Smart technology in shopping malls

I’ve blogged about smart technology in manufacturing, but not discussed its application in the retail setting.  This JLL Real Views article does just that.  It identifies how the following technologies are being used:

  • Beacons – these Bluetooth devices activate customers’ smart phone, if they have downloaded the relevant app, in order to send personalised promotional messages when in proximity to a specific location in the mall.
  • Geofences – these are either GPS or RFID activated.  They also send promotional messages to customers.
  • Chatbots – currently being used to answers shoppers’ questions sent in by text when using the mall.
  • Sensors – linked to message boards, these are being used to control traffic flow and parking at malls.
  • Security devices – cctv is being linked to vehicle registration recognition systems in car parks and to facial recognition software in retail outlets.
  • Mall directory technology – using AI this can be used to scan users in order to identify key characteristics that will enable appropriate promotional messages to be displayed.
Posted in Chap 08 Queuing and customers, Sector: Retail | Tagged , , | Leave a comment

Low cost airlines – the story of Goldilocks

There has been a lot in the media recently about low cost airlines – with the demise of Monarch and the cancelling of thousands of flights by Ryanair.  For me this illustrates how getting your strategy “just right” is incredibly important.

With regards Monarch, there were a number of problems, most of which stemmed from their origins.  They started out as a tour operator and only changed their strategy towards being a low cost airline in the early 2000s.  There were several consequences of this:

  • Mind set – whilst the low cost model may seem relatively straightforward, an in-depth understanding is needed if it is to be implemented successfully.
  • Size – as a relatively late entrant into this market, Monarch never really achieved the economies of scale necessary to support the low cost model.
  • Route network – a high proportion of its flights were a legacy from the days when it was a tour operator i.e. around the Mediterranean.  This meant that demand was more seasonal than for other operators and it left it vulnerable if its destinations suffered a slump in demand.  This was the case with two key destinations – Egypt and Turkey.
  • Margins – all of the above combined to ensure that Monarch’s margins were very tight, so that when fuel costs increased due to the fall in the value of sterling, it was unable to generate profit.

Ryanair’s problems are almost the opposite of Monarch’s.  They have an ‘ultra’ low cost mind set, they are the largest low cost carrier, and their route network is extensive.  So much so, that when relatively minor changes to employment conditions are required by an external agency, they have been unable to incorporate these into their day-to-day operations.  Hence they have cancelled thousands of flights.  At the same time, this has revealed that the employment conditions for their flight crew are resulting in employee turnover at a time when these highly trained workers are in high demand.

So if Ryanair is too big, and Monarch was too small, is easyjet “just right” i.e. Goldilocks preferred choice?


Posted in Chap 14 Operations strategy, Sector: Hospitality & Tourism | Tagged , , | Leave a comment

Operations Insight: New Balance – the additive manufacture of footwear

Shoe-making is typically thought of as a labour intensive operation, especially sports shoes.  This is because the product is made from soft materials, is manufactured in many different sizes, and many different models are marketed.  It is for this reason that many European and American operators offshore their manufacturing operations to low labour cost countries such as China.  New Balance has chosen not to do this.

The company was founded in 1906 in Boston, Massachusetts as a company selling arch supports to police officers and waiters.  It is now a $3.8 billion private company, employing 5,000 people, predominantly manufacturing shoes for running, cross-training, basketball, tennis, hiking, and golf.  It has five factories in the U.S.A. and one in the U.K.  The company has a commitment to manufacturing in its main markets, which is why it was an early adopter of automation – to keep its costs down.  Even so, New Balance shoes are regarded as a premium product, selling at slightly higher prices than those of its main competitors.

In the 1980s, it adopted “computerised stitching” which automated the delivery of materials to sewing machines.   In the 1990s, it adopted 3D printing initially to assist with new product development and prototyping.  In 2016, it made around 4,000 prototypes in this way in order to review the aesthetics and/or functionality of a new shoe or its components. But more recently this technology is also being used in other ways.  First it is used for the manufacture of specific parts of shoes such as the soles of shoes, and the cushioning materials in midsoles.  Second, it has enabled New Balance to produce one-off, customised shoes made for specific athletes or customers.

Another technology New Balance has adopted are robots, which have been used in their operations for nearly thirty years.  Increasingly cobots are being deployed, these are robots that work in combination with employees in order to assist them with repetitive tasks and assure consistency.

Finally, the company has digitised its quality and control systems, replacing paperwork with touch screens and apps.  As well as providing employees with precise specifications for manufacturing, the system is highly effective in identifying defects.  By incorporating analytics into this software, managers are now able to identify solutions to any quality problem that may occur and to disseminate these not only to every work station or production line within the factory, but also across all the factories within the company.


Posted in Chap 10 Processes and technology, Sector: Manufacturing | Tagged , , , , | Leave a comment

Co-creation and Open Innovation in New Product Development

This video does what it says on the tin…

Posted in Chap 12 New products and services, Chap 16 Innovation and CI | Tagged , , | Leave a comment

Ryanair failing to deliver on its order qualifiers

Given that Ryanair’s current problems are clearly operational I feel obliged to blog about it.  But I’ll let the media analyse their all their woes, which seem to be getting worse on a daily basis.  The facet of the story that I find most illuminating from an OM perspective is the insight it provides into the difference between order qualifiers (OQs) and order winners (OWs).  Just to remind you – OQs are characteristics of a product or service required for it to be considered by a customer, whilst OWs are the characteristics of a product or service which directly contribute to winning business from customers.  In other words, if you do not deliver on the OQs you are not even in the game.

So what are Ryanair’s OQs and OWs?  As a ‘low cost airline’, it is fairly obvious that the predominant OWs are related to cost – low selling price and low running costs; and one specific quality criteria – perceived value for money.  It is typically easy to identify OWs because these will be the aspects of the offer that are marketed to potential customers.  But what about OQs?   Often these are less obvious because they are taken as given.  In the airline industry there is one clear OQ – dependability.  And in particular three out of the five types of dependability – safety, schedule adherence, and ability to keep promises.  Clearly Ryanair is currently failing to deliver on two out of these three.   It will be interesting to see whether or not the loss of confidence in the airline because of this will have a long term effect on the business…

Posted in Chap 02 Winning Customers, Sector: Hospitality & Tourism | Tagged , | Leave a comment

“Automation, robotics, and factory of the future”

Recently published article on the McKinsey and Company website is a great overview of the current state of the art with regards the use of robots in manufacturing.  It begins by explains how the cost of adopting robotics have gone down – the machines themselves have become cheaper, installation has become easier, and more suppliers are available to install them.  It goes on to identify how robots have been used and will be used in the future.  To date, they have been deployed largely in the context of highly repetitive, high volume tasks.  Increasingly they will be used for lower volumes, as their programming and capabilities become more flexible.  This will be speeded up with the introduction of artificial intelligence.   McKinsey also see a growing role for cobots – robots working alongside people.  The article concludes with some criteria for judging exactly what form of automation is suitable for any specific manufacturing context.

Posted in Chap 03 Processes and life cycles, Sector: Manufacturing | Tagged , | Leave a comment

London 2012 – the greenest Olympics ever

Having recently blogged about megaprojects I thought I’d post a video about how the London Olympic Park was constructed.  Instead I came across this video which has Kevin McLeod talking about how the London Olympics would be the greenest Olympics ever.  Not a lot of people know that and KM is always great to watch.

Posted in Chap 17 Internationalisation and CSR, Sector: Entertainment & Sport | Tagged , , | Leave a comment

McDonalds USA relaunches McCafé

All brands need a reboot when they reach the mature stage of their life cycle, especially if they are coming under pressure from competitors and new entrants.  In the USA, McDonalds have announced a relaunch of their McCafé concept, as their press release explains.   In summary, this based on “a new look, new café-quality espresso beverages and expanded retail offerings”.  The release emphasises that new equipment will be installed and different coffee beans will be sourced in order to improve the “beverage experience”.  Clearly they see quality as being a major order winner for them.

Posted in Chap 04 Location and design, Sector: Hospitality & Tourism | Tagged , , | Leave a comment

How innovation fits into the management of megaprojects

Innovation and project management have not always been thought to go hand-in-hand.  Although as a recent blog explained, increasingly the concept of agile project management is being adopted.  In this MIT Sloan Management Review article, Davies et al (2017) argue that for very large projects over $1 billion, so-called megaprojects, innovation must be an integral part of they are managed.  They propose five basic rules, which are summarised here:

  1. “Assess what has worked before” – for instance by site lists to other megaprojects.
  2. “Organise for the unforeseen” – for instance by having flexible contracts and cross-functional teams.
  3. “Rehearse first” – for instance test off site (as Pipex do in our Operations Insight at the end of chapter 15)
  4. “Calibrate and apportion risks appropriately” – adopt traditional and agile approaches to different aspects of the project.
  5. “Harness innovation from start to finish” – have formal structures and processes for doing this.
Posted in Chap 13 Projects and crises | Tagged , | Leave a comment

Co-branding shifts to multi-branding in the hotel industry

Co-branding has been around for many years now.  This is the idea that two brands can operate side-by-side in the same building, potentially sharing some back-of-house infrastructure and front-of-house management.  (We discuss this in our book on page 102).  If two brands can share the same space, why not more?  Which leads to the idea of ‘multi-branding’.

In the USA, hotel chains have begun to adopt this as a way of optimising their property portfolio, as this article on JLL Real Views explains.  There are at least 75 co-branded hotels already, but now Marriott and other chains are combining three brands into a single property.  Their new hotel in Nashville will “feature an AC Hotels by Marriott, a Springhill Suites by Marriott and a Residence Inn by Marriott”.

Posted in Chap 04 Location and design, Sector: Hospitality & Tourism | Tagged | Leave a comment