Category: Chapter 6

Posts relating to Chapter 6

OM in the News: How Ford Blended Veteran Engineering Wisdom with AI to Climb the Quality Rankings

After years of slipping in JD Power’s Initial Quality Study, Ford surged to the top of the mass‑market rankings in 2026. The secret wasn’t a flashy new platform or a radical manufacturing overhaul. Instead, Ford made a deliberate investment in something the industry has quietly undervalued—deep, hard‑earned engineering experience.

Ford’s iPhone-based AI inspection system at the Kentucky Truck plant confirms the correct fit of electrical connectors while they are still easily accessible for correction.

The company deployed more than 350 senior engineers, known internally as “gray beards,” to tackle persistent quality issues. Many were coaxed out of retirement, bringing decades of pattern recognition, intuition, and problem‑solving discipline back into the fold. Their mission: diagnose chronic issues, mentor younger teams, and challenge design decisions before they reached production.

But Ford didn’t stop at human expertise. The automaker layered in targeted AI tools designed to amplify—not replace—engineers’ capabilities. Assembly teams now use iPhone‑based inspection systems to detect misaligned connectors or missing fasteners. Machine‑learning models sift through hundreds of thousands of transmission test traces daily, flagging anomalies that would be invisible to the human eye. Generative AI supports design reviews, helping engineers explore optimized geometries and identify potential failure points earlier in development.

This hybrid approach—experienced engineers empowered by precise AI—has reshaped Ford’s culture. Instead of hiding flaws, teams now celebrate finding them early. Quality issues aren’t embarrassments; they’re opportunities to strengthen the product before customers ever touch it.

Ford’s rise in the rankings isn’t just a win for the brand. It’s a case study for the entire manufacturing world: the future isn’t human versus AI. It’s human with AI, working side by side to build better products than either could alone.

Classroom discussion questions:

  1. How does Ford’s use of “gray beard” engineers challenge common assumptions about innovation and workforce development in high‑tech industries?
  2. Ford now “celebrates finding failures” as part of its quality culture. What are the advantages and potential risks of adopting this mindset in engineering organizations?

OM Podcast #51: AI in Healthcare and the Future of Patient Care

Happy summer to everyone!  In our latest podcast, Professors Barry Render and Misty Blessley interview Dr. Satinder Singh, Medical Director at Lehigh Valley Health Network, Jefferson Health.

Dr. Singh shares insights from his journey into medicine and leadership, and discusses how artificial intelligence is transforming clinical practice. From improving physician efficiency to strengthening the doctor–patient relationship, this episode explores how AI is already being used in healthcare—and where it’s headed next.

A key focus of the conversation is how tools like ambient AI can reduce administrative burden, allowing physicians to spend more time at the bedside. The discussion also highlights important considerations such as accuracy, oversight, and the responsible use of AI in medical decision-making.

Dr. Satinder Singh
Prof. Misty Blessley
Prof. Barry Render

 

 

 

 

Finally, Dr. Singh shares his perspective as an educator, emphasizing the importance of building strong clinical fundamentals before using AI as a tool to enhance performance.

 

LINK TO PODCAST TRANSCRIPT

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OM in the News: Chick-fil-A Dethroned as Quality Fast Food Chain Leader

America’s favorite fast-food chicken chain has been knocked from the top spot in a closely watched customer satisfaction ranking, reports FoxNews.com (June 16, 2026). Chick-fil-A, which topped the annual American Customer Satisfaction Index (ACSI) in 2025, fell to second place this year.

Jersey Mike’s claimed first place, with an ACSI score of 84 out of 100, edging Chick-fil-A’s 83. The shift marks the first time in over a decade that a new chain has led the ACSI’s quick-service restaurant (QSR) category. ASCI credited Jersey Mike’s with maintaining high customer satisfaction while rapidly expanding its restaurant footprint, writing :”Jersey Mike’s success is consistent with their business performance, including rapid unit growth, strong customer demand, and a model designed around throughput and off-premise convenience from high digital pickup usage.”

Jersey Mike’s, founded in 1956, has more than 4,000 locations across the U.S. and Canada, and is best known for its made-to-order subs and “Mike’s Way” sandwiches. A narrow menu adds to its success in the ratings.

Following Chick-fil-A were Jimmy John’s and Panda Express, which tied for third place with scores of 81. KFC, Papa Johns and Pizza Hut followed with scores of 80 — while Domino’s, Raising Cane’s, Starbucks and Subway each earned ratings of 79. Burger King, Culver’s, Dunkin’, Little Caesars and Panera Bread rounded out the next tier with scores of 78. Ranking near the bottom were Dairy Queen and McDonald’s, which tied for last place with scores of 72.

The ACSI study was based on 16,464 surveys.

Classroom discussion questions:

  1. Research the ACSI study approach and comment.
  2. Why is McDonald’s tied for last place?

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: Using AI to Inspect Fruit at Albertsons Supermarkets

Albertsons Companies just announced the launch of Intelligent Quality Control, an artificial intelligence-powered tool designed to improve the assessment process and consistency of fresh produce in stores, reports Fresh Portal (May 20, 2026).

The solution, developed by the company in collaboration with Google Cloud, uses computer vision and the  Gemini platform to support quality inspectors in distribution centers.

The system can analyze uploaded images of fresh produce and automatically assess visual characteristics against the retailer’s internal quality standards. The system then provides a rating of the product as well as recommendations to support decision-making.

Albertsons developed this tool to support its quality inspectors and increase consistency in evaluations, which is fundamental for fresh products.

The technology is currently in use to inspect strawberries and red and green grapes. The next step will be to expand the solution to the rest of the berry category and subsequently to more fresh products throughout the U.S.

Among the benefits observed, Albertsons emphasized greater uniformity in assessments across inspectors and shifts, a faster inspection process, and enhanced data collection for continuous analysis and improvement.

The new tool is part of Albertsons’ digital transformation strategy, which in recent years has incorporated AI and data science into both internal operations and consumer-facing platforms.

Classroom discussion questions:

  1. How else could vision systems and AI be used in the grocery industry?
  2. What are the advantages to Albertson in using AI?

OM Podcast #47: Leadership and Continuous Improvement

In our latest podcast, Barry Render interviews John Dyer, a well‑known speaker, consultant, and expert in continuous improvement, and the author of The Façade of Excellence: Defining a New Normal of Leadership. With over 40 years of experience—including roles at GE, Ingersoll Rand, and years of consulting across manufacturing, government, and nonprofit sectors—John brings a depth of practical insight that leaders at every level can learn from.

In this episode, Barry and John discuss:

  • What operational excellence really means beneath the surface
  • Why so many continuous improvement initiatives fail after 12–18 months
  • The psychology behind middle‑management resistance
  • The shift from “manager” to “coach” as the core leadership evolution
  • How empowerment really works
  • How AI will reshape teamwork, decision‑making, and PDCA cycles
  • Real‑world examples of fully empowered, high‑performance teams

This is an outstanding conversation for instructors, operations leaders, and students who want an honest, experience‑grounded perspective on building sustainable cultures of excellence.

 

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

John Dyer
Prof. Barry Render

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Guest Post: Martin Guitars and Operations

Prof. Howard Weiss, retired from Temple U., illustrates his wide range of interests.

Martin is a guitar manufacturer that began operations in 1833. Martin specializes in acoustic guitars which account for about half as many guitars as electric guitars in the global guitar market. It is one of the most popular brands along with Fender, Gibson, Yamaha, Ibanez and Taylor.  

Location: Martin began its operation in Manhattan. In 1839 Martin opened a plant in Nazareth PA, 90 miles due west of its NYC plant. In 1989 Martin opened a plant in Sonora, Mexico in order to make guitars that were more affordable. It is worth noting that two of Martin’s competitors, Fender and Taylor guitars also have plants in Mexico. These guitars are commonly referred to as MIM (Made in Mexico). See Ch.8.

Capacity: Martin has made over 3 million guitars since its inception, including one million since 2016. It currently produces a total of 500 guitars per day, 6 days per week, at the two plants. (See Supp. 7)

Forecasting: Clearly demand has been increasing. Martin’s forecasting needs to consider historical and causal analysis (see Ch. 4) since certain events can spike or drop the sales. For example, sales increased more than usual during the folk music craze and also when MTV was running its Unplugged series (featuring acoustic guitars). At first, COVID caused a decline in sales due to cancelled concerts and closed stores. But then there was an increase in demand, especially for beginner guitars since people were looking for activities while at home and could order guitars online.

Supply Chain: The supply chain (Ch. 11) begins in the forest and at the lumber facilities both in the U.S. and India.

Layout: Martin uses process layout–see Ch.7. Most of the work is done by hand but there are robots in the factory.

Safety: With all of the woodwork that is being performed the major safety concern is that of sawdust.

Quality Control: The incoming wood is inspected by humans because machines cannot pick up defects in the wood. Each guitar is checked for tone. The guitar gets put in a case, but then sits for 4 days and then undergoes rigorous testing to make certain the guitar parts, e.g. neck, bridge, tuning pegs, still work. (See Ch. 6).

Classroom Discussion Questions

  1. How could Martin use the Quality Control techniques discussed in Ch. 6 of your text book?
  2. What are some possible reasons Martin relocated from Manhattan to Nazareth, PA?

Teaching Tip: Why Quality Inspections Often Fail

We all know that students have trouble staying focused for a long lecture, even with the great job we all try to do. So try to find a short activity that will make a teaching point, break up the class for a few minutes, and get all the students enthused.  Here is something you may want to try in Chapter 6, Managing Quality. It takes about 10 minutes.

In this chapter, we have suggested that building quality into a process and its people is difficult. In the old days, inspection was the main form of quality control. But inspection may not catch all the errors, and it may be expensive. To indicate just how difficult inspections can be, ask your students to turn to the OM in Action box on page 234, called “Inspecting the Boeing 787”.

Ask them to each count the number of E’s (both cap and lower case), including those in the title. This should be a pretty easy inspection job, I think, and I offer a crisp $10 bill to the first student to give me the correct count. That usually gets their attention!

As they each finish, I ask them to shout out their count and I do a tally on the board. There is amazing variation and I only have to shell out the reward in maybe one out of five classes. The answer, by the way, is in the Instructor’s Solutions Manual, as discussion question #18.

If you can share a class exercise of your own, we would be very happy to publish it as a Guest Post.

Guest Post: Quality Management in Services

Prof. Howard Weiss, retired from Temple U., shares his thoughts monthly.

A recent issue of The Philadelphia Inquirer presented two compelling examples of quality management—or, more accurately, lapses in quality management—within the service sector. These cases illustrate the difficulty of applying quality principles to both healthcare and transportation.

Virtua Hospital. Two newborn infants were mistakenly brought to the wrong mothers. Each mother breastfed the wrong child before the error was discovered. The nurse who identified and reported the mistake to her supervisors was subsequently terminated. Hospital administrators justified the dismissal by claiming the nurse had failed to check infant ID bands at the beginning of her shift. The nurse stated she had never been informed of such a policy.

Your Heizer/Render/Munson text notes in Chapter 6 there should be “Employee empowerment: When employees see a problem, they are trained to take care of it.” This nurse did take care of the problem. Reporting it should have led to continuous improvement in the ward rather than her being fired. The result of firing an employee who reports a problem will mean that fewer employees will report problems. This, of course, undermines quality improvement.

Philadelphia International Airport (PHL).  PHL ranked last in customer satisfaction among the 27 Large airports that serve 10-33 million passengers per year–the 5th consecutive year it was at the bottom of the rankings.


Chapter 6 notes that “The personal component of services is more difficult to measure than the quality of the tangible component.” Nevertheless, J.D. Power evaluates airports on a range of specific, measurable factors including facilities, services, and customer experiences.

Management of PHL is fully aware of the airport’s shortcomings and has taken steps to improve by adding new bathrooms, new restaurants and a customer service training program. Plans are also underway to improve the rail platforms, seating, carpeting and roadway signage. However, these improvements will not fix the major problem. The airport is too small and too old and there is no room to expand it. One other factor to consider is that unlike with products, the passengers at PHL may not have other choices for which airport to use.

Classroom discussion questions
1. Does your employer encourage the reporting of problems/ mistakes?
2. Why might passengers at PHL not have other options? (Hint-check out American Airlines).

OM in the News: Ford Breaks Record—Of Safety Recalls

Ford has recorded more safety recalls in the first six months of 2025 than any car company ever has in an entire calendar year, reports The Wall Street Journal (July 12-13, 2025).

Ford just recalled 850,000 pickup trucks and SUVs because of a potential fuel-pump failure. A bad fuel pump could result in the engine stalling while a driver is operating the vehicle.

Last month, the firm said it would need to fix  200,000 all-electric Mustang Mach-E SUVs after receiving complaints from the government about customers being unable to open their doors as a result of the vehicle’s 12-volt battery dying, including cases where children were trapped inside. “There was no way for me to get inside my car without jumper cables,” a driver in Houston wrote in an April complaint. The person had to call emergency services and break into the car.

Also this year, Ford said it would need to fix nearly half a million 2016-2017 Explorer SUVs to prevent door trim from falling off. The issue was potentially creating a road hazard for other drivers.

In January  of 2025, Ford paid $65 million to the government as part of a settlement over violations of auto-safety laws, specifically over a delayed recall of 600,000 vehicles with defective rearview cameras. As part of the agreement, the automaker said it would spend an additional $45 million to improve internal systems for tracking safety issues.

Ford and its CEO  have staked out improving quality as a priority for the automaker. Improving quality will also help to reduce the billions of dollars Ford spends every year on warranty claims and safety recalls. The company hired a quality czar in 2022, and it has tied 70% of executive annual bonuses to quality. It said it has significantly improved product quality in recent years, with four new models winning accolades from a recent J.D. Power study on quality. The company has more than doubled its team of safety and technical experts and expanded testing on critical systems, such as vehicle powertrains, steering and braking.

Overall, recalls across the auto industry have been rising, with more than 1,000 recorded in 2024, compared with 800 a decade earlier.

Classroom discussion questions:

  1. What quality tools in Chapter 6 of your Heizer/Render/Munson text could Ford employ to decrease defects?
  2. Discuss Figure 17.1 in the context of Ford’s problems.

OM in the News: What are Boeing’s “Shadow Factories”?

Boeing is promising this year to get its jet production to precrisis levels and chip away at a growing backlog of orders. First, the manufacturer needs to clear out the dozens of planes in its shadow factories, reports The Wall Street Journal (Feb. 15-16, 2025). A shadow factory is what Boeing executives call a production line where engineers and mechanics work on fixing, maintaining or updating aircraft instead of building new ones. They exist for the company’s two-bestselling models, the 737 MAX and 787 Dreamliner.

As Boeing is struggling to hire and train enough machinists, the shadow factories can occupy some of the company’s most experienced workers. In some cases, Boeing spends more hours inspecting and reworking planes than it did to produce them in the first place. “It seems like 30% of everybody’s job is fixing something that’s bad quality or late product or something that shouldn’t have happened,” said the CEO.

It isn’t the first time Boeing has pledged to solve its shadow-factory problem. The company had initially vowed to be rid of it by the end of 2024, but clearing out the planes has proven vexing. The biggest chunk are MAXs parked at a facility in Moses Lake, Wash. They are mainly remnants of a global grounding of MAX jets following a pair of fatal crashes in 2018 and 2019. Boeing continued making the planes even though airlines weren’t taking them, and is still working to deliver them. Another couple of dozen are 787s sitting in Everett, Wash., awaiting checks to ensure parts of the planes are properly pieced together following quality questions raised years ago around the jet’s production process.

A year ago, Boeing estimated it had about 225 jets in the shadow factories.  Not only do the planes take up space and tie up billions in much-needed revenue, they require sophisticated care and reworking, which means some of the company’s most skilled machinists are charged with fixing defective jets.

Any time a model requires an update or repair—a common occurrence in machinery as complicated as a jetliner—crews must do the relevant work on every unfinished plane. In 2023, for instance, the company had to repair around 160 737s in the shadow factory after misdrilled holes were found in the fuselage of a completed jet.

Classroom discussion questions:

  1. Why is a shadow factory an unwise operations tool?
  2. What has happened at Boeing in recent years to cause such quality problems?

OM in the News: Measuring the The Best and Worst Airlines

There’s been enough drama in the past year to impact U.S. airlines quality rankings. An Alaska Airlines blowout grounded dozens of planes. There was a failed JetBlue-Spirit merger and Spirit’s bankruptcy. A summer tech outage crippled Delta. Southwest Airlines faced investor pressure and said it’s switching to assigned seating. All while planes remained packed and air traffic congested.

Delta took the crown again in The Wall Street Journal’s 17th airline scorecard (Jan. 23, 2025), standing out in nearly every category. This is Delta’s 4th consecutive win and 7th in eight years. It prides itself on reliability and customer service—it displays this and other accolades on stickers near its cabin doors—and commands a premium for it. There’s a reason those Delta tickets often cost more. Southwest finished a mere point behind Delta, with Alaska in third.  In the ratings cellar? Frontier. Spirit placed 8th and American Airlines finished 7th.

The  9 major U.S. airlines are ranked on 7 equally weighted operations metrics: on-time arrivals, flight cancellations, delays of 45 minutes or more, baggage handling, tarmac delays, involuntary bumping and what the Transportation Department calls passenger submissions (which are mostly complaints).

Delta finished first in on-time arrivals and was the only airline in the ranking to exceed 80%. It canceled far fewer flights than in 2023, giving it the lowest cancellation rate besides Southwest. “It’s a testament to our people, along with the resiliency, reliability and efficiency we’ve purposely built into our operation, that we canceled fewer than 1% of our scheduled flights and improved or held steady in nearly every category,” said Southwest’s COO.

Delta’s weak spot: bag handling. The airline’s mishandled bag rate trailed those of Allegiant, JetBlue, Frontier and Southwest. Frontier, the airline that draws you in with $19 tickets and piles on fees galore, finished at or near the bottom in all but two categories, dropping a spot in on-time arrivals and extreme delays from 2023. It did best in baggage handling, where it ranked third.

The overall scores fall off fairly dramatically after Delta and Southwest. Third-place finisher Alaska finished nine points below Delta, Allegiant 11.

Classroom discussion questions:

  1. In Chapter 6 of your Heizer/Render/Munson OM text, we discuss TQM. Which of the many tools are used in the quality ranking metrics?
  2. What would you do if you were Frontier’s operations manager?

Guest Post: Quality, Marketing and Cross Contamination

Professor Howard Weiss shares his thoughts about a variety of unusual OM topics with us monthly.

People with food allergies typically check the ingredients of a food product very carefully to ensure that the product does not contain an ingredient to which they are allergic. The top 8 allergens in food production are soy, wheat, milk, peanuts, tree nuts, fish, and shellfish.

Bimbo Bakeries, headquartered in Mexico with bakeries in 35 countries including the U.S., has taken a unique approach to listing allergens on some of its products. U.S. inspectors reported that Bimbo Bakeries USA — which includes brands such as Sara Lee, Oroweat, Thomas, Entenmanns and Ball Park buns and rolls —”listed ingredients such as sesame or tree nuts on labels even when they weren’t in the foods.” (Bimbo claims to be the largest bakery in this country).

The reason a company might purposely list ingredients that are not in its products is that it may be concerned about cross-contamination in a bakery plant and wants to ensure it will not be legally responsible in the event of cross contamination. In other words, rather than trying to introduce quality control procedures to prevent cross-contamination in its plant, the company is willing to be untruthful when listing ingredients to minimize the chance and or cost of a law suit.

It may be very expensive or difficult to prevent cross-contamination from one part of plant to another or from one machine to another. So to stay within the letter of the law some companies have deliberately added small amounts of allergens to products that previously did not contain these allergens. This helps the company avoid liability and legal costs.

Cross contamination can occur in several different ways:
 primary food production — from plants and animals on farms
 during harvest or slaughter
 secondary food production — including food processing and manufacturing
 transportation of food
 storage of food
 distribution of food — grocery stores, farmer’s markets, and more
 food preparation and serving — at home, restaurants, and other foodservice operations

There are strategies available to minimize the chance of cross-contamination. The best way is for food manufacturers to process products that contain allergens in a separate facility. If this is not possible then scheduling the production of products that contain allergens at a different time than other products may help. Cleaning procedures can be used to minimize the chance of cross contamination.

OM in the News: Tesla Recalls its Cybertrucks Over a Soap Issue

Tesla is recalling every Cybertruck  built thus far to fix a defective pedal pad that could cause accelerator pedals to get stuck in the depressed position, raising the risk of a crash, reports USA Today (April 22, 2024). Specifically, when someone stomps on the accelerator, the pad can come off and get trapped in a bit of trim.

Cybertrucks are lined up at the Tesla Giga Factory in Texas this month

That would leave the accelerator stuck in the “on” position — something that has happened at least twice. When a driver hits the brake pedal, the truck will stop even if the accelerator is depressed. No injuries or crashes have been reported.

The problem, as Tesla reported to the National Highway Transportation Safety Administration, originated on production lines with soap. “An unapproved change introduced soap to aid in the component assembly,” the report says. Evidently, workers used soap to help get the pad into place on the pedal. Traces of that slippery soap remained, hence the problem.

The recall involves all 3,878 of the aesthetically-divisive angular trucks that have been sold so far. While some Tesla recalls are for software fixes that can be issued over-the-air, meaning a vehicle downloads an update without a trip to a mechanic, this one is a physical defect. It requires a physical repair.

This is the second soap-related manufacturing process to make headlines this month. A Boeing supplier recently defended the use of Dawn dish soap as lubricant in assembling door seals in manufacturing jets like the one that lost a door mid-flight.

Meanwhile, the Tesla Cybertruck, a vehicle with an extremely unusual manufacturing process, has also faced complaints since its launch about problems with rust and potentially finger-pinching trunks.

Classroom discussion questions:

  1. Is this a quality issue–or a design issue?
  2. What are the strengths and weaknesses of Cybertrucks, according to early reviews in auto magazines?

Teaching Tip: Is Amazon Benchmarking–or Cheating?

At the end of each chapter of our text, we present an Ethical Dilemma for class discussion. The Wall Street Journal‘s expose on Amazon (April 19, 2024), called “Inside Amazon’s Secret Operation,” provides one such issue. Here is a summary:

For nearly a decade, workers in a warehouse in Seattle have shipped boxes of shoes, beach chairs, Marvel T-shirts and other items to online retail customers across the U.S.  The operation, called Big River Services, sells around $1 million a year of goods through e-commerce marketplaces including eBay, Shopify, Walmart and Amazon under made up brand names. “We are entrepreneurs, thinkers, marketers and creators,” Big River says on its website.

Big River’s website says it sells on Amazon’s marketplace but doesn’t mention anywhere that it is part of Amazon. It also misspells Seattle.

What the website doesn’t say is that Big River is an arm of Amazon that secretly gathers intelligence on its competitors.  Amazon publicly says that it pays little attention to competitors, instead focusing all its energies on being “customer obsessed.”

But Big River team members attended their rivals’ seller conferences and met with competitors, identifying themselves only as employees of Big River, instead of disclosing that they worked for Amazon.  They were given non-Amazon email addresses to use externally, but internally they used Amazon email addresses. They took extraordinary measures to keep the project secret, disseminating their reports to Amazon execs using printed, numbered copies rather than email. In the event of a leak they were told to say they were formed to improve the seller experience on Amazon, and that such research is normal.

“Amazon, like many other retailers, has benchmarking and customer experience teams that conduct research into the experiences of customers, including our selling partners,” says the firm. This benchmarking team got top corporate approval to buy inventory, use a shell company and find warehouses in the U.S., Germany, England, India and Japan so they could pose as sellers on competitors’ websites. To get information about rival logistics services, Big River stored inventory with companies including FedEx, UPS, and DHL.

Virtually all companies research their competitors, reading public documents for information, buying their products or shopping their stores. But lawyers say there is a difference between such corporate intelligence gathering of publicly available information, and what is known as corporate or industrial espionage. Companies that misrepresent themselves to competitors to gain proprietary information are open to suits on trade secret misappropriation.

Classroom discussion questions:

  1. What are the ethical implications of Amazon’s actions?
  2. How would such benchmarking be legal?