Chapter 5 – Page 3 – The OM Blog by Heizer, Render, & Munson

OM in the News: The Fast Food Revolution

McDonald’s has a new Texas restaurant with no tables or seats or bathrooms for customers and a conveyor belt that routes food to drivers who order ahead. Chipotle also offers no place for customers to sit inside an Ohio restaurant that only takes digital orders. Taco Bell is evaluating a new design that features 4 drive-through lanes, double the typical two. Starbucks, which long described itself as a “third place” for customers to gather after home and work, plans to add 400 U.S. stores with only delivery or pickup service in the next 3 years.

Taco Bell is testing a 4-lane drive through in Minnesota

America’s biggest restaurant companies made a bet during the pandemic that you would rather eat the food cooked on their premises someplace else. Now they are gambling you will want to do so for years to come. The strategy from these giant chains is to orient their operations around drive-throughs and online ordering while testing new restaurant concepts that only serve food to go, reports The Wall Street Journal (Jan.28-29, 2023). They say these designs will make them more profitable and efficient since restaurants that bring fewer customers inside cost less to build, maintain and staff.

Of all orders placed at U.S. fast-food restaurants in 2022, 85% were taken to go. That is down from a high of 90% during 2020 but up from 76% prepandemic. Among full-service restaurants, 33% of orders were to go in 2022— double prepandemic rates.

The concept of taking food and beverages to go took root in the years after World War II, as Americans embraced an automobile culture. In the 1970s the industry fully bought into the to-go idea. Wendy’s introduced its “pick-up” window in 1970, with the first McDonald’s drive-through in 1975. (90% of McDonald’s business is now drive-through).

The most distinctive feature of the new McDonald’s in Texas is an automated delivery system for customers who order ahead on an app. When you pull up to the window in the “order ahead” lane, a conveyor delivers your food with help from a robotic arm that pushes the bag out to the waiting car. Starbucks’ CEO has acknowledged its cafes now are often clogged with pick-up, drive-through, delivery and cafe orders all at once. The result: long lines and frustrated customers. His plan is 700 more U.S. stores in the next 3 years with drive-throughs as the primary means of sales.

Classroom discussion questions:

What operations issues will management face with this revised concept?
What dangers are there in making such changes? Consider a SWOT analysis as in Chapter 2.

OM in the News: 3-D Printing and the Future of Global Manufacturing

Now that much of the hype around 3-D printing has died down—no more of that 2010s-era talk about a Star Trek-style replicator in every home—a funny thing is happening to this technology. It’s becoming a widely used, and in some respects quietly revolutionary, update to the way that people manufacture and process things we rely on every day—from cars to industrial machinery to food. “What’s more, the way this technology is being used could have implications for the shape of global supply chains to come,” writes The Wall Street Journal (Jan. 14-15, 2023).

A quick refresher from Chapter 5 (see p. 290): 3-D printing, also known as “additive manufacturing,” generally works by adding tiny layers of material—usually powdered metal or plastic—one at a time to form an item, and fusing them with binding agents, lasers or other methods. Thus, parts are “grown” instead of forged, cast, molded, or machined as in traditional manufacturing. Just a decade ago, this kind of manufacturing was, with rare exceptions, suitable only for creating prototypes. What’s different now is that newer technology lets these systems print objects strong enough to be used in finished products—and relatively quickly.

Cadillac Celestiq’s new “ultra-luxury” $300,000+ vehicle has more than 100 3-D printed parts

Recently, for example, GM made 60,000 weatherproof seals using 3-D printing, in plastic, rather than making them the old-fashioned way, to make sure it could deliver its 2022 Chevy Tahoe on time. BMW is making broad use of 3-D-printed parts throughout its lineup. Mercury Marine is producing its newest V12, 600-horsepower outboard motor with 3-D-printed molds.

3-D printing is making rapid inroads into conventional manufacturing all over the world. Globally, the entire industrial additive-manufacturing market grew to $13 billion in 2022, from $5.7 billion in 2016. That growth should accelerate in the next 5 years, with the size of the industry reaching $37 billion by 2026, as industrial 3-D printing displaces traditional mass manufacturing.

Companies can also use 3-D printing to do away with some of their inventory of spare parts, many of which can sit on warehouse shelves for years. Both Caterpillar and Saudi Aramco, for example, are digitizing their libraries of old parts so that they can print them in 3-D as needed, when machines that may have working lives of decades break. During the pandemic, Caterpillar began using some 3-D printed parts, made in the U.S., in place of conventionally manufactured versions that had become difficult to import from India.

Classroom discussion questions:

Explain the concept of “additive manufacturing.”
Why does the new Cadillac have so many printed parts?

Guest Post: Product/Service Lifecycle– Landlines, Operators and Cellphones

Prof. Howard Weiss is providing Guest Posts while I am travelling abroad.

Recently Bloomberg reported that AT&T will end its operator service in 21 states, meaning that 3 million customers with digital landlines can’t dial 0 and get directory assistance. At the conclusion of World War I, there were roughly 180,000 operators employed by telecommunication companies. The number peaked to 350,000 in the 1950s but is now down to 550.

The decline in the need for operators is due to two obvious factors:.
1) There has been a steep increase in the number of households that have replaced landlines with cellphones. In 2003, 3% of adults had wireless only service; in 2008, 19% had wireless only, whereas as of June 2022, 71% of adults had wireless only service. Unsurprisingly, the percentage usage of wireless only service is related to age in that 89% of persons 25-29 years old do not have landlines whereas only 45% of persons aged 65 and older do not have only landlines. As of 2017, only 10% of the 455 million telephone numbers in the U.S. were for landlines.

2) There has been an increase in the use of the internet to find phone numbers.

Clearly, landlines and operators are both in the Decline stage of the life cycle that is displayed in Figure 5.2 in your Heizer/Render/Munson textbook while cell phones are somewhere between the Growth stage and Early Maturity stage Other products and services that are related to landlines are showing similar declines.

Answering Machines
The first commercially viable answering machine was developed in 1949. Answering machines became more widely used after the restructuring of AT&T in 1984, which was when the machines became affordable and sales reached one million units per year in the U.S.

Voicemail
The main difference between answering machines and voice mail is that messages on answering machines are stored locally whereas voicemail messages are stored in a different location, such as the cloud. Many businesses no longer use voicemail but instead rely on contact forms and emails. In addition, for many consumers, contact via the web is preferred over phone calls.

Classroom discussion questions:
1. What other products are in a growth stage due to the increase in cellphone usage?
2. What professions are in a growth stage due to the increase in cellphone usage?

OM in the News: Additive Manufacturing is Shaping the Factory of the Future

Additive manufacturing has long been heralded for its flexibility as a production method, writes Industry Week (Oct. 18, 2022). More recently, additive’s ability to safeguard against global supply chain challenges has helped accelerate adoption, making it a leading technology for many manufacturers. In addition, additive possesses unique benefits that are complementary to sustainability and automation, which are increasingly important to manufacturers as they look to build the factory of the future. We discuss the concept in both Chapter 5 (see page 170) and Chapter 7 (page 290).

Industrial organizations are beginning to further use additive manufacturing to achieve their environmental goals. Stricter European and U.S. regulations are driving companies to focus on environmentally friendly production methodology. For instance, Ford and Volvo are using 3D printing across their production lines and printing components, tooling and spare parts. Additive allows these goods to be produced on-demand, on-site, and at scale, eliminating the bulk of carbon emissions from transportation and delivery models. As the scale of these applications grow , they could have an even bigger impact on reducing emissions in the manufacturing sector.

And there is very little waste associated with additive. Compared to “subtractive manufacturing”, such as CNC machining, where materials are cut away and disposed of, additive manufacturing can reduce waste and materials costs by nearly 90% while also improving energy use by 25 to 50%. These benefits extend to the related supply chains and lead to more efficient production paths that help businesses lower their environmental footprints.

Additive manufacturing can also help deliver end products to users swiftly and efficiently, boosting supply chain resiliency. COVID-19 exposed the weaknesses of companies with limited flexibility that were highly dependent on traditional manufacturing setups. Hospitals and medical clinics, for example, were hit hard when the pandemic impacted global supply chains, cutting off access to much-needed medical equipment and supplies. To combat the shortage, additive manufacturing was used to produce supplies on demand quickly, locally and in low to mid volumes.

On-demand 3D printing reduces the amount of capital tied up in work-in-progress and finished goods inventories, enabling manufacturing agility. Engineers can design their parts in-house and iterate as often and as quickly as needed. Local facilities can print designs on-demand from files sent across the globe or print securely from a nearby supplier.

Classroom discussion questions:

Describe the difference between “additive” and “subtractive” manufacturing.
Why are 3D printers an important OM tool?

OM in the News: Large-Scale Castings Revolutionize EV Auto Production

As we discuss in Chapter 5, Design of Goods and Services, product strategy options support competitive advantage. Tesla does exactly that (see page 162) with an new huge casting system. Conventional construction of modern vehicles involves the assembly of numerous sections of stamped sheet metal that are joined together by welding, rivets, and epoxy to form the chassis structure of the car’s platform, reports Design News (Aug. 3, 2022).

New cars like the Tesla Model 3, Maserati SUV, and Volvo EV depart from convention by building the cars atop just a few very large, very complex aluminum alloy castings. These bolt together to form the entire chassis, with front, center, and rear sections that replace, in Tesla’s case, 370 discrete parts that would need to be joined together to form the car’s chassis.

The industry forecasts that the global market for all types of die casting will total more than $100 billion by 2026, from $76 billion this year. Demand for passenger cars and light commercial vehicles across the globe, more so importantly in developing markets, will especially drive robust demand for use of cast products for a range of automobile parts and components in the coming years. The market is also expected to benefit immensely from the shift towards aluminum over steel and iron products among automakers.

There are manufacturing benefits too. There is better modeling of performance and a simplified supply chain. There is just one piece for that whole weld assembly from a single source as opposed to numerous components, fastener nuts, and rivets coming from different places. Manufacturers can go to a single supplier from dozens–and a lot of those parts may have come from overseas.

Tesla explains the process in an 11 minute video that you may wish to share with your class: “Molten aluminum is forced into a high-pressure mold. It solidifies as it cools and is then dipped in water to speed up the cooling process. After some laser cutting and quality checks, the parts produced using this process will eventually become part of the floor structure in our new electric model range. This process significantly reduces the number of parts produced and allows for greater design and production flexibility.”

Classroom discussion questions:

How is Tesla achieving competitive advantage?
Why is this a supply chain issue?

Good OM Reading: “Invention-A Life,” by James Dyson

James Dyson wasn’t much of a student at an English boarding school. Yet he would become the founder of a $7 billion global manufacturing empire. Dyson gained fame as the inventor of a revolutionary vacuum cleaner that exploits the principle of the cyclone and never needs a replacement bag.

In Invention–A Life, he tells of the devastating experience of losing patent rights and being ousted from the company he had founded to manufacture his first notable invention- the “Ballbarrow”( a wheelbarrow that had a big red ball in the front instead of a wheel}. Although this venture ended in failure, the experience helped him succeeding in his bigger quest—the development of the vacuum cleaner.

DC01: The first Dyson vacuum rolled off the production line in 1993

Over a 4-year period, Dyson made 5,127 prototypes of the vacuum cleaner that would transform the way houses are cleaned. He risked all his resources, but out of many failures came success. His products—including vacuum cleaners, hair dryers, and fans and purifiers—are not only revolutionary technologies, but design classics– a legacy of his time studying at the Royal College of Art in the 1960s.

The first dual cyclone bagless vacuum cleaner (the model DC01) was sold initially through mail-order catalogs. It achieved bestseller status in spite of its unconventional features of being yellow; having an exposed, transparent and reusable plastic dust collection chamber in lieu of the traditional concealed disposable bag; and having a price tag several times that of a basic Hoover. After sales clerks and customers had the chance to witness Dyson’s machine pick up the dust conventional vacuum cleaners left behind, however, sales took off. His instincts were correct about how new features would triumph over traditional ones.

Dyson dramatically tells how his own company became one of the most inventive technology firms in the world, always looking to the future. He discusses the continuing obstacles—financial, political, regulatory, sociological, cultural—that frustrated his attempts to expand his manufacturing enterprises within the United Kingdom. This challenge drove him to move the bulk of his business to Singapore.

Dyson writes his success is due to “perseverance, taking risks and having a willingness to fail.” Inventors rarely have ‘eureka’ moments. Developing an idea and making it work takes time and patience. We fail every day. Failure is the best medicine—as long as you learn something.”

This is a great story to note when you teach Chapter 5, Design of Goods and Services.

Guest Post: Smoking– Forecasting and Product Life Cycle

Today’s Guest Post comes from Prof. Howard Weiss, the developer of the Excel OM and POM software that comes free with our text.

Forecasting: For the past 40 years, cigarette smoking has been declining at a rate of 3% to 4%. The
drop can be seen in the figure below and it clearly is following an almost straight line, which makes
forecasting very easy using the trend projection method discussed in Chapter 4.

Some of the more recent decline can be attributed to the introduction of e-cigarettes and vapes. However, smoking is on the rise again during this current pandemic which means that time-series forecasting methods, which rely on past data, would not be very useful for forecasting sales of cigarettes in the foreseeable future.

Product Life Cycle: Below is a figure that displays sales of cigarettes from 1900 to 2015 for 8 different countries on 3 different continents.

What is interesting about the figure is that while smoking started and peaked at different years, for all of
these countries, the pattern is identical for each country to Figure 2.5 in the text, which displays the 4 phases of the life cycle – Introduction, Growth, Maturity, and Decline. It is also interesting to note that the life cycle for cigarettes has been over 100 years.

Classroom Discussion Questions:

Cite another product or service with a life cycle as long as a century.
Do you think you can trust all of the data in the figure?

OM in the News: More AI From the Start Up Nation

This past week, The Wall Street Journal ran three separate articles on more high-tech research coming out of Israel. These complement the blogs we have earlier done on Israeli firms producing 3-D printed hearts (April 23, 2019), warehouse robotics (Nov. 12, 2020), computer vision systems (Nov. 21, 2018), and 3-D printed steaks (Feb. 2, 2019). Here are the latest:

First, about 7.5 million people in the U.S. have trouble using their voices. So Amazon other AI tech providers is working on tools to enable voice-activated digital assistants to understand users with a stutter and other speech impairments. Amazon’s Alexa integration, with software developed by Israeli startup Voiceitt, lets people with speech impairments train an algorithm to recognize their own unique vocal patterns (WSJ, Feb, 24, 2021). Training voice assistants to respond to people with speech disabilities could improve the experience of voice-recognition tools for a growing group of potential users, such as seniors, who are more prone to degenerative diseases.

Second, Israel’s ALYN Hospital is developing a wheelchair-mounted robot arm powered by AI chips designed to mimic the way the human brain works, a technology known as neuromorphic computing. (WSJ, Feb. 24, 2021). Neuromorphic software is programmed to learn about the surrounding environment and adapt to it in real time, enabling the system to automatically adjust the arm’s trajectory and force for precise tasks, such as delicately bringing a cup of water to a user’s mouth. The models learn similarly to the way human babies learn, by seeing an image or toy once and being able to recognize it forever. The focus is on helping patients with spinal injuries, MS and cerebral palsy.

Finally, we earlier reported that McDonald’s paid $300 million for the Israeli firm Dynamic Yield, in a bid to boost sales at drive-thrus and digital kiosks. With Dynamic Yield’s technology, restaurants can vary their electronic menu boards’ display of items, depending on factors such as the weather—more coffee on cold days and McFlurries on hot days—and the time of day or regional preferences. (WSJ, Feb. 27, 2021). For McDonald’s, it provides personalized offers for customers of its stores.

Classroom discussion questions:

Why does Israel have more high-tech startups than any nation beside the U.S?
Why is AI such an important operations management tool?

OM in the News: Rival Drugmakers Form Alliances

Some of the world’s biggest drugmakers are joining forces with rivals to help produce Covid-19 vaccines, forging unusual alliances that promise to substantially increase supplies by this summer. As we write in Chapter 5, Design of Goods and Services, alliances are a good strategy “when substantial resources are required and sizable risk is present.”

Normally big pharm companies compete to sell cancer, arthritis and other drugs. The desperate need for Covid-19 vaccines, however, is turning fierce industry competitors into fast pandemic friends. Sanofi SA recently agreed to help make a vaccine from Pfizer after Sanofi’s experimental Covid-19 shot suffered a 5-month setback, freeing up a production line in Frankfurt. Novartis AG also agreed to hep Pfizer produce more doses.

Endo International has agreed to help Novavax produce its shot.

The collaborations, along with the authorization of newer vaccines and fine-tuning by the vaccine makers themselves, could help significantly boost global output, reports The Wall Street Journal (Feb. 24, 2021). Early supplies have been limited, as vaccine makers needed time to increase production and overcome early hiccups and problems getting raw materials.

The production alliances are the latest example of industry rivals coming together to fight the pandemic, starting with research tie-ups. They build upon a year-long effort by the drug industry and partners to crank up capabilities to make everything from the tiny vials that hold the shots to raw ingredients that make them. But production can’t start overnight. Vaccine manufacturing is a complex process that often requires training staff, upgrading facilities and buying new equipment.

Novavax, which has a vaccine in the late stages of development, doesn’t own a manufacturing plant and has to lean on other companies to produce the shot. Baxter said one of its plants in Germany will help fill and finish Novavax’s vaccine, as did Endo in Rochester, Michigan–under pressure from the U.S. government.

Classroom discussion questions:

What will happen to these alliances once the pandemic is under control?
Why is it challenging to produce the new vaccines for another company?

OM in the News: Apple’s “Goldilocks” Product Strategy

Apple this year released 5 new iPhone models, the most in the device’s history. Apple started in 2007 with one iPhone but soon established a “good-better-best” strategy, where budget and premium products flank “Goldilocks” options.

For years, the company did this by keeping older models around at slashed prices, writes The Wall Street Journal (Dec. 7, 2020). But recently, it has introduced more new options at various price tiers. This year’s lineup ranged from the $399 late-adopter-targeted iPhone SE to the feature-packed $1,099 iPhone 12 Pro Max—with a “just right” iPhone 12 in the middle. The company also gave Apple Watch shoppers 3 tiers of options for the first time.

While it may be more confusing for consumers to navigate the price and quality differences between the models, this kind of price ladder is strategic and ubiquitous—from airliner cabins to gas pumps.

The trick with offering multiple versions of a product is to offer enough to help people identify their own strike price but not enough to overwhelm them. “Apple is best at this,” said one industry expert, “creating variation between models in the number of camera lenses and the different levels of storage capacity. The ‘good’ option gives firms the opportunity to keep customers within the brand, for those who face economic pressure to downsize their lifestyle.”

The WSJ article also looked at a $275 bread-baking appliance sold by Williams-Sonoma. When the retailer added a second model, similar to the first but larger and more expensive at $429, sales of the cheaper model doubled. Peloton employed a similar strategy with its new 2-tiered bike offering. When the company released a new stationary Bike+ for $2,495—with a bigger screen and more powerful software—it marked its original bike down to $1,895, from $2,245. Covid-19 has led to an explosion of demand for connected bikes as gyms closed–and Peloton’s sales jumped 172% compared with last year.

Classroom discussion questions:

In Chapter 5, we discuss product life cycles (see p.164-5). Where do the Apple 6 Plus, 8 Plus, 11, and 12 Pro fall?
Why does Apple launch new products so frequently?

OM in the News: The Pizza That Defied a Pandemic

“Few industries have suffered more during the pandemic than restaurants,” writes The Wall Street Journal (Sept. 5-6, 2020). More than 15,000 restaurants have failed during the coronavirus pandemic. Sales at stores open at least a year plummeted 37% in the second quarter from a year earlier.

Domino’s, however, didn’t have those problems. Its U.S. sales in the same period leapt 16%.

In part it was lucky: it has little dine-in business. But it has also perfected order-in and delivery through intensive innovation. While many restaurants depend on multiple systems from outside suppliers for technology such as online ordering, Domino’s developed its own, single proprietary point of sale system for all of its more than 6,000 U.S. stores.

While the pizza is made by hand, everything before and after that stage has undergone relentless innovation. Since 2007, the range of channels through which to order digitally has steadily expanded: via desktop, then mobile, apps for the iPhone, iPod Touch and Android, Samsung TVs, Pebble, smartwatches, Twitter, Amazon Echo, Google Home, Slack, and Facebook Messenger. Order time has reached its minimum with “zero click ordering”: Open the app, do nothing and in 10 seconds your favorite pizza is ordered.

All were developed to make ordering and delivery faster and more convenient. And because digital ordering obviates the need for cash to change hands, it also aided in physical distancing when the pandemic began.

Digital ordering is key to growth for food-service establishments because it yields valuable data for better targeting customers and expedites pickup. Five-ten percent of the typical quick service chain’s orders are digital. Domino’s share was 65% last year and has since climbed to 75%. Domino’s also benefited from new concepts it was able to introduce as the pandemic rolled across the U.S. One was “Carside” pickup, with GPS order tracking so that customers who didn’t want to interact with a driver could confirm the driver was in front of the house.

Classroom discussion questions:

How can other restaurant chains design more efficient services? (Hint: see Chapter 5, p. 180 of your OM text)
What is Domino’s competitive advantage?

OM in the News: GM and Honda Now in Strategic Alliance

In Chapter 5, Design of Goods and Services, we note that as the speed of new products and their technological sophistication increases, so do risks. One way to mitigate this risk is via alliances (page 175). This is exactly what GM and Honda are doing as they invest billions in an “automotive alliance” in the North American market, including plans to co-develop a range of vehicles to be individually branded by each partner.

GM and Honda plan to share vehicle platforms, including both electric and internal combustion propulsion systems. Earlier this year they agreed to jointly develop two EVs to be branded by Honda, based on the General Motors’ EV platform and powered by its Ultium battery technology.

The two automakers have been partners in selected projects over more than 20 years, including their recent collaboration fuel cell and battery technologies and production, and the Cruise Origin autonomous vehicle. Beyond the new vehicle technologies, GM and Honda will work to coordinate materials purchasing, logistics services, and localization activities, to create cost efficiencies by leveraging respective scale, insights, and best practices, reports American Machinist (Sept. 3, 2020). And, the two organizations will explore combining R&D related to advanced technology areas, including electrical architecture, advanced driver assist systems, infotainment, connectivity and vehicle-to-everything communication.

“Combining the strengths of each company, and by carefully determining what we will do on our own and what we will do in collaboration, we will strive to build a win-win relationship to create new value for our customers,” said Honda’s VP.

Classroom discussion questions:

What is the definition of an ‘alliance’?
What are the risks to GM and Honda when they establish such alliances?

OM in the News: The End of the Jumbo Jet Era

The final convoy of A380 fuselages in France

As we point out in Chapter 5 (and in Figure 2.5) every product has a life cycle, an important issue for operations managers, especially in this time of pandemic flux. And so it appears that The Queen of the Skies-the iconic Boeing 747– is approaching her abdication. British Airway (the 747’s biggest operator) just announced that its 31 747s will never fly again. Its immediate retirement of its 747s marks the demise of the jumbo plane’s 50-year reign, with similar decisions by Delta, United and Air France, reports Financial Times (July 27, 2020). The last 747 in the Qantas fleet recently flew to its final resting place in the Mojave Desert.

The A380 superjumbo jet’s life cycle was much briefer. Just 13 years after the first A380 flight by Singapore Airlines, Airbus is ceasing production. Flying, as it slowly recovers after Covid-19, looks like being smaller, nimbler and point-to-point, rather than in huge aircraft collecting passengers at hub airports. The long-haul planes of the future are the 248-336 seat Boeing 787 and the 350-410 seat Airbus A350.

It was also a Chapter 4 forecasting issue, as Airbus got flying’s economics wrong. In 1999, Boeing and Airbus sparred over how many super-large aircraft the market could support. Boeing said fewer than 400 would be needed by 2019. Airbus said nearly 1,500–but sold only 242. Boeing’s 747 prospered through the decades of explosive growth in airline travel, from 310 million passengers in 1970 to 4.5 billion last year. The 747’s best years are now gone, though it has timed its retirement perfectly.

To make matters worse for Boeing and Airbus, they are still making the smaller planes that airlines aren’t collecting, straining their finances, adds The Wall Street Journal (July 27, 2020). Airlines don’t want the aircraft for now, because they are unable to fill them profitably during a historic plunge in demand for flying. The result: finished airplanes with nowhere to fly, and less cash for Boeing, Airbus and their suppliers as they slash production and payrolls. “Clearly, we’re in a situation where we don’t need any aircraft,” said Delta’s CEO.

Classroom discussion questions:

What should Boeing’s OM strategy be at this point?
Why was Airbus’ A380 forecast so inaccurate?

OM in the News:McDonald’s Improves Operations with a Smaller Menu

McDonald’s plans to keep dozens of items off U.S. menus for the foreseeable future, after sparer operations implemented during the coronavirus pandemic led to improved service times and better margins. Salads, bagels and yogurt parfaits are among around 100 items that they removed from menus after the pandemic hit the U.S. to simplify store procedures and supply. The changes mean operators will have to stock fewer goods in their restaurants.

Many restaurant chains stripped down their menus during the pandemic in light of supply and labor constraints, reports The Wall Street Journal (June 19, 2020). Some, including Red Robin Gourmet Burgers, have reported improved operations as a result of the more limited menus, including faster service times and less waste.

McDonald’s executives said such changes had a bigger impact than they anticipated. Drive-through times fell by an average of 25 seconds during the pandemic, and customers reported in surveys that their food was better and their orders were more accurate. “Our menu strategy really has been focused as a result of Covid and the success we’ve had with a limited menu,” said McDonald’s CEO.

McDonald’s menu had ballooned in recent years as the company tried to attract new customers. That caused drive-through times to increase to levels that troubled executives, prompting the chain to test forms of automation and remove some more-complicated items. McDonald’s began offering breakfast all day in 2015, one of its biggest operational changes in years. The change improved sales in the U.S. for a time. It now allows owners to choose what breakfast items to serve all day to simplify their operations.

Classroom discussion questions:

In Ch. 5 of your Heizer/Render/Munson text, we describe 5 ways to design more efficient service systems. Which approach(es) works best at McDonald’s?
What are the advantages and disadvantages of the more limited menus?

OM in the News: Coronavirus Makes Augmented Reality’s Potential a Reality

An engineer in the Netherlands using AR glasses developed by Microsoft to guide maintenance.

Intel’s semiconductor production hit a stumbling block in March. A chip plant in Arizona needed work done, but the engineer for the job was stuck in Germany because of coronavirus flight restrictions. If Intel couldn’t recalibrate existing machines and install new ones, America’s largest chip maker faced a production slowdown just when demand was surging as PCs and the cloud became critical to facilitate remote work.

Unable to fly in the German expert, Intel transported him virtually using augmented-reality goggles that had been developed mainly to show training videos. The stranded engineer, watching a video feed his counterparts at Intel relayed via their goggles, walked them through the repair, allowing the work to be completed on schedule. At Intel, this success launched remote maintenance from an experiment to part of the company’s permanent operational plans.

Across multiple industries, augmented reality, or AR, has transitioned during the pandemic from intriguing experiment to everyday tool, reports The Wall Street Journal (June 10, 2020). That makes AR, discussed in Chapter 5 (p.172) in your Heizer/Render/Munson OM text, more useful in a world where business travel and direct human interaction are restricted—and likely to stay that way for a while. Porsche’s usage of AR glasses in its U.S. dealerships more than tripled during the pandemic as technicians performing complicated repairs on the pricey sports cars called in virtual help from repair experts hundreds of miles away.

Globalfoundries, another major chip maker, faced a similar problem to Intel’s. When one of its multimillion-dollar machines needed work, an engineer at one of its plants donned a HoloLens headset and called up a video chat to consult an equipment expert in the Netherlands to guide him through repairs. That company is now using iPads, headsets, and AR or virtual reality tools to do jobs once done by traveling engineers.

Classroom discussion questions:

What is the difference between AR and VR? (See Ch. 5)
How else might this tool be used in manufacturing or healthcare?