The Customized Bicycle Industry

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APRIL 16, 2014

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bike custom

The vast majority of bikes sold in the US are made in Asia and a handful of companies dominate the market, writesThe Atlantic (April 3, 2014).  Custom-made bikes are a very small slice of the industry. “But right now is the Golden Age in custom frame building,” says one industry expert. “There have never been more builders producing, and the quality has never been higher.” Though thriving, the 100 or so builders in the hand-built bicycle scene make up about 3.3% of the overall U.S. bike industry, valued at $6.1 billion and is sourced almost completely overseas. Almost 99% of bicycles sold in the U.S.are assembled in Asia—93% in China and 6% in Taiwan.

Additionally, just four companies—Dorel, Accell, Trek Bicycle, and Specialized Bicycle—own about half of the 140 bicycle brands available in this country. Technology, though, is very accessible to a one-person or two-person shop or frame builder. A lot of the innovation and creativity comes from the thinking that smaller companies can produce. Technology has made the production side more important by lowering the cost of reaching customers. The internet opens up selling opportunities–and more competition. So production and design capabilities are critical.

Unlike production bicycles that come off the rack in standard shapes and sizes, custom bikes are designed specifically for their owners’ bodies, riding styles, and aesthetic preferences. In determining the angles, rigidity, and flex of the frames they construct, hand builders take into account dozens of measurements and factors—everything from customers’ inseams, arm length and hip flexibility to whether they prefer a stiff ride for efficiency or a softer ride for comfort. The customer also has a say in the bike’s finish, color scheme and design. Ranging in price from $3,000 to more than $15,000, the primary market for custom bikes is affluent people in their 40s or 50s—more men than women—who are steeped in the cycling lifestyle and already own one bike, if not 10.

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.

The Environmentally Friendly Paper Cup

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APRIL 14, 2014

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Jamba Juice, McDonald’s, and several other food chains are starting to serve their drinks in paper cups. Drinks stay just as hot and cold in  new doubled-walled paper cup as in the old non-biodegradeable foam variety. The paper industry likes it a lot too. Demand for paper cups is growing 5% a year. Environmental concerns from consumers and new bans on plastic foam in more U.S. cities are prompting food chains to make a switch, reports The Wall Street Journal (April 11, 2014).

Jamba Juice said last year it would adopt paper cups for its smoothies and other cold drinks “to improve our environmental footprint.” McDonald’s is replacing plastic-foam cups with double-walled McCafe paper cups at all 14,000 McCafes across the country. The company says it is trying to be more environmentally conscious and cut costs on trash. Dunkin’ Brands Group Inc. has said it is testing paper cups. These companies join Starbucks, which has been using paper for years.

Environmental advocates say paper is easier on the environment than plastic foam because the latter tends to break up in landfills and then is mistaken by animals for food. Plastic foam is difficult to recycle unless it is kept clean and separated from other types of plastics—so many plants in the U.S. don’t take it. It isn’t biodegradable.

Paper cups are slightly more expensive than foam. Extras like double walls for insulation or plant-based lining to make it compostable add to the price. While the paper cups cost a few cents more, McDonald’s says it will make up the difference in the trash. Most of the chain’s waste is paper-based– wraps, fry cartons and Big Mac boxes—so paper cups can go into the same trash bin, and eventually into recycling bins.

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.

Delta’s Unorthodox Scheduling System

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APRIL 11, 2014

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Delta's Control Room

“The crew of Delta Air Lines Flight 55 last Thursday couldn’t legally fly from Lagos, Nigeria, to Atlanta unless they waited a day due to new limits on how much pilots can fly in a rolling 28-day period,” writes The Wall Street Journal (April 3, 2014). The trip would have to be canceled. Instead, Delta headquarters told the captain to fly to San Juan, which they could reach within their duty limits. There, two new pilots would be waiting to take theBoeing 767 on to Atlanta. The plane arrived in San Juan at 2:44 a.m., quickly took on fuel and pilots, and landed in Atlanta only 40 minutes late.

The episode, unorthodox in the airline industry, illustrates the fanaticism Delta now has for avoiding cancellations. Last year, Delta canceled just 0.3% of its flights. That was twice as good as the next-best airlines, Southwest and Alaska, and five times better than the industry average of 1.7%.

As it cut cancellations with a more-reliable operation, overall on-time arrivals improved and Delta has fewer delays. Managers in Delta operations center (featured in our Global Company Profile  in Chapter 15) move planes, crews and parts around hourly trying to avoid canceling flights. How well an airline maintains its fleet and how smartly it stashes spare parts and planes at airports affect whether a flight goes or not. Delta’s new analytical software and instruments that can help monitor the health of airplanes and predict which parts will soon fail. Empty planes are ferried to replace crippled jets rather than waiting for overnight repairs. Typically the airline has about 20 spare airplanes of different sizes each day. About half are stationed in Atlanta and the rest spread around other domestic hubs and two in Tokyo.

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.