Chapter 9 – Page 2 – The OM Blog by Heizer, Render, & Munson

OM Podcast #4: Strategic Decision Making at McDonald’s

Welcome to our latest Operations management podcast! Today, Jay Heizer and Barry Render discuss the strategic decision making at McDonald’s that has made it such a successful company. We hope you enjoy hearing about some of the interesting operations advances that firm has made in its products (Chapter 5), processes and technology (Chapter 7). and layout (Chapter 9) to give it a competitive advantage.

And don’t forget to join us at the POMS meeting on May 22nd at 4:30 pm for a “meet the authors” ice cream social.

Instructors, assignable auto-graded exercises using this podcast are available in MyLab OM. Contact your Pearson rep to learn more! https://www.pearson.com/us/contact-us/find-your-rep.html

We will be slowing down our podcasts in the summer to one a month, so we will see you for our next podcast June 12th for a discussion about NASCAR pit stops..

Guest Post: The Cutting Stock Problem

Prof. Howard Weiss suggests an interesting problem. It is called the “cutting stock problem,” which is often solved using linear programming, the topic of Module B.

What is the major thing that your television, tablet and phone all have in common? They all have a glass display screen. These display screens are all cut from a larger piece of glass known as the Mother Glass.

Mother glass is the largest possible size of glass that can be fabricated that will not break under its own weight. In 1987, the first mother glass, termed Generation 1, was roughly 12 inches by 16 inches accommodating nearly 200 square inches of screen. The latest mother glass, Generation 10, accommodates more than 70 times that amount of screen.

Consider mother glass that is 87 inches by 98 inches for a total of roughly 8,500 square inches. A 65-inch television has a width of 52 inches and a height of 39 inches for a surface area of 2027 inches. If surface area was all that mattered than this mother glass could be used for 8500/2027 = 4 (you have to round down), 65-inch televisions. However, the longer side of a 65-inch television is 52 inches and you cannot fit two of them on top of each other because the mother glass only has 98 inches for its longer dimension. If you make three, 65-inch televisions then you are utilizing 3*2027 inches of the mother glass or only 71% of the mother glass.

The layout chapter (Ch. 9) in your Heizer/Render/Munson textbook describes Assembly Line Balancing. The concepts of rounding down, making 4 televisions in theory, but only being able to make 3 televisions in practice, and utilization are identical to Assembly Line Balancing concepts of rounding down, not always being able to achieve the minimum number of stations and utilization of time, rather than area (square inches).

Fortunately, there are other options that better utilize the mother glass. If you only want to make one size of television, you could make six 55-inch televisions, eight 48-inch televisions or eighteen 32-inch televisions, each of which utilizes over 90% of the mother glass. In addition, you do not have to make only one size of screen on the mother glass. For example, glass could be cut as shown in the diagram above that includes both 55-inch televisions and 65-inch TVs.

Classroom discussion questions:
1. What is the largest single panel LCD that is currently manufactured? (Check it out on-line)
2. Using graph paper determine how many 83-inch and 32-inch televisions could be cut using the Mother Glass dimensions above.

OM in the News: The Fast Food Revolution

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

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

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

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

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

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

Classroom discussion questions:

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

OM in the News: Robots Go to Bat in Warehouses

Automatons from Nimble Robotics help fill orders at Puma North America’s warehouse

More robots that can pick up separate objects are moving from laboratories to warehouses as the technology improves and labor-strapped logistics operators look to automation to meet surging demand. Businesses are using software-powered robotic arms to sort clothing and e-commerce parcels, pack bread and industrial supplies, and pick electronics and consumer products from larger bins to prepare orders for delivery.

The technology isn’t replacing human workers anytime soon. But the latest steps show warehouse robots are evolving as the computer vision and software that guide them (see Chapter 7 in your Heizer/Render/Munson text) grow more sophisticated, allowing them to take on more tasks that have been largely done by people.

Puma is using several robotic arms to assemble orders of clothing and shoes at a distribution center in Torrance, Calif. The technology uses a combination of cameras, grippers and artificial intelligence to pluck items from bins that another automated system delivers to workstations usually staffed by people. Remote operators are on hand to assist if the robot has trouble picking up an object. The robots perform with about 99% accuracy, about as well as their human counterparts, and can run for two shifts straight.

Interest in robotic picking is up considerably in the pandemic as e-commerce orders have surged and competition for workers intensified, accelerating broader demand for logistics automation, writes The Wall Street Journal (Jan, 11. 2022). Last year SB Logistics opened a highly automated fulfillment center in Ichikawa, Japan. The center uses robotics technology to pick and pack items including electronics, household products and canned goods. The facility stores about 50,000 products, with robots doing about half the picking, and aims to eventually automate all operations.

Some businesses are deploying high-tech mechanical arms for other distribution work. Bimbo Bakeries uses robotic grasping technology to pick and pack bread. GXO Logistics is using a robotic arm equipped with camera vision to help speed up the order fulfillment process at a warehouse in the Netherlands.

Classroom discussion questions:

What are the OM advantages of using robots in warehouses?
The disadvantages?

OM in the News: The Office of the Future

“The office used to be a place people went because they had to,” writes The Economist (Dec. 4, 2021). Meetings happened in conference rooms and in person. Desks took up the bulk of the space. The pandemic, however, has exposed the office to competition from remote working, and brought up a host of questions about how it should be designed in the future. In Chapter 9 we discuss this evolution of office layouts, including the need for offices that accommodate Proximity, Privacy and Permission.

In the past the office was a place for employees to get their work done. Now some think of the office as the new offsite. Its purpose is to get people together in person so they can do the things that remote working makes harder: forging relationships or collaborating in real time on specific projects. Others talk of the office as a place that makes the idea of mingling with people attractive.

But a layout that is largely devoted to people working at desks alongside the same colleagues each day is very 2019. With fewer people coming in and more emphasis on collaboration, fewer desks will be assigned to individuals. Instead, there will be more shared areas, or “neighborhoods”, where people in a team can work together flexibly.

Designs for the post-Covid office must also allow for hybrid work. Meetings have to work for virtual participants as well as for in-person contributors: cameras, screens and microphones will proliferate. All of which implies the need for flexibility. Laptop docking stations are simple additions, but other bits of office furniture are harder to overhaul. Desks themselves tend to be tethered to the floor through bundles of cables and plugs. Will the office of the future feature desks with wheels? With flexible meeting rooms whose walls that lift and slide?

Optimists think the office of the future will be a spacious, collaborative environment that makes the commute worth it. But in reality, pragmatic considerations—how much time is left on the lease, the physical constraints of a building’s layout, uncertainty about the path of the pandemic—will determine the physical look. Whatever happens, the office won’t be what it was.

Classroom discussion questions:

Discuss the history of office layout. (Hint: see pages 371-3 in your Heizer/Render/Munson text).
Why is this an important OM issue?

Video Tip: The Automated Warehouse of the Future

It is called “the hive,” or “the grid” — a huge structure that fills a warehouse the size of 7 football fields, and seems to be a huge chessboard populated mostly by robots. There are thousands of them, each the size and shape of a washing machine, and they wheel about, night and day, moving groceries. Their job is to be cheaper and more efficient than humans.

The hive-grid is the creation of Ocado, a British online-only supermarket that’s made a name for itself designing highly automated warehouses and selling the tech to other grocery chains. Ocado’s latest operation processes 3.5 million items or around 65,000 orders every week. It’s an example of the wave of automation hitting countries around the world. The tasks being undertaken by Ocado’s bots are so basic they’re best described by simple verbs — “lifting,” “moving,” “sorting” — and that means they exist in various forms in a range of industries.

Imagine a huge machine, with groceries going in one end and shopping orders coming out the other. Humans do the unpacking and packing, while in the middle, robots sort and rearrange this vast inventory 24 hours a day. Individually, the robots aren’t intelligent; they don’t make decisions for themselves. But their actions are all coordinated by a central computer. This means the robots can be used as efficiently as possible. If you want to pick a typical, 50-item Ocado order, they will help each other. A group of robots can come together in a huddle, split up, and pick that order in a matter of minutes. In a traditional warehouse where items are scattered around on distant shelves, this process can take hours.

Ocado has made deals with supermarket chains in France, Canada, and Sweden to upgrade their warehouses. Such deals should make it easier for these firms to offer online grocery shopping (the UK is a relatively early adopter of this trend) and will help stave off fears of technologically savvy rivals (such as Amazon’s Whole Foods) muscling in on their territory.

Nothing is perfect, of course, and we note that major fires have broken out at Ocado warehouses –the latest this past July when 3 robots crashed into one another.

Nonetheless, your students will enjoy this 3 minute video of one of Ocado’s automated warehouses.

OM in the News: Saks Pairs Robots with Workers

Staff and collaborative robots, or cobots, work together in this Saks warehouse

Seven months after launching its stand-alone e-commerce unit, Saks Fifth Avenue has started shipping online orders from a high-tech Pennsylvania warehouse, deploying dozens of autonomous robots programmed to help workers find Giambattista Valli gowns and Christian Louboutin pumps.

With its robots and new facility, both operated by GXO Logistics, Saks is aiming to keep up with skyrocketing online sales, reports The Wall Street Journal (Oct. 28, 2021). Like many other retailers, Saks has been flooded by stay-at-home shoppers since Covid.

“Advances in robotics, coupled with AI and machine learning capabilities, have created exciting possibilities in automated warehouse design,” said GXO’s CIO. Many of these advances enable fulfillment-center operators to boost efficiency and speed up deliveries, he said. “Technology is enabling greater precision in inventory management. Pairing workers with robots is a winning combination.”

Robots being used by Saks—known as cobots, because they collaborate with human workers—stand 4 feet tall and move about the warehouse on wheels. They are equipped with large computer screens, which are used to display images of items that workers need to gather for an order. The robots rapidly cross-reference incoming orders with a map of product locations in the warehouse and quickly guide workers to the items. From there, workers pick up the items and route them to the appropriate delivery bay.

The system helps move goods through the fulfillment process twice as fast as manual processes alone. That kind of speed will be crucial for online retailers, like Saks, as they gird for what is expected to be a busy holiday shopping season.

The move to the new high-tech facility is part of a broader plan to boost the retailer’s use of advanced digital technology to support an aggressive growth strategy. “We are focused on elevating the entire experience,” said Saks’ VP, “from how customers discover our offering, to how they engage with us, to how the product arrives at their home.”

Over the past 2 years the e-commerce unit’s sales increased 82%. Even as vaccines make it safer to return to physical stores, many customers are sticking to online shopping habits picked up during pandemic lockdowns.

Classroom discussion questions:

How does this warehouse differ from that of an Amazon center? (Hint: see the Global Company Profile for Ch. 12 in your Heizer/Render/Munson text)
Describe the technology used at this Saks facility.

OM in the News: Time for Warehouse Digitalization

E-commerce is predicted to generate 19% of holiday retail sales this year. As more consumers do their shopping online, supply chain challenges are expected to continue adding pressure to an already stressed workforce. Warehouse operators, therefore, are increasingly embracing technology and augmenting workers with automated technology solutions, reports Material Handling & Logistics (Sept. 28, 2021) . Their ultimate goals are to boost hiring and employee retention, automate smart workflows, improve inventory visibility and management, and protect both operations and customer data with enhanced cybersecurity measures.

Despite more people entering the workforce, warehouses of all sizes face a labor shortage that threatens output and, eventually, customer satisfaction. Prospective employees expect a tech-enabled workplace because they already depend on mobile devices and constant connectivity in their personal lives. These expectations often translate to jobseekers choosing workplaces where they can rely on technology to improve their productivity and make everyday tasks easier to complete. While it takes an average of 4.5 weeks for workers to reach full productivity, mobile devices can speed up the training process.

In today’s warehouse and logistics environments, front-line workers are invaluable. They are also much more than just warehouse employees in the traditional sense—they’re tech operatives as well. As warehouse operations mature, automation refers to the bundling of separate technologies to better solve problems and free up workers to concentrate on higher-order tasks. Automated warehouse operations can integrate workforce management, inventory management and asset management.

Technology plays a major role in improving employee self-sufficiency and job satisfaction, especially if it can automate tasks and decision-making that would otherwise slow down workers or lead to mistakes. Giving them the right software tools, along with mobile devices designed for warehouse use, helps them move more easily through tasks. It also helps ensure accuracy during receiving, putaway, picking, packing and shipping processes.

Mobility solutions, when combined with barcoding systems, RFID and intelligent workflow software, can automate data capture and task assignments and take the guesswork out of locationing and decision making. This, in turn, helps improve the accuracy of operations and makes workers more efficient.

Classroom discussion questions:

Why is automation a particular concern for small warehouses?
What are some of the tools Amazon uses to automate? (Hint: see earlier posts by typing Amazon into the search bar)

OM in the News: Labor Shortages and the Automated Warehouse

The U.S. economy is in a high-pressure labor market, and warehouses are feeling the squeeze, reports Material Handling & Logistics (Sept. 13, 2021). From workers aging out of the workforce, complications from the pandemic, naturally high turnover rates and intense competition, warehouses are in a battle for laborers despite increasing wages and benefits. Adding to the problem is that 80% of warehouses primarily operate with a manual workforce. Previously, they were blessed with a large and cheap labor pool, allowing them to relegate tasks such as picking, packing, sorting and operating forklifts to humans. But those that do not have integrated automated solutions have not been able to keep up with growing e-commerce demands.

Prior to the pandemic, demands on warehouses and distribution centers were growing at a rate of 25%. Following the pandemic, demands have grown an additional 50%. This has exposed the urgent need to maximize operational productivity and efficiency.

The introduction of robotic technologies provides a solution to help fill in where manual workers aren’t present in the warehouse. Here are 5 automated solutions:

Autonomous mobile robots are agile, with the ability to self-maneuver around obstacles on the warehouse floor. This reduces inefficiency in transport workflows in manual warehouse operations.

Robotic loaders and unloaders lower logistics costs, increase productivity and allow manual workers to be placed in positions of higher value, which helps to reduce turnover. One of the most dangerous and injury-prone jobs is manually loading and unloading on the loading dock.

Automated storage and retrieval systems (described in Chapter 7 in your Heizer/Render/Munson text) appear in systems such as shuttles, carousels, cranes, and vertical lift modules. They offer a flexible and scalable solution that can retrieve and transfer product in storage to save space and allow for an increased inventory through optimal storage placement.

Warehouse execution systems can orchestrate nearly every aspect of the order fulfillment lifecycle: from automation systems and integrated processes to labor management, workload balancing and real-time decision-making.

Automated palletizers can handle a continuous flow of mixed-SKU or single-SKU pallets through the use of computer vision and machine learning algorithms. They boost warehouse productivity, and reduce worker injuries.

Robotic and automated solutions take primary control of tasks and place workers in roles that are of greater importance. These tools not only enhance productivity and efficiency but also improve employee satisfaction, which in turn improves turnover rates.

Classroom discussion questions:

What robotic tool did Amazon bring to the warehouse world? (Hint: See the Global Company Profile that opens Chapter 12).
Why is automation critical in warehouse management?

OM in the News: Amazon and the Choke on NYC

When the pandemic gripped New York City, it propelled an enormous surge in online shopping that has not waned, writes The New York Times (March 4, 2021). But it also highlighted the need for an unglamorous yet critical piece of the e-commerce infrastructure: warehouse space to store and sort packages and satisfy customer expectations for faster and faster delivery. Amazon today has 12 warehouses in NYC and more than two dozen in the suburbs, totaling over 7 million sq. ft. Having warehouses in the city is more cost effective and can trim roughly 20% off delivery expenses compared with deliveries that originate in New Jersey. No other large competitor has a single warehouse in the city.

The onslaught of e-commerce has meant a flood of delivery trucks crowding streets and vying for limited parking, resulting in 500,000 parking violations

While New York’s narrow streets, chronic traffic jams and brutal lack of parking are all formidable challenges, the city also has a severe shortage of warehouses just when they are most needed to properly grease an efficient delivery system. Roughly 2.4 million packages are delivered in the city every day, nearly half a million more than before the pandemic, And 80% of deliveries are to residential customers, compared with 40% before the outbreak.

The online shopping boom will only worsen problems like congestion and pollution that were already bad before the pandemic, sending flotillas of delivery trucks across the city and flooding sidewalks and lobbies with packages. The e-commerce demands also place added pressure on warehouse workers and drivers to fulfill and deliver orders on time, as customers now expect. Just-in-time delivery and last-mile delivery means you need to be very close to customer to provide the level of service that people now expect.

Classroom discussion questions:

Why is Amazon investing in so many warehouses in the area?
Will online demand drop after the pandemic is under control?

OM in the News: The Pandemic and the Drive-Through

The pandemic is sparking a boom in an often-overlooked type of property, the drive-through, reports The Wall Street Journal (March 3, 2021). Food halls and restaurants have taken a big hit from frequent limits on seating capacity during the Covid-19 crisis. But chains such as Chick-fil-A, McDonald’s, and Checkers & Rally’s said they are enjoying a sales uptick at stores with drive-through lanes, which have become more popular during the pandemic. As we discuss in the Chapter 9’s Global Company Profile on layout at McDonald’s (pages 368-9), drive-throughs have been ubiquitous since the 1970s. Now they are critical. “You can pull up in your car and stay socially distant,” said one industry CEO.

Even restaurant chains that have never offered drive-through options are rolling out lanes. Shake Shack is building its first drive-through this year in Orlando. Some restaurant chains that already rely on drive-throughs are bulking up with even grander versions, in part to help meet a rise in digital orders. Burger King unveiled plans for future restaurants designed with triple drive-through lanes. One of the lanes would be reserved for customers who order online.

Many Checkers & Rally’s restaurants feature double drive-through lanes.

Chipotle Mexican Grill Inc. is expanding a similar strategy. The company plans to add 200 locations this year, with many offering customers the option to pick up digital orders via drive-throughs the company calls Chipotlanes. Starbucks just said that it expects to open about 800 stores annually, particularly in suburban locations with drive-through lanes. The company added that stores with these lanes drove half of net sales last year, up more than 10% from pre-pandemic levels.

Classroom discussion questions:

Is building a 3 lane drive-through the right long-term decision?
What location issues (Ch. 8) must be considered in adding this layout to a restaurant?

Teaching Tip: The Vaccination Assembly Line

The Orange County Convention Center, here in Orlando, is a massive and magnificent building. At 7 million square feet (something like 146 football fields over 22 acres), it is the second largest facility of its kind in the U.S. The main exhibit hall alone seats 139, 857 people, enough to easily handle conventions such as MegaCon (68,940 in attendance), NCAA Volleyball Championships (72,000), and Design Week (85,000). But during COVID, the Center has largely sat empty, as tourism and its 125,000 related jobs in Orlando have declined dramatically.

But alas. The Convention Center has a new purpose. Its underground unloading area has been turned into a COVID-19 vaccination drive-thru assembly line! Here is an interesting example of a service assembly line (Ch.9) and a multichannel, multiphase queuing system (Module D) that you can share with your students. I just went through the system this week and was impressed by the operations planning and execution.

Work Station 1: Outside the building, a single channel queue greets you, with the server checking the bar code on your cell phone to be sure you are eligible to enter.

Work Station 2: Inside the building, the medical team scans your barcode again, takes your temperature, and attaches a barcode sticker to your arm. You drive forward 10 yards.

Work Station 3: Your arm barcode sticker is scanned and you are asked a series of medical questions. The brand of shot you will receive is announced (no choice) and you are provided informational material. You drive forward 10 yards to parallel Bays A, B, or C as directed.

Work Station 4: Your arm barcode is scanned again, you get the shot, with band aid applied. You are told to exit the building and wait in your car in the adjacent lot to see if there is a negative side effect. You are to honk your horn if you are ill.

Work Station 5: You sit in the lot for 15 minutes.

Work Station 6: You are scanned again as you exit the property and asked if you had any side effects. You never leave your car.

Total time in system, including 15 minutes in parking lot, is 25 minutes.

Classroom discussion questions:

Clearly the system is efficient, but can it be made more so?

2. Can it be easily replicated in every city?

OM in the News: Microfulfillment Uses Robots to Shrink Warehouses

Smaller is proving bigger in fulfillment centers thanks to increasingly sophisticated robotics technology. Companies looking to get goods to online consumers faster are turning more attention to microfulfillment, writes The Wall Street Journal (Nov. 9, 2020). This strategy puts robots and specialized technology to work in tight space spaces close to where e-commerce shoppers live.

A Brooklyn site fitted out with an automated system from Israeli robotics provider Fabric (formerly CommonSense Robotics) highlights the process in action. The 7,500 sq. ft. warehouse hosts chunky metal machines that shuttle goods from storage racks to the warehouse floor for mobile robots to ferry them along in an intricate dance choreographed by software. The automation allows users to pack goods in narrow aisles that human workers can’t reach, getting more use out of urban real estate that’s too costly for many larger logistics operations. Those economics have companies such as Nordstrom, Albertsons, Walmart, HEB, and FreshDirect, installing microfulfillment facilities.

Bins are stored at a microfulfillment center in Brooklyn, operated by Fabric.

By squeezing those operations into urban warehouses and the backs of stores, businesses pare delivery times so online orders reach their destinations in hours, not days. Fabric’s CEO said companies should be able to get orders picked and packed in 5 minutes or less with only a handful of workers.

For grocers coping with surging online demand during the pandemic, the technology offers a faster ROI than larger robotics-equipped warehouses while allowing retailers to fill orders more quickly than they can with human workers walking store aisles. The microfulfillment sites are becoming a new focus for retailers adjusting to the dizzying changes in consumer markets. Some merchants had been testing such sites in recent years, but the rush to online shopping during the coronavirus pandemic is accelerating moves toward space-saving, automation-powered warehouses.

Classroom discussion questions:

How do these warehouses differ from the typical Amazon distribution centers?
What are the advantages and disadvantages of microfulfillment centers?

OM in the News: How COVID-19 Changed Warehouses

In the first flush of the COVID-19 pandemic, warehouses rushed to do what they could to keep their workers safe. Now that warehouse managers have had time to see what’s worked, what hasn’t, and what they could’ve done better, they’ve adjusted their workflows, making changes that keep workers safe. Changes for worker safety dovetailed with a surge in demand for e-commerce, which has pushed warehouses to adjust at the same time, reports Supply Chain Dive (Oct. 27, 2020).

Warehouse managers are making investments in finding the right PPE and shifting workplace design to accommodate social distancing. “How do I incorporate temperature monitoring so I can screen potentially sick workers? How do I look at sick leave policies? How do I leverage technology to trace and track movement and contacts, if someone reports that they’ve tested positive?” are some of the questions managers are asking.

Most warehouse design changes are today less about the spaces and more about how workers move through them. Technology has played an important role, from applications that have employees do check-ins about potential symptoms, to algorithms that create routes for workers that ensure social distancing. An algorithm can recognize within an aisle if employees are following the 6 feet rule separation. AI and machine learning can use data from cameras that are networked into a central hub. Such a system knows how many people should be within that aisle within a specific time and if too many tasks are going to that aisle. Technology can also sense when an employee is not working at usual capacity, which could be a sign of illness.

With hiring at full force this holiday season, companies are trying to “pre-skill” those coming into their workforce with a basic understanding of inventory management, transportation, logistics and manufacturing. And they are also working to “upskill” leaders to be able to assimilate technology with the workforce.

Classroom discussion questions:

Prior to COVID-19, what were the main issues facing warehouse managers? (Hint: see Chapter 9’s section on Warehouse and Storage Layouts on p.375-77 of your OM text).
What are the new OM warehouse issues?

OM in the News: Berkeley Bans Junk Food in Grocery Checkout Aisles

The city of Berkeley, California, is trying to make its residents healthier, reports CNN.com (Sept. 25, 2020). As part of a health initiative, Berkeley is getting ready to become the first city in the US (in March, 2021) to require large grocery stores to stop selling junk food and candy in checkout aisles. So now instead of candy and soda and other high calories items, shoppers can expect to see fresh fruit and whole grain alternatives at checkout counters.

“Placement of unhealthy snacks near a register increases the likelihood that customers will purchase these foods and drinks when willpower is weak at the end of a long shopping trip,” said a City Council member. The new rule will affect at least 25 retailers in Berkeley. These include Whole Foods, CVS, Walgreens and Safeway.

Stores can still sell candy and soda, just not at a child’s eye level in the checkout. The council said the shift to selling more healthy products at checkouts will still be profitable for stores because data shows customers are looking for more low sugar and low sodium products anyway. “The idea of healthy checkout is that it offers parents more opportunities to say yes to their kids, and it also helps us to re-envision what treats are,” said a member of Berkeley’s sugar-sweetened beverage commission. Retailers in test cases around the country and in California have seen dramatic increases in sales of healthy foods since they changed their checkouts to include more fresh options in displays.

As we point out on page 374 of Chapter 9, layout of retail stores is a scientific OM issue whose “objective is to maximize profitability per square foot of floor space.” But checkout counter locations, valuable because of their high exposure rate, are traditionally sold to food manufacturers by the inch!

Classroom discussion questions:

1. Is it a good strategy for governments to dictate supermarket product layouts?

2. Why is this an OM issue?