Month: December 2023

Guest Post: Health Care and Location

Prof. Howard Weiss, who developed the Excel OM and POM software that comes free with our text, shares his insights monthly.

Figure 8.1 in the Location Chapter in your Heizer/Render/Munson textbook explains that two of the factors that affect site location decisions are proximity of services and customer density. Consider doctor visits.

House Calls
At the turn of the 20th century, family doctors would come to a patient’s house to give medical attention. For the patient, visits could not be more proximate than at home. House calls peaked in the 1930s but the life cycle of house calls is essentially at the end today. One reason is that there are fewer family doctors now. Another reason has to do with insurance company reimbursement requirements. There are, however, more visiting nurses, physical therapists and other medical care personnel making house calls.

Urgent Care
In the 1970s, doctors began to open urgent care centers to serve patients who do not have emergency needs. There are over 10,000 urgent care centers in the U.S. The advantages of urgent care centers are
 Centers typically do not require an appointment
 Centers are open for more hours than doctors’ offices.
 In most cases, patients are within a 10-minute drive of a center.
 Centers generally post fees and these fees are typically less than the fee at a doctor’s office or emergency room.

Mobile Health Clinics
Also, in the 1970s, health care organizations began using mobile health clinics to serve rural and underrepresented areas that have less patient density. There are over 2,000 mobile clinics in the U.S. each providing an average of 3,500 visits annually.

Medical clinics in retail outlets
Around the turn of the 21 st century, pharmacies, supermarkets and other retail outlets began to place medical clinics in their facilities. These clinics are more plentiful than mobile clinics and create a win-win situation for the patient and the retail outlet. Advantages to the patient are the same as those for urgent care centers. The advantage to the retail outlet is that the clinic increases foot traffic to the store and yields a new revenue stream.

Telehealth visits
The most recent location change has been telehealth. This brings us back full-circle to care in the home as the patient is home and communicates with a doctor via internet or telephone. Telehealth also includes using devices, such as heart monitors, that send information to the doctor’s office. There are. however, still some legal issues surrounding telehealth.

Classroom Discussion Questions:
1. Where was your last visit to a physician?
2. What might some of the legal issues of telehealth be?

Guest Post: An Inside Look at Santa Claus’ Supply Chain Issues

Dr. Misty Blessley provides monthly guest posts from her position as Associate Prof. of Supply Chain Management at Temple U.

Santa Claus “manages the world’s largest customer base, the world’s most complex planning and logistics environment, and the world’s largest manufacturing and distribution center,” reports Richard Howells, VP at SAP software, in a recent LinkedIn article (Dec. 14, 2023). So how does one of the most beloved people of the season bring it all together to deliver Christmas delight?

Here are some of the secrets to Santa’s success:
 Prioritizes Timely and Accurate Information in Decision Making – by relying on digital technologies and old school techniques such as face-to-face meetings
 Understands his Customer’s Needs and Wants – by leveraging feedback from “Elves on the Shelve”, predictive analytics and generative AI, he is able to deal with his customer database of over 8 billion records
 Mitigates Sourcing Risk – by distinguishing key materials and procuring accordingly, one approach of which includes using local suppliers
 Scales Productivity – by having a single production facility where millions of presents are produced daily
 Recognizes the Human Element – by assuring Elf Health and Safety in addition to the corporate culture Santa has long been known to promote
 Manages Distribution and Inventory – by reviewed distribution center locations and setting inventory optimization strategies
 Controls Transportation – by having has own private logistics fleet consisting of one sleigh and 8+1 reindeer
 Promotes Delivery as Promised – by sharpening the sleigh’s runners, helping the reindeer achieve peak fitness, making sure that Rudolph’s nose is shining brightly
 Minimizes His Environmental Impact – by having a practically emissions free means of transportation
 Assures Good Working Order – by stationing elf maintenance teams around the world
 Competes in E-Commerce Like No Other Firm – by having a well-established direct-to-chimney delivery model

Operations managers are responsible for 10 strategic OM decisions that can be implemented in ways that provide a competitive advantage for their firms. Santa has clearly built a world class operations and supply chain management that is unmatched, but his success leaves clues!
No matter what holidays you celebrate, may Santa bring you a Happy Holiday Season and a Happy New Year!

Classroom  Discussion Questions:
1. In your Heizer/Render/Munson text, 10 strategic OM decisions are identified. What actions does Santa take that are instrumental to making sound OM decisions?
2. How are Santa and Amazon’s systems similar? Different?

OM in the News: Using AI to Design New Cars

Researchers have found that machine learning and artificial intelligence (AI) can significantly reduce cost and time in product design (the topic of Chapter 5), not only in the actual generative design of the product, but also in the predictive analysis of whether consumers will be attracted to certain designs.

Toyota is using AI to design better cars faster

“It’s well understood in the automotive industry that aesthetics are critically important to market acceptance. An improved aesthetic design has demonstrated that it can boost sales 30% or more,” says a Yale U. prof (see INFORMS.org Dec. 11. 2023). “That’s why automakers are known to invest over $1 billion in the design of a single model.”

The current auto design process relies on the conventional human development of designs and prototypes, along with in-person testing of possible designs with actual consumers. These consumer evaluations feature what is called the A/B testing of alternative designs in laboratory test markets. The industry calls them “theme clinics,” in which hundreds of targeted consumers are recruited and brought to a central location to evaluate aesthetic designs. Consumers are asked to rate the designs based on established benchmarks, such as scales for “sporty,” “appealing,” “innovative” and “luxurious,” among other characteristics.

Auto makers invest more than $100,000 per theme clinic for one new vehicle design. Because there are multiple aesthetic designs per vehicle, and more than 100 vehicles in its product line, General Motors alone, for example, spends tens of millions of dollars just on theme clinics.

Researchers found ways to augment the traditional product development process with machine learning tools that address both the generation of the design itself, and the testing of possible consumer acceptance or rejection of the design. They developed a generative model that creates new product designs and allows designers a tool to morph potential designs more efficiently and effectively. Their predictive model helps identify those designs with high aesthetic scores. They created their models using data from an auto firm, using images of 203 SUVs that were evaluated by targeted consumers, and 180,000 high-quality unrated images.

With advancements in machine learning algorithms and computer vision technology, AI is also capable of predicting safety risks on roads by analyzing data from sensors attached to vehicles.

Classroom discussion questions:

  1. What does A/B testing mean?
  2. Why is AI a valuable tool in design of cars–and other consumer products?

OM in the News: The Megafactory Struggle to Find Workers

The U.S. is experiencing a factory-building boom as companies, burned by overstretched supply chains during the pandemic, reshore some of their operations, writes The Wall Street Journal (Dec. 12, 2023). The U.S. also has given priority to the nation’s semiconductor and EV industries, calling them matters of national security and setting aside billions of dollars in subsidies to aid their growth.

A student at Columbus State Community College studying engineering tech uses a VR headset

U.S. manufacturers have long struggled to find all the employees they need. The coming wave of megafactories, aided public incentives, is pushing the labor shortage into a crisis. The value of new manufacturing construction projects hit a record $102 billion last year, three times higher than 2019’s total. Since 2021, 33 manufacturing projects, most of them related to semiconductors or electric vehicles, have cost $1 billion or more.

More than half of the roughly 115,000 new positions expected to be created by the end of the decade could go unfilled, industry experts project. The anxiety is particularly acute in Central Ohio, where Intel is building two semiconductor plants at a combined cost of more than $20 billion, and Honda and LG Energy Solution are constructing a $3.5 billion electric-vehicle battery plant. The companies aim to hire more than 5,000 workers between them, and local suppliers that will serve the factories likely will need thousands more.

An Intel megafactory construction site in Ohio

Will students be interested? Manufacturers have tried to chip away at negative perceptions through public-awareness campaigns. “This is a different type of manufacturing,” said one 27 year old who shook off bad experiences with a previous factory job. “This is super-educated, specially trained. There’s a lot on the line for this type of work.”

Intel said its manufacturing technicians in the U.S. can earn $50,000 to $90,000 a year.

Classroom discussion questions:

  1. What are your students attitudes towards factory jobs?
  2. Why are these positions different from traditional manufacturing jobs?

OM in the News: McDonald’s Decides No More Dry Burgers

In 1948, brothers Richard and Maurice McDonald retooled their original San Bernardino, Calif., restaurant around a slim menu selling burgers for 15 cents. Their restaurant, called McDonald’s, would go on to provide the blueprint for the fast-food business. They shrunk down the patties to make them more affordable, and served them with ketchup, mustard, onions and two pickles—no substitutes, to keep service fast. The concept was a hit.

Assembling the revamped burger in a test kitchen.

Burgers last year accounted for around 40% of U.S. fast-food sales, and most chains can’t make it without a strong contender. Some 68% of Americans eat burgers at fast-food restaurants at least once a month.

The problem for McDonald’s is that it came in 13th among U.S. chains based on the number of customers (28%) calling their burgers desirable, reports The Wall Street Journal (Dec. 1, 2023). White Castle led the list with 72%, and Burger King followed at 52%.

With increased competition in the burger market, McDonald’s executives decided to revamp many of the industrial-scale techniques that have produced cheap, uniform burgers. In some cases, the firm is reviving practices it scrapped long ago in a push for efficiency. “We can do it quick, fast and safe, but it doesn’t necessarily taste great. So, we want to incorporate quality into where we’re at,” said a top exec.

Deciding it’s had enough with dry patties and squishy buns, the firm made more than 50 tweaks on its burgers adding up to the biggest enhancements in decades. They started by cooking the beef with the onions on top of the patty, added room-temperature cheese that melted faster and put it all on the shinier brioche-style bun, a moister bread to better hold heat. They found cooking 6 burgers at a time instead of 8 improved consistency and delivered fresher patties. They calibrated the gap on the metal clamshell that presses burgers on the grill down to the millimeter, to avoid pressing too hard and squeezing out all the juices.

For a chain with tens of thousands of restaurants, the overhaul posed a massive undertaking. Restaurants would have to retrain workers to look out for quality measures like when grills were running too hot and drying out patties. McDonald’s needed to ensure bakeries across the world could comply with its new specifications for buns. The plan has taken 6 years to implement.

Classroom discussion questions:

  1. Other products and services have been around for many years, like the Big Mac, and have also had continued success through enhancements. Identify one such product.
  2. Why did it tale McDonald’s so long to improve its burger?

OM Podcast #13: An Interview with DuPont’s Chief Procurement Officer

In our latest podcast, Barry interviews Miguel Gonzalez, Chief Procurement Officer at DuPont.  They discuss the increase in uncertainty and the importance of risk management with the growing number of supply chain disruptions caused by things like COVID and geopolitical situations across the globe, and how DuPont has weathered these by relying on strategic relationships.

 

 

Transcript

A Word document of this podcast will download by clicking on the word Transcript above.

Instructors, assignable auto-graded exercises using this podcast are available in MyLab OM.  See our  earlier blog post with a recording of author and user Chuck Munson to learn how to find these, or contact your Pearson rep to learn more!  https://www.pearson.com/us/contact-us/find-your-rep.html

OM in the News and Video Tip: A Circular Economy Hub for Automaker Stellantis

Stellantis opens its first circular economy hub.

Stellantis–the global automaker with brands including Chrysler, Fiat, Jeep, Maserati and Peugeot– has inaugurated a Circular Economy Hub at its manufacturing complex in Turin, Italy, demonstrating its commitment to a “360-degree approach” to automotive production, involving a strategy of remanufacturing, repair, reuse, and recycling (4R‘s.) Stellantis says it is adopting capabilities and facilities “to change its consumption model to reduce the environmental impact and better manage the company’s aggressive decarbonization target of reaching carbon net zero by 2038.”

“Circular economy,” a topic in Supplement 5 of your Heizer/Render/Munson text, describes an economic concept for production and consumption that preserves the value of energy, materials, and labor as products move from design through to end-of-use handling and recycling. The Hub represents a $40 million investment, covering 785,000 sq. ft.  The site will employ 550 workers by 2025.

“The Circular Economy Hub brings together a powerhouse of skills and activities aimed at creating a high-performing center of excellence in Europe,” stated Stellantis in American Machinist (Nov. 28, 2023). “We are industrializing the recovery and sustainable reuse of materials, building new technologies and advanced capabilities as we grow in this area.”

The primary objectives for the Hub are to extend the life of parts and vehicles, ensuring that they last for as long as possible; or, failing that, to recycle those materials and others from end-of-life vehicle dismantling for remanufacturing as new parts and/or vehicles. The goal for the first operation, “Reman,” is to manage over 50,000 remanufactured parts annually by 2025, rising to 150,000 by 2030. For the Hub’s Sorting Center, the target is to process an estimated 2.5 million worn parts annually by 2025, increasing to 8 million by 2030.

The Vehicle Reconditioning activity will undertake aesthetic and/or mechanical repair of remanufactured or used parts and then reintroduce those to the supply chain through Stellantis’ manufacturer-certified used-vehicle program and services network. Last, the Vehicle Dismantling activity will convert end-of-life vehicles into resources for parts to be remanufactured, reused, or recycled.

Stellantis intends for the Hub to generate “efficiencies and synergies” among these activities, and through vertical integration of materials and processes. Here is a 3.5-minute video showing the 4R process in action.

Classroom discussion questions:

  1. What is meant by “circular economy?” Give an example with an iPhone as the product.
  2. What auto parts will be hard to repurpose?