Taking a leap into the future

Cash, credit card or apple pay, are you ready to ditch your wallet?

appley pay intoApple Inc. Reveals Bigger-Screen iPhones Alongside Wearables

When CEO Tim Cook announced Apple’s digital wallet method in early September he didn’t go into great detail about the security aspects of Apple Pay. Although a lot of people may be hesitate on using Apple Pay it turns out Apple Pay is safer to use than ordinary credit cards.

This is how it works, it lets you use and store your credit cards just by scanning your phone. The technology that sends the payment from your phone to the register is called NFC (near field communication) it’s basically an antenna inside your phone that delivers short encrypted radio waves with your payment data.  NFC has been around for a while it has been used in Google Wallet, PayPal, and Pay Express.

It’s a lot harder to steal data from NFC because your phone doesn’t give up your credit card number; instead it uses a one-time use code that gets approved by the bank for every transaction. Even if hackers managed to hack their way into a store and grab this payment data its useless to them because a code can only be used once, plus even if someone where to steal your phone you can actually wipe all the credit cards remotely.

apple pay

Unfortunately not all stores that once accepted mobile payments options are accepting Apple Pay. Stores like CVS and Rite Aid have stopped accepting Apple Pay for two reasons.

  1. The first being is that they developed their own payment method called CurrentC, it’s designed to one day let you pay at the register without using your credit card. Wal-Mart led the effort to CurrentC along with Target, Bed Bath& Beyond, Dunkin Donuts, Gap, Sears, Shell, Wendy’s and many more have joined it. It’s really no surprise that none of these stores are accepting Apple Pay.
  2. These stores feel that Apple Pay is giving more power to credit card companies. Every time you swipe your card, retailers have to pay the credit card companies between 1.3 to 3 percent of every transaction. Apple Pay relies on credit card networks so if Apple Pay grows, it would allow Visa and MasterCard to get stronger and the fees would stick around.

Questions:

  1. Do you think people will find it difficult to put trust in Apple, after the continuous iCloud hacks that have been going on with celebrities?
  2. Why do you think retailers are so afraid of Apple Pay?
  3. Do you think it’s okay for stores like CVS and Rite Aid to deny the use of Apple Pay even though these companies can handle the tap to pay technology?

 

http://blogs.wsj.com/totalreturn/2014/11/04/why-some-merchants-say-no-to-apple-pay/

http://money.cnn.com/2014/10/27/technology/security/apple-pay-cvs-rite-aid/index.html?iid=SF_T_River

The Key to Success

 

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It was recently announced that Tesla Motors will build a Gigafactory in Nevada, but as of a few days ago, the land officially belongs to the company.  The Gigafactory will be completed by 2020, but production will start in 2017 to build lithium battery packs—cutting battery cost by 30%. In addition, Tesla Motors has encountered tremendous success not only with its stocks but growth rate as well. In the article, Tesla Motors Inc’s Secret Growth Weapon — Hint: It’s Not Cars, Adam Galas states, “Tesla has enjoyed a remarkable 158% compound annual growth rate over the past three years. While that growth rate isn’t sustainable, analysts are still expecting sales to increase 55% this year and 62% in 2015”. Tesla Motors success is due to cars, but other factors are included as well.  First, the car company is going to produce 500,000 lithium-ion battery packs a year starting in 2017, and it hopes to cut battery costs by 30%, then up to 50% in 2020.

In addition, Tesla Motors is using energy storage which is projected to be a 50 billion dollar market by the time the Gigafactory will be completed in 2020. Galas also suggests that, the “Gigafactory may be able to manufacture batteries not only for Tesla’s electric cars, but consumer electronics as well. Better yet, there’s a very good chance that Tesla and Panasonic could manufacture these consumer electronic batteries at a cost that makes them ultra-competitive for use in laptops, smartphones, and tablets”.

Not only does Tesla Motors have a great reputation by reducing battery costs, Tesla satisfies its customer needs in several ways. Elon Musk, Tesla’s CEO, has promised to build car Superchargers across the United States so that only Tesla owners can drive around the country without worrying about their car battery. Furthermore, Tesla Motor has partnered with U.S Bank to reduce monthly payments by 25%. The average monthly payment of a customer is anywhere from $780 to over $1,200. Tesla Motors is using this as an incentive to reach their goal of selling at least 17,500 cars this year.

Tesla motors has had success for several reasons. It has proved to have a good reputation, met industry standards, and each car proves to have useful life and be reliable.

Do you agree with these reasons of Tesla’s success? Do you think that the success will last? What do you think makes Tesla different than the other competitors? Also, what do you think of Tesla building the $5 billon Gigafactory?

 

Sources:

http://online.wsj.com/articles/tesla-unveils-lower-cost-lease-plan-1414427518

http://www.fool.com/investing/general/2014/10/30/tesla-motors-incs-secret-growth-weapon-hint-its-no.aspx

 

Tech-Savvy Leaders Rule the World

The past three decades marked the age of information and technology. During this period we saw companies such as Microsoft, Google, Amazon, eBay, Facebook, Instagram, list can go on, rise to success. Coincidentally, these successful companies had even more successful CEOs who shared the deep understanding of technology and upon which they built their enterprises. Leaders like Bill Gates, Mark Zuckerberg or Steve Jobs can be considered visionaries responsible why information systems have come to where they are today. Their success was based on strong leadership and exceptional visions paired with tech savvy skills, which now lead both, tech and non-tech driven companies. I believe that this skillset is necessary for any leader; however, tech Savvy CEOs are rare among fortune 500 companies, since most leadership positions are taken by older gentlemen in expensive suits flashing their MBA’s.

In my opinion, tech-savvy founders are able to better picture of what lies ahead for the company. Their understanding of information technology empowers them to better identify possibilities and opportunities as opposed to someone without that experience, because they wouldn’t be able to properly guide and execute company goals. Tech-savvy leaders/CEOs have the upper hand and can quickly analyze and adapt emerging technologies to shape their company’s strategic visions. I believe that this type of leadership helps organization to be more effective and competitive.

It comes as no surprise to me when I hear that young CEOs are outperforming older ones as we are heading into the digital age, where everything can be accessed from your mobile device in your pocket and get connected to anyone, anytime, anywhere in a split second.  Modern industry requires heavy IT skillset and leaders/CEOs that lack the background or cannot keep up with the advancements may set themselves up for a failure when it comes to critical decision making that could affect the future of the company. Without the necessary background, for example, it can become difficult to keep up with the constant changes of technology; leaders must learn to keep up with ever evolving platforms, software applications, and programming languages to excel their competitive environment.

Do you think that strong tech background is needed to be a successful leader/CEO? Are there ways for leaders to compensate for the lack of knowledge in information technology?

Sources:

  1. http://www.inc.com/aaron-skonnard/why-tech-savvy-ceos-rule-the-world.html
  2. http://iveybusinessjournal.com/topics/leadership/on-becoming-an-it-savvy-ceo#.VFgnDPnF-Tw

Finance is a Liar Sometimes

There are numerous ways to measure success for a specific company. Whether it is pure revenue based, maximizing capacity, or providing the best quality, each company has its own specific way of measuring its success. The article from industry week discussed the dangers a company has when they use financial-based planning. One example the article gave when discussing a poor financial measurement was inventory. In the world of accounting inventory is considered a current asset. A current asset relies on liquidity and more specifically so being able to convert into cash within a year. The problem with that definition is that it relies on the fact the inventory will eventually be sold. The article stated that, “High inventories therefore mean longer cycle times, longer lead times and less responsiveness to customer needs.” That quote essentially means that the more inventories a company has the ability to change becomes weaker. 

Cheap offshore labor as a method as cost savings was also mentioned as being expensive. In the books, cheap labor looks attractive as costs are being minimized and more products are being able to be made. However, with off shoring come defective goods. In my own experience, anytime I order something through Amazon which I know is coming from China I am taking a risk. 50% of the time my order will be completely defective. If not defective, the quality will be sub-par. That level of quality cannot be measured by a financial metric and as a result is not taken into account with valuating success on a revenue based level.

 henry ford image

The measures to which a company should measure their success as the article states (and I agree as well) are the three KPIs: Time, Material, and Energy. Henry Ford was a strong component of these measurements as he believed, “time, material, and energy are worth more than money because they cannot be purchased by money.” Taking into account that belief, there then becomes four major points consulted when making decisions and improvements.
1. Waste of the time of people
2. Waste of the time of things
3. Waste of materials
4. Waste of energy
All four of those points touch on the certifications we have been talking about in class. While the six sigma is not discussed in the article, concepts of lean manufacturing are present throughout. In addition, ISO 14001 certification is mentioned. An example is given that it is not only wasting raw materials it is also wasting the scrap materials. Ford specifically showed this method that even though back in his time he could have thrown scraps in the river he instead decided to use it to make something else. This allowed him to maximize raw and scrap materials which led to cost savings. In accounting, and financial reporting that is never take into account. Through this article I really understood that while financials are important that should not be the only measurement used to determine a company’s success.

 

1.) What do you think is the best way for a company to measure success?

2.) Are resources such as time, energy, and materials equally important? Or does one stand out from the rest?

3.) What are some of your own personal experiences when  ordering goods from overseas?

 

http://www.industryweek.com/leadership/when-finance-runs-factory?page=3

Starbucks takes a bite out of Apple Pay

In the article I looked at, Howard Schultz, chairman and CEO of Starbucks, gives his views on Apple Pay and how he thinks it will revolutionize business. Many retailers have expressed their dislike for the new payment platform but Schultz says that “he is not intimidated by Apple Pay.” He explains how anything, like Apple Pay or Paypal, that consumers can trust, is better for his business model, referring to the new cash-less system set up at Starbucks. Schultz predicts that in the coming years, cash and coins with be obsolete in the marketplace and people will solely use mobile payment methods.

sbux

If anyone has been to Starbucks recently, you’ve probably noticed that people pay with their mobile devices all the time. This new option has definitely added speed and efficiency, which is perfect for a place like Starbucks considering it gets a lot of  its customers during the morning rush-hour. This is an example of operations management because it addresses two of the strategic operations management decisions: managing quality and process and capacity design.

Apple Pay helps to put Starbucks on the cutting-edge, in terms of technology. Some customers have come to expect the mobile payment option and when Starbucks offers this system, it can help to increase customer satisfaction because it creates more flexibility for them. In regards to process and capacity design, Apple Pay adds this specific technology to the Starbucks system and, again, makes things easier and more efficient for customers.

I, personally, have never used a mobile payment system but I definitely think it is effective and could possibly replace cash in the future. In today’s world, everything is based on speed and convenience and I think Apple Pay addresses both of those needs. The one aspect that I think could pose a problem for mobile pay systems is cyber fraud. As society is introduced to more technology, we are exposing ourselves to a whole lot more, in terms of the cyber world, which I think comes with a lot of unknowns. As our technology continues to advance, I think we need to think about safety and make sure that we take precautions in order to keep our money safe.

Overall, I think mobile payment has helped to improve the business model at Starbucks and will continue to do the same for many other companies. As technology revolutionizes our world, business models and operations will continue to change and grow in order to fit the needs of consumers.

What are your thoughts on Apple Pay? Have you used it? Do you think methods of mobile payment will replace cash and coins in the future? Can you think of any examples of businesses that could not use a mobile payment method?

http://money.cnn.com/2014/11/03/technology/starbucks-apple-pay/index.html?iid=HP_Highlight

 

Horse Meat and See-through Yoga Pants: Supply-Chain Failures

Education Opportunities

Most students after graduating college will go to work full-time. For those students who want to continue their education either through an M.B.A or specialized Master’s Degree the options are countless. Many students may turn to an M.B.A or another common Master’s degree. However, one of the fastest growing fields in business is for individuals with degrees or experience in supply-chain management.

Supply-chain management is a broad term that incorporates numerous elements of business including leverage, communication, efficiency, innovation, risk management, and continuous improvement. These elements are used by supply-chain managers in procurement, transportation, inventory, and forecasting to name a few. Also, supply-chain hires will find themselves conducting supply-chain analysis, which can incorporate fields such as engineering, analytics, and operations.

Why Supply-chain Management?

As our economy and the economies of the world have become globally focused, supply-chain management has become a necessity. Multinational corporations and global partnerships have opened the possibilities of receiving goods from around the world at the blink of an eye. These new possibilities give businesses and consumers greater opportunities, and access to products at prices never before seen in a free-market.

However, as stories of horse meat in European stores and see-through yoga pants have become more common, managers are turning to supply-chain personnel to prevent these embarrassments from happening again. These negative story lines hurt a companies bottom line and reputation, which can have long-term consequences. By leveraging supply-chain experts a company can help their bottom line and customer service.

If interested, below is a brief overview of supply-chain management through the operations of a lemonade stand.

Supply-Chain Management Failure

One example of a supply-chain management failure, as we talked about in class, is the example of Boeing and the 787 Dreamliner. Boeing increased its outsourcing from about 35-50% on the 737 and 747 to close to 70% on the 787. The supply chain that Boeing had in mind was one that would keep cost’s low and spread the risk proportionately between themselves and their suppliers. Unfortunately for Boeing, this strategy backfired due to poor supply-chain management. Ultimately, this led Boeing to run billions of dollars over budget and caused years of delays.

If a company as large as Boeing can have supply-chain management failures, any company, large or small, can experience similar failures. By hiring individuals with a background in supply-chain management companies are hoping to counteract the potential issues related to supply-chain management.

Increasing Supply

Below are some new programs offered in supply-chain management to meet increased demand.

School Location Program Year Started
University of Houston, C.T. Bauer College of Business Houston M.B.A. certificate in supply chain management 2011
Rutgers Business School Newark and New Brunswick, N.J. Undergraduate major 2011
Bryant University, College of Business Smithfield, R.I. Undergraduate major and M.B.A. specialization in global supply chain management 2012
Governors State University, College of Business and Public Administration University Park, Ill. Online M.B.A. in supply chain management 2013
Portland State University, School of Business Administration Portland, Ore. M.S. in global supply chain management 2013
Texas Christian University, Neeley School of Business Fort Worth, Texas M.S. in supply chain management 2013
University of North Carolina, Kenan-Flagler Business School, and Tsinghua University Chapel Hill, N.C. and Beijing Global Supply Chain Leaders Program—M.B.A. from Kenan-Flagler, Master of Engineering Management from Tsinghua 2013
University of Southern California, Marshall School of Business Los Angeles Online M.S. in global supply chain management 2013
Arizona State University, W.P. Carey School of Business Tempe, Ariz. M.S. in supply chain management or M.S. in supply chain management and engineering 2014

Questions

Would an advanced degree in supply-chain management be of interest to you? Do you think supply-chain management can help companies overcome global issues?

http://online.wsj.com/news/articles/SB10001424127887324423904578523591792789054

http://www.casemoreandco.com/resources/articles/the-6-elements-of-supply-chain-strategy/

http://www.forbes.com/sites/stevedenning/2013/01/21/what-went-wrong-at-boeing/

Get Your Daily Serving of Thumb Stretch Here!

In today’s smartphone market if I say “powerful high end phone” what do you think?

I bet you thought about either the new iPhone or a Samsung, HTC, or LG Android phone. These phones are indeed powerful, high end, premium, and fast and have all the latest features. What else do they have in common? Huge screen sizes. The iPhone 6 is the smallest of the bunch and still usable in one hand however on the Android side it seems that every flagship phone is over 5 inches now. This makes it very difficult for individuals with petite hands to handle these large phones.

Is there a market for the small Android smartphone? I believe so. Per our in class discussion regarding new product opportunities one of the many ways to enter the market place is by “Understanding the customer.” Companies recognize that people want smaller phones so companies make “mini” versions of their flagship phones, this is only done within the Android camp; however, these mini smartphones are underpowered so they are not a flagship any longer. There are many articles online about how there should be more small smartphones for customers that don’t sacrifice power and premium feel.

There is a new phone that was just released called the Sony Xperia Z3 Compact that I believe meets the needs of many consumers in the US market. The phone is small and does not compromise on power or premium feel. I think Sony did a great job with the phone because it fills a gap in the smartphone market. Looking at this situation using a hypothetical QFD approach Sony identified a need for a small no compromise smartphone. Sony filled that need by developing a phone with great battery life, a small form factor and high end specifications. Sony related customer wants (small form, performance) to its product how’s by pairing the phone with a powerful battery, great camera, small size and other premium specifications. Sony looked at the requirements of the phone and tried to find relationships between the firms “how’s” so that they could build a phone consumers want. Sony could pair its energy saving software with a powerful battery for better battery life or use its display (TVs) expertise to develop a low energy vibrant display for the phone. Sony had to make some compromises in order to keep the cost and size within reason so Sony had to develop some customer importance ratings such as small size, screen pixel density, battery life, camera, etc. and rate them. Sony then could evaluate competing products against the Z3 compact and see how it compares. Finally, to complete its QFD analysis Sony would compare the performance of the product to the desirable technical attributes. This would mean testing for battery life, screen quality, camera quality and performance, bendiness, etc. Once Sony determines its phone meets the specifications it desires it can then release it to the public.

Going through this QFD approach for a new ‘standard challenging’ product helped me understand the process greatly and really appreciate the effort that goes into developing a new product and building a QFD house of quality.

What you do you think about the trend in smartphone sizes?

Are you for or against the increasing size of smartphone screens? Why or why not?

 

Sources:

http://www.theverge.com/2014/10/3/6887063/sony-xperia-z3-and-z3-compact-review

http://online.wsj.com/articles/how-to-find-the-phone-that-fits-your-hand-1395795606

http://techland.time.com/2013/07/18/the-htc-one-mini-is-yet-another-compromised-small-android-phone/

http://androidandme.com/2014/10/opinions/dear-google-please-make-a-smaller-nexus-6/

https://gigaom.com/2014/10/13/best-phones-under-5-inches-2014/

How Effective is Complaining?

I am sure most of us have experienced people complaining about others not doing their jobs correctly as a way to solve an issue at work and I wonder how effective this really is. I currently work at my dad’s high end electronics company and many people will send out office-wide emails pointing out mistakes people have made to encourage others to not do the same. For example, we have a tool sign in/out spreadsheet on Google Docs where installers, or anyone using tools is supposed to sign in or out the tool when they use it. This is to reduce loss of tools or to find out who is responsible for the loss of a tool. Recently, one of the employees in charge of tools has been sending out emails calling out those who have not been using the tool sign in/out sheet properly or have not been using it when they should have.  It is hard to tell if this has been effective since he has only started doing this recently, but people are still not using the tool spreadsheet as often as they need to be.

 

Although I cannot determine how effective this has been, recently my mom who also works at my dad’s company has started calling people who had not filled out their schedules at the end of the day and has been sending out emails based on how many people filled out their schedules like they were supposed to. After about a week of this thorough checking in on people, we finally had a day where everyone filled out their schedules. This did not take very long to see significant results. One possible reason that this worked better than the complaints about the tool spreadsheet was because it was done in a kinder way, rather than calling people out to everyone in the office. My mom kindly called people to ask them to fill out their schedule rather than being upset with them. Another possible reason this worked better was because it was more targeted at the people who were not doing what they were supposed to do. Rather than just sending out an email, they actually got a direct phone call which is much harder to ignore. Also, this could have been more effective because my mom is the boss’ wife so people are more motivated to listen to her because she has more leverage in the company. Although this was more effective, it was also more time consuming.

 

There are many ways to complain to try and get people to cooperate in the workplace, some may be affective and others not. Although some may be affective, they may have other affects as well such as others seeing the complainer in a negative light. However, sometimes it is justified because people need to understand that they cannot continue to slack off because it affects everyone else’s work.

 

Do you think sometimes complaining is necessary? If so, in what way? If not, why not?

 

Why do you think my mom’s method was affective?

 

What are some other methods to get people to do what they need to do?

How to Save Time and Money

In this post I will talk about walkability. I believe it’s an interesting perspective on everyone’s day-to-day operations. Today Americans measure distance in time, not miles. When one looks up how far the location of a restaurant is they are not interested in the amount of miles. They want to know the number of minutes.

The closer a person lives to their day-to-day activities the less time they need to spend traveling to and from them. They save time on travel and they have more time to spend on leisure with their friends and family. Basically, if you can walk somewhere conveniently, then that place is considered to be “walkable.”  Also, the amount of money and carbon emissions one can save by not owning a car is astonishing after one does the math. If a location is accessible by public transportation then it’s degree of “walkablility” is higher than a location that is only accessible by car.

I am currently reading “Reshaping Metropolitan America” by Arthur Nelson. In his work Nelson examines demographic changes over the past century and touches on opportunities for the future.  It’s a great read, and here is the bottom line. Walkability is the future.

There are enough detached single-family homes on the market today to fill our need for them until 2030. During the twentieth century the baby boomer generation built tons of McMansions on huge lots with many bedrooms. Now their kids are old enough to move out, and they want to live in cities. People are willing to accept higher rent prices for smaller units in buildings with amenities like gyms, grocery stores, swimming pools, and places to entertain. This is because they can spend less time traveling, and more time doing the things they want to do.

Furthermore, the value of the average American’s home equity fell from $200,000 in 2006 to less than $78,000 in 2008. It is extremely unlikely that the equity values will ever return to those levels because the market simply demands a different type of housing.

On it’s most basic level I believe walkability needs to be taken into consideration by all young undergrads looking for their first job after graduation. It’s simple. To cut down on your throughput time you should simply move closer to work.

Source: http://islandpress.org/reshaping-metropolitan-america

Apple’s Ruthless Supply Chain Management

For the loyal Apple customer, Apple can do no wrong. Apple reported Four million iPhone 6 and iPhone 6 plus’ pre ordered in the first 24 hours. Last year Apple sold over 150 million phones.(Satariano and Burrows) The company’s success is attributed to their innovative products which have superior functionality and exceptional user experience. Second to the product is the supply chain management that allows Apple to deliver the high demand products on time to the users.

The iPhone is the most popular phone in the world, in order for Apple to produce and deliver the sheer volume of phones to meet the demand they must create exclusivity agreements with suppliers in exchange for volume guarantees. Working with its supply chain partners, Apple helped develop new manufacturing processes, some of which have been the subject of patents filed by the company.(Apple’s process,pars 5)

Apple is always innovating their products and they do it at no cost and without any consideration of the suppliers. Suppliers of Apple sometimes come out winners and sometimes losers. The iPhone alone has components that come from dozens of different companies. Apple has a reputation as a brutally tough negotiator with companies in its supply chain, demanding advanced technology at razor-thin margins, and it doesn’t hesitate to drop longtime suppliers with little notice, says Francis Sideco, a senior manager at market researcher IHS (IHS). At least nine publicly traded companies get more than 40 percent of their revenue from Apple, data compiled by Bloomberg shows.

blog pic

Audience, a mobile audio processor maker saw their stock plummet from a high of $22 a share to about $8.50 a share when their parts were left out of the iPhone 5 in 2012.(Satariano and Burrows) Peter Santos, chief executive officer of Audience says they struggled to replace lost orders with business from other phone makers because he had no notice. Apple didn’t tell him his company was cut out, and he only knew for sure when his engineers bought an iPhone 5 and took it apart.

What makes Apple great is also what gives them the reputation of being ruthless. Apple is very involved in all aspects of the supply chain management and it’s been that way since late Steve Jobs return in 1997. Apple has a lot of power and leverage when they negotiate the terms on parts, manufacturing and transportation, this in large is what allows Apple to make a superior product to its competitors at a price that is hard to rival and still make a 25 percent profit margin. The bottom line is the company is highly regarded by the end user. Apple’s ruthlessness is what gives them the advantage and keeps them in the green year after year. Some suppliers have begun to reduce their dependence on Apple.

Is the old idiom, business is business, always true? Is it okay for a company to have a ruthless mentality? When the end-users are happy and the company sees huge profits, is it all that matters?

http://www.businessweek.com/articles/2014-09-18/some-apple-suppliers-get-cut-off-must-scramble-for-new-business

http://www.usanfranonline.com/resources/supply-chain-management/apples-process-improvements-make-it-a-global-supply-chain-leader/#.VDjg8mddV_B

https://www.google.com/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-8#q=apple%20operations%20management