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

OM in the News:McDonald’s Improves Operations with a Smaller Menu

McDonald’s plans to keep dozens of items off U.S. menus for the foreseeable future, after sparer operations implemented during the coronavirus pandemic led to improved service times and better margins. Salads, bagels and yogurt parfaits are among around 100 items that they removed from menus after the pandemic hit the U.S. to simplify store procedures and supply. The changes mean operators will have to stock fewer goods in their restaurants.

Many restaurant chains stripped down their menus during the pandemic in light of supply and labor constraints, reports The Wall Street Journal (June 19, 2020). Some, including Red Robin Gourmet Burgers, have reported improved operations as a result of the more limited menus, including faster service times and less waste.

McDonald’s executives said such changes had a bigger impact than they anticipated. Drive-through times fell by an average of 25 seconds during the pandemic, and customers reported in surveys that their food was better and their orders were more accurate. “Our menu strategy really has been focused as a result of Covid and the success we’ve had with a limited menu,” said McDonald’s CEO.

McDonald’s menu had ballooned in recent years as the company tried to attract new customers. That caused drive-through times to increase to levels that troubled executives, prompting the chain to test forms of automation and remove some more-complicated items. McDonald’s began offering breakfast all day in 2015, one of its biggest operational changes in years. The change improved sales in the U.S. for a time. It now allows owners to choose what breakfast items to serve all day to simplify their operations.

Classroom discussion questions:

In Ch. 5 of your Heizer/Render/Munson text, we describe 5 ways to design more efficient service systems. Which approach(es) works best at McDonald’s?
What are the advantages and disadvantages of the more limited menus?

OM in the News: 3-D Printing Hobbyists to the Rescue

Owen Plumb helped start a group in Alberta that has printed 1,000 face shields.

Practically overnight, 3-D-printing enthusiasts have remolded their home-based hobby into an emergency production line for scarce personal protective equipment for front-line workers, writes The Wall Street Journal (June 9, 2020).

Thousands of volunteers have banded together on several continents to help in the face of the pandemic crisis. Some 8,000 members of a British design group called 3D Crowd UK have printed parts for more than 170,000 face shields using 3-D printers in their homes. The group also arranges for the face shields’ assembly and distribution to hospitals and other health organizations in Britain.

The group is just one of a growing number of supply chains to spring up in Britain, the U.S. and Canada, staffed by 3-D-printing hobbyists and entrepreneurs helping to make PPE for health-care and other front-line workers. The groups illustrate the potential for harnessing the power of distributed manufacturing to deliver products on a large scale. Such community-driven approaches are “incredibly agile and well-suited to respond quickly to local needs'” says a U. of Cambridge prof.

Before Covid-19, Owen Plumb, 13, who lives in Alberta, Canada used his 3-D printer to create robots and toy-rocket parts. In March, Owen helped create a local group that has now 3-D-printed 1,000 face shields, many of which have been distributed to front-line essential workers at a local hospice and to other institutions lacking PPE. Likewise, the nonprofit Glia Project in London, Ontario, has provided roughly 5,000 face shields to small and midsize hospitals and clinics around Canada. And at Michigan State University, one professor has helped organize a group of 40 people who have printed 8,000 face shields for health-care workers in Michigan.

Classroom discussion questions:
1. What are the strengths of 3-D printing (often called additive manufacturing). Hint: see Chapter 7, p.295 of your OM text.

2. What are the downsides of this grass roots system?

OM in the News: Hobbled U.S. Supply Chains

Wanxiang America’s automotive components Michigan plant just resumed normal production with measures in place to reduce contact between employees.

Manufacturers emerging from weeks in hibernation during the pandemic are accelerating production with jumbled supply chains and less efficient plants, reports The Wall Street Journal (June 4, 2020).

Some U.S. factories are looking for alternative suppliers to compensate for plants that remain closed or are overwhelmed by orders for items in high demand. Other companies say new protective equipment and procedures to add space between workers will weigh on their profits and productivity. Ardisam Inc., for example, which makes fishing and gardening equipment that is in high demand from people spending more time outdoors, hasn’t been able to get enough parts for fence-post diggers and chicken pluckers from factories in China.

Wanxiang America, an Illinois-based unit of one of China’s largest auto-parts makers, restarted more than 20 plants in the U.S. last month after undergoing modifications to reduce contact between employees. But some of its suppliers have gone out of business this year because they were not viable at lower production rates anticipated across the auto industry. “Any one failure is going to impact everybody,” said Wanxiang’s CEO. “We’re all co-dependent on each other.”

GM last month delayed plans to increase production of pickup trucks because of a shortage of parts from Mexico. O-I Glass, the biggest producer of glass bottles, is using more expensive raw materials to make glass because of a shortage of recycled glass. The volume of recycled glass from states with deposits on beverage bottles plunged by 2/3 after redemptions on empties were suspended as a safety precaution for retail workers. “We’ve built our supply chains based on recycling,” said an O-I Glass exec. Housewares company Honey Can-Do International said its overhead costs have climbed, because its distribution center is less efficient with operations reconfigured to separate employees.

Classroom discussion questions:

What seem to be the major problems firms are facing as they restart production?
Which of the supply chain risks listed in Table 11.3 in your Heizer/Render/Munson OM text relate to the pandemic?

OM in the News: The Rise of the Temperature Scanner

Infrared temperate cameras inside the Hankou train station in Wuhan, China.

A coronavirus-triggered rush for infrared cameras that identify people with elevated skin temperature is causing makers of the devices to beef up supply chains. The first wave of demand came in part from factories and health-care companies, but it has since expanded as companies and governments reimagine entertainment, athletics, transportation and education under the coronavirus. The cameras use orange and yellow hues to highlight people with higher skin temperatures without the close contact required by traditional thermometers.

Prices of infrared screening systems can range from $2,000 to $15,000 or higher. The fast-growing market for body-temperature scanners could exceed $1 billion in sales by year’s end, writes The Wall Street Journal (May 22, 2020). Businesses are turning to temperature checks as they plan to reopen and look to mitigate the risk of illness. Ford Motor deployed more than 380 infrared thermal-scanning systems across 100 facilities world-wide to provide an added layer of comfort for employees on top of other safety measures, including mandatory face masks. In addition to Ford, thermal scanners will be used by, among others, Las Vegas casino The Venetian, the PGA golf tour and the Baltimore Ravens’ training facilities.

U.S. officials are preparing to start checking passengers’ temperatures at roughly a dozen airports. The temperature scanners would likely be a mix of tripods that can screen multiple people at once and hand-held thermal devices. Evolving demand from customers is raising the complexity of systems. Instead of stand-alone thermal scanners, some firms want to connect them with existing closed-circuit television networks,, raising cybersecurity and privacy concerns. Requests from places like football stadiums pose another kind of challenge, with fans entering through an outdoor entrance where humidity and temperature aren’t controlled.

Classroom discussion questions:

How might colleges use such scanners?
Referring to Chapter 5 in your Heizer/Render/Munson OM text, what life cycle phase is the thermal scanner in?

OM in the News: The New Office Layout

Cushman & Wakefield is bringing its ‘Six-Feet Office’ concept to offices in LA and NYC.

When employees file back into American workplaces—some wearing masks—many will find the office transformed, writes The Wall Street Journal (May 12. 2020). Desks, once tightly packed in open floor plans, will be spread apart, with some covered by plastic shields and chairs atop disposable pads to catch germs. The beer taps, snack containers, coffee bars and elaborate gyms and showers that once set high-dollar, white-collar environments apart will likely remain closed to prevent the spread of coronavirus.

The office adaptations reverse a decadeslong push in American corporations to cram workers into tighter spaces, with few separations between colleagues. Companies once spent millions of dollars retrofitting spaces to create rows of open desks, intimate conference rooms and elaborate communal gathering areas. Those designs, highlighted on page 373 in Chapter 9 (Layout Strategies), are now problematic. Modifying offices to safely allow some workers to return is even more challenging than sending people home. Some hallways and stairwells will become one-way, and many conference rooms will stay shut because they are too small to allow people to spread out.

Co-working giant WeWork once prized density, making corridors narrow on purpose so that people were more likely to bump into each other and chat. It rented out access to its “hot desks”—large, shared tables with no assigned seating. Cushman & Wakefield, a real-estate-services firm, plans to feature plexiglass dividers between desks and circles on the floor to indicate how far apart.

Classroom discussion questions:

What changes would you recommend we make in our presentation of Office Layout in Chapter 9?
Will these changes become a permanent part of office life?

Video Tip: Demand and Capacity Management in the Air Cargo Industry

The COVID-19 pandemic is a health and humanitarian crisis, and it is also an economic shock, reports Accenture (May 8, 2020). The aviation and air cargo sectors have mobilized in a big way to help supply personal protective equipment (PPE), hand sanitizer, ventilators and other desperately needed items for combating COVID-19. The crisis is shining a light on the importance of logistics and supply chain management for helping save lives, but also for bringing staples and food to populations sheltering in place. Air transport is being heavily relied on because many emergency supplies are located overseas, or across the country, and air is the fastest mode for getting them to where the outbreak is spreading.

This 12 minute video provides a fascinating glimpse how the world’s airlines have had to prepare for shocks in capacity and demand management, the topic of Supplement 7 in your Heizer/Render/Munson text.

OM in the News: Why Do the Empty Planes Keep Flying?

An Atlanta-to- Baltimore Delta flight on April 20

Many of us are wondering why airlines continue to fly nearly empty airplanes. It seems like they are burning cash, fuel and goodwill. Don’t they know what they’re doing? They do, says The Wall Street Journal (May 7, 2020).

Airlines scrambled in March and April to ground as many trips as they could. But they still found themselves locked into flying many trips with hardly any passengers for a number of OM reasons that show just how complex airline schedules are and how hard the choices are that OM executives must make.

Airlines have grounded 3/4 of their capacity, and it still hasn’t been enough. More than 90% of traffic has disappeared. For American, 99% of flights have been less than 20% full. Besides critical travel for funerals, medical reasons, etc., there are often operational reasons that they need to fly with 2-3 people on board.

A flight might have to go with 2 fliers because a later flight in that plane’s schedule had 60 waiting. Sometimes it isn’t the aircraft that had to get there, but the crew needed somewhere else for later flights. Some aircraft need to get to a maintenance base for overnight routine work. Overnight parking is in short supply at many airports housing grounded planes. So a jet may need to make the last trip of the day with 1-2 passengers just to get to its assigned parking space. And a few passengers might luck out because the plane has a large cargo payload–often medical supplies.

Now a growing concern is that there will be heavier loads on flights where passengers won’t be able to socially distance. Adding to the complexity is a requirement in the federal airline bailout (Cares Act) that requires airlines to maintain service to all the cities they currently serve. Finally, because of the complexity of schedules, airlines need to figure out which aircraft to put in storage while facing uncertainty over travel patterns in the pandemic.

Classroom discussion questions:

List some of the operations issues airlines are now facing.
What percent of your class is willing to fly in the next 4 weeks?

OM in the News: Mexico’s Shutdown Snags U.S. Factories

Whirlpool has said some of its suppliers in Mexico haven’t secured permission to remain open. A Whirlpool facility in Monterrey, Mexico.

Mexico exported $358 billion worth of goods to the U.S. last year, surpassing China as the nation’s largest trading partner. But many subsidiaries and suppliers of parts or finished goods to U.S. manufacturers remain closed by the order of Mexico’s Health Ministry, limiting the flow of goods back north across the border. So U.S. manufacturers preparing to resume production after a month of lockdowns are returning to work without a reliable supply of parts from plants in Mexico. The supply strains are adding to the uncertainty for manufacturers navigating one of the steepest drops in demand for their products in decades, writes The Wall Street Journal (May 6, 2020).

Mexico’s lockdown covers entire industries that remain in operation in the U.S. or are planning to resume production, including the auto industry. Repairing the frayed supply chains will be an early test for the revised version of a free-trade agreement between the U.S., Mexico and Canada, which is set to take effect in July. The pact, like many trade treaties, lacks standard definitions for essential industries that would remain open during a crisis that affects all three countries such as the coronavirus pandemic.

U.S. companies and some states have been lobbying for Mexican plants near the border to reopen, raising tensions between border towns where manufacturing and trade are tightly linked. Mexican authorities have cited border factories for contributing to higher rates of infection in northern Mexico. Public health authorities there say the trajectory of the pandemic in Mexico is behind the U.S., requiring that more businesses there remain closed. Tijuana, just across the border from San Diego, has been one of Mexico’s most infected areas.

Classroom discussion questions:

Explain why maquiladoras (see Ch. 2 in your Heizer/Render/Munson text) are important parts of U.S. supply chains.
Besides coronavirus, what other risks do supply chains face? (Hint: see Table 11.3)

OM in the News: Manufacturers Pivot to Fulfill an Urgent Need

Headline after headline, we are seeing a wide array of manufacturers embark on major pivots away from their daily offerings to produce an array of products out of necessity. Ventilators, masks, gowns, shields. As the COVID-19 pandemic continues to creep along, the list of products continues to grow. The pivots these organizations are embarking upon are not easy. They require strengths that do not always see the spotlight including a skilled workforce, diverse supply chain, a culture that thrives when facing adversity and strategic investments in technology, writes IndustryWeek (April 23, 2020).

As one Rockwell Automation exec explains: “This type of shift is possible only when operations have been designed and set up for agility. It is dependent on tools and processes for supply chain planning, availability of materials and people, product lifecycle management, product specifications management, plant configuration flexibility, the flexibility of the manufacturing and equipment, quality control regimens, and tracking and tracing components the product is made up of.” With any new product comes new processes, a heightened importance for these processes to be closely followed, and the need to quickly adapt and scale best practices.

Here are 3 examples of successful pivots: At Naturepedic, expert sewers, together with 3D printing technology, allowed the firm to quickly pivot and produce face masks from organic cotton fabric that was used in the manufacturing of organic mattresses. Abundant 3D printers allowed CMD to pivot from plastic bag production to make the parts for face shields. Previous product development in healthcare gave Vecna Technologies a strong foundation in product development, rapid prototyping, and responsiveness to healthcare needs to quickly produce a ventilator.

Classroom discussion questions:

How has the pandemic altered the product development stages in Figure 5.3 of your Heizer/Render/Munson text?
How is 3D printing becoming an important OM tool?

Guest Post: Coronavirus and the Basic Rules of Lean

Today’s Guest Post comes from Dr. Jeff Heyl, at Lincoln University in Christchurch, NZ. He is currently Associate Academic Dean and Director of the Centre for Lean Education and Research.

As the coronavirus crisis has developed, one key element of the response planning is accurate measurement of any infection. Unreliable measures meant that public health labs could not perform the disease surveillance required to predict and minimize harm before the virus became widely established. The impact has been magnified by the inability to rapidly expand the availability of testing. Yet developing tests for viral infections is a well-understood process. Within one week of the release of the genetic sequence of the virus, tests were successfully being administered in many countries. But the early test released in the US were flawed. What happened?

It seems the problem was a very basic manufacturing error. The CDC was charged with creating the initial test kits. They had considerable experience in this and placed well-qualified people in charge of the project. They also chose to manufacture the kits, and this is where the real problem arose.

The CDC failed to follow common laboratory protocols and procedures, which resulted in contamination of the components in the test kits. The test reported false positives at 24 of the 26 labs that received the early shipments. There should have been no confusion. The CDC had the protocols and procedures with complete documentation, but they were not followed.

The problem, however, started earlier during the design phase. A decision was made to include a 3rd component to the test, and this added complexity while not providing any useful information for the testing labs. It was intended to differentiate COVID-19 from other related viruses, but the genetic sequence of COIVD-19 is unique and the test was unnecessary. The CDC designed a product no customer needed or wanted.

So in a sense, it’s not surprising the test was fatally flawed. Two basic rules of lean were violated – customer focus and follow the rules. The failures may have resulted in higher rates of illnesses and fatalities. Most commercial failures don’t have such visible or tragic consequences, but their implications for firms implementing lean systems can be just as profound.

OM in the News: The Food Chain’s Weakest Link

This S. Dakota Smithfield Foods slaughterhouse was the nation’s single largest coronavirus “hot spot,” with 16% of the 3,700 employees testing positive.

The modern American slaughterhouse is a very different place from the one that Upton Sinclair depicted in his 1906 novel, “The Jungle.” Many are giant, sleek refrigerated assembly lines, staffed mostly by unionized workers who slice, debone and gut carcasses, under constant oversight of government inspectors. The jobs are often grueling and dangerous, but meat producers have some of the most heavily sanitized work spaces of any industry.

Yet meat plants, honed over decades for maximum efficiency, have become major “hot spots” for the coronavirus pandemic, with some reporting widespread illnesses among their workers, writes The New York Times (April 19, 2020). The health crisis has revealed how these plants are becoming the weakest link in the nation’s food supply chain, posing a serious challenge to meat production. In the cattle industry, a little more than 50 plants are responsible for 98% of U.S. slaughtering.

Shutting down one plant, even for a few weeks, is like closing an airport hub. It backs up hog and beef production across the country, crushes prices paid to farmers and eventually leads to months of meat shortages. “Slaughterhouses are a critical bottleneck in the system,” said one SCM professor.

The ripple effects of the virus are now being felt across the entire meat supply chain, all the way to grocery stores. More than a dozen beef, pork and chicken processing plants have closed or are running at greatly reduced speeds. The number of cattle slaughtered has dropped 22% from a year ago. Plant closings have also caused a major disruption, leaving many ranchers with nowhere to send their animals.

Large numbers of employees have become infected in other businesses where people work close together. But the pandemic has caused more serious disruption in the meat industry, where consolidation has given outsize importance to a small number of plants.

Classroom discussion questions:

Chapter 11 of your Heizer/Render/Munson text examines ethics within the supply chain. Relate the slaughterhouse supply chain to this issue.
Detail the meat supply chain.

OM in the News: Solving the Health-Care Equipment Supply Shortage

“As we struggle to come to terms with the scale of the Covid-19 pandemic, one of the most frustrating sights is witnessing front-line health-care workers begging for more masks, protective gowns, testing kits, ventilators and intensive-care beds,” writes MIT Prof. Yossi Sheffi in The Wall Street Journal (April 10, 2020).

The crisis has focused attention on just-in-time inventory principles. The discipline and mantra that “inventory is waste” was built out of the Toyota Production System (see Chapter 16 in your Heizer/Render/Munson text) that has become iconic in supply chain around the world.

The JIT philosophy calls for lean inventories and tight connections between companies and their suppliers. It reduces manufacturing and supply chain costs, as well as response times along the supply chain. All sorts of industries have applied its principles, including health care. When hospital JIT supply chains run as advertised, the savings in those costly and high-stakes systems can be substantial.

However, supply chains built on precise and timely deliveries are vulnerable to unexpected and large-scale disruptions. The fallout can become acute when supplies aren’t available when demand spikes. This is one of the main reasons the coronavirus pandemic has crippled health-care supply chains. Clearly, JIT systems haven’t been up to the challenge, and there have been suggestions that medical supply chains should build more “just-in-case” inventory to ensure they are prepared for such outbreaks. Yet the benefits of JIT are just too significant to forgo. Organizations that rely on large inventories won’t be able to compete with facilities that remain lean, and that is true for hospitals.

Instead, says Sheffi, the U.S. must keep a very large, centrally-managed inventory of health-care supplies in several locations around the country to supplement the inventory maintained at each hospital. The parallel here is the strategic oil reserves. We prepare for shortages of oil and weapons in times of crisis. Medical supplies are just as critical.

Classroom discussion questions:

What are the three main principles of Lean/Toyota Production Systems discussed in Ch. 16?
Sheffi’s plan is future-based. What can be done today to help the shortages?

OM in the News: The COVID-19’s Effect on Flight Capacity

It’s not an exaggeration to say that the COVID-19 pandemic has thrown the travel world into a tailspin, with a staggering impact on the $880 billion global airline industry. The earliest pains were felt in February, as flight capacity in and out of China dropped 71% compared to 2019. Flight capacity for Hong Kong went down by 92%. Flights to and from Italy plummeted 89%, while Germany and Spain have 93% less capacity as of this month.

So it is no surprise that airlines have been forced to ground a significant portion of their fleets, reports Forbes (April 4, 2020). Large aircraft like the superjumbo A380 were some of the first to be grounded, with diminished demand for the seats. However, whether it’s widebodies or narrowbodies, airlines still have the issue of where to store these planes. Delta and American are each parking about half of their fleets – or more than 1,200 aircraft. Tulsa Airport has been able to close a seldom-used runway to fit about 50 American Airlines planes, charging them about $150 a day to store. American also parked 100 planes in New Mexico, 50 in Pittsburgh, and more in Mobile and Greensboro. In addition to the cost of parking, a facility may charge maintenance costs that begin at about $2,000 per plane a month. Every day, each plane needs to have its engine run, has to taxi far enough for the tires to rotate fully, and has to have its hydraulics, avionics, and electronics checked.

A grounded fleet of British Airway planes sit on the runway at Glasgow

Capacity planning, the topic of Supplement 7, is difficult enough during normal times. But look at the capacity cuts made these 6 airlines: Ryaniar, Flydubai, and Spice Jet, 100%; American, 80%; United, 65%; Southwest, 60%. And on Sunday, April 12th, 122,029 travelers flew through U.S airports–compared to 2.5 million on the same day a year ago!

Classroom discussion questions:

What is the difference between demand management and capacity management?
How does this differ from the capacity issues faced in the recession (2008-2010) and the 9-11 terrorist attacks?

Guest Post: Storytelling Using Data Analytics During Coronavirus Outbreak

Today’s Guest Post comes from Charles Render, whose analytics firm (render-consulting.com) works with client organizations of all sizes, leveraging big data to optimize their businesses.

During these unprecedented times, data analytics and data visualization experts have a unique opportunity to measure the magnitude of the Coronavirus’ impact on the business world. The “big data” trend that has taken off the last decade has not been around long enough to experience a world-defining event such as this, and this storytelling opportunity is too good to pass up for data scientists. Data visualization is not just about giving answers; it is also about presenting the opportunity to ask new questions we have not yet thought to ask.

For example, which companies/industries are benefiting from quarantining and people staying home? Uber Eats, a food delivery service, has experienced a spike in Google searches while OpenTable, a restaurant reservation service, has dropped to almost no traffic.

Which stocks could rise while the rest of the market is struggling? Are there any companies that may get a free increase in stock share as a result of having the right name? After many investors mistook Zoom Technologies (stock ticker ZOOM) for Zoom Video Communications (stock ticker ZM) during a rise in the latter’s popularity amidst COVID-19, Zoom Technologies’ stock price surged about 318% in 8 days.

These are just two examples of the data visualization tools that are discussed in Module G (Applying Analytics to Big Data in Operations Management) of your OM text.

OM in the News: Where is All the Toilet Paper?

“What does toilet paper have to do with a global pandemic? Nothing,” writes The Orlando Sentinel (April 9, 2020).

Yet millions of people have been panicking about their household supply. Stores shelves have been emptied. Amazon is often out of stock. And social media is bursting with jokes and pleas for a roll or two. Some were stockpiling last month in advance of government lockdown orders.

It’s a common reaction in times of a crisis, when consumers feel a need for control and security. Online and in-store U.S. toilet paper sales rose 51% between Feb. 24 and March 10, as buyers started getting uneasy about the growing number of virus cases. But sales rocketed a whopping 845% on March 11 and 12 as states announced lockdowns.

Toilet paper flows from paper mills to retail stores through a tight, efficient supply chain. It is bulky and not very profitable, so retailers don’t keep a lot of inventory on hand; they just get frequent shipments and restock their shelves. The amount of toilet paper the average American uses hasn’t changed; it’s around 141 rolls per year (compared to 134 rolls in Germany and just 49 rolls in China). But even small changes in buying habits can throw everything into disarray, as we see with the bullwhip effect discussed in Supplement 11 of your OM text.

With a regional disruption like a hurricane, stores can redirect some inventory to the affected area. But a global pandemic doesn’t leave a lot of wiggle room. The big three U.S. toilet paper companies — Georgia-Pacific, P&G, and Kimberly-Clark — were already running their toilet paper plants 24 hours a day before coronavirus hit. That’s the only way they can make a profit on such a low-margin product. But now the companies are trying to increase output by making fewer varieties of toilet paper.

Classroom discussion questions:

Explain the bullwhip effect.
What supply chain options are available?