Operations & Services- Hospital Industry

In today’s scenario if a customer is ready to pay anything for medical treatment then he won’t compromise on the services even a bit. The question arises does operating a hospital or for that reason any other big chain in the hospitality industry goes without any study or is there a “science” that goes behind managing the show. Well the answer to that is that any hospitality industry has got a dedicated team that takes care that everything goes smooth and the customer gets value for his money. Operations Management in a hospital is one such job that takes care that the process and administration goes smooth. By the fact that hospitals are literally turning out to be more of a hospitality industry the job becomes even more challenging.

              Apollo Hospital, Bilaspur (Chhatisgarh)

Amongst the many hospital chains in India , Apollo Hospitals stands out as a name of trust  in case of any medical treatments.  Apollo Hospitals is a chain of hospitals started by Mr. Prathap C Reddy in 1983 and today the chain has got hospitals in as many as 9 countries across the globe. The chain manages more than 53 hospitals across the globe with each of them having impeccable services. 

Apollo has made it a point to have key international standard certifications under its brand name and this keeps the standards of the chain high. In fact the hospital at Hyderabad was the first hospital outside USA to have an accreditation from Joint Commission International (USA).

 Through a central networking Apollo makes sure that all its hospitals have similar standards and quality is maintained across. Apollo manages hospitals for its partners (non Apollo Hospital) as well and takes over the operation of that hospital in the process. All the partnering hospitals gain from the central purchasing of Apollo Hospitals which in turn brings in monetary benefits to the partnering hospitals. A hospital in Nigeria to which Apollo had given its operations expertise could actually bring in 86% per bed day increase in its revenues.

To keep up to the standards and quality there is lot more than medicine that goes in for the strategy.

Most of the doctors in Apollo will be highly qualified an in many case have experience in western countries.  Apollo makes sure that it maintains a relation with its customers even after they have returned home. A special customer relation cell would take care that nothing from the patient goes unheard. At employee level there is a constant interaction between the management and the staff/employee to make sure that satisfaction levels are high. In case of Medical Technology,  the group makes sure that it has got some of the best medical equipments in the world.

 These are some of the technique which differentiates one from the masses and brings in competitive advantage. Though most of the organizations that excel, have in their roots, the idea of considering the customer as god but this was not a common practice in medical industries in India before Apollo made it.

It was the way Apollo had managed its business and operations that the group towered above any other competitor. But the strategies of giving 5 star hospital services were soon taken by other competitors as well and the nearest rival (Fortis Group) is now gearing up to touch the milestones set by the Apollo group. It is now to be seen that how does the hospital that has been on the top for over 27 years now continues to be on the top. More than its medical treatment was the way it treated its patients that took the group to such heights and it requires another great operation strategy to keep that top place intact.

References-Digitaltermpapers.com, Business India, apolloglobalprojects.com

The writer of this article, Abhijeet Srivastava is a PGP student of Indian Institute of Management, Raipur.

Dr. Eliyahu M. Goldratt

Dr. Eliyahu Moshe Goldratt, the Israeli physicist turned business guru was one of the greatest of his time. His death is a huge loss to society; there could have very well been a lot more coming from this polymath. He was mostly recognized for, ‘Theory of Constraints’, ‘Cause and Effect of thinking’ and ‘Slayer of Paradigms’ which are considered his best work along with several business novels.

His book ‘The Goal’ which he took 13 months to write was an effort to improve the efficiency that would in turn have positive influence on the implementation mainly based on the company he was working was a huge success after a initial hick up where it was not received well by the company. But, his continuous efforts to improve the status of the company he was working for didn’t go too well and he was eventually fired. This was the start of the Avraham  Y. Gldratt Institute (AGI) which he named after his father.

The goal for the establishment of the AGI was to promote the Theory of Constraints and help it be implemented worldwide. It was here that the development of his famous works started. According to his plans, he retired from the institute before his 50^th birthday.

AGI is considered to be the birthplace of constraint-based techniques and solutions for business success.

But it is truly to be said that our dead are never dead to us until we have forgotten them.

At IIM Raipur, we pay tribute to Dr. Eliyahu M. Goldratt, author, educator, philosopher, scientist and originator of the “Theory of Constraints”, who passed away at his home in Israel on 11 June 2011.      

The writer of this article, Anshu Katiyar is a PGP student of Indian Institute of Management, Raipur. He has done his B.Tech in Information Technology from Dr. M.G.R. University, Chennai and can be reached at anshukatiyar @ hotmail.com.

Starbucks in India: Creating Sourcing, Quality and Pricing Synergies

Starbucks is finally coming to India. The world's largest premium coffee retail chain announced in January that it has entered into an agreement with Tata Coffee for a strategic alliance.

Headquartered in Seattle, Washington, Starbucks operates in more than 50 countries. It has been sourcing coffee beans from India for the last seven years.

Tata Coffee is Asia’s largest coffee plantation company and the third-largest exporter of instant coffee in the country. It produces more than 10,000 million tonne of shade grown Arabica and Robusta coffees at its 19 estates in south India. Its two instant coffee manufacturing facilities have a combined installed capacity of 6,000 tonne.

Under a non-binding memorandum of understanding (MoU), Starbucks will explore setting up stores in the Tata group's retail outlets and hotels, besides sourcing and roasting coffee beans at Tata Coffee's Kodagu facility.

Tata Coffee, one of the biggest suppliers of Arabica coffee beans, has shipped coffee beans to Starbucks in the past and is now building a structure for a long-term relationship, a joint release from the Tata group and Starbucks.

Retail growth outside the US is now central to the company's strategy. In an investor presentation, Starbucks International President John Culver said the company hopes to operate at least 1,500 stores in mainland China by 2015. He also said that the company sees exciting growth prospects in other emerging countries such as India and Brazil.

According to the MoU, the two companies will collaborate on providing training to local farmers, technicians and agronomists to improve coffee-growing and milling skills. The two companies will also explore social projects in the coffee-growing regions Tata Coffee operates.

“This MoU is the first step in our entry to India. We are focused on exploring local sourcing and roasting opportunities with the thousands of coffee farmers within the Tata ecosystem. We believe India can be an important source for coffee in the domestic market, as well as across the many regions globally where Starbucks has operations,’’ said Howard Schultz, chairman, president & CEO, Starbucks Coffee Company.

In the areas of sourcing and roasting, Starbucks will explore procuring green coffee from Tata Coffee estates and roasting at the Indian company’s existing facilities. At a later phase, Tata Coffee and Starbucks will consider jointly investing in additional facilities and roasting green coffee for export, the release said. 

This is a good strategy for Starbucks to have sourcing and roasting operations in the market which it aims at entering. This integration will help Starbucks to maintain the high quality of its products, customize them to the taste of the Indian palette and achieve pricing synergies. The entire operations of Starbucks India will be streamlined and hence Quality maintenance will not be a problem.

Vishwajit Vyas has done his B.Tech. in Electronics Engineering from Wayne State University, Detroit,  Michigan and can be reached at vishwajitvyas @ gmail . com.

Digital six sigma effort at Motorola: Cisco helps

Motorola has been known as an innovative and technology driven company. It has been among the early ones to use six sigma quality and 10X cycle-time reduction strategies among its competition. However by year 2000, it started to suffer almost generating no profit at bottom line even though having a sales of USD $27 billion. After initially unsuccessfully trying out the strategies of laying off workers and closing don factories to cut costs, it rightly laid the stress on process driven improvements. This initiative was called Digital six sigma and incorporated Web-based training tools, modelling and simulation tools, digitized process compliance and quality measurement tools. The aim was to do a USD $3 billion cost reduction within 3 years, as there was a lack of profitability.   It was a decentralized business model with a great amount of independence being given in how every unit run their business. For the success of digital six sigma stress was laid on collaborating the various activities happening in company and reducing costs by coordinated buy-ins. Global synergy teams were formed and functional areas for improvement were targeted. Various areas that were targeted were:

·         Customer service and support

·         Logistics

·         Sourcing and supply chain

·         New product introduction

An assessment was conducted to discover where each sector was in terms of self-service capabilities. Exploratory findings were found on not yet identified strengths and weaknesses and opportunities. Cisco help was brought in and Motorola teams attended sessions with them to learn about industry best practices. It was worked upon how Motorola could take advantage of networking and Web tools in areas of service and support and implement automatic contract management, software downloads and update product specifications. Web automation was also implemented for requirement gathering and remote monitoring methods.

As a result Motorola was successful in saving nearly USD $3 billion in less than years by process improvements. This method was termed as digital six sigma.

References : http://www.cisco.com/web/about/ac79/docs/success/Motorola_Final.pdf

The writer of this article, Naman Jain is a PGP student of Indian Institute of Management, Raipur . He has done his B.Tech in Computer Science & Engineering from Vellore Institute of Technology, Vellore and can be reached at namanvit @ gmail . com

The Pepsi Challenge

Pepsi Pennsauken is easing distribution flow by outfitting its sales representatives with handheld computers that instantly send data back to the distribution centers over a wireless network. Sales and delivery capacity have increased at lower costs than before.

A bottleneck at one of Pepsi's biggest bottlers was choking distribution and costing thousands of dollars in overtime pay and lost sales. Pepsi Pennsauken, which serves the Philadelphia and southern New Jersey region, was servicing a booming cola market with an aging, outmoded infrastructure--a common dilemma across the soft drink industry. For the nation's number-two cola brand, though, it was a hard problem to swallow.

The difficulty was, sales reps couldn't get their orders from the field back to the loading docks quickly enough. Workers in the distribution centers would spend their afternoons sitting on their signals. The backlog of weekday orders stacked up so that they ended up delivering 30,000 to 40,000 cases on Saturday--and paying time-and-a-half plus commission to do it. Then the orders would start backing up on Monday, and would go through the whole vicious cycle again.

The scenario was leaving a bad taste in the mouths of Pepsi Pennsauken's customers, too. The solution appeared in 1994, when Pepsi Pennsauken outfitted its sales reps with handheld computers that instantly send data back to the distribution centers over a wireless network. Reps no longer had to waste precious selling time listening to busy signals, and workers in the distribution centers received orders as soon as they were taken. When drivers made it back to the loading dock, their orders were waiting for them, instead of them for their orders. Pepsi had a fifteen percent improvement in labor efficiency in the first months the program was in operation.

Wireless was perfectly suited to the demands of the soft-drink industry. Generally, bottlers sell soft drinks to retailers in one of two ways: on a route sales basis, where drivers take orders and pull cases right off the truck; or pre sell, where reps take orders in advance for later delivery. With the explosive growth of the ultra competitive soft-drink business--fueled by the introduction of New Age teas, juices, and waters—pre selling for next-day delivery was critical to bottlers' strategic planning.

Beginning in May 1994, each of the company's 15 route-sales drivers were given wireless equipped handheld computers. Reps now carry the devices with them as they check inventory at each of the client retail outlets. Soft-drink orders are punched directly into the device as reps stand in front of the counters and tally the inventory. The order is then immediately sent over wireless network to large antennas that forward the order via a landline connection back to the distribution center.

The real-time element of wireless data transfer meant that the warehouse could receive an order almost as soon as the rep could write it. A rep could transmit the order from a radio modem in his car without jammed phone lines forcing him to transmit all the orders at the end of the day. It used to be that one salesperson handled three stores; now one salesperson covers four or five. It helped in increased sales and delivery capacity, and at lower costs than before.

Aniket Choudhary is a PGP student of Indian Institute of Management, Raipur. He has done his B.E. in Mechanical Engineering from College of Technology and Engineering, Udaipur. Aniket can be reached at aniketchoudhary87 at gmail . com