iPad – Lessons in Operations Strategy, Quality Management and New Product Introduction @ Apple
Even several months before the introduction of iPad by Apple CEO Steve Jobs on January 27th, 2010 the media was humming with the anticipation of this new revolutionary product. The 9.7 inches touch-screen mobile computing devise is supposed to let users play games, check emails, watch videos and read books on an attractive product with a vibrant color screen. This device can either take advantage of the existing wireless internet networks or access information via AT&T’s 3G networks around the United States. The iPad (some say a big brother of iPhone) is priced between $499 – $829. Additional specs about this product are outlined below in Figure 1 (source: Wall Street Journal: January 28, 2010).
Figure 1: Some features of iPad
The ultimate success of this product will be determined on a number of factors including pricing, product features, quality, competition, and apple’s ability to consistently enhance the future generation of products. Nevertheless regardless of its success or failure, iPad is destined to encourage the development of a series of products that will be introduced by companies in the upcoming months that have the potential to revolutionize the mobile computing and the telecommunications industry.
Apple’s introduction of iPad and other innovative products since its inception provide many lessons for effective operations strategy (Chapter 1) and quality management (Chapter 2) and new product development (chapter 3). An example of major products launches of Apple are summarized below in Figure 2 (source: Wall Street Journal: January 28, 2010).
Figure 2: Major Product Launches by Apple
Clearly some products such as Macintosh (1984), iMac (1998), iPod (2001) and iPhone (2007) have been highly successful; while some other products (e.g. Lisa (1983), Newton (1992), Apple TV (2007)) have been equally big failures. Furthermore, while several apple products were designed to appeal to new markets and consumers, many similarities can be seen across its product offerings. In addition, there is a common perception that apple products are generally more expensive than its competitors. They’re also supposed to be astatically more pleasing than other products the marketplace.
Finally, the launch of iPad and its uncertain market potential creates an interesting production planning problem for the company. For example, if Apple forecasts sales of 2 million units the first year, what happens if the actual sales are 1 million? or 4 million? How do they or should they build a responsive supply chain to facilitate the uncertain demand for a new product?
Discussion Questions
- Based on the information provided above, what can you infer about apple’s dominant competitive priority? Is it cost, quality, delivery, or flexibility, or some combination of the four? (Chapter 1).
- Which of the eight determinants on product quality does apple emphasize In its products? (Chapter 2)
- Explain how Apple can use the newsvendor analysis and related concepts to build a responsive supply chain for their new products such as iPad (Chapter 6).
- Explain which of the following new product development concepts are applicable to the development and launch of iPad? Explain, why? (Chapter 3)
- Time based competition
- Continuous or disruptive innovation
- Mass customization
- Modular design
- Concurrent engineering
- Product platforms
- Reverse engineering
Additional Information:
Watch iPad Launch Video: http://www.apple.com/ipad/#video
Wall Street Journal Articles about iPad: http://topics.wsj.com/subject/A/apple-ipad/5857
OM Blog 7: January 13, 2009
GUEST BLOG: Michael Dixon, Cornell University
Michael Dixon is a PhD candidate at Cornell University School of Hotel Administration studying Service Operations Management. His research interests include understanding how process management decisions of service firms impact customer long term behaviors.
Recently I was contacted by a volunteer from the American Red Cross and asked to sign up to donate blood during a blood drive on campus. I have donated blood several times during my life and have never had a reason to turn down such requests, so I signed up for a 1:30 pm appointment on a Monday. I arrived at 1:30 pm sharp and started the process of the donation. Their website recognizes the 4 step process to donation:
- Registration: read about the donation process and eligibility requirement.
- Health History and Mini Physical: personal health history questions, temperature, blood pressure, etc.
- Donation: Approximately 1 pint of blood is drawn from your arm
- Refreshments: Spend a few minutes eating sweets and drinking fluids
Again, from their website: “The donation process, from the time you arrive until the time you leave takes about an hour. The donation itself takes about ten minutes.” From a purely process management standpoint, this statement might raise an eyebrow. If it only takes 10 minutes to draw the blood, why do donors have to spend an hour to donate? The other three process steps surely don’t take 50 minutes. Answer: there is a lot of waiting done by the donors. In my case the process took nearly two hours while the donation itself took about three minutes.
I had lot of time thinking about their process and had a hard time not seeing potential process improvements during my long wait.
Reservation/Appointment Management: As I arrived, there were about 8 donors in front of me in the registration area. It appeared that there were two separate appointment books: one from the phone calls made by a regional headquarters and one from the local blood drive supporters. My guess is that they did not synchronize the two appointment books and overbooked. In addition, they were taking walk-ins and everyone was served on a first come first serve basis; reservations did not get any priority over walk-ins.
Bottleneck and Capacity Management: With a quick glance to the donation process area, I saw six beds. If the actual donation time takes an average of ten minutes, then the capacity of the donation process is 6 beds * 60 minutes in an hour divided by 10 minutes per donation = 36 donations per hour assuming the area is properly staffed. The health history/ mini physical area also has enough space for 6 donors being service at one time and a 10 minutes average time for this process is probably reasonable. However, there was only 1 dedicated employee in this area restricting the capacity down to 6 donations per hour.
Labor Scheduling & Capacity Planning: At 1:30 employees were coming and going taking lunch breaks. I suspect that the reason there was only 1 staff member working the health history / mini physical step was because someone was on break. Labor scheduling is essentially matching system capacity with expected demand. In the case of a blood drive, the expected demand could be managed by allowing for more appointments during fully staffed times and less appointments during periods of breaks (e.g., lunch time); however, it appeared that blood drive volunteers were asked to find the same number of donors for each time period, e.g., for each half hour block find 4 donors. Perhaps the actual capacity during periods of full staff is higher than what they ask for and much lower during lunch times. This means that donors in the morning and late afternoons will be serviced very fast (maybe 30 to 40 minutes) while the donors during the lunch hours can expect long queues and much longer waits (like mine: 2 hours). The average wait may indeed be 1 hour but the variability in what is experienced by donors varies widely. Perhaps the American Red Cross tries to determine its daily capacity and asks blood drive volunteers to fill this uniformly throughout the day; however, labor scheduling forces the capacity to fluctuate throughout the day and reservations should be scheduled to match the capacity fluctuations.
What is the goal?
Again, according to their website, the number 2 reason people don’t donate after “I don’t like needles” is “I’m too busy”. Only 43% of donors are “repeat and loyal donors.” Perhaps a large percentage of the remaining 57% realized that they didn’t like needles after their first donation, but certainly some of them stopped coming because they were “too busy” which is a nice way of saying “it takes too long”. Blood is highly perishable and donations are needed every day in order to maintain adequate supply for medical patients who need blood. A top priority for the American Red Cross should be to increase the percentage of loyal donors in order to maintain the need blood supply. Any marketer will tell you it is easier and cheaper to maintain an old customer than to win a new one; however, the American Red Cross spends a great deal of its effort in finding new donors.
Questions:
How can the principles of operations management improve donor loyalty?
Where was the bottleneck in my process? Where should it have been if donations where to me maximized?
What could the American Red Cross do to manage their appointment system better? How could they handle walk-ins?
Sources:
The blood donation process:
http://www.givelife2.org/donor/process.asp
Top 10 reason people don’t give blood:
http://www.givelife2.org/donor/top10excuses.asp
50 quick facts about donating blood (including loyalty percentages): http://www.givelife2.org/sponsor/quickfacts.asp
Advances in Medicine: The Checklist
OM Blog 6: January 5, 2010
By Ken Boyer, Fisher College of Business, Ohio State University and Rohit Verma, Cornell University
Authors: Operations and Supply Chain Management for the 21st Century, 2009, Southwestern Cengage Publishing
Magnetic Resonance Imaging (MRI), Image-guided Radiofrequency Ablation (RFA), Computed Tomography Angiography (CT) and Checklists. In this list of the “latest and greatest” in medical treatments, which one would seem not to belong? Checklists? Really? In 2009 with all the DNA mapping, computer assisted and imaging technologies that have contributed to improved medicine (and often substantially increased costs), simple checklists are being proffered as a critical tool for improving medical care and outcomes.
In a new book released in mid-December (The Checklist Manifesto: How to Get Things Right, Metropolitan Books, 2009), Dr. Atul Gawande, explores the nature of complexity in our lives and in medicine in particular. Gawande, bestselling author of Better and Complications, MacArthur Fellow, general and endocrine surgeon at Boston’s Brigham and Women’s Hospital and an associate professor at the Harvard Medical School offers his observations, experiences and research on the use of checklists. His central argument: medicine has advanced to a point where there is tremendous know how an ability to effectively treat many medical conditions, yet there are over 150,000 deaths from surgery every year – at least half of which are attributable to preventable error. Why so many errors? Because medicine is complicated and with many complex pressures it is common for doctors, nurses or other medical professionals to either forget a step or perform a critical step out of order. A powerful illustration of this can be drawn from Gawande’s writing:
Central Line Infections:
In 2001, Dr. Peter Pronovost, a critical care specialist at Johns Hopkins Hospital decided to tackle the challenge of reducing (preventing) infections when patients received a central line. He wrote the following steps on a piece of paper:
- Wash hands with soap
- Clean patient’s skin with Chlorhexidene Antiseptic
- Place sterile drapes over the entire patient
- Wear a mask, hat, sterile gown and gloves
- Put a sterile dressing over the insertion site once the line is in.
As Gawande writes, “These steps are no brainers: they have been known and taught for years”. And yet, when Pronovost recruited nurses in the ICU to observe doctors for one month, he found that in more than one third of the patients, AT LEAST ONE STEP WAS SKIPPED!
Dr. Patchen “Patch” Dellinger reads off of a checklist for surgery at the University of Washington Medical Center
The next step involved Pronovost and his team persuading administrators at Johns Hopkins to authorize nurses to stop nurses if they saw doctors skipping a step. Nurses were also encouraged to ask doctors each day whether any lines should be removed – thus not leaving them in any longer than necessary. Now, Gawande being a surgeon has better authority regarding medical practices than any non-medical professional has, but essentially he writes that nurses have always had ways of nudging physicians and reminding them to perform critical steps. Yet, this approach was revolutionary – encouraging nurses to intervene and “checklist” the doctors. The results were amazing – the ten day infection rate dropped from 11 percent to zero. Pronovost and colleagues calculated that in just one hospital, the new checklist had prevented forty-three infections and eight (8) deaths and saved $2 million in costs.
I will not reveal more of Gawande’s writing here – I highly encourage you to buy or borrow a copy of the book and read it yourself. The point is – technology does not have to be complicated to be effective. Operations management professionals in a variety of service and manufacturing industries have been employing checklists for years. Other basic, yet effective tools covered in most textbooks include:
- Pareto Analysis
- Bar charts
- Histograms
- Scatter Diagrams
- Run charts
- The Five S: sort, straighten, shine, standardize, sustain
- Poka-yoke
While people often fall for the fancy and impressive technologies and medical treatments, often getting the simple stuff right can be more important. So, think of ways that you use checklists in your daily life – both for personal use and for business use. Maybe you should have one for your doctor the next time you see him or her?
Discussion Questions:
Sources:
Dr. Atul Gawande, The Checklist Manifesto: How to Get Things Right, Metropolitan Books, 2009)
Pronovost, P.J., et al., 2003, “Improving Communication in the ICU Using Daily Goals” Journal of Critical Care, V. 18, pp. 71-75.
“UW Medical Center Using Surgical Checklist to Improve Safety”, Carol M. Ostrom, Seattle Times, June 26, 2008
OM Blog 5: November 25, 2009
By Ken Boyer, Fisher College of Business and Rohit Verma, Cornell University
Authors: Operations and Supply Chain Management for the 21st Century, 2009, Southwestern Cengage Publishing
Retailers spend a large part of the year planning for the Christmas sales season. The key event in this busy season is Black Friday – the day after Thanksgiving. Stores offer fantastic deals and open early in the morning in order to entice/lure/pull people into shopping and spending their hard earned dollars. In 2009, with the economy down, there is more pressure than ever for retailers to get shoppers into their stores. Scores of websites offer listings of the best deals – both for physical stores and for online stores. Wal-Mart, the world’s largest retailer, opens at 5 AM on Nov 27 and is offering a Sony Bravia 46” LCD 1080p HDTV! Wow, that crushes our tv at home – I wonder if Santa has my list yet? Oh yeah, where was I? Among the offerings:
So, clearly this is a bonanza for customers will to venture into the whirlwind of shopping, but operationally this also imposes substantial challenges on running the stores. Among the key challenges:
- Workforce Staffing: While shoppers may be excited to get up at 3 or 4 AM to shop, workers are generally far less excited to get up even earlier in order to open the store and deal with hundreds or thousands of excited – and sometimes difficult – customers.
- The Ultimate Newsvendor Problem – the hot deals are loss leaders for the stores, but the managers must make decisions on how many of these items to stock. Too many and there will be excess inventory and costs after the sales ends. Too few and customers will leave disappointed – or worse. There have been scores of examples of angry customers stampeding or yelling at store employees.
- Crowd Management – While it is a marketing dream to have hundreds of customers lined up to get into your store, it is also a manager’s nightmare. This violates one of the key principles of good operations management – minimize variability. Instead, retailers encourage it by trying to whip customers into a frenzy and then opening the doors. Occasionally, this leads to disasters – it seems like every year there is a story of someone getting trampled and even killed during the mad rush. Even if there are not major problems, there are usually very long lines and very overworked employees. Of course, stores can bring in extra staff to make things go more smoothly – but this costs money.
- Production Planning: WalMart has an interesting new feature – customers can get a detailed map of their local store. This map shows exact locations of each and every deal – no wasted time sprinting to the wrong location. To the fastest and best planned go the spoils! What efficiency!
Retailers (and customers) clearly believe the benefits outweigh the challenges – so we are unlikely to see Black Friday fading in the near future. This can be an extremely fun event for shoppers and retailers alike. If you plan to participate, I recommend a good pair of sturdy shoes and an outfit that allows easy movement and cushions you from bumps and bruises. Me? I’ll be sleeping off the turkey – I don’t begin thinking about my holiday shopping until at least December 22.
Discussion questions:
- How should stores approach inventory planning for Black Friday, in particular the newsvendor problem (Chapters 5: Forecasting and 6: Independent Demand Inventory, pp. 222-223? How should retailers plan the process of opening the doors and getting excited customers through checkout (Chapter 4: Process Design and Analysis)? What capacity planning approaches should retailers use for Black Friday (Chapter 10: Capacity Planning)
- What are your favorite or least favorite memories of this shopping day? How did the operations of the store contribute to this experience?
Sources:
- The Chicago Tribune offers a handy photo gallery of tips on how to survive Black Friday at the following: http://www.chicagotribune.com/features/holidaily/sns-holiday-black-friday-survival-pg,0,748950.photogallery
Have you gotten your Flu shot yet?
OM Blog 4: November 2, 2009
By Ken Boyer, Fisher College of Business and Rohit Verma, Cornell University
Authors: Operations and Supply Chain Management for the 21st Century, 2009, Southwestern Cengage Publishing
Amidst the public debate these days about whether or not individuals should get shots for either the regular, seasonal flu or for H1N1, there is another challenge. That is, if you do want to get a shot, where and how can you get one? This is not a trivial question as there have been numerous delays and canceled clinics around the U.S. in the past two weeks.
What does this have to do with operations and supply chain management? Several things.
First, manufacturing and distribution of vaccine dosages is a substantial supply chain challenge. The U.S. Centers for Disease Control and Prevention (CDC) had hoped to have 40 million doses of the H1N1 vaccine ready by the end of October, but there were numerous manufacturing delays. As of October 30, Dr. Thomas R. Friedan of the CDC stated that there were 26.6 million doses available, up from only 10 million a week prior to that.
Manufacturing flu vaccine is a challenge – each dose must be grown in a chicken egg and carefully handled and harvested to avoid any contamination. The yield of antigen is unpredictable, making it difficult to forecast how much to produce. In addition, production must start several months before doses can be administered. Another challenge is that the revenue is relatively small for a complicated product. In short, vaccine production is a complicated process, that must be started months ahead of need and the revenue and yield is very unpredictable.
Once the vaccine is produced, then there is the distribution challenge. The CDC must ship the vaccine to numerous hospitals, clinics, doctor’s offices and pharmacies. In the current situation, many if not most of these organizations want more doses than are available. Thus, doses must be allocated and some potential patients will be left without. Once vaccine is actually delivered to a clinic, it must be administered as efficiently as possible. In short, the distribution of vaccine is one giant application of the newsvendor problem (see pages 222-223 of textbook). In the current case, there seem to be more stockouts than excesses.
Discussion questions:
- How does vaccine distribution relate to key operations and supply chain management questions including: quality management (Chapter 2), new product development (Chapter 3), forecasting (Chapter 5) and project management (Chapter 8)?
- Could more vaccine be made available if the government or patients simply paid more money for it? What are the pluses and minuses of producing extra at an increased cost?
- How should the government and producers balance safety – i.e. carefully assessing the vaccine so that few unintended consequences occur – versus speed of getting the vaccine to patients?
Sources:
- The following article from CNN has some interesting data on flu vaccine production: http://www.cnn.com/2009/HEALTH/10/30/h1n1.vaccine.available/index.html
- The CBS TV show 60 Minutes has a good video on flu vaccine production: http://www.youtube.com/watch?v=ABYrGSCn4M0
Food Factories
OM Blog 3: October 30, 2009
By Ken Boyer, Fisher College of Business and Rohit Verma, Cornell University
Authors: Operations and Supply Chain Management for the 21st Century, 2009, Southwestern Cengage Publishing
Food Factories
What is involved in running a grocery store? A lot. Every day, managers must make thousands of decisions regarding inventory (what to buy and how much), job scheduling and assignment (i.e. how many employees in which departments and what jobs should be done and in what order), and quality (how to ensure good products are sold and good service is provided). Pretty daunting eh? And this is for just one store. Consider Kroger Co., headquartered in Cincinnati, Ohio, it operates over 2,400 supermarkets, with revenues of more than $70 billion and has over 300,000 employees. It is the second largest grocery retailer in the U.S. after Wal-Mart. Efficient and effective operations are one of its keys to excellence.
Yet, when we think of groceries it is usually in terms of services – after all, stores don’t make anything do they? Actually, they do. Kroger owns 40 different manufacturing plants (a competitor, Safeway, owns 32). These manufacturing plants make roughly 14,400 in-house (also known as generic) products, including 38,000 “party pails” of ice cream per day – which sell for $2.99 each, or approximately 30% of the cost for name brand ice cream such as Dreyer’s, Ben & Jerry’s or Graeter’s. Stores like making their own because they often can get a higher profit margin on in-house products than for name brand products – because they are controlling more of the process, hence are providing more value.
Kroger is selling 15% more in-house products by volume this year due to the down economy. Consumers often will trade a lower cost for that name brand. In fact, industry wide, sales of store-branded items increased nearly 10% over the past year. In-house products account for 35% of Kroger’s sales, up from 31 percent five years ago. In a down economy, this growth is resulting in increased hiring – Kroger created 400 new manufacturing jobs in the last year for a total of 7,400.
So, the next time you shop for groceries, give a thought to where those groceries came from – it might not be where you think.
Discussion questions:
- How do the practices described above relate to operations and supply chain strategy (chapter 1), process design and analysis (Chapter 4)? Capacity planning (chapter 10) and technology and integrated supply management (Chapter 13)?
- Describe the main challenges of running a food manufacturing plant. How are these similar to or different from running a grocery chain or store?
- Do you think that Kroger ships directly from the factories to its individual stores? Or does it ship products to an intermediate distribution center and from there to its stores?
- How should Kroger treat these facilities? Should they be exclusive to Kroger, or should they provide sales to other retailers? How does this effect capacity planning and forecasting? What are the advantages and disadvantages if Kroger uses the factories to produce products for other retailers?
Sources:
- Information for this story comes from the article “Food Factories”, by Dan Sewell, Columbus Dispatch, October 21, 2009 – to see the full story click here (http://www.dispatch.com/live/content/business/stories/2009/10/21/kroger_food.ART_ART_10-21-09_A12_H1FE63G.html?sid=101)
McDonald’s Pursuit of the Perfect Potato
Authors: Operations and Supply Chain Management for the 21st Century, 2009, Southwestern Cengage Publishing
Next time you bite into a hot, crunchy, delicious French fry give a moment’s thought to the journey that this lone fry took from the field to your mouth. This is something that occupies much of the waking thoughts of Mitch Smith, McDonald’s agricultural products director. The company buys over 3 billion pounds of potatoes per year – that’s a lot of spuds. And getting on the coveted list of McDonald’s supplier’s is the key goal of farmers around the world.
After Ray Kroc developed the franchising system for McDonald’s in the early 1950s, the company took off, growing to become the world’s biggest restaurant system – with 31,967 restaurants in 118 countries around the globe. The company had sales of $23.5 billion in 2008 and it is estimated that the company serves food to 1% of the individuals on planet earth on a given day and over 5% of all Americans. Most of this success is due to the company’s keen attention to the numerous details, challenges and opportunities of managing its daily operations and supply chain. The company has excelled both in creating a standardized system for providing reliable, consistent quality in service of millions of meals per day as well as a supply chain system par excellence long before the term was coined and in a service sector business rather than a manufacturing oriented business that many people presume “need supply chain expertise”.
Jack Simplot founder of Simplot approached Ray Kroc with the idea of switching from fresh to frozen French fries in the early 1960s. The company had been having substantial problems managing the distribution, inventory and supply of fresh potatoes – according to Simplot “They were having a hell of a time maintaining potato quality in their stores. The sugar content of the potatoes was constantly going up and down, and they would get fries with every color of the rainbow. I told him that frozen fries would allow him to better control the quality and consistency of McDonald’s potato supply.” In 1964, Simplot invested $400,000 (equivalent to over $5 million today) to put potatoes in cold storage during the summer – but the experiment failed when all of the potatoes rotted. Undeterred, Simplot returned in 1965 with another proposal – converting from fresh to frozen potatoes. McDonald’s executives carefully researched the possibilities and discovered that the traditional freezing process drained structure and flavor from French fries. Ice crystals would form in the potato during freezing, resulting in ruptured starch granulates. McDonalds worked with Simplot to develop a process to dry French fries with air, run them through a quick freezing cycle, then freeze them. The result was a reduction of moisture in the frozen French fry, which improves its crispness. After Simplot volunteered to build a production line for the new process, McDonalds rewarded the company with 50% of its potato business (up from 20%) – which in 1992 meant a total of 1.8 billion pounds of French fries. Today, Simplot is a more than $4 billion a year business and supplies approximately 40% of McDonald’s total demand.
Today the competition among suppliers for a piece of the potato pie is intense. It has been seven years since the fast food behemoth has approved a new variety of potato to the three approved varieties currently on its list. The mainstay potato is the Russet Burbank which provides the best taste, but has some substantial limitations – it takes a long time to mature/grow, requires huge quantities of water and is vulnerable to rots and disease. This means that farmers must douse it in chemicals – a practice that customers and socially conscious investors would like McDonald’s to reduce or eliminate. And yet … these are the best tasting potatoes. The second major variety is early-maturing Canadian-bred Shepody potatoes that make up a large percentage of fries sold in August – October. Unfortunately, these potatoes don’t store very well.
So, in November the company switches focus to Ranger Russet fries, followed by Umatilla Russets, which store better and fill our bellies from December until February. Umatilla Russets were the last potato variety approved by the company in 2002. The remainder of the year (March – August) consists of the standby Burbank Russets brought west to prime potato country of Idaho, Oregon and Washington by Luther Burbank in 1875.
In 2008, Idaho farmers planted 57% percent of their land with Russet Burbanks, while it accounted for 41% of all potato production across the 8 largest potato-growing states in the U.S. Yet, because of the high cost of growing Russet Burbanks and the need to use massive quantities of pesticides, the search for a new variety is intense. The tasting rooms at McDonald’s corporate headquarters in Oak Brook, IL employ scores of people to test for taste, texture and consistency. Perfume-wearing intruders are chased from tasting rooms in order to prevent contamination from fry samples randomly pulled from restaurants across the U.S. for monthly examination by representatives of the three main supplier’s to the giant: J.R. Simplot, Canada’s McCain Foods Ltd. And Omaha, Nebraska based Con-Agra Foods.
While these suppliers may resent McDonald’s ability to supervise them and control their actions, they are also eager to maintain or increase their current level of business. The same is true of the thousands of farmers that contract or sell to Simplot, McCain or Con-Agra. As Jeanne Debons, the director of the Potato Variety Management Institute notes: “It’s a card game, where McDonald’s holds nine-tenths of the cards”. The institute was established in 2005 by the Idaho, Oregon and Washington potato commissions to handle licensing and royalties from new varieties developed at federal research facilities and universities.
So, in this multi-billion dollar business, McDonald’s will test and taste and suppliers/farmers will jockey for position. According to Mitch Smith: “If we [McDonald's] can find a variety that … with less inputs, water or whatever, that’s something we’re looking for. To date, there are not a lot of varieties that perform consistently enough”. In other words, in the stomachs of people around the world, French fries are no small potatoes.
Discussion questions:
- How do the practices described above relate to quality management techniques (Chapters 2 and 11)? Inventory management and forecasting (chapters 5-7) and global supply chain (Chapter 14)?
- How should/does McDonald’s manage the trade-offs between taste (i.e. product excellence/quality), cost and social concerns?
- Describe how McDonald’s works with suppliers to improve the potato supply chain. Also discuss how there may be conflicts of interest of different parties within this chain.
Sources:
- The idea and much of the information for this entry comes from the article “The Next Super Spud“, John Miller, Columbus Dispatch, October 3, 2009.
- For a great read on McDonald’s, its history and the many ways it has used operational and supply chain excellence, check out the book McDonald’s: Behind the Arches by John Love, originally published in September 1986. Available on Amazon.com at: (http://www.amazon.com/McDonalds-Behind-John-F-Love/dp/0553347594).
- McDonald’s financial and corporate data comes from its annual report.
- Simplot financial data comes from Business and Company Resource Center on Gale Group’s Infotrac system (http://galenet.galegroup.com).
Airline Security: Efficiency vs. Safety
How often have you stood in line to go through security at the airport and been mildly annoyed … or downright angry. Being an operations professor I can’t help but observe the process and think of ways to “do it better” – while also feeling pressure to “keep the line moving”. While there is clearly a need to maintain security, one wonders if the many hoops that we have to jump through are the right hoops. And then, there is always the one annoying individual who seems to have no comprehension that:
- There are other people in the line
- They can’t take their pocket knife, 5 gallons of water or 92 pound suitcase through.
- The poor TSA employees (in the U.S. – in other countries there is another acronym) face three conflicting pressures: keep the line moving, catch the bad guys/gals and deal with the public – who often can be inept, clueless or downright difficult.
I’m sure you have bumped into one or more of these people. Recently, I was in line and in the process of getting naked. Taking off my shoes, belt, wedding and class rings, watch, medical ID bracelet, phone and spare change (believe it or not I am not a jewelry wearing kind of guy). Did I forget the part about taking out my laptop? We might as well have to get naked ….
So, I had just put my cellphone in one of the plastic trays – precariously balanced on top of a 6 foot high stack of empty trays – because the people in front of me were taking their precious time and talking to their friends in the next line. So, this older gentleman takes a break from his critically important conversation with his friend in the other line, turns and without looking, grabs the tray with my cell phone and starts to walk off. Given that I was busy, and I was in another country where I speak very little of the native tongue, all that I could manage to do was yell – NO! at about 150 decibels. This stopped cell phone grabber in his tracks and I received an apology – I think in French – and we all proceeded on our way. I was a bit embarrassed, but my cellphone was OK.
Similar scenes play out thousands of times per day at airports around the world. Almost no one involved in this dance enjoys it, but we must do it. …. And yet, does this process have even a reasonable chance of catching the bad guys/gals? We all want the process to work – and yet there are enormous operational challenges. There are tradeoffs between efficiency and the quality of the safety scan. There are human challenges – no matter how the system is designed and what technology is used, there is always the issue of 1) getting employees to do the proper things thousands of times per day and of 2) getting passengers to understand and follow the rules.
So, next time you are experiencing the security line, see what you can do to make it flow more smoothly, make the TSA employees feel appreciated and observe the process and think about ways it can be improved to make it less burdensome, more efficient, less costly and/or more reliable.
Discussion questions:
- Describe how managing the security process at airlines uses principles or methods of quality management (Chapters 2 and 11), process design and analysis (Chapter 4), technology (Chapter 13) or lean production (Chapter 12).
- How might optimization or simulation modeling be employed to improve the process?
- What suggestion(s) do you have for improving this process?
- How might TSA officials better “train” or communicate with passengers to streamline security?
- What is your most interesting security experience? Why did this occur? Was this a system flaw or simply an outlier – i.e. is it an assignable cause or is it an alpha error?
Sources:
- Many, many personal experiences.
