How McDonald’s New Ordering System Works

WSJ – April 10, 2013, 4:57 PM ET

Your McDonald’s Ordering Ritual Is About to Change

Bloomberg

By Julie Jargon

Ordering burgers and fries is becoming more orderly at McDonald’s restaurants.

The chain is in the midst of rolling out a new “dual point” ordering system in which customers place an order at one end of the counter and then get a receipt with an order number. When the food is ready, the order number is displayed on a monitor and the customer picks up his food at the other end of the counter, where an employee is supposed to thank them and ask them to come again. The receipt is then scanned, clearing the order from the system, to avoid confusion over whether orders have been fulfilled.

The idea is to reduce the chaos that can ensue on both sides of the counter when people are waiting for their food and don’t know where to stand or which employee is going to hand it to them. A new position of “runner” has been created to do things like hand out cups and sauce packets, freeing up the order-taker to focus on the customer.

According to an April 3 memo McDonald’s sent to franchisees that are implementing the system, and reviewed by The Wall Street Journal, “To the customer, we appear friendlier and better organized. Dual point gives us a chance to impress our guests at the front counter, in the moment of truth.”

Dual point also calls for a staging area to be installed in the kitchen – a raised counter below which condiments are placed so that employees can quickly fill bags or trays with ketchup and other items.

At a downtown Chicago McDonald’s that is operating a temporary form of dual point, in which numbers are called and food is delivered at another end of the counter but no monitors have yet been installed, service was noticeably fast during a recent lunch rush. Regular customers commented on how much smoother and faster the service had become in the months that the new ordering system had been in place.

It’s not immediately clear how many McDonald’s have moved to the new ordering system or when the roll-out will be complete. A McDonald’s spokeswoman declined to comment, citing the quiet period ahead of the company’s April 19 earnings.

McDonald’s works on delivering better service

WSJ – April 10, 2013, 7:30 p.m. ET

McDonald’s Tackles Repair of ‘Broken’ Service

By JULIE JARGON

McDonald’s Corp., MCD +0.35%battling back from recent earnings disappointments, is putting unusual emphasis on a longtime challenge: getting its far-flung workforce to provide service with a smile.

 

Agence France-Presse/Getty Images

A restaurant in New York City.

The fast-food giant, whose restaurant sales in the U.S. began to slip last year, is pushing franchisees to improve staffing and service amid mounting complaints about rude employees.

In a webcast McDonald’s executives held with franchise owners last month, the company said 1 in 5 customer complaints are related to friendliness issues “and it’s increasing,” according to a slide from the presentation reviewed by The Wall Street Journal. The webcast identified the top complaint as “rude or unprofessional employees.”

One slide said that complaints about speed of service “have increased significantly over the past six months.” Another mentioned that customers find service “chaotic.”

“Service is broken,” said a slide from part of the webcast delivered by Steve Levigne, vice president of business research for McDonald’s USA.

Brand reputations are among the most prized assets major corporations have but brands can fall as fast and as hard as they have climbed. MarketWatch’s Rex Crum discusses U.S. companies that had to learn that the hard way. (Photo: Getty Images)

One franchisee said McDonald’s has renewed emphasis on customer service since Chief Executive Don Thompson installed Jeff Stratton, the chain’s global chief restaurant officer, as president of McDonald’s USA in November, after two consecutive quarters in which the company missed Wall Street’s earnings expectations.

“The new leadership has decided to focus on customer satisfaction as a real driver for us to build the brand and build sales,” this franchisee said, adding that the company had been gaining market share for years. “So for us to maximize the potential that’s out there, we’ve got to be the leader in guest satisfaction,” the franchisee said.

A McDonald’s spokeswoman wouldn’t comment on the webcast or on what the company is doing to address complaints, and declined to make executives available for interviews, citing a quiet period ahead of the company’s earnings on April 19.

Hulton Archive/Getty Images

A McDonald’s outlet in Des Plaines, Ill., in 1955. The chain is rolling out a new ordering system in the U.S.

But she said the company continually evaluates its performance “through restaurant inspections [and] customer and employee feedback,” and that “McDonald’s USA and our franchisees are absolutely committed to doing even more to consistently deliver a great restaurant experience for every customer at every visit.”

McDonald’s, which has more than 14,000 U.S. restaurants, performed well throughout most of the economic downturn by sticking to its strategy of remodeling and tidying up restaurants and rolling out a steady stream of new menu items at a range of prices—from inexpensive snack wraps to more costly fruit smoothies—intended to appeal to more consumers.

But achieving speed and friendliness of service across the chain has been a particularly elusive goal, at least in part because about 90% of McDonald’s restaurants in the U.S. are owned by independent operators.

In QSR Magazine’s annual Drive-Thru Study, the only comprehensive industry comparison of customer service at fast-food chains, other restaurants have consistently outperformed McDonald’s in those areas. In last year’s study, the average service time at the McDonald’s drive-through studied was 188.83 seconds, compared with 129.75 for industry leader Wendy’s Co. WEN +0.90%Chick-fil-A had the top friendliness ratings. Out of the seven major chains in the study, McDonald’s was second to last in the “very friendly” ranking, just above Burger King BKW +3.41%.

“I think it’s an ongoing problem, and it always will be,” another McDonald’s franchisee said.

After McDonald’s posted its first monthly same-store sales decline in nine years last October, company executives told investors that they underestimated the importance of “value” offerings for cash-strapped customers. The company has since added more items to its Dollar Menu and promoted those items in its ads.

That formula has started to help. In January, the company reported fourth-quarter earnings that beat analysts expectations, but Mr. Thompson cautioned that economic uncertainty still is expected to affect the company.

McDonald’s shares have also rebounded since they took a hit last fall. In 4 p.m. trading Wednesday, they were up 43 cents at $101.49, near their record of $102.22 in January 2012.

Some analysts say McDonald’s is continuing to lose customers.

During its webcast, McDonald’s told franchisees that customers rate good service almost as highly as dollar value, pointing to a National Restaurant Association survey.

The reason behind the rise in customer complaints is unclear, but some franchisees say it could be partly because customers now have more ways to supply feedback. In recent years, the company has added an email address to its food packaging where customers can direct complaints, and restaurants in some regions of the country have recently started asking customers to fill out an online survey, using information on their receipts.

High employee turnover also could be a contributor. While McDonald’s declined to comment on its turnover, fast-food restaurants have an average annual turnover rate of 60%, according to a 2010 report from the National Restaurant Association.

Monica George, a McDonald’s employee in Brooklyn, N.Y., said she can understand why customers complain, and that there are frustrations on both sides of the counter. “Let’s say I’m in front at the register and the grill’s not pushing out food quickly enough. So you have to wait on food, and the customer is getting aggravated at you because you’re not giving them the food quick enough, and the grill gets aggravated with the cashier because we’re asking where the food is,” she said.

Ms. George, who says she earns $7.25 an hour, said one problem behind slow service and inaccurate orders is that employees are trained to do specific tasks and don’t always understand what other employees are doing.

Franchisees say the company is doing several things to improve service, from boosting staffing at peak hours to rolling out a new system for taking orders.

Under a new “dual point” ordering system that is being rolled out nationwide, the customer places an order at one end of the counter and is given a receipt with a number. When the order number appears on a screen, the customer picks up his food at the other end of the counter. The new position of “runner” has been created to do things like hand out cups and sauce packets, and fetch juice boxes for Happy Meals, freeing up the order taker to focus on the customer. The employee who delivers the food at the other end of the counter is supposed to thank customers and ask them to come again, according to franchisees.

“Dual point provides personalized one-on-one service which directly improves order accuracy,” according to a memo the company has sent to some franchisees, and which was reviewed by the Journal. “To the customer, we appear friendlier and better organized.”

At a downtown Chicago McDonald’s that doesn’t yet have the screens to display order numbers, but is starting to implement dual-point ordering by calling out the number on the receipts, service was fast and friendly on a recent day. Karen O’Mara, a legal assistant who has been a customer there for the past seven years, said she has noticed a change since the restaurant began using the new system last year. “It’s gotten faster,” she said.

“The service varies so much depending on which McDonald’s you visit. It can vary from very friendly to very rude,” said Jane Fiedler, an office manager who occasionally visits the same downtown Chicago location.

McDonald’s also began using new software recently that helps restaurant owners decide the optimal number of employees to have on hand at a given time. And a new management structure, in which each manager is held accountable for a specific area of the operation, such as the kitchen or service, is expected to improve the customer experience, according to franchisees.

Write to Julie Jargon at julie.jargon@wsj.com

A version of this article appeared April 11, 2013, on page B1 in the U.S. edition of The Wall Street Journal, with the headline: McDonald’s Says ‘Service Is Broken,’ Tries a Fix.

New Office Layouts–No Walls!

WSJ – Updated April 2, 2013, 8:08 p.m. ET

Say Goodbye to the Office Cubicle

Walls Come Down as Many Companies Switch to Layouts Designed to Foster Collaboration

By BEN KESLING And JAMES R. HAGERTY

The same folks who brought you the bland office cubicle are turning a profit these days by trying to kill it off.

As the nation’s economy recovers, office-furniture makers, who were hit hard by the recession, are racking up sales by persuading companies that newer office layouts can encourage collaboration and, in some cases, shrink their space requirements and costs.

Changing Office Landscapes

From 1892′s double-sided desks to the ‘flying chair’ of the 1930s and the ‘action office’ of the late 1960s, take a look back.

General Photographic Agency/Getty Images

This ‘office of the future,’ complete with ‘flying’ chairs, was on display around 1930 at the Berlin Office Equipment Show.

Herman Miller Inc., MLHR -2.72%which helped spawn the cubicle craze more than 40 years ago, is one of the suppliers leading the charge. Its revenue has risen by nearly a third in the past two years, thanks to customers such as Microsoft Corp. MSFT +0.66%

The software giant hired Herman Miller’s consultants to track how space was used at some of its locations. They found, among other things, that conference rooms designed for 20 were often being used by just two or three people. So, Microsoft created more “focus” rooms—smaller spaces where two to four people could huddle.

“Work is really getting done in smaller teams,” says Martha Clarkson, Microsoft’s global workplace strategist.

Postcubicle offices began to crop up in earnest about a decade ago, inspired by changes in the way people worked. They feature lower walls between desks, or even no walls, and more areas designed for conversation, to encourage impromptu problem-solving sessions.

Many companies were intrigued by the idea, but the recession stalled the trend, sending the U.S. office-furniture industry’s revenue plunging 26% in 2009, according to market researcher IBISWorld. Lately, however, the surging stock market and growing optimism about the economy have rekindled “projects that were sleeping for several years,” says Franco Bianchi, chief executive of Haworth Inc., one of the nation’s biggest office-furniture makers.

That’s part of the reason IBISWorld expects 2013 to be the industry’s strongest year of growth in nearly a decade. The firm predicts that office-furniture makers’ revenue will hit $21.5 billion this year, up more than 4% from 2012—though still 26% below the peak in 2006.

Mr. Bianchi has sought to counter some customers’ lingering caution about spending by improving service and providing more design advice. He says Haworth has added around 20 employees who work with clients to create effective work environments. Closely held Haworth, which is based in Holland, Mich., says its sales have climbed 18% since 2009 to $1.31 billion in 2012.

“Ten years ago we didn’t have the resources to engage people on how they work,” Mr. Bianchi says. “We were selling furniture, and now we’re selling interiors.”

Herman Miller is widely credited with inventing the cubicle in the 1960s, when it introduced what it called the “Action Office,” a line of panels and desks that could be configured in a variety of ways.

At the time, private offices were a symbol of rank and privilege. But the new partitions, some of them six feet tall, could be arranged to provide similar privacy for rank-and-file workers, who had largely labored in open areas called “bullpens,” with their desks placed in rows. In the decades that followed, cubicles became ubiquitous.

In recent years, as electronic communications supplanted paper and flat-screen monitors and laptops replaced unwieldy desktops, businesses found that workers were left with unused space. Some of them also were feeling isolated.

Ryan Collerd for The Wall Street Journal

Helped by Herman Miller, Campbell Soup has been remodeling its 55-year-old Camden, N.J., headquarters, above, to include more common spaces.

Younger workers were accustomed to using wireless devices in settings like coffee shops, where they could move around and chat, rather than being tethered to workstations.

“There are incredible changes in demographics in the workspace,” says Tracy Brower, a Herman Miller executive who advises clients on using space. Many of those clients demand hard data on the best ways to drive productivity and improve employee morale through interior design. “Customers are demanding more quantitative data in their decision making,” Ms. Brower adds.

To get a better handle on worker behavior, Herman Miller has its own research arm, which relies on some high-tech tools. For example, it temporarily attaches electronic sensors to chairs in some clients’ offices to determine how often they are occupied.

The research shows many cubicles are used for only a bit more than a third of the workday, and individual offices can sit empty 80% of the time.

Based in part by those findings, the company launched Avive, a line of thin, free-standing tables that can be used as personal desks or pushed together to form for group workspaces.

Last month Herman Miller reported its profit for the fiscal third quarter ended March 2 rose nearly 11% to $16.5 million as revenue increased 5.9% from a year earlier to $423.5 million. For the fiscal year ended in June 2012, the company’s revenue rose 4.5% to $1.7 billion, after jumping 25% the year before.

The changing office landscape is most visible in the famously futuristic buildings of Silicon Valley, which are also known for their zany touches.

“Not everyplace looks like Google, GOOG +1.46%” says Jonathan Webb, head of business sales at Krueger International Inc., known as KI, a commercial-furniture maker in Green Bay, Wis. “Not everybody has a slide in the lobby.” But some tech-company furnishings are filtering into the mainstream

“The biggest trend we see from our clients in Silicon Valley is the trend for personal workspace flexibility—the ability to adapt a workstation,” Mr. Webb says.

Partly as a result, KI’s sales of desks that can be electronically raised for standing work or lowered for sitting have more than doubled over the past three years. Mr. Webb says the desks allow employees more choice in how they work, without being considered too radical or costly a change.

Using furniture and advice from Herman Miller, Campbell Soup Co. CPB +0.55%has been remodeling its 55-year-old Camden, N.J., headquarters, providing more common spaces, including “huddle rooms” for meetings of two to four people.

“People are collaborating much more” now that they aren’t “bound by walls or cubes,” says Beth Jolly, a Campbell spokeswoman.

Many Campbell managers and executives still have offices, but they are being standardized at 120 square feet. That means smaller offices for some executives, creating more open space that can be devoted to common areas. It also is easier to move people, since rank no longer dictates space allocation.

Does that apply to the CEO? “We’re getting to that,” Ms. Jolly says.

A version of this article appeared April 3, 2013, on page B1 in the U.S. edition of The Wall Street Journal, with the headline: Say Goodbye to the Office Cubicle.

No More Inventory??? Read this carefully, integration is the key.

Forward Thinking

The end of inventory?

By Mark Solomon | March 26, 2013

Fewer goods are being stored in warehouses and distribution centers, and that doesn’t seem likely to change. Are we in permanent lean mode?

Ever since the Great Recession ended in late 2009, it’s been the hope of executives and analysts alike that shell-shocked retailers would emerge from their foxholes to begin a cycle of inventory replenishment that would buoy shipping and economic activity.

Hope continues to spring eternal. Yet retail inventory levels, which hit their lows on an absolute basis during the recession as businesses froze ordering and sold from their existing stocks, are today as lean as ever. Thanks to improvements in inventory management processes and advances in forecasting and distribution management technology, what many initially thought to be a short-term trend influenced by macroeconomic forces has become a secular phenomenon unaffected by the economic conditions of the moment.

The Institute for Supply Management’s (ISM) influential monthly “Manufacturing Report on Business” said in its February edition that its Customers’ Inventories Index, which measures inventory at the retailer level, came in at 45. That marked the 45th consecutive month with a reading below 50, an indication that finished goods inventories are too low.

Bradley J. Holcomb, former head of procurement for Dallas-based food and beverage giant Dean Foods Co. and chair of the ISM committee that publishes the report, said the below-50 readings have persisted for so long that the decline in inventories may be irreversible. “I just don’t see anything changing here,” he said.

Holcomb added that order lead times have shortened to the point that no one wants to hold inventory for any prolonged period.

A quarterly survey by Morgan Stanley & Co. of 500 U.S. and Canadian shippers that forecasts inventory levels six months out found that about 46 percent of respondents surveyed in Q4/2012 planned to maintain their current inventory levels through mid-2013. About 37 percent of respondents said they would reduce inventories through the middle of this year, while only 17 percent said they planned to increase them.

“Shippers continue to manage inventories very tightly, with no evidence of any big restocking in the near future,” William Greene, the firm’s lead transportation analyst, said in a mid-February analysis accompanying the data.

For many years, the dollar values of retail inventories were higher than for inventories in the wholesale trade, according to Rosalyn Wilson, a supply chain analyst at Vienna, Va.-based Delcan Corp. and author of the Council of Supply Chain Management Professionals’ annual “State of Logistics Report.” That changed around the second quarter of 2008, and after a period when levels of both types of inventory moved in near-lockstep, wholesale stocks have grown at a faster clip than those for retail, she said.

At the end of 2012, U.S. wholesalers held $597.6 billion in inventory, while retailers held $522 billion, Wilson said. Wholesale inventories are at their highest levels since before the financial crisis and subsequent recession, suggesting that retailers are becoming more adept at pushing inventory back upstream through the supply chain, at least to the wholesale channel, she said.

According to the U.S. Census Bureau, the current inventory-to-sales ratio (a measure of a company’s on-hand inventory relative to its net sales) for retailers stands at about 1.28, which is at or near all-time lows. The ratio has been trending downward since 2000, but began to drop in earnest following the 2008-09 recession. It spiked during the worst of the downturn, mostly due to collapsing sales.

That the ratio has stayed so low since mid-2010 even with a modest pickup in retail sales activity indicates that either sales remain subpar or that retailers are doing a better job of calibrating supply and demand, or possibly both.

Better tools
The advent of high-tech forecasting tools has clearly been a boon to inventory management. Retailers and manufacturers alike have greater visibility into their demand patterns and can adjust supply flows quickly and precisely. This reduces the need for guesswork and the overstocking that comes with it.

This is particularly true with e-commerce orders, where an estimated 98 percent of sales data are generated at the point of transaction. By leveraging that data, retailers can do a superior job of gauging customer demand. They then share that information with manufacturers and their suppliers, enabling them to better plan their production schedules.

Further enhancing efficiency is the migration to Web-based “cloud” computing, which allows all partners in a supply chain to have instant access to the same data. This gives all parties visibility into orders and dissolves the intercompany silos that often thwart the success of such collaborative efforts.

All of this is leading to a best-of-both-worlds scenario for a growing number of retailers: lean inventories without the risk of stockouts. Ralph Cox, an inventory management expert and principal at Raleigh, N.C.-based Tompkins International, said the top retailers have mastered the art of keeping inventory low while recording a high “SKU (stock-keeping unit) in-stock” score. According to Cox, larger companies began working on these initiatives long before the downturn, while smaller rivals, either lacking resources or foresight, did not.

The result is a tale of two inventory scenarios. “The big retailers are lean because they’ve learned how to do it,” Cox said. Smaller companies may appear lean, but that’s due as much to cutting back on orders after the recession as to any proactive measures, he said.

Cox said the next big push in IT systems will not be in forecasting, but in tools that enable efficient distributed order management. Multichannel retailers today have access to software that allows them to determine the best location from which to fill an order, he said. For example, a retailer with overstock at a store location can leverage e-commerce orders for the same product and ship the item from the store, rather than redeploy it to the distribution center. Multichannel retailers need this level of flexibility to compete with an e-tailer like Amazon.com, whose efficient online model has forced all retailers to compress their fulfillment and delivery schedules, he said.

Like other inventory gurus, Cox believes the days of inventories driving macroeconomic activity are over. Even the less-efficient, more-reactive retailers are adopting the technologies and processes needed to be more productive, and their operations run better today than they did five years ago, he said. Given the inexorable global march toward e-commerce, he added, those companies “will be more efficient five years from now than they are today.”

Mark Solomon is a senior editor at DC Velocity, a sister publication of CSCMP’s Supply Chain Quarterly.

Tablet Computers Replace Workers in a Small Business!

WSJ – Updated March 27, 2013, 7:06 p.m. ET

Can the Tablet Please Take Your Order Now?

As Wages Rise, Employers Consider Replacing Workers With Technology; Burger-Flipping Robot May Be on Horizon

By SARAH E. NEEDLEMAN and ANGUS LOTEN

Carla Hesseltine is considering buying a few tablet devices for her bakery so customers can place orders for her signature M&M cupcakes on their own, straight from the counter.

The reason: She fears the $7.25 an hour that she currently pays her 10 customer-service employees, mostly college students, could rise, perhaps to $9 an hour under a pledge by President Barack Obama earlier this month.

In order for her Just Cupcakes LLC to remain profitable in the face of higher expected labor costs, Ms. Hesseltine believes the customer-ordering process “would have to be more automated” at the Virginia Beach, Va., chain, which has two strip-mall locations as well as a food van. Thus, she could eliminate the 10 workers who currently ask customers what they would like to eat.

Matt Eich for The Wall Street Journal

Customers at Just Cupcakes, a Virginia Beach, Va., bakery, may be asked to use self-service tablets, helping owner Carla Hesseltine cut labor costs.

Small-business owners have long griped that increases in the minimum wage hurt their bottom lines by forcing them to spend more on payroll, related taxes and benefits. The president’s proposal is unlikely to pass, yet many business owners nonetheless feel threatened having seen the minimum wage increase in nearly every state in the past six years.

Some owners say they now see a possible solution to the problem: replacing workers with new and cheaper technologies designed to help employers simplify operations.

Hardware and software prices have come down in the past decade, making them more affordable to small firms. For example, the average price of a tablet—the kind Ms. Hesseltine is looking into—dropped to $394 by the end of 2012 from more than $1,330 three years earlier, according to IHS, a market research firm.

The combined cost of two such tablets, plus a customized application for displaying products with descriptions and processing orders, ranges from $5,000 to $15,000 to implement. But in recent years, online app-building tools have become available at substantially lower costs.

Unlike major corporations, which can often absorb increases in labor costs, small-business owners typically have few options for coping with higher wages, particularly when the economy is weak. They can raise prices only so much without decreasing sales, and many have already done so because of higher operating costs, such as commodity and gas prices and health-care premiums.

Supporters of the president’s proposal argue that the federal minimum wage is long overdue for an upgrade and that a higher rate would provide residual benefits, such as a reduction in turnover and increased productivity. Before rising to $5.85 in 2008, the federal minimum wage held steady at $5.15 for a decade.

Twenty-six states have a minimum wage equal to or lower than the current federal minimum of $7.25 an hour. And 19 states, plus the District of Columbia, require employers to pay an even higher minimum wage, with Washington requiring the greatest amount, $9.19 an hour, followed by Oregon’s minimum of $8.95 an hour. Ten states index their minimum wages to keep pace with inflation; for instance, Arizona, Missouri and Vermont raised their minimum wages earlier this year.

In all, one-third of low-wage workers are employed by businesses with fewer than 100 employees, according to estimates by the National Employment Law Project, an organized-labor-backed advocacy group for low-wage workers.

Mike Reis, 43 years old, who earns $7.25 an hour as a sales clerk at Hobby Works in Rockville, Md., says he’s not worried about losing his job if the minimum wage goes up. “In retail, it’s not like you can get a machine to replace someone on the floor,” he says. But he is worried about having his hours cut back and ending up with less cash in his pockets, he adds.

Just how many small firms will turn to technology to replace jobs in the face of a wage increase isn’t clear. Many studies about the effects of higher wages on overall employment tend to be politicized, clashing over whether the benefits of higher paid workers outweigh the costs of having fewer low-wage jobs.

To support President Obama’s case for an increase in the minimum wage, the White House cites a 2009 academic study that says any adverse employment effect from such would be of a small and possibly irrelevant magnitude. The president’s 2013 report, released this month, further states that “even with the tax relief we’ve put in place, a family with two kids that earns the minimum wage still lives below the poverty line.”

Owners of small firms tend to wear a lot of hats, but might not have the know-how to operate complicated technologies. Even simple technologies, such as tablets, bring other costs, including implementation, maintenance upgrades and repair.

Tarang Gosalia, of Cambridge, Mass., hopes he can get away with having fewer employees waiting on customers at the three hair-salon franchises and one frozen-yogurt outlet he owns by using Square, a three-year-old technology brand designed to streamline credit-card transactions. He is planning to test it out starting in June to see if it will make accepting payments easier and faster for his staffers—and therefore allow him to downsize. About 70% of the 35 employees who work for his combined businesses currently earn $8 an hour, the minimum pay required in his state. Raising prices to offset the higher payroll costs strikes him as too risky, because he worries his sales may suffer.

Some entrepreneurs see a promising market in selling technologies to small businesses that might help them to streamline operations and do away with low-wage workers, or retrain them for higher-skilled jobs. An automatic hamburger flipper currently in development could replace low-wage line cooks at a beachside burger joint, for example. A $22,000 six-foot-tall robot with flexible arms, a face screen and rolling pedestal might replace low-wage workers at small manufacturing firms that can’t afford traditional automation. The robot would likely require an employee to program it.

There are significant downsides to using technology to replace low-wage workers, too. At small firms, many employees tend to work a variety of tasks, such as answering customer questions, mopping floors and setting up displays.

Ms. Hesseltine got the idea for using touch-screen technology to eliminate most or all of her minimum-wage customer-service staff after seeing a nearby juice business do something similar. She figures she could install tablet devices that would display photos of her cupcakes, which she sells for $3 apiece, and their ingredients.

Customers could scroll through the options and select what they want, rather than have a customer-service worker jot down their order on a piece of paper and pass that along to another employee who fills it.

Ms. Hesseltine says she hopes her son, a 27-year-old computer engineer, will be able to do some of the setup work for free.

—Emily Maltby
contributed to this article.

Write to Sarah E. Needleman at sarah.needleman@wsj.com and Angus Loten at angus.loten@wsj.com

A version of this article appeared March 28, 2013, on page B10 in the U.S. edition of The Wall Street Journal, with the headline: Can the Tablet Please Take Your Order Now?.

Building Jeeps in Russia

WSJ – March 25, 2013, 1:16 p.m. ET

Alternative to Russian Jeep Factory Proposed

By LUKAS I. ALPERT

MOSCOW—Russia’s largest bank, OAO Sberbank, SBRCY -1.31% said on Monday that it and Italy’s Fiat SpA F.MI -1.30% are reconsidering a plan to build a factory to produce Jeep sport-utility vehicles and may turn to a struggling Russian manufacturer for assembly.

Itar-Tass

A Jeep Grand Cherokee at the 2010 Moscow car show. Fiat and Sberbank’s planned Jeep venture hasn’t jelled.

In early 2012, Fiat and state-owned Sberbank proposed a €850 million ($1.1 billion) joint venture to produce 120,000 Jeeps a year at a facility to be built near St. Petersburg, holding out the possibility of expanding production to a second site.

That deal, expected to give Fiat a major foothold in an expanding auto market, was never finished. The companies haven’t commented on the lack of progress.

Fiat, the majority owner of U.S.-based Chrysler Group LLC, may consider producing sport-utility vehicles at Taganrog Automobile Plant, or TagAZ, in Rostov-on-Don near the Ukrainian border, the bank said in its statement on Monday.

Sberbank is one of the largest creditors of TagAz, which filed for bankruptcy last year.

“Chrysler, the manufacturer of Jeep, has expressed an interest in TagAZ and is considering the possibility of starting production at its facility. Chrysler now is carrying out technical analysis of the condition of the factory and the outlook for starting production there,” Sberbank said in its statement.

Fiat declined to comment on the bank’s statement or on the original proposal. TagAZ didn’t respond to requests for comment.

Sberbank’s statement represents a setback to Jeep’s plans to expand internationally. Fiat and Chrysler have sought to build production facilities outside North America to increase Jeep sales, with the hope of selling 800,000 of the SUVs globally by 2014, up from a record 701,626 last year.

In addition to the St. Petersburg plant, the two companies had discussed using a plant run by Zavod Imeni Likhachova, near Moscow, to build Jeeps.

Earlier this month, French auto maker PSA Peugeot-Citroën SA UG.FR -1.88% disclosed it was in talks with ZIL to assemble its vehicles in the country. Fiat Chief Executive Sergio Marchionne said days later that he was looking at “options beyond” ZIL.

At a news conference last Friday, Sberbank Chief Executive German Gref said he was “not aware” of any progress with the Fiat joint venture.

Sberbank also said it is “interested in the preservation of production activities at TagAZ and in the transitional period, the company is considering an alternative of starting production of the Chinese car Chery,” the bank said, referring to China’s Chery Automobile Co.

Neither TagAZ nor Chrysler’s spokeswoman in Russia responded to messages seeking comment. A spokesperson for Chery Automobile Co. couldn’t immediately be reached.

Low-cost Chinese manufacturers have been eager to increase their presence in Russia, one of the world’s fastest-growing auto markets, but have met resistance from Russian producers of similarly priced vehicles.

Many foreign manufacturers have aggressively tried to ramp up manufacturing in Russia as their sales in Western Europe collapsed. In 2013, new vehicle sales in Russia are expected to inch up to 2.95 million units, according to the Association of European Businesses in Russia. By contrast, the International Organization of Motor Vehicle Manufacturers expects a 2% decline in Germany this year and a 5% fall in France.

—Gilles Castonguay and Andrey Ostroukh contributed to this article.

Write to Lukas I. Alpert at lukas.alpert@dowjones.com

A version of this article appeared March 26, 2013, on page B7 in the U.S. edition of The Wall Street Journal, with the headline: Jeep Assembly in Russia Hits a Roadblock.

Finally the Boeing 787 Flies Again!

WSJ – March 25, 2013, 6:28 p.m. ET

Boeing Begins 787 Test Flights

By JON OSTROWER

Boeing Co. BA +0.04% began the first in a series of 787 Dreamliner test flights Monday, preparing for regulators to evaluate changes to its lithium-ion battery system and marking another step in the plane maker’s effort to return the jet to commercial service.

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A Boeing 787 with a redesigned battery taxis to the runway for a test flight in Everett, Wash. The jets have been grounded since January.

The company flew what it dubbed a “functional check flight” on a production model 787 Dreamliner, painted in the colors of LOT Polish Airlines SA. Monday’s flight at the company’s Everett, Wash., factory was designed to check the systems of the jet, which hasn’t flown since taking to the air for the first time on Jan. 13. The entire 787 fleet was ordered grounded by the regulators around the world on Jan. 16 after the lithium-ion batteries burned on two Japanese 787s earlier that month.

Following Monday’s roughly two-hour flight, with six crew aboard, Boeing was to evaluate the performance of the aircraft’s systems and move to perform ground tests for certification.

Timeline: Dream Diverted

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“The crew reports that the flight went according to plan,” said Boeing spokesman Marc Birtel.

The LOT airplane is slated to fly next on a single demonstration test flight “in the coming days” for certification testing with the Federal Aviation Administration, said Mr. Birtel. FAA personnel are expected to participate in the airborne certification trial.

The flight is the first for a Dreamliner since Feb. 11, when Boeing conducted a pair of flight tests to gather temperature and operating data for the jet’s original battery design.

The company has been conducting a series of ground and laboratory tests on the 787′s new battery design, which includes increased spacing between the eight lithium-ion cells, a new stainless-steel containment casing, an updated battery charger and a venting system for any smoke or fumes, should a failure occur.

One critical ground test, which will be undertaken on one of Boeing’s original 787 test aircraft, will see the battery pushed to destruction to verify the new containment and venting systems work as designed, said two people familiar with the tests.

Once Boeing receives final approval from the FAA and other global regulators, the company plans to deploy the modifications to the fifty 787 jets in operators’ hands in “roughly the same order as deliveries,” said Mr. Birtel, putting Japanese carriers All Nippon Airways Co. 9202.TO -1.93% and Japan Airlines Co. 9201.TO -2.36% at the front of the line of the eight current operators.

Write to Jon Ostrower at jon.ostrower@wsj.com

A version of this article appeared March 26, 2013, on page B3 in the U.S. edition of The Wall Street Journal, with the headline: Boeing Begins 787 Test Flights.