I'd like to go back to the well on this one and discuss our dry cleaning process at Crystal Cleaners in regards to team organization. Since I have not been a part of the dry cleaning process for some time since transferring to UIUC, I will discuss the system in its current form, without me in it.
At this time, the system could be considered a simple "One Boss" arrangement. My sister, Emily, oversees all business operations, including all facets of the dry cleaning process. Underneath her, the system is broken up into smaller sectors: Dry Cleaning, Laundering, Dry Cleaning Pressing, Shirt Pressing, Sorting/Processing, Customer Service, and Transportation. These sectors perform tasks largely individually, with few overlaps in production, so high levels of communication between sectors is not always required. They also all answer to Emily directly and refer to her with any questions or concerns. Of course, this does not mean one sector can function completely freely of all others. They are all facilitated by one another and require one another to perform their tasks properly in order to perform their own tasks.
Here I will give a quick synopsis as to how the system works and what each sector's tasks are:
-The Dry Cleaning and Laundering Teams arrive before the store opens, ready the machines and clothing items, and begin washing/cleaning all items.
-The Shift Clerk (Customer Service) arrives to open the store to customers at 7 am.
-The Shirt Pressing Team arrives at 7:30 am, when the first loads of shirts are finished in the washers, and begins pressing. Shirt pressing is a three-part process: Shirts first go on a buck press on which the body of the shirt is pressed. Then, shirts are inspected for any unwanted creases or imperfections the buck may have left and imperfect areas are pressed by a hot head press. Finally, shirts are brought to a basic iron where sleeves are ironed and the shirts are readied for processing.
-The Dry Cleaning Team arrives at 8;00 am, when the first load of dry cleaning is finished being cleaned, and begins pressing. Dry cleaning presses is essentially broken up into three categories: Trousers are pressed on a "legger" press and touched-up by a pant-topper press. Jackets are pressed on a cushioned utility press and steamed-out by a "Suzie" machine. Finally, all other miscellaneous dry cleaning/laundering items are pressed by hand on a utility press and Suzie if need be.
-The Processing Team arrives at 9;00 am and begins inspecting finished items for any mistakes and then places items on the line with their order ticket. As orders are completed, items are bagged and place with in a designated area with other orders from that particular location. Crystal dry cleaning is placed on our rotating rack for customer pick-up.
-All dry cleaning from our drop stores are loaded and transported to those locations. While at each location, incoming dry cleaning from the day is picked up and returned to Crystal.
-Team members leave after their tasks for the day are finished and the day's work is completed.
This system seems to be successful as of now and it may be because it includes several of Katzenbach and Smith's distinguishing characteristics of high-quality teams.
-The system allows each team to handle its own matters throughout the day. Granted, she has taught each team how shes wants things to be done and what ways she feels will produce the greatest efficiency, but she does let each team go about its business without breathing down their necks constantly.
-Each sector's tasks have been broken down into measurable goals. As you may have been able to tell, much of the dry cleaning process involves labor, machine utilities, and other variable costs. Therefore, our system is centered around been as efficient as possible. Therefore, we have employed the use of time and quality-measured performance goals to ensure that work is being done in a timely manner.
-The size of the system may seem big from my explanations, but actually, there are only about 10 people in the system. most of the teams I mentioned earlier are actually made up of just 1 or 2 people.
-Expertise may be a field in which we are lacking a bit. Mainly, since employees are only performing tasks relating to their sectors, they don't carry much expertise in the other dimensions of the system. However, there are a handful of team members that do have experience in multiple fields which comes in handy when someone misses a day of work or one particular sector has more work to do than normal.
-Working relationships is another field in which we aren't as strong as we could be. Team members within the same sector have often become quite close as they are working toward the same immediate goals and are also in close proximity to each other. However, since sectors don't often overlap, there is little need to develop close relationships with those outside one's sector. Don't get me wrong here though. It is a small business and everyone knows everyone, but as far as interpersonal communication, it is not necessarily vital to the success of the system.
-The final piece is the one that intrigues me most of all. In a remedial labor-driven business like ours, it is incredibly difficult to get our employees to become committed to the business. This problem can present itself in many ways. An employee can work slowly because they don't care about being efficient. They could skimp out on quality as far as pressing because making sure items are perfect can be a pain and they don't care about perfection. Or they could be careless when processing items, which leads to customers' items being placed with the wrong orders or being lost altogether. This has been our biggest problem since we started at Crystal and our main strategy to prevent it is to simply try to make Crystal a pleasant place to work so that employees enjoy being there (as much as they can at leas) and to involve them in the decision-making process so that they feel they are truly a part of our business because in truth, they are. This strategy has had some success lately. Our current team includes some of the hardest working and more efficient employees I've seen since we've started. And believe me, I've seen a lot. In this type of industry, turnover is something you see quite a bit.
Friday, September 26, 2014
Friday, September 19, 2014
Experience with Opportunism and Inopportunism
In addition to running a few dry cleaners/laundromats in the Springfield area, my parents also own Flynn Sales & Service, a business in which we sell and repair commercial and industrial laundry equipment. We are also official distributors for Dexter Laundry Equipment for central and southern Illinois. Essentially, we work with almost exclusively other small businesses: laundromats, nursing homes, hotels, etc. This can make things a little difficult when it comes to the payment side of the transaction.
Small businesses are more difficult to run now than ever and our customers can, obviously, be a little stingy when it comes to what they're willing to pay. This stinginess can present itself at any time: when we send them a quote for the estimated price, when we get to the location and find out they've changed their mind, or in some cases, even after we're finished installing the machines and they feel they can haggle since it would be too much work for us to uninstall the machine at that point. This behavior can drive some of us crazy, to the point where we would prefer to not do business with stingy customers at all. But my dad, who essentially makes all sales and service decisions for the company, has an unbelievable ability to remain steadfast, to his own detriment in many cases.
My dad truly believes that small businesses are a most vital part of our economy. He is also a very humble and hard working individual, never trying to steal an extra buck from anyone. He believes that if you work hard and do the right thing, things will take care of themselves. I greatly admire his philosophy as an individual, but this way of thinking can sometimes muddy the water when it comes to business.
At times, when customers try to haggle or talk him down, it is truly because they just don't have the money and would pay if they just had a little more. Other times, they may be just wise to the fact that my dad is quite easy-going when it comes to money. Regardless, my dad is usually willing to give a lot more than the rest of us would like him to. I've asked him on several occasions, "you only charged enough to cover our cost of the machine and barely enough to cover our cost of labor and gas. Why not charge more?" He hates that question since he gets it almost constantly from the rest of the employees and of course, my mom, who is not only part-owner but is also in charge of all finances. But he always just answers, "It's tough out there for us small businesses. We have laundries. We know it's hard. The economy and customers are hard enough to handle. The least we small businesses can do is help each other out." He goes on to say that we're getting enough to cover our paychecks and put a little money back into the business, and that's good enough.
You could easily argue that my dad is not great at this business thing. But he's been running Flynn Sales for over 25 years and he has one of the best reputations in the state. He also has a great reputation with Dexter, despite having a small sales region and many times talking his own customers into buying used equipment because of Dexter equipment's durability. He's been offered to take over larger regions including St. Louis but has turned them down as he doesn't want to sacrifice the quality of his work just to expand. He seems to turn down opportunities fairly often in his work, but he's made it very clear why. He cares about his customers and would rather see to it that they are taken care of than make a few extra bucks, and he knows that when it comes to laundry equipment, nobody can take better care of his customers than him.
Small businesses are more difficult to run now than ever and our customers can, obviously, be a little stingy when it comes to what they're willing to pay. This stinginess can present itself at any time: when we send them a quote for the estimated price, when we get to the location and find out they've changed their mind, or in some cases, even after we're finished installing the machines and they feel they can haggle since it would be too much work for us to uninstall the machine at that point. This behavior can drive some of us crazy, to the point where we would prefer to not do business with stingy customers at all. But my dad, who essentially makes all sales and service decisions for the company, has an unbelievable ability to remain steadfast, to his own detriment in many cases.
My dad truly believes that small businesses are a most vital part of our economy. He is also a very humble and hard working individual, never trying to steal an extra buck from anyone. He believes that if you work hard and do the right thing, things will take care of themselves. I greatly admire his philosophy as an individual, but this way of thinking can sometimes muddy the water when it comes to business.
At times, when customers try to haggle or talk him down, it is truly because they just don't have the money and would pay if they just had a little more. Other times, they may be just wise to the fact that my dad is quite easy-going when it comes to money. Regardless, my dad is usually willing to give a lot more than the rest of us would like him to. I've asked him on several occasions, "you only charged enough to cover our cost of the machine and barely enough to cover our cost of labor and gas. Why not charge more?" He hates that question since he gets it almost constantly from the rest of the employees and of course, my mom, who is not only part-owner but is also in charge of all finances. But he always just answers, "It's tough out there for us small businesses. We have laundries. We know it's hard. The economy and customers are hard enough to handle. The least we small businesses can do is help each other out." He goes on to say that we're getting enough to cover our paychecks and put a little money back into the business, and that's good enough.
You could easily argue that my dad is not great at this business thing. But he's been running Flynn Sales for over 25 years and he has one of the best reputations in the state. He also has a great reputation with Dexter, despite having a small sales region and many times talking his own customers into buying used equipment because of Dexter equipment's durability. He's been offered to take over larger regions including St. Louis but has turned them down as he doesn't want to sacrifice the quality of his work just to expand. He seems to turn down opportunities fairly often in his work, but he's made it very clear why. He cares about his customers and would rather see to it that they are taken care of than make a few extra bucks, and he knows that when it comes to laundry equipment, nobody can take better care of his customers than him.
Friday, September 12, 2014
Experience with Organizational Changes and Transaction Costs
Before transferring to Illinois last year, I attended UIS in Springfield while working for my family's dry cleaning/laundromat business, Crystal Cleaners. My family has owned and operated Crystal for about 6 years now. When we took over the business, it was a little down on its luck, but my family has had years of experience in the industry and we felt we could turn it into a very successful and profitable business. We performed renovations on the laundromat and conducted a complete overhaul of the dry cleaning process. Still, our expectations were humble. We expected steady increases in profits, which we assumed would be due in part to increased laundromat revenue and improved efficiency in the cleaners. However, the actual increases were much more dramatic than our highest hopes! Soon, we were able to take over Crystal's sister-store, Family Pride Cleaners and Laundry, which, up to that point had been serving as a drop store and sending us their dry cleaning. While we weren't nearly as large as some of the other dry cleaner chains in Springfield, we were by far the fastest growing, and our two laundromats had (and still have) the best reputations in town.
Last year, we were given another opportunity to grow as one of the other dry cleaner chains came to us with a proposal to merge. Their dry cleaning plant was in need of tedious renovations and their income at that time made making upgrades impractical. Therefore, we took on their dry cleaning as part of a partnership. However, this nearly doubled the size of our business in terms of clothing items per week. We had dealt with gradual increases in output and shocks to our systems before, but nothing of this magnitude. We had to change our entire system of production. We nearly doubled the size of our dry cleaning/pressing staff, installed additional presses, completely reworked our production line, and even altered our hours of production. While undergoing these changes were difficult at the time, we learned that we can adjust and adapt to new shocks to our system, not only planned shocks, but unplanned ones too if they were to arise in the future. As we continue to grow, we will continue to make these adjustments as they are needed. Hopefully, they will be due to pleasant changes such as an increase in business as opposed to negative changes!
To specify some of the transaction costs incurred as we took on more business, they mainly regarded our plant and our production system. Before the merger, we were able to begin our dry cleaning process at 7 a.m. when we opened each morning. My sister, Emily, the co-owner and manager, or I will open the store and begin readying the dry cleaning items for cleaning. Soon after, our shirt team will come in and begin readying the shirts for washing, a sometimes lengthy process. The dry cleaning pressing team would come in a couple hours later, once the first load of dry cleaning has been cleaned, to begin pressing the items while the shirt team began doing the same to the shirts. As items were finished being pressing, they were inspected by Emily or I and then placed with their order, bagged and processed into our line for pick-up.
This process seemed to work well with the amount of items that we had at that time. However, when the number of items nearly doubled, we couldn't simply plan to work twice as long. Instead, Emily planned to come in earlier, either before we opened in the morning or during the evening before, to begin readying the dry cleaning. This way, we could have the dry cleaning pressing team come in and start slightly earlier in the day. Also, she began having the evening workers ready the shirts for wash before close and even load them into machines. This way, Emily could simply start the machines when she arrived in the morning and they would be ready for the shirt team when they arrived soon after. These prep changes seem minor but they are often the cause when production falls behind.
Some bigger transactions costs of increasing business were the costs of increasing the staff and installing new pressing equipment. Simply adding staff when adding to business is one thing, but we couldn't run our old system with a different amount of staff members. We added a new utility press on which hand-iron shirts and dry cleaning items could be done, as well as an additional "suzie" press, a steaming press for dresses, jackets, etc. Also, we moved one of our hand-irons, on which the shirt team would iron shirt sleeves, next to the hot-head press so that it was more quickly available to the shirt team and they didn't have to wheel their rack of shirts over to it from across the plant.
One last transaction cost was our transportation system. Before expansion, we had only a few deliveries and pick-ups to make each day and each of them usually involved smalls amounts of dry cleanings. Therefore, we simply used our own vehicles and made rounds after leaving the plant for the day. However, after expansion, we had far too much dry cleaning to fit in our vehicles, so we invested in a van to haul dry cleaning. Also, our new production system, in which we prep dry cleaning and shirts before the morning, required that we return to Crystal after making our rounds each day to drop off the pick-ups from each drop store.
These examples may not be particularly accessible for those outside the industry, but they were each very vital to the success of this expansion. We spent a great deal of time determining what parts we needed to change and how we needed to change them. I think we learned a lot from it.
Last year, we were given another opportunity to grow as one of the other dry cleaner chains came to us with a proposal to merge. Their dry cleaning plant was in need of tedious renovations and their income at that time made making upgrades impractical. Therefore, we took on their dry cleaning as part of a partnership. However, this nearly doubled the size of our business in terms of clothing items per week. We had dealt with gradual increases in output and shocks to our systems before, but nothing of this magnitude. We had to change our entire system of production. We nearly doubled the size of our dry cleaning/pressing staff, installed additional presses, completely reworked our production line, and even altered our hours of production. While undergoing these changes were difficult at the time, we learned that we can adjust and adapt to new shocks to our system, not only planned shocks, but unplanned ones too if they were to arise in the future. As we continue to grow, we will continue to make these adjustments as they are needed. Hopefully, they will be due to pleasant changes such as an increase in business as opposed to negative changes!
To specify some of the transaction costs incurred as we took on more business, they mainly regarded our plant and our production system. Before the merger, we were able to begin our dry cleaning process at 7 a.m. when we opened each morning. My sister, Emily, the co-owner and manager, or I will open the store and begin readying the dry cleaning items for cleaning. Soon after, our shirt team will come in and begin readying the shirts for washing, a sometimes lengthy process. The dry cleaning pressing team would come in a couple hours later, once the first load of dry cleaning has been cleaned, to begin pressing the items while the shirt team began doing the same to the shirts. As items were finished being pressing, they were inspected by Emily or I and then placed with their order, bagged and processed into our line for pick-up.
This process seemed to work well with the amount of items that we had at that time. However, when the number of items nearly doubled, we couldn't simply plan to work twice as long. Instead, Emily planned to come in earlier, either before we opened in the morning or during the evening before, to begin readying the dry cleaning. This way, we could have the dry cleaning pressing team come in and start slightly earlier in the day. Also, she began having the evening workers ready the shirts for wash before close and even load them into machines. This way, Emily could simply start the machines when she arrived in the morning and they would be ready for the shirt team when they arrived soon after. These prep changes seem minor but they are often the cause when production falls behind.
Some bigger transactions costs of increasing business were the costs of increasing the staff and installing new pressing equipment. Simply adding staff when adding to business is one thing, but we couldn't run our old system with a different amount of staff members. We added a new utility press on which hand-iron shirts and dry cleaning items could be done, as well as an additional "suzie" press, a steaming press for dresses, jackets, etc. Also, we moved one of our hand-irons, on which the shirt team would iron shirt sleeves, next to the hot-head press so that it was more quickly available to the shirt team and they didn't have to wheel their rack of shirts over to it from across the plant.
One last transaction cost was our transportation system. Before expansion, we had only a few deliveries and pick-ups to make each day and each of them usually involved smalls amounts of dry cleanings. Therefore, we simply used our own vehicles and made rounds after leaving the plant for the day. However, after expansion, we had far too much dry cleaning to fit in our vehicles, so we invested in a van to haul dry cleaning. Also, our new production system, in which we prep dry cleaning and shirts before the morning, required that we return to Crystal after making our rounds each day to drop off the pick-ups from each drop store.
These examples may not be particularly accessible for those outside the industry, but they were each very vital to the success of this expansion. We spent a great deal of time determining what parts we needed to change and how we needed to change them. I think we learned a lot from it.
Friday, September 5, 2014
Susan Athey Biography
Susan Athey is an American economist and Economics graduate professor at Stanford University. She is also the Chief Economic Consultant at Microsoft. Her main areas of research include industrial organization and microeconmic theory as well as the economics of technology. This has led her to specialize in studying the advancement of auction-based marketplaces and economics of the internet, with an emphasis on the role of advertising online and the economics of news media.
Athey was born November 20, 1970 in Boston, MA. Enrolling at the age of just 16, she received her Bachelor's degree from Duke University with a triple major in economics, mathematics, and computer science. She then went on to receive her PhD from Stanford University, completing her doctorate at the age of 24. She began teaching as an associate professor at MIT and was there for six years before moving on to Stanford as a professor of economics. After five years, she moved on to Harvard where she taught until 2012, when she decided to return to the Stanford graduate school of business, where she currently teaches today. She has received a number of honors for her research, most notably the John Bates Clark Medal in 2007, an award given to an American economist under the age of forty who has made a significant contribution to the field of economic thought and knowledge.
Subscribe to:
Posts (Atom)