Chapter 7 – Page 10 – The OM Blog by Heizer, Render, & Munson

OM in the News: 3-D Printed Homes

“3-D printing is scaling up,” writes The Wall Street Journal (April 2, 2018). All over the world, an impressive diversity of people and organizations, ranging from startups to construction and engineering firms, are successfully prototyping 3-D-printed buildings. Prototype single-family dwellings have been 3-D-printed in China, Italy, Russia—and Texas. Global infrastructure firm AECOM uses 3-D printing to prefabricate jail cells and hospital rooms.

The technology is still nascent and it isn’t about to disrupt the $10 trillion global construction market. But the technology looks like it can save energy, materials and time. CLS Architetti in Milan has just finished 3-D-printing an 1,100-square-foot, single-family dwelling, using a portable concrete 3-D printer.

Using traditional methods, El Salvador’s People Helping People has already built more than 800 homes for families who previously lived in single-room shanties made of timber and sheet metal. Currently, a cinder-block house requires about 15 days and $6,500 to build. Printing a home instead is projected to take 24 hours, cost $4,000 and use half as much iron rebar.

Fundamentally, 3-D printing with concrete is a modern update of incredibly old building technologies. Worldwide, our prehistoric ancestors made homes from mud, adobe, cob and similar materials, building up their walls one layer after another. Their structures shared many of the same advantages of modern 3-D-printing: They were strong, cheap, locally sourced and minimized waste.

While concrete is by far the most widespread architectural-scale additive-manufacturing material, it isn’t the only one. In France, a home has been printed out of both concrete and foam. Researchers elsewhere are attempting architectural-scale building with cellulose, glass and a variety of novel composite materials.

Classroom discussion questions:

What are the advantages and disadvantages of using 3-D printing to construct buildings?
Is this technology really going to change the construction industry?

OM in the News: How Big is the Role of Robots in Shipping?

Humans and robots work side by side in a FedEx distribution center. The green “tugger” robots pulls heavy goods.

In 2012, Amazon acquired the robotics company Kiva. Since then, it has moved more than 100,000 Kiva robots into its network of 210 fulfillment and package-sorting centers. Now, writes The New York Times (March 19, 2018), many Amazon competitors are moving in the same direction, including shipping and logistics operations like FedEx and DHL. But what is happening at all 3 firms may be a surprise to people who fear that they are about to be replaced by a smart machine: a robot might take your role, but not necessarily your job.

Yes, the robots replace a few jobs right away (typically taking 25 jobs in a facility that employs 1,300 people). But warehouses create lots of new jobs every year — and a heavily robot work force still seems like the distant future. Inside Amazon the need for human labor is growing much faster than the robot work force. Since deploying its first robots, Amazon has expanded its work force by 300,000 people.

A control center inside a FedEx distribution hub

As people have become more comfortable buying online, big and bulky goods like car tires, canoes and boxes as big as a coffin have accounted for an increasing percentage of the packages flowing through distribution centers. These ungainly items can’t fit on a conveyor belt.

McKinsey recently predicted that about 1/3 of workers in the U.S. will have to switch occupations because of technology-driven automation by 2030. “What people underestimate is the time needed for this to happen,” said a McKinsey partner.

Classroom discussion questions:

Why can’t distribution centers be fully automated?
What roles can robots play in distribution hubs?

OM in the News: Software Robots for Office Work

“Software robots have become one of the hottest fads in business automation, as a new wave of AI is poised to sweep through the back-office functions of large corporations,” writes The Financial Times (March 9, 2018). Software robots replicate the routine work humans often do in front of computer screens.

The rise of the bots promises to bring sweeping changes for cubicle dwellers. “Some 4 million in the U.S. are likely to see their jobs taken over by the end of 2021,” says one analyst. Each bot can handle the work it would take 3-4 full-time workers to perform. At $8,000-$9,000 a year in licensing costs, they are a lot cheaper.

But many automation experts say that the majority of these displaced workers will be kept on. Most companies will use the technology — known as “robotic process automation” — to automate only the most tedious aspects of back-office jobs, then retain the staff to work alongside the bots doing more interesting things. (There has been particular interest in Japan for the robots, given demographic trends that point to a coming shortage of workers).

Supporters think that applying machine learning to data could give companies important new insights into their operations. The automation software is also a natural place for bringing other types of AI into companies. Once a routine task is automated, it often makes sense to “plug in” an AI service from a third-party — for instance, using a vision system to analyze signatures as part of a bill-paying process. One insurance company, for example, has used bots to automate some of the work of 1,500 people who process new insurance requests, while also tapping into 3rd party “cognitive service” software to help make underwriting decisions.

Classroom discussion questions:

Do you agree with the industry analyst’s comment regarding the 4 million jobs?
Provide other examples of how office robots could make for higher productivity.

OM in the News: The Use of Drones Grows

A drone hovers over a home, capturing detailed images of the roof

“Building inspectors who used to rely on binoculars and ladders are turning to drones to check property exteriors for signs of damage or deterioration that could lead to injuries,” writes The Wall Street Journal (Feb. 21, 2018). But their lower cost and greater thoroughness is coming into conflict with another public safety concern: the danger drones pose to other aircraft or people on the ground. In New York City, which has thousands of old skyscrapers, drone use is prohibited for property inspection. Yet buildings over 5 stories must be regularly inspected in NYC, forcing inspectors to go out with binoculars, field notes, a pen and paper.

Drones, which had early applications in warfare and surveillance, increasingly are being adopted by a wide range of businesses—from package delivery to underwater exploration. Business applications have grown significantly since 2016, when an FAA ruling made it easier to become a drone operator. Since that ruling, technological developments have made drones smaller, more reliable and easier to fly, causing a growing number of building inspectors to embrace them.

Take the inspection of a cathedral in Long Island. Using a drone, inspectors could examine the chimney without having to erect scaffolds—the difference between a $1,000 inspection and a $10,000 scaffolding inspection. Using a drone also can shorten a weekslong inspection to a day. “It is realistic that a $10,000 drone inspection could cost over $100,000 of hanging scaffolding,” said one engineering consultant.

About 8% of the 21,000 certified home inspectors in the U.S. now use drones for inspections. Four years ago, there were virtually zero.

Classroom discussion questions:

What are the advantages and disadvantages in drone usage for building inspection?
How else might drones be used in OM?

OM in the News: Amazon’s Cashierless Grocery Store Opens

Shoppers use an app to enter the subway-like turnstiles

“The first clue that there’s something unusual about Amazon’s store of the future hits you right at the front door,” writes The New York Times (Jan.22, 2018). A row of gates guard the entrance to Amazon Go, allowing in only people with the store’s smartphone app. Inside is an 1,800-square foot market packed with typical shelves of food. But the technology that is also inside, mostly tucked away out of sight, enables a shopping experience like no other. There are no cashiers or registers anywhere. Shoppers leave the store through those same gates, without pausing to pull out a credit card. Their Amazon account automatically gets charged for what they take out the door.

There are no shopping carts or baskets inside Amazon Go. Instead, customers put items directly into the shopping bag they’ll walk out with. Every time customers grab an item off a shelf, the product is automatically put into the shopping cart of their online account. If customers put the item back on the shelf, Amazon removes it from their virtual basket. Checking out actually resembles shoplifting, with no lines, cashiers, or clunky self-checkout kiosks to slow down the process.

The only sign of the technology that makes this possible floats above the store shelves — arrays of 100’s of small cameras throughout the store. The cameras track shoppers once they are inside, though they don’t use facial recognition. A customer entering the store scans his or her phone and then becomes represented internally as a 3-D object to the system. Cameras also are pointed at the shelves to determine interactions with goods.

There are about 3.5 million cashiers in the U.S. — and some of their jobs may be in jeopardy if the technology behind Amazon Go eventually spreads.

Classroom discussion questions:

Why do you think the opening of the 1st Amazon Go, in Seattle, was delayed a year? (The store opened Jan. 29, 2018).
Can this technology be spread to much larger supermarkets? Why?

OM in the News: Machines are Making Your Sushi, and That’s Good

In the belly of a machine about the size of an office printer, a plastic roller presses sticky rice onto a bed of seaweed. The oxygen-to-grain ratio has been precisely calibrated with the aid of X-ray tests. A razor slices the sheet into a flawless rectangle, which plunks down onto a steel tray ready to be stuffed with ruby-red tuna or smoked eel.

The $14,000 robot can help a food prep worker churn out 200 sushi rolls an hour—up from the 50 or so a chef could make by hand, according to its maker, Autec USA. Autec says orders have quadrupled over 5 years amid rising sushi consumption and a growing chef shortage. Among its customers is Whole Foods.

Service industries have lagged other sectors in spending on labor-saving equipment during this economic expansion, because as long as workers were plentiful and wages stagnant, it made more sense to hire than to invest in automation. Services make up a growing share of the U.S. economy—64% of gross output last year, up from 40% in the 1950s—but their share of capital expenditures has been relatively flat over time.

“Now, many businesses are going beyond replacing old equipment,” writes Businessweek (Dec.25, 2017). They’re also pouring money into new technology, along with buildings and production equipment. For the first time since 2000, service sector investment in intellectual-property products (think software and R&D) has surpassed 4% of GDP.

Autec expects demand for its robots to stay strong. Its most popular machines are an example of the kind of automation that can make life easier for workers—rolling out rice over sheets of nori is one of the most difficult, and tedious, parts of sushi making—rather than make them obsolete. Customization—inserting different kinds of filling—still requires humans.

Classroom discussion questions:
1. Why did service sector investment lag behind the industrial sector?

2. Why is efficiency improvement important in the service sector?

Good OM Reading: Will 375 Million Jobs Be Automated by 2030?

A new McKinsey Global Initiative report cautions that as many as 375 million workers will need to switch occupational categories by 2030 due to automation. The work most at risk of automation includes physical jobs in predictable environments, such as operating machinery or preparing fast food. Data collection and processing is also in the crosshairs, with implications for mortgage origination, paralegals, accounts and back-office processing.

To remain viable, workers must embrace retraining in different fields. “The model where people go to school for the first 20 years of life and work for the next 40 or 50 years is broken,” states the report. “We’re going to have to think about learning and training throughout the course of your career.”

McKinsey believes we may see a massive transition on a scale not seen since the early 1900s, when workers shifted from farms to factories. A needed plan would include a big investment from the private and public sectors in new training programs and workforce transition programs.

Despite the looming challenges, the report revealed how workers can move forward. While the introduction of PCs in the 1980s eliminated some jobs, it created many more roles. Workers who are willing to develop new skills should be able to find new jobs. “The dire predictions that robots are taking our jobs are overblown. Yes, work will be automated, but there will be enough jobs for everyone in most areas,” McKinsey writes. The company adds that automation will not displace jobs involving managing people, social interactions or applying expertise. Gardeners, plumbers, child and elder-care workers are among those not facing risk.

Classroom discussion questions:

What do your students think about the concept of career-long training and learning?
How does this change impact the field of OM?

OM in the News: Wal-Mart Cracks the Code for Online Groceries in China

An employee fills electronic orders for the 1-hour delivery platform at a Wal-Mart store in Shanghai

Amazon may have sent a chill through the U.S. supermarket business with its purchase of Whole Foods. But grocers also had better keep an eye on the world’s largest brick-and-mortar retailer—Wal-Mart Stores—for some lessons on the future of online grocery shopping. Wal-Mart has already developed a big online grocery delivery business in China, capable of transporting fresh produce from its shelves to homes within an hour.

To accomplish that feat, it’s created a network of chilled mini-warehouses, used A.I. to tailor inventories, and employed an army of crowdsourced deliverymen to rush meat, fruits, and vegetables to customers’ doorsteps. That could provide it with insight and experience to keep tech upstarts from disrupting it out of one of its core U.S. businesses.

Fresh food is considered the last frontier of Chinese e-commerce. “Wal-Mart’s efforts in China revolve around trying to tap into a smartphone, convenience-craving, population,” writes Businessweek (Dec. 4, 2017).

At the heart of its operation are what it calls “dark stores” that stock 1,500 different products such as bananas, pork ribs, dumplings, and chicken feet. Workers grab printouts of the online orders, zip through the aisles placing items in a bag, and exit the other side, where they hit a button summoning a delivery driver. The drivers are independent contractors with cellphones and scooters. The time from picking up the order printout to hitting that button can’t exceed 10 minutes, or else the 1-hour delivery is in peril.

Shelves are stocked with products based on order patterns for the surrounding area—meaning a store in northern China may have more soup ingredients as winter comes. The company adjusts each store’s online inventory every 4 weeks, and the added information about fresh grocery demand from web orders helps boost the accuracy of Wal-Mart’s product forecasting for offline stores.

Classroom discussion questions:

Is this online operation transferable to the U.S.?
How does this approach differ from typical supermarket shopping?

OM in the News: Robots at the World’s Largest On-line Grocery Retailer

Congratulations is in order, because someone has just graduated from the robotics lab at England’s online grocer Ocado. They’ve spent the last year and a half practicing the same routine over and over, a training regimen that’s about to get even tougher with a transfer to a bigger facility.

“But the student in question isn’t a person,” writes Forbes (Nov. 30, 2017). It’s a large robotic arm that can “see” and grab dozens of different products. Built from aluminum and featuring a suction nozzle as its “hand,” it has practiced picking up plastic pots of porridge, boxes of tea and packets of popcorn from one plastic box, before placing them in plastic bags stretched open in a separate box. Once the bags are full, it stops. Each object takes about 5 seconds to move, making the arm over time about as fast as a human picker.

Ocado’s robot is unique in being able to grasp all these different products. Industrial robots are typically designed to pick up one thing well, like uniform bottles of water or tubes of toothpaste. But there’s been little research on grabbing objects randomly scattered inside a box. Even Amazon, with over 50% of e-commerce sales, and whose warehouses are teeming with wheeled Kiva robots and cranes, relies on human pickers for the intricate task of taking individual products out of one bucket and placing them in another.

Ocado, comparable to Trader Joe’s in terms of quality – but based totally on-line is the world’s largest dedicated online grocery retailer, with sales of $1.4 billion. Its highly automated warehouses (see this 1.5 minute video) are manned almost entirely by robots. The robots “swarm” around a giant cube filled with grocery products, a kind of hive that’s as wide as a football field. They then deliver boxes filled with products for humans to sift through before those humans bag and load them onto trucks.

Classroom discussion questions:

Will this robot replace workers?
What are the advantages of this approach?

OM in the News: The Driverless Truck Vs. The Teamsters Union

It was the tale of a successful, long-distance beer run. A robotic truck coasted driverless 120 miles down Interstate 25 in Colorado on its way to deliver 51,744 cans of Budweiser. “Driverless vehicles threaten to dramatically reduce America’s 1.7-million trucking jobs,” writes the Los Angeles Times (Nov. 23, 2017). It is the front end of a wave of automation that technologists have been warning for years. Some predict it could rival the impact of the economic globalization and the resulting off-shoring of jobs.

At California start-up Embark, there already are indications of how trucking jobs are about to change. The company has made test-runs in which it is using self-driving trucks to ship refrigerators from a warehouse in Texas to a distribution center in Palm Springs. There is a driver in the cab, but for the bulk of the ride, when the truck is on the I-10 Freeway, that person is not driving. Eventually, there could be nobody in the cab for legs of the trip. Embark’s CEO says truck drivers still will have jobs and their quality of life will be much improved. Instead of making long hauls thousands of miles, he says they could stay in their communities and handle the more-complicated short hops at the beginning and end of the trips, along with loading and unloading.

Teamsters executives are skeptical, particularly as many pilot programs exhibit a diminished role for blue-collar workers. Volvo, for example, boasts how the autonomous garbage truck it developed doesn’t need a driver in the cab to navigate the route, freeing up that person to load the trash bins. Two jobs appear to become one. Many of the new positions created by such technology look nothing like the stable trucking jobs that are a staple of blue-collar America. They involve coding, data analysis and operation of complicated computer systems.

Classroom discussion questions:

What are the plusses and minuses of driverless trucks?
When do you think the autonomous vehicle revolution will actually impact society?

Video Tip: Why UPS Drivers Don’t Turn Left And You Probably Shouldn’t Either

Vehicle routing problems involve finding the best route between points

It might seem strange, but UPS delivery vans don’t always take the shortest route between stops. The company gives each driver a specific route to follow and that includes a policy that drivers should never turn through oncoming traffic unless absolutely necessary. This means that routes are sometimes longer than they have to be. So, why do they do it?

Every day, along with thousands of other companies, UPS solves versions of the vehicle routing problem (see Online Tutorial 5). In these mathematical problems, you are given a set of points and the distances between them, and you have to find the best route(s) to travel through all of them. Best is usually defined as the route with the shortest overall distance. Vehicle routing problems are used to organize many things, from coping with more delivery trucks in cities and hailing taxis to catching chickens on a farm.

UPS has designed its vehicle routing software to eliminate as many left-hand turns as possible. Typically, only 10% of the turns are left turns. As a result, the company uses 10 million gallons less fuel, emits 20,000 tons less carbon dioxide and delivers 350,000 more packages every year. The efficiency of planning routes this way has even helped the firm cut the number of trucks it uses by 1,100, bringing down the company’s total distance travelled by 28.5 million miles – despite the longer routes. The TV series Mythbusters tested this idea and confirmed that, despite many more turns, the policy of only turning right does save fuel.

Here is an entertaining 1 minute video illustrating the point. You could show it when discussing sustainability (Supp.5) or process analysis (Ch.7).

OM in the News: Robots as Job Saviors?

When the robots came to online retailer Boxed, dread came too: The fear that the machines would take over, leaving a trail of unemployed humans. Yet this did not come to pass. When the new warehouse opened this spring, workers found that their jobs were less physically demanding than at the previous, manual warehouse in Edison, NJ. And rather than cutting jobs, the company added a 3rd shift to keep up with rapidly growing demand.

“What happened at Boxed – and elsewhere – suggests that widespread fears about automation and job loss are often misplaced,” reports The Orlando Sentinel (Oct. 31, 2017, page A9). Automation has actually helped create jobs in e-commerce, rather than eliminate them. By accelerating delivery times, robotics and software have made online shopping an increasingly viable alternative to bricks-and-mortar stores, and sales have ballooned at online retailers.

The surge in e-commerce has required the rapid build-out of a vast network of warehouses and delivery systems that include both robots and human workers. Even if the robots replace some people in each warehouse, the proliferation of new warehouses should still generate hiring for years to come. Jobs have been lost at storefront retailers, which have suffered under the e-commerce onslaught.

But worries about a “retail apocalypse” wiping out many of the nation’s 16 million retail jobs have missed a more important trend: E-commerce leads to more jobs, by paying people to do things we used to do ourselves. Amazon accounts for much of the additional employment. Yet it’s also at the vanguard of automation. Since 2014, Amazon has deployed 100,000 robots in 25 warehouses worldwide. It’s tripled its hourly workforce, from 45,000 to 125,000. At Amazon’s Baltimore warehouse, employees called “stowers” are needed to stock the shelves that are carried by robots. And that requires human judgment: Software suggests to workers where each item should be placed. But it’s an employee’s responsibility to make sure the shelves, which are tall and narrow, remain balanced.

The explosion of online commerce is also building demand for higher-paying jobs in software and robotics, with 14% of software job listings are now posted by retailers.

Classroom discussion questions:
1. Why can’t warehouse such as these be totally automated?

2. What is the future of storefront retailers?

OM in the News: Is Fanuc the Most Important Manufacturing Company in the World?

Businessweek thinks there is one clear winner in the manufacturing world: the $50 Japanese billion company that controls most of the world’s market for factory automation and industrial robotics. “In fact,” writes Businessweek (Oct. 23, 2017), “Fanuc might just be the single most important manufacturing company in the world right now, because everything Fanuc does is designed to make it part of what every other manufacturing company is doing”.

At Fanuc’s Mt. Fuji plant, hundreds of bright yellow Fanuc robots are working around the clock to build other Fanuc robots. Some robots will be shipped elsewhere in Japan, where strict immigration policies and a declining birthrate have left manufacturers of all sizes more dependent on factory automation. But most are bound for China.

Automation has been rising in China over the past decade, partly because, as wages and living standards have risen, workers have proved less willing to perform dangerous, monotonous tasks, and partly because Chinese manufacturers are seeking the same efficiencies as their overseas counterparts. More and more, it’s Fanuc’s industrial robots that assemble and paint automobiles in China, construct complex motors, and make injection-molded parts and electrical components.

And as China goes, so goes the rest of the industrial world. Multinationals that are reshoring operations from Asia to N. America and Europe are doing so in part because automation promises sophisticated production methods and labor savings; they are spending more than ever on industrial robots– 32% more than a year earlier, with many of them are ending up in Midwestern steel and auto manufacturing centers. Orders from the U.S., though, are dwarfed by those from China—some 90,000 units, 1/3 of the world’s total industrial robot orders last year. (Researchers estimate that each new industrial robot displaces 5 human workers).

The key to Fanuc’s success may lie in AI. In the past, the selection of a single part from a bin full of similar parts required skilled programmers to “teach” the robots how to perform the task. Now, Fanuc’s robots are teaching themselves. “After 1,000 attempts, the robot has a success rate of 60%,” the company said. “After 5,000 attempts it can already pick up 90% of all parts—without a single line of program code having to be written.”

Classroom discussion questions:

What is the role of artificial intelligence in robotics?
What will be the impact of robotics on U.S. manufacturing?

OM in the News: Adidas Automates to Make Shoes Faster

In a production hall as clean as a hospital, pea-size beads of white plastic pour into what looks like a minivan-size Adidas shoe box, complete with 3 white stripes down the side. That’s fitting, because in just a few seconds the machine heats and molds the stuff into soles of Adidas running shoes, with only one worker needed to wedge in pieces of plastic called stability bars. This is Adidas AG’s “Speedfactory,” where the shoemaker aims to prove it can profitably produce footwear in high-cost, developed economies, reports Businessweek (Oct. 9, 2017). By next fall the facility, as large as half a soccer field, will employ 160 people to make 1,500 pairs of shoes a day, or 500,000 annually.

The plant, halfway between Munich and Frankfurt, and a twin opening this fall near Atlanta, will be key to Adidas’s effort to catch industry leader Nike. It replaces manual stitching and gluing with molding and bonding done by machines, churning out running shoes in a day, vs. 2-3 months in China and Vietnam, where components are shuttled among suppliers that produce individual parts. “In the history of sneaker making, this is probably the biggest revolution since manufacturing moved to Asia,” says an industry exec.

The factories take a page from fast-fashion pioneers Zara and H&M, part of an effort by Adidas to more quickly get shoes, soccer jerseys, and other goods from designers’ sketchbooks to store shelves. Adidas says coupling speed with customization will allow it to sell more gear at full price and keep customers from defecting to rivals. Adidas’s rivals are pursuing similar strategies, with Nike investing in a company making electrical adhesion machines that can assemble the upper part of a shoe 20 times faster than a human worker can. New Balance and Under Armour have started 3D-printing parts of the soles of some shoes.

Classroom discussion questions:

Will these Speedfactories replace traditional shoe production in Asia?
Why is this a revolution in the industry?

Video Tip: Robots at Alibaba, China’s Largest Online Retailer

Occupying .7 acres, Alibaba’s warehouse is situated in China’s Guangdong Province

Online retailer Alibaba has opened the largest ‘smart warehouse’ in China manned by 60 cutting-edge robots. These Wifi-equipped, self-charging machines are responsible for moving goods in the warehouse. They send the goods to human workers, who then arrange the products to be packed and posted to customers around the world.

The automated robots, similar to Amazon’s Kiva machines, started working at the warehouse in July, and have helped increase its output by threefold. Each of the machines is fitted with laser detection which prevents them from bumping into each other. Once fully charged, the robot can work 8 hours non-stop, travelling up to 5 feet per second and carry a load as heavy as 1,322 pounds.

Traditionally, a worker could sort 1,500 products during a 7.5-hour shift after taking 27,924 steps; with the help of the robots, the same worker could sort 3,000 products during the same period of time and only 2,563 steps need to be taken. The machines also lift and rotate the shelves, which makes it easier for human workers to reach the goods.

This entertaining 2 minute video can be shown when you are covering robotics in Chapter 7 or warehousing in Chapter 9.