Category: Chapter 11

Posts relating to Chapter 11

OM Podcast #54: Defense Strategy, Military Logistics, and Strategic Stockpiles

Col. Jay Reckard

In our latest podcast episode, Barry and Misty interview Colonel Jay Reckard, who retired from the U.S. Army after 28 years of service and now works as a defense strategist through his consulting practice. During his military career, Jay served in a variety of leadership roles, culminating as director of the U.S. Army Chemical Materials Activity.

In this podcast, Barry, Misty, and Jay discuss the critical role of logistics and supply chains in military operations. Topics include strategic stockpiles, chemical and biological defense, 3D printing in deployed environments, munitions readiness, contested logistics, and the supply chain implications of global events such as activity in the Strait of Hormuz and the South China Sea.

Prof. Barry Render
Prof. Misty Blessley

As we prepared for this episode, Jay took a moment to reflect on his friend and fellow soldier, the late Retired Colonel Jeffrey J. Britton (1969–2026). He shared how Jeff’s leadership in military logistics made it possible for others, including Jay, to accomplish their missions. We were touched by Jay’s tribute and join him in remembering Jeff’s dedicated service and lasting impact.

“Jeff Britton was the finest logistician I ever served with. He was intelligent, capable, and a man of deep character. His strengths were many and his weaknesses few, and he cared for his soldiers more than himself. Jeff’s steadfast leadership of the 193d BSB solved every logistics challenge facing the 4th MEB. Above all, he loved his family. I will always be in his debt and wish him lasting peace.”    

 

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OM in the News: Why America Needs Manufacturing Capability—Not Just More Factories

For decades, operations leaders have been trained to hunt for bottlenecks inside the plant: slow lines, underutilized machines, rework loops, labor gaps. But today’s manufacturing constraints increasingly sit outside the four walls, write Profs. Kenneth O’Connor and Gerry Goldstein in Industry Week (Sept. 18, 2026). As the U.S. confronts rising demand in defense, aerospace, semiconductors, robotics, and advanced materials, one truth is becoming unavoidable: building more factories is not the same as building more manufacturing capability.

Capability comes from ecosystems—dense, coordinated networks of suppliers, logistics partners, research institutions, workforce pipelines, and public‑sector stakeholders. A factory produces products. An ecosystem produces scalable, resilient capacity.

Recent defense production challenges illustrate this clearly. After the U.S. sought to ramp 155mm artillery output from 14,000 to 100,000 rounds per month, progress stalled not because of floor space, but because of ecosystem gaps: propellants, explosives, metal parts, specialized equipment, qualified technicians, and capital investment. These constraints lived between organizations, not inside a single plant.

This pattern repeats across high‑value sectors. A manufacturer may have demand but lack second‑tier suppliers. It may have equipment but not technicians. It may have prototypes but no test stands. It may have engineering talent but no digital‑thread integration across partners. These are ecosystem bottlenecks—and they determine whether plant capacity becomes usable capability.

Regional strength matters even more. Regions with robust suppliers, applied research institutions, logistics networks, and workforce pipelines outperform those with isolated factories. National initiatives show how shared capabilities and coordinated development can lift entire ecosystems, especially small and mid‑sized manufacturers whose hidden expertise often enables surge capacity.

Operations managers need to ask whether suppliers can scale, where external bottlenecks sit, how long workforce development lead times truly are, how connected their production network is, and whether their ecosystem could respond if demand doubled tomorrow.

Lean operations and efficiency still matter—but the next competitive frontier is adaptive capacity: the ability to shift suppliers, redesign products, qualify new processes, train workers, reroute logistics, and integrate new technologies under pressure. That capability cannot be built in a crisis. It must be cultivated through relationships, coordination, and shared investment long before demand spikes.

Classroom Discussion Questions

  1. Where do the most critical bottlenecks exist in today’s manufacturing ecosystems—inside factories or across supplier, workforce, and logistics networks?
  2. How should regions and firms build “adaptive capacity” rather than simply expanding physical capacity?

Guest Post: AI and the Automation of Transportation

 

Prof. Howard Weiss shares his insights with our readers monthly.

Automation is increasingly transforming the transportation industry. As one recent report noted, “Automation is turning transportation networks into continuously optimizing systems that consume less energy per unit moved, operate for longer hours, reduce labor bottlenecks and reshape demand for fuels and electricity.” The importance of this transformation is significant because transportation accounts for approximately 30% of U.S. energy consumption, second only to electric power generation. As discussed in the Chapter 11 of your Heizer/Render/Munson textbook, air, rail, highway, and waterway transportation systems are essential components of an effective supply chain system. Automation and AI are changing how each of these modes operates.

Trucking  accounts for the majority of transportation miles and approximately 60% of transportation fuel consumption. Driverless trucks are already being tested and used in Texas. However, widespread deployment remains challenging because automated systems can have difficulty handling conditions such as curves, hills, and other unpredictable roadway situations.

 While automation could eventually reduce the demand for truck drivers, the industry currently faces a shortage of drivers. So the immediate objective is often to have automation assist drivers rather than replace them. In Ohio, for example, automated trucks operate with a human driver present. These trucks can operate for much longer periods, increasing capacity by avoiding the limitations imposed by driver-hours regulations.

Rail is also becoming increasingly automated. AI and automated systems continuously inspect tracks, evaluate track conditions, and monitor wheel integrity. Rather than relying solely on periodic inspections by employees, railroads can collect information continuously. AI can also analyze train performance at different speeds and use the resulting data to identify more efficient operating practices.

Barges are particularly energy efficient because they can move large quantities of goods using less fuel than either trucks or trains. On the Mississippi River, AI-assisted pilot systems have been tested to help identify changing river conditions. Machine-learning systems are also being developed for navigation, hazard monitoring, vessel tracking, and calculating stopping distances.

Safety is perhaps the most important potential benefit of automation. However, AI can also reduce fuel consumption, minimize delays and bottlenecks, improve asset utilization, and allow transportation systems to operate more efficiently. 

Classroom Discussion Questions:

  1. To what extent should humans remain involved in operating and supervising automated transportation systems?
  2. How might advances in AI influence decisions about which transportation mode companies use to move goods in the future?

 

OM in the News: Reshoring is Up, But Problems Persist

Manufacturing companies increased their interest in reshoring operations this year, writes Material Handling & Logistics (Sept. 3, 2026). The 2026 USA Reshoring Survey Report found that 36% of manufacturers had reshored or were actively engaged in additional reshoring– an increase from 29% in 2025.  Projects are still in the works as well, with 32% of manufacturers saying they were currently quoting reshoring projects–double the 16% reported in 2025.

Why Reshore? The top reason might not be a surprise — tariffs. Here is a breakdown of survey results.

  • Tariffs — 65%
  • Geopolitical Risk — 60%
  • Delivery time/proximity to customers — 50%
  • Image/Brand of Made-in-USA — 40%
  • Quality/Rework/Warranty — 25%
  • Having manufacturing near engineering –15%
  • Tax Reduction (from One Big Beautiful Bill) — 10%

Benefits of reshoring. Respondents saw these benefits as a result of their reshoring efforts.

  • Improved speed to market — 70%
  • Better fulfillment/on-time delivery — 65%
  • Logistics savings (freight/transit) — 60%
  • Inventory optimization/lower carrying costs — 40%
  • Enhanced pricing power/brand value –20%

Challenges to Reshoring

However, there are challenges to reshoring, and those have changed over time.  Currently, the top challenge, at 35%, is the availability of labor and overhead costs. Other issues include:

  • Domestic component gaps — 35%
  • Supply chain transition friction –20%
  • Labor availability challenges — 15%
  • Regulatory /compliance burdens –15%

While the Reshoring report is optimistic about reshoring as a way to reduce imports, a recent survey, The Kearney 2026 Reshoring Index, found a less positive view. They said that despite changes in US trade and tariff policies and significant changes in geopolitical realities, as of the end of 2025, America remains even more reliant on imports while its manufacturing capacity remains years away from projected goals.

The report found that despite US manufacturing investments tripling over the past four years, there’s only been 1.5% growth in capacity so far. Resolving the labor issues and other barriers to reshoring, at the end of the day, requires further supply chain adjustment.

Classroom discussion questions:

  1. Why might companies be motivated to reshore even when the outcomes are less positive than expected? What does this tension reveal about strategic decision‑making in operations management?
  2. How do capacity limitations, labor shortages, and domestic component gaps shape the feasibility of large‑scale reshoring? What operational strategies could help firms overcome these constraints?

OM Podcast # 53: AI at Verizon and the Future of Work

Welcome back to school!  We hope the start of fall classes is going smoothly for everyone, and we hope you enjoy our first podcast of the semester.

AI is transforming the way organizations operate and Bryan Hartling, Senior Program and Project Manager at Verizon, is helping lead that change.

Prof. Misty Blessley
Prof. Barry Render
Dr. Bryan Hartling

 

 

 

 

In this episode, Bryan joins Barry and Misty to discuss Verizon’s AI initiatives, machine learning applications, procurement automation, business intelligence modernization, and the future impact of AI on jobs and software services. The conversation provides an insider look into how large organizations are using AI to simplify processes, improve decision-making, and drive innovation.

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Guest Post: Enabling the Supply Chain– What Clorox’s ERP Journey Teaches

 

Prof. Misty Blessley

Dr. Misty Blessley frequently cohosts our monthly OM podcasts from her office at West Virginia University, where she is Associate Professor of Supply Chain management.

In Chapter 11 of your Heizer/Render/Munson textbook, students learn about the Supply Chain Operations Reference (SCOR) model. SCOR entails 6 core steps – Plan, Source, Make, Deliver, Return, and Enable. While the first 5 steps focus on the flow of products and information, the Enable step focuses on the technology, data and infrastructure that support all other supply chain activities. In many ways, when firms enable, they lay the foundation that allows the rest of the supply chain to function effectively.

A recent article in Supply Chain Dive provides an excellent example of the enable process in action. Clorox, the consumer products company known for brands such as Clorox bleach, Pine-Sol, Glad trash bags, and Kingsford charcoal, expects to realize significant supply chain improvements as it completes its transition to a new enterprise resource planning (ERP) system. The benefits include better planning, lower inventory levels, greater automation, and a more responsive supply chain that can react more quickly to changes in customer demand. 

But implementing a new ERP system (the topic of Chapter 14) can cause significant disruption before improvements can be realized. The company’s ERP transition began in 2021 as part of a 5-year, $500 million digitization effort designed to replace decades-old technology. During implementation, Clorox experienced fulfillment challenges and incurred additional costs as the rollout progressed more slowly than expected. 

Clorox believes those challenges are largely behind it. the firm has integrated business planning into the new system and moved many activities away from spreadsheet-based manual processes toward automated workflows. The payout is expected to be improved demand fulfillment, streamlined order-to-cash activities, and reduced inventory throughout the supply chain. 

 Enabling capabilities often determine how effectively the entire supply chain performs. Investments in technology, data, and infrastructure may not produce immediate results, but they can create the foundation for long-term operational excellence. ERP systems improve visibility, coordination, and decision-making across organizations. Firms have learned that not implementing ERP can be costly.  But just as The Clorox Company experienced, implementation woes are not unusual.

Classroom Discussion Questions: 

  1. Why do you think so many organizations struggle with ERP implementations?
  2.  What should firms do in advance to ease the implementation process?

OM in the News: Beyond Outsourcing–Why Best-Shore Is Reshaping the Future of OM

For more than three decades, outsourcing followed a simple logic, moving work to lower-cost locations to reduce expenses and gain efficiency, writes Material Handling & Logistics (July 24, 2026). That model delivered real benefits, but the business environment has changed. Organizations now face pressure to innovate faster, strengthen resilience, protect worker safety, and meet increasingly complex regulations.

Instead of focusing solely on low-cost offshore outsourcing, organizations are adopting to a best-shore strategy, an approach that evaluates the nature of the work and places it in the location that delivers the greatest overall business value. The best-shore model recognizes that cost matters, but so do collaboration, speed, resilience, compliance, talent availability, and operational continuity.

Supply chain disruption, cybersecurity threats, geopolitical uncertainty, workforce shortages, regulatory change, and rising customer expectations have created new challenges that traditional outsourcing models were not designed to address. The lowest-cost location is now not always the lowest-cost solution.

A manufacturing plant cannot afford prolonged downtime because a critical engineering issue must wait until another region wakes up. A logistics operation cannot delay responding to a cybersecurity incident due to communication barriers.

Under the best-shore approach, organizations leverage a combination of offshore, nearshore, and onshore resources, assigning responsibilities based on business requirements rather than geography alone. Best-shore models incorporate three complementary delivery layers.

Offshore: Scale and Cost Efficiency Offshore delivery remains an essential component of global operations. Countries with large technical talent pools offer access to skilled professionals at competitive costs. Offshore teams often provide the scale necessary to support large transformation programs, application development initiatives, engineering projects, testing activities, data management, and managed services.

Nearshore: Speed and Collaboration Nearshore delivery helps bridge the gap between cost efficiency and operational responsiveness by locating teams in similar time zones and cultural environments. Teams can collaborate during the same business day, participate in real-time meetings, respond quickly to changing priorities, and engage more directly with business stakeholders.

Onshore: Governance and Business Alignment Certain activities benefit from being located close to the business itself. Executive engagement, regulatory compliance, stakeholder management, strategic planning, safety oversight, and customer relationships often require local presence and a deep understanding of business context.

Recent years have demonstrated how vulnerable organizations can become when they depend too heavily on a single geography, supplier, or operating model. A diversified best-shore model helps reduce concentration risk.

Classroom discussion questions:

  1. Summarize the differences between best-shoring and off-shoring.
  2. Provide an example of a firm that has best-shored.

 

 

Guest Post: Defense Supply Chains at the Heart of National Security are Under the Microscope 

Prof. Misty Blessley, Associate Professor of Supply Chain Management at West Virginia University, brings up a timely topic.

A major shift is underway in U.S. defense procurement policy, according to Reuters.com (July 20, 2026). President Trump recently signed an executive order making it harder for defense contractors to obtain waivers that allow them to purchase critical minerals and materials from China and other prohibited foreign suppliers. Contractors must now demonstrate that they searched for alternative sources, disclose where materials originate, and provide a plan to reduce dependence on those suppliers.

This policy aligns closely with the goals of the Buy American Act of 1933, which requires federal agencies to give preference to domestically produced goods when purchasing supplies. The law was designed to support American manufacturing, strengthen the nation’s industrial base, and reduce dependence on foreign suppliers. While waivers have long been available when products were unavailable domestically or significantly more expensive, the new executive order signals a tougher approach to those exceptions in defense contracting. 

Why have defense contractors relied on foreign suppliers? In many cases, the answer involves availability. Critical minerals and specialized components are often sourced through global supply chains, with some materials heavily available from prohibited foreign suppliers. Cost can also play a role. Foreign suppliers may offer lower prices, allowing contractors to control expenses. 

At the heart is the urgent need to keep weapons flowing to U.S. forces and allies. According to Peter Navarro, White House senior counselor for trade and manufacturing, “This is not paperwork. It is battlefield preparation.” 

From a supply chain perspective, the most important aspect of the executive order is its focus on visibility and resilience. The Pentagon has been directed to map lower-tier suppliers and identify vulnerabilities hidden deep within defense supply networks, to give a clearer view whether foreign-controlled suppliers could threaten weapons production during a conflict. Contractors must also evaluate suppliers for foreign ownership, financial stability, and manufacturing risks. 

The U.S. government is not leaving contractors high and dry. Recent investments in companies such as MP Materials, a domestic producer of rare earth materials, demonstrate efforts to make buying American easier. 

Classroom Discussion Questions:

  1. What opportunities do you see resulting from this executive order?
  2. Do the benefits of increased supply chain security outweigh the likely increase in costs? Why or why not?

 

 

OM in the News: Agentic AI Revolutionizes the Factory

It’s 4 a.m. at a large automotive parts plant. The night-shift supervisor freezes as the dashboard flashes an alert: a critical spindle is vibrating out of tolerance. In the old world, he’d wait for maintenance to evaluate and decide. But today, an AI agent has already paused the line, checked service records and called the right technician—before he even takes a step toward the control room.

That’s the new reality for many manufacturers facing a stubborn obstacle: the ever-widening gap between data and decisive action. Now, a new class of digital entities is changing that equation. AI agents powered by decision intelligence are beginning to sense, reason and act across the manufacturing ecosystem, cutting decision latency from minutes to milliseconds.

Think of AI agents as the digital nervous system of a modern factory. They continuously sense what’s happening across machines, people and systems, then respond intelligently without losing context. Across the manufacturing stack, they’re quietly reshaping work for every role:

On the shop floor: Agents merge operations and information technology (IT) data to give operators real-time context. They can recommend optimal machine parameters, trigger tool-change schedules, balance workloads across lines or alert technicians before deviations escalate. Maintenance teams can use agents to predict component wear and plan interventions that don’t interrupt production– a topic in Chapter 17.

In production and quality operations: Agents help supervisors and quality staff detect process drift early. They analyze sensor data, images and process variables, suggesting immediate corrections or automated parameter tuning. In continuous manufacturing, this can mean fewer rejects and less rework, which we discuss in Chapter 6.

In ERP and planning: Agents connect production, procurement and finance systems. A planning agent (see Chapter 14) can run simulations of “what if” scenarios, what happens if a supplier shipment is delayed or if energy costs spike and recommend production adjustments.

Across the supply chain: Agents can constantly monitor inventory, supplier performance and logistics signals. When a potential shortage or delay is detected, they are able to trigger contingency workflows such as redistributing available stock, recommending alternate suppliers or rescheduling deliveries–see Chapters 11 and 12.

To sum it up: “Tomorrow’s factories won’t just inform — they’ll decide,” writes Industry Week (June 12, 2026).

Classroom discussion questions:

  1. Summarize what AI agents can do in a factory setting.
  2. How does agentic AI have the potential to change the manufacturing operation?

OM in the News: Patriot Missiles and Second Tier Suppliers

The newest Patriot surface-to-air missiles can be fired in seconds, but take more than two years to build and cost around $4 million each.  Despite that math, the U.S. and its allies can’t get enough of them, reports The Wall Street Journal (June 10, 2026).

Pentagon officials just reached an agreement with Lockheed Martin to more than triple production of the latest Patriot, the PAC-3, to 2,000 a year. But the weapons maker isn’t expecting to hit that target until the end of 2030. Why is that?

Lockheed is facing a litany of challenges to hit its target. It counts more than 400 companies that provide parts for its missile. More than 80% are at the second tier—the PAC-3 suppliers’ suppliers. But these firms provide components to more than one missile program. That makes it harder to increase production of one type of missile without disrupting the supply chain for another in-demand weapon.

And some missile circuitry is considered commercially obsolete, forcing the U.S. to rely on expensive equipment from foreign suppliers. The “seeker” in the missile’s nose—a vital part that allows the interceptor to lock onto incoming missiles and aircraft—comes from a single Boeing factory.

Boeing said the company has sped up “seeker” production by adding robotic equipment and finding new suppliers to provide parts like circuit cards. L3Harris plans to boost its rocket-motor production capacity as it brings more manufacturers into its supply chain. “You need the whole ecosystem to line up,” L3Harris’ CEO. “If we quadruple a missile, we’ve got to quadruple the cases. We’ve got to quadruple the igniters, valves, the throttles.”

For decades, the military favored lean supply chains and peacetime efficiency. That approach saved money, but under the pressure of conflict its weakness is revealed. Depending on one qualified source for a key missile component is not the answer. Selective redundancy and second-sources for critical components may be.

Classroom discussion questions:

  1. Why are tier 2 suppliers a problem in many supply chains?
  2. Summarize all the issues slowing the production of Patriot missles.

Guest Post: Amazon’s Next Act–Supply Chain as a Service

Dr. Jon Jackson is Associate Professor of Operations Management at the Providence College School of Business. He has created a series of AI exercises for each chapter in our text.

The term “software as a service” (SaaS) has become ubiquitous over the last few decades, covering everything from CRM systems (e.g., Salesforce) to file storage (e.g., Dropbox) and e-commerce platforms (e.g., Shopify). Amazon entered this arena in 2006 with Amazon Web Services (AWS), offering “infrastructure as a service.”

Fast forward to 2026, and Amazon is applying a similar playbook to logistics with its new “supply chain as a service” platform, Amazon Supply Chain Services (ASCS), according to an Amazon press release (May 4, 2026).

ASCS opens Amazon’s vast global logistics network not just to its own marketplace sellers, but to businesses operating across competing marketplaces and in B2B channels. As Peter Larsen, vice president of Amazon Supply Chain Services, puts it, the platform is “available to any business of any shape or size.”

This marks a significant shift. For years, companies have relied on third-party logistics providers (3PLs), with an estimated 94% of Fortune 500 companies using at least one. Now, Amazon is positioning itself as a full-stack alternative, offering freight, warehousing, fulfillment, and last-mile delivery in a single integrated system. In 2025, Amazon’s logistics revenue was estimated at $172 billion, far surpassing competitors like DSV ($37 billion) and DHL Supply Chain ($35 billion), reported by The Wall Street Journal (May 4, 2026).

Early adopters of ASCS include major brands such as Procter & Gamble, 3M, Lands’ End, and American Eagle Outfitters.

If AWS transformed how companies build and scale software, ASCS could do the same for physical commerce by reshaping supply chains and the competitive dynamics of global logistics.

Classroom Discussion Questions

1.How does ASCS impact traditional 3PLs (e.g., FedEx, UPS, DHL)? What can they do to differentiate and defend their market share?

2. As a business owner, what concerns would you have about outsourcing your entire logistics operation to Amazon?

3. Could Amazon’s “supply chain as a service” model become as dominant as AWS? What would that mean for competition in retail and logistics?

 

OM Podcast #49: An Interview with the CEO of the Florida Semiconductor Engine About Reshoring

In this episode of the Heizer Render Munson OM Podcast, Barry Render talks with Dr. Ron Piccolo, CEO of the Florida Semiconductor Engine, about why semiconductors have become such a critical issue for the U.S. economy. From phones and cars to medical devices and defense systems, semiconductors power everyday life—but much of the manufacturing and packaging happens overseas, creating supply‑chain and security risks.

A key focus of the conversation is advanced packaging, which refers to newer ways of assembling semiconductor chips to improve performance, reduce heat, and increase reliability. Piccolo explains that while high‑volume manufacturing will likely remain global, the U.S. has a strong opportunity to bring specialized, high‑reliability packaging back home—especially for industries like space, healthcare, and defense.
The episode also explores how universities, government, and industry can work together to build regional innovation ecosystems. Supported by a National Science Foundation grant, the Florida Semiconductor Engine aims to create a one‑stop shop for design, prototyping, and testing—strengthening U.S. competitiveness while supporting high‑skill jobs and regional growth.

 

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Prof. Barry Render
Prof. Ron Piccolo

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OM in the News: Rise in Cargo Theft as Criminal Tactics Evolve

There is a deepening and increasingly complex global cargo theft crisis, driven by organized criminal networks deploying ever more sophisticated tactics across road, rail, sea, and digital channels, according to Material Handling & Logistics (April 28, 2026).

Food and beverage products led all stolen commodity categories, followed by agriculture, electronics, automotive parts, construction materials, and metals.

Trucks remain the dominant target, accounting for 70% of all incidents globally, and more than a fifth of global cargo theft incidents involved the cooperation of insiders.  Brazil, Mexico, India, the U.S., Indonesia, Chile, China, Germany, and South Africa ranked as the world’s top countries for recorded cargo theft incidents.

Rail cargo theft in the U.S. rose to 10% in 2025. Organized criminal groups – including cartels operating out of Sinaloa, Mexico – carried out coordinated attacks on freight trains across rural areas of Arizona and California, employing deliberate system sabotage, detailed advance planning, and armed encounters with law enforcement.

Technology-enabled theft also grew more sophisticated, with criminals exploiting cybersecurity weaknesses, fraudulent documents, and impersonation tactics to carry out fictitious pickups, double and triple brokering, and product hostage schemes.

In Europe, Germany, Italy, the U.K., France, and Spain reported the greatest number of thefts. Facility thefts rose notably – particularly in Italy, Germany, Romania, and Bulgaria. In the U.K., cargo theft losses reached $149 million in 2024. A $9 million smartphone heist at Heathrow airport ranked among the highest-value incidents.

In Asia, India, Indonesia, China, Bangladesh, and Vietnam were the region’s most affected countries. Half of all incidents occurred at warehouses and production sites. A notable emerging trend was the theft of rare earth minerals in China. Maritime risks also escalated sharply, with sea piracy incidents rising 85% in the first half of 2025 – reaching their highest levels in nearly a decade.

Criminal groups are targeting every link in the chain – from unsecured parking spaces and rest stops to exploitable digital freight platforms.

Enhanced GPS tracking and tamper-evident sealing, tighter governance around load board usage, increased investment in scanning technology and cross-agency intelligence sharing, as well as heightened scrutiny of subcontracted transport providers, are all needed.

Classroom discussion questions:

  1. What can operations managers do to quell this threat?
  2. What is the main source of the thefts documented?

Guest Post: Why the Union Pacific – Norfolk Southern Merger Could Reshape U.S. Rail

Temple U. Professor Misty Blessley looks at an important logistics issue.

Union Pacific (UP) and Norfolk Southern (NS) are seeking Surface Transportation Board (STB) approval to merge into what would become the first true coast- to-coast Class I railroad in the United States. A Class I railroad is a freight carrier generating more than $1 billion in annual revenue.

A unified UP–NS network could eliminate thousands of daily railcar and container handlings, reduce chokepoints, and create a more fluid national network. For shippers, that means fewer delays, lower inventory carrying costs, and more predictable inland flows from ports.

The UP–NS merger would follow the 2025 Canadian Pacific–Kansas City Southern (CPKC) merger, which created the first single-line railroad connecting Canada, the U.S., and Mexico. But CPKC is significantly smaller than either UP or NS.  CPKC has 51,065 cars online, compared to 304,481 for Union Pacific and 162,339 for Norfolk Southern.

The combined railroad would reshape east–west freight flows. However, the massive scale underscores why the UP–NS proposal is drawing scrutiny.
A major part of the railroads’ argument is competitive pressure from long haul trucking. Motor carriers win when shippers need speed, flexibility, and door-to-door simplicity. If the merged railroad can reliably cut one to two days from cross country moves, rail becomes a more credible alternative to truckload.

The STB has ordered Union Pacific and Norfolk Southern to submit full internal documents so regulators can verify the merger’s promised benefits. While the Board is not an antitrust agency in the traditional Department of Justice sense, it is responsible for evaluating whether a merger would reduce competition, create market dominance, or harm shippers. The STB is “getting all the facts and elevating transparency in agency decision making.” For now, only time will tell.

Classroom Discussion Questions:
1. Would you allow the merger given its potential benefits and its potential risks to competition? Why?

2. In Example S4 of Chapter 11 in your Heizer/Render/Munson textbook, Transportation Mode Analysis, Daily Cost of Holding shows how time is money. How does a shipper benefit financially when transit times improve?

OM in the News: Delta’s Vertical Integration Risk Pays Off

Vertical integration is an interesting topic in Chapter 11 of your Heizer/Render/Munson text. There are plusses and minuses, and we warn: “Most organizations are better served by concentrating on their own specialty and leveraging suppliers’ contributions.”

But Delta Air Lines, facing billions of dollars of pain at the fuel pump (because of Iran’s blockage of the Straits of Hormuz) along with all the other carriers, is unique. It happens to own its own gas station, writes The Wall Street Journal (April 10, 2026).

Jet-fuel prices have roughly doubled since late February, pushing up airlines’ costs.

Since 2012, Delta has been the owner of a Pennsylvania refinery that processes crude into fuel. Over the years, the investment has looked like either a stroke of genius or a boondoggle, generally depending on the price of oil. Since the U.S. and Israel began carrying out strikes on Iran, the refinery is set to pay off again for Delta. With it, Delta has an asset that can help it offset some of the recent surge in fuel prices.

Energy experts rolled their eyes when Delta plunked down $150 million for the refinery. If the plant was such a good investment, why was ConocoPhillips, its previous owner, shutting it down? Rival airline executives scoffed that they would benefit from increased jet-fuel output on the East Coast without the headaches of refinery ownership.

Now even United, one of Delta’s top rivals, has acknowledged that the refinery benefits Delta. Its CEO Scott Kirby states: “Right now the crack spread (the gap between the price of jet fuel and the price of crude oil) is much higher…and so they’ll get real benefit from the higher crack spread that will be unique to them.”

Delta has said that the refinery makes an operating profit most years. The airline has said owning the refinery insulates it from supply disruptions in the Northeast and helps mitigate risk from volatile prices—effectively lowering its jet-fuel costs, often by several cents a gallon. In 2022, when fuel prices surged after Russia began its invasion of Ukraine, the refinery helped it save $785 million.

But the airline has had to pour money into the plant, which is more than a century old, to keep it running smoothly, investing $1.6 billion in capital expenditures over the years.

Classroom discussion questions:

  1. Did the purchase make sense for Delta?
  2. Many economists think the refinery was a costly mistake. Why?