It was a typical, foggy California morning as the executive team of Ye Olde Sandwich Shoppe began to assemble for the weekly operations review meeting. They were meeting in the company's board room which had originally been an oversized corner office that overlooked the Pacific Ocean. The sleek glass table was strewn with papers, memos, and documents, while all the way down the center were sandwiches, desserts, and beverages from the company stores for the team to enjoy at their meeting.

Six months ago, the team had finished opening 4 new stores, capping what was one of Ye Olde's most aggressive expansions ever. The first quarter of operations had just ended for all of the four new stores but the team really couldn't celebrate. Topping the agenda that morning was the strange increase in food costs occurring at all four of the company's newest stores.

The first to alert the team to the problem was Anita Knighton, the Chief Financial Officer of the firm. She had noticed that overall receipts were not covering the costs at each of the new stores. Anita prepared a memo to Carl Parker, the President of Ye Olde, outlining the first quarter's results at each of the new stores and included a table showing historical averages. Carl read the memo and then shared it with the rest of his management team prior to the meeting.

Click the icon to see the memo in PDF format. (78 KB)

John Herrington, the company's VP for Store Operations, and Michael Denton, Ye Olde's purchasing VP, got together immediately after receiving the memo. The two of them had worked together closely over the past few months as the four new stores opened. Combined, the four new stores had cost Ye Olde over $30,000,000 to build and bring on-line. Neither John nor Michael, the biggest supporters of the expansion, wanted to see any failures.

While Anita had been thorough in preparing the numbers, she had offered little in the way of analysis. John and Michael decided that the best way to get to the bottom of the problem was to look more closely at what the numbers were saying. They first noticed that the biggest area of cost escalation was in "Materials - Food." Over the course of that first quarter, food costs had outstripped average historical food costs by nearly 15%. They also noted that "Payroll - Overtime Costs" was up by 5%, and that "Materials - Serving Equipment" was up by 7%.

The two first compared the numbers of the four new stores against existing store numbers to see if it was a problem unique to just the new stores or if it was a system wide problem. No luck. Existing store numbers were actually below the historical averages in most cases and right at average in almost all the rest. Those stores that were above average were only moderately so, and only in a single category, not in three or more like the new stores.

The two then looked at external factors, such as inflation and the cost of raw materials. At the same time, they checked to make sure that their purchasing was being done to company standards, that all discounts were being applied and taken, and that the suppliers were honoring the bulk buying agreements. Their digging found little evidence to suggest that any of these items were the source of the rising costs. As they continued to look at the numbers, the overtime costs really began to bother them and so they decided to talk to the Store Managers to see what was going on.

Upon calling the stores and talking to the Store Managers they discovered that the overtime was mostly for Food Preparation team members who were working extra hours. Since the Store Managers (and the stores!) were new, they weren't sure why the need for all the extra hours other than they kept running out of food on the production line. Michael and John turned their attention to the Food Preparation teams.

That's when they discovered that a tremendous amount of the rising materials costs was due to rework. It was becoming apparent that the Sandwich Makers were wasting a lot of food in the preparation process, but why? Unfortunately, there were too many Sandwich Makers over too many shifts for the two to interview before the executive team meeting so they summarized their results up to that point and prepared to present their findings when Anita's memo came up on the agenda.

Back in the board room, the entire executive team was just sitting down as Carl entered the room. "Good morning ladies and gentlemen. It looks as if we've got our work cut out for us today, don't we?"

John and Michael led the group through their analysis of the numbers Anita had provided and then turned the meeting over for group discussion. The first to speak was Cinthia Lambin, the Ye Olde sales and marketing vice president.

Cinthia's staff had been monitoring a recently implemented guest-care hotline. The hotline allowed guests to call a special 1-800 number on the bottom of their receipt to share any feelings they had about their Ye Olde experience. When they called in, they provided their order number (from the receipt) which allowed the marketing department to determine the store location, the date and time of visit, and other relevant details about the guest's experience.

Cinthia noted that for each of the four stores, complaints about inaccurate sandwich orders being delivered to guests was three times higher than at their other stores. In fact, total complaints about inaccurate sandwich orders at the four new stores was double that of the other 11 stores combined! She noted that the guest care line had offered a total of $10,850.00 worth of direct refunds or complimentary sandwich cards for the past quarter for all of the four new stores.

Cinthia was then followed by Valencia Lewis, the vice president tasked with human resources and training. She too had been intrigued by Anita's memo when it came out the week before the meeting. She had been doing some new store post-opening evaluations herself because a number of the Sandwich Makers at each of the stores had recently quit. As part of the exit process, an interview between Valencia and each Sandwich Maker took place.

The results of the interviews all contained a mention of being frustrated at how fast things moved and how they felt totally unprepared to deal with the orders they were being asked to complete. Furthermore, many of them indicated that they had been hired, shown a few basic things about Ye Olde's process, and then scheduled to work on the production line.

In sharing her findings, Valencia suggested that the expansion schedule had been too aggressive and that adequate time for training had not been allocated. John and Michael rebuffed that suggestion and noted that Valencia had complete authority over the training process and any failures in training were completely her own.

Carl stepped in and drew the group's attention back to the evidence on the table:

• Material costs out of line with historical averages.
• High level of turn over in typically stable positions.
• High level of frustration with not knowing how to meet guest needs.
• New stores with new teams with several new food items.
• Higher than normal guest complaints about incorrect sandwich orders.

"What are we going to do?" he asked the group. It was then that Rose Walker, the founder of the firm, spoke up. While Michael and John and Valenica had been arguing, no one had noticed Rose entering the room.

"All of your evidence suggests that we clearly have a problem with our Sandwich Makers. This reminds me of the time we opened our San Leandro store on a tighter-than-usual schedule. Maybe it's time to revisit our training programs and make sure that they have what they need to be successful. Especially since we have less and less time between hiring and working."

The team all pondered this for a moment and then they all began to nod in agreement. "Valencia," Carl said, "I'd like you to take this on and see what you can do with it."

"How about we bring in an outside team to look at it? I think it's time that we got a fresh pair of eyes on the whole situation."

"Sure. Why don't you get someone in and when you get back their recommendations, why don't you share them with us. Then we can decide what to do next." Carl then steered the meeting through the rest of the agenda.

Over the next month, the operations at the four new stores continued to deteriorate and the turn-over rate among Sandwich Makers increased. During this period Valencia hired Westfield Consulting. They coordinated a business process analysis (BPA) that looked at the company's operations and how best to handle the problem. From the list of recommendations provided by Westfield, the management team decided to commission a set of job aides for their Sandwich Makers that could be used as both on-the-job training (OJT) and as a form of performance support.

Valencia was then asked to hire a team to develop the job aide. Carl suggested that the team be comprised of a project manager (to help keep things on track because Valencia has other duties to handle), a subject matter expert, a lead designer, and a lead content developer/writer. (He did, after all, have an M.S. in Instructional Technology from Georgia State!)

The team's first task was to design the job aide for the creation of one of their basic sandwiches: The Standard PB&J.

That's where you come in. Are you up to the challenge?

This instructional design case study was designed by Mr. Peter Thorsett under the direction of Dr. Laurie B. Dias for use with Instructional Technology 7100 at Georgia State University. All on-going maintenance of the site is done by Mr. Thorsett.

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