Tag: business analytics

Guest Post: Using AI to Decrease Food Waste and Combat Food Insecurity

Temple University Professor Misty Blessley raises an interesting issue in her Guest Post today.

The Supplemental Nutrition Assistance Program (SNAP), overseen by the U.S. Department of Agriculture (USDA), plays a crucial role in combating food insecurity across the U.S. SNAP offers monthly benefits through an Electronic Benefit Transfer card, enabling food- insecure individuals and families to purchase food at authorized retailers.

Food insecurity, defined as a lack of consistent access to adequate and safe nutrition, affects about 13% of the U.S. population. Delaware recently became the first state to pilot an AI-powered app aimed at linking surplus food with SNAP demand. With over 30% of food wasted during production and distribution, food insecurity is increasingly viewed as a supply chain challenge.

This new AI-powered app is instrumental in combatting food insecurity by addressing the potential for waste along the supply chain.

How it works: The app, called the Smart Shopper app, allows producers and retailers to offer SNAP-approved items at discounted prices in locations where surplus inventories and unmet SNAP demand overlap. SNAP recipients can download digital coupons to purchase food that would otherwise be wasted. Developed by the creators of Priceline, the app operates similarly by offering discounted goods, much like Priceline offers unused hotel rooms and airplane seats. One key advantage is its ability to predict food surpluses at their source, rather than merely reacting to food approaching its expiration date.

The benefit: The app extends the value of SNAP benefits, helping recipients make fewer compromises when deciding which foods to purchase. It also creates a win-win situation.
Delaware noted that “when we help our most vulnerable buy locally grown products, they receive the most nutritious, freshest food Delaware has to offer, and we support small farms, boosting and growing the local economy.” Additionally, the app addresses a $250 billion food waste issue at the retail level. The app is expected to become available nationwide.

Classroom discussion questions:
1. Refer to Introduction to Big Data and Business Analytics in Module G of your Heizer/Render/Munson text. In what ways does the Smart Shopper app move decision-makers from information to optimization?
2. Why is inventory record accuracy important to the proper functioning of the Smart Shopper app?
3. How are agricultural products the same as/different than hotel rooms and airplane seats?

Guest Post: Leveraging Operations for Competitive Advantage in 2024

Prof. Misty Blessley, at Temple University, shares her insights with our readers monthly.

“From inventory management to materials requirement planning (MRP), for many years manufacturing leaders have viewed operations as a cost center — one that takes money off the bottom line rather than adding revenue to the top line”, writes Forbes (Jan. 22, 2024).This, in turn, has created a tendency to treat OM as a set of functional areas that must be continually optimized to reduce costs. But industry is at an inflection point. In an era of heightened customer expectations, diversified supply networks, rapidly advancing technologies, and enhanced environmental, social and governance (ESG) scrutiny, firms are challenged to consign this long-standing, cost-driven view to the past.

With the supply chain being where many of these challenges are being addressed, it is the focal point for viewing operations as a firm’s competitive advantage. By taking a more strategic approach, companies can also think outside the box of traditional OM and turn their supply chain into the center of enhanced operations performance.

Here are three questions firms must answer to achieve an advantage through their operations.

1. What does making the supply chain a center of enhanced performance look like? It means leaving behind the use of historical data in favor of taking on new technologies to gather consumer insights for driving customer satisfaction.

2. What happens when firms get strategic operations right? When consumer insights and OM are in harmony, firms do a better job at meeting customer expectations, to the benefit of increased customer loyalty (i.e., sales). The employee experience is also improved.

3. How can strategic operations be achieved? This can be done by integrating the supply chain across multiple enterprise operations in response to demand signals captured across the value chain. For example, rather than just trying to balance demand and supply to avoid a stock-out or excess inventory, companies work to balance operations to deliver the right product to the right customer at exactly the right time.

There is always pressure to control costs, but leveraging technology is the key to using the supply chain to build competitive advantage. This has the potential to positively affect the firm’s top as well as bottom lines.

Classroom Discussion Questions:
1. Chapter 11 of your text states: “The objective of supply chain management is to structure the supply chain to maximize its competitive advantage and benefits to the ultimate consumer.” How is viewing the supply chain as a revenue driver, as opposed to a cost center, in line with this objective?
2. What is the role of business analytics (Module G) in setting the stage for strategic operations in 2024?

Good OM Reading: The Hard Work Behind Analytics Success

mit sloanThe hype around business analytics, our topics in Modules A-F, has reached a fever pitch. From baseball to biomedical advances, stories abound about data scientists applying their wizard like talents to find untapped markets, make millions, or save lives. Data has been described as the new oil, the new soil, the next big thing, and the force behind a new management revolution. Despite the hype, the reality is that many companies still struggle to figure out how to use analytics to take advantage of their data. The experience of managers grappling, sometimes unsuccessfully, with ever-increasing amounts of data and sophisticated analytics is often more the rule than the exception, concludes a new MIT Sloan Management Review study (March, 2016).

Five key findings came from the research:

  • Competitive advantage with analytics is waning. The percentage of companies that report obtaining a competitive advantage with analytics has declined significantly as increased market adoption of analytics levels the playing field and makes it more difficult for companies to keep their edge.
  • Optimism about the potential of analytics remains strong, despite the decline in competitive advantage. Most managers are still quite positive about its potential. They’ve seen increased interest in analytics over the past few years, and they expect its use to continue to grow.
  • Achieving competitive advantage with analytics requires a sustained commitment to changing the role of data in decision making. This commitment touches many organizational aspects, from revamping information management to adapting cultural norms.
  • Companies that are successful with analytics are much more likely to have a strategic plan for analytics, and this plan is usually aligned with the organization’s overall corporate strategy.
  • Most companies are not prepared for the investment and cultural change that are required to achieve sustained success with analytics, including expanding the skill set of managers who use data and broadening the types of decisions influenced by data.

Good OM Reading: Analytics–The Widening Divide

Why don’t more managers embrace the business analytic tools we use in so many aspects of our OM courses?  A new report by MIT Sloan Management Review (Nov.8, 2011) answers the question with a survey of 4,500 executives regarding the integration of analytics in their enterprises. The report,  Analytics: The Widening Divide,  concludes that cultural biases, such as the need for new management competencies and organizational resistance to new ideas –more than technological hurdles–are the primary barriers.

First, a definition of business analytics: “the use of statistical, quantitative, predictive, and other models to drive fact-based planning, decisions, execution, management, measurement, and learning. Analytics may be descriptive, predictive. or prescriptive”.

The MIT Sloan report breaks companies down into 3 categories: Transformed (heavy users), Experienced (moderate users), and Aspirational (companies least experienced in the use of business analytics). The good news is that the number of firms in the 1st two categories, who use analytics for competitive advantage, has surged by 57% in the past year. The Aspirational group’s use of analytics actually declined by 5%. Transformed organizations have set the pace in expanding use of analytics and were found to be 2.2 times more likely to substantially outperform industry peers.

The Transformed group keenly appreciates the value of precise and real-time decisions, and is 3 times more likely to focus on speed of decision-making than Aspirational firms. This means managing operations and improving output levels based on real-time supply and demand management. Inventory replenishment processes, for example, are automated and production is optimized in these companies. As a case study, the report follows McKesson, which processes 2 million hospital orders per day. McKesson does so by embedding algorithms into customer orders to manage the inventory process without human intervention.

When students ask you why analytics are important in your OM course, this report provides a ready response.

Teaching Tip: Helping Your OM Students Find Jobs with Business Analytics

Just a day or two ago, I got a nice email from our colleague Barry Spraggins, who is Chair of the Managerial Sciences Department at the University of Nevada-Reno.  Barry uses our text Operations Management, 10th ed.,  and noted that he teaches heavily from all the Quantitative Modules, including Decision Making Tools (Module A), LP (Mod. B), Transportation (Mod.C), Queuing (Mod.D), Learning Curves (Mod.E), and Simulation (Mod.F). He writes: “I still think these are relevant components”. Not by coincidence, we find that The Wall Street Journal (Aug. 4,2011), Jay and I,  and IBM all agree.

The Journal reports that finding qualified graduates in business analytics has proven difficult–and colleges are finally stepping up to meet industry demand. IBM, which spent more than $14 billion since 2005 to buy a flock of analytics companies, has now teamed up with over 200 colleges to develop analytics courses. Fordham and Indiana U. are unveiling analytics curricula, as well as certificate and degree programs. Indiana, for example, is offering certificate programs in business analytics to both Deloitte and Booz Allen employees. Fordam has a required course called Marketing Analytics for MBAs. U. of Virginia, also working with IBM, is introducing an analytics track this fall.

“Analytics is certainly one of the top five things executives are worried about and investing in heavily”, says the president of Teradata. “Industry is going to demand it. Students are going to demand it”. As IBM and other big firms drive the software implementation process to the board room, we in academia may very well see a resurgence of demand for the very topics Prof. Spraggins has long espoused. In a tough job market, this is one way to help our students gain competitive advantage.

OM in the News: How OR/MS Morphed into Business Analytics

My interest in OR/MS isn’t just because the last 6 chapters of our hardcover OM book are quantitative topics. It goes back to my days at the U. of Cincinnati, when I first received an MS in Operations Research (from the Math dept.), followed by a Ph.D in Quantitative Analysis (from the B School).The first text I wrote used that QA title , and the second was Intro. to Management Science. Then later, at George Mason U., I chaired the Decision Sciences Dept. And finally, one of my more recent books is called Managerial Decision Modeling . Now you can understand why so many CEOs in this country are confused about  what  OR/MS/QA/DS/MDM  does for them!  At least in OM, Finance, Accounting, etc., one term is used to explain what a manager does for a living.

All this is backdrop to my point today. INFORMS (as we see in OR/MS Today) is making a brave new rebranding move from OR/MS to Business Analytics. (The group’s previous marketing approach as “The Science of  Better” obviously didn’t take off). And it just changed the name of its Spring meeting to INFORMS Conference on Business Analytics and OR.

Ironically this push for clarity is heavily weighted by IBM’s entry into what it  is branding as Business Analytics. The company spent over $14 billion in the past 4 years to acquire 24 software companies in the field, including  iLog, Neteezza, and SPSS.  IBM, reports  The Wall Street Journal (Jan.18,2011),  intends to boost its business analytics revenue from $9 billion in 2009 to $15 billion in 2015. And it is facing pressure from Oracle, SAP, and even Microsoft for the analytics market.

All of this may turn out to be good news for profs and colleges that are willing to risk rebranding their own dominions. IBM will spend serious money to encourage schools to add/modify courses to fit under this analytics wording. This is just one step it is taking to convince CEOs that they need the software.