Sweet Mandy B’s Sweet Success

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Most students at DePaul University have encountered the delicacy of Sweet Mandy B’s at some point during their college education, whether directly or indirectly. There are the die hards (as often as they can get there, they do), the excuse makers (I don’t want to write this paper anyways, so lets go get cupcakes), the “I earned it” girls (who can justify the indulgence since they worked out), the special occasions (birthdays, weddings, the works), and the rest have either simply tried Mandy B’s or heard other students discuss it.

The number of students that Sweet Mandy B’s draws in on a daily basis is astounding; and students are only a portion of their customer base. There are people all over Chicago who are willing to make the trip to Lincoln Park in order to get Mandy B’s. In food and confection related industries, the quality is top priority since that is what consumers are truly after when they go in for a treat. In order to sustain such high quality management and fresh cupcakes, cookies, and specialty foods, just in time inventory is a must. Nobody wants to walk all the way there to spend money on a cookie that is stale or doesn’t satisfy that sweet tooth. Managing the way that baked goods are created, decorated, and stored in order for maximum freshness for the maximum amount of time appears to be something that Sweet Mandy B’s management has mastered, from my experience at least.

Another aspect of operations that is essential to consider in this industry is capacity. When people place orders for cakes, it is typically for a special occasion, in which case they need the cake at a specific time on a specific day. Cake orders and order patterns must be closely analyzed in order to increase staff during busy ordering times such as holidays or time of large events like graduation. Space and oven scheduling is another consideration, for only so many cakes can be baked as there are ovens. Sweet Mandy B’s seems to have this under control as well, for the entire second half of their store is available should they need to utilize that space, yet the don’t waste money keeping it lit or stocked when they are able to limit baking to the main kitchen.

Location strategy is interesting in this case, for Sweet Mandy B’s does not follow the typical “Location is everything” mantra. Rather it makes a product that is too good to resist, and people have no problem travelling from all over the city to pick up their pre-ordered cakes or stop by for a snack. However, their location is, in fact, intelligently placed because many college students do not drive, and the proximity to campus is a major plus. Its convenience also encourages students to stop by when they probably would not have made the trip if they had to actually plan for it and catch a train. With its thriving success, is there anything that could drastically hurt Sweet Mandy B’s sales?

 

HTC First to HTC Last

 

Facebook-hoaxImagine if you were Mark Zuckerberg, the CEO of Facebook, and your product attracted 175 million people on a daily basis.  I don’t know about you, but I would be thinking of other ways to capitalize on this already loyal fan base and try to introduce more products targeted toward their needs without stemming off the confines of what has made Facebook successful.  Hey, what about a cell phone?!

This idea has apparently caught AT&T’s eye when they decided to allow the new Facebook Home software to be integrated in the HTC First cell phone.

Facebook Home is software for your phone that allows Facebook to essentially take over your phone.  This allows users to take advantage of their already established social base on Facebook and communicate with these friends on their cell phone “more conveniently”.  It consists of features such as the cover feed that allows you to glance at your phone for photos and posts, chat heads that allows you to send and receive texts and Facebook messages in one place, allows notifications to be accented on your home screen and an app launcher.

To me, the advantages this product are allowing cell phone users to no longer have to pay a texting fee due to the chat heads feature and from a company point of view it allows Facebook to mass distribute its product without consumers having to buy a cell phone.   However, from a product design standpoint, I don’t think Facebook Home targets the cell phone market very well.  It tries to reinvent the cell phone world too much by focusing the cell phone software design around people instead of apps.  As a consumer would you enjoy having your cell phone constantly flowing with your friend’s pictures and status?htc-first-slide-01

Apparently the majority of Facebook Home users did not enjoy having their phone being constantly engulfed with their friend’s updates when the first month sales reports came back.  “BGR.com says that sources at AT&T indicate that fewer than 15,000 of the phones had been sold by the end of its first month.  By comparison, in the three months of the year AT&T sold 6M smart phones, of which about 1 M were android phones- an average of more than 300,000 per month. “AT&T then cut the original $100 price to $99 cents on-contract. The mistake HTC First made to integrate their product with Facebook home has seemed to have left them with an essentially useless product with a lot of inventory.  Now it is rumored that the HTC First will soon be discontinued and unsold inventory will be returned to HTC.

I would question management’s decisions during the product development stages when designing the product, how they reviewed Facebook Homes design, and most importantly how they tested the market.  If these stages were done efficiently I feel that AT&T could have better understood the consumer demand for the HTC First Facebook phone and could have been more aware of this disaster before it occurred.

As a consumer would the HTC First Facebook phone satisfy you?  How do you feel management could have avoided this disaster?

 

 

 

 

 

http://www.foxnews.com/tech/2013/05/13/no-home-for-facebook-at-att-htc-first-to-be-discontinued/
http://www.techhive.com/article/2039633/facebook-slams-brakes-on-htc-firsts-international-plans-following-poor-home-reception.html
http://www.facebook.com/help/558055177560569
http://www.guardian.co.uk/technology/2013/may/14/facebook-home-app-htc-problems
http://news.cnet.com/8301-1035_3-57329634-94/facebook-phone-who-would-buy-this-thing/
http://www.theatlanticwire.com/technology/2013/05/htc-one-isnt-saving-htc-facebook-phone/65486/
http://news.softpedia.com/news/175-Million-People-Use-Facebook-Every-Day-133744.shtml

Quality vs. Price

hAs a customer how do you measure quality? Would you settle for lower quality due to lower price? Does the economy hurt the companies that don’t lower price because people cannot afford the same quality with the reduced income? These questions are raised in the article “High Quality Products Is Key for Chicagoland’s DK Organics” on constructionequipmentguide.com. DK Organics emphasizes product quality over any other key factors such as price. Many businesses compete by lowering price for a product and then eventually which leads to lower quality. Many well established companies choose to not compete with lowering price or lowering quality but rather with adding features to their product to attract customers rather than losing their reputation. After all, a reputation lost takes a lot of time to gain back which some companies are smart not to lose.

However, it is independently determined if a company is willing to be known as a low price company that attracts most of the lower and middle class therefore does generate high profit. On the other side a company like DK Organics can still be stable in a bad economy with not changing their price but maintaining quality and continuing to stabilize their reputation as well. Measuring quality is different for each firm as discussed in class. Companies have to choose between value based quality to compete.

ISO 9000, quality system, requires the companies to focus on customer’s requirements, needs and expectations. ISO 9000 exists to guarantee equity in the marketplace. Reputation for companies are built through customer review and what type of customer’s shop at the stores builds the reputation for the companies. on DK Organics website it is stated on the home page that “Our material yard carries top quality mulches, composts, soils, stone and sand. “(dkorganics.com) Material yard is bold to emphasize quality regardless of the price. “high value experience every time!” (dkorganics.com) again refers to quality that the individuals will get out of the product which can be measured by customer’s satisfaction and the rich lasting result of the soil. DK Organics product can be purchased by individuals but it is usually provided through a contractor “a service” in order to receive the product, which could cost extra money but quality is still measured high.

When a product cannot be purchased by a customer by itself easily and needs a service provider to obtain the product also increases the value and quality of the product. This could be also considered a great marketing strategy to generate more revenue by adding a service to the product. DK Organics can be considered a great business because landscaping is very important and public places will always hire someone to do the job for them instead of doing it on their own, thus generating revenue for the company.

 

Sources: http://bit.ly/112Ni1p

KFC China: Straying too Far from Kentucky?

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Bloomberg Business Week featured KFC, a Yum brand restaurant, in two recent articles focusing on the brands Chinese storefronts. KFC, a household name in US fast food chains, has been suffering in several different aspects. Originally tied with the name “Kentucky Fried Chicken”, KFC has evoked feelings of unhealthiness with US consumers for years, and has suffered sluggish sales. However, the chains crowning glory has been KFC China which has been a start for Yum brands and been increasingly profitable.

Recently, however, KFC China has suffered from image issues and quality problems, and therefore there sales in China have been dipping. For KFC in the past, unhealthiness was not as much of an issue for its Chinese counterpart, because it brought a unique competitive advantage: its traditional American menu. KFC China took a different approach that may have ruined that competitive advantage, by trying to adapt the menu to the Chinese audience and adding traditional Chinese fare. So far it appears that this was not a wise choice, and consumers are left wondering what happened to their beloved American food. KFC needs to reassess their product design to match the wants of the Chinese customer base.

On top of this reconstructed image issue for KFC China, what may have been even more damaging was quality control issues. A history of poor quality issues can be severely damaging to a brand, especially one associated with the food industry. Consumers take extra precautions with what they are putting into their bodies, so when news of KFC chicken containing “unacceptably high levels of antibiotics” the chain suffered. This on top of already high concerns dealing with avian flu, made Chinese consumers even more skeptical about consuming this product. This illustrates, how damaging a quality issue can be for a brand, as discussed in Chapter six.

KFC China had been so successful in the past, that Yum has considered completely selling the United States stores in order to focus on those abroad that were growing at a much faster rate. However, if they continue to have these image and quality issues in China, getting rid of US stores may be a poor choice.  If KFC abandons its US stores, does that destroy its image of being a classic American restaurant even further? Only time will tell what happens to this brand, but it is crucial that Yum and KFC managers assess this project.

What are your thoughts on KFC and KFC China?

Questions for discussion:

1. Should KFC focus on one brand or the other? Or continue with both?

2. How should a major fast food brand adapt to international markets? Maintain their original image, or add traditional food, specific to the location?

3. Where to you see Yum and KFC moving in the future?

Article Links:

http://www.businessweek.com/articles/2013-05-16/kfc-loses-its-touch-in-china-its-biggest-overseas-market

http://www.businessweek.com/articles/2013-05-14/should-kfc-rethink-its-china-strategy

 

Elimination of Enrollment Bottleneck: Graduates Who Don’t Do Science.

Bottleneck
Source: xda-developers.com

In class, we learned that a bottleneck is the longest activity that is the limiting factor in operations management. Managers want to match capacity and design while still maintaining the greatest efficiency possible.

Education is no different as it follows basic business rules. Schools increasingly want students to graduate, get jobs, and eventually donate back as alumni. Universities across the country have a problem with so called “bottleneck courses,” which prevent students from graduating. California State University (CSU) reports about 30 such courses that have a high rate of failure, including math, science, and history. Those courses distract students from their major studies and often cause failing or withdrawing, if not dropping out of college altogether.

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Source: brightlandcollege.in/

CSU wants to address the bottleneck courses by providing science labs online and moving away from traditional in-person classes, especially for students who do not major in science. CSU does not have sufficient capacity to match demand for bottleneck classes due to limited lab space. Virtual labs are a way of offering more lab sections and thus increasing enrollment and moving more students through the system (increasing the rate of graduation).

Low cost of such classes coupled with high demand means more money the school will earn and able to re-invest. However, CSU’s solution to bottleneck science courses raises concerns over the quality of education given. In-person classes are especially important for science labs; a biology department chair at CSU, Jeffrey Bell, says, “my biggest concern, especially with freshman classes is you don’t want students seeing reality as a video game—a key thing in science is we investigate reality.”

Before we can argue about the quality of such courses, let’s ask ourselves: “what is the real value of education?” The content that is learned in science classes is available online. Therefore, the content is not the sole value of education, but rather a college experience: the ability to interact with the professor and peers on one-to-one basis. But just how important is the experience for non-science majors who just want to pass the class to graduate?

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Source: biofluff.files.wordpress.com

CSU’s demand far exceeds school’s effective capacity, mainly due to struggling students repeating the class. School’s solution to increase the capacity through online sections to match enrollment demand is one way of managing the problem. School could also manage demand by increasing capacity—building new science labs and hiring more professors. This long-term solution would ensure that struggling students are offered adequate in-person help, rather than let them pass without a sufficient knowledge of science.

CSU’s tactic for managing bottleneck science lab courses is rather new, thus raises concerns about its quality, especially in the time when U.S. students lag behind in science and math compared to other countries. Is removing this bottleneck sacrificing or improving the quality of science lab courses? Will this decision eventually lead to graduates who do not have sufficient knowledge of science or scientific thinking? Can you think of other solution to tackle the bottleneck course problem?

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Source: www.scpr.org
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Are Corporations Our Personal Shoppers?

The thought of ordering an item online and receiving it the same day, just a few hours later seems unrealistic. With technology becoming more integrated in our world and the demand for instant gratification, this unrealistic idea is now a reality. Major corporations like Wal-Mart, Amazon, and EBay have adopted this new service of same-day delivery. It is really testing the limits of supply chain management, and now a whole new look on logistics is being placed in the hands of these corporations.

walamrt  Wal-Mart , is sitting at an advantage because of its massive fleet of stores across the country. They use their 4,005 locations as inventory holders and distribution centers, so now when you order something before noon you can receive it by that evening. Workers will literally go down the aisle and collect the item you want, which is later delivered to your door. Even though this service is only in the test phase in five major cities, Denver, Philadelphia, Minneapolis, northern Virginia and San Francisco/San Jose, it has proven to be a huge success thus far.

Amazon has a new technology that now sends your order to the closest of its 40 massive and highly efficient distribution centers that has same day service available. From here a robot find your item and places it in a place where a human can package it and ship it to you just in time before the day is over. This is pretty crazy, right? Wait till read this next corporation’s new strategy!

debay   EBay, a dominant online seller has a brand-new beta service that brings same day delivery to an even new level. It currently operates in beta form in New York, San Francisco, and San Jose. This service involves personal shoppers, or “valets, that EBay will send to pick up a good you have just ordered. They will literally drive to the outlet from which you ordered it from through EBay, and deliver it to your doorstep that same day, sometimes even within only few hours! If this doesn’t impress you then this will. EBay now even offers an iOS app that you can use to buy, and track your item for same day delivery. This app tracks your “valets” progress in real time so you know exactly where he/she is, what step of the delivery they are on, and how far away they are from your home. This tracking app will even give you a picture of what the “valet” looks like so you can recognize them when they arrive. Once they have arrived, all you have to do is simply swipe your credit card, or pay with PayPal. The best part about this service is that it costs only $5, yes that’s it!

With this extremely gratifying service from these corporations how do you think it tests the limits of supply chain management and inventory management? Could this be the future for online shopping or delivery? Do you think implementing the service that EBay has in many other corporations could add a lot of jobs to the economy?

 

Sources:

http://www.wired.com/insights/2013/05/once-refined-same-day-delivery-will-be-commonplace/

 

http://blog.apptricity.com/bid/283436/How-Walmart-and-Others-Are-Achieving-Same-Day-Delivery

 

Beef Prices at an All-Time High a Good Thing?

In the recent months, commodity prices have soared to record highs, with the sharpest increase being in the price of beef. The reason for this increase is partially due to last summer’s drought, but it is much higher than most analysts predicted. This has begun to affect the profits of large restaurant chains such as Burger King, Wendys, and most importantly McDonalds.

1C7301038-130509_angus_hmed_1213p.blocks_desktop_smallIn early May, McDonalds announces that it would remove its Angus Third Pounders from their menu. The company said the removal of this burger was done to make room for other food options, but most experts agree that the profit margins are too low for beef items like these to remain profitable.

This has resulted in McDonalds and other restaurant chains to begin to retool their supply chain to put a heavier emphasis on chicken products, which is more profitable than beef. McDonalds has already begun to roll out new items such as the premium chicken wraps. This will definitely be more costly in the short run, but with rising prices, and more health-conscious consumers, it is a good long-term strategy.

With obesity at all time highs, and consumers becoming more health-conscious, this rise in beef prices could not come at a better time. Chicken is much healthier that beef, having significantly less calories and fat. With chicken prices being low, this could benefit both the restaurants and the consumer.

This situation can be compared to gas prices hitting an all time high in 2008.  Once prices hit the high, there was a sudden demand for more fuel-efficient vehicles, planes, trains, etc. They use less fuel, are much more efficient, and produce significantly less emissions that harm our environment. Similar to beef prices, consumers had no reason to switch to the better option until it became cost-effective.

In any industries of this size, change has to be gradual. Switching from beef to chicken is easy for consumers. On the contrary, in order to fulfill demand, restaurants like McDonalds have to completely re-tool their supply-chain. Farms need to change their facilities to accommodate more chickens, processing plants need to change all their machinery, and restaurants need to change how they cook and prepare the final product.

I personally believe that this will benefit both the profit-minded producer, along with the health-conscious consumer. The fast food world is changing, and these companies know that innovation is essential to adapt to the changing taste buds of consumers.

What is your eating preference at these fast food chains? Do you think this rise in commodity prices is a good thing? Have you become more health-conscious?

http://www.nbcnews.com/business/wheres-beef-mcdonalds-dropping-angus-burgers-us-menu-1C9864163

Abercrombie & its Hitch.

Abercrombie & Fitch has been affected by a dramatic decrease in sales in the US. ANF’s stock had once been gaining 20%, when the stock market barely moved. However, everything came to an end on May 24, 2013, when ANF reported its earnings. ANF’s store sales declined 17%. Their shares then went down 8%. Even though they reduced their loss to $7.2 million from $21.3 million, it completely blew Wall Street’s prediction of $0.05 loss per share.

What could be the cause of these huge losses that Abercrombie is facing? Is it the result of CEO Mike Jeffries’ comments that resurfaced recently from a 2006 interview, on how the Abercrombie and Fitch brand don’t carry plus sizes for teens, because the brand exclusively only goes after the cool, good-looking kids? Or could there be something more?

Well, it turns out that Abercrombie started declining before the CEO’s comments reemerged this year. Even though there has been a lot of consumer out lash at the company, the CEO insists that the main problem facing Abercrombie is inventory shortage issues. Abercrombie hasn’t been able to bring in their spring merchandise quickly into the stores, compared to most of their competitors like H&M, who believe in fast-fashion. To gain a competitive advantage and to get back on their sales track, Abercrombie is changing the way they order their inventory, for a quicker turnaround. The CEO stated that most of their inventory issues have been resolved now, however, their sales profits forecasts has been lowered for the rest of the year, compared to previous years. With the company operating 1,053 stores currently, they also predicted to close 40 to 50 stores in the United States. Abercrombie has been acting really quickly on addressing key issues throughout their company to get their profits back up.

In class, we learned about the ten critical decisions which includes inventory management, then we learned about ethics and social responsibility and finally forecasting. Abercrombie’s situation ties in all of these things we’ve learned and teaches us how important these factors are in a business.

The company is now dealing with their losses and their shares plunging, just because of the inventory issue. Another issue, I think they’re facing is the social media. As a reputable company, they have a social responsibility to respect all of their customers. Ever since the CEO’s comments appeared in the media, many people have been fighting against Abercrombie (Examples: A man donating Abercrombie clothes to homeless, a plus size blogger posing in similar Abercrombie ads, a teen activist who petitioned for an apology from the CEO with 68,000 signatures). Do you think that Abercrombie is dealing with these losses solely because of their inventory management or because of the recent outlash at the company? Also, will Abercrombie  remain confident in their solid brand equity, when its competitors like H&M, American Eagle, and Aeropostale are attracting teens with their prices and fast fashion layout, bringing in new merchandise to the stores more often?

Source:

http://www.latimes.com/business/la-fi-abercrombie-earnings-20130525,0,6735405.story

http://www.chicagotribune.com/business/breaking/chi-abercrombie-earnings-20130524,0,3689716.story

Plus size blogger: http://abclocal.go.com/kgo/story?section=news/business&id=9113106

Video:

Man giving homeless people, Abercrombie & Fitch clothes: http://www.youtube.com/watch?v=TPmqZAhLVuI

No South For You! CTA approves plan to close South Side Red Line Branch for Reconstruction

imagesOn September 28, 1969, the southern part of the Red Line was completed for the first time. This section has been worn down over the years and 44 years later, they are in dire need of repair.  Yet, where does one start?  This is a tough decision to make.  In the eyes of an operations manager, the entire section of track is completely in shambles, and there are sections that need repairing.  Yet, even if that track is repaired, how much is it going to cost?   That is the question that the Chicago Transit Authority (CTA) had to ask.

There was a lot of work that needed to be done.  The tracks haven’t been fixed in 44 years and “the limestone ballast is worn [as well], failing to properly drain water from the rail bed or keep the tracks securely in place” (Chicago Tribune).  So, that has to be fixed as well because it wouldn’t make sense to fix the tracks if the supports wouldn’t hold them.  Working with Kiewit Infrastructure Corporation, the CTA approved a plan in April to completely redo the entire track section between Cermak-Chinatown to 95th/Dan Ryan.  This company will completely disassemble the entire supports of the old track system and put in new tracks as well as a new drainage system under the tracks.  The total cost of this will be $425 million dollars.

This project is expensive, but it will give jobs to 1,200 workers that will work in two 10-hour shifts for 6 days for a total of 5 months.   imagesCAVNHMYQ Once this project gets finished, the benefits will show.  With the new track system, the South Side Red Line Branch will be able to increase speeds from 15 mph to 55 mph, make a downtown commute to 95th/Dan Ryan 20 minutes shorter, and make the Red Line in general have a much smoother commute as well.   This process can clearly create efficiency for the Red Line as well as the other CTA trains.

Yet, devil’s advocate is that a good section of the Red Line is being worked on and the people who live down there have to take longer to get to where they need to go.  There would be also traffic tie-ups as well.  Behold option #2. With this first option in mind, there happens to be alternative plan as well.  It would have all the necessary adjustments done on the weekends, and would keep the train running during the week.  The bad news?  $75 million more and four years extra to finish.  In my opinion, the first option is the better offer, and in the end, it will help out everyone and it also appears to be the most efficient, which is what the CTA believed to when they made this agreement.  It will also save money and time in the future even though it would cause headaches and tie-ups now.

Do you believe that CTA  was correct to go with their first option or should they have tried the second option?

Sources:

Hilkevitch, Jon. “Red Line Going Offline during Reconstruction.” Chicago Tribune. Chicago Tribune, 10 May 2013. Web. 23 May 2013. <http://articles.chicagotribune.com/2013-05-10/news/ct-met-cta-red-line-south-rebuild-20130510_1_red-line-95th-street-stations-green-line>.

 

Reebok: Using CrossFit to Fire Up the Intensity

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Many of us have heard of the fairly new workout brand CrossFit that has been sweeping the world for the past decade or so (2000). Some of you may even participate in the ultra intensified fitness regiments at your local CrossFit gym, or “boxes” as the growing cult has come to call them.  For those of you who are unfamiliar with CrossFit, it is an exercise program that advocates a mix of aerobic exercise, body weight exercise, gymnastics, and Olympic weight lifting that requires an individual to “to keep up the intensity, each and every time.” What does CrossFit have to do with total quality management within a corporate conglomerate you ask?

Well it just so happens that Adidas recently purchased Reebok back in 2006 and the company has been struggling mightily ever since the latter lost its decade long contract to outfit the National Football League last April to its biggest rival, Nike. This loss will reportedly cost Adidas an estimate of upwards to $250 million in lost revenue annually, a crushing blow to a company that was already being scrutinized for its purchasing of the floundering organization that had become Reebok. Reebok has also suffered heavy losses from lawsuits regarding their falsified health claims of their new “toning” shoes that deceived consumers. These allegations were brought forth by the Federal Trade Commission and required Reebok to pay nearly $25 million in total refunds. To top it all off, there has been turmoil within the infrastructure of the organization as an investigation has been prompted relating to alleged fraud by two former executives. However, there may be a silver lining yet for this once promising business transaction as Adidas hopes that sponsoring CrossFit using their newly affiliated business partner Reebok as its representative will not only reverse the current trend of posting a decline in sales the last three of five years, but also restore the brands image as a major powerhouse in the industry that is a force to be reckoned with.

adidas

Adidas continues to stand by there decision to purchase Reebok and hopes that their new two year deal with CrossFit will help them accomplish their goals that they set for themselves prior to their recent setbacks. In hopes of reaching the $3 billion objective for 2015, Adidas believes that their sponsorship of CrossFit will help speed up the process and provide them with some insurance they desperately need. The rapid growth of the CrossFit health craze is most certainly a positive sign for pulling Reebok out of the gutter as more than 3,000 gyms have popped up worldwide. The cult-like fitness routine seems it will continue to grow in popularity in the future as people gravitate towards the infectious atmosphere of the contagious motivation/energy and the promise of a complete workout in under 20 minutes. Will Adidas end up regretting their decision to purchase Reebok in the future? Or will the new addition of Reebok and the sponsorship of CrossFit pay off in the long run?

 

Source: http://www.businessweek.com/articles/2012-06-21/how-adidas-is-whipping-reebok-into-shape