Category: Chapter 5

Posts relating to Chapter 5

OM in the News: 3-D Printing Hobbyists to the Rescue

Owen Plumb helped start a group in Alberta that has printed 1,000 face shields.

Practically overnight, 3-D-printing enthusiasts have remolded their home-based hobby into an emergency production line for scarce personal protective equipment for front-line workers, writes The Wall Street Journal (June 9, 2020).

Thousands of volunteers have banded together on several continents to help in the face of the pandemic crisis. Some 8,000 members of a British design group called 3D Crowd UK have printed parts for more than 170,000 face shields using 3-D printers in their homes. The group also arranges for the face shields’ assembly and distribution to hospitals and other health organizations in Britain.

The group is just one of a growing number of supply chains to spring up in Britain, the U.S. and Canada, staffed by 3-D-printing hobbyists and entrepreneurs helping to make PPE for health-care and other front-line workers. The groups illustrate the potential for harnessing the power of distributed manufacturing to deliver products on a large scale. Such community-driven approaches are “incredibly agile and well-suited to respond quickly to local needs'” says a U. of Cambridge prof.

Before Covid-19, Owen Plumb, 13, who lives in Alberta, Canada used his 3-D printer to create robots and toy-rocket parts. In March, Owen helped create a local group that has now 3-D-printed 1,000 face shields, many of which have been distributed to front-line essential workers at a local hospice and to other institutions lacking PPE. Likewise, the nonprofit Glia Project in London, Ontario, has provided roughly 5,000 face shields to small and midsize hospitals and clinics around Canada. And at Michigan State University, one professor has helped organize a group of 40 people who have printed 8,000 face shields for health-care workers in Michigan.

Classroom discussion questions:
1. What are the strengths of 3-D printing (often called additive manufacturing). Hint: see Chapter 7, p.295 of your OM text.

2. What are the downsides of this grass roots system?

 

OM in the News: The Rise of the Temperature Scanner

Infrared temperate cameras inside the Hankou train station in Wuhan, China.

A coronavirus-triggered rush for infrared cameras that identify people with elevated skin temperature is causing makers of the devices to beef up supply chains. The first wave of demand came in part from factories and health-care companies, but it has since expanded as companies and governments reimagine entertainment, athletics, transportation and education under the coronavirus. The cameras use orange and yellow hues to highlight people with higher skin temperatures without the close contact required by traditional thermometers.

Prices of infrared screening systems can range from $2,000 to $15,000 or higher. The fast-growing market for body-temperature scanners could exceed $1 billion in sales by year’s end, writes The Wall Street Journal (May 22, 2020). Businesses are turning to temperature checks as they plan to reopen and look to mitigate the risk of illness. Ford Motor deployed more than 380 infrared thermal-scanning systems across 100 facilities world-wide to provide an added layer of comfort for employees on top of other safety measures, including mandatory face masks. In addition to Ford, thermal scanners will be used by, among others, Las Vegas casino The Venetian, the PGA golf tour and the Baltimore Ravens’ training facilities.

U.S. officials are preparing to start checking passengers’ temperatures at roughly a dozen airports. The temperature scanners would likely be a mix of tripods that can screen multiple people at once and hand-held thermal devices. Evolving demand from customers is raising the complexity of systems. Instead of stand-alone thermal scanners, some firms want to connect them with existing closed-circuit television networks,, raising cybersecurity and privacy concerns. Requests from places like football stadiums pose another kind of challenge, with fans entering through an outdoor entrance where humidity and temperature aren’t controlled.

Classroom discussion questions:

  1. How might colleges use such scanners?
  2. Referring to Chapter 5 in your Heizer/Render/Munson OM text, what life cycle phase is the thermal scanner in?

OM in the News: Manufacturers Pivot to Fulfill an Urgent Need

Headline after headline, we are seeing a wide array of manufacturers embark on major pivots away from their daily offerings to produce an array of products out of necessity. Ventilators, masks, gowns, shields. As the COVID-19 pandemic continues to creep along, the list of products continues to grow. The pivots these organizations are embarking upon are not easy. They require strengths that do not always see the spotlight including a skilled workforce, diverse supply chain, a culture that thrives when facing adversity and strategic investments in technology, writes IndustryWeek (April 23, 2020).

As one Rockwell Automation exec explains: “This type of shift is possible only when operations have been designed and set up for agility.  It is dependent on tools and processes for supply chain planning, availability of materials and people, product lifecycle management, product specifications management, plant configuration flexibility, the flexibility of the manufacturing and equipment, quality control regimens, and tracking and tracing components the product is made up of.” With any new product comes new processes, a heightened importance for these processes to be closely followed, and the need to quickly adapt and scale best practices.

Here are 3 examples of successful pivots: At Naturepedic, expert sewers, together with 3D printing technology, allowed the firm to quickly pivot and produce face masks from organic cotton fabric that was used in the manufacturing of organic mattresses. Abundant 3D printers allowed CMD to pivot from plastic bag production to make the parts for face shields. Previous product development in healthcare gave Vecna Technologies a strong foundation in product development, rapid prototyping, and responsiveness to healthcare needs to quickly produce a ventilator.

Classroom discussion questions:

  1. How has the pandemic altered the product development stages in Figure 5.3 of your Heizer/Render/Munson text?
  2. How is 3D printing becoming an important OM tool?

OM in the News: Electric Cars are Here. Buyers Aren’t

Ford unveiled the all-electric Mustang Mach-E last month

“It is no surprise auto executives worldwide have announced nearly 75,000 layoffs this past year,” writes The Wall Street Journal (Dec.7-8, 2019). This downsizing isn’t driven by market-share wars or oil shocks or economic crisis but by the belief that electric cars will soon boom. (Just 2 days ago, our blog spoke of the shortage of EV batteries worldwide).

Stop me if you’ve heard this before. Auto executives say they really, really mean it this time, though, as they point to technological advances, looming regulation and pent-up demand. The trouble is that EVs cost more than their gasoline counterparts, are cumbersome to charge and sell fewer in the U.S. than the Toyota Camry. For every 8 pickups sold there is one pure-plug-in vehicle sold.

Still, companies are preparing for the electric age by cutting workers. This is partly to save money needed for development, but it is primarily to prepare for a vehicle design-and-production process that will be, as they say in Silicon Valley, “asset light.” EVs are less complex than gasoline or diesel rivals, requiring fewer parts, people and suppliers. Ford says 30% fewer hours of labor and 50% less factory space will be needed for EVs.

But even the smartest auto exec doesn’t have a clue when the EV revolution will happen. Could be 2025, or it could be 2050. To date, the customer’s appetite for big trucks and SUVs running on cheap gasoline has ruled the market. Hype for EVs persists even as car makers lose money on them. For instance, amid $4-a-gallon gasoline earlier in the decade, GM predicted it would have 500,000 electric cars on the road by 2017. It missed badly. The U.S. market needed until mid-2018 to hit the 1-million-EV mark, with each sale bolstered by at least $7,500 in tax incentives (that are now ending).

Car makers, at the same time, have raised fuel-economy numbers on conventional cars, trucks and SUVs by using turbochargers, lighter materials, and smaller engines. This has gone a long way toward pleasing regulators and customers demanding better efficiency.

Classroom discussion questions:

  1. What is your forecast for when EV sales will exceed traditional gas rivals.
  2. How is this an operations issue? (Refer to the OM decisions in Chapters 5, 7, 8, 9,10, and 11 in your Heizer/Render/Munson text).

OM in the News: Israeli Startup Races to Roll Out 3D Printed Steaks

The walls of Redefine Meat Ltd.’s lab in Rehovot, Israel, are plastered with posters of cuts of beef, including sirloins, T-bones, and rib-eyes. But the startup isn’t looking to sell the perfect cut of beef. Instead, it wants to create a plant-based facsimile. The company is building a 3D printer that it says will produce a meatless steak that’s so fatty, juicy, and perfectly meaty that even the most dedicated carnivore won’t know the difference. “All meat alternatives today are basically a meat-homogeneous mass,” says  Redefine Meat’s CEO. “If you 3D-print it, you can control what’s happening inside the mass to improve the texture and to improve the flavor.”

Redefine Meat says that 3D printing promises to give diners the same sensory experience as eating a real T-bone or rump roast, writes BusinessWeek (Nov. 25, 2019). The technology involves developing a design that can then be printed countless times. First, proprietary computer software creates a detailed model of a steak, including the muscle, fat, and blood, based on whichever cut it’s emulating. That blueprint is then transmitted to a printer loaded with plant-based “inks.” Hit the start button and out comes a “steak.”

While ground-meat replacements are widely available, mimicking an actual cut of meat has proved far more challenging. That’s because replicating the mouthfeel and visual appeal of a juicy sirloin is a lot tougher than cranking out something that’s going to be slapped between a bun. “A beefsteak is the holy grail of plant-based meat,“ says one exec.

The faux-meat category has already reached an estimated $14 billion in annual sales worldwide, and will grow to $140 billion in 2029. Redefine Meat plans to introduce its plant-based steaks to the public in the first quarter of 2020. It will supply customers, including restaurants, meat distributors, and retailers, with both the printers and cartridges. Redefine Meat’s printer can now deliver five 7-ounce steaks in an hour. The company hopes to speed that up to 22 pounds by the end of 2020. That will mean 50 servings an hour, or the equivalent of a cow’s worth of steak a day.

Classroom discussion questions:

  1. What are the OM issues involved in “printing” a steak?
  2.  Will this new product be as successful as an Impossible Burger?

OM in the News: Popeyes Runs Out of Chicken?

The new chicken sandwich

Popeyes sparked the so-called chicken wars between restaurants this summer when it launched a crispy sandwich– the first time the 47-year-old chain had rolled out a chicken sandwich nationally. The sandwich features filets from small-breasted birds, which tend to be favored by retailers and are in tighter supply than large-size birds. But supplies are low and producers have pre-existing commitments with competitors.

It turns out the chicken-sandwich sales far exceeded the Popeyes’ expectations, reports The Wall Street Journal (Oct. 28, 2019). A viral social-media campaign fueled by snarky exchanges between Popeyes and competitors led to lines out the door at many of its 2,400 U.S. locations. Customers who couldn’t get a sandwich grew angry and desperate. Many owners initially hoped to sell more than 60 sandwiches a day, but some went through 1,000 instead. Popeyes announced at the end of August that it had run out of the sandwich. The company went through a supply intended for 3 months in 14 days!

So Popeyes has spent much of the past 2 months securing suppliers that could meet its specifications for quantity and small-breast size of the item’s poultry. The lengthy amount of time Popeyes is taking in bringing the sandwich back highlights the supply-chain high-wire acts that can go on behind the scenes as restaurants try to move quickly to meet consumer tastes, and how forecasting and reality can diverge wildly even after 2 years of testing a new product. Competitors, hoping to satisfy the craving, have stepped in, with McDonald’s testing a new spicy chicken sandwich last month. Getting ready for its relaunch next month, Popeyes franchises have been hiring staff.

Supply crunches have hit other chains testing new menu items. Chipotle warned last week that it would likely run out of its new carne asada steak offering as early as next month after demand exceeded expectations.

Classroom discussion questions:

  1. What supply chain mistakes did Popeyes make?
  2.  What forecasting techniques (see Ch. 4) could Popeyes have used for this new product?

OM in the News: Pizza Hut Thinks Outside the Square Box

Pizza Hut’s new round box

Consider the pizza box. Not a specific pizza box, because they all pretty much look the same, but all the pizza boxes you might have encountered anytime in the last half century or so. They’re probably some combination of red, white and green, and maybe feature an Italian-looking chef with a swirly mustache. They’re bulky, and you struggle to fit them in your fridge when there are leftovers, or even in your trash can when they’re empty.

The pizza box has been this way for decades, even as cars have gone electric and phones have become pocket-size. Innovation in the pizza-box space has consisted of the addition of those miniature plastic platforms that keep the top of the box from sticking to the cheese below. And so what might seem like a small step — Pizza Hut is trying out a high-tech new design that’s round instead of square — feels like a giant leap for pizza-kind.

The pie chain’s claims about the new box are many, writes The Washington Post (Aug. 22, 2019) Some of its shiny new features are meant to improve its function and use: The round shape means there’s less waste (i.e., it’s better for the environment), and it’s made of sustainably harvested plant fiber. It’s industrially compostable. Less material also means it takes up less space on the shelves of Pizza Hut locations — and in your fridge. They don’t require time-consuming assembling by employees, and they break down easily — you can fold them over multiple times until you have something compact enough to drop into your trash can.

Classroom discussion questions:

  1.  What are the advantages and disadvantages of the new box?
  2. Can students can think of the other products in need of a packaging innovation?

OM in the News: The Ford-VW Electric Car Alliance

(From L-R) Jim Hackett, Ford CEO, Bryan Salesky CEO of Argo AI, and Herbert Diess, VW CEO.

As we discuss in Chapter 5 (see the Product Development Continuum and Figure 5.6), alliances are often appropriate for exploiting opportunities where substantial resources and risk are involved. We now see Ford and VW investing in Argo AI to pursue the market for electric and self-driving cars.

Unprecedented shifts facing the auto industry are forcing players to consider new partnerships and potential consolidation, writes Industry Week (July 12, 2019). VW, the world’s top automaker, offers the industry’s most ambitious roll-out of electric models, while Ford, also in the top 10, is developing advanced self-driving technology with Argo. For VW, the Argo investment offers an opportunity to potentially catch up with Alphabet’s Waymo, and GM’s Cruise unit. Road tests and accumulating huge amounts of data are critical for the further development of self-driving cars, and few apart from Waymo are equipped to do it alone.

Besides sharing costs for the development of self-driving cars, Ford will use VW’s electric-car underpinnings that form to backbone of the most aggressive rollout of electric cars in the industry, with VW spending $34 billion. Adding more vehicles to production lines would help gain scale and save costs, and offer Ford a platform to better comply with tougher rules on carbon-dioxide emissions in Europe. Ford will build at least one mass-market battery car in Europe starting in 2023 and deliver more than 600,000 European vehicles based on VW’s platform, dubbed MEB, over 6 years.

“Our global alliance is beginning to demonstrate even greater promise , and we are continuing to look at other areas on which we might collaborate,” said VW’s CEO.

Classroom discussion questions:

  1. Define an alliance.
  2. What are the advantages and disadvantages of an alliance such as one described above?

OM in the News: Boeing’s Configuration Management Problem

An aerial photo shows 737s parked on the tarmac at the Boeing Factory in Renton, WA.

On page 178 of Chapter 5, Design of Goods and Services, we introduce Configuration Management, and define it as “the system by which a product’s planned and changing configurations are accurately identified and for which control and accountability of change are maintained.” The recent news of Boeing 737 wing components prone to cracking and the ability to trace them to the specific planes on which they are installed reminds us of just how important this OM technique is.

More than 300 Boeing 737 jets, including the Max, may have faulty wing parts that don’t meet strength and durability standards, reports CNBC.com (June 3, 2019). The FAA plans to order airlines to remove and replace the parts if their aircraft are affected. As many as 148 parts made by a Boeing supplier, Spirit AeroSystems, could be “susceptible to premature failure or cracks,” the FAA said. (Slats are pieces on the front of the wing and move along a track to create lift during take-off and landing.)

The requirement to remove the parts in question on certain 737s creates a new wrinkle for some airlines that are scrambling to ensure they have enough aircraft during the peak summer travel season. Airlines that fly the 737 Max have had to cancel thousands of flights through August as the planes remain grounded. Boeing said it is planning to provide replacement parts for its airline customers affected by the slat track issue “to help minimize aircraft downtime while the work is completed.” Boeing informed the FAA that leading edge slat tracks may not have been properly manufactured and pose a safety risk.

Classroom discussion questions:

  1. What suggestions do you have for Boeing avoiding this issue in the future?
  2. How is this a supply chain issue?

 

OM in the News: How a 50-Year-Old Design Came Back to Haunt Boeing

“A set of stairs may have never caused so much trouble in an aircraft,” writes The Los Angeles Times (March 18, 2019). First introduced as a short-hop commuter jet in 1968, the Boeing 737-100 had folding metal stairs attached to the fuselage that passengers climbed to board before airports had jetways. Ground crews hand-lifted luggage into the cargo holds in those days, long before the advent of motorized belt loaders.

A Boeing 737 Max 8 airplane parked in Seattle awaits clearance to be delivered to a client.

That low-to-the-ground design was a plus then, but it has proved to be a constraint that engineers modernizing the 737 have had to work around ever since. The compromises required to push forward a more fuel-efficient version of the plane — with larger engines — led to the controversial flight control software system now under investigation. The crisis comes after 50 years of remarkable success in making the 737 a profitable workhorse. (Boeing has a massive 737 backlog of 4,700 orders).

But the decision to continue modernizing the jet, rather than starting at some point with a clean design, resulted in engineering challenges that created unforeseen risks. “Boeing has to sit down and ask itself how long they can keep updating this airplane,” said a former pilot. Few, if any, complex products designed in the 1960s are still manufactured today. The IBM 360 mainframe computer was put out to pasture decades ago. The Apollo spacecraft is revered history.

Over the years, the FAA has implemented new and tougher design requirements, but a “derivative” gets many of the designs grandfathered in. Still some aspects of the legacy 737 design are vintage headaches, such as the obsolete ground clearance designed to allow a staircase. To handle a longer fuselage and more passengers, Boeing added larger, more powerful engines on the 737 MAX, but that required it to reposition them to maintain ground clearance. As a result, the MAX can sometimes pitch up. Hence the software fix..

The 737 has survived other crises. In a 1988 accident on a Hawaii flight, the entire top of the plane came off. A flight attendant was sucked out and 65 were injured because of faulty lap joints in the aluminum skin of the fuselage, which Boeing reengineered.

Classroom discussion questions:

  1. What are the plusses and minuses of reengineering an older plane model?
  2. Is it possible that this is a training or maintenance problem–not a design one?

OM in the News: The Short Life Cycle of a Superjumbo Jet

An A380 landing in Heathrow. Production never met its grand ambitions and output quickly fizzled.

Airbus just announced that it is halting production of the A380 superjumbo plane, abandoning the $16 billion project after airlines around the world flocked to smaller, nimbler jets for long-range travel, reports The Wall Street Journal (Feb. 15, 2019). The A380 was the European company’s answer to Boeing’s 747, which brought long-haul travel to the masses 50 years ago and was the undisputed queen of the skies for decades. The A380, which first went into service in 2007, represented a future for long-distance commercial aviation based on big jets, shuttling between major hubs.

Passengers came to love the plane for its spacious, quiet cabins. Most airlines, though, were less enamored, turning instead to a new breed of fuel-efficient smaller jets that gave them the flexibility to serve less popular routes. A380 sales lost momentum early. Airbus never turned a profit on its flagship plane, and write-offs related to the program weighed on the company for years. This week, Dubai-based Emirates Airline, the A380’s biggest customer by far, cut sharply its plans to buy more of them. Airbus’ CEO said the airline’s decision  left the company with “no basis to sustain production.”

In 2000, Airbus unveiled its superjumbo program, saying it would spend $10 billion to build a 555-seat jet in an effort to supplant its U.S. rival’s 747. But development delays and $6 billion in cost overruns set the project back early. Boeing’s 747 has also fallen out of favor, but more gradually. The aircraft is now made mainly to haul cargo. Only about 230 A380s have been built, versus more than 1,500 747’s. But as we point out in Chapter 5, every product has a life cycle–some shorter than others.

Classroom discussion questions:

  1. Why was the 747 more successful in sales and longevity?
  2. Research some of the reasons why the A380 program was an OM nightmare.

OM in the News: Life Cycles and the Smartphone

When Steve Jobs demonstrated the first iPhone in 2007, the audience was amazed by features we consider mundane today

“Steve Jobs took to a stage a dozen years ago this week to introduce a revolutionary new product to the world: the first Apple iPhone,” writes The Wall Street Journal (Jan. 16, 2019). That groundbreaking device, and the competitors that followed, changed the way people communicated, ordered dinner and hailed a taxi. The technology world reoriented around the smartphone, supplanting the PC, MP3 players, the digital camera and maps. The mobile economy was born.

Today, it looks like the era of smartphone supremacy is starting to wane. The devices aren’t going away any time soon, but their grip on the consumer is weakening. A global sales slump and a lack of hit new advancements has underlined a painful reality for the matured industry: smartphones don’t look so smart anymore. Wristwatches can now text emojis. Televisions can talk and listen. Voice-activated speakers can order diapers.

The number of “connected” devices in use that can stream music, clock mileage or download apps has more than doubled to 14 billion in the past 3 years. Now the universe has expanded to voice apps, car infotainment centers and wearable devices. Like the arc of the PC, smartphones may be engaged in a race downward. Titans Apple and Samsung risk seeing their high-end phones become commoditized, as Chinese rivals Huawei and Xiaomi prove capable of making similar devices at lower prices.

More than half of the world’s population now owns a smartphone. While that leaves billions of potential first-time buyers in poorer areas, they offer lower profits. Meanwhile, the market in the U.S. has become saturated, as the improvements in the devices become more incremental and many consumers have decided they don’t need to get each new upgrade. In developed markets, smartphone usage may be reaching its upper limits, as some consumers pull back amid acknowledgment their phones can be addictive, spur anxiety, distract drivers and cast a pall of silence over the dinner table.

Classroom discussion questions:

  1. Referring to the product life cycle curve in Figure 2.5, where does the iPhone fit?
  2. Do your students agree that smartphones are “in a race downward”?

OM in the News: The Future of the Auto Industry

The future of the auto industry is going to look like the history of the cell phone, writes IndustryWeek (Dec. 18, 2018). The two even share technology: the lithium-ion battery. As the world’s automakers gradually switch from combustion to charging, some of today’s dominant car companies will share the fate of a few former titans of the smartphone. Remember BlackBerry, Nokia and Palm?

This transition will play out as electric options flood showrooms. In the next 2 years, 85 more battery-powered models will be marketed, bringing the global fleet to 357. VW is near the front of the pack, promising 20 new electric models by 2020 and another 80 by 2025. VW just announced the internal combustion vehicles being designed now will be its last!

Being first, however, is no guarantee of success. Honda’s Insight promised 70 mpg as the first U.S. hybrid in 1999. Yet the Toyota Prius, which reached the market later, became the icon of greener wheels. A crowd of copycat hybrids arrived but none came close to matching the Prius.

For the next decade, old-school car executives will try to pull off a tricky financial stunt: driving returns with gasoline engines until their electric models have enough momentum to start keeping pace. They are essentially using an old technology to fund the transition to the next. Jump to the electric too soon and the whole works will grind to a halt; jump too late and lose the EV race. Startups such as Tesla don’t have to make this awkward jump. They don’t have to worry about feeding a legacy business as it slowly winds down.

Electric drivetrains and smart manufacturing systems have the potential to open up car manufacturing–and remove the stranglehold car companies have had on the business because of the high cost of capital.  And as we note as one of our 10 strategic decisions of OM, Product Design (Ch.5) is critical. Products must be designed to a dynamic market meeting sometimes harsh capital and labor requirements and time constraints. VW, like other auto manufactures is “biting the bullet.”

Classroom discussion questions:

  1. Is VW making a wise decision? (SWOT analysis)?
  2. Where would you place EV and gasoline cars on the product life cycle curve now and in 10 years? (See Figure 2.5 in the text)

 

 

OM in the News: Honda to Invest $2.75 Billion in GM’s Self-Driving Cars

Honda’s investment will give the auto maker a 5.7% stake in GM Cruise.

Honda is investing $2.75 billion in GM’s self-driving car unit, for the joint development of a mass-produced fully autonomous car, writes The Wall Street Journal (Oct. 7, 2018). Auto makers and technology giants have been scrambling to plant stakes in a transportation landscape that is swiftly being reshaped by technology. Honda will work with GM Cruise LLC to develop a driverless car from the ground up that can be manufactured in high volumes and deployed globally. (GM set up Cruise as a separate business unit to draw in investors who don’t want exposure to the cyclical, low-margin business of manufacturing cars).

Honda’s decision to invest in GM’s self-driving arm reflects a culture change under way at the Japanese car maker, which long prided itself on its engineering prowess, shunning technologies developed by outside companies. One industry analyst said he expects only a handful of “winners” to emerge from the race to commercialize driverless vehicles. That prospect and the large capital outlays required to develop the technology could lead to more collaboration among automotive competitors.

Car companies have been teaming up with tech firms and suppliers to develop driverless technology. GM’s pact with Honda is a further sign that traditional auto makers will look to join forces with one another as they try to fend off Waymo and others vying to lead in a technology that could upend the transportation sector.

Fiat Chrysler has joined a BMW-led consortium to develop self-driving car technology with the aim of producing fully automated vehicles by 2021. BMW launched the partnership with Intel and Israeli car-camera software provider Mobileye. Toyota just announced it would invest $500 million in Uber to work jointly on autonomous vehicles. Uber will integrate its self-driving technology into Toyota minivans for use in Uber’s ride-hailing network.

Classroom questions:

  1. Name other companies that are forming “alliances” ( a topic in Chapter 5).
  2. Why are such alliances useful in designing goods and services?

OM in the News: Product Life Cycle and the Boeing 747

1970: The aircrew of the first commercial passenger flight of the Boeing 747, which flew from NYC to London for Pan American Airways.

Having worked on the design team for McDonnell Douglas’ DC-10 jumbo jet in the late 1960’s, I have followed the industry and competition with great interest. The DC-10 died a fairly quick death, but Boeing’s even larger plane, the 747, became the iconic symbol of success when introduced in 1970. Only 180 of the original 747s, dubbed the Queen of the Skies, remain in passenger service. Boeing built more than 1,500 of them but the 24 orders that still remain on the books are all freighters. Delta and United, the last U.S. airlines flying the giant, both retired their remaining 747s late last year.

The 747—six stories tall, with a wingspan more than 70 yards wide and the fully loaded weight of 7 M1 Abrams tanks—was a breakthrough in aviation, writes The Wall Street Journal (June 7, 2018). It revolutionized international air travel, bringing affordable tickets to the masses and making it far easier to jet between continents.

At the time, aircraft design was more focused on supersonic planes such as Europe’s 100-seat Concorde. Not fully believing in the passenger potential for a whale of a plane, Boeing designed the 747 with a distinctive bubble top for the cockpit so that when used to carry freight, containers could be loaded right up to the nose of the plane. The 747 became the most identifiable plane in the skies, and a symbol of American engineering and manufacturing prowess in the 1970s and 1980s.

But its 4 engines led to the plane’s descent from passenger airline service. Two-engine jets burn less fuel yet grew to closely match the 747’s carrying capacity. United had 374 seats on its recently retired 747s; its 777s carry 366 passengers and burn 25% less fuel. Airbus has also struggled with its 4-engine A380 superjumbo. Over the past 12 years, only 223 A380s have been delivered. No airline other than Emirates has placed an A380 order for over 2 years.

Classroom discussion questions:

  1. Referring to Figure 2.1 (page 41), where do the 747, 737, and 787 appear on the Product Life Cycle curve?
  2. Has any plane in commercial production survived longer than the 747? Why?