Monday, August 25, 2014

Stampede - an Operations failure

Operations failures that cause a loss of lives and are avoidable without much difficulty are very painful. Here lives are at stake and not merely excess stocks or breakdowns or some other performance metrics. Take the lastest stampede in Madhya Pradesh: http://bit.ly/1p7f9yf. 

As of now 10 people have been reportedly dead.

The number of temple stampede deaths in India are unprecedented. Take this data:
October 2013: Madhya Pradesh, 115 dead
February 2013: Allahabad, 36 dead
November 2011: Haridwar, 16 dead
January 2011: Sabrimala, 102 dead
March 2010: Kunda, 71 dead
August 2008: Himachal Pradesh, 162 dead

The list can go on. These are all stampede events with relation to some religious activity. The data has been sourced from wikipedia.

All places of religious importance have a significantly higher than average rate of human density. This makes the system highly susceptible to failures. An electric fire at home may at most cause a fire and in a worst case death of a few people. In a dense area, an exactly similar event can lead to very grave outcome. A small spark may ignite a chain of events leading to an enormous tragedy. The first point being made here is that tragedies of similar nature in domestic and public locations have a much greater impact in public places.

At homes, or even in offices the people in the system are more or less constant. All those people generally have a long term stake in the well being of that place. Thus, in a majority of cases, minimum safety standards are ensured. In public places, in spite of the religious connection, the situation is very different. Pilgrims may not always be as careful in ensuring a risk minimizing behaviour. That there are so many other pilgrims may create a condition where no individual takes the onus.

A third point is about the concept of risk probability. Say an office has 100 people and each of them is capable of causing a catastrophe with a probability of 0.01%. The chance the there will be a catastrophe in the office is still lower than 1%. In a gathering of 10,000 people the chance of a similar tragedy would be more than 60%. Simple statistical calculations point to the fact that the probabilities of tragedies caused by human failure are significantly higher in public places.

Some religious places have a spurt of pilgrims on some specific days of a year only. This spurt can increase the number of pilgrims by more than a thousand times. With pilgrims the entourage also includes shopkeepers, beggars and similar people. Most places are not designed to handle this sudden increase in the number of people. Thus the system is in a shock and very susceptible to failures. 

There can be more reasons. But, the point remains, that in places with high human density, like the places of worship, the probability and the impact of a tragedy are both very high. It thus makes sense that temple management and the staff of such public places give more than average attention to safety issues. There has to be some sort of paranoia for tragedy prevention.

One way to create such systems is of course by the rule of law. Temples and other religious places could be forced to have a set of safety based policies and the temple management could be made directly liable for any deviations or failures. The fear of punitive action might force attention on this ignored issue. However, it is common knowledge that forced compliance based system rarely result in intended outcomes. People would always find ways to subvert the rules and thus there would be no major improvement in the behavior.

I am not clear to the exact nature of the solution. But, I am clear that every place of religious gathering would have to evolve their own ways of safety procedures. Temple management and staff must be educated and thus motivated to create safety policies. A temple would never have a deity that is unclean. Something should be done so that unsafe practices are a similar anathema. Every human is an incarnation of the divine. Thus, ensuring safety of humans is probably as big as any other offering made to the almighty. 


Thursday, August 14, 2014

Imagining the future of Retailing

Sunil Chopra and Aditya Jain had this article in the Economic times: http://articles.economictimes.indiatimes.com/2014-08-13/news/52768197_1_online-retailer-blue-nile-zales

They talk about merging the concepts of online and offline retailing with overall benefits for everyone, the consumers, retailers and etailers. As a concept no one can doubt on such win win scenarios. But, as a matter of practice, the article says nothing, and uses completely wrong examples to prove their point.

There is a comparisons of the costs of an online diamond firm Blue Nile with an offline firm Zales. Of course their cost structures are going to be different. For that matter the cost structures of Toyota and Mercedes Benz would be different, that of Walmart and Macy's would be different. To compare and then try and derive some relationships is perverse academics.

Online and offline are very different businesses. So an online business is bound to have higher revenue per dollar invested in infrastructure. But, the aim of business is surely not to maximise the revenue per infrastructure dollar. For all our enthusiasm for etailing, Amazon is still losing money.

In the Costco and Amazon example, Amazon's high transportation costs cannot be used to justify the better performance of Costco. The low variety model of Costco is great, but the profit margins of Wal-Mart are significantly higher than Costco. Here it seems that the authors have been selective in giving their pre-meditated examples so that they can prove a point.

Online and offline are very different models. As of now, 'touch' is an important part of shopping for many items. Who knows, the evolved customer may not need need to feel. Also, this concept may vary with the category of material. Last mile is surely a major cost for online models, but collaboration with offline for this may not be the only way. Online businesses may create mini warehouses inside cities. Similarly, offline businesses may not be limited to being a demonstration center for products that are ultimately bough online. They will have their own needs and create their own purpose. There also might be some form of collaboration, but not necessarily in the model that Chopra has proposed.

When I read an article by stalwarts like Chopra I expect articles with more imagination and not such mundane discussion that is part of every run of mill SCM seminar. But I guess the pressure to get something in print seems to be taking a toll of even the best among us.