Tag: IBM

OM Podcast #2: How Does Blockchain Work?

Welcome to our second Operations management podcast! Today, Jay Heizer and Barry Render delve into the topic of blockchain, which is a topic in Chapter 11, Supply Chain Management. We will talk about its cryptocurrency origins and the work of Gerber, Nestle, Unilever, Walmart, and IBM to create a blockchain system called Food Trust. We also discuss blockchain’s shortcomings and how both shipping giant Maersk and retail giant Walmart have had to cut back on their original goals dramatically.

 

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

See you every two weeks in our new podcast series. Next up, on April 24th, is a discussion about the formidable task of managing large projects, which ties into Chapter 3 of our OM text.

OM in the News: Blockchain Fails to Gain Traction

Blockchain, the technology underpinning bitcoin and other cryptocurrencies, for years has been viewed by some companies as a way to drive industry-transforming projects, among them the tracking of assets through complex supply chains. So far, that hasn’t happened, writes The Wall Street Journal (Dec. 16, 2022).

We have followed the topic (Chapter 11, pages 451-2 in your Heizer/Render/Munson text) relentlessly, with 22 blogs over the past few years. To review them, enter “blockchain” in the search box on the right.

Maersk and IBM discontinued a blockchain-based program to track shipments

The latest effort to run aground was that of Maersk and IBM, which hoped to follow shipments via the blockchain. Another big effort, Walmart’s attempt to track groceries on the blockchain, continues, but very slowly.

“There’s not one company that has really shown, let’s say, a material change,” said Moody’s VP, of blockchain efforts in supply chains. It has been slow going or worse for big bets on blockchain for a number of reasons: the complexity of the technology, the time required to get a blockchain into operation and the difficulties in enlisting participants.

TradeLens, the Maersk- IBM blockchain platform, was launched in 2018 to help digitize container shipping on a secure global tracking platform. Had it worked, it would have been a game-changer, cutting down on paperwork to clear customs and offering cargo owners more visibility of their boxes during transit.

In 2018, Walmart partnered with IBM to start tracking its produce items through blockchain. The effort began with leafy greens, and in the four years since has added just one more item: green bell peppers. Walmart said it took time to get buy-in from suppliers who found the onboarding process daunting. Many didn’t have digital record-keeping systems and had to make large upfront investments before they could start using blockchain.

“There used to be a time, 4 years ago, every interview that I would get into, the question was about blockchain and how’s UPS going to use blockchain. Are you guys going to solve all the problems in the world with blockchain?” says a former UPS exec. “It’s been a long time since anyone has asked me about blockchain,” he added. “It never really took off in my world.”

Classroom discussion questions:

  1. Describe exactly how blockchain works.
  2. Why has blockchain faltered?

 

 

OM in the News: Blockchain on the Seas

As discussed on pages 453 and 586 of the text, blockchains have huge potential to add efficiency and security to operations. Two major European ship operators have just joined a blockchain platform formed by Maersk and IBM, in a significant boost for the adoption of the technology across the logistics industry, reports The Wall Street Journal (May 28, 2019).

The addition of France’s CMA CGM and Swiss’s Mediterranean Shipping to the effort called TradeLens means the 3 carriers that control 1/2 of all seaborne containerized cargo capacity will make the movement of freight in international supply chains more transparent and potentially generate substantial annual savings.

Maersk and IBM in 2016 kicked off the blockchain platform for container ships, which carry the vast majority of consumer goods, furniture, manufacturing parts and other basics of global commerce. Large companies such as Walmart, P&G and DuPont, along with 100 ports, have been testing the technology to get a better view of their supply chains, from raw materials to finished goods.

For ocean carriers, the blockchain technology allows trusted participants to share information as goods move through supply chains. The system also promises to reduce the cost of paperwork. Maersk said the cost of the required documentation to process and administer many of the goods shipped each year makes up 1/5 of the actual physical transportation costs.

The French carrier’s decision to join TradeLens  is “a signal that the whole notion of blockchain tourism is over and that we are at a tipping point for scale where participants will share data in a trusted fashion,” said an IBM exec.

Classroom discussion questions:

  1. Explain how blockchain works.
  2. What impact is blockchain intended to have on this industry?

OM in the News: Blockchain and Strategic Mineral Supply Chains

Congo mines are in the hands of rebels at times

Ford, Huayou Cobalt, IBM, LG Chem and RCS Global are beginning to use blockchain technology to trace and validate ethically sourced minerals, reports Mining Review (Jan. 16, 2019). The group, which includes participants at each major stage of the supply chain from mine to end-user, will begin with cobalt in exploring an open, industrywide blockchain platform that could ultimately be used to trace and validate a range of minerals used in consumer products.

Cobalt is in high demand for its use in lithium-ion batteries, which power a wide range of products such as laptops, mobile devices and electric vehicles. By 2026, demand is expected to multiply eightfold. The typical electric car battery requires up to 20 pounds of cobalt and a laptop requires an ounce of the mineral.

Cobalt produced at Huayou’s industrial mine site in the Democratic Republic of Congo will be traced through the supply chain as it travels from mine and smelter to LG Chem’s cathode plant and battery plant in South Korea, and finally into a Ford plant in the U.S. An audit trail will be created on the blockchain, which will include data to provide evidence of the cobalt production from mine to end manufacturer. An important objective is to help increase transparency in small-scale mining and enable these operators to sell their raw materials in the global market, while they meet their internationally ratified responsibility requirements.

Built on the IBM Blockchain Platform, the platform is designed to be adopted across industry and to allow parties of all sizes and roles in the supply chain easy access, including manufacturers across the automotive, electronics, aerospace and defense industries and their supply chain partners such as mining companies and battery manufacturers. Work is expected to be extended beyond cobalt into other battery metals and raw materials, including minerals such as tantalum, tin, tungsten and gold, which are sometimes called conflict minerals, as well as rare earths.

Classroom discussion questions:

  1. Why is blockchain an important OM tool?
  2. What other products are experimenting with or using blockchain?

OM in the News: Farm to Cradle–Tracking Gerber Baby Food on the Blockchain

Gerber traced the ingredients of its sweet potato, apple and pumpkin puree on the Food Trust blockchain

Gerber is putting some of its baby food products on a food-tracking blockchain to test whether the technology can trace the fruits and vegetables that go into its products, writes The Wall Street Journal (Aug. 1, 2018). Gerber’s effort is part of a wider food-industry exercise aimed at improving food recalls by using the technology behind bitcoin to trace a worldwide ingredient supply chain. Food recalls can diminish consumer confidence and lead to lost sales. News of tainted baby food hits an especially sensitive nerve – stakes that in part prompted Gerber to choose blockchain.

Gerber has discovered that putting blockchain technology to use in a corporate supply chain takes some grunt work, mainly centered on moving data from the company’s SAP SE enterprise software onto the shared digital ledger. Another wrinkle is dealing with the mix of paper and electronic data in different formats, from farmers, processors and others in its supply chain.

Gerber (and parent Nestle) are working with 9 other large food companies, including rivals Unilever and Walmart, and with IBM on a blockchain system called Food Trust, to trace food and ingredients worldwide. (The 107-year-old IBM sees blockchain as a key area of growth). The theory is that having partners and competitors share a single record-keeping system can speed up investigations of bad food and make recalls more accurate and less expensive. IBM supplies the blockchain technology and a mobile app that farmers and others can use to enter data onto the Food Trust system. For companies using Food Trust, data about harvests, processing, packaging and shipping is stored electronically on the blockchain system, which can allow trace-backs in seconds compared to days and weeks.

Classroom discussion questions:

  1. Why blockchain?
  2. Why is Gerber working with competitors on this technology?

 

OM in the News: Walmart Tries Out Blockchain

Walmart found blockchain can improve the speed and accuracy of product recalls

Blockchain isn’t only about bitcoin. The technology best known as the record-keeping system behind cryptocurrencies seems poised to play a broader role in business, where it could change how supply chains work.
Walmart is using the blockchain technology to manage supply chain data for mangoes, berries and dozens other products. “The system, built with IBM, will help Walmart figure out where bad food came from during product recalls,” writes The Wall Street Journal (Feb. 7, 2018). 

Here is how it works: A blockchain ledger allows participants to add blocks of information after each party runs algorithms to evaluate a proposed transaction. If the parties agree that the transaction looks valid — identifying information matches the blockchain’s history and follows the rules created by the participants — then it will be approved, time-stamped and added to the chain.

For example, after a mango is picked from a tree, it makes many stops before getting to a store shelf. Farmers, packing-house workers, and others along the way use a mobile app from Walmart to send details such as harvest dates, locations and images of their fruit to the retailer’s blockchain. The process is simpler and more secure than the array of barcodes, scanners, paper forms and individual databases Walmart usually uses.

In a simulated recall under the blockchain system, Walmart traced the origin of a bag of sliced mangoes in 2.2 seconds. With Walmart’s other systems, the same exercise took 6 days, 18 hours and 26 minutes. This speed and accuracy could save sales that otherwise would be lost as stores pull all mangoes off shelves while waiting for trace-back results. It could also prevent illness and death. “We’re all after trust in the supply chain, especially in a crisis,” says Walmart’s head of food safety.

Classroom  discussion questions:

  1. Explain what a blockchain is.
  2. Why is the concept so potentially valuable as a supply chain tool?

 

OM in the News: IBM and Maersk Apply Blockchain to Shipping

Shipping giant Maersk and IBM formed a joint venture using blockchain

Shipping giant Maersk is the latest company jump onto the blockchain train, entering a joint venture with IBM to create a more efficient and secure platform for organizing global trade using blockchain technology, writes The Wall Street Journal (Jan. 17, 2018). The platform could be used to streamline operations for the entire global shipping ecosystem. The idea came from the current stack of paperwork needed to process and track the shipping of goods. The cost of the required trade documentation to process and administer many of the goods shipped each year is estimated to reach 1/5 of the actual physical transportation costs.

The companies said blockchain, the technology behind increasingly popular cryptocurrencies such as bitcoin, is ideal for organizing large networks with different partners like the shipping industry, which transports more that $4 trillion goods a year. “The potential from offering a neutral, open digital platform for safe and easy ways of exchanging information is huge, and all players across the supply chain stand to benefit,” said a top Maersk exec.

More corporations, including General Motors and P&G , are exploring ways to use it to streamline supply chains and customs clearance. Singaporean and Peruvian customs also are exploring collaborating with the platform to facilitate trade flows and enhance supply chain security.

The move comes as Maersk and IBM have been attempting to reinvent themselves. IBM, the 106-year-old technology giant, has been looking to new lines of business, including blockchain, as sales in its legacy business of selling hardware and software slow. Maersk has been trying to transform itself to into a global supply-chain major like UPS and FedEx by integrating its transport and logistics units.

Classroom discussion questions:

  1. What is blockchain and why is it important in OM?
  2. How does blockchain relate to supply chains?

 

OM in the News: Why Does IBM Have More Employees in India than in the U.S.?

The IBM logo identifies a company building in Bangalore. Dozens of other foreign technology companies have offices nearby.

IBM dominated the early decades of computing with inventions like the mainframe and the floppy disk. Its offices and factories, stretching from upstate New York to Silicon Valley, were hubs of American innovation long before Microsoft or Google came along. “But over the last decade, IBM has shifted its center of gravity halfway around the world to India, making it a high-tech example of the globalization trends that the Trump administration has railed against,” writes The New York Times (Oct. 1, 2017).

Today, the company employs 130,000 people in India — 1/3 of its total work force, and more than in any other country. Their work spans the entire gamut of IBM’s businesses, from managing the computing needs of global giants like AT&T and Shell to performing cutting-edge research in fields like visual search, A.I. and computer vision for self-driving cars. The work in India has been vital to keeping down costs at IBM, which has posted 21 consecutive quarters of revenue declines as it has struggled to refashion its main business of supplying tech services to corporations and governments.

The tech industry has been shifting jobs overseas for decades, but IBM is unusual because it employs more people in a single foreign country than it does at home. The company’s employment in India has nearly doubled since 2007, even as its work force in the U.S. has shrunk through waves of layoffs and buyouts. It employs well under 100,000 people in the U.S. now, down from 130,000 in 2007. The salaries paid to Indian workers are 1/2 to 1/5 those paid here, and the range of work done by IBM in India shows that offshoring threatens even the best-paying American tech jobs.

Classroom discussion questions:

  1. When the trend in manufacturing is “reshoring,” why is IBM offshoring more?
  2. What other industries are outsourcing to India?

OM in the News: Outsourced Jobs to India May Now Go To Indiana

For years, American companies have been saving money by “offshoring” jobs — hiring people in India and other distant cubicle farms. “Today,” writes The New York Times (July 31, 2017), “some of those jobs are being outsourced again — in the U.S.” Salaries have risen in places like South Asia, making outsourcing there less of a bargain. (A decade ago an American software developer cost 5-7 times as much as an Indian developer. Now the gap has shrunk to 2 times). In addition, as brands pour energy and money into their websites and mobile apps, more of them are deciding that there is value in having developers on the same continent.

Many of these domestic outsourcers are private, little-known companies, but IBM, one of the foremost champions of the offshore outsourcing model, has announced plans to hire 25,000 more workers in the U.S. over the next 4 years. As a result, the growth of offshore software work is slowing, to nearly half the pace of recent years.

“The nature of work is changing,” said the CEO of Infosys, the Indian outsourcing giant. “It is very local. And you often need whole teams locally. It’s not enough to have people offshore in India.” This is a departure from the offshore formula of having a project manager on-site but the work done abroad. Infosys just announced plans to hire 10,000 workers in the U.S. over the next 2 years, starting with centers in Indiana and North Carolina.

In the 1990s, the internet allowed tasks like payroll and financial reporting work to be sent to low-wage nations, especially India. That brought the rise of the big outsourcing companies like Tata and Infosys, which still excel at maintaining the software that runs back-office systems.

Classroom discussion questions:

  1. How has the outsourcing model changed?
  2. List the advantages and disadvantages of outsourcing abroad.

OM in the News: IBM Says No to Home Work

“IBM is giving thousands of its remote workers in the U.S. a choice this week: Abandon your home workspaces and relocate to a regional office—or leave the company,” reports The Wall Street Journal (May 19, 2017). The 105-year-old giant is dismantling its popular decades-old remote work program to bring employees back into offices, a move it says “will improve collaboration and accelerate the pace of work.” IBM’s decision is a useful resource when you discuss work schedules in Chapter 10.

The shift is particularly surprising since IBM has been among the business world’s staunchest boosters of remote work, both for itself and its customers. It markets software and services for what it calls “the anytime, anywhere workforce,” and has published numerous studies on the merits of remote work. IBM has boasted that more than 40% of employees worked outside traditional company offices, and just posted a May 4th blog that “telework works.”

IBM may be part of a broader rethink of remote work under way at large companies, as CEOs argue that putting workers in the same physical space hastens the speed of work and sparks innovation. Employers tread a fine line, however, since workers rate flexible-work programs highly, and research has found telecommuters often work more effectively than their cubicle-bound counterparts. (Companies began offering generous remote work policies because they expected large savings in office and real-estate costs, but those savings haven’t always materialized).

IBM workers have been given 30 days to decide whether to move to company-maintained office space that can be hundreds of miles away from their homes. Those unwilling to move were also given 90 days to seek another role within IBM.

 

Classroom discussion questions:

  1. What are your personal experiences with remote work?
  2. What are the advantages and disadvantages of teleworking?

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: IBM’s Strategy Changes Bring it 100 Years of Success

Every newspaper in the country heralded IBM’s 100th anniversary this week, so we also look at this globe-spanning technology behemoth. “IBM’s global reach and broad product portfolio still make it one of the largest and most profitable IT companies in the world”, says Computerworld (June 16-23, 2011). With 427,000 employees and nearly $15 billion profit on sales of $100 billion in 2010, IBM is 2nd in sales in the computer industry only to H-P. Not that the firm has avoided ups and downs. The US  antitrust suit in 1969 (dismissed in 1982) pushed IBM to separate hardware from software. After Tom Watson, Jr., retired in 1971, its mainframe business faced strong competition from smaller, more modular systems. But under the reins of Lou Gerstner, the firm bounced back in the 1990’s focusing on software, system integration, and other services. It was the strategy change  has likely been IBM’s key to success today.

A quick history:

1911  The merger of 4 tabulating companies results in the company, which has 13,000 employees.

1914  The icon Tom Watson, Sr.,  leaves NCR to lead IBM for 40 years.

1928  The IBM punched card becomes the standard for five decades.

1953  The IBM 701 becomes the 1st production computer; it features tape drive technology.

1957  IBM introduces FORTRAN, the standard for technical programming.

1964  The firm successfully bets $5 billion on the System/360– a family of computers that share technology.

1981  The IBM PC is invented, with Microsoft providing the operating system, paving the way for PC-clones such as Dell .

2002  IBM pays $3.5 billion for PricewaterhouseCoopers to strengthen its services and technology consulting units.

2007-today  The company spends over $14 billion to acquire dozens of business analytics software firms (such as SPSS and iLog), planning on $16 billion revenue from analytics by 2015.

As OM professors, this latest move will have a major impact on the availability of free software we can use in class, a trend we need to watch carefully.

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.