like here in the spontaneity of sports, Professor Bamford states: “Operations management can aid the athlete and players by ensuring they are at the right place, with the right kit at the right time to turn in a winning performance,” and “….Operations management has the potential to increase the satisfaction of the spectators even further.”

Performance metrics coupled with the rise in technology are reshaping the role of the scout and the formula for success for coaches and players. Teams are tracking everything with their players down to the finest of details. The movie Money Ball is a great example how the Oakland A’s, a professional Major League Baseball team, used saber metrics and mathematical modeling to form a highly successful baseball team even with their low levels of revenue. The San Antonio Spurs, according to an ESPN article, utilize “Stats’ SportVU’s high-speed photography, using real-time acceleration stats” which can”more tangibly measure game-play execution.” Advanced stats such as “Who isn’t getting back on defense” and “Who can shoot a jump shot with defense in their face” are replacing the eye and ear tests. Today, hard numbers are preferred. For top professional athletes, performance off the court is also analyzed just as much. With team psychologists and frequent physiological tests measuring all aspects of athletes’ bodies, the analysis never ends.

Organizations can profit from efficient configuration and planning of their stadiums to improve fan experience and their return on investment. Jumbotrons and Wi-Fi at some stadiums are calculated efforts at this. Also the physical layout and organized personnel within the stadium is crucial for experience and fan safety as tragic events can be avoided such as the Hillsborough disaster, where 96 people died due to poor stadium design and training of staff.

Effective integration of operations management into the often un-orchestrated world or sports is a tough formula to devise. However, those organizations that achieve this balance and invest their resources correctly into technology aimed at analyzing and improving all aspects of their operations on the field as much as they do off the field are positioned to succeed more than their foes. Well, on paper at least.

———————————————————————————————————

http://www.sciencedaily.com/releases/2012/07/120724104141.htm

http://espn.go.com/nba/story/_/id/9980160/nba-how-analytics-movement-evolved-nba

http://espn.go.com/blog/playbook/fandom/post/_/id/18402/new-studies-change-how-you-see-sports

http://www.bbc.com/news/uk-19545126