Grubhub Grabs Profit by the Seams

GrubHub and Seamless have now merged into one company. Last year alone they collectively earned over $870 Million dollars in profit. GrubHub has Chicago origins while Seamless started in New York.  Mike Evans the co-founder of GrubHub and the newly combined companies COO said, “I’m excited about the expanded restaurant network that our diners will be able to use.”

The merge initially has many benefits, but over time there are very important executive decisions to make in order to optimize all dimensions of a quality service. One benefit is that combined they will operate in over 500 cities in the United States. They also decided to keep all 650 full-time employees. The former CEO of GrubHub Matt Maloney will remain CEO while the former CEO of Seamless Jonathan Zabusky will be president.  Both former companies have merged with much smaller organizations in the past. For example in 2011 GrubHub bought Dotmenu which gave them an extra 250,000 menu listings at different restaurants around the nation.

The company still has many decisions to make. One decision the company has yet to make is the name of the new brand. Perception is reality, and they should take very careful consideration of how to name the new brand. They have been heavy competitors in cities like Chicago for many years, and they have both built their own brands into what they are today. GrubHub did have more profit, and therefore it would be advantageous to keep that name over Seamless. Changing the name entirely is also an option. Since there whole process is derived from online use it is unlikely they will create a new name. For example if a family uses GrubHub or Seamless on a nightly basis, they will likely have the URL memorized or saved in their favorites. This means the new company needs to be very transparent and loud with their changes in order to retain the brand loyal consumers from both companies.  I have one recommendation if they decide to change the name of the company, and that is to buy a new website with the company name. Then link both former websites to the new website which on the surface seems like it would satisfice all the consumers. From there the new company needs to internally improve their servicing process.

After the merged company has chosen a conforming brand they should also merge the processes to optimize reliability. They can assume they will have a large impact in the market for online food ordering because separately they held large portions of the market share. It is likely that both former organizations had their own unique processes, but one standardized process would be most financially beneficial.

Do you think the new company should change their name? Or should they use GrubHub or Seamless as the new company name? Do you think they should standardize their processing systems? Overall do you think this merge is beneficial to the owners?

 Sources:

http://www.chicagotribune.com/business/breaking/chi-grubhub-seamless-20130520,0,4610644.story

Two minutes, does add up

This past week American Airlines learned that the more suitcases are hauled onto the cabin, the longer it takes to get people on board.  Passengers boarding with American Airlines with items small enough to store on the floor will now be allowed to board before passengers with large suitcases. This in turn will help reduce all the traffic of roller bags down the aisle of planes. This new change in process should help planes depart gates faster along with improve on-time arrival rate.

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Before implementing this new change, American Airlines more than likely came up with a type of process improvement model like Deming Cycle, PDCA. Plan, is the first step on the cycle, where the airline had to describe the process, define customer expectations, identify causes of problems, develop potential solutions, and finally select the most promising solution. In this case, customer expectations probably included on time arrivals to destinations.

 

The second step to the Deming Cycle requires a pilot study to test the potential solution. In the article, it is mentioned that American Airlines conducted a four-week test demonstrating the new boarding procedure and proved to cut off an average of two minutes of flight loading time. Two minutes may not sound like a lot, but as Daniel Bellavigna, supervisor of continuous improvement, says “it adds up”.

 

The third step of PDCA, check, means examining the results of the study and determining if the new process performance has improved. In American Airlines case, their four-week pilot study performance did improve. It reduced boarding time by two minutes.

 

Act, is the last step of Deming’s Cycle. In this phase, the best solution is implemented with a process to monitor process performance. The airline company implemented the new way for boarding, passengers with small carry ons to board before those with suitcases, this past Thursday, May 16.

 

Along with the PDCA cycle, the company probably also came up with a process flow diagram in order to understand their process better and to help simplify and redesign the process. This process mapping most likely helped to come to their conclusion.

 

A cause and effect diagram could have also helped American Airlines. The effect being, late arrival flights, and one of the causes being, too much time spent on boarding passengers onto the plane.

 

In March, about 20 percent of U.S. airline flights were delayed, and about 7 percent of these delays were due to late-arriving aircraft. With American Airlines new boarding plan, it is hoped to bring down the percent of delayed flights.

 

With their new boarding plan, American Airlines is making passengers with lots of luggage pay, but not only in money but also in the amount of time spent in line waiting to get on board. They hope with this new plan, passengers start to carry less in their carry ons and that other airlines start to adopt the same procedures. What other ideas would you recommend for airlines to improve on time arrivals.?

 

 

http://www.businessweek.com/articles/2013-05-17/american-airlines-doesnt-want-your-bags-in-the-cabin#r=nav-r-story