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

OM in the News: Cockpits Go Paperless

Airline pilots, who fly some of the world’s most technologically advanced machines, have long relied on paper navigation charts and manuals, which clutter the cockpit and have to be lugged around in cases that can weigh as much as a small child. Now, however, airlines are catching up with the tablet era, reports The Wall Street Journal (June 27, 2013).

JetBlue Airways just received FAA clearance to provide its 2,500 pilots with Apple iPads that will store digital copies of the heavy paper manuals they refer to during flights. American Airlines said its 8,000 pilots had largely gone paperless now that the carrier has completed the rollout of its own iPad program. By storing manuals and navigation charts on iPads, American figures it has eliminated 3,000 pages of paper per pilot. In April, United started requiring its 10,000 pilots to carry iPads. Southwest started an iPad trial with 150 pilots this month and expects to expand it to an additional 550 pilots in the third quarter.

The volume of paper traditionally required by cockpit crews is almost overwhelming in the confines of a cockpit. American estimates that removing the bags from all its planes saves about 400,000 gallons of fuel annually, worth $1.2 million at current prices. One Alaska Airlines pilot said having the approach plates, arrival charts and runway diagrams available at the touch of a tablet is a lot quicker and more user-friendly. “It’s about information management, the human factors of managing charts,” he said. The change helps pilots be “safe and compliant” and helps the airline run a “better business.”

This is a great article to share with your class when you are discussing Technology in Services in Chapter 7.

Discussion questions:

1. What are the advantages and disadvantages of the paperless cockpit?

2. What are the operations issues involved here?

OM in the News: Penney’s Turns to the iPad For a Cash Register

In Chapter 7, Process Strategy, we discuss the impact of new technology and equipment on the customer service experience. USA Today (July 25, 2012) provides a great example to use in class with a front page story that starting this weekend, salespeople in Penney’s new Levi’s shops will use only iPads to check out customers. All of Penney’s 1,100 stores will offer mobile checkout by the end of the year.

More than 6,000 Nordstrom salespeople are already using mobile devices to check people out, just like at Apple stores. “By the end of this year, Nordstrom salespeople will be able to do everything on their handheld devices that they can at a register,” says Jamie Nordstrom, grandson of the chain’s founder. “I believe the future of our point-of-sale systems is completely mobile,” he adds. “It’s hard to know whether it’s in one year or five years because the technology is evolving so rapidly.”

Several grocery stores — Costco and Sam’s Club are two — already use employees armed with mobile devices for “line busting.” The workers scan products for customers standing in lines and print a bar code that they can take to cashiers to pay. Nordstrom salespeople will still be able to make change, but not with the “cash registers of yesterday”. “As long as there is cash, we’ll always be happy to accept cash”, Nordstrom says.

Other stores where customers interact often with salespeople will likely start adopting mobile checkout. “If you go through the whole process of shopping with help along the way, why should you have to stop and be funneled to a line?” says an industry consultant.

Discussion questions:

1. What other technology changes are impacting OM in the retail scene?

2. How does the iPad build flexibility into the store’s operations?

OM in the News: Apple’s Move to Multiple Suppliers for the New iPad

The scene at Apple stores around the world last Friday resembled a rock concert, with large crowds, barricades, food, and cheering as the company introduced its 3rd generation iPad. But when covering Supply Chain Management in Chapter 11, you and your students may be more interested in what’s going on under the hood of the new iPad tablets. The Wall Street Journal (March 17-18, 2012) writes that Apple “heavily hedged its bets on suppliers of key components, a strategy aimed at holding down costs and risks. The strategy allows a customer to play one supplier off another for lower prices, and minimize disruption if a single factory runs into production problems.”

How do we know the contents and supplier names? The research firm UBM TechInsights, it turns out, bought and took apart several iPads on Friday, and found components with the same functions made by at least 3 manufacturers in different tablets. Some teardowns revealed memory devices from Micron Technology, some from Hynix Semiconductor, as well as others with chips from Toshiba. The distinctive high-resolution displays came from Samsung, LG Display, and Sharp.

The desire to diversify supply sources has taken on added importance with recent natural disasters, including the 2011 earthquake in Japan and flooding in Thailand. “The multiple suppliers in the iPad suggest Apple is more actively trying to mitigate such risks,” says a UBM executive, adding that the strategy is credited to Apple CEO Tim Cook who “made his name at the beginning as the master of the supply chain.”

After opening the new device, UBM estimated that Apple paid $309 for the components in the iPad (that sells for $629). This compares to a current cost of $248 for the iPad 2, which was released last year. Here is the link to a 3 min. video on the iPad teardown.

Discussion questions:

1. Why do many electronics industry companies seek multiple suppliers?

2. Why did component costs increase in this new iPad?

Teaching Tip: Apple’s Ethical Dilemma

We end each chapter in the book with an Ethical Dilemma, intended to enhance class discussion on topics of interest. Here is a timely issue regarding Apple, based on a front-page New York Times (Jan.26,2012) report that details the shocking working conditions in Chinese factories that build the company’s products. The article tells the story of one worker who was killed in an aluminum dust explosion at a factory last year and paints a picture of the “harsh” and “bleak” environment in which iPads and other devices are built.

One former Apple executive says: “Most people would still be really disturbed if they saw where their iPhone comes from.” An ex-employee of Foxconn, the biggest of Apple’s suppliers in China, which has made headlines because of suicides among workers, said: “Apple never cared about anything other than increasing product quality and decreasing production cost. Workers’ welfare has nothing to do with their interests.”

And while excited buyers eagerly anticipate new products, Apple’s audits have found evidence of employees being forced to work more than 6 days a week and put in extended overtime. There have been allegations of involuntary labor, under-age workers, record falsification and the improper disposal of hazardous waste.

The Times also details the pressure manufacturers are under. “Executives want to know every financial detail. Afterward, Apple calculates how much it will pay for a part. Most suppliers are allowed only the slimmest of profits. So suppliers often try to cut corners, replace expensive chemicals with less costly alternatives, or push their employees to work faster and longer.”

The lengthy article notes that companies like Nike and Gap have been forced to change their ways in the face of public outrage, but ends with the words of a current Apple exec: “Right now, customers care more about a new iPhone than working conditions in China.” Do your students agree?

OM in the News: Pilots and the iPad–Efficiency in the Airlines, Part 2

Yesterday’s blog was on building efficient airplanes that weigh less and pollute less. With jet fuel prices at near record high prices, we noted that every pound lighter a plane can be made saves 30 gallons of fuel a year. It’s interesting that the very next day, The New York Times (July 5, 2011) reported that 1.5 pound iPads are replacing 60 pounds worth of flight manuals that pilots currently drag around. The FAA has started to authorize airlines to use the tablet computer as an electronic flight bag to take the place of bulky paper manuals that contain operations instructions, checklists, log books, navigation charts, weather information and airport diagrams.

The flight director at Alaska Airlines says: “The iPad allows pilots to quickly and nimbly access information. When you need to make a decision in the cockpit, 3 to 4 minutes fumbling with paper is an eternity”. Every one of Alaska’s pilots is now using the device — and American Airlines, which just got FAA approval, is not far behind. The e-manuals include hyperlinks and color graphics. And pilots skip the tedium of updating manuals by swapping out old pages with new ones. Switching to the iPad is also expected to reduce absenteeism from shoulder and back injuries associated with hoisting the heavy bags (which also tear up the seats, according to one AA pilot).

There are now over 250 aviation apps for the iPad, including some that are easier to use than avionics technology installed in the planes. As we discuss in Ch.7, technology can play a major role in increasing operational efficiency. With American’s fleet at about 620 planes, the airline stands to save over 1 million gallons of fuel per year just with the iPads!

Discussion questions:

1. How else does technology save the airlines time and money?

2. Can the iPads be used when the plane is in flight?

OM in the News: The Foxconn Explosion and the iPad

We last blogged about Foxconn– one of China’s and the world’s largest manufacturers–when Businessweek featured the company as its cover story last September. Known as the “consumer electronics assembler of the world, this giant firm makes products for nearly every major electronics company. Its customers include Apple (iPads and iPhones), Acer (PCs), Amazon (Kindles), Cisco (networking gear), H-P (printers and PCs), Dell (PCs), Motorola (phones), Microsoft (Xbox systems), and Sony (Playstations). The headlines at that time centered about working conditions at Foxconn, where almost a dozen employees committed suicide last year.

So yesterday’s headline in The Wall Street Journal (May 24, 2011), “Factory Blast Roils Tech Supply Chain” raised a number of concerns, especially at Apple, whose iPads are reportedly made at the same Hon Hai plant in southwestern China. (Apple, concerned about even rumors of supply chain disruptions for the popular iPad2, would not acknowledge that the product is manufactured there. The original report came in a leak to the Washington Post 2 days ago).

In the blast at the relatively new Hon Hai plant, 3 workers were killed and 15 injured, and the safety practices at Foxconnn are being raised anew. Labor rights groups had already warned the factory about hazardous working conditions , including aluminum dust floating in the air because of a process that workers use to polish iPad cases. The combustible dust, a recognized risk in electronics manufacturing, appears to be the cause of the explosion. Apple had earlier complained to Foxconn about factory conditions, but did not move its contracts elsewhere.

Discussion questions:

1. Why do so many electronics firms contract out their manufacturing?

2. Why is Apple unwilling to confirm where its iPads are made?

OM in the News: Hi, I’m iPad–May I Take Your Order?

In our Table 7.4 (from the Process Strategy chapter) we list several examples of technology’s impact on services, including “wireless orders from waiters to the kitchen”. I think we may need to update this idea for the next edition! USA Today (Feb.16,2011) just reported that a new restaurant chain is opening soon in S. California in which each of the 60 tables will have an industrial-strength iPad for customers to design and place their orders. Diners at Stacked: Food Well Built will use the iPads not just as menus and to order, but to pay for the meals as well.

The future of restaurant ordering and design may well be digital. Two-thirds of young people (18-34 year olds) responded to a national survey that they’d favor a restaurant with high-tech gear.

Others have tried iPads already: NY’s Kennedy and La Guardia airports have them at restaurants near Delta Air gates; and Bone’s Restaurant in Atlanta found that wine sales jumped 20% since iPads were added 6 months ago.

Will this be the future for all restaurants? Certainly your students will find the topic interesting for class discussion.

Discussion questions:

1. What are the downsides of this new technology? The advantages?

2. Where else might the iPad concept work besides restaurants?