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What Happens When Operation Management Fails? Who Do We Blame?
Imagine you have a 10 page paper due at midnight and you’re almost finished, you are starting to feel relieved and BOOM! Your computer crashes! What do you do? Who do you blame for it? I am sure many of your first reactions after crying all night is to take it back to where you purchased it from, and ask them to diagnose the problem. You don’t actually care what the problem is and who’s at fault, you just want it fixed. But what happens when the situation is more complex and deals with a defect that cost someone their life? Do we pay attention now?
Last Monday, General Motors death toll rose to 21 people resulting from a defect in the ignition switch on older model cars. Although General Motors knew of the ignition switch defect almost a decade ago, they did not take action until recently. The ignition slips to off or accessory, cutting off power to the air bags so they will not deploy during a crash and also cutting electronic steering and braking, causing people to veer off the road. We see that when operation management fails, companies have to have recovery strategies in place. General Motors hired compensation expert Kenneth Fienberg who decide that all passengers, pedestrians, and bystanders who were injured in result to the crash could receive a settlement. In addition, General Motors CEO; Marry Barra fired 15 employees who knew of the defect. Although a great start to reprimanding those who knew of the situation, the company is still being fined $ 35 million by the U.S. Transportation Department for failing to report the need for a recall have an estimated payout of $400 million to compensate victims. Their recovery strategies could have been prevented if their operations team considered ethics.
This reminded me of our paper puppet exercise. Our assembly line created 20 puppets, where process one failed to mention defects in the original paper. As the defected paper continued through the assembly line it was cut, folded, and colored where the defect was not as noticeable anymore. Once it reached our inspection line, many of them did notice. Yes many of us laughed when we found out our assembly line continued to use them, but I don’t think we would laugh if we knew this case could possibly be the outcome.
Who do we blame for the death of these victims? I am sure many of us would say General Motors. Why did they withhold so much information from the public? Why didn’t the National Highway Safety Administration take these claims more serious and open an investigation? Operations management failed, their strategic decision steps failed, and their quality management team did not ensure safety like it should have. As average citizens in society we often accept the answer that something is fixed, but do not care for all the details. This plays into why quality control often lacks ethical standards. We too have to do better.
Who do you blame?
G.M Timeline of Problems and Who Knew
Nissan Factory Life: How Cars are Built
Ignition Switch Death Toll Rises to 21
Nike Relationship with Livestrong Charity Dies!
A relationship that generated millions and branded Nike to what it is today has finally come to an end. After a nine year relationship, Nike is closing down its support with the Livestrong Foundation that former bicyclist Lance Armstrong has created to help cancer survivors.
The footwear company is pulling the plug on all Livestrong merchandise off of store shelves. I know exactly what all of you are thinking, “Wait a Sec! That means no more yellow Livestrong wristbands?” Yes this is exactly what it means. They are discontinuing all footwear and clothing, so the shoes you just bought last week that retailed over $100 will now be worth nothing. Nike has generated over 100 million in funds to the foundation since 2004 and during the time accounted for about a quarter of Livestrong’s average yearly revenue.
The foundation said that change in its relationship will have no affect on the services it provided to cancer survivors. Nike said they would continue the support in other ways, but they weren’t able to provide specifics at the moment.
The company ended the sponsorship last October after becoming aware to the news of Lance Armstrong using performance-enhancing drugs and lied to Nike for over a decade. Mr. Armstrong is now resigned from chairman of the foundation and dissociated himself from Livestrong.
Stores like Dick’s Sporting Goods and Sport Authority are now severely hurting due to heavy inventory of Livestrong merchandise of exercise equipment and clothing that failed to sell. Consumers have already turned their back on the brand that was once so dominating and meant so much. The foundation that is based in East Austin, Texas, is looking for a new outlook and a way of rebuilding itself to what it used to be. A Spokesperson for the foundation said, “We want to steer a strong and independent course that ensures the long-term health and sustainability of the organization.”
The foundation has derived 1/3 of its budget from corporate and licensing sponsors, 1/3 from events, and 1/3 from general fundraising, according to chief executive Doug Ulman.
Livestrong still has some corporate sponsors, and still in the works for seeking more. “The foundation has taken other steps to reinvent itself, including moving its “call-to-action” day—which was celebrated on the anniversary of Mr. Armstrong’s cancer diagnosis—to May 17, the day that its yellow wristband was introduced.” The foundation has started new relay marathons all throughout Austin, while ending the sponsorship with the Austin Marathon in April after three years being the top sponsor. Nearly 500 runners associated with Livestrong have already raised $250,000 this year.
I just feel that after the foundation was basically led by an imposter is going to be really hard for the company to regain its trust in its consumers and hard to rebuild itself after an impact like this.
WILL THE FOUNDATION BE ABLE TO REBUILD THEMSELVES AFTER NIKE DROPPING THEM?
WILL THIS AFFECT THE QUALITY OF THE SERVICE THE FOUNDATION PROVIDES?
Sweet Mandy B’s Sweet Success
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?
Is that an ISOlated case of the flu?
Quality management standards seem rare to come across when you look at the health system in Iowa. Specifically their hospitals. Iowa Lutheran is the first hospital in Iowa to achieve their ISO certification.
ISO 9000 standards are well known to American manufacturers as they have used ISO for quality assurance in their products. ISO gives suppliers a peace of mind that what they are receiving, follow international standards in their quality management. That means that a company’s upper management has set up a processes for all steps of their respective system. Six procedures are required by ISO; control of documents, control of quality records, internal audit, nonconforming control, corrective action, preventive action. The organization’s mission is to set standards for goods and services, ensuring efficient processes.
When you look at healthcare and hospitals, quality care is necessary and could be the difference between life and death. Should it be troubling that this is the first hospital in Iowa that follows ISO standards? Not necessarily. Prior to seeking ISO 9000-certification hospitals were granted certification through the Joint Commission on Accreditation of Hospitals (JCAHO). The largest and oldest accrediting organization for healthcare, they set standards for the quality and safety of health care provided to patients.
What could be the implications of switching from a healthcare specific accreditation organization to an international standard organization? Is ISO 9000 a better quality tool overall for healthcare?
According to the article, “Iowa Lutheran has implemented a quality management system that includes review of acute medical, surgical, critical care , rehabilitative, obstetrical, emergency care, laboratory and radiology services.” It is obvious to see that the hospital is striving for excellence in healthcare and providing the patients with the best services, as any hospital should. It seems to me that any hospital would have the best possible standards set in place for all their different systems. Not only does ISO set up certain guidelines, but it also allows for collaboration between members for best practices, and this is an international group. Iowa Lutheran specifically attained 9001:2008 ISO certification. It takes a process-oriented approach. The requirement ensures ‘what’ an company must do to meet customer needs and expectations. ‘How’ this is done is left up to the company, or in this case, the hospital. Hospitals are a lucrative business in the way they charge for a doctor to visit a patient, to take and x-ray, virtually everything they do. Insurance companies, healthcare systems and providers, and pharmaceutical companies. There are so many systems, guidelines, and protocols to follow. The four sections that make up ISO 9001:2008 would really benefit a hospital and how it is run. The sections include management responsibility, resource management, product and/or service realization, and measurement, analysis and improvement.
The other metropolitan hospital in Des Moines refuses to change to ISO 9000 standards. How else can ISO 9000 benefit hospitals?
Can the Cruise Industry Stay Afloat?
It’s been a nightmare at sea for this seasons start to the 2013 Cruise Season. From passengers going overboard, crew members dying and of course the horrific Carnival cruise ship that suffered a mass power outage that left over 4200 passengers stranded in the Mexican Gulf, the industry has been hit with new challenges.
Although, Carnival Cruise line has been getting the blunt of the bad media coverage for several equipment failures, the whole industry of cruise ships still have been affected. The Cruise Industry is now facing challenges of attracting new passengers due to recent events coupled with the old challenge of increasing operational costs and competition.
With high fuel costs, expensive airfare, and a rougher economy, almost every cruise line has been forced to cut costs while still trying to attract consumers. The Carnival Cruise ships have been proof that cutting costs in procedures, maintenance and quality crew members in order to provide over the top amenities and attractive destinations at reasonable costs to passengers have major consequences.
The challenge is not just picking attractive destinations and providing better service and perks then the next cruise ship.
All cruise lines have been optimistic in light of the horrific at-sea events, through the release of big upgrades, innovations and reengineered cruise ships in attempt to save the industry and their images. Cruise lines are taking on the challenge by restructuring ships to be the destination. An editor of cruisecritic.com , Caroyln Spencer Brown believes that “When you start focusing on shiny new ships with funky, fun, new amenities and features, the market comes back.” Or at least that is their hope.
The Royal Caribbean will release more thrill seeking attractions like bumper cars and simulated skydiving, while the Disney Cruise line will be redesigning their old ship to mimic the Marvel Comic Superhero theme. Several other major attractions like water parks, state of the art dining , world class exercise classes are all features that are changing the cruise line industry; it’s no longer just about the port destinations, its the ship itself that delivers the true experience.
While other cruise lines are adding over-the-top products and services to their ships, Carnival Cruise is sticking to product improvement. They have cancelled several cruises and spent over $300 million on safety upgrades and emergency generators to enhance their dependability and prevent anymore-technical nightmares.
Although, the thrill of walking on a plank, ice bars, eccentric food from Food Network Chefs, themes and celebrity shows sound enticing…I think there is a point where safety should not be forfeited. Also, is it really right for Cruise Lines to believe the ship “experience” outshines the actual destinations?
United Airlines: Quality Taking Off or Crash Landing?
In recent years, the United Airlines Company has fallen drastically in terms of Quality. Complaint after complaint United continued to try new approaches to improve user and product based qualities. As a result of their changes, they received a ranking of dead last in AirlineQuality Ratings. United is arguing this ranking of 2012 but I would love to hear what you all have to say after reading this blog post.
As we know, United Airlines reputation had plummeted after previous unfortunate events. This has had a huge impact on their quality as a company. They have been forced into the dead last position and now they are tryingdifferent approaches to fly their way to the top. The initiatives that United is implementing include sharpening performance, enhancing passengers experience and making service more responsive. The stigma of their reputation has haunted them throughout the years, but let’s see if the initiatives are taking off, or if the Airline Quality Ratings ranking is accurate.
The judging process of this ranking system is based off four key areas including “on-time arrivals, mishandled bags, rate of passengers bumped off overbooked flights, and the number of customer complaints.” Seeing as the complaint rates have doubled in the past year, I am guessing that United is wrong in what they have claimed to be doing. It appears that the features and conformance that it takes to have high quality ratings guide the performance of their product quality. The only place that they are visibly making an effort to improve is their status is by hiring more full-time reservations agents that angry customers use to vent about their frustrations! As an occasional United flier, I can say that I have seen an improvement in numbers but not an improvement in quality.
United Airlines has taken initiative to improve company quality through thte usage of social media initiatives. Mark Krolik, the Director of Marketing and Product Development stated, “Anyone who’s tweeted at United and gotten their problem resolved is someone who isn’t standing in line at the airport service counter.” This sums up the companies value in quality. They are not succeeding transcendentally. Rather, they are taking the bare minimum initiatives and hiring individuals for venting purposes as opposed to hiring individuals to make improvements.
Although it might appear that United is only making minimal changes, two out of three of their initiatives are being fulfilled through these simple differences. Many individuals have had great experiences in finding alternatives to cancelled or delayed flights and taking advantage of social media has also helped individuals stay calm in hectic times. The key to this ease in customer frustration revolves around loyalty and quick responses. For example, an individual with a delayed flight was so frustrated that she directly tweeted at united and told them about her angers. They responded promptly to her tweet giving her options around her delay but a service representative had already helped her. United even goes above and beyond by following up on tweets even if there is no need to. They are going above the expectations of quality responsive services through social media acts such as this one.
What do you all believe? Does United Airlines deserve the “dead last” ranking that they received? Through your own experiences or simply through this text, please let me know if you think they could be doing more or if they are dong enough in this first step of regaining loyalty and reputation.
1950 vs. 1971
It’s all about reputation, speed, quality, value, and money for Dunkin Donuts and Starbucks. It’s up to customers which brand they want to choose between Dunkin Donuts and Starbucks. The low cost of Dunkin Donuts coffee is a big factor why it is the leading coffee brewery in the Country. Dunkin Donuts and Starbucks both have their own one of its kind flavors. National Coffee Drinking Trends Study of 2004 says, “More than 100 million people in the U.S. alone drink coffee everyday”. Most of the people have their own different taste to which coffee brand they like. Dunkin Donuts and Starbucks have two different coffee beans, only difference is price and style. Dunkin Donuts started with the donuts and then their coffee, After Dunkin Donuts started doing well in the business Starbucks came along in 1971. The only difference between both brands is that Dunkin Donuts coffee is 100% Arabica coffee while Starbucks has choices of different coffee from different countries.
According to Dunkin Donuts website, “Dunkin Donuts is America’s largest seller coffee by the cup, serving nearly 1.5 billon cups of brewed coffee each year. Dunkin Donuts sells more than 30 cups of freshly brewed coffee each second”. Drinks at Dunkin Donuts are least 20% less in price than at Starbucks. This helps Dunkin Donuts capture business of price sensitive customers. At Starbuck a customer would pay $1.49 for a shot of espresso while at Dunkin Donuts espresso shot is only 99 cents. Dunkin Donuts prices are low and they offer high quality products. So customers can afford the price and have a good quality of coffee. Starbucks has recently launched a new line of flavored drinks. The new flavored drinks that Starbucks came out with are Blueberry, Coconut, Raspberry, Marshmallow, Caramel, Toasted, Almond and Cinnamon. These flavors can be added with different items of coffee you are getting. The most popular and top selling flavors for both Dunkin Donuts and Starbucks are Original Blend, Hazelnut, French Vanilla, and Decaf. Dunkin Donuts operates approximately 12000 units worldwide, while about 7600 of those are in United States alone. Starbucks operates about 8500 shops in more than 30 countries while most of their shops are in United States.
According to my research Dunkin Donuts is more popular then Starbucks. However, I personally choose Starbucks as my personal choice of coffee, because in my opinion Starbucks products cost more but, have better quality. What coffee shops would you pick between Starbuck and Dunkin Donuts and why?
Starbucks: Getting Big but Staying Small
“How do you get big but stay small?” Starbucks CEO, Howard Schultz, recently discussed the keys to the immense success and growth of the company. Focusing on operating with the goals of the small, 100 employee company that Starbucks began as is essential, no matter how large the scope of the company gets. Sometimes success can come from the simplest of goals; Schultz discloses that the secret to “getting big while staying small” is focusing on customers as individuals, one cup of coffee at a time.
When it comes to strategy and operations decisions, Starbucks is obviously not competing for cost leadership. Every time I grab a latte and see that my total is $5.14, I flinch a little at the cost. Then when my coffee is handed to me, I breathe it in, take a sip, and say, “Oh, but it’s so worth it.” Hence, their success, for the quality and product differentiation of a Starbucks cup of coffee is what keeps loyal customers coming back day after day. With suppliers of the highest grade coffee from 30 different countries, Schultz provides that Starbucks’ greatest goal is “to stay committed to our coffee core.” Not only do they maintain the best quality coffee by doing this, but they also ensure that their each and every action is sensitive to the needs of both the environment and the farmers. Treating the farmers as partners supports one of Starbucks’ most fundamental missions, to maintain the importance of every employee as an asset to the company. Further considering the environment, the recycling efforts and introduction of reusable cups are constantly improving.
With companies that have such continued success as Starbucks, I often assume that they got big and then just stayed that way. But, in reality, a commitment to innovation as well as social perception is essential to truly growing as a company. Starbucks has no shortage of either; with more product lines, global expansion, and ethical efforts than virtually any other coffee supplier, the company ensures that they provide they next best thing before anyone else. From K-cups to the newly released Vismo system, VIA ready brew coffee to the new Veranda blend, customers always have a fresh taste to try. In addition to trying these coffees, thousands of customers also tried a new way to purchase it. The Starbucks mobile app allows for purchases and account management.
Whether the motivation is impeccable quality or the convenience of a store being located on every corner, the numbers prove that customers think very highly of Starbucks. With global revenues of $13.3 billion in 2012, reflecting a 14% increase from the prior year, Starbucks is hitting record highs in sales.
If you are a Starbucks addict, do you take into consideration the ease of mobile technology or the benefits of the loyalty program when buying coffee? Or do you remain loyal simply because the coffee tastes that good? If you steer clear of Starbucks, would the environmental or social efforts have the ability to make you reconsider?
Starbucks CEO Schultz on Digital Innovation: http://www.usatoday.com/story/money/business/2013/04/24/starbucks-howard-schultz-innovators/2047655/
Starbucks: FY 12 Annual Report: http://investor.starbucks.com/phoenix.zhtml?c=99518&p=irol-irhome
Netflix is taking a bold move after spending over two years recovering their losses from their last big controversial pricing and programming change. The Netflix CEO Reed Hastings is doing everything possible to avoid another Qwikster disaster.
Since their lose of nearly 800,000 users and 75% of it’s value, Netflix has worked it’s way back to the top with over 29.1 million members, surpassing enterprises like HBO.  However, Netflix could not have done this without turning back the focus to their users wants and needs.
Netflix has done a great deal to reinvent their service, pricing and licensing deals. Recently, Netflix has utilized Facebook to create a Netflix Social , where users can link their facebook and Netflix account and view tabs of “what your friends are watching” or “friends favorite”.  Netflix also just made a deal with Dreamworks to begin producing another Children’s original animation series.  Furthermore, Netflix’s production and release of 15 new episodes of the popular show Arrested Development has also received a lot of praise by Netflix users..
Despite their growth and efforts to reconstruct their service, Netflix has run into a new growing problem.
Their current problem is that over 10 million users are not paying for the streaming service Netflix’s CEO is trying to be very cautious about handling the shared user and password issue. Hastings does not want to lose or ban viewers, but instead he wants to keep people positive and excited about Netflix’s service.
Analysts insist that Netflix’s profit would exponentially increase if Hasting’s cracked down on the issue. One analyst believes they could be making up to 5% more per subscriber if they fix their current pricing or offer different plans for users.
Instead, Netflix’s CEO is celebrating the idea “that people love the service”. 
The new plan that will be unveiled will allow four streams for $11.99, while the current pricing of $7.99 for two streams per account will still be available. They expect less than 1% of customers to opt for the new plan, but they hope as their service becomes in bigger demand that users will begin to see the value.
Other plans consist of adding a $3 increase for added users , adding extra fees for children programming or limiting the number of devices that can be attached to the account. 
Netflix users are vulnerable since the last price and policy change, so Hastings needs to remain very sensitive to the issue in order to sustain their level of expansion and growth in the market. Therefore, Hastings is not interested in making any drastic changes, but slowly implementing different plans with added benefits.
Whether you are a current Netflix user or considering a subscription to Netflix, what plan or price increasewould drive you away? What added benefits or licensing deals would make you keep your subscription?