Friday, September 30, 2016

illinibucks

I actually went to Illinois State before transferring here and they already had a very similar system to the proposed illinibucks. ISU had redbird dollars (set amount that would replenish each month, can't have more than your max balance so you want to spend these) that were linked to your student ID and could be used at all campus vending machines and a good deal of restaurants that were in the student union. When I went there I would just use these redbird dollars on a nice iced coffee everyday because the balance is derived from what meal plan you chose. The redbird dollars and the amount of swipes to get into the dining halls worked in inverse of each other, so the more redbird dollars per month the less swipes in the dining hall you had per week and vice versa. After you moved out of the dorms (ending your reliance on campus dining) you would still be able to purchase redbird dollars and it would be charged to your student account, much like how printing charges are auto-charged in our libraries here. However after moving out of the dorms not many students would buy the redbird dollars as they most likely all started to cook their own meals instead (living in an apartment vs dorms).

As far as illinibucks go and cutting to the front of the line I'm not sure how practical this would be on campus. In my opinion the only restaurant that actually always has a very long that people would want to cut at is chipotle. However if a lot of students have the power to cut there and use it then it is just causing even more line problems. Hypothetically other restaurants could also use this idea to let certain students who qualify for the illinibucks to cut the line but I just do not see 'cutting line' as a practical use for this idea. The only other establishments I could think of where this idea could work would be the campus bars but I feel like it would be a logistical nightmare for the employees of the bar to deal with. Not only having to deal with unruly patrons and make sure everyone is of age to be in the establishment but also somehow redeem their illinibucks to let them cut? How would they redeem them? There would need to be some type of credit card scanner to redeem them on or else it would just be way too hard.

If anything I would like to propose the illinibucks be more similar to ISU's redbird dollars. Have the Ibucks redeem on the first of the month every month up to the amount that was paid for. Restaurnts around campus and on Green street could run deals different days of the week that could only be purchased with these Ibucks to incentivize people to go. If the administered price was too low then the restaurants would be losing money for the Ibuck only deals and if it was too high then not enough students would buy the Ibucks making the system not efficient.

Tuesday, September 27, 2016

teams

I used to work at a bar on campus here in Champaign. The goal of any bar is obviously to sell as many drinks as possible to maximize revenue, but there are more moving parts that go into it than just the drinks being served. The structure of the bar I worked at resembled a simple hierarchy that splits into dual authority near the bottom of the hierarchy. There was a general manager (non-student) who was the main communication line from the bars owners to the rest of the staff. They were in charge of liquor orders, making schedules, promotions, as well as any upper-level clerical work that the bar required (renew permits, think of new promotions, etc). The general manager would not be working every shift (usually worked more on the weekends as they are busier and require more management) but would usually stop by every night as a patron if they were not working to make sure the ship was sailing alright.

When they would come in as a patron they would be interacting with the next people in line in the hierarchy: the (student) managers. There were usually 6-7 student managers and they are usually seniors as they get to that part of the hierarchy by working there through the ranks. The student managers are much more involved in the 'hands-on' management of the bar. Meaning that a shift that a student manager would work they would be managing all aspects of the bar that night: putting bartenders on registers, tracking sales, making sure bottles were stocked up, dealing with the bouncers/ doormen, dealing with specifically unruly patrons, and any major issues such as the police showing up or something bad happening outside the bar in the line or in the beer gardens. The managers technically answer to the general manager, but when they are on shift they have autonomous authority over the rest of the staff and their word is the law.

After the managers is where the simple hierarchy splits into two different groups: bartenders then under them barbacks and head doors, carders, and under them at the absolute bottom are doormen. Bartenders technically answer to the GM and managers, but their role is very defined within the bar so they in a sense would be working independently. The bartenders main and only focus would be to serve as many drinks as fast as they can to maximize sales/ revenue. Helping the bartenders succeed at this goal are the barbacks who essentially work as administrative assistants to the bartenders. The barbacks responsibility is to keep all facets of the bar stocked so the bartenders can at all times continuously serve. Their responsibilities include restocking all fridges of beer bottles and mixers, stocking on red bull, stocking liquor bottles inside the bar as well as always refilling a bartenders 'rail' to assure they always have liquor right within reach, and refilling the ice tubs.

The other side of the split lies the head doors and carders. A carder is above a doorman but below a barback technically. Carders have one job only and that is to effectively in accordance with the law vet would be patrons IDs and provide them with a wristband if they are over 21. This is their only function. The head doors on the other hand are essentially 'door managers'- the carders answer to them but their role is so defined that they need very little managing. The head doors main job is to manage the doormen. The head door will coordinate doorman at the beginning of each shift, while it is not busy, to start basic cleaning of the bar. After this initial cleaning phase the head door will assign the doormen to specific areas of the bar to patrol- such as near the dance floor, in the beer garden, near the exit gate (so people dont try and sneak in), and help coordinate the line outside especially if it is getting long/busy. The head doors main focus is keeping the bar within safe means- meaning that all the exit gates are patrolled by doormen so no under age people sneak in, kicking unruly patrons out personally (head doors are usually very large people), and helping out with any general issues that arise inside the bar. They essentially work as human liability insurance trying to make sure nothing catastrophic goes down that night. Finally at the bottom of the totem pole are doormen, and their function is very simple: do all the worst jobs that are associated with the bar. Extensive cleaning at all times, spot sweeping, guarding exit gates/ beer gardens, surveying the bar for unruly patrons/ fights and kicking those people out, and taking out all the garbage. At the end of the night the head door will coordinate all the doormen to do a deep clean of everything inside the bar that isn't physically behind the bar where the bartenders work. The bartenders and barbacks are responsible for cleaning the areas behind the bar only.

The structure of this bar has a lot of characteristics of high functioning teams. To start, teams shape purpose in response to a demand or an opportunity placed in their path usually by higher management: everyone knows their role to a 'T' when showing up for a shift. Obviously when everyone comes in the managers and head doors start telling people what to do, but this is just out of formality. Employees will be left to their own devices after being told what to do by higher ups and the managers/ head doors will only step in if someone is doing something very wrong. High performing teams are manageable size: although the staff may be huge, only a select few people are working a specific shift making it much more manageable. Moreover, bartenders and barbacks are usually much older employees and need very little management and the head door is responsible for managing the doormen/ carder. This essentially splits up where managing needs to be done making it easier on the people in power. High performing teams develop a common commitment to working relationships: again, everyone knows their role. Each job is very specialized and each role depends on all the others doing their job for them to succeed. High performing teams hold themselves collectively responsible: even though everyone has very defined roles, if it is a bad night for any facet of the bar it is bad for everyone. Everyone wins or loses at the end of the night when the manager comes up from the office once cleaning is done and gives a small post-shift speech. This is because the managers and general managers have to answer to the owners if there were bad sales or some other negative thing happened. They are not going to sell out some specific doorman for letting in his underage friend who got caught by police inside getting the bar a ticket- they will take the brunt of the heat for the rest of the employees. In this regard it is a very collectively accountable environment.

Friday, September 16, 2016

Opportunism

This previous summer I worked for a 3PL (3rd Party Logistics) company doing carrier (trucks/ trucking) sales. I along with all the other interns were assigned to specific regions of the country to focus our efforts on for the summer. The regions were split up into groups that resemble the power-5 conferences in college football- Big 10 East and West (midwestern states), PAC 12 (west coast), Big 12 North and South (Southwestern and middle America states up to the Dakotas), Big East (Northeast), ACC (coastal states and other non-midwest states like West Virginia etc), and the SEC (Southeast). I was assigned to the SEC and focusing on the southeastern states as well as 5 other interns.

We all are assigned mentors to shadow for the summer and to learn from as we go and learn the nature of sales and cold calling. We each receive a list of potential carriers that have worked with our company (meaning they used us as a broker to receive and transport one of our customers loads) but haven't been assigned to a specific rep within the company. Getting quality carriers assigned into your name is one of the main goals in the way we do our brokering and sales. This is because once the carrier is in your name no other reps in the company are allowed to contact them and try to sell them any freight. The way you get a carrier assigned into your name is to find one that is not assigned and run atleast x5 loads with them in a week and then atleast x3/ week after they have been assigned to keep them in your name. This system allows for 'hungrier' reps to poach potential carriers from each other in a 'co-opetition' (competitive cooperation) manner if one rep isn't giving enough attention to that specific carrier- they become un-assigned again.

When myself and the other interns in the SEC started we were given a list of recently un-assigned carriers in our region to start our search for our own carriers. A few days before we started a rep with a large book of carriers had quit making all of his previous ones un-assigned and they left them open specifically for us (interns) to call upon. The largest one of all of these was called Red Classic Transit, a huge carrier company in the southeast with hundreds of trucks and drivers moving per day. All the full time employees joked with us whoever got Red Classic into their name would most definitely win the intern sales challenge (a friendly competition between all interns to see who can sell the most) and that is exactly what the 6 of us started trying to do.

The thing about this carrier Red Classic is that they had been working with the same rep for the past few years now and were very used to his style of operations and brokering to them- so they were almost rudely hesitant to want to start listening to a bunch of interns telling them what to do. Also, a lot of the employees at the company had been there for years and were very understandably 'stuck in their own way' of doing things, making it somewhat difficult to try and give them a hard sell with minimal sales experience. However we all started calling on them daily asking them what they were working on, where they had trucks located and where they were trying to go, etc -- but to no avail. We (interns and I) each would sell them one or two loads max per week for the first few weeks but no one could sell enough to get them into their name.

Eventually people stopped trying to deal with them seeing the opportunity of working with these 'grouchy' dispatchers as a waste of their time and they moved on to other leads. This worked straight into my hands luckily. I did not go above and beyond or anything for this carrier, I just gave them a call each morning inquiring on potential business. Finally midway through the summer by some divine work Red Classic cracked and actually brokered 6 loads through me in one day- making them assigned to my name for the time being. A huge moral victory for myself just from staying persistent and not getting down on myself from being rejected on the phone for weeks straight. I worked with them for the rest of summer and ended up in the top 5 of 60 interns in sales for the summer- mainly due to my 2nd half of summer deals I made with Red Classic.

The missed opportunity here was on the other 5 interns in my region and I believe 'good things come to those who wait' explains this scenario pretty well. The rest of the interns got tired of dealing with their dispatchers and calling them everyday to only be rejected, and reasonably decided to focus their efforts on carriers who actually wanted to work with them. I happened to just be the most patient and caught them at a perfect time where another broker bailed on them on multiple loads with no warning- and no other interns calling on them that day. I speculate that the other interns just decided during their brief summer period at the company they wanted to hone their sales skills more and get the satisfaction of getting smaller, much easier carriers into their name. Also, I believe that they just ran out of patience and decided, "oh, there are thousands of other carriers I can be working with I am wasting my time here...." or good things come to people who wait.

I believe that the three separate explanations for opportunistic behavior (or lack thereof) are different. The 'good citizen' reason is more of a personal, moral reason for not taking an opportunity. Some scenarios can be objective to different people and they may think they are acting almost altruistically by being a good citizen and not taking the opportunity- but some others may not think that line of moral thinking applies there. Also, the unethical reason one can more be described as putting self-interest ahead of other interests when the opportunity presents itself. Being a rational, self-interested individual are some of the basic assumptions of economics. The good things come to people who wait in this case worked in my favor, but that is because I saw the scenario differently than the other interns. Where they were thinking, "this company is hard to deal with, I'm done- good things will come to me in the form of other carriers if I just wait" where in this scenario the exact opposite happened for them.







Wednesday, September 7, 2016

Ben Bernanke post #2 - My organization/ transaction costs

I have worked at a third-party logistics company for the past two summers in downtown Chicago. The basic organization structure is pretty simple, essentially dividing the company in half. The way third party logistics companies work is that there are customer reps and carrier reps. The customer reps can either be vetting new leads/ small customers or they can be doing the day to day operations for large account such as Pepsi (scheduling appointments, tracking shipments, communicating with facilities, issue resolution, etc.). The carrier reps have a sole responsibility and that is to leave every night with zero loads left on the open board on our company software. Meaning that they are making sales calls to either new carrier (trucking) companies to start doing business with them or they are calling on carriers who they have been working with for a long time offering them up loads. The carrier reps are assigned 'conferences' that they work in and they try to cover freight in a specific area, such as the west coast. This is because most carrier companies like to work regionally and usually try and take consistent loads from the same cities on the same day per week; like clockwork. So the customer reps and carrier reps collaborate through our company software to simultaneously service our customers and correctly build and cover their shipments then we broker the load out to carrier companies to physically transport the shipment from point A to point B.

*Note: third party logistics means the company I work for are essentially freight salesmen or brokers and this is so because our company owns no trucks and employs no drivers, we just make deals.*

Both the customer and carrier reps on a covered load (meaning it has been sold to a carrier) make commission, but the motivations from either party may not always align. The customer reps main focus is to service the customer and hope they can get the cheapest price possible on one of their loads. However, the carrier reps main focus is to service the carrier company and usually the reps have very good relationships with these carrier companies, so they are trying to get them as much money as they can. So there is sometimes a thin line being walked where the carrier rep needs to find the perfect price that makes him and the customer rep commission, but also pays a good price to his carrier company. At the end of the day however my company would rather take a loss on 100 loads in a row for a bad price then to not cover it and service it for the customer. My companies main focus is in providing un matchable service to our customers. There are dozens of other freight brokerages in Chicago doing the exact same thing as us so it is our mission to win customers loyalty through service at any cost.

At the end of summer 2015 the fist time I was working here the company was bought out by UPS for 2 billion dollars. When I came back to work there this previous summer I was very surprised to see that almost nothing had changed about the day to day operations of an employee. UPS takes a very hands off approach and bought us as a subsidiary to help firm up their own supply chain with our software and logistic experience. Since UPS is such a large company their supply chain is very fragmented and sometimes hard to navigate, and their main goal for us is to fill their trucks 'backauls'.

Imagine a UPS facility in Chicago, they have a truck that drives down to St Louis every other day with ___X___ shipment of whatever. The truck is going to drive back to Chicago regardless if it is empty or full after dropping off X product in St Louis --> this is where we come in for UPS. We use our system to find that UPS driver another load in St Louis on the day he is delivering X product so he can drive back to Chicago headquarters (which he is going to do regardless) but also while making money doing it. If anything UPS has only strengthened our companies potential market cap by giving us name recognition and access to all their equipment.

The main transaction cost I endured while working here was definitely driving from the suburbs to downtown. It is slightly unfortunate I could not take the train as the office was in Logan Square and not downtown in the Loop. So I had to endure 1.5 hours of traffic driving to and from work everyday and in logistics we work on eastern time meaning I had to be there at 7am everyday. Although I was willing to endure because 1) they were paying me 2) you have to do what you have to do to get that resume looking good. It was super annoying to wake up that early and I was constantly tired but I'm hoping my experiences there and the traffic I had to endure will pay future dividends for my career.

Friday, September 2, 2016

Ben Bernanke

Ben Bernanke is the most previous chairmen of the Federal Reserve, he is currently being succeeded by Janet Yellin. He was educated and the Massachusetts Institute of Technology and Harvard Business School. He helped guide the FED and the whole country out of some of the biggest financial crises in the last 100 years. He was listed as the world's 7th most powerful man in 2013.

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