‘1 million for work flexibility’

In the UK there has been much debate about the so-called gig economy, zero hours contracts, and flexible working.  I have blogged about how it is perceived to be undesirable by some politicians, employers and trades unions here in the UK.  So it is interesting to see  a different perspective from the USA.

I million for work flexibility (1MFWF) is a US-based pressure group calling for more flexibility in the work place (website here).  They are in favour of this because according to them it provides “work-life balance, better health, greater productivity, more availability for our families, less stress, stronger local job economy, more time to volunteer, reduced commutes, environmental concerns”.  Make up your own mind…

Posted in Chap 11 Jobs and people | Tagged , , | Leave a comment

Fruit and veg not loose. But maybe there’s a screw loose?

Good article in The Grocer about Asda’s decision to trial selling only pre-packaged fruit and vegetables.  This has apparently caused “outrage” and “uproar”, even hitting the headlines.  Some customers in the store where it is being trialled have ripped open the packaging in order to take the exact quantity they want.  So what’s going on?

The business case for not selling loose fruit and veg is fairly clear.  First, it appears that by standardising package size the overall price will come down.  This seems counter intuitive – surely unpackaged items in bulk are less expensive to process than packaged ones?  But apparently not.  Second, it may slightly speed up check out, as loose items will no longer need to be weighed or counted in order to establish the price at the till.  Finally, it is likely to reduce food waste.  Fresh products sold loose tend to be sorted by consumers who leave those items that do not conform to their expectations.

The case against only selling pre-packaged product is also fairly clear.  First, it is believed prices will go up – because consumers will have no choice but to buy more than they might want.  Second, waste will go up.   But instead of it being in the supermarket it will occur in the supply chain and in the households.  It will occur in the former because there will be huge pressure to produce individual fruits and vegetables that conform to a precise cost standard, as well as a quality standard.   So slightly underweight or overweight items will not be packaged.  And it will occur in households because they end up buying more fruit or veg than they can consume.

So who is right?  From an operations perspective, this is all about a choice here between two different order winners (OWs) – cost or flexibility.  Pre-packaging delivers lower cost; loose fruit and veg delivers flexibility.  Because Asda are under huge pressure from low cost supermarket chains, and their research suggests that price is a key factor in a consumers decision to shop in their stores, they have favoured delivering on the cost OW and discarded the flexibility OW.   They are probably wrong to do so, simply because they have more than one target customer.  Their customer base includes hard-up families who may well be cost conscious, but it also includes people living alone, retired couples and so on, all of whom may well prefer flexibility.  On this basis, it does not matter which of the two approaches minimises waste and is the most environmentally friendly – both are needed.

Posted in Chap 06 Materials and inventory, Sector: Retail | Tagged , , , | Leave a comment

Wingstop winging its way to the UK

This restaurant chain is set to open 100 new outlets in the UK in the next 12 years.  If you’ve not heard of it here is their corporate video.  But what interests me is it’s growth strategy and its international expansion.

Since it opened its first outlet in 1994, it has grown to be a chain of more than 1,000 restaurants worldwide.  And it has expanded outside the USA into Mexico, Singapore, the Philippines, Indonesia and the United Arab Emirates.  And two weeks before announcing its expansion plans into the UK, it announced it would be opening 30 restaurants in Malaysia.

97% of the chain’s outlets are franchises.  Whereas in the USA, these might be with individual franchisees in different cities or states, all of its international expansion has been with a single corporate franchisee awarded the rights to operate the chain in that country.  In the UK, this is Lemon Pepper Holdings – which has been specifically set up by UK-based restaurant entrepreneurs to operate the Wingstop franchise.

Posted in Chap 17 Internationalisation and CSR | Tagged , | Leave a comment

By 2030 Dubai plans one quarter of its police force will be robots

If you think this is crazy, Robocop 1 has just started work this week…

Posted in Chap 10 Processes and technology, Sector: Public Services & Charities | Tagged | Leave a comment

BAh!

BA thinks of itself as an airline with an IT system.  Maybe if it thought of itself as an IT company that moves people around, yesterday’s events would never of happened?  After all that’s how Amazon thinks – an internet company that moves products around.

Just a Sunday morning thought. (I’ll probably blog in more detail on their IT fiasco later this week when more is known about it).

Posted in Chap 01 Introduction, Sector: Hospitality & Tourism | Tagged , | Leave a comment

Why operations are at the heart of any business strategy

I blog about operations.  But this has to be placed in the context of the overall strategy of the business or organisation conducting those operations.  So it’s worth now and again to ponder on strategy, and reflect on current thinking in this field.  Except this article from strategy + business is somewhat critical of current (and even historic) strategic concepts.

But it seems to me that it falls foul of the very thing that it is critical of – namely that strategy has largely been a set of fashionable “universal prescriptions” that have quickly become superseded by the next big thing.  One problem with this critique is that many of the concepts it suggests are ‘strategies’ are clearly not.  For instance, the article suggest that TQM and business process reengineering (BPR) are ‘strategies’, when they are not.  Like many that talk about this subject, it confuses means with ends.  TQM and BPR are the means by which the strategy can be delivered, not the strategy itself.

Despite this, the article is an interesting read especially as it proposes the five core elements of any strategy.  These are:

  1. What business should you company be in?
  2. How should you add value to your business?
  3. Who should be the target customer for your business?
  4. What should be the value proposition to those customers?
  5. What capabilities should differentiate your ability to add value to your business and deliver its value proposition?

(Personally I think question 1 and 2 are redundant.  If you answer questions 3, 4 and 5, by definition questions 1 and 2 are answered for you.)

From this it is clear where operations fit into strategy.  We spend the entire second chapter of our book explaining and discussing order qualifiers (OQ) and order winners (OWs).  Just to remind you – OQs are necessary for a product or service to be considered by a customer, and OWs are the characteristics of a product or service which directly contribute to winning business from the customer.  There are five main OWs – cost, quality, flexibility, dependability and speed.  Within these there are total of 32 specific OWs.  Selecting which of these specific OWs to offer answers question 4 i.e. they make up the ‘value proposition’.  Then selecting the right processes to deliver these resolves question 5 i.e. they differentiate you from others in the market – in one of two ways.  Either you have a unique combination of OWs that no one else has (not easy to achieve these days), which is what the article talks about as  the “big idea”.    Or you have the same OWs as competitors, but you outperform them in one or more of them.

So if your target market is the price-sensitive, short haul, leisure traveller, you combine predominantly cost OWs in oder to create a low cost strategy designed to compete in the budget airline industry.  Whereas if customer are concerned about quality, you combine predominantly quality OWs into an operations strategy – which may or may not be termed TQM or continuous improvement depending on your specific approach.

Posted in Chap 02 Winning Customers, Chap 14 Operations strategy | Tagged , , , | Leave a comment

It’s not just budget hotels being constructed from prefab modules

Budget hotels have been assembled from preconstructed modules for quite some time now, as have bathrooms installed into hotels.  But as this technology has become more sophisticated, more upmarket and boutique properties are being developed in this way .  For instance, all of the hotels in the CitizenM chain have been constructed using this approach. There are several advantages to modular building – as this article in Hospitality Business News explains.

  • total construction time is reduced, in one case from 30 months down to 6 months
  • on-site construction (or assembly) time is much shorter – as little as four weeks
  • waste of materials is reduced by up to 80%
  • there are fewer defects upon completion of the build due to tight quality control in the factory where the modules are made.

The article makes no mention of it, but I am fairly certain that costs are also significantly lower, even though the modules may have to be shipped from China.

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

The impact of seasonality and fuel costs on easyjet

easyjet shares lost 6% this week on the release of their half year results.  The airline, like most other similar airlines in Europe, always makes a loss in the winter months  due to lower levels of demand at this time of year.  What caused the shares to fall was the size of this loss – £212m compared with £21m in the previous year.  According to the BBCNews this was due to “seasonality and higher fuel costs”.

So I took a look at easyjet’s presentation to City analysts (here).  Seasonality is a feature of this business, so what has made 2016/17 so different?  At first sight (slide 5) it was incomprehensible.  When compared with 2015/16, passenger numbers were up 9% and even the load factor was slightly up by 0.5%.  However, whilst the volume of demand  had been maintained, it seems this had only been achieved by lowering price.  Revenue per seat was down by 4.9%.  But despite this (slide 6) total revenue was up 3.2%.  So it would seem that seasonality has not affected profitability at all, as it only affects revenues not costs.

So was the high loss simply due to the increased cost of fuel?  Apparently not.  Headline costs excluding fuel had gone up 18.7% (slide 6), whereas fuel costs had actually gone down 0.5%. This is not making any sense…  There are then three slides (slides 7,8 and 9) that are meant to explain this:

  • Slide 7 explains why revenue per seat was down.  This was for two reasons.  First, Easter was included in the 2015/16 period, but was outside the half year in 2016/17.  But this only accounted for less than a third of the difference.  The biggest effect was due to “underlying market conditions”.
  • Slide 8 explains “headline cost per seat bridge”.  This shows that overall these costs were “flat” (i.e. the same) in both periods, except for two things.  Fuel costs which were lower, and “P&L Fx” which were higher, and which accounted for the actual higher cost per seat.  It seems that P&L Fx is something to do with foreign exchange rate and the value of the pound against the dollar.
  • Slide 9 appears to confirm this.  But to be honest, this is where I got lost…

Another slide in the presentation caught my eye.  This outlined easijet’s key strategic goals (slide 3).  One of these was “continued investment in customer proposition and lean initiatives” (my emphasis).  Given that this airline is a low cost carrier, it’s whole business model is based around being lean already.  So this illustrates how adopting a lean approach is not just a one off activity, it is something that is put in place for the long term. Exactly what easijet’s initiatives are, is explained in slide 26.

Posted in Chap 07 Capacity and demand, Sector: Hospitality & Tourism | Tagged , , , , | Leave a comment

Remote sensing for business

The term remote sensing has two different meanings.  Three years ago I blogged about how some firms are using sensors to monitor the performance of their machinery and equipment remotely.   This is often adopted as part of their products-as-services strategy.  But a second meaning, more commonly used, is the use of satellites and other technologies to view and analyse what is happening on the surface of the earth.  Originally deployed for military and scientific purposes, digital aerial photography and satellite imaging is now being applied commercially.

In this article, Segal talks about the application of the second type of remote sensing to the business world.  One of its earliest buses was in the field of oil exploration.  But more recent remote sensing is being used by retailers and others for market analysis, site selection, market planning and change detection.  One simple example is the swimming pool cleaning company that used to go house-to-house promoting its services.  By using aerial photography, the company no longer had to go to every house, but only those that they knew already had a pool.

Posted in Chap 04 Location and design, Sector: Public Services & Charities, Sector: Retail | Tagged , | Leave a comment

Implications of AI for the travel industry

Over the next few years, consumers and employees will increasingly speak to their smart devices rather than use a key board. This has significant implications for how consumers will buy products and services and for how these products will be made and how services will be delivered.  This is exemplified by this article that looks at Google’s adoption of AI and how this will affect one specific industry – the travel sector.

In the article, Huang explores Google’s strategy and how it will be deploying artificial intelligence (AI).  She then explores the implications of this for the travel industry.  The key thing will be that consumers will not be typing in search terms on their keyboards, but be using ‘natural language’ to speak to their devices.  This is likely to make their searches more specific and hence the results they get more customised to the needs of each consumer.

Posted in Chap 10 Processes and technology, Sector: Hospitality & Tourism | Tagged , | Leave a comment