Barry Render

OM in the News: What Robots Can’t Do

Most of our blogs about robots extol their cost-saving virtues and the explosion of new and exciting OM applications. “But on the front line of automation, where robots truly are poised to displace humans from their jobs, some cutting-edge technology is testing the best minds in Japanese industry,” writes The Financial Times (Aug. 7, 2017).

Making a bento — little portions of rice, fish, meat, pickles and other delicacies packed in a plastic box and sold for a few hundred yen — is currently a miserable job done by hand on grim midnight production lines, so that Tokyo stores can be filled with lunches by the morning. Tofu or vegetables are soft and irregularly shaped, and are extremely hard to grasp. “There are so many things that robots still can’t do,” says a Japanese robotics manufacturer.

It also takes a lot of people, time and money to get robots working. The engineering can cost 3 to 8 times, sometimes even 20 times, more than the hardware. “The simplest thing we cannot do is exert large force,” says the head of robot maker Yaskawa. “An Olympic weightlifter can lift several times their own body weight, but for every kilogram you move with a robot, the robot will weigh 10kg.” Pound for pound, then, even the average human is 10 times stronger than a factory robot.

Finally, a major challenge is agility. Most robots are single-handed. “We can make the arm but we can’t really make the hand,” says one manufacturer. That lack of agility is linked to one of the biggest practical problems with factory robots: the difficulty of reprogramming them to do something else. There was a time when firms tried to go to full automation on auto assembly lines, but it didn’t work because the vehicle changes. If you wanted the same model in the same color for 10 years you could fully automate it. But, of course, it wouldn’t sell.

Classroom discussion questions:

Summarize all the limitations of robots?
What is the trend for robotic installations?

OM in the News: Score One for Hydrogen

Fuel-cell-powered warehouse forklifts gaining on electric

Ever since a Swiss inventor named François Isaac de Rivaz built the first hydrogen-powered automobile in 1808, inventors and futurists have pinned their dreams and fortunes on the clean technology that converts water to energy. But hydrogen never caught on as a fuel, mainly because of its relatively high costs.

“Now, thanks to the thriving warehouse networks of online and big-box retailers, hydrogen has found a place inside growing fleets of forklifts,” reports Businessweek (Aug. 7, 2017). The numbers work out: Although a forklift outfitted with a hydrogen fuel-cell pack costs up to $58,000 — about twice as much as one with a standard lead-acid battery — hydrogen models are 10% cheaper over the 10-year life span of an average forklift. That’s because they can be charged in minutes instead of hours, eliminating the labor cost of charging batteries, freeing up warehouse space and keeping goods flowing around the clock.

Fewer than 3% of the 600,000 forklifts used in U.S. warehouses run on hydrogen, but that number is growing. Amazon recently agreed to try out the technology in forklift fleets at 10 of its warehouses. And last month, Wal-Mart matched Amazon’s $600 million deal, committing to double, to 58, the number of its warehouses that use forklifts running on hydrogen cells.

Fuel-cell companies are also pushing beyond forklifts, using hydrogen to power buses, delivery trucks and drone aircraft. In each of those markets, the vehicles return to a central depot for refueling, eliminating the need for a sprawling network of hydrogen stations.

If you are covering Supplement 5, Sustainability in the Supply Chain, this is a perfect real life example to illustrate Life Cycle Ownership (see Example S2).

Classroom discussion questions:

How can the operations manager decide which forklift is the best choice?
What are the advantages and disadvantages of hydrogen-powered vehicles?

OM in the News: The Rise of the Collaborative Robot

Locus Robotics makes a type of collaborative robot that is designed to work with humans.

“In the battle of humans versus machine on the warehouse floor, some companies have found common ground,” writes The Wall Street Journal (Aug. 4, 2017). Instead of developing technology to completely replace manpower, the firms are designing robots meant to work alongside people. These robots, for example, can guide workers to items to be picked or can transport goods across a warehouse to be packed and shipped. Known as “collaborative” robots, they are small and relatively cheap—costing tens of thousands of dollars—compared with miles of conveyor belts and automation systems that run into the tens of millions. Many collaborative robots resemble motorized platforms fitted with shelves and touch screens. They use sensors to navigate past people and forklifts.

The new robots are designed with the majority of warehouses world-wide in mind, where orders continue to be fulfilled manually by people pushing carts up and down aisles. Robotics firms pitch them as a way to help people work faster and boost productivity during busy times, such as the holidays, when extra labor is harder to find. (Surging online sales and a tight labor market have made it more difficult and expensive to fill warehouse jobs.) For example, the robots can slash the number of steps workers take to fulfill an order. But they don’t grab objects off shelves, a task that is simple for humans but tricky to automate, though developers are getting close.

Such robots aren’t yet widespread compared to more-established technologies, like the shelf-moving robots developed in the mid-2000s by Kiva Systems, which Amazon bought in 2012. But collaborative robot’s lower price point could speed adoption.

Classroom discussion questions:

Can robots completely take over warehouse fulfillment in the next few years?
What is the difference between a collaborative robot and a Kiva robot?

Good OM Reading: Faster, Higher, Farther–The Volkswagen Scandal

Two years ago, Volkswagen proudly reached its goal of surpassing Toyota as the world’s largest automaker. But in Fall 2015, the EPA disclosed that VW had installed software in 11 million cars that deceived emissions-testing mechanisms. By early 2017, VW had settled with U.S. regulators and car owners for $22 billion, with additional lawsuits still looming. In Faster, Higher, Farther, New York Times reporter Jack Ewing details the conspiracy. He describes VW’s rise from “the people’s car” during the Nazi era to one of Germany’s most prestigious and important global brands, touted for being “green.” The first half of the book is the story of VW, the legendary creation of the Beetle by the Nazis, and the car’s role as a counterculture icon during the 1960s.

Ewing then portrays VW chairman Ferdinand Piëch and CEO Martin Winterkorn. The author argues that the corporate culture they fostered drove employees, working feverishly in pursuit of impossible sales targets, to illegal methods. Within a year of taking over, Winterkorn had announced a plan for VW to attain “world domination.” His diesel fuel and a “clean diesel” marketing campaign became vital components of this strategy. Although diesel leads to fuel efficiency, it also leads to high toxic emissions. Unable to build cars that could meet emissions standards honestly, engineers were left with no choice but to cheat. VW then compounded the fraud by spending millions marketing this clean diesel.

In 2013, the lie was first exposed by a handful of student researchers on a shoestring budget at West Virginia University who tested the fuel emissions of a diesel Passat, a diesel Jetta and a diesel BMW. The vehicles passed EPA standards when tested in a controlled lab-setting. But when the cars were tested in a non-lab setting, the Passat and Jetta exhibited nitrogen oxide emissions that were off the charts. As we know, this led eventually to the guilty plea to criminal charges in a landmark Department of Justice case.

In dealing with ethics of OM, here is a global company whose deceit half destroyed it–and the story is not finished.

OM in the News: Outsourced Jobs to India May Now Go To Indiana

For years, American companies have been saving money by “offshoring” jobs — hiring people in India and other distant cubicle farms. “Today,” writes The New York Times (July 31, 2017), “some of those jobs are being outsourced again — in the U.S.” Salaries have risen in places like South Asia, making outsourcing there less of a bargain. (A decade ago an American software developer cost 5-7 times as much as an Indian developer. Now the gap has shrunk to 2 times). In addition, as brands pour energy and money into their websites and mobile apps, more of them are deciding that there is value in having developers on the same continent.

Many of these domestic outsourcers are private, little-known companies, but IBM, one of the foremost champions of the offshore outsourcing model, has announced plans to hire 25,000 more workers in the U.S. over the next 4 years. As a result, the growth of offshore software work is slowing, to nearly half the pace of recent years.

“The nature of work is changing,” said the CEO of Infosys, the Indian outsourcing giant. “It is very local. And you often need whole teams locally. It’s not enough to have people offshore in India.” This is a departure from the offshore formula of having a project manager on-site but the work done abroad. Infosys just announced plans to hire 10,000 workers in the U.S. over the next 2 years, starting with centers in Indiana and North Carolina.

In the 1990s, the internet allowed tasks like payroll and financial reporting work to be sent to low-wage nations, especially India. That brought the rise of the big outsourcing companies like Tata and Infosys, which still excel at maintaining the software that runs back-office systems.

Classroom discussion questions:

How has the outsourcing model changed?
List the advantages and disadvantages of outsourcing abroad.

OM in the New: Wal-Mart Introduces OTIF Inventory

Packages move along a conveyor belt inside a Wal-Mart fulfillment center.

“Long known for squeezing its vast network of suppliers, Wal-Mart is about to step up the pressure,” reports Businessweek (July 24, 2017). The focus this time is delivery scheduling, and the company’s not messing around. Two days late? That’ll earn you a fine. One day early? That’s a fine, too. Right on-time but goods aren’t packed properly? You guessed it–fined.

The program, labeled On-Time, In-Full, or OTIF, aims to add $1 billion to revenue by improving product availability at stores. It underscores the urgency Wal-Mart feels as it raises wages, cuts prices and confronts a powerhouse rival in Amazon that’s poised to grow with its planned purchase of Whole Foods. Says a retail expert, “They’re trying to squeeze and squeeze and squeeze.’’

The initiative builds on progress Wal-Mart has made in reducing inventory and tidying its 4,700 U.S. stores after the back rooms became so cluttered it often stored surplus products in cargo trailers parked out back. The new rules begin this August, and the company said they will require full-truckload suppliers of fast-turning items — groceries, paper towels — to “deliver what we ordered 100% in full, on the must-arrive-by date 75% of the time.” Items that are late or missing during a one-month period will incur a fine of 3% of their value. Early shipments get dinged, too, because they create overstocks.

By February, 2018, Wal-Mart wants these deliveries to be “OTIF” 95% of the time. Its previous target was 90% hitting a more lenient 4-day window. “Variability is the No. 1 killer of the supply chain,’’ says a senior Wal-Mart exec. While big suppliers should be able to invest in fancy inventory-management systems to get up to speed with the new rules, smaller businesses will feel more pain. Some don’t even know what “OTIF’’ stands for.

Classroom discussion questions:

What are the implications of OTIF to suppliers?
Why is Wal-Mart introducing this inventory strategy?

OM in the News: Foxconn’s U.S. Factory Plans

Foxconn makes iPhones and other gadgets for Apple

Foxconn, which helped turn China into the center of electronics manufacturing, just announced it will build a $10 billion plant in Wisconsin to make display panels used in TVs and other products. This marks the first major U.S. investment for Foxconn, the world’s largest contract manufacturer of electronics and the maker of iPhones.

“Foxconn,” writes The Wall Street Journal (July 27, 2017), “is betting the U.S. can rebuild an electronics supply chain that largely shifted to China and other lower-cost Asian countries in recent decades.” The factory is expected to employ 3,000 people initially and as many as 13,000 people eventually. The state is providing Foxconn with a $3 billion, 15-year incentive package of tax credits.

In addition to the factory workers, it is estimated that the plant will create 22,000 indirect jobs and another 10,000 construction jobs– and draw as many as 150 supporting suppliers to Wisconsin and nearby states. The average salaries for the 13,000 jobs at the factory would be $53,000 annually, plus benefits.

The 20-million-sq.-ft. campus will primarily produce high-resolution liquid-crystal displays, known as 8K resolution LCD, used in smartphones and car dashboards, in addition to TVs. Many TVs currently sold in the U.S. are assembled in Mexico, so it is possible that the displays made in Wisconsin could be shipped across the border to be installed in TVs that are later shipped back to the U.S. for sale.

Classroom discussion questions:

Why is Foxconn entering the U.S?
What are the benefits and risks to Wisconsin?

OM in the News: Robots Picking, Retailers Grinning

An engineer adjusts a robotic arm at RightHand Robotics

“Robot developers are close to a breakthrough—getting a machine to pick up a toy and put it in a box,” writes The Wall Street Journal (July 24, 2017). It is a simple task for a child, but for retailers it has been a big hurdle to automating one of the most labor-intensive aspects of e-commerce: grabbing items off shelves and packing them for shipping. Several companies, including Saks Fifth Avenue and Chinese online-retail giant JD.com have recently begun testing robotic “pickers” in their distribution centers. Robotics companies say their machines can move gadgets, toys and consumer products 50% faster than human workers.

Retailers and logistics companies are counting on the new advances to help them keep pace with explosive growth in online sales and pressure to ship faster. Picking is the biggest labor cost in most e-commerce distribution centers, and among the least automated. Swapping in robots could cut the labor cost of fulfilling online orders by a fifth.

Until recently, robots had to be trained to identify and grab each item, which is impractical in a distribution center that might stock an ever-changing array of millions of products. Now, several automation companies are working on automating picking. Hudson’s Bay is testing startup RightHand Robotics’ robots in an Ontario distribution center. “This thing could run 24 hours a day,” said Hudson’s SCM VP. “They don’t get sick; they don’t smoke.”

Previous waves of warehouse automation didn’t lead to sudden mass layoffs, partly because order volumes have been growing so fast. And automated picking is still at least a year away from commercial use. The main challenge lies in creating the enormous databases of 3D-rendered objects that robots need to determine the best way to grip new objects. (There is also 4 minute video that accompanies the WSJ article).

Classroom discussion questions:

Compare this change to other advances in warehouse automation.
Why is robotics so important in order fulfillment?

Teaching Tip: The First Day of Your OM Class

There’s no discounting the importance of the first day of your OM class. What happens that day sets the tone for the rest of the course. Here are a few novel activities (see Faculty Focus—July 19, 2017) that emphasize the importance of learning and the responsibility students share for shaping the classroom environment.

Best and Worst Classes – On one section of the blackboard you write: “The best class I’ve ever had” and underneath it “What the teacher did” and below that “What the students did.” On another section you write “The class from hell” and then the same two items beneath. Ask students to share their experiences, without naming the course or teacher, and begin filling in the grid based on what they call out. In 10 minutes, 2 very different class portraits emerge. Move to the best class section of the board and tell students that this is the class you want to teach, but that you can’t do it alone. Together you and your students have the power to make this one of those “best class” experiences.

First Day Graffiti – Flip charts with markers beneath are placed around the classroom. Each chart has a different sentence stem. Here are a few examples:

“I learn best in classes where the teacher ___”
“Students in courses help me learn when they ___”
“I am most likely to participate in classes when ___”
“Here’s something that makes it hard to learn in a course: ___”
“Here’s something that makes it easy to learn in a course: ___”

Students are invited to walk around the room and write responses. After there are comments on every flip chart, you walk to each one and talk a bit about 1-2 of the responses.

Behaviors: Theirs and Ours – Put students in groups and have them respond to: “What are 5 five things faculty do that make it easy to learn?” Make a master list to share in class or online. Below the 5 things faculty do, you can also list the 5 things students do that make it hard or easy to teach.

OM in the News: Retailers Check Out Automation

The Cash360 machine now in the back rooms of most of Wal-Mart’s 4,700 U.S. stores.

Shopping is moving online, hourly wages are rising and retail profits are shrinking—a formula that pressures retailers, ranging from Wal-Mart to Tiffany, to find technology that can do the rote labor of retail workers or replace them altogether. “Many U.S. retail jobs are ripe for automation, with 2/3 at high risk of disappearing by 2030,” reports The Wall Street Journal (July 20, 2017).

Self-checkout lanes can replace cashiers. Autonomous vehicles could handle package delivery or warehouse inventory. Even more complex tasks like suggesting what toy or shirt a shopper might want could be handled by a computer with access to a shopper’s buying history, similar to what already happens online today. “The primary predictor for automation is how routine a task is,” says a Citi researcher. “A big issue is that retail is a sizable percentage of the workforce.”

Nearly 16 million people, or 11% of nonfarm U.S. jobs, are in retail. Now, as stores close, these jobs are disappearing. Since January, the U.S. economy has lost about 71,000 retail jobs. Automation is filtering through many parts of retail. Tiffany is using machines to polish jewelry. Home Depot has self-checkouts in most stores and is testing scanner guns for shoppers buying bulky products like lumber.

Wal-Mart has long squeezed efficiency out of its business. Although it employs 1.5 million people in the U.S., it has around 15% fewer workers per sq. ft. of store than a decade ago. Its U.S. stores now have a Cash360 machine, making thousands of positions obsolete. Employees whose task was to count cash and track the accuracy of the store’s books have been replaced by the hulking gray machine that counts 8 bills per second and 3,000 coins a minute–then digitally deposits the money at the bank.

Classroom discussion questions:
1. What other jobs are likely to be replaced by automation in the coming decade?

2. Why is this an OM issue?

MyOMLab: Improvements for Fall–Part 3

Here are four more upgrades we have made to MyOMLab for Fall 2017. Click for details

OM Simulations Each of these 4, self-contained simulations help students employ critical thinking and analysis to make OM decisions in realistic business contexts. From inventory management for a new tech product to forecasting fuel consumption, students gain valuable exposure to how OM works in the real world, learning key course concepts as they go. Topics Include: Inventory Management, Quality Management, Project Management and Forecasting. (If you are one of our over 500 adopters who is still not using MyOMLab, this one feature alone makes the learning system worthwhile!)

Automatic Grade Sync for Canvas MyOMLab instructors who have integrated their courses with Canvas have the option to select automatic grade sync, allowing for a seamless way to sync grade data between MyOMLab and their LMS. Automatic grade sync saves time for instructors by transferring grades completely touch-free, eliminating the need to manually transfer grades. Instructors have the option to select all assignments or specific assignments to automatically sync.

Dynamic Study Modules (DSMs) DSMs provide students personalized assistance by continuously assessing their activity and performance in real time. Summer 2017 updates introduce a student dashboard and expand instructor reporting capabilities, giving faculty easier insight into student, and class, mastery of concepts. Five new DSM reports and dashboard views provide instructors with the following: ● A high-level summary of a class’ aggregate performance ● Information on topics where students tended to answer questions incorrectly, but with a high degree of confidence ● An in-depth view into the activity of students who continue to answer questions incorrectly ● Insight on student progress towards completing assigned DSM activities ● Details on student’s specific performance.

MyOMLab Plus Portal Update The overall look and feel of the MyOMLab Plus Course Portal is being refreshed to give instructors a more modern, clean, and user-friendly experience. Improvements have been made to the MyOMLab Plus Portal to allow for easier course organization and management.

MyOMLab: Improvements For Fall–Part 2

Here are five more upgrades we have made to MyOMLab for Fall 2017. Click for details

My Course Portal Updates Instructor access to information about courses in the My Courses Portal has been improved! Updates include a refreshed forgotten username/password screen and visible listing of third-party LMS partners. Instructors will also now have the ability to create categories for improved organization and a shortcut for easier access to member sections of coordinator courses via the new pin/unpin functionality.

Shortcuts to Nested Courses Instructors will now have the ability to create a shortcut for easier access to member sections of coordinator courses on the My Courses Portal home page via the new pin/unpin functionality. This functionality is available in both the tile and list view.

Assignment Manager Updates The Assignment Manager is now easier to navigate. The ability to filter assignments by type and “Set Prerequisites” have been nested within drop down menus, and “Individual Student Settings” has been moved to the menu bar.

Gradebook Updates Updates to the options available when managing roster, managing incompletes, and the ability to show/hide class metrics allow instructors to easily access and navigate to the student performance data that’s important to them.

Improved Accuracy of Time-Spent Values Homework assignment inactivity alerts have been reduced from 60-minutes to 30-minutes. If the user does not respond to the alert within 5 minutes, the assignment will be saved and closed. In addition, a 30-minute alert has been added to media assignments. Inactivity alerts will reduce large time-spent values and increase the ability for instructors to track time-spent more accurately.

More to come!

MyOMLab: Improvements For Fall–Part 1

The MyOMLab Summer 2017 Release increases levels of customization and flexibility for instructors for in-progress assignments and simplifies the teaching and learning experience with ease of use updates. Here are 4 changes--click for details. More to follow over the next few days!

Improved Organization Both students and instructors can personalize how their MyOMLab courses appear on the main portal page by creating categories to group and sort courses/products. Users can create categories to group courses by semester, discipline, or any other organizing structure: (1) Users can create, remove, rename, or move, categories in the My Courses Portal; (2) Categories can be created on all page views: Active, Inactive, and Nested; and (3) After setting up categories, they will be visible with expand and collapse options.

Increased Customization of Assignments MyOMLab instructors will now have even more flexibility to edit homework assignments. Instructors are able to modify in-progress homework assignments and remove questions even after students have already completed and submitted the assignment. You simply select the “Remove Questions” option within the “Actions” drop down menu. Questions removed from an assignment will become unavailable for students to access. All students, regardless if they have submitted results or not, will automatically receive full credit on removed questions. After the question is removed, it will remain visible but appear struck-through within the assignment manager.

Late Submissions and Penalties for Quizzes and Tests Updates to assignment settings allow for instructors to have even greater control and flexibility when creating quizzes and tests. Instructors may configure quizzes and tests to allow for student submissions past the due date and set a late submission penalty. Within quiz and test settings, instructors may allow students to work and submit after the due date. Instructors have the option to deduct points from a student’s score for late submissions. If a student begins a quiz or test after the due date, the student will be notified of the penalty for the late submission prior to beginning the assignment.

OM in the News: Why Can’t Houses Be Built Like iPhones?

Katerra manufactures whole walls—including windows, insulation, wiring and plumbing—in its factory

The world’s housing crisis has many causes, but there is a stubbornly persistent one that we should have been able to solve by now: Productivity. As prices of components and materials for pretty much every other physical object—cars, cellphones, clothing—have dropped precipitously, it still costs too much to build a building. “Over the past 60 years, productivity in manufacturing has increased 8-fold while remaining basically flat in construction,” writes The Wall Street Journal (July 3, 2017).

Some companies think they have a solution. They are reviving old ideas in construction, including prefabrication and modular building. And they’re applying all the logistics and IT knowledge gained from building the global supply chains that deliver mobile devices, and all the automation pioneered by the automobile and other manufacturing industries.

Take Katerra. It has a 200,000-sq-ft factory in Phoenix where it manufactures whole walls, including all the windows, insulation, electrical wiring and plumbing. Katerra uses an integrated CAD/CAM system that tells all the factory’s automated saws and routers how to produce all the buildings’ components. The same system connects to job-site cranes that lift and place the finished panels. Katerra ships the walls to construction sites, where they’re snapped together like Lego bricks. The company’s goal is to build 7 more factories in 2 years, each intended to serve a different geographic area.

Katerra is responsible for its buildings from design to final construction, which allows it to further cut costs. In consumer electronics, “design for manufacturability”—the reconfiguring of a device’s shape and function to make it cheaper to build—is standard. Another thing Katerra borrows from that industry: buying goods in bulk, direct from suppliers.

Classroom discussion questions:
1. What is design for manufacturability? Give an example.

2. Of what type of layout is this an example (see Ch. 9)?

OM in the News: The City That iPhone Built

Foxconn iPhone workers walk between Zhengzhou Foxconn factories

It was 2010 and the iPhone was coming to a new industrial town on the edge of Zhengzhou, China that would be known as iPhone City. One year later, Foxconn, the manufacturer, said the iPhone factory complex had 100,000 workers. Today, it employs 250,000 at the plant. The company makes 150 million iPhones each year, along with 20 million iPads.

“With Apple embracing outsourced manufacturing in Chinese cities, the iPhone’s success in the decade since it launched has fueled China’s rise at the center of the global electronics supply chain,” writes The Wall Street Journal (July 5, 2017). The explosion of higher-tech manufacturing was encouraged by Beijing as leaders sought to move factories up the value chain from making plastic toys and clothes. That shift transformed the lives of millions of Chinese, bringing jobs but also leading to complaints from workers of repetitive labor, restrictive work rules and poor living conditions.

The move to Zhengzhou followed a spate of suicides in 2010 at Foxconn’s other iPhone factory in Shenzhen, along the coast where wages were higher. “We hold our suppliers to the standard we hold ourselves: They must treat everyone with dignity and respect,” said Apple. Apple said wages and working conditions at its suppliers have improved significantly in the past 5 years.

Like American company towns a century ago—Pullman, Ill., Hershey, Pa., and Henry Ford’s Detroit—iPhone City revolves mainly around a single product, and it depends on that product for its wealth. During last fall’s rush to make the iPhone 7, when Foxconn was short-handed, state-owned coal companies lent workers to Foxconn. In past years, the province issued quotas to local authorities stating how many workers they needed to produce for Foxconn.

Classroom discussion questions:

Why doesn’t Apple manufacture iPhones in the U.S.?
What has China’s government done to assist manufacturers such as Foxconn?