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OM in the News: Hospital Patients May Feel Better Already in New Hospital Layout

August 23, 2014

hospital3Can good hospital layout help heal the sick, asks The New York Times (Aug. 22, 2014)? The University Medical Center of Princeton realized that it had outgrown its old home and needed a new one. So management decided to design a mock patient room–similar to the process we report in our video case study in Chapter 9 (called Laying Out Arnold Palmer Hospital’s New Facility). Medical staff members and patients were surveyed. Nurses and doctors spent months moving Post-it notes around a model room set up in the old hospital. It was for just one patient, with a big foldout sofa for guests, a view outdoors, a novel drug dispensary and a bathroom positioned just so.

Equipment was installed, possible situations rehearsed. Then real patients were moved in from the surgical unit — hip and knee replacements, mostly — to compare old and new rooms. After months of testing, patients in the model room rated food and nursing care higher than patients in the old rooms did, although the meals and care were the same. But the real eye-opener was this: Patients also asked for 30% less pain medication.  Ratings of patient satisfaction are in the 99th percentile, up from the 61st percentile before the move. Infection rates and the number of accidents have never been lower.

There are also some fine points to the Princeton layout, like a sink positioned in plain sight, so nurses and doctors will be sure to wash their hands, and patients can watch them do so. It’s less antiseptic, cluttered and clinical than your average patient room, more like what you find in a Marriott hotel, anodyne and low-key, with a modern sofa under a big window; soft, soothing colors; and a flat-screen TV. “The room,” writes the Times, “is dignified, which matters to a patient’s mental health. And it works.”

This is a great classroom example of the role of layout in the service sector.

Classroom discussion questions:

1. Why is layout important in hospitals?

2. What are some of the OM benefits of this new layout?

OM in the News: Starbuck’s Controversial Scheduling Software

August 21, 2014

starbucks“Starbucks just announced revisions to the way the company schedules its 130,000 baristas, saying it wanted to improve ‘stability and consistency’ in work hours week to week,” reports The New York Times (Aug.15, 2014). The company intends to curb the much-loathed practice of “clopening,” or workers closing the store late at night and returning just a few hours later to reopen. All work hours must be posted at least one week in advance, a policy that has been only loosely followed in the past. Baristas with more than an hour’s commute will be given the option to transfer to more convenient locations, and scheduling software will be revised to allow more input from managers.

The revisions came in response to a Times article about a single mother struggling to keep up with erratic hours set by automated software. A growing push to curb scheduling practices, enabled by sophisticated software, has caused havoc in employees’ lives: giving only a few days’ notice of working hours; sending workers home early when sales are slow; and shifting hours significantly from week to week. Those practices have been common at Starbucks. And many other chains use even more severe methods, such as requiring workers to have “open availability,” or be able to work anytime they are needed, or to stay “on call,” meaning they only find out that morning if they are needed.

Starbucks prides itself on progressive labor practices, such as offering health benefits and stock. But baristas across the country say that their actual working conditions vary wildly, and that the company often fails to live up to its professed ideals, by refusing to offer any guaranteed hours to part-time workers and keeping many workers’ pay at minimum wage. Scheduling has been an issue for years. Said a former company executive: “Labor is the biggest controllable cost for front-line operators, who are under incredible pressure to hit financial targets.”

Classroom discussion questions:

1. What is the goal of the scheduling software many fast food restaurants use?

2. Why is scheduling a major operations issue at Starbucks?

OM in the News: The Bellhop Robot

August 19, 2014


A touch screen on Botlr allows guests to give the robot a review

A touch screen on Botlr allows guests to give the robot a review

“Think of it as the Terminator’s human-friendly sibling,” writes The New York Times (Aug.12, 2014). In the Aloft  hotel lobby in Cupertino CA, a desk clerk places a razor in the bin of a 3-foot-high robot and taps in a room number on a display. The robot, “Botlr,” chirps an R2-D2-style acknowledgment and rolls off to an elevator and its final destination. On the move, it can reach speeds of up to 4 miles per hour, adequate for Botlr to hustle razors, toothbrushes, smartphone chargers, snacks and the morning paper to any of the hotel’s 150 rooms in 2-3 minutes.

When the robot reaches the guest’s door, the system calls the room, alerting the guest to the delivery. The robot, which has a camera and other sensors, can recognize that the room door has been opened and then lift the lid on the storage bin that holds the delivery. A flat panel display at the top of the robot is used for the guest to enter a “review” rather than giving a tip. In return for a positive review, the robot will do a small dance before it departs.

Perhaps the most impressive capability of the new robot is its ability to independently make its way to upper floors. When it reaches the elevator, it wirelessly sends a command for the door to open and then maneuvers into the elevator car, taking care to stay out of the way of any human passengers. When it returns to the lobby, Botlr can plug itself into a recharging station while it awaits its next errand. As a hotel application, the robot can free up the hotel desk clerk from having to run up to the room, giving the staff more time with the guests.

Classroom discussion questions:

1. How else can service robots be used in hotels?

2. What are the advantages and disadvantages of Botlr, from an OM perspective?

OM in the News: Ford’s Epic Gamble on Aluminum

August 16, 2014
Alcoa's Iowa plant has expanded to meet the growing need for aluminum in the auto industry

Alcoa’s Iowa plant has expanded to meet the growing need for aluminum in the auto industry

Ford has a long-term plan to unify its global manufacturing, writes Fortune (July 24, 2014). But profits depend largely on a beefy truck that is sold only in N. America and will never find a market in Asia or Europe. Not that it needs to. The F-series has outsold every other car and truck in the U.S. for 3 decades, with some 33 million out the door. So when Ford decided in 2009 to fundamentally change the product it advertises as “Built Ford tough” by making it with a lightweight aluminum body, it was messing with a uniquely valuable franchise. Ford figured the change could reduce the weight of the F-series by 700 pounds, significantly improving its fuel economy (US standards require a fleetwide average of 54.5 mpg by 2025).

But aluminum is more expensive than steel, more complicated to assemble, and more difficult to repair. The changeover from steel would mean alterations to nearly every phase of the business. Aluminum can’t be easily welded and must be riveted and bonded with adhesives. New suppliers would have to be found and validated, plants refitted, production techniques changed, repair technicians hired and trained. Importantly, the changeover to the 2015 models would have to be extended, slowing production and denting profits. “It will be magic or tragic,” says the CEO of AutoNation.

Adds Ford’s CEO, “We had three alternatives: make incremental changes to the existing truck, add more aluminum parts, or make it all aluminum.” Ford created 4 work teams to investigate what it saw as the big unknowns surrounding aluminum: availability, manufacturability, serviceability, and likability. At the Dearborn Truck Plant, one of 2 plants where the F-150 will be built, the company is spending hundreds of millions of dollars to build and install new stamping presses and dies to produce the aluminum panels and replace today’s spot welders with rivet guns, advanced welders, and adhesive machinery in the body shop. With both plants currently producing the 2014 F-150, they will have to be taken down one at a time for a total of 13 weeks for refitting, depriving Ford of $2 billion in revenue.

Classroom discussion questions:

1. How is Ford’s production process changing?

2. What are the risks the company faces?

OM in the News: The New Push for Standard Auto Parts

August 15, 2014


Volkswagen's modular set of underpinnings, code-named MQB, is an example of efforts to standardize modules and systems.

Volkswagen’s modular set of underpinnings, code-named MQB, is an example of efforts to standardize modules and systems.

“Automakers have long sought standard parts that can be used in various cars to cut costs,” writes Automotive News (Aug. 6, 2014). Now they want standardized modules and systems. “The requirement that we face is clearly to develop products from the outset in such a way that they can be used in all the platform derivatives without the expense of making changes,” said one German exec. But with mass standardization, a part with a quality problem can now be supplied to millions of vehicles. That puts a premium on quality.

The growth of global platforms is accelerating the trend of standardized parts. Currently, 24% of all manufactured vehicles are built on the 10 biggest platforms worldwide, with the figure expected to rise to 30% by 2020. In the process, the need for common parts that can be swapped in and out of various models will grow substantially. Why are car makers moving in this direction? First, building multiple models off one basic platform saves money in product development, tooling, and facilities. Second, manufacturers benefit from risk pooling; if one model is not selling well, it may be offset by another that can be built at the same plant.

Meanwhile, internationalization complicates the job of making standard parts and systems. To exploit regional cost advantages, automakers are pushing their system suppliers to make parts purchases in local markets. But the quality standards of suppliers in different markets vary greatly.  “When there are new product launches, we train our suppliers in the appropriate methods and processes when necessary and go into their factories to make sure there is a stable production process,” said a parts supplier. Common parts with the same specifications from various countries and on different tools may have to be manufactured in a way that they are absolutely identical in quality so that they can be installed at any other factory at any time.

Classroom discussion questions:

1. Why are standardized parts and systems so important?

2. Why are global platforms becoming the norm?

OM Syllabi: U. of New Hampshire, Penn State U., McMurry U., Florida Institute of Technology

August 13, 2014



syllabusAs the semester is about to begin, Jay and I thought you might be interested in how a wide variety schools approach the course. In today’s blog, we share the OM syllabi of 4 more schools using one of our texts: University of New Hampshire, Penn State University-Erie, McMurry University, and Florida Institute of Technology.  To see the syllabi of the 43 other schools we have posted so far, just click on the OM syllabi button on the right side of our blog site.

U New Hampshire , ADMN 580, Roger Grinde. Roger uses MyOMLab with the 11th edition of OM, team case studies using our company video series, and provides 2 sessions on spreadsheet modeling in his course.

Penn State-Erie, SCM 301, Carol Putman.  Carol also uses MyOMLab in her class, for both homework and quizzes.

McMurry U, MGMT 3370, Patricia Lapoint. Pat includes team projects, case studies, and ExcelOM  at McMurry.

Florida Institute of Technology, MGT 5024, James Lawson. Jim teaches this as an on-line course and includes an interesting student project.

Good OM Reading: Creating More Resilient Supply Chains

August 11, 2014
The Japanese earthquake and tsunami created one of the biggest supply chain disruptions in modern history

The Japanese earthquake and tsunami created one of the biggest supply chain disruptions in modern history

Many more companies now find themselves at increasing risk of supply chain disruption,” write Professors Maria Saenz and Elana Revilla in the  MIT Sloan Management Review (Summer 2014). They note a recent study by AON Risk Solutions which found that, on average, the percentage of global companies reporting a loss of income due to a supply chain disruption increased from 28% in 2011 to 42% in 2013. At many companies, the resiliency of the supply chain has not kept pace with the continually rising level of logistical complexity. Most supply chain managers have yet to do much about this problem.

A recent MIT study found that even many large companies are unable to create contingency rules and procedures for operations during a complex, high-risk event. In fact, about 60% of the surveyed managers either do not actively work on supply chain risk management or do not consider their company’s risk management practices effective. These managers lack a framework to guide them in the deployment of their risk management practices. Many understand so little about their risks that they don’t even know what kind of framework would fit the particular supply chain dynamics they face.

The example of some companies that have more advanced risk management systems suggests that it doesn’t have to be this way, report the authors. Cisco Systems Inc. is one of a handful of companies — others include Coca-Cola, Whirlpool and Procter & Gamble — that have tried to understand and measure the operational and financial vulnerabilities that could threaten the smooth operation of their supply chains. Supply chain managers at Cisco have learned to integrate supply chain design and supply chain risk management, balancing proactive mitigation capabilities with reactive capabilities in order to keep the company’s supply chain as resilient, efficient and profitable as possible. As John Chambers, CEO of Cisco Systems, comments, “In an increasingly networked world, supply chain risk management is top of mind in global organizations as well as a key differentiator for leading value-chain organizations.”


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