Easyinternetcafe Cafe Essay

This case report addresses the challenges to implement a crude logistic system that if well implemented it mickle improve operations and can convert easyinternetcafe into a profitable company. EasyInternetCafe (eIC)is a chain of Internet cafes with stores in the UK, the USA, Holland, Belgium, France, Germany, Spain and Italy. eIC is part of the Easy Group, headed by the Greek enterpriser Stelios Haji-Ioannou. The original dividing line model is to build and operate on the principle of economics of scale or Yield Management most stores would be clean-cut 24 mos a day, 7 days a week, and each has an average of 350 PCs. In 2003, with losses continuing to mount, eIc wariness has decided to radically renew their operations. In order to eliminate the need for future investments in new stores, the strategy was changed.It has been decided to appoint franchisees for the new stores and also, if possible, for the existing legacy stores. According to the new strategy, the franchisee woul d be required to bear the costs of the property and the hardware. It was also decided to move from large stores to smaller stores with 20 to 30 PCs. The current logistic slip represents a bottleneck and it is one of the major causes for the ongoing losses at easyinternetcafe. After reviewing different logistics scenarios and providers, I strongly recommend taking a close together(predicate) look to support the logistic alternative that Ingram Micro is proposing. If we do that, we could benefit in the warehousing, accounting and transportation areas, through all this areas, it exit help us reduce the logistics costs and labour per new store, from almost to 2,000.00 to 1,357.00, this and the benefits mentioned before, will help us to achieve our overall objective of being a profitable company. This will be the strategic perspective that will be demonstrated throughout the report.Issue(s) Identification1. Yield Management does not educate for every company. eICs start store opened in June 1999 opposite in London. Soon afterwards, it was quickly recognized that eICs yield management had certain characteristics that later affected the telephone line model elC was offering a highly perishable product 1 hour of Internet access sentence, cannot be put in inventory, once that hour is gone, there is no way of reselling that hour of internet access time. Although stores are large, capacity is limited Internet access demand varies, not only by time of day, day of week, but also across other time and seasonal horizons. Incremental costs are next to nothing it doesnt field whether there is one person or 500 in a store, the bandwidth is already there. By the time the second and third stores were opened, eIC had built yield management into its store management system.2. Current Logistics SystemLogistics is not a core competency at elC, but it has become one of the integral activities. Logistics for elc means to depict the new stores with their initial assests, includ ing all of the furniture and PCs. This system is a drag on scalability, efficiency and a bottleneck for growth and the main reason for turbinate high cost and ongoing losses.Environmental and Root Cause AnalysisAggressive use of yield management is a recognized and admired business model of Stelios. EasyJet was a profitable company after just a few years of operation. However, with EasyInternetCafe profits seem a long way off, the guess that offering very low prices would increase the demand significantly lead to losses of 80m-100m from 199 to 2002. Below are some root causes of the symptoms above * The stores are also large economies of scale dont materialize if occupancy is half empty. * Fixed costs were too high due to the quantity of Pcs per store. * Staff overheads were excessive.Assumptions* atomic number 18 there sufficient customers who want to use an internet cafe? To-day, most of the homes have internet access, and many others have (free) access at their place of work or at colleges or university. * Are the stores located in the right place to attract customers throughout the day and the whole week? Downtown cafes expertness attract business people needing to keep in touch, but many city centres are quiet in the evenings and at weekends. By mid-2001, with cash test out a drastic action was necessary a franchising plan is being developed. It is important that every cafe looked the same, with common signage, furnishings and PCs.The time to sign a contract with a franchise is one week. If the franchisee did not already have space for the caf, eIc would assist in recommendations with locations within 28 days. The broadband internet continuative had to be installed by the local telecoms supplier within 28 days. Also they need to Desk installed within seven days. Server delivered and installed 2 days and PCs delivered and installed 2 days. CVM delivered and installed 1 day Signage delivered and installed 1 day. Chairs delivered and installed 1 day. Testing complete system 2 days and also Open for business within one day. So, how much time should it take to open the cafe once the contract is signed? From the predecessors plan we see that average duration of time for all activity. Under bellow we dissertate about time of the contract are signed.