15.760: Alaska Air 1. Admin/Intro: PeaPod, Webvan 2. What are important characteristics of services vs. manufactured products? 3. In what sense must AA concurrently develop product & process? 4. What are the key operations tasks that AA must accomplish? 5. Can “self-service through technology” provide a “sustainable competitive advantage” for AA? 6. Why use hubs?15.760: WEBVAN ASSIGNMENT Take the position of a consultant to Webvan. Write a memo to theCEO of Webvan, providing him with your assessment of theWebvan operations model and business model -- based solely onthe information available in the case. Include in your assessmentsome analysis of the value proposition to customers as well as thevalue proposition to investors. (I.e., how profitable will Webvanlikely be?) (Max length: 1500 words & six supporting exhibits.) We all know that Webvan went broke. Feel free to take the positioneither that the business could make money (and provide theassumptions and/or analysis and/or creative ideas that supportyour position) or that the business is hopeless. If you take thelatter position, you still need to back up your assessment with ananalysis of why you concluded what you did. (I.e., whatspecifically are the flaws in the business model or operationsassumptions?)Some Characteristics of Services (vs. Manufacturing) – Intangibility - explicit and implicit intangibles • “We manufacture perfume; we sell hope.” • Mgmt Issues: Expectations & Perceptions – Perishability - an hour of non-production is an hour lost • Airplane w/o spare part costs > $10K/hr • Mgmt Issues: Preventation Processes & Mentality – Heterogeneity - inherent variability of service & customer • Each doctor’s bedside care is unique, as is each patient • Mgmt Issues: Hiring, Training, Listening, Customization – Simultaneity - services simultaneously produced & consumed • A poor attitude by the server cannot be recalled • Mgmt Issues: Hiring, Training, Situation ControlProduct Development (Sega, #2) Supply Chain (Nokia, #1, Dell, #4) Process Design & Management (Burger King, #3) Three Foundational Components of Operations Management (Alaska Air #5)Product Development (Sega, #2) Supply Chain (Nokia, #1, Dell, #4) Process Design & Management (Burger King, #3) Three Foundational Components of Operations Management (Alaska Air #5) Dell Product Features • µP & modem speed • CD ROM speed • MB DRAM & HD • screen size • order-to-deliv time • features range • fufillment accuracy AA Product Features • check-in time • reservations help • meals • price • flight frequency • mileage awards • route coverage • baggage handling • customer coddlingOperations Tasks for Alaska Airlines1. DESIGN A. Product Features (See Above; Contrast with Southwest) B. Fleet Configuration C. Reservations System D. Human Resources System (Care of Employees; Esprit de Corp) 2. PLANNING A. System schedule; B. Hiring/Training of Pilots, Flight Attendants, Ground Crew C. Workforce scheduling, Aircraft scheduling & maintenance D. Pricing, Marketing, Promotions (Competitor Actions) 3. CONTROL A. Reservations, Check-in, & Flight processes B. Responses to unplanned events: weather, breakdowns, etc. C. Processing Customer Complaints 4. IMPROVEMENT A. Operations Costs; Capacity Utilization (Role of Technology) B. Customer Experience (Role of Technology) C. Reputation & BrandTechnology Strategy at Alaska Airlines Hypothesis: “Self-service through technology” provides “sustainable competitive advantage.” ***Eliminate, Simplify Automate*** 1. Culture of Innovation (among tech leadership) 2. IMAGE system • customer service, employee satisfaction, • flexibility with laptops, missed opportunity? 3. On-line booking, e-tickets, kiosks, redeem miles • Reduce costs and Improve Customer Satisfac. 4. Navigation and Guidance Systems Is this profitable? Sustainable?Why use hubs (e.g., Seattle) ? Victoria Calgary Seattle San Francisco Las Vegas Victoria Calgary Seattle San Francisco Las