coronavirus – The OM Blog by Heizer, Render, & Munson

Guest Post: Hiring Workers to Meet Demand

Our Guest Post today comes from Howard Weiss, Professor of Operations Management Emeritus at Temple University.

The city of Philadelphia is one of many cities that due to COVID-19 are experiencing increasing volumes of residential trash that needs to be collected, reports The Philadelphia Inquirer (Aug. 26, 2020). Because people have been spending more time at home there has been a dramatic increase of household trash. The problem is compounded by the fact that some of the trash collectors are not showing up for work because they have the virus, fear getting the virus or are self-quarantining because they have been exposed to someone who has the virus.

In Aggregate Planning, Chapter 13 in your Heizer/Render/Munson OM text, one option suggested is to hire workers as needed to meet the demand. This may be easier said than done. In July, the mayor of Philadelphia announced that between 120 and 150 workers would be hired into the Streets Department. The city maintains a list of 3,455 labor candidates but at the moment there are only 45 of these candidates employed for trash collection. Fifty-five have been hired but 10 have quit.

The Inquirer notes that “The city has faced challenges at every step of the hiring process. Issues include finding workers from the city’s existing list of laborer civil service candidates who are interested in taking the job, getting them to show up for and pass medical assessments, and then keeping them at work once they begin.”

Baltimore is using a different option of collecting trash but not recyclables. For recyclables, Baltimore is using a self-service option as discussed in Chapter 7 in which citizens are expected to take their recyclables to a drop-off center. Dallas is considering ending collections in alleyways because collecting on streets is more efficient in terms of labor.

Classroom discussion questions:
1. What other options do cities have to increase their trash collection?
2. What other resources are required if more trash collectors are hired?

OM in the News: Wrestling With Unsold Clothing Inventory

A new French law is forcing industry giants to donate or recycle unsold goods that they would have otherwise destroyed.

Apparel companies, from elite fashion houses to mass-market chains, are saddled with an inventory glut following months long closures during the pandemic. Now, they are trying to get rid of the excess without angering waste-conscious consumers—or harming their brands, reports The Wall Street Journal (Aug. 14. 2020). In the U.S., brands and retailers locked out of an entire fashion season are flooding charities with unsold products, in addition to sending goods to discount stores and liquidators.

Good360, a nonprofit that collects excess merchandise and distributes it to charities, expects more than $660 million in donations for the entire year, double what it received last year. “Brands don’t want their unsold products winding up at flea markets or on Craigslist,” said the CEO of Good360.

LVMH—which owns Louis Vuitton, Dior and other brands—booked a $200 million write-down on its inventories for the first half of the year, because many products destined for the spring/summer fashion season were ordered just before much of the West went into lockdown.

Big retailers sometimes destroy returned products rather than deal with the cost of trying to resell or even give them away. Brands that destroy unsold goods have sparked outrage from consumers, politicians and environmental groups. French businesses destroyed $700 million in unsold goods in the most recent year with available data– six times more than they donated. But high-end fashion companies fear angering clientele who would spend thousands on a designer dress or bag, only to see the same item a year later at a discount store selling for a fraction of the price.

Classroom discussion questions:

Why does French policy differ from that in the U.S?
How is the EOQ model (see Ch. 12 in your Heizer/Render/Munson OM text) impacted by the coronavirus?

OM in the News: Boeing’s Supply Chain Takes a Hit

Boeing sits atop a chain of more than 16,000 suppliers. These companies, making parts for Boeing jets, are shrinking rapidly in the wake of the travel downturn, writes The Wall Street Journal (Aug. 13, 2020). U.S. aerospace manufacturers have already shed more than 100,000 jobs since the start of the year, with the pandemic adding to existing pressures from the sharply reduced production of the still-grounded 737 MAX jet. The biggest supplier on the MAX program, Spirit AeroSystems (which makes fuselages), is cutting 8,000 jobs, around 40% of its commercial aerospace workforce. GE is shedding 13,000 from its aviation unit.

In addition to the MAX, the Boeing supply chain is taking other hits. The overall production of new jets has declined, and the big drop in flying—a 1/3 of the global fleet remains grounded—has reduced demand for spares and improvements such as new seats. The reduced workload comes as companies had invested in new equipment and hiring to support higher jet production and the steady rise in airline passengers, only for the pandemic to render their business plans irrelevant.

Boeing forecast that it would produce 240 planes this year, 2/3 lower than in 2019, and has had to twice reduce that forecast downward. It delivered just 4 jets in July and is producing only a dozen MAX a month, down 36 from a year ago. Before the pandemic, Boeing was supporting suppliers by ordering more parts than it needed and stockpiling them ahead of a planned increase in MAX production. That acceleration has failed to materialize so it has slowed orders.

Raytheon won’t start shipping parts for new MAX jets until the second half of next year. Safran, which also makes Boeing engines, said its commercial sales fell 66% last quarter. “We have a concern regarding the future of some of our suppliers and subcontractors because they are in crisis, too,” Safran’s CEO stated.

Classroom discussion questions:

What supply chain dangers is Boeing facing?
What can it do at this point?

OM in the News: Hotel Robots Help During Covid-19

Room-service robots like Relay reduce in-person interactions between staff and guests.

“Robots that delivered a burger and fries a few years ago were a high-tech gimmick that gave hotel guests a good laugh,” writes The Wall Street Journal (Aug. 12, 2020). Now, manufacturers are suggesting these machines could help guests stay safe during a global pandemic.

Hoteliers and robotics companies say delivery bots like Sovioke’s Relay are cutting down on potentially unsafe interactions between hotel staff and room guests, by offering contactless room service. And cleaning robots, like Maidbot’s Rosie, are vacuuming hallway floors while cleaning crews spend more time than ever sanitizing rooms.

Before the pandemic, bots at one California hotel chain would typically make 200-300 trips a month, mostly ferrying items like toothbrushes or towels from the reception desk, on to elevators, and up to people’s hotel rooms. Those same bots now make about 700 trips a month, as more guests seek to avoid interactions with hotel staff. And there are new types of robots in development that could help hotel owners during the pandemic. Maidbot vacuuming robots are rolling out wet-cleaning and disinfecting machines to further assist housekeepers in virus-proofing room surfaces.

The use of robots in the hotel industry has concerned some that these machines could eventually be used to replace employees. Many U.S. hotels have reduced staff during the pandemic, and although hotel operators and robotics companies insist robots help rather than reduce staff, robots could limit how much extra labor hotels bring on to meet new sanitation demands.

The robots aren’t always perfect. Children can confuse them by trying to get them to move in too many directions at once, causing the bots to get stuck. And sometimes it takes patience and a few programming tweaks before the robots really learn the layout of the hotel.

Classroom discussion questions:

How else is technology changing the hotel industry? (Hint: see Ch. 7 in your Heizer/Render/Munson OM text)
What other tasks might hotel robots perform?

OM in the News: Vaccine Supplies Won’t Be Enough for Everyone at High Risk

Should doctors and nurses get vaccinated before the general public?

Initial supplies of any successful coronavirus vaccines are now expected to fall short of what is needed even for high-priority groups like health-care workers, forcing drugmakers and U.S. officials to grapple with the thorny question of who should be first in line. Public-health officials estimate more than 100 million Americans, including doctors and nurses, other essential workers and nursing-home residents, should get vaccinated before the general public.

Yet initial supplies now look like they will cover only a fraction of the high-priority groups, if a vaccine clears testing and is authorized in the fall, reports The Wall Street Journal (Aug. 7, 2020).

There may be 10 million to 20 million doses available at first. The limited initial reserve is forcing U.S. health officials and their advisers to make hard choices about who should get vaccinated first. It could mean prioritizing staff at hospital emergency departments and intensive-care units over health-care workers who have less interaction with the sickest patients. But if a vaccine is shown to be protective in the elderly, they may end up getting high priority because older people are at higher risk of severe disease. Officials are also weighing how high to prioritize people who work outside of health care but in important jobs like those in the food supply chain.

Companies working on vaccines say they are ramping up manufacturing to eventually produce hundreds of millions of doses, but that bigger supply is unlikely to kick in until next year. The most difficult allocation decisions will be in the first 6-9 months of vaccine availability, but then supplies should begin to catch up to the broader population.

Classroom discussion questions:

From a business perspective, who should receive early vaccinations?
From an ethical perspective, who should be vaccinated first?

OM in the News: The Race to Build Covid-19 Vaccine Supply Chains

Pharmaceutical companies that are racing to develop vaccines for the coronavirus are already working behind the scenes to build the supply chains needed to deliver their drugs to billions of people as rapidly as possible. To serve global demand once a vaccine is approved, a complicated and high-stakes supply chain would kick into gear on a scale that the drug industry has rarely seen, writes The Wall Street Journal (Aug. 1, 2020). The preparations involve lining up raw materials and factory capacity to manufacture a vaccine in large volumes, and the equipment needed to transport many millions of doses at once through distribution channels that will be subject to tight security and temperature controls.

“Once a vaccine has been successfully developed, how do you get all the production you need, and how do you get it out?” said Senator McConnell.

Some of the companies involved are building this supply chain for the first time. Moderna, which just started final-stage testing of a vaccine, had never sold a product on the market. Neither has Novavax, a drug developer that was awarded a massive federal grant for vaccine manufacturing.

Pharmaceutical companies at the start will need to produce enough of what is known as the drug substance, the primary vaccine ingredient. Once they have produced the final liquid vaccine, they will need to fill vials with it, adding another hurdle to distribution. (J&J alone has bought 250 million vials). Medical glass has been in short supply since before the pandemic, and that shortage has worsened.

Logistics operators could be another speed bump. They have struggled at times during the pandemic amid upheaval in demand—particularly for consumer products and medical gear—that has left companies scrambling to find warehousing and transportation space. Airfreight capacity, which will be crucial for moving a vaccine in the early days of distribution, has been hit particularly hard because thousands of flights have been grounded since the pandemic began.

Classroom discussion questions:

Why is this supply chain complex?
How will the Covid supply chain differ from the beer supply chain in Figure 11.1 of your Heizer/Render/Munson text?

Teaching Tip: Giving Your OM Students an Individualized Experience in Online Learning

As universities across the country begin to make the difficult decision to continue with online learning in the fall semester, faculty will again be asked to adapt their classes to an online format, writes Faculty Focus (July 27, 2020). Here are some ideas for individualized instruction that you may want to introduce into your online OM course to increase student engagement.

Making Content Manageable. In an individualized instruction model, students have the freedom to work through course material at their own pace while being provided a safety net of support from course staff to shepherd them through the course. For example, divide the content into 10 units which are each assessed about one week apart. Breaking the material down into these manageable chunks is important in keeping students from becoming overwhelmed with the content. For each unit, provide students with a list of concepts and objectives you expect them to master by the end of their study on the unit. They can take advantage of text readings, online supplemental materials, your mini-lecture videos, and tutoring sessions.
Flexibility. One of the most important aspects of any individualized instruction model is scheduling. Students should adhere to a “deadline schedule” to ensure they continue progressing through the course, and have a “deadline” by which they need to complete each unit. You can, of course, provide flexibility on deadlines.
Interacting with Course Staff. Students seem to prefer scheduling individual (or small group) meetings with course staff over virtual office hours or weekly review sessions. While course content can be disseminated via recordings of your lectures, viewing of these lectures leave students with “Zoom fatigue.” Small group interactions succeed in keeping students engaged and learning.
A Point Person for Every Student. Assigning every student to a course staff member as their point-of-contact means students develop relationships with someone who provides regular contact via 1-on-1 tutoring and guidance through the assessment process.
Building Community. From day one have students assign themselves to small group discussion sessions that meet during the first 4 weeks of the class. In these sessions, students get to know each other, get to know course staff, and begin to familiarize themselves with the resources available to them for the course.

OM in the News: The End of the Jumbo Jet Era

The final convoy of A380 fuselages in France

As we point out in Chapter 5 (and in Figure 2.5) every product has a life cycle, an important issue for operations managers, especially in this time of pandemic flux. And so it appears that The Queen of the Skies-the iconic Boeing 747– is approaching her abdication. British Airway (the 747’s biggest operator) just announced that its 31 747s will never fly again. Its immediate retirement of its 747s marks the demise of the jumbo plane’s 50-year reign, with similar decisions by Delta, United and Air France, reports Financial Times (July 27, 2020). The last 747 in the Qantas fleet recently flew to its final resting place in the Mojave Desert.

The A380 superjumbo jet’s life cycle was much briefer. Just 13 years after the first A380 flight by Singapore Airlines, Airbus is ceasing production. Flying, as it slowly recovers after Covid-19, looks like being smaller, nimbler and point-to-point, rather than in huge aircraft collecting passengers at hub airports. The long-haul planes of the future are the 248-336 seat Boeing 787 and the 350-410 seat Airbus A350.

It was also a Chapter 4 forecasting issue, as Airbus got flying’s economics wrong. In 1999, Boeing and Airbus sparred over how many super-large aircraft the market could support. Boeing said fewer than 400 would be needed by 2019. Airbus said nearly 1,500–but sold only 242. Boeing’s 747 prospered through the decades of explosive growth in airline travel, from 310 million passengers in 1970 to 4.5 billion last year. The 747’s best years are now gone, though it has timed its retirement perfectly.

To make matters worse for Boeing and Airbus, they are still making the smaller planes that airlines aren’t collecting, straining their finances, adds The Wall Street Journal (July 27, 2020). Airlines don’t want the aircraft for now, because they are unable to fill them profitably during a historic plunge in demand for flying. The result: finished airplanes with nowhere to fly, and less cash for Boeing, Airbus and their suppliers as they slash production and payrolls. “Clearly, we’re in a situation where we don’t need any aircraft,” said Delta’s CEO.

Classroom discussion questions:

What should Boeing’s OM strategy be at this point?
Why was Airbus’ A380 forecast so inaccurate?

OM in the News: A Forecasting Nightmare for Farmers

In early July, S. Carolina farmer Jeremy Storey dropped off an order of eggs at a restaurant’s back door as planned and continued on his way. But 6 hours later, he got a call that the eggs were never collected — the restaurant had suddenly closed because a staff member tested positive for Covid-19, and nobody canceled the order. After half a day in the hot sun, the eggs could no longer be eaten. “Half the restaurants we’re going to now, we find out upon delivering to them that they’re closed,” he said. He’s now sitting on a surplus of about 24,000 eggs, with no idea when, or if, things will stabilize.

The unpredictability is a major problem for farmers. If they can’t forecast what demand for eggs (and other products) will look like tomorrow, much less months out, they run the risk of overproducing — which would leave them with expensive surpluses — or underproducing, which would prevent them from having enough product on hand to meet demand.

Now, just as restaurants began to resume dine-in service, a new surge of coronavirus cases has paused reopening plans and put farmers back in limbo — and made it even more difficult to forecast. Planning is essential to farmers because they have to anticipate their customers’ demand months, and sometimes years, ahead of when they deliver so that they have enough time to grow crops or raise animals, writes CNN Business (July 16,2020).

Uncertainty “is really what’s causing the problem,” said a union exec. “There’s no end in sight. That makes it “really hard to plan for the future.” If the uncertainty drags out for another year or two, he said, some farms and restaurants will go out of business. It also means that some restaurants that make it through this dark period won’t have a steady source of supply at the other end.

Classroom discussion questions:

1 Should demand during the pandemic be excluded from future time-series forecasts?

2. With so much uncertainty, is it better to raise or lower production for the next agricultural cycle?

OM in the News: A Safe Return to Manufacturing Productivity

COVID-19 is changing everything in manufacturing. Companies face a long journey to the “next normal,” one that will likely have far-reaching financial and operational implications, writes Industry Week (July 14, 2020). Immediate priorities include creating a safe work environment for production employees. Missteps could invoke legal or regulatory actions, something all companies want to avoid. As many manufacturers enter the Recover phase of COVID-19, one that is marked by restarting production at plants in regions that have been impacted differently by virus outbreaks, workforce safety becomes a critical priority. The restart/ramp-up should generate considerations across the work itself, the workforce, and the workplace.

Work: How will new physical distancing constraints and supply/demand variability be incorporated into operations? Are there opportunities to remove humans from processes through automation and/or robotics?

Workforce: How will workers “feel” safe and come back to work willingly? What new policies and procedures are required to protect employees, reduce risk of spread (e.g. personal protective equipment (PPE), break room policies)?

Workplace: What physical/operational changes are necessary to meet health and safety requirements? What technologies and solutions could create a safer work environment in plants and facilities?

A holistic approach toward the recovery phase should include solutions that address all three of these areas. It will likely blend strategy and process changes with advanced technologies, which can hold the key to a robust recovery for manufacturers. Some of the smart factory technologies that many manufacturers have already been piloting, such as data analytics–71% in a recent study, sensors–54% and wearables–29%, could dramatically accelerate the pathway to recovery.

Classroom discussion questions:

What other complications will operations managers face when reopening factories or service facilities?
What role can sensors play?

OM in the News: COVID-19, Force Majeure and Supply Chains

Global industry is now 6 months into the COVID-19 pandemic and its effects on supply chains, and the broad features of the event are becoming clearer. As the first wave of the pandemic has washed around the world, few businesses have been unaffected. About 75% of American companies, and 97% of international firms, have experienced some supply chain disruptions, writes IndustryWeek (July 9, 2020).

Some sectors, such as agriculture and food processing, have seen sharp increases in demand and pivoted swiftly into new opportunities. Others, such as aviation and apparel, have encountered demand collapses and faced extremely difficult supply chain management challenges.

Nearly 1/3 of companies reported that they had already faced a claim that a supplier or customer was excused from performing their obligations under an agreement because of the law of force majeure. This concept allows one party to a contract to claim a right to suspend, or stop, their fulfillment of their end of the bargain, because of an intervening event that is outside of their control and that overcomes their ability to perform as both parties had expected.

The COVID-19 pandemic is unlike the sorts of events to which force majeure law usually applies, and presents multiple risks. The “usual” force majeure event – like a facility fire or a hurricane – is limited in time, scope, and geographic place. The current pandemic, however, is persistent and worldwide. It can seem as if a global pandemic and state-ordered shutdowns must qualify as “acts of God.” But the law on the subject differs widely from place to place, and is flexible. Most cases will be highly fact-specific, and subject to maneuvering.

The COVID-19 pandemic will be with us for some time, and for business the waters will remain between choppy and treacherous. Careful, systematic and forward-looking management of the supply chain disruptions that are occurring now may make the difference in results.

Classroom discussion questions:

Why is force majeure an OM issue?
What other supply chain risks are companies facing today? (Hint: see Chapter 11’s Table 11.3 in your Heizer/Render/Munson text)

OM in the News: Why We Ran Out of Meat

Workers donned protective gear at a Tyson poultry-processing plant in Camilla, Ga.

The Covid-19 pandemic has been a debacle for the $213 billion U.S. meat industry, writes The Wall Street Journal (July 10, 2020). For the first time in memory, there wasn’t enough meat to go around. Reduced production forced grocery giants such as Kroger, Costco. and Albertsons to limit how much fresh meat shoppers could buy. Wendy’s had to tell customers that some restaurants couldn’t serve hamburgers.

Deboning livestock and slicing up chickens has long been hands-on labor. Low-paid workers using knives and saws work on carcasses moving steadily down production lines. It is labor-intensive and dangerous work. and remains one of the more hazardous jobs in the U.S. With 4.3 workplace injuries or illnesses per 100 workers in 2018, the industry’s rate is nearly 40% higher than the national average for all industries, surpassing logging, mining and construction.

And factory floors have been especially conducive to spreading coronavirus. In April and May, more than 17,300 meat and poultry processing workers in 29 states were infected and 91 died. Plant shutdowns reduced U.S. beef and pork production by more than 1/3 in April. The companies are searching for a solution–and they think the found one: robotic butchers.

Over the past 3 years, Tyson, the biggest U.S. company (with 122,000 employees out of 585,000 industry-wide) has invested about $500 million in technology and automation. It plans to increase the shift to robots in the aftermath of the pandemic. While some of these robots, such as automated “back saw” cutters that split hog carcasses along the spinal column, labor alongside humans in plants, the finer cutting, such as trimming fat, for now largely remains in the hands of human workers, many of them immigrants. Annual turnover in meat plants ranges from 40% to 70%, versus 31% average for manufacturers.

Yet a growing consumer appetite for products such as deboned chicken and skinless meat has required more people on processing lines. Decades ago, most Americans bought whole chickens. Now, 85% of chicken eaten is parts like breasts and wings or products such as chicken finger.

Classroom discussion questions:
1. Which of the 9 production technology tools described in Ch. 7 in your Heizer/Render/Munson text could be applied to this industry?

2. Why have robots not made a greater headway in meat plants?

OM in the News: China’s Chokehold on Medical Supplies

Alarmed at China’s stranglehold over supplies of masks, gowns, test kits and other front-line weapons for battling the coronavirus, countries around the world have started to set up their own factories to cope with this pandemic and outbreaks of the future, writes The New York Times (July 6, 2020). But when the outbreak subsides, those factories may struggle to survive. American companies have been reluctant to make big investments in fabric manufacturing because they worry that mask demand will be temporary.

China, however, has laid the groundwork to dominate the market for protective and medical supplies for years to come. Its market grip is a testament to its drive to dominate important cogs in the global industrial machine.

Before the pandemic, China already exported more respirators, surgical masks, medical goggles and protective garments than the rest of the world combined. Beijing’s coronavirus response has only added to that dominance. It increased mask production nearly 12-fold in February alone. That is 5 times what China could make before the outbreak, and 15 times the output of U.S. companies even after they ramped up production this spring. The Chinese government played a major role in this year’s medical-equipment build-out with cheap land, subsidies, and a demand that that its own hospitals buy locally.

The U.S. has begun a push for the federal government to buy American-made pharmaceuticals and medical supplies. Likewise, France pledged to produce homegrown masks and respirators by the end of this year. But Chinese pharm companies supply 40-45% of heparin (a blood clot medicine), 70% of acetaminophen, and over 90% of antibiotics, vitamin C, ibuprofen and hydrocortisone to the U.S. About 80% of the active ingredients used in U.S. drugs also come from other countries.

Thus, it begs asking: Is it time for America to take control of its pharmaceutical and medical production?

Classroom discussion questions:

This article suggests risks in outsourcing. Relate this to the pandemic.
How does the theory of comparative advantage stand up in this situation? (See Ch. 2 of your Heizer/Render/Munson text).

OM in the News: Why the Consumer Has Fewer Choices–Maybe for Good

Consumer-oriented companies spent the past decades trying to please just about everyone, as we discuss in Chapter 7’s treatment of mass customization. The pandemic made that impossible, and now some no longer plan to try. Sellers of potato chips, cars, meals and more have been narrowing offerings since the coronavirus snarled supply chains and coaxed consumers back to familiar brands, writes The Wall Street Journal (June 27-28, 2020).

Some IGA grocery stores now offer only 4 choices of toilet paper. “We may not need 40 different choices of toilet paper.” says IGA’s CEO. Georgia-Pacific switched all production of its Quilted Northern toilet paper to 328-sheet rolls; it had been also producing the brand in 164-sheet rolls. It plans to stick with the bigger rolls even after the pandemic, which let it speed production and make distribution more efficient. Retailers also had an easier time keeping Northern toilet paper in stock by having fewer varieties on shelves.

In grocery stores, the average number of SKUs was down 7% over the past month, with some categories, such as baby care, bakery and meat, down 30%. Frito-Lay, featured in Chapter 13’s Global Company Profile, stopped producing 1/5 of its products. Over the past 45 years, Lay’s has gone to 60 varieties of chips from 4. Since 1984, Campbell Soup has quadrupled the types of soup it sells to about 400.

Those efforts helped consumer-goods makers claim more shelf space as supermarkets expanded into big-box stores. In 2018, the average U.S. food retailer stocked 33,000 different items, compared with 9,000 SKUs in 1975, But now food makers have cut back on options, streamlined supply chains and concentrated production on the most-demanded goods.

Darden Restaurants said it was going to largely keep slimmed-down menus it started during the pandemic, which have helped reduce prep work and costs. And while last year, auto makers offered more than 605,000 vehicle configurations (even before taking different colors into account), showrooms today offer choices more limited because of supply-chain bottlenecks and lower volumes.

Classroom discussion questions:
1. What are the advantages of stocking fewer SKUs?

2. Why is this a supply chain issue (see Ch. 11)?

OM in the News: Post-Pandemic Supply Chains and Automation

A U.S.-based engineer working from home uses software to examine a manufacturing line in China.

Factories around the world are turning to technology to help them safely open back up after being shut down by the coronavirus pandemic, reports The Wall Street Journal (June 15, 2020). Software, sensors, robotics and A.I. tools that make it easier for workers to keep their distance in factories and let engineers monitor and fix problems remotely have surged in demand. “Covid has really been the catalyst for the adoption of software solutions to automate workflows and make it more efficient when you have less people around doing things,” said one industry expert.

Manufacturers are focusing on using software to dynamically change assembly lines. And they are using A.I. to remotely do quality inspections in real-time. For U.S. electronics manufacturers, mistakes, defects and wasted time add up to 25% of costs and often require engineers from the U.S. to visit factories in China to fix problems. A.I. systems can scan images of every product produced on an assembly line to identify anomalies and defects. Engineers can then analyze and fix them remotely.

One Calif. food manufacturer remained open during the pandemic by using enterprise resource planning (ERP) software to remotely manage its manufacturing, supply chain and finances, letting 30% of its employees work from home. Meanwhile, technology is helping manufacturers deal with disruption to global supply chains stemming from factory shutdowns. Clear Metal, in San Francisco, has proprietary data from sources such as satellite data, shipping ports and trucking companies, along with A.I. that can predict problems in supply chains and help companies change shipping methods or suppliers in real-time.

And of course, supply-chain problems caused by factories closing in China have caused companies to look to move manufacturing closer to home. The only way to do that is automation, with factories closer to customers. Previously, automation was only used by large factories with budgets of millions of dollars with long production cycles. But automated assembly lines are now available for use in smaller spaces than large factories, with one machine doing the work of 3 people at a fraction of the cost.

Classroom discussion questions:

How can technology help improve OM?
Why is automation important in reshoring?