Recession Doesn’t Lead To More Fraud, Just Redistributes It Among Industries

According to a study by international consultancy Kroll, while overall occurrences of fraud affecting businesses have not increased since the global recession began, the industries impacted have changed. Eighty-five percent of companies surveyed reported financial losses due to fraud, averaging a loss of $8.8 million. The losses, however, have shifted between industries disparately impacted by the recession, as the following table shows.

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As Venture Capital Funding Slows, Three Investors Provide Tips for Securing Financing

According to the latest PricewaterhouseCoopers/National Venture Capital Association MoneyTree report, venture capital (VC) investments in the first half of 2009 are 55% lower than the same period in 2008, falling from $15.2 billion to $6.8 billion. To be sure, $6.8 billion is still a substantial sum of money, but the decrease in funding from venture capital firms means increased competition for every dollar in an financial environment that is already unfriendly to new investments. As banks have reduced or eliminated companies’ credit lines and are unwilling to provide other forms of financing, entrepreneurs are now forced to look for more-creative ways to fund their operations. Venture capital funding, where investors provide financing to begin operations, support ongoing growth, and foster development of new ideas, is an increasingly appealing option for small businesses impacted by the recession. Whereas entrepreneurs may have previously resisted relinquishing any amount of control over their companies (see below) in exchange for operating capital, some organizations now find that they have no other choice if they are to survive.

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Post Office’s Justification of Monopoly is Outdated

A recent editorial in The Wall Street Journal takes aim at the U.S. Postal Service’s monopoly over first-class and bulk mail. After 200 years as a monopoly, I think the writer is on to something. Then there’s that two-year, $14 billion loss. Indeed, I believe it’s time for change to come to the post office.

For the full editorial, see “US Postal Service Needs to Cut Back and Make Changes,” The Wall Street Journal, August 22, 2009.

Starbucks Borrows ‘Lean’ Page from Toyota

As The Wall Street Journal reports in “Latest Starbucks Buzzword: ‘Lean’ Japanese Techniques,” the coffee giant is adopting one of the auto giant’s most successful management practices as it combats the economic downturn. In lean manufacturing (known as the Toyota Production System until the 1990’s), any activity that doesn’t ultimately add to the value of the product is wasteful. This can be anything from moving a part around a factory excessively to locating various production processes inconvenient distances from each other.

In the case of Starbucks, waste takes the form of excessive moves about the store, waiting for timers to expire or brewers to finish, and lifting items from under-counter storage. Even the barista who once stood guard behind the pastry case, awaiting only pastry orders and taunting the coffee purchasers, has been eliminated. Speaking from personal experience, I never much saw the point of having a barista perform such a limited task, even when I did order food with my caffeinated creation. The company is even hoping that decreasing the distance a barista moves for the various components of a drink will increase productivity and reduce the number of baristas needed for each shift. But, given how little a barista moves from the espresso machine now (with exceptions, of course—see below for how this is changing), I wonder how much efficiency the company can find there. Nonetheless, if you’ve been in a store lately, you may have noticed some of the changes without realizing it.

As I mentioned, gone is the barista at the pastry case, generally. Lately, I’ve noticed that the barista making iced teas and Frappuccinos is largely responsible for toasting items as needed. Otherwise, the barista ringing up the orders is pulling pastry items from the case. This seems to free the barista at the espresso machine to focus on those drinks. I’ve also noticed containers for bulk ground coffee are now located next to the brewers, rather than below them, along with filters. Undoubtedly, items have moved behind the espresso machines, but I haven’t noticed anything so far. However, the new espresso machines, which the company is rolling out now, hold more beans and give the baristas more control over shot length and steaming, so presumably that should equal more efficiency by way of less wasted milk, espresso, and ultimately, time.

As a customer, I have to say that the few changes I’ve noticed are for the better. I can’t speak to how these changes have affected peak times or the bottom line, but if the company is confident enough to implement lean procedures in its 11,000 stores, something must be working.

Maybe with all the money the company is saving on this efficiency, it can work on putting together some better pairings. After all, I need more than a tall beverage in the morning.