service efficiency – The OM Blog by Heizer, Render, & Munson

OM in the News: Abercrombie–and Others–Agree to End “On-Call” Scheduling

Abercrombie & Fitch will cease using on-call scheduling—which requires workers to make themselves available for shifts that may be canceled at the last minute—at its New York stores by the end of 2015, reports The Wall Street Journal (Aug. 7, 2015). The retailer, which also operates the Hollister chain, was among 13 companies that received notice from the N.Y. state attorney general, warning that they might be violating state law by requiring workers to show up or stay home with little notice. “Unpredictable work schedules take a toll on all employees, especially those in low-wage sectors,” said the attorney general.

Workers whose shifts are canceled don’t receive pay, even if they had blocked out that time and made child care or other arrangements. A&F workers say that they were expected to be on call at least twice a week and were often told to stay home just an hour before their shifts were to start. On-call scheduling allows retailers to staff up quickly during busy times and save on labor costs during slow days. Software now widely used by retailers forecasts staffing needs based on real-time sales and store traffic data. Workers, labor activists and legislators have criticized the practice, saying it makes employees’ lives and pay unpredictable.

A&F workers will now receive their schedules one week in advance and can opt in to receive alerts about additional shifts that need to be filled on short notice. Victoria’s Secret, which also received the letter, told employees it would stop using on-call shifts. The other companies targeted by the state are: Burlington; Crocs ; Gap; J.C. Penney; J. Crew; Sears; Target ; TJX; Urban Outfitters; Ann Inc.; and Williams-Sonoma.

Classroom discussion questions:

How common is on-call scheduling?
What are the ethical issues involved?

OM in the News: Airlines and the Digital Bag Tag

Airlines are adding new technology to improve and automate how they handle and track bags

“For decades, fliers have checked their bags the same way: hand them to an airline employee and trust that they will reappear at the destination,” writes The Wall Street Journal (July 6, 2015). Now big changes to that model are coming as airlines look to streamline the airport experience—and pass more work to customers and machines.

Their latest ideas including letting fliers tag their own bags, print luggage tags at home and track their bags on smartphones. Later this year, some fliers in Europe likely will begin using what could be the future of flying luggage: permanent bag tags that digitally update if flight plans change. Improved technology and loosened security rules are accelerating changes to baggage handling. More than 1/3 of global airlines now ask fliers to tag their own bags, compared with 13% in 2009. By 2018, 3/4 of carriers intend to offer the service.

Airlines say such technology isn’t intended to reduce staff, but instead free workers to handle customer problems. From 2004 to 2014, a period in which airlines added many self-service technologies like kiosks, the number of U.S. ticket agents fell about 13.5% to 138,000. U.S. airline passengers increased 8.6% to 761 million over that period.

The biggest of the coming changes is permanent bag tags, electronic devices that strap on to frequent fliers’ luggage and digitally display their flight information. The tags display bar codes like a traditional tag, allowing them to work with existing infrastructure. Fliers update the tags via Bluetooth from their smartphones, and the airline can also remotely update the tag if its owner gets rerouted. Air France KLM is also releasing a bag tracker that goes inside luggage. The device uses satellite data to give travelers the bag’s location and light sensors to alert them if the bag is opened en route. Tracking should help reduce the rate of mishandled bags world-wide, though airlines in 2014 lost 7.3 bags per 1,000 fliers, compared with 13.2 bags in 2003.

Classroom discussion questions:

1. Why are airlines encouraging the process change?

2. What is the downside of the new system?

OM in the News: Speeding Up the McDonald’s Drive-Thru

McDonald’s Corp., losing the speed race to rivals and racking up customer complaints about slow service, is adding a third drive-thru window, reports The Chicago Tribune (Nov.15, 2013).

Called Fast Forward Drive-Thru, the reboot will start appearing in new and rebuilt McDonald’s stores next year. Patrons now pay at the first window and pick up food at the second. Soon there will be a second pick-up window. The drive-thru is even more important to McDonald’s than the Big Mac. The fast-food chain generates 70% of its sales from hungry drivers. Ever since McDonald’s created its first drive-thru in 1975 in Sierra Vista, Ariz., fast-food chains have competed fiercely to shave seconds off order times, equipping workers with headsets, video cameras and clocks showing how long cars have been waiting. In the early days, fast-food restaurants derived about 40% of their sales from drive-thrus.

Disgruntled diners have taken to Twitter to complain about slow drive-thru service at McDonald’s. “I HATE when McDonald’s makes me pull out of the drive thru line and wait in a parking spot like a chump,” @EmLynnClements posted last week. @HumblePie34 added: “McDonald’s needs an express drive thru lane so I don’t have to wait an hour for a mcflurry.”

A more complicated menu has bogged down McDonald’s service. Customers, for example, can choose from 9 different sauces to go with Mighty Wings. Fueling up at McDonald’s drive-thrus takes longer than at Taco Bell and Wendy’s. It takes 189 seconds at a McDonald’s, compared with 158 seconds at Taco Bell and 134 seconds at Wendy’s. McDonald’s drive-thru service is slower than last year and its slowest ever.

Classroom discussion questions:

1. Name 5 ways to increase service efficiency (see Chapter 5, page 175).

2. What are the advantages and disadvantages of adding the 3rd window? Why doesn’t every drive-thru use this approach?