2 Business Topics 2

The Lululemon Management Model

Posted on by Laurena25

Ever since I discovered Lululemon my first year out of high school, I have been obsessed with their athletic wear.  Because the clothing is way out of my price range, I will admit I only have a few items from the brand. However, the items I do own, I absolutely love. Maybe the Lululemon fit, style, and quality has stolen the hearts of all is customers (as it has mine) and that is why they have such a profitable business. However, I think much of the success is credited to their very strategic business model.

There are three distinct practices that I believe really sets Lululemon apart from its competitors. The first is empowerment. Lululemon stores are not meant to be simply a carbon copy of the some model store. Each manager of the individual Lululemon locations operates their store as if it were their own small business.  The individual stores are not micromanaged by corporate. Instead, the Lululemon is highly decentralized.

Furthermore, managers provide monthly feedback to the design departments. These correspondences between the individual store operators and the design team ensure that ideas and preferences of the managers have an opportunity to influence the next generation of products.

This brings me to my next point: the community-focused approach of Lululemon. Each Lululemon store is expected to not just merely exist in its surrounding but to integrate itself into the community. One way our local Lincoln Park location does this is by offering free yoga classes to on Saturday mornings. Hospitable services, such as the free yoga sessions, build brand loyalty while also facilitating a great service to their community.

The third distinct practice of Lululemon makes them so successful is keeping their inventory extremely scarce. Did you know that Lululemon is able to sell ninety-five percent of their inventory at full price? How many other retail stores do you know that can say that?

Lululemon never has a huge amount of inventory on site because the main distributor does not over produce their products.  But how do they know what is the ideal inventory? Well, the customers tell them. That’s right, some old fashion listening is the secret behind finding the ideal amount of inventory to have in store. The location of the folding tables is thoughtfully places neat the fitting rooms so employees are able to listen in on what their shoppers like and don’t like about the product.  If several people are complaining about an awkward fit of a particular shirt, the employees are trained to notify their manager would can avoid ordering any more of that item.  The company also is able to learn from their mistakes and therefore, if all goes as planned, avoid making such mistakes again.

http://online.wsj.com/article/SB10001424052702303812904577295882632723066.html

http://www.bcbusiness.ca/your-business/lululemon-athletica

 

 

Tepco Faces Decision to Dump Radioactive Water in Pacific

Posted on by spr1311sabraham

Are ethical dilemmas an issue for operational management? If your answer is no, you are wrong.  There are many ethical dilemmas that companies face each day regarding their operations.  This Bloomberg article regarding an ethical decision needed to be made by Tokyo Electric Power Company (or ‘TEPCO’) , a Japanese electric utility company, is ground shaking with the large implications that will result per their ultimate decision.

TEPCO has discovered leaking in water storage pits within the Fukushima atomic station- The station was destroyed in March 2011 from an earthquake and tsunami simultaneously (link to article —-> http://www.telegraph.co.uk/news/worldnews/asia/japan/8953574/Japan-earthquake-tsunami-and-Fukushima-nuclear-disaster-2011-review.html)

From within the seven pits, leaks were found in the basements from when the disaster teams were called in to cool down the reactors. The company is now under pressure because it may be forced to dump the radioactive water in the Pacific Ocean.

Time is of the essence due to the water busting through basement walls at roughly 400 tons per day.  This water is then becoming contaminated, thus a huge issue.

TEPCO has two operational decisions to make to pass down to its work crew:  reduce radiation levels from the water by pouring it into the Pacific Ocean or continue their production of “above-group storage tanks”.

Why such a tough decision for management?  It is essentially impossible to keep up with the inflow of water that is leaking. Even with production of 450,000 tons of the tanks above ground by September 2013 and 700,000 tons by the middle of 2015 this company clearly is fighting an uphill battle.

What are the effects of their decisions? Well, an important factor in this are human lives.  The United Nations Scientific Committee on the Effects of Atomic Radiation (or ‘UNSCEAR’ link to their website here –> http://www.unscear.org/) has remarked that humans can get cancer, such as leukemia, with moderate to high levels of exposure to the toxins.

Even though TEPCO is working on the removal of many of the radioactive substances, the purification system they have created continues to see operational issues in functioning properly.  The company’s image continues to be at stake, they face legal issues, disrupting the fishing industry, and their company’s attractiveness to investors in the future. Other than the business side, their obligated to think of their own people as in their workers and also those people that this could affect.

The original cause of the leaks could have potentially been a flaw in the staffs proper inspection of the equipment and additional tests before dumping toxic water into the leaking pits.

This is an operational nightmare for TEPCO.  I feel that this story directly related to what we have already learned within class.  Within the puppet making exercise the workers continued to feel pressured by upper management to just get the job done. Also, within the tower exercise having an effective team leader was crucial along with the planning phase of construction.

I am curious to hear your thoughts on what truly caused these leaks and what you would do in this situation.

Link to article –> http://www.bloomberg.com/news/2013-04-11/tepco-faces-decision-to-dump-radioactive-water-in-pacific-ocean.html

“So-called Leaders” – Should They be Feared?

Posted on by spr1311agreen

Leaders: The people in our office that we report to, sometimes look up to, but always try to please. Why are they in charge?

Someone believed that they had the ability to manage those underneath them, so they were anointed from above. Liz Ryan, expert on the new-millennium workplace and former Fortune 500 HR executive, explains, “Let’s not forget that what’s significant about the conferred-from-above leadership status is that it gives extra power to the person who’s been named leader. That power is inextricably linked to fear”

Is a person chosen for this position because they are influential  or because they successfully know how to instill fear in others? Fear should be eliminated from this equation, but is still prevalent in corporate management today. Workers are afraid that if they do not impress the person an charge, than they will be punished, or in the worst case, fired.  Those in leadership positions should be focusing on more important things: making sure they’re team is working productively together, and easing tension between members whenever it arises. Unfortunately, fear in this setting has a way of reducing productivity rather than promoting it. A leader should be put in this position because they are knowledgeable about the tasks assigned for the team. They are experienced and trusted.

In her article, Ryan describes the great number of leadership conferences and workshops she has attended. They are filled with ‘so-called leaders’ that are given quick tips about how to manage others, but few actually have these characteristics to be an effective supervisor. They are feared, but lack knowledge and influence. Often times these people are put in highly-regarded positions, but do very little in terms of work.

This bureaucratic style of leading is diminishing. Ryan explains, “The age of human workplace is here.” It is imperative that we escape this fear-based culture and focus on teamwork. While one person is in charge, anyone can lead when it comes to ideas and projects, and it is the leader’s job to facilitate this. If a person is not afraid of getting fired, they can freely express their ideas without their superior’s power constantly weighing down on them. A leader should be used as a knowledgeable resource and a coach that is willing to listen but is focused on the success of the group. Personal gain should take a back seat.

We will continue to report to our superiors, hopefully look up to them, and always try to please them out of respect, not fear.

This can all be rooted back to a few basic questions: Should fear be completely eliminated when it comes to leading, or does it have some positive effects as well? What makes a successful leader? How productive can someone be living in fear?

Reference: http://www.businessweek.com/articles/2013-04-12/everything-you-know-about-leadership-is-wrong#r=nav-r-blog

Fiat’s New Deal

Posted on by Peter McGraw-Schuchman

Fiat Industrial, a division of Fiat specializing in trucks and construction/agricultural equipment has announced a change in management structure to help the transition of acquiring a new subsidiary, CNH Global (agricultural equipment maker).

The new structure will emphasize brands and brand awareness, in addition to region by region operations. The adoption strategy will be similar to when Fiat acquired the American car company Chrysler in 2011.

While negotiations of the acquisition are still in progress, Fiat Chairman Sergio Marchionne is confident they will succeed, however expensive it may be. While this may briefly take a toll on the company’s overall revenue and income, its assets will increase with the purchase of a new division. Since CNH Global is a company with nearly $20 Billion in revenue yearly and business in over 150 countries, the deal should turn out to benefit Fiat in the end.

 

 

In addition to acquiring CNH Global to bolster Fiat Industrial, Marchionne has announced that Alfredo Altavilla will take over operations in an attempt to turn around Chrysler Group LLC, the failing American car company that is 58.5% owned by Fiat. in addition to American sales, Fiat announced it will be focusing on returning Chrysler’s market presence in Europe, the Middle East and Africa as well.

In the next two years, due to the aforementioned acquisitions and the attempted turnaround of Chrysler, Fiat expects to lose money. As a result they are turning to innovation to differentiate themselves. They plan to introduce 19 new models in the next four years including a Jeep compact car. Also, they are making efficiency a priority in their Italian factories they feel are under performing. By renovating and innovating they are attempting to stop the tide of losing money Chrysler faced due to the American economic crisis of recent years. Making a Jeep compact and over half a dozen new Alfa Romeos and Maseratis is going to push Fiat’s products into new market segments that will bring them more customers and greater revenue. Maximizing efficiency of existing processes, in addition to reducing costs and raising output, may have the added benefit of improved products, which could help them to retain customers better.

Additionally, visionary leader Marchionne has approached leaders of American car company General Motors and French car company Peugeot with an idea of combining forces to take over Volkswagen’s dominance of the European automobile market.  However, it is unclear if such a deal would ever take place, especially considering that both GM and Peugeot have taken bailout money from their respective governments in recent years, weakening their financial position.

 

 

 

 

 

Works Cited:

http://www.washingtonpost.com/business/fiat-industrial-announces-new-management-structure-to-ease-integration-with-us-subsidiary-cnh/2012/11/12/fa1c6930-2ccb-11e2-b631-2aad9d9c73ac_story.html

http://www.washingtonpost.com/business/news-summary-fiats-new-management-structure/2012/11/12/87c6c86c-2cf3-11e2-b631-2aad9d9c73ac_story.html

http://www.bloomberg.com/news/2012-10-30/fiat-ceo-said-to-have-proposed-merger-with-opel-peugeot.html

Holiday holding Inventory!

Posted on by f1224arodriguez

With the holidays right around the corners, and the sales on so many items at various stores, inventory management is crucial during these times. Not only are large quantities expected to be in inventory but also excess inventory to continually carry the stores throughout the holiday season all the way passed Christmas. Walmart announced that its Black Friday sale will start at 8p.m. on Thursday, November 22. Many big named brand items have already been  announced for customers to start placing on their wishlists.

Despite such an increased expected demand, Walmart will guarantee products to customers by giving them what they call guarnatee cards, that will ensure that customers get the item they wanted before Christmas at the advertised Black Friday price. Walmart is even going as far as having three rounds of sales to be able to keep up with the high demand of items on sale, especially electronics.

Do you think the Walmart should purposefully order more merchandise to account for such high demand during the holiday times or do you think that the products that they do have available on hand are excess items ordered previously throughout the year that has just sat in holding inventory? How might Walmart be able to access ordering trends and be able to supply enough of the items that are in high demand?

 

http://finance.yahoo.com/blogs/the-exchange/black-friday-sales-gear-leaks-trickle-210533372.html

There’s a new Santa Claus

Posted on by f1224grodriguez

http://news.yahoo.com/blogs/upshot/kentucky-man-buys-kmart-inventory-gives-away-220043176.html

 

 

 

 

In early May of this year, a Kentucky man bought every last inventory item that a Kmart store had in Kentucky. Due to the store closing in only a couple of days,  Rankin Paynter decided it would be best to buy everything the store had left and give it away to charity. He donated all items, from office supplies to clothing to Clark County Community Services. He was an unprivileged boy when he was younger only owning a pair of summer slippers as shoes. Now that he makes enough money to buy $200,000 worth of Kmart inventory, he is giving back to those in need.

 

With Kmart store not selling enough to make up for their cost of goods, they are being forced to close down several stores across the country. Their inventory is just sitting in the warehouse or backroom or even their front of the store without selling. Because Kmart still has debt to pay, they are forced to liquidate everything they have, starting with inventory, to pay off their heavy loans. The cost of holding inventory is higher than having just in time inventory like DELL is known to have started.

 

Even though there are several factors feeding into their decreasing sales, Kmart’s lack of efficient inventory management is costing them a lot more than just sales.

Hurricane Sandy Causing Problems for Small Businesses

Posted on by f1224mtorelli

When compared to major corporations, small businesses have it rough.  They don’t have the staff, resources, or logistical capabilities of larger companies.  Imagine, then, the nightmare that so many small business owners awoke to after Hurricane Sandy devastated the East Coast.  It’s for this reason that I’ve decided to discuss small businesses and the logistical difficulties they are facing after Hurricane Sandy – especially in regard to their supply chains.  The following New York Times article is one of the few I found that exposed the grim reality so many small businesses will face in the coming months.  Below is a synopsis.

______________________________________________________________________

A small business owner stands amongst the devastation caused by Hurricane Sandy.  Click the image to be taken to the article.

The article begins with a story that perfectly illustrates the dire circumstances so many business owners found themselves in after Hurricane Sandy passed through the East Coast.  Kristy Hadeka and Sean Tice – co-owners of Brooklyn Slate Company, a company that produces slate cheese boards – had been preparing for the holiday season when Sandy hit.  As a small business, the company depends on the revenue generated during this time of the year.  According to the article, holiday sales typically make up 75% of the company’s annual revenue.  Instead, they found themselves dealing with a litany of other issues – a depleted staff, damaged inventory, halted UPS shipments, and even customer emails requesting arrival times for orders.  Kristy and Sean even had to locate missing merchandise that was being transported to a Whole Foods store in Massachusetts.

Another small business, Linda the Bra Lady, had a similar experience. While the company did not experience any physical damage, co-founder Carl Manni explained that they did suffer financially as a result of the storm.  Manni explained that due to damage sustained to several of his vendors’ warehouses, he was unable to procure the inventory he needed to fill online orders.  He consequently had to back out of the orders – a decision that will cost him approximately $50,000 for this week alone.

Outside of lost inventory and stifled supply chains, the looming issue is that many of these business owners did not have insurance that covered a disaster of this nature.  Consequently, many small businesses will have to file for bankruptcy if they do not receive disaster relief funds from the government.

Ultimately, I feel that small businesses have a much harder time dealing with catastrophes of this nature.  Whereas large retailers can reroute their supply chain or reorganize resources to soften the punch Sandy packed, small businesses do not have the necessary resources to reroute orders or replace inventory – especially given the current state of the economy.

* The information provided in this post was drawn from the following New York Times article:

http://www.nytimes.com/2012/11/08/business/smallbusiness/after-the-storm-business-owners-assess-damage-and-ponder-lessons.html?smid=pl-share

Questions to Consider

  1. How do the logistical challenges faced by small businesses differ from those faced by major corporations?
  2. In the aftermath of Sandy, who has the rougher road – large corporations or small businesses?
  3. Put yourself in the shoes of a small business owner, how would you have reacted to a disaster of this nature?
  4. Should the government help small businesses recover from this disaster?

Black Friday vs. Black Thursday !!!

Posted on by f1234fshamoun

 

 

It’s that time of the year again Black Friday deals. I never understand why so many people sleep outside all night to get something that is limited to very low number like five or ten pieces and the person there whose number eleven just got nothing but waited all night in cold weather. Last year I decided to try and shop at midnight I went to Macy’s waited in line for about two hours and when we finally got into the store I honestly didn’t find any good deals so I think it was not worth it for me to wait in cold weather for noting. I just wanted to experience it and I did but I don’t think I would repeat it again. Well I found this interesting article that talks about opening as early as 8:00pm on Thursday this year that means Thanksgiving will be cut short for a lot of people. Wal-Mart was the first one to announce that they will be opening as early as 8:00pm this year. And this is when competitors come in to place Sears also announced they will open at 8:00pm. Now Wal-Mart has to worry about their competitors and what they are offering to beat their prices.

Wal-Mart also announced that they will have enough inventory from 10:00-11:00pm for customers to get the same deal as they would get in store online. Now inventory managing will be a big part of this they will have to make sure that inventory will remain available and the numbers of inventory are accurate so that no problems will occur with consumers. Wal-Mart has to make sure that their entire inventory will come on time with correct amount to avoid any problems. The best way to make sure inventory is accurate is to forecast their inventory and make sure the demand numbers are correct. Some customers are already unhappy because they will have to cut their Thanksgiving with family and friends early to go shopping so that’s why inventory has to be done correctly so that customers will be satisfied. But what happens to those poor employees who want to spend some quality time with their family and friends on Thanksgiving Day? Now they have to come to work early but will the quality of employees towards customers be the same? Of course not employees will be unhappy and quality will go down. This is where Wal-Mart and Sears need to work on quality management system so that they will make sure their employees are happy so that customers will be satisfied and happy also. So maybe paying them double on that day will make their employees happier. So opening early is good but Wal-Mart and Sears need to make sure that quality, and inventory is in good shape for customers to be happy and for them to make good profit.

Do you think opening early this year is a good idea? And will quality and inventory be in good shape or will there be a problem?

la-fi-walmart-black-friday-20121108,0,376002.story

la-fi-thanksgiving-shopping-protest-20121110,0,4704988.story

 

Preventing Supply Chain Disruption Like Hurricane Sandy

Posted on by f1234swatch

Hurricane Sandy in the East Coast resulted in roads to be closed and shortages of gasoline and groceries in some areas of New York and New Jersey. The damages cost approximately $50 billion. Moreover, the storm also impacted the supply chain of products, which can determine success or failure of retailers during the upcoming holiday shopping season.

A high transparency of supply chain management system from procurement to warehouse to transportation is very important, for the reason that it allows businesses to quickly respond to the unexpected or disaster. According to The New York Times, before the Hurricane Sandy, economists expected 1-2 percent growth of the fourth quarter. After Sandy, they expect that the growth will be reduced by half a percentage point, and this may cause “ripples throughout the holiday season” (Knotts).

However, the storm is no longer an outlier of the supply chain disruption it caused based on a study by the Business Continuity Institute. This is because 85 percent of respondents worldwide experienced at least one disruption mainly associated with weather. The disruption becomes worse and worse “with the increase in megastroms worldwide and the growing complexity of international supply chains and E-procurement” (Knotts).

It is interesting that one third of the respondents do not know where disruptions occur due to the fact that the full supply chain is not being analyzed. A half of respondents said productivity is decreased due to the disruption, and a third said that they lost revenue. Fortunately, automating command and controlling of supply chains can mitigate losses.

The following lists are what companies need to take into account to create an effective supply chain management.

  • Inventory: Businesses need to focus on stock quantity, location, shelf life and expiration, which will help businesses avoid costly mistakes.
  • Asset: Businesses can use software to “accurately account for all assets across each facility from procurement to retirement with real time data available anywhere you have access to a browser or mobile device” (Knotts).
  • Transportation: Transportation process should be automated including route planning and status notifications.
  • Work orders: Businesses can use software to track all details of goods and services. Good work orders help businesses enforce accountability, timely response and work quality.
  • Warehouse management: It should be automated for full transparency. By using software, it helps businesses “map the warehouse for maximum storage effectiveness and schedule enough workers to receive shipments, among many other capabilities” (Knotts).

This article relates to supply chain management topic from our class lecture. As we know, supply chain management is very important in today’s competitive market place since competition is among supply chains not companies.  Therefore, it is crucial that companies have a good understanding and manage their supply chains effectively to avoid risks and costly mistakes that may happen.

Question:

What other factors other than those listed above do you think that companies should consider when it comes to effective supply chain management?

Source:

view?url=http%3A%2F%2Fblog.apptricity.com%2Fbid%2F241154%2FSupply-Chain-Disruptions-Like-Hurricane-Sandy-Are-No-Longer-Outliers

 

Will iPhone lose its top spot?

Posted on by f1234msztuk

The iPhone may have some actual competiton now. According to BusinessWeek, in the third quarter of this year, Samsung Galaxy III has outsold the iPhone by 1.8 million during this 3-month period when comparing shipment orders to sales of the iPhone. Samsung has been the only smartphone even close to competing with Apple since the iPhone’s inception. We have recently been talking about supply chain management and this could be why Samsung has such an edge up compared to other smartphone manufactures. As we learned in class, companies are not competing against each other, rather by their supply chain. Samsung is able to produce its own chip, flash memory for internal storage and Super Amoled handset displays. They are the only smartphone manufactures who do this, while Apple designs their chips and then hands it off to someone else to manufacturer them. They also outsource their production of the actual phone to factories in China. Apple’s supply chain process has been working will for them which are why they are ahead of their competition besides all of the features of the phone. Samsung is closely following Apple’s supply chain model by controlling what they can as much as possible. Samsung has also recently been sued by Apple for imitation of their phone. Do you think they will eventually be able to have a leg up on Apple do to their supply chain model? Or are they a top competitor because their phone is so closely imitated to the iPhone?

 

 

Source: http://www.businessweek.com/articles/2012-11-09/why-only-samsung-builds-phones-that-outsell-iphones#r=nav-fst