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

OM in the News: Behind Boeing’s Alaska Blowout

Just last week, we posted the story of Boeing’s intended takeover of its troubled fuselage provider, Spirit AeroSystems. Today’s post is a story of quality control at Boeing. You will recall that a door blew off an Alaska Airlines flight in January because a few bolts were not properly installed. Months before the 737 piece blew out midflight, the plane spent nearly three weeks shuffling down an assembly line with faulty rivets.

*Traveled work*—when work is completed out of the production line’s ordinary sequence—is a problem of Boeing’s safety culture.

In turns out that workers had spotted the bad parts almost immediately after the plane’s fuselage arrived at the factory from Spirit, reports The Wall Street Journal (March 12, 2024) . But they didn’t make the fix right away and the 737 continued on to the next workstation. (See the Chapter 9 photo on page 383 illustrating the assembly line process). When crews completed the repair 19 days later, they failed to replace four critical bolts on a plug door they had opened to do the job, leading to the accident.

At Boeing, there is a term for situations when work is completed out of the production line’s ordinary sequence: traveled work. This practice of completing work out of sequence is a liability when it comes to airplane quality. “The folks on the line, they know what it is,” Boeing CEO said. “It creates opportunities for failure.” Yet, four years ago, Boeing laid out 5 values central to improving safety. Number 3 on the list: eliminate traveled work.

Doing work out of order complicates the intricate, taxing process of putting together an airplane. In the 737 factory, each plane moves its way through a series of stations, where crews are tasked with completing certain tasks. Those stations are equipped with tooling, platforms and crews trained to do the jobs designated for the site. Planes advance to the next station every 24 hours. Keeping production lines moving even when certain parts aren’t available for a given job helps avoid costly slowdowns.

When a missing part prevents workers from finishing, the plane still moves ahead and the part gets added or repair is completed somewhere down the line. Sometimes, the work isn’t done until the plane leaves the factory. But the proper tooling may not be on hand there, leaving workers moving back and forth to get the necessary equipment.

Classroom discussion questions:

As the new OM head of the 737 line, what is your recommendation?
Can an assembly line like this be stopped?

OM in the News: AI in Manufacturing

Manufacturers are increasingly evaluating and adopting AI solutions to leverage their data, writes Industry Week (Feb. 13, 2024). Here are some key areas that stood out in how manufacturers are adopting the technology:

Quality control enhancement: AI can improve manufacturing quality control through vision systems trained on images and videos, accurately detecting complex product defects. Real-time monitoring identifies issues promptly to prevent future defects, and AI’s continuous learning enhances defect detection. (See Ch. 6)

Supply chain visibility: Manufacturers deal with enormous amounts of data in their operations, and the integration of AI technology allows real-time observation, quicker trend identification and more accurate forecasting to meet demand effectively. AI algorithms analyze historical sales data, market trends and external factors, enabling more precise demand forecasts and aligning production and inventory levels. In logistics, AI optimizes routes by analyzing transportation costs, delivery times and traffic patterns, enhancing efficiency and cost-effectiveness. The strategic use of AI in the supply chain offers benefits like improved visibility, increased agility and better planning, enhancing overall resiliency and responsiveness. (See Ch. 11)

Energy efficiency and resource utilization: Companies are using AI to optimize energy consumption and resource utilization in manufacturing processes. These capabilities analyze real-time data from sensors, production equipment and other sources to identify patterns and trends in energy usage. This can inform predictive recommendations to optimize energy consumption, reduce waste and enhance overall resource efficiency. (See Supp. 5)

Predictive maintenance improvement: The use of AI in predictive maintenance enables a shift from reactive to proactive strategies, leveraging data-driven approaches. AI algorithms analyze real-time data to predict maintenance needs and failures. AI identifies patterns on the factory floor, detecting anomalies and potential malfunctions. This proactive approach minimizes unplanned downtime, extends equipment lifespan and allows manufacturers to optimize resource allocation through scheduled service activities during planned downtime, enhancing overall productivity and reducing costs. (See Ch. 17)

The use of AI in manufacturing operations in coming years is expected to accelerate. Investment in AI technologies is forecast to rise among 96% of companies by 2030.

Classroom discussion questions:

How will AI become a common tool for operations managers?
Using a search engine, describe a real company example for these applications.

OM in the News: Is Allegiant Really One of America’s Best Airlines?

Perhaps surprising to students and professors who fly a lot, Allegiant Air took 3rd in The Wall Street Journal’s (Feb. 8. 2024) annual airline scorecard, which ranks nine major carriers on their operational performance.

It’s the highest finish for the Las Vegas-based no-frills airline. The smallest carrier in the rankings scored well in the categories of (1) fewest mishandled bags, (2) fewest cancellations and (3) fewest passengers involuntarily denied boarding.

Flying Allegiant does mean accepting limitations. Some routes are only available twice a week. If there is a cancellation, travelers could be stuck for days. It charges a host of fees for add-ons—picking a seat assignment, bringing a carry-on bag or even ordering a premium beverage. But Allegiant only flies nonstop, meaning fliers can avoid annoying layovers that increase the chances of a trip gone wrong.

Allegiant has grown more reliable. In 2022, it canceled 4.25% of its flights, the most of any airline in the WSJ rankings, and fewer than 2/3 of its flights arrived on time. It finished 5th overall in that 2022 rankings. In 2023, the airline canceled less than 1% of its flights and improved its on-time arrival percentage to 72.8%—10 points up from the year before. (Allegiant still finished 6th of 9 carriers for on-time arrivals.)

So what are its operation management advantages? First, Allegiant flew its planes for about 7.5 hours per day in 2023, hours less than Spirit and Frontier, which are its low-budget competitors. That relative infrequency gives Allegiant more time to recover if things do go wrong. Second, Allegiant flies less than Frontier and Spirit. It had 115,500 flights scheduled in 2023—60% of Frontier’s total and 38% of Spirit’s. Third, unlike Spirit and Frontier, Allegiant doesn’t oversell its flights, so it didn’t bump a single passenger last year. It also placed first in baggage.

Allegiant placed 5th in complaints in the rankings. It says it plans to add more self-service tools so customers can make changes on their own, as well as add more precise callback features. Allegiant had a higher rate of delayed flights than the larger airlines because of the infrequency of its routes and the fact that it frequents smaller airports. The airline says it would rather delay flights than cancel them.

Classroom discussion questions:

From an OM perspective, what is Allegiant doing well? Why?
How can it improve its perceived quality?

OM in the News: An Inside Look at Boeing’s Outsourcing Mess

The site of this month’s midair door-plug blowout on this Boeing 737 is behind the wing, outlined in red

Long before the harrowing Alaska Airlines blowout this month, there were concerns within Boeing about the way it was building its planes. Like so many other manufacturers, Boeing was outsourcing more and more of the components.

Much modern manufacturing, of course, includes outsourcing, our topic in Chapter 2. From hot tubs to iPhones, machines are built in small pieces by different companies, then delivered to another factory for final assembly. The system has sliced costs from the process by letting production lines maximize output and eliminate waste. But the strategy also stretches oversight and adds risks, since the final product is only as good as the least-good supplier, writes The Wall Street Journal (Jan. 13-14, 2024).

A Boeing engineer distributed a controversial report in 2001 warning of the risks of its subcontracting strategy, especially if Boeing didn’t provide sufficient on-site quality and technical support to its suppliers. “The performance of the prime manufacturer can never exceed the capabilities of the least proficient of the suppliers. These costs do not vanish merely because the work itself is out-of-sight,” he wrote.

But Boeing doubled down on outsourcing in the 2000s with its 787, which was the first jet that was heavily designed by suppliers. To lower costs and risks of a new design, Boeing authorized dozens of suppliers to design and build major sections of the 787 (see text page 30), including mostly completed fuselage sections.

Now, Boeing is reckoning with the fallout from this strategy. Dozens of factories build key pieces of 737 and 787 models to be assembled by Boeing. One of the major subcontractors is Spirit Aerosystems, the sole supplier of the fuselages used in 737s and 787s. Spirit is heavily dependent on Boeing for revenue, and the two companies have often battled over costs and quality issues. The earlier 737 MAX grounding and pandemic sapped Spirit’s finances, and the company slashed thousands of jobs, leaving it short-handed and with inexperienced workers when demand recently bounced back.

Spirit employees said production problems are common and internal complaints about quality are ignored. In a given month, at a production rate of 2 fuselages a day, there are 10 million holes that need to be filled with some combination of bolts, fasteners and rivets. The result: a factory under pressure where workers rush to meet unrealistic quotas and where pointing out problems is discouraged if not punished. Increasingly, Spirit workers say, planes have been leaving the factory with “undetected defects.”

Classroom discussion questions:

What are the advantages and disadvantages of outsourcing?
What are Boeing’s options vis a vis Spirit?

OM in the News: At Ford, Quality Is Now Problem 1

In May, Ford recalled some Ford Expeditions and Lincoln Navigators after reports of fires while vehicles were parked. In June, it recalled 49,000 Mustang electric SUVs over concerns that the battery contactors could overheat. In the first 7 months of the year, Ford had 46 separate safety recalls on 6.8 million vehicles, more than any other U.S. auto maker.

Once touted for its quality record—“Quality is Job 1” was its slogan for much of the 1980s and 1990s—last year Ford set aside more than $4 billion for warranty costs, up 76% from 5 years earlier. Those billions that Ford spends yearly on warranty repairs and recalls could instead have gone towards spending for new EV models, and battery and manufacturing plants, writes The Wall Street Journal (Aug. 6-7, 2022).

Ford recalled Mustang Mach-E electric SUVs.

In 2021, Ford allocated $1,041 per vehicle for covering warranty claims compared with $713 per vehicle for rival GM. This year, in addition to the recalls, auto-safety regulators also opened a defect investigation into 2021 Ford Broncos after receiving reports of “catastrophic engine failures” at highway speeds.

One of the challenges at Ford was that it tried to make too many last-minute design and engineering changes ahead of a new-vehicle launch, increasing the risk of problems down the line. Workers rallied to fix problems when they blew up, but weren’t empowered to flag them early in the process when there was still time to head them off. Consumer Reports says Ford has too many new-model launches bunched together and often makes more substantive changes in its redesigns, while other car companies use more carry-over parts.

Ford recently installed video cameras to monitor the early build of vehicles—before production—to target any steps they can eliminate or simplify. Higher tech cameras are now used to inspect the vehicles for quality, too, allowing workers to scour for an incorrectly placed hose or a paint blemish. “We are placing more time and emphasis on ensuring everything is done right upfront to prevent quality issues from manifesting later in the development process,” says Ford’s new quality czar.

How Ford compares itself to rivals in quality has changed, too. It now sets its quality targets against the benchmarks of its competitors. One example is the quality of Ford’s Bronco SUV as compared with the Jeep Wrangler.

Classroom discussion questions:

Select one of the 7 tools of TQM found in your Heizer/Render/Munson text in Figure 6.5 and describe how Ford might use it.
When and where should Ford inspect according to Chapter 6?

Guest Post: Emergency Services and COVID

Professor Howard Weiss, recently retired from Temple University, looks at quality issues arising from COVID.

Several sources have reported that due to COVID there has been a decrease in Emergency Services quality. In Philadelphia, the average police response time, the time between a police dispatcher receiving the call and the arrival of the police, was 20% higher in 2021 than in 2020. In Los Angeles, response times to emergencies increased due to over 200 firefighters missing their shift. In San Diego, response times for its most urgent calls for service rose from 21 minutes in 2018 to 28 minutes in 2020. The problem, of course, is not limited to the U.S. Police response times have also increased in England, and Bermuda has had 48 officers unable to work as opposed to a more normal 16 officers. In addition to delayed response times, no-shows of police, has become more common since the onset of COVID.

The major reasons for the increase in response time are:

Unavailable emergency personnel because they have been stricken with COVID or quarantined because they were with someone who had COVID
Layoffs of emergency personnel who are not vaccinated
Staffing shortages in the 911 call centers
A spike in crime
Technology issues

A major concern, if the slow response times continue, is that if police do not respond in a timely fashion then people will stop calling the police at all.

Chapter 13 of your Heizer/Render/Munson textbook notes that “Police and fire departments have provisions for calling in off-duty personnel for major emergencies. Where the emergency is extended, police or fire personnel may work longer hours and extra shifts.” To increase capacity, some cities have done this and some cities have relaxed quarantine rules so emergency personnel can get back to work more quickly. Others have canceled vacation times for personnel. Some cities have brought in others to increase capacity. Another option is to put a web site in place for minor problems such as losing a driver’s license in order to reduce the demand for emergency services.

Not all increases in response times have been due to COVID. For example, in Montreal, response times are slower due to the merger of two police stations. Ft. Worth, Texas, which has the highest response time goal of Texas’ five major cities, had response times that were deemed too slow prior to COVID.

Classroom discussion questions:

As a manager in your town, how would you address this concern?
What other fields are experiencing the same issues?

OM in the News: Boeing’s Operations Management Problems

Some 787s are even being stored in the desert.

How would you like to be in charge of operations at Boeing? There are forecasting problems, capacity issues, quality failures, and supply chain snarls. The result: Boeing’s commercial airplanes unit delivered an operating loss of $472 million in the quarter, says The Wall Street Journal (July 28, 2021).

This follows two all-consuming crises. Its MAX jets had been grounded for nearly two years after two fatal crashes that took 346 lives, and the pandemic had sapped demand for new airplanes as passengers stayed home and airlines retrenched. The company has also grappled with production-quality problems on its 787 Dreamliner. Global airline capacity remains 30% below pre-pandemic levels and industry executives expect it to take until 2024 to catch up.

U.S. aerospace companies last year announced plans to shed more than 100,000 jobs, including many at Boeing’s 12,000 suppliers. Boeing itself has plans to cut its own workforce by almost 1/5 to around 140,000 by the end of this year. While the return of the 737 MAX has bolstered sales and cash, Boeing has recently slowed Dreamliner production while it addresses new issues with the planes. The company has delayed deliveries to fix defects that emerged about a year ago and is awaiting regulatory approval for a plan to inspect aircraft. With customers unwilling or unable to receive deliveries of their new 787s, Boeing has 50 undelivered widebodies scattered around its facilities and is running out of space to park them.

The new 787 problem surfaced on the forward pressure bulkhead at the front of the plane. It involves the skin of the aircraft and is similar to a previously disclosed Dreamliner issue found elsewhere on the planes. Engineers at Boeing and the FAA are trying to understand the defect’s potential to cause premature fatigue on a key part of the aircraft’s structure.

Further, the firm needs orders from China to participate fully in a stronger-than-expected recovery in air travel. Boeing hasn’t secured a direct new jetliner order from China in almost 4 years, and has been pushing for improved trade relations with the U.S. Boeing’s payroll depends on U.S.-China trade relations, says its CEO.

Classroom discussion questions:

How can Boeing forecast jet sales in the coming years? What techniques in Chapter 4 of your Heizer/Render/Munson text are applicable?
Why is Boeing facing continuing quality problems?

OM in the News: Making Vaccine Bottles

Combating the Covid-19 pandemic is at the top of the global agenda. Providing vaccines to populations around the globe means providing 8 billion doses—with only one for every person in the world. In addition to the availability of the vaccine, a decisive factor in the race against time is the accessibility of the glass vials. Producers of the vials are massively ramping up their production so as not to become the proverbial bottleneck in the supply chain, reports New Equipment Digest (April 6, 2021).

vaccine

However, medical-grade vaccine vials are not standard glass tubes. They are all made of the special glass borosilicate and require customized production lines. For example, the glass must be resistant to a wide range of chemicals and temperature changes and must not contaminate medicines. Any interaction between the container and the liquid inside must be prevented, as any chemical interference could affect the vaccine. Even the smallest scratch, crack or fissure can render an entire batch unusable, contaminate the line during the filling process or even lead to a machine standstill.

The demands on manufacturers are enormous: it is not only a matter of producing large quantities quickly but also of maintaining particularly high-quality standards. So what is needed is very fast quality control with high reliability in defect detection. One solution is vision systems, our topic on page 296 in Chapter 7. Powerful cameras can capture images of 120 vials per minute to be inspected for dimensional accuracy or surface condition with very high precision. Defects such as cracks, scratches, chips, inclusions or stains are detected with an accuracy of 0.1 square millimeters. Intelligent software enables accurate fault description analysis and classification. Testing takes place at various points in the manufacturing process, such as directly after the bottles have been formed or shortly before packaging.

Classroom discussion questions:

What are vision systems and why are they a useful OM tool?
Which of the quality control tools in Chapter 6 (Figure 6.6) of your Heizer/Render/Munson text could vial producers employ?

Good OM Reading: Quality is Free

This Thanksgiving, 2020, is unlike any in our living past. Yet we are still healthy, continue to teach (albeit differently), and have much to be grateful for. So I thought I would share with you and your students my memories of a friend and mentor, Philip Crosby, who died almost 20 years years ago. Crosby is famous for his dozen books on management and quality, starting with his classic 1979, Quality is Free, published by McGraw Hill.

Crosby guest-lectured in my MBA classes every semester for a decade and I required my students to select any of his books and write a 1-page report on how they personally benefitted from his insights. To this day, if you visit management offices of quality-conscious manufacturers worldwide, you are likely to hear the words “zero defects” and “do it right the first time,” with Crosby’s 4 absolutes of quality as their cornerstones.

Here are his words about that 1979 book: It goes back to how people think about quality. Conventionally, quality is always looked at as goodness, as gold-plating. Quality is viewed as an expense, a trade-off, something that you have to spend money on. But you can’t manage with goodness as your definition of quality. Quality is conformance to carefully thought-out requirements. So quality is free because it is already built-in. The expense of quality is nonconformance.

Crosby believed that workers are not the problem with quality–that they pretty much do what management tells them to do. He wrote: “People think that quality is some undefinable thing that you only know when you see it. Yet quality requirements are clear. They talk about vague things like delighting the customer, but you can’t tell people what that really means, so you can’t manage that way.”

His 4 absolutes are: 1. quality is conformance to requirements, not goodness.; 2. the basic aim of quality management is prevention, not appraisal; 3. that zero defects is the performance standard, not some acceptable level of defects like 6-sigma; and 4. the measurement of quality is the price of nonconformance.

Time flies by, but Crosby’s books are always worth a second read.

Guest Post: Student Perspectives on the MyOMLab Quality Management Simulation

Wende Huehn-Brown is Professor of Supply Chain Management at St. Petersburg College in Florida. She continues her review of our five OM simulations.

As shared in prior guest posts, the Heizer/Render/Munson MyOMLab simulations offer a realistic scenario to help students further evaluate their OM lessons. The Quality Management simulation uses the hospitality industry, in which students role play a restaurant manager. This simulation helps students see the details that go into improving quality for an organization to be more successful. Almost 60% of my students found this relatable to their work experiences.

This simulation challenges students to use the quality management principles from the textbook. Students need to think logically about the evidence they are given to make decisions about various investments to improve customer service and reduce failure rates. Visualizing the options to prioritize further actions needed gives students some insight on what a manager must deal with, especially when pressured to turn around a restaurant. The various problems students are given really does draws them into the scenario!

Students reflected on options that supported immediate operating needs, as well as options that may be nice to consider, but did not necessarily address complaints or fix major issues. One student came up with several ideas, not even built in the simulation, that were great examples of critically thinking about the lessons to extend additional realistic options.

Students need to sift through the feedback they are given to identify relevant customer and staff issues to support their financial and customer service goals. The majority of the students felt the simulation was fun as it gave them a sense of accomplishment and pride to positively influence profits and customer reviews over the simulated one-year time period. Some students further commented how the simulation was driving them to even improve quality at their work!

OM in the News: It Takes a Long Time to Repair a Tesla

Some owners have had a Tesla waiting 3 months for parts to arrive.

Tesla has cranked up its Model 3 production in recent months, enabling many buyers to get their vehicles after long waits, reports The Wall Street Journal (Feb. 11, 2019). But as Tesla’s U.S. sales approach those of luxury auto makers like BMW and Mercedes-Benz, it has encountered new logistical problems, from delivery and servicing of a growing fleet to balancing supply and demand. A Florida resident who recently damaged his bumper in a low-speed collision, had to wait 3 months for the repair shop to get the spare parts from Tesla and fix his car.

The unusually long wait for a repair underlines a drawback of being a Tesla customer. The upstart car company has created a coveted luxury brand but is still learning some of the basics of the auto business. Tesla CEO Elon Musk has acknowledged some of the operational challenges, saying: “We’ve just been very silly about where we store our parts. Tesla was shipping spare parts from China to the U.S. and then back to customers in China.”

Tesla plans to deliver as many as 400,000 vehicles world-wide this year, roughly four times what it sold 2 years ago. Customers in recent months have been venting on social media about trouble getting repair appointments, long waits for those fixes and flaws in newly delivered vehicles, whether they are the paint job or cracks in windows. Part of the problem is that Tesla, unlike other auto makers, doesn’t have a network of hundreds of franchise dealerships to sell and service its vehicles. It has long touted this as an advantage, giving it more control over the customer experience. But it means Tesla has to pay for service centers and to staff them.

Tesla slid to 27th of 29 automotive brands ranked for reliability by Consumer Reports last year. The Model 3 earned an “average” rating.

Classroom discussion questions:

How can Tesla address this problem?
What are the main operations issues that the automaker has had to deal with in the past 2 years?

OM in the News: Does Tesla Have a Quality Problem?

A car in the Scottsdale lot marked “inv,” or inventory, indicating it has no buyer, with service needs noted.

Tesla has been parking hundreds and hundreds of cars at lots and industrial buildings in Burbank, Antioch, and Lathrop, Calif, reports The New York Times (Oct. 2, 2018). Last week, a batch of about 100 Model 3s turned up in Bellevue, Wash., with smaller collections in Chicago, Dallas, Las Vegas and Salt Lake City. The parked vehicles were discovered over the last two months by amateur detectives who closely follow the company stock.

Elon Musk recently acknowledged that the company was having difficulty shipping cars to customers, saying Tesla was in “delivery logistics hell.” He attributed the problem to a shortage of trucks to haul cars around the country. But the Auto Haulers Association says it is not aware of any shortage of car haulers, and that other automakers that are not having shipping troubles.

Is Tesla simply gathering cars together before shipping them to customers, or bringing cars with defects together to repair them before delivery? If the former, it suggests Tesla failed in a critical task: It didn’t set up an efficient way of delivering hundreds of cars a day as it was scrambling to produce 5,000 a week. A more worrisome problem would be if Tesla built these cars and now doesn’t have customers willing to take them. Musk had long promised that the Model 3 would be available for as little as $35,000. But the least costly version available now starts at $49,000.

In some cases, cars have been marked — with a bar-coded sticker or with grease pencil on the windshield — to indicate that they are inventory vehicles, meaning they have no customers awaiting them. Some markings indicate repairs required before the cars can be sold. In the rush to ramp up Model 3 production, Tesla has faced growing issues with vehicle quality. Some customers have complained that cars arrived with scratches, loose parts and other manufacturing defects. And a new headache has cropped up: severe shortages of replacement parts. Owners needing repairs have complained of waiting a month or longer for parts.

Classroom discussion questions:

What is Tesla’s biggest OM issue?
Why is the company only producing high-option models of Tesla 3?

OM in the News: Harley-Davidson Discovered “The Problem Was Us”

“As he struggled to save Harley-Davidson Inc. from financial ruin in the mid-1980s, Vaughn Beals got a bit of help from Uncle Sam in the form of temporary tariffs on imports of Japanese motorcycles,” writes The Wall Street Journal (Sept. 1-2, 2018). But the CEO’s success in preserving one of America’s strongest brands owed more to one of his insights: The real problem wasn’t the Japanese. It was Harley’s inefficient factories and slipshod quality.

As CEO for most of the 1980s, Beals, who passed away August 18th at age 90, declared war on defects, slashed production costs and aimed marketing at a colossal opportunity: Baby boomers, reaching middle age, were itching for a way to feel young and rebellious again, if only on weekends. “For years we tried to figure out why the Japanese were beating us so badly,” Beals said in 1988. “First we thought it was their culture. Then we thought it was automation. Then we thought it was dumping. Finally, we realized the problem was us, not them.”

Beals told workers to inspect every Harley motorcycle as it came off the line, rather only a sample, and sought suggestions from workers on improving quality. Meanwhile, Harley honchos toured Japanese plants and came back with ideas. Previously, Harley made parts in huge batches and stored them. Inventories were so bloated that workers sometimes couldn’t find a part by the time it was needed. Now the company began making parts only as needed, to match current motorcycle production.

As part of the effort to attract customers who didn’t fit the old Hell’s Angels image, Harley made the motorcycles more comfortable. It reduced vibration on touring bikes by mounting engines on rubber. One thing didn’t change: The rumbling sound from the tailpipe. “It makes your heart thump a bit,” said an Arizona dentist.

We feature Harley in our Global Company Profile in Chapter 7.

Classroom discussion questions:

Describe Harley’s production process (see Ch. 7).
What changes has Harley made over the past decades?

OM in the News: Tesla’s Changing Assembly Line

The Model 3’s third assembly line, under a tent.

Just outside Tesla’s sprawling electric-car Fremont, Calif. plant, an unusual structure has taken shape in the past few weeks: a tent, about 50 feet high and several hundred feet long. Its purpose is as notable as its hasty construction, writes The New York Times (July 1, 2018). The tent houses a 3rd assembly line — part of a desperate effort to speed up production of the Model 3. Just 2 years ago, Tesla envisioned 2018 as a breakthrough moment. With a high-speed, high-tech assembly process, the company’s sales would soar more than fivefold, to half a million vehicles. It hasn’t turned out that way. As CEO Elon Musk said: “the company faced a prolonged period of manufacturing hell.”

Tesla has raced to iron out kinks in the assembly process, mainly by scrapping some complicated robots that proved ill-suited to certain tasks and hiring hundreds of workers to replace them. On the factory floor, it’s a frantic race that has taken a toll on some employees. Trying to break with standard auto-industry practices, Tesla is searching for ways to shorten the time that robots take to weld parts. It is even making seats, a component most car companies leave to specialized suppliers. And it is doing this while trying to root out bottlenecks and glitches in the manufacturing process.

Established car companies master the process with assembly-line workers and then find ways for machines to take over some of the work. Tesla did the opposite. It designed a highly automated production line populated by over 1,000 robots. But the most efficient lines use a lot of manual labor. “The most automated ones are at the bottom of the list,” said one industry expert.

Adding a new assembly line, even temporarily, is a rare and risky move in the auto industry. A line set up hastily, in an untested environment, might not achieve the quality Tesla promises. The first step in auto quality is stability.

Classroom discussion questions:

What do you think is the impact on the workers on the Model 3 lines?
What did Tesla do wrong?

OM in the News: Japan’s Manufacturing Crisis

Hiroya Kawasaki, CEO of Kobe Steel, bowed as he left a news conference in Tokyo

Japan’s reputation for flawless manufacturing quality and efficiency transformed the country’s postwar economy, changed business practices world-wide and spawned a library’s worth of management manuals and business advice books. “Now, the model is cracking,” writes The Wall Street Journal (Feb. 5, 2018).

Kobe Steel, Mitsubishi Materials, and Subaru have all just admitted to manipulating quality inspections. Takata declared bankruptcy last year after supplying 50 million defective vehicle air bags in the U.S. Mitsubishi Motors has admitted covering up vehicle faults and falsifying fuel-economy data. Nissan says its Japanese factories let unqualified employees perform final quality inspections. Indeed, Japanese brands have been bested by U.S. car makers in the past 2 years.

The scandals call into question one of the world’s most influential theories of management and manufacturing. Japan’s model, celebrated in publications such as HBR, hinges largely on the concept of kaizen, or “continuous improvement.” Kaizen means eliminating unnecessary activity, reducing excess inventory and using teamwork to fix problems when they arise. It also places enormous responsibility on the line workers (called genba) at the factory-floor level to manage daily operations and generate innovation. The genba have traditionally been guaranteed jobs for life in return for dedication. But many Japanese companies can no longer afford the luxury of lifetime employment for factory craftsmen.

At Kobe Steel, quality-checking staffers became the first targets of layoffs because they didn’t appear as busy as production-line workers. Line workers were told to make quality checks themselves, and some checks were outsourced after the company suspended hiring. Workers involved in data falsification felt they had no choice because they needed to keep production moving.

(Japan, nonetheless, remains a manufacturing powerhouse, ranking 3rd in manufacturing output, behind China and the U.S. and just ahead of Germany).

Classroom discussion questions:

Explain the concept of kaizen.
Why is the Japanese system facing a crisis?