Category Archives: Domestic Business

Big Mickey Is Watching

Posted on by

MARCH 14, 2014

by 

Disney's bands track user patterns

The couple  tapped their lunch orders onto a touchscreen at the entrance to the restaurant at Disney World and were told to take any open seat. Moments later a food server appeared at their table with their sandwiches. “How did they know where we were sitting,” asked the guest.The answer, writes BusinessWeek(March 10-16, 2014), was on the electronic bands the couple wore on their wrists.

That’s the magic of the MyMagic+, Walt Disney’s $1 billion experiment in crowd control, data collection, and wearable technology that could change the way people play—and spend–at Disney. If the system works, it could be copied not only by other theme parks but also by museums, zoos, airports, and malls. Change is always tricky for Disney,  where introducing a new brand of coffee can spark a revolt by fans. And MyMagic+ promises far more radical change. It’s a sweeping reservation and ride planning system that allows for bookings months in advance on a website or smartphone app. Bracelets called MagicBands, which link electronically to a database of visitor information, serve as admission tickets, hotel keys, and credit or debit cards; a tap against a sensor pays for food or trinkets. The bands have RFID chips—which critics derisively call spychips.

The goal is to offer people what Disney calls “a more immersive, more seamless, and more personal experience”—allowing Disney employees to address a child by name, for example, or wish someone a happy birthday. Moreover, visitors with full Disney World schedules mapped out in advance on the MyMagic+ system will be less likely to jump spontaneously to one of the dozens of other attractions here in Central Florida, including Universal, SeaWorld, and Legoland. And, of course, the MagicBands make it so easy to spend. The new system also helped the Magic Kingdom park accommodate 3,000 additional daily guests during the Christmas holiday season by reducing congestion around the most popular attractions.

This post provided courtesy of Jay and Barry’s OM Blog at www.heizerrenderom.wordpress.com. Professors Jay Heizer and Barry Render are authors of Operations Management , the world’s top selling textbook in its field, published by Pearson.

 

Now Comes the Hard Part for General Motors

Posted on by

MARCH 11, 2014

by 

gm recall“Less than a month after General Motors announced it would recall 1.6 million cars because of a defective ignition switch,” writes The New York Times (March 10, 2014), “the automaker now faces an arduous task: fixing the cars.” The process, particularly for older vehicles like the ones G.M. is recalling, is time-consuming and requires many steps, from designing the new parts, testing them to make sure they solve the problem, finding and informing owners, and actually completing the repairs.

The company has just started to send out the recall letters with a stern, if unusual, warning: “Remove all items from your key ring, leaving only the vehicle key.” That is because if the defective ignition switch is jostled, or even if the key chain is too heavy, it can turn off the engine and the car’s electrical system, disabling the air bags. G.M. said it had linked the defect to 31 crashes and 13 deaths since it was first alerted to the problem in 2004. The letter also tells owners that the replacement parts “are not currently available.”  G.M. said the supplier, Delphi, needed to prepare the machines that would make the part before mass production could begin. In some recalls, parts suppliers have already sold off those machines, making it even more time-consuming.

The G.M. recall is large, but it is one more than 900 recalls in the past 7 years, covering 50 million vehicles. While recalls are not unusual, the number of fatalities involved and the way G.M. handled this one stretching over the past decade has the potential to cost the company hundreds of millions of dollars in fines and possible legal damages, in addition to tarnishing its reputation. This is a great story to bring to your class both in the context of Chapter 17 (Maintenance and Reliability) and as an Ethical Dilemma in Chapter 5 (Design of Goods and Services.)

This post provided courtesy of Jay and Barry’s OM Blog at www.heizerrenderom.wordpress.com. Professors Jay Heizer and Barry Render are authors of Operations Management , the world’s top selling textbook in its field, published by Pearson.

 

Lowe’s Turns to Satellites to Forecast Customers

Posted on by

MARCH 5, 2014

lowesForget Amazon’s package-toting drones—the future of retail may lie in satellites. That’s how Lowe’s is catching up to Home Depot in the hunt for customers. Lowe’s, writes BusinessWeek(Feb. 26, 2014), says that “it has been gauging traffic at its almost 1,900 stores from space, scanning satellite images of its parking lots to find out how many shoppers it can expect at every hour of every day.” It has also started syncing its parking lot observations with actual transaction counts to see how many people drove away without making a purchase.

The space snooping is a great way for Lowe’s to manage its workforce, scheduling surges in floor staff when parking spaces are about to become hard to come by. Evidence shows the satellites are helping move the needle for Lowe’s. The fourth-quarter close rate—the share of shoppers who bought something—improved by almost 1%, and total sales per hour of labor increased by 2%. The company’s profit in the recent quarter increased 6.3%, while sales ticked up 3.9%.

Anyone who has every wandered through a hardware superstore looking for an odd screwdriver or a particular kind of sandpaper understands how critical staffing is for Lowe’s. Cornering an aproned employee can seem more challenging than fulfilling the project. And there are few greater frustrations in retail than standing by with a simple question while another customer solicits a protracted product review.

Lowe’s and Home Depot more or less sell the same products at the same prices in the same places. Assuming their supply chains and marketing strategies are in sync, their market shares ride almost entirely on service. From that perspective, being able to have more employees around when more customers need help is success–and not paying them to sit around in the store when shoppers are sparse helps, too.

This post provided courtesy of Jay and Barry’s OM Blog at www.heizerrenderom.wordpress.com. Professors Jay Heizer and Barry Render are authors of Operations Management , the world’s top selling textbook in its field, published by Pearson.