1 Quick Order Pass Presented By: Andrej Ciric and Chris Roberts Representing: Quick Order Systems,...

1

Quick Order Pass

Presented By: Andrej Ciric and Chris RobertsRepresenting: Quick Order Systems, Inc.

CS410 - Professional Workforce Development I

2

Team Members

Andrej CiricProject Manager

Christian CrisostomoDemographics

Kevin JonesRisk Assessment

Christopher RobertsTechnical Feasibility

Software Development

Michael SchaeferWebsite

Documentation

Carlton Northern Marketing

3

Overview

Societal ProblemProposed SolutionProject Schedule

4

Societal Problem

The process coffee houses use to provide specialty orders is inefficient, inconvenient and error prone.

5

Inherent Complexity of Specialty Orders

Starbucks menu:

73 Regular Menu Items

10 Flavors of Syrup

13 Modifiers

9490 possible combinations assuming only (1) of each is selected.

http://www.starbucks.com

6

Traditional Transactions

Inefficient Inconvenient Error prone

“ I’d like a double tall, non-fat, decaf, vanilla latte, one-pump walnut, with room, please”

Consider a typical order by a daily customer:

Order

Cash/Credit

Change/Credit & Receipt

OrderAmount Owed

Cash/Credit

Change/Credit & Receipt

Amount Owed

7

Proposed Solution

Develop a system that can digitally:Retrieve an order Provide payment

Without verbal communication.

8

Typical Transaction with Our System

Quick Order is accurate Payment is precise Easy to use

Order & Payment

Receipt

9

Typical System Use:

Customer #

Receipt Customer #

Waves Pass

1010010111101010101

Customer #, 30bits

Central Database

Customer #

Order &Account Balance

New AccountBalance

10

Solution Will Not

Eliminate preparation errorsPreclude current ordering systems

Can always order and payProhibit order changesEliminate the casual customer

11

Project Organization

Project Organization

Management Plan Evaluation Plan Marketing Plan Funding Plan

Scheduling and AccountsIndustry ConsultationTestingTeam Formation

12

Management Organization

Weekly team meetings Take minutes Progress performance assessment

Schedule deadlines WBS Team status checks

Technical Progress and Reporting Evaluation plan

Software development protocols CVS – (Concurrent Versions System ) Design Documentation

13

Evaluation Plan

Design Reviews All design documents evaluated before implementation Industry consultation as necessary Documentation generated

Quality Reviews Deliverables evaluated at each phase by team and independent testers Post mortem evaluation of group process and effectiveness Documentation generated

Testing Testing at each stage of Research and Development Independent evaluation of product Documentation of testing process and integration

14

Evaluation Plan, Cont.

Beta-site testingProduct in real world environmentCustomer feedbackConsumer feedback

Seamless integration

15

Funding Plan

• SBIR Grant Funding• National Science Foundation • The NSF support’s high quality projects on important scientific, engineering, or

science/engineering education problems and opportunities that lead to significant commercial and public benefit.

• Phase 1• Maximum 100k• December 8th

• Phase 2 • January 29th

• Maximum 750k

• Old Dominion University• Provides

• Facilities• Ethernet

16

Marketing Plan

Major coffee shop retailer criteria:

Extensive market share Strong future growth and revenue potential Compatible market strategies in regards to our

product High repeat order frequency

17

Market Identified

Net Revenue 2003:

$4.1 billion Net Earnings 2003:

$268.3 million 77% of Net Revenue

from beverage sales

http://www.fool.com/news/commentary/2004/commentary040130ram.htm http://www.starbucks.com/

18

Starbucks U.S. Market by Stores

Source: http://www.organicconsumers.org/starbucks/indie-coffee.cfm AND http://www.starbucks.com/aboutus/pressdesc.asp?id=454

19

Market: Customer Use

A: Are you a repeat customer here?B: Do you order the same thing most of the time?C: If you had small device that could store your order would you use it?D: If you could pay with this device also, would you use it?

Starbucks Survey50 people

98%

2%

70%

30%

54%

46%

52%

48%

0

10

20

30

40

50

60

Yes No Yes No Yes No Yes No

Am

ou

nt

of

Peo

ple

A B C D

20

Faster Service Generates Revenue

Statistics indicate that each six-second improvement in speed of service generates an extra 1 percent of sales.

Wireless payment methods have shaved 15 to 20 seconds off transaction times.

http://pittsburgh.bizjournals.com/pittsburgh/stories/2004/05/31/story6.html?t=printable%208sep04 http://www.chainleader.com/archive/0702/0702tech.html

21

Starbucks Card

Consumer use

Stored value card Starbucks Card: 35 million cards activated to date. Customer “buys” card at store, over the phone, or

on the Starbucks website Customer registers on Website or over the phone Ties registered user to unique number on card

22

Quick Order System

Will follow exact same registration process as current system

Transponder can be in card or keychain format

Requires addition of customer order number field in the central database

23

Required Hardware

Hardware Required:

RFID Reader Model p_1023

Transponder POS Terminal

IBM 4695-322

24

Software GUI

Register Person: Hi, How may I take your order?Customer: I would like a double café latte please.Register Person: Double café latte, that will be $1.03 please.Customer: Here is $2.00.Register Person: Okay $2.00Register Person: here is your change and receipt. Thank you and have a nice day.

Order Display:

Double café latteTotal: $1.03Payment: $2.00Change: $0.73

25

Quick Order Pass Full Use

Register Person: Hi, how may I help you?Customer: (Uses Quick Order Pass) Register Person: Thank you and have a nice day.

Order Display:

Double café latteTotal: $1.03Change: $0.00

SaveOrder

Pass

26

Phase 0: Deliverables

Feasibility presentationMilestone presentation

WBSFinal Approval presentation

SBIRProject Website

27

Phase 0: Conception Schedule

28

Phase 0: Project Conception

29

Phase 0: Budget

None

30

Phase 1: Deliverables

Documentation Technical Description Paper Budget White Paper Draft Sub-contractual Paper User’s Manual

Market Research Prototype Design Lab Prototype Project Website SBIR Phase 2

31

Phase 1: Proof of Concept Schedule

32

Phase 1: Organization

33

Phase 1: Budget

34

Phase 2: Deliverables

Production SpecificationsBeta-test contractsManagement planPersonnel planTest/Evaluation planMarketing plan

35

Phase 2: Prototype Development

36

Phase 2: Prototype Development Organization Chart

37

Phase 2: Budget

38

Phase 3: Deliverables

Sales ContractsProduct ManualsCustomer Support LocationProduct Roll-outOut Year Strategy

39

Phase 3: Production Schedule

40

Phase 3: Production Organization Chart

41

Phase 3: Budget

42

Consumer Response

Security

Transition

Component Cost

Starbucks Not Interested

Risk Analysis/Mitigation

43

Risk AnalysisRisk Mitigation Likelihood Consequence

Starbucks not interested

Additional market research - modify product

Low High

High component cost

Cost Benefit

Analysis

High Medium

Transition Training High Low

Security Device Proximity Low Medium

Consumer Acceptance

Slight difference from current use

Low High

44

Summary

Efficient and convenientBased on developed technology

Highly accurateEasy to integrate

Strong market potential

45

Questions

?

46

Appendix

A. Determining CostB. Hardware CostC. Survey Raw Data

47

Hardware Installation Profit Table

Item Number of units

Base Cost Cost to

Retailer

Profit

RFID Reader 3 @ 45.00 135.00 270.00 135.00

Cables 3 @ 3.00 9.00 18.00 9.00

Mounting and Installation

3 @ 110.00 330.00 660.00 330.00

Total 948.00 474.00

48

Hardware Cost

Hardware cost: RFID Readers: Base cost is 45.00, Cost to Starbucks 90.00 Cables: Base cost is 3.00, Cost to Starbucks 6.00 Installation: Base Cost is 110.00, Cost to Starbucks 220.00 Figures from Hardware Installation Table assume 3 registers. Transponder: Base Cost is 0.20, Cost to Starbucks is 0.30

5500 stores are capable of accepting the Starbucks Card currently

http://www.phidgetsusa.com/viewcategory.asp?category=USB+Sensors http://www.starbucks.com

49

Hardware Costs to Starbucks

948,000

2,370,000

3,790,000

5,210,000

7,580,000

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

Cost (dollars)

1000 stores 2500 stores 4000 stores 5500 stores 8000 stores

Number of Stores

Hadware Installation Cost to Starbucks

1000 stores

2500 stores

4000 stores

5500 stores

8000 stores

Refer to Appendix for details

50

Transponder Cost to Starbucks

1,500,000

4,500,000

7,500,000

10,500,000

13,500,000

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

Cost (dollars)

5 million 15 million 25 million 35 million 45 million

Transponders

Transponder Cost to Starbucks

Refer to Appendix for details

51

Starbucks Profit by Tag Use

947,000

2,840,000

4,730,000

9,500,000

14,200,000

23,700,000

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

Profit (dollars)

1 percent 3 percent 5 percent 10percent

15percent

25percent

Customers using Tag

Starbucks Profit by Customer use (per fiscal year)

Refer to Appendix for details

52

Starbucks Break Even Analysis

Starbucks Break Even Analysis

-6,200,000

3,300,000

9,500,000

-8000000

-6000000

-4000000

-2000000

0

2000000

4000000

6000000

8000000

10000000

12000000

Year 1 Year 2 Year 3

Year

Pro

fit

(do

llar

s)

Series1

Series2

Refer to Appendix for details

53

QOS, inc. Profit by Transponder

500,000

1,500,000

2,500,000

3,500,000

4,500,000

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,000

Profit (dollars)

5 million 15 million 25 million 35 million 45 million

Number of Transponders

QOS, inc. Profit by Tranponder

5 million

15 million

25 million

35 million

45 million

Refer to Appendix for details

54

QOS, inc. Profit by Hardware

474,000

1,185,000

1,895,000

2,605,000

3,790,000

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

Profit (dollars)

1000 stores 2500 stores 4000 stores 5500 stores 8000 stores

Stores

QOS, inc. Profit by Hardware

1000 stores

2500 stores

4000 stores

5500 stores

8000 stores

Refer to Appendix for details

55

Determining Profit / Cost

Estimates based off Starbucks Net Revenue, 2003. 77% beverage sales

4.1 billion X 0.77 = 3.157 billion

Time: 15-20 second range from statistics, we use 18 second average

Sales increase 1% for each 6 seconds saved, therefore 18 / 6 = 3% increase in sales

3.157 billion x 0.03 = 94,710,000 million

94,710,000 assumes 100% customer use

Scaled Values based on current Starbucks Card Customer use

1. Starbucks Card represented 10% of all transactions in 2003

2. Starbucks Card, 35 million total activated to date

Profit potential (assuming 10% customer use): 94,710,000 x 0.10 = 9,471,000 million

Potential Cost: 35 million x 0.30 = 10.5 million

http://www.fool.com/news/commentary/2004/commentary040130ram.htm http://www.starbucks.com/aboutus/pressdesc.asp?id=451 http://www.entrepreneur.com/article/0,4621,315202,00.html http://www.mindfully.org/Technology/2004/HyperActive-Bob8sep04.htm

56

Survey Raw Data

Total 50 people surveyed Starbucks, Ghent Location 3-5pm

Questions Asked: 1. Are you a repeat customer here

Yes: 49 No: 1

2. Do you order the same thing most of the time? Yes: 35 No: 15

3. If you had a small device that could store your order, would you use it? Yes: 27 No: 23

4. If you could pay with this device also, would you use it? Yes: 26 No: 24

5. Of the people who answered Yes to 3 would they also pay with it? Yes: 26 No: 1

57

Survey Raw Data

Location: Starbucks (Greenbrier location) Time: Times below recorded from Employee greeting, to receipt generation (in seconds)

81, 38, 32, 51, 46, 33, 72, 117, 76, 19, 24, 18, 23, 33, 77, 65, 32, 66, 16, 23, 31, 28, 14, 33, 40, 29, 25, 40, 130, 60, 31, 52, 20, 43, 41, 21, 37, 52, 24, 14, 18, 66, 24, 22, 35, 50, 20, 80, 34, 45

Average is 42 seconds

58

Starbucks Growth

59

Starbucks Projected Growth

www.starbucks.com

1000

4400

8700

15,000

30,000

0

5000

10000

15000

20000

25000

30000

Number of Stores

1998 2001 2004 2006 long term

Year

Starbucks Store Growth

60

Commitment to Innovation

“These strong trends can be attributed to an all-time high level of innovation, continued speed-of-service improvements, and successful new store concepts”

Jim Donald, Starbucks CEO designate

61

Starbucks Vision

Starbucks continues to refine the Starbucks Experience:

“Starbucks has become an enduring, global brand by continually raising the bar and finding ways to innovate throughout all areas of the business”

CEO Designate, Jim Donald

62

Starbucks Order Modifiers

Americano: A coffee made w/ two shots of espresso and hot water.

Breve: A latte made w/ half-and-half. Cappuccino: A drink made w/ espresso and

foamed milk. Con Panna: Italian for whipped cream Creme: A coffee-free beverage Demitasse: Half-cup Doppio: Italian for double Double: Two shots of espresso Dry: More foam, less milk Espresso: Coffee's purest, sweetest and most

intense form. Frappucino: Icy and smooth drink Grande: 2nd to the largest size drink Half-Caf: One shot of regular and one shot of

decaf Latte: A drink made w/ espresso and steamed

milk Light: Less of something in a drink Macchiato: Italian for marked or stained Misto: Italian for mixed, combination of drip

coffee and steamed milk Mocha: A drink made w/ espresso, chocolate and

steamed milk

Quad: Four shots of espresso in a drink Ristretto: A short pull of espresso, capturing only

the sweetest part Shaken: Iced tea or coffee mixed w/ ice in a

shaker Short: Small drink size Single: One shot of espresso in a drink Skinny: Made w/ nonfat milk Solo: One shot of espresso by itself Tall: Regular size drink Triple: Three shots of espresso in a drink Unleaded: Decaffeinated Valencia: Orange syrup Venti: Large size drink Wet: More milk, less foam Whip: Whipped cream With Legs: To Go With Room: Space to add milk in a drink

63

Competition Table: QOP vs. Starbucks Card

RFID Starbucks Card

(Magnetic Stripe)

Transaction time 15-20 seconds faster Normal

Duration 100,000 cycles 1,000 cycles

Durability High Durability Low Durability

Storage Capacity 1000+ Bytes 210 bytes

Security Encryption possible No Encryption

Cost $0.20 + $0.01-$0.40

64

Order Times

Transaction Time

0

20

40

60

80

100

120

140

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49

Order Number

Tim

e (s

eco

nd

s)

Average Order Time (from greeting to receipt): 42 seconds

65

Software Translation

Actual Start Actual Finish

Venti Decaf Café Latte Skim milk Extra Hot

Customer Order Number0010010101001011100101

Software Translation

Register Side Database matches bits to actual order

items

01001 à Cafe Latte

Order #, 100 bits

1010010111101010101….

Existent register software

matches item to cost and totals

order