Why is efficiency important in airline boarding processes?

  

usethe environmental analysis you researched.Createa 10- to 12-slide presentation including detailed speaker notes in which you include the following:Examine the results of the internal environmental scan findings in the analysis.Examine the results of the external environmental scan findings in the analysis.Discuss the findings of the scans as they relate to relevant research.Recommend 3 strategic objectives based on the SWOT analysis.Translate each objective into a business goal.Create a related operational tactic for 3 distinct sectors of the organization such as marketing, finance, accounting, etc.Formatyour assignment consistent with APA guidelines.
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CHAPTER9
ValueChainManagement:Functional
StrategiesforCompetitiveAdvantage
LearningObjectives
Afterstudyingthischapter,youshouldbeableto:
LO9 Explaintheroleoffunctionalstrategyandvaluechainmanagementinachievingsuperior
quality,efficiency,innovation,andresponsivenesstocustomers.
1
LO9 Describewhatcustomerswant,andexplainwhyitissoimportantformanagerstobe
responsivetotheirneeds.
2
LO9 Explainwhyachievingsuperiorqualityissoimportant,andunderstandthechallenges
facingmanagersandorganizationsthatseektoimplementtotalqualitymanagement.
3
LO9 Explainwhyachievingsuperiorefficiencyissoimportant,andunderstandthedifferent
kindsoftechniquesthatneedtobeemployedtoincreaseefficiency.
4
LO9 Differentiatebetweentwoformsofinnovation,andexplainwhyinnovationandproduct
developmentarecrucialcomponentsofthesearchforcompetitiveadvantage.
5
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AMANAGER’SCHALLENGE
ReadyforTakeoff?IncreasingAirlinesBoardingEfficiency
Whyisefficiencyimportant? Isitfastertoboardthebackoftheplanefirst?Orshouldairlines
file in passengers with window seats first, followed by those with middle seats, followed by those
withaisleseats?Whataboutjustassigningpassengerstorandomgroupsandboardingthatway?Or
howaboutnotassigningseatsandjustallowingpassengerstositwherevertheywant?
These were the questions some major airlines were asking themselves recently in an effort to
improvetheirpunctualityratings.Latedeparturesandarrivalscostairlinesdearlyinmorewaysthan
reputation,somakingsureboardingoccursinatimelymannerisofgreatconcerntotheindustry,as
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wellastopassengersneedingtomakeconnectingflights.
Certainly the first two options sound like they would be faster than the freeforall of allowing
randomgroupstoboardatthesametimeorallowingpassengerstositwherevertheylike.Yettwo
recentstudiesfoundthatrandomboardingdoesworkalittlequickerthantheotheroptions,believeit
ornot.
OnestudywasconductedbyAmericanAirlines.Itspenttwoyearsstudyingwaystospeedupthe
boarding process and landed on randomized group boarding for most passengers. The airline still
gives families, military personnel, and travelers with elite status priority boarding. It also allows
passengerstheoptionofpayingforearlyboardingiftheychoose.
PartofAmerican’sstudyhadobserverswatchthousandsofboardingprocessestoseewherethings
boggeddown.Carryonbagswereabigproblem.Passengerswerebringinglargebagsonboardto
avoidbaggagefees.Whentheplanewasboardedbacktofront,thosewaitingintheaislestogetto
theirseatswouldputtheirbagsinoverheadbinsatthefrontoftheplane,leavingnospaceforthe
bagsofpassengerswhoboardedlater.
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Usingcomputersimulations,Americannotonlyfoundthatthebacktofrontboardingmethodwas
slowerthanthewindowmiddleaisleseatmethod,itsurprisinglydiscoveredthatputtingpassengers
into random boarding groups allowed the plane to fill up faster. Using the random method, more
passengersgottotheirseatsatthesametimethanthetwoatatimerateofthebacktofrontmethod.
Also,passengersweremorelikelytostowtheirbagsinoverheadbinsclosertotheirseatsthanatthe
frontoftheplane.ThenewmethodevenreducedthenumberofbagsAmericancheckedatthegate
by20percent.1Morerecently,Americantweakedthesystemtoaddpassengerswithoutcarryonsto
thelistofpriorityboarders.2
Another study was done by MythBusters, the Discovery Channel television show that applies
scientificmethodstotestvariousacceptedideas.Intheepisodeonplaneboarding,theMythBusters
team sought to confirm the myth that when boarding an airplane, boarding backtofront is the
slowestmethod.3Ontheprogram,thehostsbuiltaplanereplica,completewithseatsandoverhead
bins. Volunteers tested the various boarding methods. To further simulate reality, 5 percent of the
volunteersweretoldtodisruptboardingbysuchactionsassittinginthewrongseatorstandinginthe
aisleforlongerthanneeded.Professionalflightattendantswerehiredtohelpwiththeprocess.The
programmeasuredtwooutcomesofeachmethodtested:howlongittooktoboardtheplaneandhow
satisfiedthevolunteerpassengerswerewitheachexperience.
The method with the highest satisfaction rating was the reverse pyramid in which elite
passengersboardedfirstfollowedbyacomplexsetofzonesthatbeganwiththerearwindowseats.
Thatmethodallowedtheplanetoboardin15minutesand10seconds.Themethodthatallowedfor
fastestboardingwastheonewithnoassignedseats.Whenused,theplanewasboardedin14minutes
and7seconds.Yetthismethodhadthelowestsatisfactionratingofallthemethodsattemptedonthe
show.
The second fastest method was boarding elite passengers first, followed by the windowmiddle
aisleseatmethod.Thismethodreceivedhighmarksforpassengersatisfaction.Thismethodissimilar
to one called the Steffen Method, named for astrophysicist Jason Steffen who wrote a research
paper with a mathematical approach to efficient boarding. In that method, passengers board in the
windowmiddleaisleseatmethod,butinassignedzonesthatkeepthemindifferentpartsoftheplane
andallowsimultaneousboarding.4
Whatslowsdownboarding?Manyindustryanalystsandbloggershavelistedthereasons.Forone,
manypassengersboardoutsidetheirzoneorwhatevermethodtheairlineisusing,whichmakesthe
systemlessefficient.Somepassengersmaydothispurposefullyandcountongateagentstolookthe
otherway.5Second,otherpassengerspayforearlyboardingoraregivenearlyboardingaspartof
theirfrequentflierrewardprogram,whichhasthesameeffectasthosewhojumpedtheline.Boththe
passengerswhoboardedwiththewronggrouponpurposeandthosewhopaidfortheprivilegemay
beintheaisleasotherstrytoboardormaybestrappedintomiddleoraisleseatsandwillneedto
standwhenthewindowseatpassengersarrive.6Third,sometimesafterstowingacarryonbaginthe
overheadbin,apassengerrememberssomethingneededfromthebag,stands
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up,andblockstheaislewhilerummagingthroughthebagtofindit.7
Probablythemostmentionedculpritforslowboardingisbaggageissues.Airlinesstartedcharging
forcheckedluggagein2008whenfuelpriceswentup.8Toavoidthefees,morepassengersbegan
usingcarryonluggage.Theextraluggageslowstheboardingprocessbyleavingpassengersinthe
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aislelonger.Theextraluggagealsofrequentlyfillsupthebins,requiringextratimeandeffortfor
airlinepersonneltogatecheckthebags.9
Whyisthespeedofboardinganairplaneimportant?Airlinessave$30foreveryminuteshavedoff
boardingtimes.10However,airlinesappeartobemakingsomeofthismoneybackinfees.In2014
U.S.basedairlinesplannedtoincreasetheirfees,despitemakingover$6billionfromfeesin2013.
UnitedContinental,whichcollectedalmost$650millionincheckedbagsfeesin2013,increasedits
feechargedtopassengersflyingwithmorethantwobagsby$25perbag.Oversizedbagscost$200
to check, and bags weighing more than 70 pounds cost $400 to check.11 Delta Airlines collected
about$1billioninfeesin2013.12
Fees vary at different airlines, as do methods for boarding planes. Southwest Airlines uses the
unassigned seat method of boarding. The airline assigns passengers to boarding groups and gives
eachpassengeraboardingnumberwithinthegroup.Passengerslineupingroupsandinnumerical
order.Sinceseatsarenotassigned,eachpassengerselectsaseatwhenontheplane.13LikeAmerican
Airlines, most airlines use assigned seating and some type of boarding group system to put
passengersontheplanes.
Overview
As A Manager’s Challenge suggests, organizations don’t always agree on the best way to conduct
business. Even organizations in the same industry can vary widely on business practices. Some
organizations may adopt the latest research and methods, while others find different ways to stay
competitive. In this chapter we focus on the functionallevel strategies managers can use to achieve
superior efficiency, quality, innovation, and responsiveness to customers and so build competitive
advantage.Wealsoexaminethenatureofanorganization’svaluechainanddiscusshowthecombined
orcooperativeeffortsofmanagersacrossthevaluechainarerequiredifanorganizationistoachieveits
missionandgoalofmaximizingtheamountofvalueitsproductsprovidecustomers.Bytheendofthis
chapter, you will understand the vital role value chain management plays in creating competitive
advantageandahighperformingorganization.
FunctionalStrategies,theValueChain,
andCompetitiveAdvantage
As we noted in Chapter 8, managers can use two basic businesslevel strategies to add value to an
organization’s products and achieve a competitive advantage over industry rivals. First, managers can
pursuealowcoststrategyandlowerthecostsofcreatingvaluetoattractcustomersbykeepingproduct
prices as low as or lower than competitors prices. Second, managers can pursue a differentiation
strategyandaddvaluetoaproductbyfindingwaystomakeitsuperiorinsomewaytotheproductsof
othercompanies.Iftheyaresuccessfulandcustomersseegreatervalueintheproduct,thenlikeApple
theycanchargeapremiumorhigherpricefortheproduct.Thefourspecificwaysinwhichmanagers
can lower costs and/or increase differentiation to obtain a competitive advantage were mentioned in
Chapter1 and are reviewed here how organizations seek to achieve them is the topic of this chapter.
(SeeFigure9.1.)
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Figure9.1 FourWaystoCreateaCompetitiveAdvantage
LO91
Explaintheroleoffunctional
strategyandvaluechain
managementinachievingsuperior
quality,efficiency,innovation,and
responsivenesstocustomers.
1. Achievesuperiorefficiency.Efficiencyisameasureoftheamountofinputsrequiredtoproducea
givenamountofoutputs.Thefewertheinputsrequiredtoproduceagivenoutput,thehigheris
efficiencyandthelowerthecostofoutputs.Forexample,inGartner’sannualrankingofthe
world’ssupplychains,Applewasrankednumberoneforsixyearsinarow.PartofApple’s
strengthhasbeenitsfocusonsimplicity.Yetthecompanyhasbeguntoexpanditsproduct
portfolio,whichwillincreasetheneedforcomplexitymanagementinitssupplychain.14
2. Achievesuperiorquality.Qualitymeansproducinggoodsandservicesthathaveattributessuch
asdesign,styling,performance,andreliabilitythatcustomersperceiveasbeingsuperiortothose
foundincompetingproducts.15Providinghighqualityproductscreatesabrandnamereputation
foranorganization’sproducts,andthisenhancedreputationallowsittochargehigherprices.Inthe
carindustry,forexample,Toyota’sreputationformakingreliablevehiclesallowedittooutperform
rivalcarmakersandgivesitacompetitiveadvantage.
3. Achievesuperiorinnovation,speed,andflexibility.Anythingneworbetteraboutthewayan
organizationoperatesorthegoodsandservicesitproducesistheresultofinnovation.Successful
innovationgivesanorganizationsomethinguniqueordifferentaboutitsproductsthatrivalslack
moreattractive,useful,sophisticatedproductsorsuperiorproductionprocessesthatstrengthenits
competitiveadvantage.Innovationaddsvaluetoproductsandallowstheorganizationtofurther
differentiateitselffromrivalsandattractcustomerswhoareoftenwillingtopayapremiumprice
foruniqueproducts.Forexample,Nintendo’sformercompetitiveadvantageinhandheldvideo
gamedeviceslikethe3DShasbeenerodedasmoregamesareavailableonsmartphonesand
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tablets.16
4. Attainsuperiorresponsivenesstocustomers.Anorganizationthatisresponsivetocustomerstries
tosatisfytheirneedsandgivethemexactlywhattheywant.Anorganizationthattreatscustomers
betterthanitsrivalsdoalsoprovidesavaluableservicesomecustomersmaybewillingtopaya
higherpricefor.Managerscanincreaseresponsivenessbyprovidingexcellentaftersalesservice
andsupportandbyworkingtoprovideimprovedproductsorservicestocustomersinthefuture.
TodaysmartphonecompaniessuchasSamsung,Apple,andNokiaaresearchingforwaystobetter
satisfychangingcustomerneedsforhigherqualityvideo,sound,andInternetconnectionspeed.
FunctionalStrategiesandValueChainManagement
functionallevelstrategy Aplan
ofactiontoimprovetheabilityof
eachofanorganization’sfunctions
toperformitstaskspecific
activitiesinwaysthataddvalueto
anorganization’sgoodsand
services.
valuechain Thecoordinated
seriesorsequenceoffunctional
activitiesnecessarytotransform
inputssuchasnewproduct
concepts,rawmaterials,
componentparts,orprofessional
skillsintothefinishedgoodsor
servicescustomersvalueandwant
tobuy.
Functionallevelstrategyisaplanofactiontoimprovetheabilityofeachofanorganization’sfunctions
ordepartments(suchasmanufacturingormarketing)toperformitstaskspecificactivitiesinwaysthat
addvaluetoanorganization’sgoodsandservices.Acompany’svaluechainisthecoordinatedseriesor
sequence of functional activities necessary to transform inputs such as new product concepts, raw
materials,componentparts,orprofessionalskillsintothefinishedgoodsorservicescustomersvalueand
wanttobuy(seeFigure9.2).Eachfunctionalactivityalongthechainaddsvaluetotheproductwhenit
lowerscostsorgivestheproductdifferentiatedqualitiesthatincreasethepriceacompanycanchargefor
it.
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valuechainmanagement The
developmentofasetoffunctional
levelstrategiesthatsupporta
company’sbusinesslevelstrategy
andstrengthenitscompetitive
advantage.
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Value chain management is the development of a set of functionallevel strategies that support a
company’s businesslevel strategy and strengthen its competitive advantage. Functional managers
develop the strategies that increase efficiency, quality, innovation, and/or responsiveness to customers
and thus strengthen an organization’s competitive advantage. So the better the fit between functional
andbusinesslevelstrategies,thegreaterwillbetheorganization’scompetitiveadvantage,andthebetter
able the organization is to achieve its mission and goal of maximizing the amount of value it gives
customers.Eachfunctionalongthevaluechainhasanimportantroletoplayinvaluecreation.
AsFigure9.2suggests,thestartingpointofthevaluechainisoftenthesearchfornewandimproved
productsthatwillbetterappealtocustomers,sotheactivitiesoftheproductdevelopmentandmarketing
functions become important. Product development is the engineering and scientific research activities
involvedininnovatingneworimprovedproductsthataddvaluetoaproduct.Forexample,Applehas
been a leader in developing new kinds of mobile digital devices that have become so popular among
buyersthatitsproductsarerapidlyimitatedbyitscompetitors.Onceanewproducthasbeendeveloped,
themarketingfunction’staskistopersuadecustomersthattheproductmeetstheirneedsandconvince
themtobuyit.Marketingcanhelpcreatevaluethroughbrandpositioningandadvertisingthatincrease
customerperceptionsoftheutilityofacompany’sproduct.Forexample,moviegoersappearwillingto
paymoretowatchamoviein3D.In2014,28filmswereslatedtobereleasedin3D.17Evenfilmmaker
StevenSpielbergdoubtedthevalueofpayingextrafor3D.Inaninterview,hesaidhehoped3Dticket
priceswouldgetinlinewith2Dprices.However,hedidindicatethatIMAXmovieswouldcontinueto
beworthextraforapremiumexperienceinapremiumenvironment.18
Even the bestdesigned product can fail if the marketing function hasn’t devised a careful plan to
persuade people to buy it and try it outor to make sure customers really want it. For this reason,
marketing often conducts consumer research to discover unmet customer product needs and to find
betterwaystotailorexistingproductstosatisfycustomerneeds.Marketingthenpresentsitssuggestions
toproductdevelopment,whichperformsitsownresearchtodiscoverhowbesttodesignandmakethe
neworimprovedproducts.
At the next stage of the value chain, the materials management function controls the movement of
physicalmaterialsfromtheprocurementofinputsthroughproductionandtodistributionanddeliveryto
thecustomer.Theefficiencywithwhichthisiscarriedoutcansignificantlylowercostsandcreatemore
value.Walmarthasthemostefficientmaterialsmanagementfunctionintheretailindustry.Bytightly
controlling the flow of goods from its suppliers through its stores and into the hands of customers,
Walmarthaseliminatedtheneedtoholdlargeinventoriesofgoods.Lowerinventoriesmeanlowercosts
andhencegreatervaluecreation.
Figure9.2 FunctionalActivitiesandtheValueChain
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Theproductionfunction is responsible for creating, assembling, or providing a good or Page
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252
production,wegenerallymeanmanufacturingandassembly.Forservicessuchasbanking
or retailing, production takes place when the service is actually provided or delivered to the customer
(forexample,whenabankoriginatesaloanforacustomer,itisengagedinproductionoftheloan).
By performing its activities efficiently, the production function helps to lower costs. For example, the
efficientproductionoperationsofHondaandToyotahavemadethemmoreprofitablethancompetitors
suchasRenault,Volkswagen,andChrysler.Theproductionfunctioncanalsoperformitsactivitiesina
waythatisconsistentwithhighproductquality,whichleadstodifferentiation(andhighervalue)andto
lowercosts.
Atthenextstageinthevaluechain,thesalesfunctionplaysacrucialroleinlocatingcustomersand
then informing and persuading them to buy the company’s products. Personal sellingthat is, direct
facetoface communication by salespeople with existing and potential customers to promote a
company’s productsis a crucial value chain activity. Which products retailers choose to stock, for
example,orwhichdrugsdoctorschoosetoprescribeoftendependsonthesalesperson’sabilitytoinform
andpersuadecustomersthathisorhercompany’sproductissuperiorandthusthebestchoice.
Finally, the role of the customerservicefunction is to provide aftersales service and support. This
function can create a perception of superior value in the minds of customers by solving customer
problemsandsupportingcustomersaftertheyhavepurchasedtheproduct.Forexample,FedExcanget
its customers parcels to any point in the world within 24 hours, creating value and support for
customersbusinesses.Customerservicecontrolstheelectronicsystemsfortrackingsalesandinventory,
pricingproducts,sellingproducts,dealingwithcustomerinquiries,andsoon,allofwhichcangreatly
increaseresponsivenesstocustomers.Indeed,animportantactivityofsalesandcustomerserviceisto
tellproductdevelopmentandmarketingwhyaproductismeetingornotmeetingcustomersneedsso
theproductcanberedesignedorimproved.Henceafeedbacklooplinkstheendofthevaluechaintoits
beginning(seeFigure9.2).
In the rest of this chapter, we examine the functional strategies used to manage the value chain to
improve quality, efficiency, innovation, and responsiveness to customers. Notice, however, that
achieving superior quality, efficiency, and innovation is part of attaining superior responsiveness to
customers.Customerswantvaluefortheirmoney,andmanagerswhodevelopfunctionalstrategiesthat
resultinavaluechaincapableofcreatinginnovative,highquality,lowcostproductsbestdeliverthis
value to customers. For this reason, we begin by discussing how functional managers can increase
responsivenesstocustomers.
ImprovingResponsivenessto
Customers
Allorganizationsproduceoutputsgoodsorservicesthatareconsumedbycustomers,who,inbuying
theseproducts,providethemonetaryresourcesmostorganizationsneedtosurvive.Becausecustomers
are vital to organizational survival, managers must correctly identify their customers and pursue
strategiesthatresultinproductsthatbestmeettheirneeds.Thisiswhythemarketingfunctionplayssuch
an important part in the value chain, and good value chain management requires that marketing
managersfocusondefiningtheircompany’sbusinessintermsofthecustomerneedsitissatisfyingand
not by the typeofproducts it makesor the result can be disaster.19 For example, Kodak’s managers
said no thanks when the company was offered the rights to instant photography, which was later
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marketed by Polaroid. Why did they make this mistake? Because the managers adopted a product
oriented approach to their business that didn’t put the needs of customers first. Kodak’s managers
believed their job was to sell highquality glossy photographs to people. Why would they want to
becomeinvolvedininstantphotography,whichresultsininferiorqualityphotographs?Inreality,Kodak
wasnotsatisfyingpeople’sneedsforhighqualityphotographsitwassatisfyingtheneedcustomers
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hadtocaptureandrecordtheimagesoftheirlivestheirbirthdayparties,weddings,graduations,and
soon.Andpeoplewantedthoseimagesquicklysotheycouldsharethemrightawaywithotherpeople
whichiswhytodaydigitalphotographyhastakenoffandKodakfiledforbankruptcyin2012.
WhatDoCustomersWant?
LO92
Describewhatcustomerswant,
andexplainwhyitissoimportant
formanagerstoberesponsiveto
theirneeds.
Given that satisfying customer demand is central to the survival of an organization, an important
questionisWhatdocustomerswant?Althoughspecifyingexactlywhatcustomerswantisnotpossible
becausetheirneedsvaryfromproducttoproduct,mostcustomersprefer
1. Alowerpricetoahigherprice.
2. Highqualityproductstolowqualityproducts.
3. Quickserviceandgoodaftersalesservicetoslowserviceandpooraftersalessupport.
4. Productswithmanyusefulorvaluablefeaturestoproductswithfewfeatures.
5. Productsthatare,asfaraspossible,customizedortailoredtotheiruniqueneeds.
Managers know that the more desired product attributes a company’s value chain builds into its
products, the higher the price that must be charged to cover the costs of developing and making the
product.Sowhatdomanagersofacustomerresponsiveorganizationdo?Theytrytodevelopfunctional
strategiesthatallowtheorganization’svaluechaintodelivertocustomerseithermoredesiredproduct
attributes for the sameprice or the same product attributes for a lower price.20 For example, in 2014
WalmartannouncedthatithadmadeadealtobetheonlynationalretailertoselltheWildOatsbrand
organicfoodsandthatitwoulddosoatpriceslowerthanthoseusuallychargedfororganicproducts.
WildOatswasawellknownorganicfoodbrandinthelate1980sbuthasbeenstrugglingsincethelate
2000s. Walmart’s massive size allows it the organizational efficiencies to offer the organic brand at a
moreaffordablepriceforconsumers.21
ManagingtheValueChaintoIncreaseResponsiveness
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toCustomers
Becausesatisfyingcustomersissoimportant,managerstrytodesignandimprovethewaytheirvalue
chainsoperatesotheycansupplyproductsthathavethedesiredattributesquality,cost,andfeatures.
Forexample,theneedtorespondtocustomerdemandforcompetitivelypriced,qualitycarsdroveU.S.
carmakerslikeFordandGMtoimitateJapanesecompaniesandcopyhowToyotaandHondaperform
their value chain activities. Today the imperative of satisfying customer needs shapes the activities of
U.S.carmakersmaterialsmanagementandmanufacturingfunctions.Asanexampleofthelinkbetween
responsiveness to customers and an organization’s value chain, consider how Southwest Airlines, the
mostprofitableU.S.airline,operates.22
ASouthwestticketagentmayassistacustomerandthenturnaroundtoloadherorhisbaggageaspartofthe
organization’semphasisoncrosstrainingworkersformultipletasks.Southwest’soperatingsystemisgearedtoward
satisfyingcustomerdemandforlowpriced,reliable,andconvenientairtravel,makingitoneofthemost
consistentlysuccessfulairlinesinrecentyears.
ThemajorreasonforSouthwest’ssuccessisthatithaspursuedfunctionalstrategiesthatimprovehow
itsvaluechainoperatestogivecustomerswhattheywant.Southwestcommandshighcustomerloyalty
preciselybecauseitcandeliverproducts,suchasflightsfromHoustontoDallas,thathaveallthedesired
attributes:reliability,convenience,andlowprice.Ineachofitsfunctions,Southwest’sstrategiesrevolve
around finding ways to lower costs. For example, Southwest offers a nofrills approach to inflight
customer service: no meals are served onboard, and there are no firstclass seats. Southwest does not
subscribetothebigreservationcomputersusedbytravelagentsbecausethebookingfeesaretoocostly.
Also, the airline flies only one aircraft, the fuelefficient Boeing 737, which keeps training and
maintenancecostsdown.Allthistranslatesintolow
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prices for customers. Additionally, Southwest is one of the few airlines that does not charge baggage
fees.Passengerscanchecktwobagsforfree.23
Southwest’s reliability derives from the fact that it has the quickest aircraft turnaround time in the
industry. A Southwest ground crew needs only 15 minutes to turn around an incoming aircraft and
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prepareitfordeparture.Thisspeedyoperationhelpskeepflightsontime.Southwesthassuchaquick
turnaround because it has a flexible workforce that has been crosstrained to perform multiple tasks.
Thusthepersonwhochecksticketsmightalsohelpwithbaggageloadingiftimeisshort.
Southwest’s convenience comes from its scheduling multiple flights every day between its popular
locations,suchasDallasandHouston,anditsuseofairportsthatareclosetodowntownareas(Hobbyat
HoustonandLoveFieldatDallas)insteadofusingmoredistantmajorairports.24 In sum, Southwest’s
excellentvaluechainmanagementhasgivenitacompetitiveadvantageintheairlineindustry.Another
companythathasfoundawaytoberesponsivetocustomersbyofferingthemfasterserviceisPanera,
whichisprofiledintheaccompanyingManagementInsightfeature.
ManagementInsight
BreadintheeCommerceFastLane
Paneraisa1,777bakerycafchainlocatedinboththeUnitedStatesandCanada.Thechainismade
up of three companies: Saint Louis Bread Co., Paradise Bakery & Caf, and Panera Bread.25 Until
recent years, the bakeries had been operating successfully with a traditional bakerycaf model of
offeringsandservice.That’suntilthecompany’sCEO,RonShaich,hadanepiphany.Alwaysrunning
latewhendrivinghissontoschoolinthemornings,Shaichwouldarrangeforbreakfastandlunchfor
hissonbycallingaheadtooneofhisstoresandordering.Whenhearrivedatthestore,hissonwould
run in with his credit card, skip the line, and pick up the food. While the system worked for the
Shaichs,itwasnotonethatwasavailabletoeveryone.
That’swhatgaveShaichtheideaforPanera2.0.Nowcustomerscanplaceordersviacomputeror
mobile app. When the customer arrives at the restaurant, he or she can skip the line, pay for the
orderedfood,andeithereatinorcarryout.Therealsoaretouchscreenkiosksattherestaurantsfor
customers who did not order ahead but who want to get through the line faster. And of course
customerscanstillgototheregisterandplaceanorder.26
Untilrecently,PaneraBreadhadbeenoperatingitsbakerycafsinatraditionalmanner.Now,afterCEORon
ShaichgottheideaforPanera2.0,customerscanplaceordersonline,skipthestoreline,payfortheorder,and
eatinorcarryout.ThenewsystemallowsPaneratoincreasetheirefficiencyandcustomerservicesatisfaction.
One advantage of the new system is that it syncs with the MyPanera rewards program. The
programremembersallordersthatthecustomerplaces.Ifacustomerorderedacustomsandwichat
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onevisit,thesystemremembersitandofferstoplacethesameorderatthenextvisit.
Panerabegantestingthesystemin2011andhopestohaveitrolledouttoallrestaurantsby2016.
AndithasalreadyseenusersofPanera2.0andkioskusersincreasethefrequencyoftheirvisits.At
onelocation,saleswereupmorethan50percent.27
Thenewsystemalsohasimprovedtheorderaccuracyrates.Theindustryaverageisoneinseven
incorrectlyfulfilledorders,manyoftheerrorsoccurringduringinputattheregister.Ifwe’reinthe
togobusiness,wehavetobe100percentaccurate,Shaichsays.28Inadditiontodependingonthe
customertoentertheordercorrectly,employeesdoublecheckeachorderbeforeitleavesthestore.
Of course adding the system has meant changes for the employees at Panera. The information
technologyteamhasdoubled.Operationshavebeenaffectedaswell.Whencustomersplaceorders
onlineoratakiosk,itsavesemployeesattheregisterfromhavingtodoso.Thoseemployeescanbe
redeployedtothekitchentohelpkeepupwiththedemandofincomingorders.Oncethesystemisin
place at every Panera location, Shaich believes Panera will be one of the 10 largest ecommerce
operatorsintheUnitedStates.
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Although managers must seek to improve their responsiveness to customers by improving how the
value chain operates, they should not offer a level of responsiveness to customers that results in costs
becoming too highsomething that threatens an organization’s future performance and survival. For
example, a company that customizes every product to the unique demands of individual customers is
likelytoseeitscostsgrowoutofcontrol.
CustomerRelationshipManagement
customerrelationship
management(CRM) A
techniquethatusesITtodevelop
anongoingrelationshipwith
customerstomaximizethevalue
anorganizationcandelivertothem
overtime.
One functional strategy managers can use to get close to customers and understand their needs is
customerrelationshipmanagement(CRM).CRMisatechniquethatusesITtodevelopanongoing
relationshipwithcustomerstomaximizethevalueanorganizationcandelivertothemovertime.Bythe
2000smostlargecompanieshadinstalledsophisticatedCRMITtotrackcustomerschangingdemands
fora company’s products this becameavitaltoolto maximize responsiveness tocustomers.CRMIT
monitors, controls, and links each of the functional activities involved in marketing, selling, and
delivering products to customers, such as monitoring the delivery of products through the distribution
channel,monitoringsalespeople’ssellingactivities,settingproductpricing,andcoordinatingaftersales
service.CRMsystemshavethreeinterconnectedcomponents:salesandselling,aftersalesserviceand
support,andmarketing.
Suppose a sales manager has access only to sales data that show the total sales revenue each
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salesperson generated in the last 30 days. This information does not break down how much revenue
came from sales to existing customers versus sales to new customers. What important knowledge is
being lost? First, if most revenues are earned from sales to existing customers, this suggests that the
moneybeingspentbyacompanytoadvertiseandpromoteitsproductsisnotattractingnewcustomers
andsoisbeingwasted.Second,importantdimensionsinvolvedinsalesarepricing,financing,andorder
processing. In many companies, to close a deal, a salesperson has to send the paperwork to a central
salesofficethathandlesmatterssuchasapprovingthecustomerforspecialfinancinganddetermining
specificshippinganddeliverydates.Insomecompanies,differentdepartmentshandletheseactivities,
anditcantakealongtimetogetaresponsefromthemthiskeepscustomerswaitingsomethingthat
oftenleadstolostsales.UntilCRMsystemswereintroduced,thesekindsofproblemswerewidespread
and resulted in missed sales and higher operating costs. Today the sales and selling CRM software
containsbestsalespracticesthatanalyzethisinformationandthenrecommendwaystoimprovehowthe
salesprocessoperates.
OnecompanythathasimproveditssalesandaftersalespracticesbyimplementingCRMisEmpire
HealthChoiceInc.,thelargesthealthinsuranceproviderinNewYork,whichsellsitspoliciesthrough
1,800 sales agents. For years these agents were responsible for collecting all the customerspecific
information needed to determine the price of each policy. Once they had collected the necessary
information,theagentscalledEmpiretogetpricequotes.Afterwaitingdaysforthesequotes,theagents
relayed them back to customers, who often then modified their requests to reduce the cost of their
policies. When this occurred, the agents had to telephone Empire again to get revised price quotes.
Becausethisfrequentlyhappenedseveraltimeswitheachtransaction,itoftentookmorethan20daysto
closeasaleandanother10daysforcustomerstogettheirinsurancecards.29
Recognizingthatthesedelayswerecausinglostsales,EmpiredecidedtoexaminehowaCRMsystem
could improve the sales process. Its managers chose a webbased system so agents themselves could
calculatetheinsurancequotesonline.Onceanagententersacustomer’sdata,aquoteisgeneratedinjust
afewseconds.Theagentcancontinuallymodifyapolicywhilesittingfacetofacewiththecustomer
untilthepolicyandpriceareagreedupon.Asaresult,thesalesprocesscannowbecompletedinafew
hours,andcustomersreceivetheirinsurancecardsin2to3daysratherthan10.30
WhenacompanyimplementsaftersalesserviceandsupportCRMsoftware,salespeoplearerequired
to input detailed information about their followup visits to customers. Because the system tracks and
documentseverycustomer’scasehistory,salespeoplehaveinstantaccesstoarecordofeverythingthat
occurred during previous phone calls or visits. They are in a much better position to respond to
customers needs and build customer loyalty, so a company’s aftersales service improves. Cell phone
companieslikeTMobileandSprint,for
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example, require that telephone sales reps collect information about all customers inquiries,
complaints, and requests, and this is recorded electronically in customer logs. The CRM module can
analyze the information in these logs to evaluate whether the customer service reps are meeting or
exceedingthecompany’srequiredservicestandards.
ACRMsystemcanalsoidentifythetop10reasonsforcustomercomplaints.Salesmanagerscanthen
worktoeliminatethesourcesoftheseproblemsandimproveaftersalessupportprocedures.TheCRM
systemalsoidentifiesthetop10bestserviceandsupportpractices,whichcanthenbetaughttoallsales
reps.
Finally, as a CRM system processes information about changing customer needs, this improves
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marketinginmanyways.Marketingmanagers,forexample,haveaccesstodetailedcustomerprofiles,
including data about purchases and the reasons why individuals were or were not attracted to a
company’s products. Armed with this knowledge, marketing can better identify customers and the
specificproductattributestheydesire.TraditionalCRMsystemswereorganizedbyhavingsalespeople
inputcustomerinformation.NowsocialCRMsystemscantrackcustomersonsocialmediaandputthem
on a company’s radar. For example, if a Twitter user posts frequently about a topic relevant to the
company or about the company’s product, a CRM system can bring the user to the attention of the
company as an important connection or a potential customer.31 In sum, a CRM system is a
comprehensive method of gathering crucial information about how customers respond to a company’s
products.Itisapowerfulfunctionalstrategyusedtoalignacompany’sproductswithcustomerneeds.
ImprovingQuality
LO93
Explainwhyachievingsuperior
qualityissoimportant,and
understandthechallengesfacing
managersandorganizationsthat
seektoimplementtotalquality
management.
As noted earlier, highquality products possess attributes such as superior design, features, reliability,
andaftersalessupporttheseproductsaredesignedtobettermeetcustomerrequirements.32Qualityisa
concept that can be applied to the products of both manufacturing and service organizationsgoods
suchasanApplecomputerorservicessuchasSouthwestAirlinesflightserviceorcustomerserviceina
Citibank branch. Why do managers seek to control and improve the quality of their organizations
products?33Therearetworeasons(seeFigure9.3).
First,customersusuallypreferahigherqualityproducttoalowerqualityproduct.Soanorganization
abletoprovide,forthesameprice,aproductofhigherqualitythanacompetitor’sproductisservingits
customers betterit is being more responsive to its customers. Often providing highquality products
createsabrandnamereputationforanorganization’sproducts.Thisenhancedreputationmayallowthe
organizationtochargemoreforitsproductsthanitscompetitorscancharge,andthusitmakesgreater
profits. For example, in 2014 Lexus was ranked number one on the J.D. Power list of the 10 most
reliablecarmakersforthethirdyearinarow.34ThehighqualityofLexusvehiclesenablesthecompany
tochargehigherpricesforitscarsthanthepriceschargedbyrivalcarmakers.
The second reason for trying to boost product quality is that higher product quality can increase
efficiency and thereby lower operating costs and boost profits. Achieving high product quality lowers
operatingcostsbecauseoftheeffectofqualityonemployeeproductivity:
Figure9.3 TheImpactofIncreasedQualityonOrganizationalPerformance
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Higherproductqualitymeanslessemployeetimeiswastedinmakingdefectiveproductsthatmustbe
discardedorinprovidingsubstandardservices,andthuslesstimehastobespentfixingmistakes.This
translatesintohigheremployeeproductivity,whichalsomeanslowercosts.Thewayeachmanagercan
haveanimpactonqualityandcostisdiscussedintheaccompanyingManagementInsightfeature.
ManagementInsight
VendorRelationshipsKeytoTJX’sStoreOfferings
The TJX Companies Inc. sell clothes, shoes, handbags, and other fashions along with home
decoratingitemsatdiscountedprices.ItsU.S.storesareT.J.Maxx,Marshalls,SierraTradingPost,
and HomeGoods. The company was founded in 1919 as the New England Trading Company and
expanded into a chain of women’s clothing stores. The sons of the founders built the Zayre
department store in the 1950s then came T.J. Maxx in 1976, which was created under the Zayre
name.Inamajorrestructuringinthelate1980s,theZayrestoresweresoldandthecompanychanged
itsnametoTJXCompanies.ItlateracquiredMarshalls,HomeGoods,andSierraTradingPost.
The company states its mission as delivering a rapidly changing assortment of fashionable,
quality, brand name and designer merchandise at prices generally 2060 percent below department
andspecialtystoreregularprices,everyday.35Asidefromthesavings,themainappealofthestores
isthetreasurehuntshoppingexperience36inwhichthestoreshavedifferentitemsandadifferent
lookoftenasomewhatoppositeexperiencetoperusingthemorestaticseasonalproductlinesfound
intraditionaldepartmentstores.37
Thecompany’sbusinessmodelallowsittoperformwellinalmostanyeconomicenvironment.TJX
is able to sell highquality namebrand merchandise at a discount by purchasing overstocks and
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canceledordersfromotherretailers.TJXbuysupexcessinventoryatasteepdiscount,whichitthen
passesontothecustomer.38
TJXstoreshavenowallsorphysicaldividersbetweendepartments.Thisallowsthemerchandise
categories to expand or contract according to supply and demand. Inventory turns rapidly, which
keepsstoresfreshandallowsthecompanytobuyasitneeds.39Ouruniverseofover16,000vendors
affords us tremendous flexibility, and we continue to strengthen our vendor relationships and build
newonestoofferconsumersevenmoreexcitingbrands,saidTJXCEOCarolMeyrowitz.While
we drive our top line, we expect to also drive our profitability through even better inventory
managementandafurtherimprovedsupplychain.40
ThesupplychainisimportanttoTJX’sabilitytodelivervalueandtoproperlystockeachstore.The
retailerhasmorethan3,000storesandplanstogrowthroughnewandremodeledstores,anewhome
officeanddatacenter,newdistributioncenters,andsystemsandsupplychainimprovements.41 The
companyrecentlyopenedanewdistributioncenterinArizona,itsfirstinabout10yearsdespitea40
percentincreasedstorebase.Meyrowitzsaidthecompanywillcontinuetoinvestinitssupplychain
infiscal2015.42
TotalQualityManagement
totalqualitymanagement
(TQM) Amanagementtechnique
thatfocusesonimprovingthe
qualityofanorganization’s
productsandservices.
Attheforefrontofthedrivetoimproveproductqualityisafunctionalstrategyknownastotalquality
management.43 Total quality management (TQM) focuses on improving the quality of an
organization’sproductsandstressesthatallofanorganization’svaluechainactivitiesshouldbedirected
toward this goal. TQM requires the cooperation of managers in every function of an organization and
across functions.44 To show how TQM works, we next describe the way that Citibank used the
technique.Then,usingCitibankasanexample,welookatthe10stepsthatarenecessaryformanagers
toimplementasuccessfulTQMprogram.
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Inthe2000sCitibank’stopmanagersdecidedthebankcouldretainandexpanditscustomerbaseonly
if it could increase customer loyalty, so they decided to implement a TQM program to better satisfy
customer needs. As the first step in its TQM effort, Citibank identified the factors that dissatisfy its
customers.Whenanalyzingthecomplaints,itfoundthatmostconcernedthetimeittooktocompletea
customer’srequest,suchasrespondingtoanaccountproblemorgettingaloan.SoCitibank’smanagers
began to examine how they handled each kind of customer request. For each distinct request, they
formedacrossfunctionalteamthatbrokedowntherequestintothestepsrequired,betweenpeopleand
departments, to complete the response. In analyzing the steps, teams found that many of them were
unnecessaryandcouldbereplacedbyusingtherightinformationsystems.Theyalsofoundthatdelays
oftenoccurredbecauseemployeesdidnotknowhowtohandlearequest.Theywerenotbeinggiventhe
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rightkindoftraining,andwhentheycouldn’thandlearequest,theysimplyputitasideuntilasupervisor
coulddealwithit.
Citibank’s second step to increase its responsiveness was to implement an organizationwide TQM
program.Managersandsupervisorswerechargedwithreducingthecomplexityoftheworkprocessand
findingthemosteffectivewaytoprocesseachparticularrequest,suchasarequestforaloan.Managers
werealsochargedwithtrainingemployeestoanswereachspecificrequest.Theresultswereremarkable.
Forexample,intheloandepartmenttheTQMprogramreducedby75percentthenumberofhandoffs
necessarytoprocessarequest.Thedepartment’saverageresponsetimedroppedfromseveralhoursto30
minutes.Whatarethe10stepsinTQMthatmadethispossible?
1. Buildorganizationalcommitmenttoquality.TQMwilldolittletoimprovetheperformanceofan
organizationunlessallemployeesembraceit,andthisoftenrequiresachangeinanorganization’s
culture.45AtCitibanktheprocessofchangingculturebeganatthetop.Firstagroupoftop
managers,includingtheCEO,receivedtraininginTQMfromconsultantsfromMotorola,where
SixSigmawasfounded(SixSigmaistrademarkedbyMotorola).46Eachmemberofthetop
managementgroupwasthengiventheresponsibilityoftrainingagroupatthenextlevelinthe
hierarchy,andsoondownthroughtheorganizationuntilall100,000employeeshadreceivedbasic
TQMtraining.
2. Focusonthecustomer.TQMpractitionersseeafocusonthecustomerasthestartingpoint.47
AccordingtoTQMphilosophy,thecustomer,notmanagersinqualitycontrolorengineering,
defineswhatqualityis.Thechallengeisfourfold:(1)toidentifywhatcustomerswantfromthe
goodorservicethatthecompanyprovides(2)toidentifywhatthecompanyactuallyprovidesto
customers(3)toidentifyanygapbetweenwhatcustomerswantandwhattheyactuallyget(the
qualitygap)and(4)toformulateaplanforclosingthequalitygap.TheeffortsofCitibank
managerstoincreaseresponsivenesstocustomersillustratethisaspectofTQMwell.
3. Findwaystomeasurequality.AnothercrucialelementofTQMisthedevelopmentofameasuring
systemthatmanagerscanusetoevaluatequality.Devisingappropriatemeasuresisrelativelyeasy
inmanufacturingcompanies,wherequalitycanbemeasuredbycriteriasuchasdefectspermillion
parts.Itismoredifficultinservicecompanies,whereoutputsarelesstangible.However,witha
littlecreativity,suitablequalitymeasurescanbedevisedastheywerebymanagersatCitibank.
Citibankusedcustomersatisfactionsurveysasqualitymeasuresanddefinedadefectasanyrating
belowthetwohighestratings.48
4. Setgoalsandcreateincentives.Onceameasurehasbeendevised,managersnextstepistoseta
challengingqualitygoalandtocreateincentivesforreachingthatgoal.AtCitibanktheCEOsetan
initialgoalofreducingcustomercomplaintsby50percent.Onewayofcreatingincentivesto
attainagoalistolinkrewards,suchasbonuspayandpromotionalopportunities,tothegoal.
5. Solicitinputfromemployees.Employeesareamajorsourceofinformationaboutthecausesof
poorquality,soitisimportantthatmanagersestablishasystemforsolicitingemployee
suggestionsaboutimprovementsthatcanbemade.Atmostcompanies,likeCitibank,thisisan
ongoingendeavortheprocessneverstops.
6. Identifydefectsandtracethemtotheirsource.Amajorsourceofproductdefectsistheproduction
systemamajorsourceofservicedefectsispoorcustomerserviceprocedures.TQMpreachesthe
needformanagerstoidentifydefectsintheworkprocess,tracethosedefectsbacktotheirsource,
findoutwhytheyoccurred,andmakecorrectionssotheydonotoccuragain.TodayITmakes
qualitymeasurementmucheasier.
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prosecuted.
inventory
Thestockofraw
materials,inputs,and
componentpartsthatan
organizationhasonhandata
particulartime.
justintime(JIT)inventory
system Asysteminwhich
partsorsuppliesarriveatan
organizationwhentheyare
needed,notbefore.
7. Introducejustintimeinventorysystems.Inventoryisthestockofrawmaterials,inputs,and
componentpartsthatanorganizationhasonhandataparticulartime.Whenthematerials
managementfunctiondesignsajustintime(JIT)inventorysystem,partsorsuppliesarriveat
theorganizationwhentheyareneeded,notbefore.Also,underaJITinventorysystem,defective
partsenteranorganization’soperatingsystemimmediatelytheyarenotwarehousedformonths
beforeuse.Thismeansdefectiveinputscanbequicklyspotted.JITisdiscussedmorelaterinthe
chapter.
8. Workcloselywithsuppliers.Amajorcauseofpoorqualityfinishedgoodsispoorquality
componentparts.Todecreaseproductdefects,materialsmanagersmustworkcloselywith
supplierstoimprovethequalityofthepartstheysupply.ManagersatXeroxworkedcloselywith
supplierstogetthemtoadoptTQMprograms,andtheresultwasahugereductioninthedefect
rateofcomponentparts.Managersalsoneedtoworkcloselywithsupplierstogetthemtoadopta
JITinventorysystem,alsorequiredforhighquality.
9. Designforeaseofproduction.Themorestepsrequiredtoassembleaproductorprovideaservice,
themoreopportunitiesthereareformakingamistake.Itfollowsthatdesigningproductsthathave
fewerpartsorfindingwaystosimplifyprovidingaserviceshouldbelinkedtofewerdefectsor
customercomplaints.Forexample,Applecontinuallyredesignsthewayitassemblesitsmobile
digitaldevicestoreducethenumberofassemblystepsrequired,anditconstantlysearchesfornew
waystoreducethenumberofcomponentsthathavetobelinkedtogether.Theconsequenceof
theseredesigneffortswasacontinuousfallinassemblycostsandmarkedimprovementinproduct
qualityduringthe2000s.AtCitibank,defectdetectionandresolutionleadtobetterperformancein
processtime,cashmanagement,andcustomersatisfaction.49
10. Breakdownbarriersbetweenfunctions.SuccessfulimplementationofTQMrequiressubstantial
cooperationbetweenthedifferentvaluechainfunctions.Materialsmanagershavetocooperate
withmanufacturingmanagerstofindhighqualityinputsthatreducemanufacturingcosts
marketingmanagershavetocooperatewithmanufacturingsothatcustomerproblemsidentifiedby
marketingcanbeactedoninformationsystemshavetocooperatewithallotherfunctionsofthe
companytodevisesuitableITtrainingprogramsandsoon.AtCitibank,acrossfunctional
processmappingmethodwasusedtodescribethefunctionsinvolvedineachstepofaprocess
flow.50
Inessence,toincreasequality,allfunctionalmanagersneedtocooperatetodevelopgoalsandspell
outexactlyhowtheywillbeachieved.Managersshouldembracethephilosophythatmistakes,defects,
and poorquality materials are not acceptable and should be eliminated. Functional managers should
spend more time working with employees and providing them with the tools they need to do the job.
Managers should create an environment in which employees will not be afraid to report problems or
recommendimprovements.Outputgoalsandtargetsneedtoincludenotonlynumbersorquotasbutalso
some indicators of quality to promote the production of defectfree output. Functional managers also
need to train employees in new skills to keep pace with changes in the workplace. Finally, achieving
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better quality requires that managers develop organizational values and norms centered on improving
quality.
SixSigma Atechniqueusedto
improvequalitybysystematically
improvinghowvaluechain
activitiesareperformedandthen
usingstatisticalmethodsto
measuretheimprovement.
SIX SIGMA One TQM technique called Six Sigma has gained increasing popularity in the last
decade, particularly because of the wellpublicized success GE enjoyed as a result of implementing it
across its operating divisions. The goal of Six Sigma is to improve a company’s quality to only three
defectspermillionbysystematicallyalteringthewayalltheprocessesinvolvedinvaluechainactivities
are performed, and then carefully measuring how much improvement has been made using statistical
methods.SixSigmashareswithTQMitsfocusonimprovingvaluechainprocessestoincreasequality
butitdiffersbecauseTQMemphasizestopdownorganizationwideemployeeinvolvement,whereasthe
SixSigmaapproachistocreateteamsofexpertchangeagents,knownasgreenbeltsandblackbelts,
totakecontroloftheproblemfindingandproblemsolvingprocessandthentotrainotheremployeesin
implementingsolutions.TheaccompanyingManagementInsightfeatureshowshowSixSigmaworks
forthecityofTyler,Texas.
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ManagementInsight
Everything’sComingupRosesinOneTexasTown
Tyler is a city of more than 107,000 people in the northeast quadrant of Texas.51 It has the largest
rose garden in the United States and a large rosegrowing industry, earning it the nickname Rose
CapitalofAmerica.52TylerRoseGardenhasmorethan500varietiesofroses.Eachyearthecity
hosts a rose festival when hundreds of thousands of roses are in bloom. Visitors can tour the Rose
MuseumandattendtheRoseParade.
Butlatelythecityhasalsobeennotedforaqualitycontrolinitiativethathassaveditfromsome
thorny issues. In 2009, facing reduced revenues from sales taxes and sluggish property values, the
city hired a Six Sigma Master Black Belt and began training city employees in Lean Six Sigma, a
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branch of Six Sigma that focuses on eliminating waste in manufacturing and other areas. By 2014,
whenitwasannouncedthatLeanSixSigmaprogramshadsavedmorethan$5millionforthecity,
almost 27 percent of city employees had been trained in Lean Six Sigma and worked on Lean Six
Sigmaprojectsaspartoftheirregularworkloads.
In five short years, we’ve changed the culture of how we look at our jobs at city hall, Mayor
BarbaraBasssaid.Forwhicheverdepartmentyou’rein,you’relookingwithneweyesonhowto
improveyourdepartments,andyourfriendsfromotherdepartmentsaresteppingupandhelpingyou
withthatprocess.53
The city has completed more than 90 Lean Six Sigma projects and still has 35 more in process,
according to City Manager Mark McDaniel. One project entailed developing and implementing
inventorycontrol.BeforetheLeanSixSigmaproject,TylerPurchasingManagerSherryPettitsaidno
inventorywasbeingdoneatthewaterutilitiesservicecentermetershop.Itwaskindofamess.We
reallydidn’tknowwhatwasinthereoranything.Sowewentinandcleaneditallup.54
Anotherprojectinvolvedcleaningupthefilingprotocolsandsystemsinthecityattorney’soffice.
Alegalassistantcommented,Itwastakingusonaverageabout25minutestofindourdocuments
andeverything,andafterourprojectitsavedabout$10,000insalarycostsandgotitdowntofour
minutes.55
These and other projects led to reductions in overtime and improved waste collection. While the
citypopulationhasgrownby30percentsincethemid1980s,theLeanSixSigmaprojectsmadeit
possibleforthecityservicestoworkwithroughlythesamenumberofemployeesithadinthemid
1980s.
The city posts a list of its Lean Six Sigma Green Belts and Black Belts on its web page. Green
Beltsrequire80hoursoftrainingandarethenassignedprojectswithinthescopeoftheGreenBelt’s
currentjob.Traditionally,aGreenBeltwouldbetrainedinfullday,weeklongincrementsovertwo
months.However,Tylerchangedtheformattofourweeksofhalfdaytrainingoverfourmonths.To
befullycertified,aGreenBeltmustcompleteaLeanSixSigmaprojectwithinayear.Candidatesfor
BlackBeltsareselectedfromthepoolofGreenBeltsandattendanadditional80hoursoftraining.In
Tyler,BlackBeltsparticipateinmultipleprojectsacrossthecity.Aspartofthecertification,Black
Belts must complete two Lean Six Sigma projects within a year, mentor Green Belts, and work to
spreadLeanSixSigmathroughouttheorganization.56
Barbara Bass, the mayor, said: All ofour Green Belts and BlackBelts havecompletedprojects
thatarefocusedonimprovingacityprocess,savingeithertimeormoney.Manyothercityemployees
haveparticipatedonprojectteamsthatputimprovementintothehandsofthosemostfamiliarwith
theprocessourfrontlineemployees.57
In Tyler style, the announcement of the savings accrued from Lean Six Sigma was made in the
city’sRoseGarden.
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ImprovingEfficiency
LO94
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Explainwhyachievingsuperior
efficiencyissoimportant,and
understandthedifferentkindsof
techniquesthatneedtobe
employedtoincreaseefficiency.
The third goal of value chain management is to increase the efficiency of the various functional
activities.Thefewertheinputresourcesrequiredtoproduceagivenvolumeofoutput,thehigherwillbe
the efficiency of the operating system. So efficiency is a useful measure of how well an organization
usesallitsresourcessuchaslabor,capital,materials,orenergytoproduceitsoutputs,orgoodsand
services. Developing functional strategies to improve efficiency is an extremely important issue for
managers because increased efficiency lowers production costs, which lets an organization make a
greaterprofitorattractmorecustomersbyloweringitsprice.Severalimportantfunctionalstrategiesare
discussedhere.
FacilitiesLayout,FlexibleManufacturing,and
Efficiency
facilitieslayout Thestrategyof
designingthemachineworker
interfacetoincreaseoperating
systemefficiency.
flexiblemanufacturing Theset
oftechniquesthatattemptto
reducethecostsassociatedwith
theproductassemblyprocessor
thewayservicesaredeliveredto
customers.
Thestrategiesmanagersusetolayoutordesignanorganization’sphysicalworkfacilitiesalsodetermine
its efficiency. First, the way in which machines and workers are organized or grouped together into
workstationsaffectstheefficiencyoftheoperatingsystem.Second,amajordeterminantofefficiencyis
thecostassociatedwithsettinguptheequipmentneededtomakeaparticularproduct.Facilitieslayout
is the strategy of designing the machineworker interface to increase operating system efficiency.
Flexible manufacturing is a strategy based on the use of IT to reduce the costs associated with the
product assembly process or the way services are delivered to customers. For example, this might be
howcomputersaremadeonaproductionlineorhowpatientsareroutedthroughahospital.
FACILITIESLAYOUT Thewayinwhichmachines,robots,andpeoplearegroupedtogetheraffects
how productive they can be. Figure 9.4 shows three basic ways of arranging workstations: product
layout,processlayout,andfixedpositionlayout.
Inaproductlayout,machinesareorganizedsothateachoperationneededtomanufactureaproductor
processapatientisperformedatworkstationsarrangedinafixedsequence.Inmanufacturing,workers
arestationaryinthisarrangement,andamovingconveyorbelttakestheproductbeingworkedontothe
next workstation so that it is progressively assembled. Mass production is the familiar name for this
layoutcarassemblylinesareprobablythebestknownexample.Itusedtobethatproductlayoutwas
efficient only when products were created in large quantities however, the introduction of modular
assemblylinescontrolledbycomputersismakingitefficienttomakeproductsinsmallbatches.
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Figure9.4 ThreeFacilitiesLayouts
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In a process layout, workstations are not organized in a fixed sequence. Rather, each workstation is
relatively selfcontained, and a product goes to whichever workstation is needed to perform the next
operationtocompletetheproduct.Processlayoutisoftensuitedtomanufacturingsettingsthatproducea
variety of custommade products, each tailored to the needs of a different kind of customer. For
example,acustomfurnituremanufacturermightuseaprocesslayoutsodifferentteamsofworkerscan
produce different styles of chairs or tables made from different kinds of woods and finishes. Such a
layoutalsodescribeshowapatientmightgothroughahospitalfromemergencyroomtoXrayroom,to
operatingroom,andsoon.Aprocesslayoutprovidestheflexibilityneededtochangeaproduct,whether
it is a PC or a patient’s treatment. Such flexibility, however, often reduces efficiency because it is
expensive.
Inafixedpositionlayout,theproductstaysinafixedposition.Itscomponentpartsareproducedin
remoteworkstationsandbroughttotheproductionareaforfinalassembly.Increasingly,selfmanaged
teamsareusingfixedpositionlayouts.Differentteamsassembleeachcomponentpartandthensendthe
parts to the final assembly team, whichmakes the finalproduct. Afixedpositionlayout iscommonly
used for products such as jet airliners, mainframe computers, and gas turbinesproducts that are
complexanddifficulttoassembleorsolargethatmovingthemfromoneworkstationtoanotherwould
bedifficult.Evencompaniesthatspecializeinofficearchitecturehaverethoughttheirworkspaces,asthe
accompanyingManagementInsightfeaturediscusses.
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ManagementInsight
WorkspaceCompanyRedefinesItsOwnWorkspace
Philosophy,PuttingItsMoneyWhereItsMouthIs
Steelcasedevelopsandmanufacturesofficefurniture,technology,andotherofficearchitecture.The
Michiganbased company was founded in 1912 as the Metal Office Furniture Company. Its first
patent was in 1914 on a metal wastebasketan important item in an era when straw wastebaskets
werefirehazards.Thecompanywentontodevelopandsellmanyofficeproducts.In1954thename
waschangedtoSteelcase.58
Inthemorethan100yearsthatthecompanyhasbeenaround,workspacedesignhaschanged.As
CEOJimHackettexplainsit,workersusedtojockeytobeclosertotheCEO.Liketheorganizational
chart,thecloserapersonwastotheCEO,themorepowerthepersonhad.Nowinformationispower,
andthedesignoftheworkspaceshouldreflectandpromotethat.
In2014Steelcasepublishedastudysuggestingthatthedesignofofficesaffectstheemotionalwell
being of employees, which can have an impact on business results. The study suggested that
workspacescansupportpositiveemotionsbyencouragingasenseofbelonging,helpingworkerssee
theirworth,andpromotingmindfulness.59
Workspace should celebrate the shift of what we call the I space to the we space, Hackett
says. Space has to enable and empower information in ways we only imagine (across) a
continuum of I and we work people need a range of settings to accommodate focused,
collaborative,andsocialworkinbothopenandenclosedenvironmentsinotherwords,apaletteof
place.60
Steelcase does not just sell the products that make new workspaces possibleit has changed its
ownworkspacestoallowforcommunicationandanopenculture.OneofHackett’sfirstactsasCEO
wastomoveallexecutiveofficesontofloorsdesignedaroundimportantissuesfacingthecompany.
Insteadofgivingexecutivesspace,Hackettassignsspacetocommandlevelprojects.61Thisshifts
thefocusofmeetingsbacktobusinessandproducts,andhelpsfosterteambuilding.
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Innovationrequirescollectivewework,Hackettsays.Tothisend,it’scriticaltodesignspaces
that not only support collaboration, but augment it (with) spaces that promote eyetoeye contact,
provideeveryonewithequalaccesstoinformation,andallowpeopletomovearoundandparticipate
freely.62
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FLEXIBLEMANUFACTURING Inamanufacturingcompany,amajorsourceofcostsissettingup
the equipment needed to make a particular product. One of these costs is that of production forgone
because nothing is produced while the equipment is being set up. For example, components
manufacturers often need as much as half a day to set up automated production equipment when
switchingfromproductionofonecomponentpart(suchasawasherringforthesteeringcolumnofa
car) to another (such as a washer ring for the steering column of a truck). During this halfday, a
manufacturingplantisnotproducinganything,butemployeesarepaidforthisnonproductivetime.
Itfollowsthatifsetuptimesforcomplexproductionequipmentcanbereduced,socansetupcosts,
andefficiencywillrisethatis,thetimethatplantandemployeesspendinactuallyproducingsomething
will increase. This simple insight has been the driving force behind the development of flexible
manufacturingtechniques.
HousingunitsmoveontheproductionlineasemployeesofToyotaMotorCorporationworkduringtheinstallation
processatthecompany’sKasugaiHousingWorks,oneoftheplantsofToyotahomebrandhousesonKasugai,
AichiPrefecture,Japan.Toyotaenteredthehousingindustry30yearsagoapplyingtheplanttechnologyand
experienceitgainedthroughproducingcars.
Flexible manufacturing aims to reduce the time required to set up production equipment.63 By
redesigningthemanufacturingprocesssoproductionequipmentgearedformanufacturingoneproduct
canbequicklyreplacedwithequipmentgearedtomakeanotherproduct,setuptimesandcostscanbe
reduced dramatically. Another favorable outcome from flexible manufacturing is that a company can
produce many more varieties of a product than before in the same amount of time. Thus flexible
manufacturingincreasesacompany’sabilitytoberesponsivetoitscustomers.
To obtain the benefits from flexible manufacturing, General Motors built a plant in Lansing,
Michigan,in2001thatcanexpandasthecompanyseesfit.Whenitwasfirstbuilt,thecompany’sGrand
River Assembly plant was already more flexible than its other plants.64 It was modeled after GM’s
innovativeoverseasfacilities.WhilesomeGMexecutivesexpressedconcernthatthesitewastoosmall
toworkwell,theplanthasreceivedpraiseforitscapacitytomanufactureavarietyofcarmodels,aswell
as for the collaborative team management style it facilitates and its automation capabilities. And GM
plans to add on to the plant. In 2013 GM announced that it would build a $44.5 million Logistics
OptimizationCenter.Theexpansionwillincludeabuildinginwhichpartswillbesortedanddelivered
fortheassemblyline.In2014GMannouncedthata$162millionstampingplantwouldbeaddedtothe
site.Stampingplantsmakepartsforautoassemblylines.65
JustinTimeInventoryandEfficiency
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Asnotedearlier,ajustintimeinventorysystemgetscomponentstotheassemblylinejustastheyare
neededandthusdrivesdowncosts.InaJITinventorysystem,componentpartstravelfromsuppliersto
theassemblylineinasmallwheeledcontainerknownasakanban. Assemblyline workers empty the
kanbans,whicharesentbacktothesuppliersasthesignaltoproduceanothersmallbatchofcomponent
parts, and so the process repeats itself. This system can be contrasted with a justincase view of
inventory,whichleadsanorganizationtostockpileexcessinputsinawarehouseincaseitneedsthemto
meetsuddenupturnsindemand.
JIT inventory systems have major implications for efficiency. Great cost savings can result from
increasing inventory turnover and reducing inventory holding costs, such as warehousing and storage
costs and the cost of capital tied up in inventory. Although companies that manufacture and assemble
productscanobviouslyuseJITtogreatadvantage,socanservice
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organizations.66 Walmart, the biggest retailer in the United States, uses JIT systems to replenish the
stockinitsstoresatleasttwiceaweek.ManyWalmartstoresreceivedailydeliveries.Assoonasgoods
arepurchased,newonesareorderedthroughWalmart’ssophisticatedsupplychain.However,whilethe
supplychaindoesagoodjobofgettingthegoodstostores,Walmartrecentlyranintosomeproblems
withstoresthatweresoleanlystaffed,therewerenotenoughpeopletomovethegoodsfromthestorage
areatotheshelves.Tomaintainitsefficiencybasedcompetitiveadvantage,Walmartwillneedtobring
staffinguptooptimallevelsaswell.67
Even a small company can benefit from a kanban system, as the experience of United Electric
Controls,headquarteredinWatertown,Massachusetts,suggests.UnitedElectricisthemarketleaderin
the manufacture of alarm and shutdown switches for industrial plant safety. At one time the company
simplystoredallitsinputsinawarehouseanddispensedthemasneeded.Thenitdecidedtoreducecosts
by storing the inputs closer to their point of use in the production system. This led to inaccurate part
countsandcausedproductionstoppagesduetoalackofinputs.
SomanagersdecidedtoexperimentwithasupplierkanbansystemeventhoughUnitedElectrichad
fewerthan40suppliersandtheywereuptodatewithitsinputrequirements.Managersdecidedtostore
a threeweek supply of parts in a central storerooma supply large enough to avoid unexpected
shortages.68Theybeganbyaskingtheircastingsuppliertodeliverinputsinkanbansandbins.Oncea
week, this supplier checks the bins to determine how much stock needs to be delivered the following
week. Other suppliers were then asked to participate in this system, and now more than 35 major
suppliersoperatesomeformofthekanbansystem.
By all measures of performance, the kanban system has succeeded. Inventory holding costs have
fallensharply.Productsaredeliveredtoallcustomersontime.Andnewproductsdesigntoproduction
cycles have dropped by 50 percent because suppliers are now involved much earlier in the design
processsotheycansupplynewinputsasneeded.
SelfManagedWorkTeamsandEfficiency
Another functional strategy to increase efficiency is the use of selfmanaged work teams.69 A typical
selfmanagedteamconsistsof5to15employeeswhoproduceanentireproductinsteadofjustpartsof
it.70 Team members learn all team tasks and move from job to job. The result is a flexible workforce
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because team members can fill in for absent coworkers. The members of each team also assume
responsibility for scheduling work and vacations, ordering materials, and hiring new members
previously all responsibilities of firstline managers. Because people often respond well to greater
autonomyandresponsibility,theuseofempoweredselfmanagedteamscanincreaseproductivityand
efficiency. Moreover, cost savings arise from eliminating supervisors and creating a flatter
organizationalhierarchy,whichfurtherincreaseefficiency.
The effect of introducing selfmanaged teams is often an increase in efficiency of 30 percent or
sometimes much more. After the introduction of flexible manufacturing technology and selfmanaged
teams,aGEplantinSalisbury,NorthCarolina,increasedefficiencyby250percentcomparedwithother
GEplantsproducingthesameproducts.71
ProcessReengineeringandEfficiency
processreengineering The
fundamentalrethinkingandradical
redesignofbusinessprocessesto
achievedramaticimprovementin
criticalmeasuresofperformance
suchascost,quality,service,and
speed.
Thevaluechainisacollectionoffunctionalactivitiesorbusinessprocessesthattransformsoneormore
kindsofinputstocreateanoutputthatisofvaluetothecustomer.72Processreengineeringinvolvesthe
fundamentalrethinkingandradicalredesignofbusinessprocesses(andthusthevaluechain)toachieve
dramaticimprovementsincriticalmeasuresofperformancesuchascost,quality,service,andspeed.73
Order fulfillment, for example, can be thought of as a business process: When a customer’s order is
received (the input), many different functional tasks must be performed as necessary to process the
order, and then the ordered goods are delivered to the customer (the output). Process reengineering
boosts efficiency when it reduces the number of order fulfillment tasks that must be performed, or
reducesthetimetheytake,andsoreducesoperatingcosts.
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For an example of process reengineering in practice, consider how Ford used it. One day a manager
fromFordwasworkingatitsJapanesepartnerMazdaanddiscoveredthatMazdahadonlyfivepeoplein
itsaccountspayabledepartment.TheFordmanagerwasshockedbecauseFord’sU.S.operationhad500
employeesinaccountspayable.HereportedhisdiscoverytoFord’sU.S.managers,whodecidedtoform
ataskforcetostudythisdifference.
Fordmanagersdiscoveredthatprocurementbeganwhenthepurchasingdepartmentsentapurchase
ordertoasupplierandsentacopyofthepurchaseordertoFord’saccountspayabledepartment.When
thesuppliershippedthegoodsandtheyarrivedatFord,aclerkatthereceivingdockcompletedaform
describing the goods and sent the form to accounts payable. The supplier, meanwhile, sent accounts
payableaninvoice.Thusaccountspayablereceivedthreedocumentsrelatingtothesegoods:acopyof
theoriginalpurchaseorder,thereceivingdocument,andtheinvoice.Iftheinformationinallthreewas
in agreement (most of the time it was), a clerk in accounts payable issued payment. Occasionally,
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however, all three documents did not agree. And Ford discovered that accounts payable clerks spent
most of their time straightening out the 1 percent of instances in which the purchase order, receiving
document,andinvoicecontainedconflictinginformation.74
Fordmanagersdecidedtoreengineertheprocurementprocesstosimplifyit.Nowwhenabuyerinthe
purchasing department issues a purchase order to a supplier, that buyer also enters the order into an
onlinedatabase.Asbefore,supplierssendgoodstothereceivingdock.Whenthegoodsarrive,theclerk
at the receiving dock checks a computer terminal to see whether the received shipment matches the
description on the purchase order. If it does, the clerk accepts the goods and pushes a button on the
terminalkeyboardthattellsthedatabasethegoodshavearrived.Receiptofthegoodsisrecordedinthe
database, and a computer automatically issues and sends a check to the supplier. If the goods do not
correspond to the description on the purchase order in the database, the clerk at the dock refuses the
shipmentandsendsitbacktothesupplier.
Paymentauthorization,whichusedtobeperformedbyaccountspayable,isnowaccomplishedatthe
receiving dock. The new process has come close to eliminating the need for an accounts payable
department. In some parts of Ford, the size of the accounts payable department has been cut by 95
percent.Byreducingtheheadcountinaccountspayable,thereengineeringeffortreducedtheamountof
timewastedonunproductiveactivities,therebyincreasingtheefficiencyofthetotalorganization.
InformationSystems,theInternet,andEfficiency
With the rapid spread of computers, the explosive growth of the Internet and corporate intranets, and
highspeeddigitalInternettechnology,theinformationsystemsfunctionismovingtocenterstageinthe
quest for operating efficiencies and a lower cost structure. The impact of information systems on
productivityiswiderangingandpotentiallyaffectsallotheractivitiesofacompany.Forexample,Cisco
Systems has been able to realize significantcost savingsby movingits orderingand customerservice
functionsonline.CiscoSystemsdesigns,manufactures,andsellsnetworkingequipment.Thecompany
hasjust300serviceagentshandlingallitscustomeraccounts,comparedtothe900itwouldneedifsales
werenothandledonline.Thedifferencerepresentsanannualsavingsof$30millionayear.Moreover,
without automated customer service functions, Cisco calculates that it wou…

Introduction:
In today’s intensely competitive business world, achieving superior quality, efficiency, innovation, and responsiveness to customer needs is essential. Business leaders must take an in-depth look at their functional strategies and value chain management to realize their goals. This involves a comprehensive internal and external environmental scan to identify strengths, weaknesses, opportunities, and threats (SWOT) related to relevant research. This information can be leveraged to generate strategic objectives and operational tactics that can spur growth and profitability.

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Description:
The article delves into the critical importance of achieving superior quality, efficiency, innovation, and responsiveness to customers for a business to succeed. Using the example of the airline industry, the article explores how American Airlines used a randomized group boarding process, which turned out to be more efficient than the back-to-front method. The article also examines different factors that can slow down the boarding process, such as oversized and excess baggage, passengers boarding outside their zone, and passengers who pay for early boarding. The article underscores the need for organizations to conduct a SWOT analysis supported by relevant research and recommends strategic objectives and operational tactics based on their findings. These can form the basis for achieving competitive advantage, growth, and profitability.

Objectives:
– To analyze and evaluate the results of the internal and external environmental scans
– To identify relevant research findings related to the scan results
– To recommend 3 strategic objectives based on the SWOT analysis
– To create related operational tactics for 3 sectors of the organization

Learning Outcomes:
Upon completion of this presentation, learners will be able to:
1. Explain the importance of conducting internal and external environmental scans in achieving superior quality, efficiency, innovation, and responsiveness to customers.
2. Identify and describe customers’ needs and explain why it is important for managers to be responsive to their needs.
3. Evaluate the challenges facing managers and organizations that seek to implement total quality management and achieve superior quality.
4. Differentiate between two forms of innovation and explain why innovation and product development are crucial components of the search for competitive advantage.
5. Develop strategic objectives based on the SWOT analysis and translate them into business goals.
6. Create relevant operational tactics for 3 distinct sectors of the organization such as marketing, finance, accounting, etc.
7. Format assignments consistent with APA guidelines.

Solution 1: Boarding Efficiency Solution for Airlines
Heading: Improving the Efficiency of Boarding Process in Airlines

Introduction:
Boarding process is one of the critical processes for airlines, as it helps airlines to achieve their on-time departure goals, and improves passenger satisfaction. There have been various methods adopted by different airlines to deal with this process. However, are the current methods efficient?

Internal and External Environmental Analysis Findings:

Internal factors:
– Baggage issues: In 2008 airlines started charging for checked luggage to avoid the fees, more passengers began using carry-on luggage which slows down the boarding process.
– Passenger behavior: Passengers board outside their zone or whatever method the airline is using which makes the system less efficient.
– Boarding methods: Airlines use different methods such as boarding back-to-front, random boarding, and boarding based on the seat type.

External factors:
– Competitive environment: Airlines are in a highly competitive environment and boarding speed can be a key differentiator.
– Customer perception: On-time departure is crucial to the customer as it helps them with their schedule.

Three strategic objectives based on SWOT analysis:
1. To provide faster boarding services, an airline can implement new technologies such as mobile boarding passes and boarding automation, which will reduce the waiting time of passengers.
2. Airlines can provide checked luggage allowances to customers who are early at the airport, encouraging them to arrive early and reducing the boarding time.
3. Airlines can promote ethical behavior of passengers by releasing a statement that encourages passengers to board based on their assigned group.

Business Goals and Operational Tactics:
1. Marketing: offer discounted boarding rates to passengers travelling with no or minimum luggage, to encourage them to reduce the number of bags they carry onto the plane.
2. Finance: to reduce the cost of lost opportunities due to delayed and late boarding, airlines can implement a system to monitor the cost of delays caused by delayed boarding.
3. Accounting: airlines can create a cost-benefit analysis to determine the appropriate boarding method and whether the investment in technology is viable.

Solution 2: Total Quality Management in the Aviation Industry
Heading: Improving Quality in the Aviation Industry using Total Quality Management

Introduction:
Total Quality Management (TQM) is a management approach that involves continuous improvement of processes and products through customer feedback, employee involvement, and the use of quality tools and techniques. This approach has been proven to be effective in several industries, including aviation.

Internal and External Environmental Analysis Findings:
Internal factors:
– The complexity of aviation processes: Airline processes are complex, and any errors can have significant consequences.
– Human error: Human error can cause negative impacts not only on the airline but passengers as well.
– Budget constraints: Airlines face budget constraints on implementing innovative ways of improving quality, which results in a delay in improvement in infrastructure and technology.

External factors:
– Competitive environment: The demands of better quality airline services have caught the eyes of customers and given rise to more competitively priced and better quality air travel services.
– Government regulations: Airlines are subject to strict regulations to ensure passenger safety. The FAA mandates minimum standards for aircraft maintenance, pilot instruction, and airline operations.

Three strategic objectives based on SWOT analysis:
1. Develop a TQM system to monitor and optimize aviation processes to increase quality standards.
2. Employee training and empowerment – ensuring every employee is well-trained and empowered to provide the best possible service to customers.
3. Implementation of Quality Control Checklists – Instruct employees to use quality control checklists to minimize human errors.

Business Goals and Operational Tactics:
1. Marketing: Promote the quality of the airline services through various marketing channels- digital, print or social media, etc. Conduct surveys and collect feedback on customer preferences.
2. Finance: Set-up a TQM team to monitor the airline’s TQM implementation and allocate a budget for employee training.
3. Accounting: Implement a quality control audit system consisting of checklists, standardized operating procedures, and coaching or mentoring programs. This would reduce human error and ultimately save the company operational costs.

Conclusion:
Despite the challenges faced by aviation industries, total quality management can help improve the quality of airline services, enhance customer satisfaction, and reduce operational costs. It is essential to have a framework that ensures continuous improvement and maintains quality for the passengers’ safety and satisfaction.

Suggested Resources/Books:
1. “Value Chain Management: Functional Strategies for Competitive Advantage” by Hokey Min
2. “Total Quality Management: Key Concepts and Case Studies” by Prabir K. Bagchi
3. “Innovation and Entrepreneurship” by Peter F. Drucker

Similar Asked Questions:
1. What are the challenges organizations face when implementing total quality management?
2. How can organizations become more efficient in their operations?
3. What methods can organizations use to increase innovation and product development?
4. How important is customer responsiveness in achieving competitive advantage?
5. What are some strategies organizations can use to improve their value chain management?

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