Description
The documentation about Operations management covers topics like strategies of Southwest airlines, Heidelberg strategy, Mitec Group efficient service.
OPERATIONS MANAGEMENT
Topic : Operations
in Services
Case Study on Southwest Airlines
Mission Statement:
We are committed to provide our employees a stable work environment with equal opportunities for learning and personal growth. Creativity and innovation are encouraged for improving the effectiveness of Southwest Airlines. Above all, Employees will be provided the same concern, respect, and caring attitude within the organization that they are expected to share externally with every Southwest Customer.
Problems faced by Southwest Airlines:
a) Competitors like United and Continental were entering into its low fare market. b) Stock Prices were falling down making it difficult to answer the questions raised by the investors. c) Sustaining the present culture and the quality of operations along with expansion of the organization. d) Demand by the employees for providing wages at par with the industry as Southwest Airlines use to pay lower wages to their employees. e) Finding a suitable successor after Kelleher. f) Low cost and low fare strategies adopted by its competitors.
Measures taken by Southwest Airlines:
1) Emphasis on point-to-point routes: It emphasizes on point to point routes, with no central hubs and an average flight time of 65 minutes. Majority of its customers fly non-stop to their final destination. By avoiding a hub and spoke system, Southwest Airlines is able to avoid delays associated with connecting flights and thus reducing the lead time and increased productivity and profitability. 2) Flying to airports that are underutilized: Many of the airports were not utilized by Southwest to optimum level. The point-to-point strategy and the use of less congested airports improved the efficiency of flight operations and also increased the number of flights at each airport.
3) Short turn-around time: The 15 minute turn-around time was a remarkable approach towards competitive advantage. This helped optimum utilization of the flights and the airports that were underutilized. Also by improving more number of flights the cost was reduced and low fare to the customers was affordable. In case of other competitors the turn-around time was 35 minutes. 4) Pilots and Attendants paid by trips: Normally in other airlines pilots and flight attendants were paid on monthly basis. But Southwest realized that the flight attendants were the people most close to their customers and therefore by paying them on the basis of number of trips would motivate them to work more and better. 5) Using a single type of fuel efficient aircraft: Boing 737 was the aircraft which was used extensively by Southwest. The fuel efficiency of this aircraft enabled the organization to save on maintenance and training cost. 6) Reducing booking of tickets through travel agents: Southwest has never sold interline connections to other carriers and has being unwilling to pay to be part of other airlines‘ reservation systems. As a result only 55% of Southwest‘s seats were booked by travel agents compared to 90% tickets of major airlines. 7) Long time program for fuel hedging: Southwest has purchased fuel options years in advance to smooth out fluctuations in fuel costs. Thus, it has maintained its competitive advantage for future. 8) Blended winglets to increase fuel efficiency: All of Southwest's 737-700s have blended winglets to increase fuel efficiency. Additionally, Southwest began installing blended winglets on up to 90 of its 737-300 aircraft beginning in mid-January 2007, with AAR of Indianapolis, Indiana, accomplishing the work. 9) Involving customers in interviewing new flight attendants: As flight attendants were the people most close to the customers, involving customers in interviewing flight attendants made decisive for the Southwest to recruit and train the right kind of potential employees.
10) Offering stock ownership to employees: Southwest was the only airlines to offer stock ownership to the employees without wage concessions. About 80-90 of the employees own stock in the company, and about 11% of Southwest‘s outstanding shares are owned by the employees.
Impact of the initiatives taken:
1) 15 minute turn-around: 70% of the flights of Southwest Airlines had 15 minute ground time which was less than industry‘s average. This helped in increasing the number of flights and also improving the efficiency of the staff. This called for a very systematic and perfect order of operations. Other competitors had an average turn-around of 35 minutes. 2) More number of flights per gate: Due to decrease in the turn-around time there was an increase in the number of flights per gate. It was initially 8 flights and it was increased to 10.5 flights per gate. 3) Increase in passenger volume by 2-3 times: More number of flights made a remarkable increase of 2-3 times in the number of passengers. A reduction in fare was thus affordable. 4) Save on maintenance and training cost: Southwest used a single type of fuel efficient aircraft i.e. Boing 737 which led to a decrease in training cost as all the pilots used the same kind of aircraft. As the flights were of the same kind it made it easy even for the maintenance staff to perform their operations as they become used to it. 5) Fewest number of customer complaints: A systematic and clear approach in performing the operations helped the employees in serving their customers in a more efficient and effective manner. Southwest also created a record in fewest number of customer complaints and also recorded fewest number of lost bags in the airline industry.
Southwest Airlines has come a long way. It has expanded from a tiny company with merely three aircrafts to one of today's major airliners that flies between 58 cities carrying over 60 million customers each year. The secret of its success lies in its workforce and the way they are motivated to perform their functions even better.
Case Study
One Global Network Helps Heidelberg Stay in the Lead
About Heidelberg
Building on a tradition of quality and service, Heidelberger Druckmaschinen AG (Heidelberg) is the global leader with more than 40 percent market share in sheet-fed offset printing machinery. Headquartered in Heidelberg, Germany, the company has roots that go back more than 150 years. It has offices in several German cities, including a major manufacturing location in nearby Wiesloch. More than many firms, Heidelberg is truly a global operation. It operates 14 call centers and 250 sales offices in 170 countries, as well as a new manufacturing facility in China.
Situation
Heidelberg had achieved global growth in part through acquisitions that created a hodgepodge of different systems, software and network providers. Dozens of work sites ran their own IT operations, with little thought to interoperation and integration. Employees found it difficult to communicate between locations and IT systems that needed to interoperate often couldn‘t. With 100 different network service providers, it was impossible to leverage Heidelberg‘s traffic volume to get the best rate. The Heidelberg board turned to outside consultants to recommend ways to improve workflow within Heidelberg. Their advice was clear: consolidate services across the enterprise and assign the work of developing new applications to one central organization, instead of letting everyone work independently.
Solution
Today Heidelberg connects its 60 largest locations over a modern IP-based network using multiprotocol label switching (MPLS) technology from a single provider: AT&T. The powerful unified network now transmits a host of new applications: self-diagnostics reports from intelligent Heidelberg presses, real estate management information such as security images and point-of-sale data, and communications from Heidelberg‘s customers. Network volume is
increasing rapidly, yet IT costs have been slashed and IT staffing reduced. At the same time, IT services have improved and customer satisfaction is up.
A Drive to Simplify and Focus on the Customer
The popularity of the Internet has not diminished the importance of the printed word as every day the world‘s presses print 100 billion 10×14 pages, and that does not include newspapers. Many of those pages flow through presses from Heidelberg. Heidelberg‘s nearly 200,000 customers are found in virtually every country, and many are relatively small businesses employing 20 or fewer people. For these small firms, the press is the center of their business, and if it goes down, the business comes to a halt. For Heidelberg, such a situation is intolerable as customer service is central to the company‘s success. Yet such global operations can pose significant management challenges. In the 1990s, Heidelberg‘s leaders realized that the company‘s history of growth through acquisitions had created a complex and unwieldy corporate infrastructure. Virtually every one of its dozens of locations had its own IT department, its own unique standard and its own network provider. Doing business, even within the company, was difficult. ?You name the operating system or network system; it was out in the company,? said Howard Hutchings, Vice President for Information Technology. ?We had over 100 different providers of network services, but Point A couldn‘t communicate with Point B. They were using Windows 98, somebody else was using Windows 2000 and someone else was using Apple. You could not go from one building to the next and have seamless connectivity.? In addition, the lack of a unified approach was costly. It was impossible to leverage Heidelberg‘s networking volume with its providers, and the cost undercut Heidelberg‘s margins and competitiveness. Heidelberg decided to simplify and centralize its global IT operations. Among the company‘s goals were to enhance customer support, boost efficiency and bottom-line results and streamline workflows.
One Network, Many Connections
Recruited from Heidelberg‘s US operations to manage the unified IT organization, Hutchings looked for a networking provider capable of supporting his company‘s worldwide base of employees and customers. ?While there were some other big providers in the marketplace,? Hutchings recalled, ?we had some good experience with AT&T in the Americas and they had an excellent support staff in our key locations including Germany and the UK. AT&T was moving into Asia Pacific, one of our fastest growing markets, and had the market in America, our number one sales area.? A leadership team visit to the AT&T Network Operations Center in Bedminster, N.J. helped cement the decision. Today the AT&T MPLS-enabled network connects 60 major Heidelberg locations and carries 70 percent of the company‘s fast-growing traffic. Smaller sites are connected through a virtual private network managed by Hutchings‘ IT team. With just one network to manage, Heidelberg can focus on applications that put the company‘s global connectivity to optimum use. In addition to the expanding number of sites, another contributor to the growing network traffic is the number of people working from home or on the road. Of Heidelberg‘s 18,000 plus staff, 1,000 work at home full time and an additional 4,000 do so occasionally. Sales and service people, designers, data input workers, office workers – even Hutchings and his network managers – need to have connectivity to corporate systems.
Keeping Sales and Service Connected
Where once 80 percent of the value of a press was in steel and machine work, that figure has dropped to 45 percent with the remaining 55 percent dedicated to electronics and software. This is because Heidelberg presses communicate easily with the computers used in graphic design to transform artist concepts into finished printing plates. They also proactively monitor their own performance so when service is needed, the presses use the network to call for help. This built-in self diagnostic capability is an important part of Heidelberg‘s pro-active service commitment. ?Inside each press is its own little network,? said Hutchings. ?Today the machine automatically phones home to the diagnostics people. Any parts needed are automatically drop shipped. The new direction is to have parts that are replaceable by a pressman working on the press, instead of having to send one of our service people. That puts a huge stress on our network because this is
live data coming through via the Internet and dropping into our network. We are tying in every small printer around the world.? Another advanced application – mSALES® and mSERVICE® – connects its 7500 sales and service people in real time over personal digital assistant (PDA) devices. Technicians can receive service orders no matter where they are. When the job is done, they can signal immediately that it is customer-approved. Generating a customer bill used to take days or weeks, but with mSERVICE it takes minutes. As a result, Heidelberg has reduced bills outstanding and improved collections by 25 percent. Boosted by these and other applications, Heidelberg‘s network traffic has grown rapidly, up 45 percent each year for the past four years. Yet, due to their centralized IP-based network, IT costs have been cut by 39 percent in the last five years and staffing has been reduced by 36 percent.
The New Importance of Business Continuity
With the increased reliance on the network, business continuity has taken on an even greater importance. If a press goes down, a small printer‘s business is at risk. That‘s one reason Heidelberg takes customer service so seriously, supporting customers with contractual agreements on the level of service their presses will deliver. The network plays the same central role in Heidelberg‘s own business, both for customer support and the company‘s continuing operations. ?The network has become the backbone,? says Hutchings. ?It‘s vital now that the links are up 7/24/365. This is a company wide demand, all the way from the design group doing CAD work to the sales force doing phone calls and sales on the road. Everyone is tied in demanding the network now. ?It was vital to design a network that could sustain business continuity. In the past it was very difficult, especially when we were trying to manage a hundred different providers.? But moving to a single networking vendor made business continuity planning much more straightforward. ?We were able to put together segments of the network that absolutely had to have this robustness to it,? Hutchings continued, ?and supplement these with a mixture of backup solutions that AT&T offers. On top of that, I brought in service level monitoring so we are making sure that when we say we‘re at 99.99 percent uptime, we can prove that 99.99.?
A Dramatic Gain in Productivity
Its centrally managed network is delivering a dramatic difference in the rich applications, improved workflow, business continuity and the savings that Heidelberg had set out to achieve. In that time Hutchings and his team have reduced the IT budget, trimmed the IT work force, and produced a 300 percent improvement in services delivered. New applications like mSALES and mSERVICE are transforming the way work is done, and helping Heidelberg provide the customer service it is famous for in a whole new way. Such gains in efficiency and productivity take on new importance as Heidelberg expands into the world‘s fastest-growing markets in Africa, China, India and Asia. As much as they need steel and cement, these developing economies need printing. With its world-renowned presses and its world-class network, Heidelberg will be there to serve them.
Mitec Group – Efficient Service with Optima
The company - Mitec Group
The Mitec Group has 12 years of experience in the area of voice network management. The Group has a proven track record from supplying scalable management solutions for Voice Managed Services.
The Challenge
An increasing number of enterprises decide to buy managed services or completely or partly outsource the voice infrastructure and IT responsibility. The customers are today far more exposed to a complex voice/data infrastructure. Following this, an increasing number of customers are getting increasingly conscious about service quality and require better and measurable service level agreements. Service quality is more and more an actual measurable parameter. Consequently the price of service agreement will depend upon both agreed and supplied quality of service. The Challenge is to compose a good service offering at a reasonable price. To achieve this it is crucial to industrialize the production of services.
Operations Management
Today, services are to a great extend executed manually. Many of these service tasks are repetitive, time consuming and tedious. In addition, the service tasks are of such a nature that competence and experience is required to perform the actual service. As a consequence, skilled technicians are designated to perform relatively basic work. In many
cases this turns out to be expensive and wrong deployment of valuable resources. Experience shows that an average service task takes up to 20 minutes to perform. This is because different persons execute the various tasks at different times with varying routines. Additionally critical information such as equipment passwords, inventory data and traffic analysis data are stored on different places, making it difficult to administer efficiently. In addition the human factor may lead to non-fulfillment of obligations defined in service contract, i.e. password changes, back-ups etc. Once a service task has been defined, Optima will ensure that the task is properly executed at the agreed time.
Centralized and streamlined production
As a result of long experience from service production in the European Managed Services market, the Mitec Group has developed a framework to cater for automation of time consuming service tasks. The target is to reduce the amount of manually executed service tasks to a minimum at the same time as releasing knowledge and resources for more complex and revenue generating tasks. The powerful Optima Framework is an engine, which allows multiple executions of different service tasks without human intervention other than initial configuration. Optima is normally placed in the Network Operations Centre (NOC) for centralized configuration, execution and administration of customer data from different sources. Optima therefore enable efficient data sharing with other 3rd party solutions for further processing.
Optima key features
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WEB based configuration and administration Optima offers an intuitive GUI for easy configuration of new single or multiple service task executions
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Flexible Plug-in architecture The flexible Plug-in architecture enables fast and easy add-on of new service task plugins.
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Scalable and module based Optima can run with either one or multiple plug-ins. The solution is designed for scalability and grows with your requirements.
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Easy scheduling of multiple tasks Optima allow the user to define concurrent service task execution on different customers.
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Integrated reporting and email notification in case of errors Optima facilitates a sophisticated report manager which displays all pending service tasks as well as any unsuccessful attempts. In case of errors Optima may forward an email notification.
One common source for information
With the centralized Optima for all data capture and storage, both technicians and sales personnel have one common source for information about customer premises equipment. With all customer data in one place, the administration of and access to vital information will be made significantly easier. Additionally information can easily be shared with other 3rd party solutions to further enhance value of existing data. The robust Optima Framework enables automation of
service tasks on different equipment types. The flexible Plug-in solution also facilitates definition of new plug-in.
Fast ROI
Optima enables automated execution of repetitive service tasks without human intervention except than the initial configuration of the task. Optima can run one or multiple service tasks, e.g. during hours with low traffic. Consequently, the more you utilise Optima the quicker you will achieve a ROI. Taken into account that a service task may take 20 minutes to perform, Optima will provide the same service within a fraction of time.
Key benefits
- Optima increases efficiency through automated services - Significant reduction of manual operations - Releases manpower for other revenue generating tasks - Framework for new value-added Services - Increase revenue through improved service level - Fast ROI
How Cisco IT Outsourced Network Management Operations
Challenge:
Monitoring and managing Cisco LANs and the Cisco global WAN backbone—which comprises more than 10,000devices—is an unrelenting and resource-intensive discipline. To gain the most value from IT resources, Cisco IT distinguishes between core and contextual activities. Core activities involve strategic IT programs and new technology, while contextual activates are repeatable, consistent day-to-day tasks,. Examples of core activities for Cisco IT include the architecture and design for newer programs such as next-generation wireless technologies, network admission control, and security. Examples of contextual activities are responding to outages on voice circuits that connect field offices, installing operating system patches, and supporting the company‘s more than 3000 legacy access points. Until 2003, Cisco IT managed contextual as well as core activities. In Asia Pacific, for example, IT staff took turns being on call 24 hours a day for a full week, once every six to eight weeks. When it was their turn, staff members would be paged in the middle of the night to respond to events such as voice circuit outages, which can occur more than 100 times nightly in certain countries. Each time, the engineer would have to get up and log a ticket with the carrier—whose support personnel might not speak the same language as the local support person. "The next morning, the engineers were expected to be productive at their ?real‘ job—which was to deploy new technology intended to increase operational efficiency or create a competitive advantage. Not only did nighttime pager duty diminish job satisfaction and productivity, it complicated event tracking. When engineers fixed a problem such as a failed power supply in the middle of the night, they did not always thoroughly document changes or check them for quality after execution. Changes that occur outside of normal business hours sometimes do not manifest as problems until the following morning. Their customer, Cisco IT, wanted better change management.
Solution:
Cisco IT decided to outsource network monitoring and management activities for the Cisco global LANs and global WAN. The service organization would need to offer the following: ? Service-level objectives (SLOs) for availability, which is the top priority for Cisco IT, as well as long-term fix resolution. In addition to tracking what went wrong, Cisco IT wanted to know why it went wrong and what actions were needed to make sure that it did not happen again. ? An SLO that defined the operational agreement between Cisco IT and the service organization. ? 24-hour monitoring and response. ? SLOs for mean time to notify, mean time to isolate, and mean time to resolve incidents. ? Ability and willingness to collaborate with the Cisco IT Tier 3 organization, which would provide knowledge transfer about new network technologies after managing them internally—usually for six months or longer. ? Support for all Cisco technologies. Rather than trying to manage relationships with different outsourced partners for the WAN, routers, firewalls, and other technologies, Cisco wanted the simplicity of a single, trusted relationship. ? A commitment to customer satisfaction.
Cisco IT decided to contract with Cisco ROS, a service organization that Cisco acquired in 2004. Within the Cisco lifecycle strategy for delivering services—Prepare, Plan, Design, Implement, Operate, and Optimize (PPDIOO)—Cisco ROS takes responsibility for selected aspects of the operate phase (Figure 1). The operate phase is the core business of Cisco ROS. By taking responsibility for day-to-day operations activities, Cisco ROS frees Cisco IT to focus on more strategic activities, such as planning, designing, and implementing new technologies.
Deciding Which IT Activities to Outsource
Duncan Mennie, EMEA network operations lead for Cisco, helped to develop the processes for transitional support. The topic of the first planning meeting, he says, was identifying the global IT tasks to outsource. They considered which tasks caused them problems, which would save us the most time, and which we were comfortable outsourcing. The team wanted to make a decision that would be applied globally. Following are the factors that the team considered when deciding which activities to outsource to Cisco ROS: Core or Contextual Activity At the outset of the relationship, Cisco retained core activities while outsourcing contextual activities. If an activity is measurable, repeatable, and consistent, and we can come up with a test plan to verify the deployment, then that activity is a good candidate to outsource. An example is patching the Microsoft Windows servers used for Cisco Unified Call Manager—almost 50 servers in Asia Pacific alone. If Cisco determines that a new patch is necessary, Cisco ROS can install the patches on all global servers quickly, and as often as necessary. When does a core activity become contextual? Each time Cisco adopts a new network technology, Cisco IT manages that technology until it can establish best practices—ordinarily within 6 to 12 months. ?During that time, they engage Cisco ROS for limited activities, such as monitoring, so that they can begin becoming familiar with the technology in their environment, Later they outsource more responsibility, such as configuration, and eventually they outsource all monitoring and management responsibility.? Currently Cisco IT is transferring knowledge to Cisco ROS about the newest version of Cisco Unified Call Manager and the Cisco Tele Presence solution. ?For most of their customers, Cisco ROS manages new technologies so that customers can adopt them even if they do not have the internal expertise. ?Cisco IT is a highly sophisticated customer that does have the internal expertise needed to adopt new technologies. Unlike many Cisco ROS customers, they prefer to manage new technologies for several months so that their engineers can keep their knowledge and skills current. They tailored an agreement with Cisco IT, as they do with all their customers, to meet their unique business needs.? Criticality of Environment
Cisco outsources noncritical (Tier 2) activities and some mission-critical (Tier 3) activities. The Tier-3 component that Cisco ROS manages is the Cisco global WAN backbone, which links more than 34,000 employees in more than 25 global sites. Availability is nearly 99.999 percent. Cisco IT has chosen to manage noncritical activities that occur in the Cisco data center environment. ?All tasks that occur in data center are considered core, and although Cisco ROS has the capability to manage them—and does for its other customers—they made the decision to retain control,?
Results: More Strategic Use of Cisco IT Resources
?By outsourcing contextual activities to a trusted provider, we gain more time for core activities that will create operational efficiencies or a competitive advantage. ?The Cisco IT organization functions most effectively if we assign our talented resources to our core activities. For Cisco ROS, in contrast, Tier 2 network monitoring is a core activity. It is what they do best.? Relieved of 24-hour pager duty, Cisco engineers have more time and energy to devote to strategic new applications, such as Network Access Control (NAC) and other advanced security technologies. ?Our IT resources regard strategic outsourcing of contextual activities as a boost to their careers,? says Higa. ?This avoids the frustration that comes from doing contextual work for many years.?
Improved Responsiveness
?People whose core competency is to respond to network problems tend to do a better, more consistent job,? says Rosling. ?Cisco ROS has a 24-hour NOC as well as a translation service so that their engineers can talk to service providers that do not have English-language support.? Cisco IT emphasizes that it did not eliminate jobs as a result of outsourcing. In 2007, Cisco IT is managing 20 strategic IT programs, such as availability metrics and strategy for the IP NextGeneration Network (IP NGN). Each requires an enabling and operating function. ?By outsourcing contextual functions, Cisco IT has more resources to devote to these programs. Their
IT professionals would prefer to work on new technologies rather than tasks like patching, and they have enough work to keep them busy indefinitely.? Global monitoring of the Cisco network enables Cisco ROS to identify potential network problems more quickly than when regional Cisco IT organizations monitored their own portions of the network. Their global monitoring personnel talk weekly. Therefore, if they notice a bug that occurs with a particular router hardware and software combination in Europe, they can take action in other geographic regions before the problem even surfaces. Cisco ROS determined that one user‘s faulty network interface card was generating enough bad traffic to make the wireless access card reset, which caused the network interface card to associate with another access point and reset that one, as well. The remedy is to identify the user and request that the network interface card be turned off. ?Global monitoring enables them to see rare problems more frequently than they would if they monitored each region separately, which accelerates problem identification and resolution
doc_864849575.docx
The documentation about Operations management covers topics like strategies of Southwest airlines, Heidelberg strategy, Mitec Group efficient service.
OPERATIONS MANAGEMENT
Topic : Operations
in Services
Case Study on Southwest Airlines
Mission Statement:
We are committed to provide our employees a stable work environment with equal opportunities for learning and personal growth. Creativity and innovation are encouraged for improving the effectiveness of Southwest Airlines. Above all, Employees will be provided the same concern, respect, and caring attitude within the organization that they are expected to share externally with every Southwest Customer.
Problems faced by Southwest Airlines:
a) Competitors like United and Continental were entering into its low fare market. b) Stock Prices were falling down making it difficult to answer the questions raised by the investors. c) Sustaining the present culture and the quality of operations along with expansion of the organization. d) Demand by the employees for providing wages at par with the industry as Southwest Airlines use to pay lower wages to their employees. e) Finding a suitable successor after Kelleher. f) Low cost and low fare strategies adopted by its competitors.
Measures taken by Southwest Airlines:
1) Emphasis on point-to-point routes: It emphasizes on point to point routes, with no central hubs and an average flight time of 65 minutes. Majority of its customers fly non-stop to their final destination. By avoiding a hub and spoke system, Southwest Airlines is able to avoid delays associated with connecting flights and thus reducing the lead time and increased productivity and profitability. 2) Flying to airports that are underutilized: Many of the airports were not utilized by Southwest to optimum level. The point-to-point strategy and the use of less congested airports improved the efficiency of flight operations and also increased the number of flights at each airport.
3) Short turn-around time: The 15 minute turn-around time was a remarkable approach towards competitive advantage. This helped optimum utilization of the flights and the airports that were underutilized. Also by improving more number of flights the cost was reduced and low fare to the customers was affordable. In case of other competitors the turn-around time was 35 minutes. 4) Pilots and Attendants paid by trips: Normally in other airlines pilots and flight attendants were paid on monthly basis. But Southwest realized that the flight attendants were the people most close to their customers and therefore by paying them on the basis of number of trips would motivate them to work more and better. 5) Using a single type of fuel efficient aircraft: Boing 737 was the aircraft which was used extensively by Southwest. The fuel efficiency of this aircraft enabled the organization to save on maintenance and training cost. 6) Reducing booking of tickets through travel agents: Southwest has never sold interline connections to other carriers and has being unwilling to pay to be part of other airlines‘ reservation systems. As a result only 55% of Southwest‘s seats were booked by travel agents compared to 90% tickets of major airlines. 7) Long time program for fuel hedging: Southwest has purchased fuel options years in advance to smooth out fluctuations in fuel costs. Thus, it has maintained its competitive advantage for future. 8) Blended winglets to increase fuel efficiency: All of Southwest's 737-700s have blended winglets to increase fuel efficiency. Additionally, Southwest began installing blended winglets on up to 90 of its 737-300 aircraft beginning in mid-January 2007, with AAR of Indianapolis, Indiana, accomplishing the work. 9) Involving customers in interviewing new flight attendants: As flight attendants were the people most close to the customers, involving customers in interviewing flight attendants made decisive for the Southwest to recruit and train the right kind of potential employees.
10) Offering stock ownership to employees: Southwest was the only airlines to offer stock ownership to the employees without wage concessions. About 80-90 of the employees own stock in the company, and about 11% of Southwest‘s outstanding shares are owned by the employees.
Impact of the initiatives taken:
1) 15 minute turn-around: 70% of the flights of Southwest Airlines had 15 minute ground time which was less than industry‘s average. This helped in increasing the number of flights and also improving the efficiency of the staff. This called for a very systematic and perfect order of operations. Other competitors had an average turn-around of 35 minutes. 2) More number of flights per gate: Due to decrease in the turn-around time there was an increase in the number of flights per gate. It was initially 8 flights and it was increased to 10.5 flights per gate. 3) Increase in passenger volume by 2-3 times: More number of flights made a remarkable increase of 2-3 times in the number of passengers. A reduction in fare was thus affordable. 4) Save on maintenance and training cost: Southwest used a single type of fuel efficient aircraft i.e. Boing 737 which led to a decrease in training cost as all the pilots used the same kind of aircraft. As the flights were of the same kind it made it easy even for the maintenance staff to perform their operations as they become used to it. 5) Fewest number of customer complaints: A systematic and clear approach in performing the operations helped the employees in serving their customers in a more efficient and effective manner. Southwest also created a record in fewest number of customer complaints and also recorded fewest number of lost bags in the airline industry.
Southwest Airlines has come a long way. It has expanded from a tiny company with merely three aircrafts to one of today's major airliners that flies between 58 cities carrying over 60 million customers each year. The secret of its success lies in its workforce and the way they are motivated to perform their functions even better.
Case Study
One Global Network Helps Heidelberg Stay in the Lead
About Heidelberg
Building on a tradition of quality and service, Heidelberger Druckmaschinen AG (Heidelberg) is the global leader with more than 40 percent market share in sheet-fed offset printing machinery. Headquartered in Heidelberg, Germany, the company has roots that go back more than 150 years. It has offices in several German cities, including a major manufacturing location in nearby Wiesloch. More than many firms, Heidelberg is truly a global operation. It operates 14 call centers and 250 sales offices in 170 countries, as well as a new manufacturing facility in China.
Situation
Heidelberg had achieved global growth in part through acquisitions that created a hodgepodge of different systems, software and network providers. Dozens of work sites ran their own IT operations, with little thought to interoperation and integration. Employees found it difficult to communicate between locations and IT systems that needed to interoperate often couldn‘t. With 100 different network service providers, it was impossible to leverage Heidelberg‘s traffic volume to get the best rate. The Heidelberg board turned to outside consultants to recommend ways to improve workflow within Heidelberg. Their advice was clear: consolidate services across the enterprise and assign the work of developing new applications to one central organization, instead of letting everyone work independently.
Solution
Today Heidelberg connects its 60 largest locations over a modern IP-based network using multiprotocol label switching (MPLS) technology from a single provider: AT&T. The powerful unified network now transmits a host of new applications: self-diagnostics reports from intelligent Heidelberg presses, real estate management information such as security images and point-of-sale data, and communications from Heidelberg‘s customers. Network volume is
increasing rapidly, yet IT costs have been slashed and IT staffing reduced. At the same time, IT services have improved and customer satisfaction is up.
A Drive to Simplify and Focus on the Customer
The popularity of the Internet has not diminished the importance of the printed word as every day the world‘s presses print 100 billion 10×14 pages, and that does not include newspapers. Many of those pages flow through presses from Heidelberg. Heidelberg‘s nearly 200,000 customers are found in virtually every country, and many are relatively small businesses employing 20 or fewer people. For these small firms, the press is the center of their business, and if it goes down, the business comes to a halt. For Heidelberg, such a situation is intolerable as customer service is central to the company‘s success. Yet such global operations can pose significant management challenges. In the 1990s, Heidelberg‘s leaders realized that the company‘s history of growth through acquisitions had created a complex and unwieldy corporate infrastructure. Virtually every one of its dozens of locations had its own IT department, its own unique standard and its own network provider. Doing business, even within the company, was difficult. ?You name the operating system or network system; it was out in the company,? said Howard Hutchings, Vice President for Information Technology. ?We had over 100 different providers of network services, but Point A couldn‘t communicate with Point B. They were using Windows 98, somebody else was using Windows 2000 and someone else was using Apple. You could not go from one building to the next and have seamless connectivity.? In addition, the lack of a unified approach was costly. It was impossible to leverage Heidelberg‘s networking volume with its providers, and the cost undercut Heidelberg‘s margins and competitiveness. Heidelberg decided to simplify and centralize its global IT operations. Among the company‘s goals were to enhance customer support, boost efficiency and bottom-line results and streamline workflows.
One Network, Many Connections
Recruited from Heidelberg‘s US operations to manage the unified IT organization, Hutchings looked for a networking provider capable of supporting his company‘s worldwide base of employees and customers. ?While there were some other big providers in the marketplace,? Hutchings recalled, ?we had some good experience with AT&T in the Americas and they had an excellent support staff in our key locations including Germany and the UK. AT&T was moving into Asia Pacific, one of our fastest growing markets, and had the market in America, our number one sales area.? A leadership team visit to the AT&T Network Operations Center in Bedminster, N.J. helped cement the decision. Today the AT&T MPLS-enabled network connects 60 major Heidelberg locations and carries 70 percent of the company‘s fast-growing traffic. Smaller sites are connected through a virtual private network managed by Hutchings‘ IT team. With just one network to manage, Heidelberg can focus on applications that put the company‘s global connectivity to optimum use. In addition to the expanding number of sites, another contributor to the growing network traffic is the number of people working from home or on the road. Of Heidelberg‘s 18,000 plus staff, 1,000 work at home full time and an additional 4,000 do so occasionally. Sales and service people, designers, data input workers, office workers – even Hutchings and his network managers – need to have connectivity to corporate systems.
Keeping Sales and Service Connected
Where once 80 percent of the value of a press was in steel and machine work, that figure has dropped to 45 percent with the remaining 55 percent dedicated to electronics and software. This is because Heidelberg presses communicate easily with the computers used in graphic design to transform artist concepts into finished printing plates. They also proactively monitor their own performance so when service is needed, the presses use the network to call for help. This built-in self diagnostic capability is an important part of Heidelberg‘s pro-active service commitment. ?Inside each press is its own little network,? said Hutchings. ?Today the machine automatically phones home to the diagnostics people. Any parts needed are automatically drop shipped. The new direction is to have parts that are replaceable by a pressman working on the press, instead of having to send one of our service people. That puts a huge stress on our network because this is
live data coming through via the Internet and dropping into our network. We are tying in every small printer around the world.? Another advanced application – mSALES® and mSERVICE® – connects its 7500 sales and service people in real time over personal digital assistant (PDA) devices. Technicians can receive service orders no matter where they are. When the job is done, they can signal immediately that it is customer-approved. Generating a customer bill used to take days or weeks, but with mSERVICE it takes minutes. As a result, Heidelberg has reduced bills outstanding and improved collections by 25 percent. Boosted by these and other applications, Heidelberg‘s network traffic has grown rapidly, up 45 percent each year for the past four years. Yet, due to their centralized IP-based network, IT costs have been cut by 39 percent in the last five years and staffing has been reduced by 36 percent.
The New Importance of Business Continuity
With the increased reliance on the network, business continuity has taken on an even greater importance. If a press goes down, a small printer‘s business is at risk. That‘s one reason Heidelberg takes customer service so seriously, supporting customers with contractual agreements on the level of service their presses will deliver. The network plays the same central role in Heidelberg‘s own business, both for customer support and the company‘s continuing operations. ?The network has become the backbone,? says Hutchings. ?It‘s vital now that the links are up 7/24/365. This is a company wide demand, all the way from the design group doing CAD work to the sales force doing phone calls and sales on the road. Everyone is tied in demanding the network now. ?It was vital to design a network that could sustain business continuity. In the past it was very difficult, especially when we were trying to manage a hundred different providers.? But moving to a single networking vendor made business continuity planning much more straightforward. ?We were able to put together segments of the network that absolutely had to have this robustness to it,? Hutchings continued, ?and supplement these with a mixture of backup solutions that AT&T offers. On top of that, I brought in service level monitoring so we are making sure that when we say we‘re at 99.99 percent uptime, we can prove that 99.99.?
A Dramatic Gain in Productivity
Its centrally managed network is delivering a dramatic difference in the rich applications, improved workflow, business continuity and the savings that Heidelberg had set out to achieve. In that time Hutchings and his team have reduced the IT budget, trimmed the IT work force, and produced a 300 percent improvement in services delivered. New applications like mSALES and mSERVICE are transforming the way work is done, and helping Heidelberg provide the customer service it is famous for in a whole new way. Such gains in efficiency and productivity take on new importance as Heidelberg expands into the world‘s fastest-growing markets in Africa, China, India and Asia. As much as they need steel and cement, these developing economies need printing. With its world-renowned presses and its world-class network, Heidelberg will be there to serve them.
Mitec Group – Efficient Service with Optima
The company - Mitec Group
The Mitec Group has 12 years of experience in the area of voice network management. The Group has a proven track record from supplying scalable management solutions for Voice Managed Services.
The Challenge
An increasing number of enterprises decide to buy managed services or completely or partly outsource the voice infrastructure and IT responsibility. The customers are today far more exposed to a complex voice/data infrastructure. Following this, an increasing number of customers are getting increasingly conscious about service quality and require better and measurable service level agreements. Service quality is more and more an actual measurable parameter. Consequently the price of service agreement will depend upon both agreed and supplied quality of service. The Challenge is to compose a good service offering at a reasonable price. To achieve this it is crucial to industrialize the production of services.
Operations Management
Today, services are to a great extend executed manually. Many of these service tasks are repetitive, time consuming and tedious. In addition, the service tasks are of such a nature that competence and experience is required to perform the actual service. As a consequence, skilled technicians are designated to perform relatively basic work. In many
cases this turns out to be expensive and wrong deployment of valuable resources. Experience shows that an average service task takes up to 20 minutes to perform. This is because different persons execute the various tasks at different times with varying routines. Additionally critical information such as equipment passwords, inventory data and traffic analysis data are stored on different places, making it difficult to administer efficiently. In addition the human factor may lead to non-fulfillment of obligations defined in service contract, i.e. password changes, back-ups etc. Once a service task has been defined, Optima will ensure that the task is properly executed at the agreed time.
Centralized and streamlined production
As a result of long experience from service production in the European Managed Services market, the Mitec Group has developed a framework to cater for automation of time consuming service tasks. The target is to reduce the amount of manually executed service tasks to a minimum at the same time as releasing knowledge and resources for more complex and revenue generating tasks. The powerful Optima Framework is an engine, which allows multiple executions of different service tasks without human intervention other than initial configuration. Optima is normally placed in the Network Operations Centre (NOC) for centralized configuration, execution and administration of customer data from different sources. Optima therefore enable efficient data sharing with other 3rd party solutions for further processing.
Optima key features
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WEB based configuration and administration Optima offers an intuitive GUI for easy configuration of new single or multiple service task executions
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Flexible Plug-in architecture The flexible Plug-in architecture enables fast and easy add-on of new service task plugins.
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Scalable and module based Optima can run with either one or multiple plug-ins. The solution is designed for scalability and grows with your requirements.
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Easy scheduling of multiple tasks Optima allow the user to define concurrent service task execution on different customers.
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Integrated reporting and email notification in case of errors Optima facilitates a sophisticated report manager which displays all pending service tasks as well as any unsuccessful attempts. In case of errors Optima may forward an email notification.
One common source for information
With the centralized Optima for all data capture and storage, both technicians and sales personnel have one common source for information about customer premises equipment. With all customer data in one place, the administration of and access to vital information will be made significantly easier. Additionally information can easily be shared with other 3rd party solutions to further enhance value of existing data. The robust Optima Framework enables automation of
service tasks on different equipment types. The flexible Plug-in solution also facilitates definition of new plug-in.
Fast ROI
Optima enables automated execution of repetitive service tasks without human intervention except than the initial configuration of the task. Optima can run one or multiple service tasks, e.g. during hours with low traffic. Consequently, the more you utilise Optima the quicker you will achieve a ROI. Taken into account that a service task may take 20 minutes to perform, Optima will provide the same service within a fraction of time.
Key benefits
- Optima increases efficiency through automated services - Significant reduction of manual operations - Releases manpower for other revenue generating tasks - Framework for new value-added Services - Increase revenue through improved service level - Fast ROI
How Cisco IT Outsourced Network Management Operations
Challenge:
Monitoring and managing Cisco LANs and the Cisco global WAN backbone—which comprises more than 10,000devices—is an unrelenting and resource-intensive discipline. To gain the most value from IT resources, Cisco IT distinguishes between core and contextual activities. Core activities involve strategic IT programs and new technology, while contextual activates are repeatable, consistent day-to-day tasks,. Examples of core activities for Cisco IT include the architecture and design for newer programs such as next-generation wireless technologies, network admission control, and security. Examples of contextual activities are responding to outages on voice circuits that connect field offices, installing operating system patches, and supporting the company‘s more than 3000 legacy access points. Until 2003, Cisco IT managed contextual as well as core activities. In Asia Pacific, for example, IT staff took turns being on call 24 hours a day for a full week, once every six to eight weeks. When it was their turn, staff members would be paged in the middle of the night to respond to events such as voice circuit outages, which can occur more than 100 times nightly in certain countries. Each time, the engineer would have to get up and log a ticket with the carrier—whose support personnel might not speak the same language as the local support person. "The next morning, the engineers were expected to be productive at their ?real‘ job—which was to deploy new technology intended to increase operational efficiency or create a competitive advantage. Not only did nighttime pager duty diminish job satisfaction and productivity, it complicated event tracking. When engineers fixed a problem such as a failed power supply in the middle of the night, they did not always thoroughly document changes or check them for quality after execution. Changes that occur outside of normal business hours sometimes do not manifest as problems until the following morning. Their customer, Cisco IT, wanted better change management.
Solution:
Cisco IT decided to outsource network monitoring and management activities for the Cisco global LANs and global WAN. The service organization would need to offer the following: ? Service-level objectives (SLOs) for availability, which is the top priority for Cisco IT, as well as long-term fix resolution. In addition to tracking what went wrong, Cisco IT wanted to know why it went wrong and what actions were needed to make sure that it did not happen again. ? An SLO that defined the operational agreement between Cisco IT and the service organization. ? 24-hour monitoring and response. ? SLOs for mean time to notify, mean time to isolate, and mean time to resolve incidents. ? Ability and willingness to collaborate with the Cisco IT Tier 3 organization, which would provide knowledge transfer about new network technologies after managing them internally—usually for six months or longer. ? Support for all Cisco technologies. Rather than trying to manage relationships with different outsourced partners for the WAN, routers, firewalls, and other technologies, Cisco wanted the simplicity of a single, trusted relationship. ? A commitment to customer satisfaction.
Cisco IT decided to contract with Cisco ROS, a service organization that Cisco acquired in 2004. Within the Cisco lifecycle strategy for delivering services—Prepare, Plan, Design, Implement, Operate, and Optimize (PPDIOO)—Cisco ROS takes responsibility for selected aspects of the operate phase (Figure 1). The operate phase is the core business of Cisco ROS. By taking responsibility for day-to-day operations activities, Cisco ROS frees Cisco IT to focus on more strategic activities, such as planning, designing, and implementing new technologies.
Deciding Which IT Activities to Outsource
Duncan Mennie, EMEA network operations lead for Cisco, helped to develop the processes for transitional support. The topic of the first planning meeting, he says, was identifying the global IT tasks to outsource. They considered which tasks caused them problems, which would save us the most time, and which we were comfortable outsourcing. The team wanted to make a decision that would be applied globally. Following are the factors that the team considered when deciding which activities to outsource to Cisco ROS: Core or Contextual Activity At the outset of the relationship, Cisco retained core activities while outsourcing contextual activities. If an activity is measurable, repeatable, and consistent, and we can come up with a test plan to verify the deployment, then that activity is a good candidate to outsource. An example is patching the Microsoft Windows servers used for Cisco Unified Call Manager—almost 50 servers in Asia Pacific alone. If Cisco determines that a new patch is necessary, Cisco ROS can install the patches on all global servers quickly, and as often as necessary. When does a core activity become contextual? Each time Cisco adopts a new network technology, Cisco IT manages that technology until it can establish best practices—ordinarily within 6 to 12 months. ?During that time, they engage Cisco ROS for limited activities, such as monitoring, so that they can begin becoming familiar with the technology in their environment, Later they outsource more responsibility, such as configuration, and eventually they outsource all monitoring and management responsibility.? Currently Cisco IT is transferring knowledge to Cisco ROS about the newest version of Cisco Unified Call Manager and the Cisco Tele Presence solution. ?For most of their customers, Cisco ROS manages new technologies so that customers can adopt them even if they do not have the internal expertise. ?Cisco IT is a highly sophisticated customer that does have the internal expertise needed to adopt new technologies. Unlike many Cisco ROS customers, they prefer to manage new technologies for several months so that their engineers can keep their knowledge and skills current. They tailored an agreement with Cisco IT, as they do with all their customers, to meet their unique business needs.? Criticality of Environment
Cisco outsources noncritical (Tier 2) activities and some mission-critical (Tier 3) activities. The Tier-3 component that Cisco ROS manages is the Cisco global WAN backbone, which links more than 34,000 employees in more than 25 global sites. Availability is nearly 99.999 percent. Cisco IT has chosen to manage noncritical activities that occur in the Cisco data center environment. ?All tasks that occur in data center are considered core, and although Cisco ROS has the capability to manage them—and does for its other customers—they made the decision to retain control,?
Results: More Strategic Use of Cisco IT Resources
?By outsourcing contextual activities to a trusted provider, we gain more time for core activities that will create operational efficiencies or a competitive advantage. ?The Cisco IT organization functions most effectively if we assign our talented resources to our core activities. For Cisco ROS, in contrast, Tier 2 network monitoring is a core activity. It is what they do best.? Relieved of 24-hour pager duty, Cisco engineers have more time and energy to devote to strategic new applications, such as Network Access Control (NAC) and other advanced security technologies. ?Our IT resources regard strategic outsourcing of contextual activities as a boost to their careers,? says Higa. ?This avoids the frustration that comes from doing contextual work for many years.?
Improved Responsiveness
?People whose core competency is to respond to network problems tend to do a better, more consistent job,? says Rosling. ?Cisco ROS has a 24-hour NOC as well as a translation service so that their engineers can talk to service providers that do not have English-language support.? Cisco IT emphasizes that it did not eliminate jobs as a result of outsourcing. In 2007, Cisco IT is managing 20 strategic IT programs, such as availability metrics and strategy for the IP NextGeneration Network (IP NGN). Each requires an enabling and operating function. ?By outsourcing contextual functions, Cisco IT has more resources to devote to these programs. Their
IT professionals would prefer to work on new technologies rather than tasks like patching, and they have enough work to keep them busy indefinitely.? Global monitoring of the Cisco network enables Cisco ROS to identify potential network problems more quickly than when regional Cisco IT organizations monitored their own portions of the network. Their global monitoring personnel talk weekly. Therefore, if they notice a bug that occurs with a particular router hardware and software combination in Europe, they can take action in other geographic regions before the problem even surfaces. Cisco ROS determined that one user‘s faulty network interface card was generating enough bad traffic to make the wireless access card reset, which caused the network interface card to associate with another access point and reset that one, as well. The remedy is to identify the user and request that the network interface card be turned off. ?Global monitoring enables them to see rare problems more frequently than they would if they monitored each region separately, which accelerates problem identification and resolution
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