Brexit and operations: short-term issues

I’ve deliberately not blogged about Brexit before – there is more than enough coverage of this topic.  But we’ve decided to write a case study on Brexit for the new edition of our book, and I have been researching* the topic.  So I thought I would share some insights from this research with you here…

It seems that British politicians have woken up to the fact that a No Deal scenario would be the worst possible outcome, especially for business.  Nonetheless, it is still a possibility, so firms are putting in place contingency plans for this scenario.  One such response is to stockpile supplies of goods inwards and finished stock.  The IHS Markit/CIPS UK Manufacturing PMI® Report for April 2019 reported “The rate of increase in stocks of purchases hit a survey-record high for the third month running in March. The three sub-industries covered (capital, consumer and intermediate goods) all saw inventories rise at series high rates. A similar story was told for stocks of finished goods, which rose at a record pace for manufacturing as a whole and at, or close to, record highs across the three product sectors”.  As a result, the UK Warehousing Association (UKWA) reported that its 750 members, operating 9.3 million square metres of space between them, had reported little or no spare capacity.  Demand has been so strong that warehousing costs had risen by 25% in three months. Pharmaceuticals storage, which is handled by five specialist licensed operators in the UK, was at capacity. Frozen and chilled food warehouses were also full. Tesco has rented frozen food containers and located them outside all their largest stores.

A second major issue is professional expertise in importing and/or exporting under WTO rules.  Currently the U.K. has a free trade deal with the 27 other E.U. countries, and through the E.U. another 50 trade agreements with other countries.  In a no deal scenario most, if not all, of these trading arrangement would cease.  The complexity of operating under WTO rules is such that firms would probably need to secure the service of an agent – if it is possible to secure the services of one, given the huge demand for their services.

The third major issue is logistics. The Road Haulage Association has six pages of advice for its members  covering issues such as Certificates of Compliance in each vehicle, international driving licences for drivers, Economic Operator Registration and Identification Number (EORIN), customs codes, motor insurance Green Cards, and the Export Security and Safety Declaration.  There were some issues waiting “to be clarified”, such as VAT fuel rebates, Driver 3rdCountry attestation forms, vehicles on hire or lease, fines, and tolls.

Depending on a firm’s exposure to these issues, it all means added costs to pay for agents, warehousing, import tariffs, lorry hire, compliance, and etc. etc.   This creates serious issues with regards firms’ working capital and cash flow.  This is why a few days ago, Barclays announced a £14bn fund designed to help small and medium-sized businesses (SMEs) to respond to the challenge of Brexit.

And all of the above are just the short-term issues…..

*I’ve avoided press reports and focused on government sources, and professional associations such as the CBI and U.K. Warehousing Association.

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Automated parking

In May last year I posted a video of a new car parking system in Leiden.  This is another way to park as many cars as possible in the smallest possible space.

[You may want to turn the volume down…]

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Don’t just book an airline seat, book a bin too

The annual Aircraft Interiors Expo in Hamburg is taking place right now, and have reviewed some of the innovations being showcased there (here).  These include “new seats, fabrics, lights, in-flight entertainment systems and creative layout concepts”.  My own personal favourite is what Boeing are working on – ‘intelligent’ overhead compartments.  As well as making the bin bigger, they are being made smarter, with the fitting of sensors to identify if the bin is in use and how heavy the objects in it are. The logical extension of having smart bins is that passengers will be able to book space in one, just like they book a seat.

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AI and corporate ethics

Interesting article on the LBS website by Ioannou and Baker (2019) on the impact that artificial intelligence (AI) could have on the ethical behaviour of large corporations.  In brief, they argue that AI should improve decision-making, both in terms of the speed decisions are made and the quality of the outcome.  For corporations this will increase efficiency, reducing wasted resources – all of which could benefit society as a whole.  But (there’s always a but) “Whether optimisation is about making things better at the macro level for society, or organisations, a beneficial outcome still depends on a decision being a ‘good’ decision, from an ethical perspective,” says Baker. “Without absolute clarity on what is good or bad, we may run into difficulty.”  This is because there may well conflicts of interest between different stakeholders, unconscious bias programmed in, or simply unintended consequences of AI determined decisions.  Ioannou and Baker go on to propose a number of ethical safeguards that should be put in place to avoid ‘bad’ outcomes.

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Mass customising hair products

Function of Beauty is a start-up that adopted customisation as its competitive strategy.  As it says on its website: “Our founding team—world-class MIT engineers and data scientists—spent years building our own algorithm and machines, that pull from hundreds of ingredients to potentially create billions of completely unique shampoo and conditioner combinations”.  In order to do this, individual customers are set a series of questions relating to their type of hair and its structure, “scalp moisture”, “hair goals” (what individuals want from their hair do), and preferred fragrances.

More insight in this video…


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Talking of apps – Bill Gates reckons there will soon be one that detects Alzheimer’s

At my age… I do hope so.

Bill Gates has recently published an article on his blog that discusses how he is involved in finding new ways to diagnose and potentially cure Alzheimer’s.  One of these ways is to use an app that detects changes in voice patterns associated with the disease.

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Three quarters of 200 richest economic entities are corporations not countries has compiled data on the revenues of corporations and countries.  In 2017, 69 of the top 100  are corporations rather than governments. With regards the top 200 entities, 157 are corporations. The top 10 corporations, including Walmart, Shell and Toyota, turned over $3 trillion.  These global corporations all accrued more wealth than even fairly rich countries like Russia, Belgium, and Sweden.

This makes the corporate ethics of these corporations hugely significant….

More details here.

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2,100,000 apps now available…

I’ve been writing about the use of apps and bots to manage service transactions for our new edition and found some interesting facts and figures:

  • As of the end of 2018, Google Play, the world’s largest App Store, had more than 2,100,000 apps available for android devices.  Apple’s App Store had over 2,000,000, although many of these replicate android versions of apps.
  • Devising and selling apps is now a big business.  By 2020, mobile apps are projected to generate US$188.9 billion in revenues either from direct sales via app stores and from in-app advertising.
  • The average smart phone user has 60 to 90 apps on their phone and  spends more than two hours a day using them.
  • IBM forecast that by 2020 85% of all customer interactions will be handled without a human agent, either through apps or chatbots.
Posted in Chap 08 Queuing and customers, Sector: Entertainment & Sport, Sector: Financial Services, Sector: Hospitality & Tourism, Sector: Public Services & Charities, Sector: Retail, Sector: Transportation | Tagged , , , | Leave a comment

Don’t forget ‘stage directions’ in your service scripts

I’ve just finished writing a new Operations Insight about service encounters for the second edition of our book.  This has got me thinking about the issue of scripting such encounters….

Just to be clear about what we mean by a service script, here is a typical definition: “A service script is a detailed guide for front-line employees to follow during a service encounter. A script includes a predetermined set of specific words, phrases, and gestures, as well as other expectations for the employee to use during each step of the service process”1.  This definition refers to “gestures” and “other expectations”, but often in practice the focus of scripting is just the spoken words.  In a call centre this makes sense, but for physical encounters it may be that non-spoken aspects of the script are equally important.

In the theatre, a script does not simply provide the dialogue for actors to speak, it also includes stage directions, such as whether the actor is standing or sitting, and where on the stage they are.  The same should be true of a service operation.  One good example of what I mean is a personal experience of mine.  I once had occasion to complain about service at the front desk of a hotel.  The Duty Manager was called.  The first thing he did when he met me was to say his name and shake my hand (gesture).  He then suggested we move from the front desk to a quieter part of the lobby and sit down in comfortable chairs (stage direction).  These non-verbal aspects of the encounter were key to his professional conduct of the event.



Posted in Chap 08 Queuing and customers, Sector: Entertainment & Sport, Sector: Hospitality & Tourism, Sector: Public Services & Charities, Sector: Retail | Tagged | Leave a comment

You can benchmark organisational culture…

Did you spot the deliberate (sic) error in yesterday’s blog about organisational culture?  I woke up at 5.00 am this morning, realising that I had made a blunder!

Yesterday’s headline was “You can’t benchmark and copy organisational culture”, which reflected the title of the article you were directed to.  I then added some words of wisdom of my own – about weak and misaligned cultures.  The obvious flaw in my argument (and the headline) was that an organisation attempting to improve its culture’s performance will benchmark itself.  As we say in our book (page 239) “Often benchmarking is thought of as an organisation comparing itself against other organisations [which was yesterday’s false assumption], but large organisations can also adopt internal benchmarking … comparing the same operation over time (or) one part of the business with another.”

I’m pleased to have cleared this up!

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