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OM in the News and Video Tip: FedEx Recruits Robots

August 10, 2020

Robotic arms manufactured by Yaskawa America

Sue, Randall, Colin and Bobby are 4 of the most reliable FedEx workers in Memphis. Each clocks 8 hours a day, sorting 1,300 packages an hour. They almost never take breaks, as they are actually 260-pound industrial robot arms.

They work only about half as fast as skilled humans, but they are quickly becoming an important part of the chain that keeps packages flowing. These robots, getting both “eyes” and “brains” that allow them to sense and respond, typify an important and growing trend in automation, writes The Wall Street Journal (Aug. 8-9, 2020). They have cameras which perceive visible light and sensors to perceive depth, and their “brains” are built with machine-learning AI. This gives them a level of adaptability not before seen. (There is an excellent 6 min. video that opens this WSJ article).

But the robots are not about to steal all the jobs in these industries. For now, they’re mostly filling vacancies created by surging demand. The explosion of e-commerce means an explosion in the volume of packages shipped to homes. Some 87 billion parcels were shipped worldwide in 2018—that’s 40 a year to every person in the U.S.—and this volume will more than double by 2025.

The need for social distancing within warehouses means robots can play a role in helping workers do their jobs without being directly adjacent to one another. And logistics companies are still finding it hard to hire people fast enough. (FedEx’s air hub in Memphis currently has 500 job openings).  FedEx estimates one human could tend up to 8 robots.

The overwhelming majority of industrial robot arms in the world are still the “dumb” kind: They repeat the same action over and over again—for example welding the same parts together repeatedly on an auto production line. The holy grail of picking technology—a robot that can handle the same variety as a human—will remain out of reach for a long time, in the same way we have yet to create an autonomous vehicle that can handle the same variety of road situations a human can.

Classroom discussion questions:

  1. Why is it so hard for robots to replace warehouse workers?
  2. Why are firms like FedEx more driven to automate?

OM in the News: Vaccine Supplies Won’t Be Enough for Everyone at High Risk

August 8, 2020

Should doctors and nurses get vaccinated before the general public?

Initial supplies of any successful coronavirus vaccines are now expected to fall short of what is needed even for high-priority groups like health-care workers, forcing drugmakers and U.S. officials to grapple with the thorny question of who should be first in line. Public-health officials estimate more than 100 million Americans, including doctors and nurses, other essential workers and nursing-home residents, should get vaccinated before the general public.

Yet initial supplies now look like they will cover only a fraction of the high-priority groups, if a vaccine clears testing and is authorized in the fall, reports The Wall Street Journal (Aug. 7, 2020).

There may be 10 million to 20 million doses available at first. The limited initial reserve is forcing U.S. health officials and their advisers to make hard choices about who should get vaccinated first. It could mean prioritizing staff at hospital emergency departments and intensive-care units over health-care workers who have less interaction with the sickest patients.  But if a vaccine is shown to be protective in the elderly, they may end up getting high priority because older people are at higher risk of severe disease. Officials  are also weighing how high to prioritize people who work outside of health care but in important jobs like those in the food supply chain.

Companies working on vaccines say they are ramping up manufacturing to eventually produce hundreds of millions of doses, but that bigger supply is unlikely to kick in until next year. The most difficult allocation decisions will be in the first 6-9 months of vaccine availability, but then supplies should begin to catch up to the broader population.

Classroom discussion questions:

  1. From a business perspective, who should receive early vaccinations?
  2. From an ethical perspective, who should be vaccinated first?

OM in the News: The Race to Build Covid-19 Vaccine Supply Chains

August 5, 2020

Pharmaceutical companies that are racing to develop vaccines for the coronavirus are already working behind the scenes to build the supply chains needed to deliver their drugs to billions of people as rapidly as possible. To serve global demand once a vaccine is approved, a complicated and high-stakes supply chain would kick into gear on a scale that the drug industry has rarely seen, writes The Wall Street Journal (Aug. 1, 2020). The preparations involve lining up raw materials and factory capacity to manufacture a vaccine in large volumes, and the equipment needed to transport many millions of doses at once through distribution channels that will be subject to tight security and temperature controls.

“Once a vaccine has been successfully developed, how do you get all the production you need, and how do you get it out?” said Senator McConnell.

Some of the companies involved are building this supply chain for the first time. Moderna, which just started final-stage testing of a vaccine, had never sold a product on the market. Neither has Novavax, a drug developer that was awarded a massive federal grant for vaccine manufacturing.

Pharmaceutical companies at the start will need to produce enough of what is known as the drug substance, the primary vaccine ingredient. Once they have produced the final liquid vaccine, they will need to fill vials with it, adding another hurdle to distribution. (J&J alone has bought 250 million vials). Medical glass has been in short supply since before the pandemic,  and that shortage has worsened.

Logistics operators could be another speed bump. They have struggled at times during the pandemic amid upheaval in demand—particularly for consumer products and medical gear—that has left companies scrambling to find warehousing and transportation space. Airfreight capacity, which will be crucial for moving a vaccine in the early days of distribution, has been hit particularly hard because thousands of flights have been grounded since the pandemic began.

Classroom discussion questions:

  1. Why is this supply chain complex?
  2. How will the Covid supply chain differ from the beer supply chain in Figure 11.1 of your Heizer/Render/Munson text?

Guest Post: Coffee Shops and the Pareto Principle

August 2, 2020

Our Guest Post today comes from Howard Weiss, Professor of Operations Management Emeritus at Temple University

In studying Chapter 12 on inventory we learn that ABC Analysis is founded on the Pareto principle that states that there are a “critical few and trivial many.” More specifically, this is phrased as “roughly 80%of the effects come from 20% of the causes.”  An example of the Pareto Principle has to do with a couple of measures about Coffee Shop chains.

There are at least 12 coffee shop chains in the U.S,. with over 30,000 branded coffee shops.  Starbucks and Dunkin’ accounted for 80% of the over 1400 new store openings in the U.S. over the past year. That is, Starbucks and Dunkin comprise fewer than 20% of the chains but accounted for 80% of the new store openings.  Starbucks has a 40% share of the U.S. coffee shop market and Dunkin’ has a 26% share of the market. In other words, fewer than 20% of the coffee chains account for 66% of the market. This is not 80% but it is a considerably high percentage.

The figure below from Daily Coffee News (Oct. 25, 2019) exhibits pre-pandemic numbers.

 

 

Classroom discussion questions:
1. Analysts forecast that coffee sales will not rise to pre-pandemic levels until 2024. Should we
expect Starbucks and Dunkin to account for 80% of the coffee shop closings in the next 4 years?
2. Which organizations related to coffee shops will be affected by the current drop in sales due to
the pandemic?

Teaching Tip: Giving Your OM Students an Individualized Experience in Online Learning

July 30, 2020

As universities across the country begin to make the difficult decision to continue with online learning in the fall semester, faculty will again be asked to adapt their classes to an online format, writes Faculty Focus  (July 27, 2020). Here are some ideas for individualized instruction that you may want to introduce into your online OM course to increase student engagement.

  1.  Making Content Manageable. In an individualized instruction model, students have the freedom to work through course material at their own pace while being provided a safety net of support from course staff to shepherd them through the course. For example, divide the content into 10 units which are each assessed about one week apart. Breaking the material down into these manageable chunks is important in keeping students from becoming overwhelmed with the content. For each unit, provide students with a list of concepts and objectives you expect them to master by the end of their study on the unit. They can take advantage of text readings, online supplemental materials, your mini-lecture videos, and tutoring sessions.
  2. Flexibility. One of the most important aspects of any individualized instruction model is scheduling. Students should adhere to a “deadline schedule” to ensure they continue progressing through the course, and have a “deadline” by which they need to complete each unit. You can, of course, provide flexibility on deadlines.
  3. Interacting with Course Staff. Students seem to prefer scheduling individual (or small group) meetings with course staff over virtual office hours or weekly review sessions. While course content can be disseminated via recordings of your lectures, viewing of these lectures leave students with “Zoom fatigue.”  Small group interactions succeed in keeping students engaged and  learning.
  4. A Point Person for Every Student. Assigning every student to a course staff member as their point-of-contact means students develop relationships with someone who provides regular contact via 1-on-1 tutoring and guidance through the assessment process.
  5. Building Community. From day one have students assign themselves to small group discussion sessions that meet during the first 4 weeks of the class. In these sessions, students get to know each other, get to know course staff, and begin to familiarize themselves with the resources available to them for the course.

 

OM in the News: The End of the Jumbo Jet Era

July 27, 2020

The final convoy of A380 fuselages in France

As we point out in Chapter 5 (and in Figure 2.5) every product has a life cycle, an important issue for operations managers, especially in this time of pandemic flux.  And so it appears that The Queen of the Skies-the iconic Boeing 747– is approaching her abdication. British Airway (the 747’s biggest operator) just announced that its 31 747s will never fly again. Its immediate retirement of its 747s marks the demise of the jumbo plane’s 50-year reign, with similar decisions by Delta, United and Air France, reports Financial Times (July 27, 2020). The last 747 in the Qantas fleet recently flew to its final resting place in the Mojave Desert.

The A380 superjumbo jet’s life cycle  was much briefer. Just 13 years after the first A380 flight by Singapore Airlines, Airbus is ceasing production.  Flying, as it slowly recovers after Covid-19, looks like being smaller, nimbler and point-to-point, rather than in huge aircraft collecting passengers at hub airports. The long-haul planes of the future are the 248-336 seat Boeing 787 and the 350-410 seat Airbus A350.

It was also a Chapter 4 forecasting issue, as Airbus got flying’s economics wrong. In 1999, Boeing and Airbus sparred over how many super-large aircraft the market could support. Boeing said fewer than 400 would be needed by 2019. Airbus said nearly 1,500–but sold only 242. Boeing’s 747 prospered through the decades of explosive growth in airline travel, from 310 million passengers in 1970 to 4.5 billion last year. The 747’s best years are now gone, though it has timed its retirement perfectly.

To make matters worse for Boeing and Airbus, they are still making the smaller planes that airlines aren’t collecting, straining their finances, adds The Wall Street Journal (July 27, 2020). Airlines don’t want the aircraft for now, because they are unable to fill them profitably during a historic plunge in demand for flying. The result: finished airplanes with nowhere to fly, and less cash for Boeing, Airbus and their suppliers as they slash production and payrolls. “Clearly, we’re in a situation where we don’t need any aircraft,” said Delta’s CEO.

Classroom discussion questions:

  1. What should Boeing’s OM strategy be at this point?
  2. Why was Airbus’ A380 forecast so inaccurate?

OM in the News: Sustainability Goes Mainstream

July 23, 2020

Expired yogurt. Cardboard cartons. Pallets and plastic jugs. Wilted lettuce. Steel drums. Is it ecologically sound policy to send multiple trucks to transport waste products for separate recycling and diversion, when one dump truck could haul it all away? This is just one question companies face when trying to improve sustainability and in some cases reach carbon neutrality, the topic of Supplement 5.

Companies are increasingly cognizant that consumers and investors are watching their actions to reduce emissions– and realize their pledges have other positive impacts, including financial ones. Instead of sending tons of material to landfill, companies are identifying their waste streams with economic value and sending those materials to recycling facilities, writes Supply Chain Dive (July 21, 2020). Firms can calculate the carbon footprint involved with waste and landfill and see if diversion would yield additional savings.

Consumer sentiment now makes waste reduction a priority. “It’s becoming more prevalent; 30-40 years ago, nobody cared,” said one industry exec. (We recommend showing our video case study: “Green Manufacturing and Sustainability at Frito-Lay” to make this point).

In the U.S., over 30 million tons of food goes to the landfill– about 75% of total food waste, comprising 22% of municipal solid waste (MSW) landfill. Almost 7.5 million tons of food waste is converted to energy through combustion of MSW, and 2.57 million tons is composted. Materials like cardboard and plastics have resale value, and businesses are relatively disciplined about recycling these, due to the economic incentives and sustainability goals. Metal has the highest impact in recycling, given its value. It takes 75% less energy to make a steel product with recycled steel versus with virgin steel, and 95% less energy to make aluminum cans with recycled aluminum.

Companies can calculate emissions using the EPA’s Waste Reduction Model, a reporting tool for baseline and ongoing greenhouse gas emissions.

Classroom discussion questions:

  1. What does the Triple Bottom Line mean?
  2. What forces during the pandemic are working against increased sustainability efforts?

OM in the News: A Forecasting Nightmare for Farmers

July 21, 2020

In early July, S. Carolina farmer Jeremy Storey dropped off an order of eggs at a restaurant’s back door as planned and continued on his way. But 6 hours later, he got a call  that the eggs were never collected — the restaurant had suddenly closed because a staff member tested positive for Covid-19, and nobody canceled the order. After half a day in the hot sun, the eggs could no longer be eaten.  “Half the restaurants we’re going to now, we find out upon delivering to them that they’re closed,” he said. He’s now sitting on a surplus of about 24,000 eggs, with no idea when, or if, things will stabilize.

The unpredictability is a major problem for farmers. If they can’t forecast what demand for eggs (and other products) will look like tomorrow, much less months out, they run the risk of overproducing — which would leave them with expensive surpluses — or underproducing, which would prevent them from having enough product on hand to meet demand.
Now, just as restaurants began to resume dine-in service, a new surge of coronavirus cases has paused reopening plans and put farmers back in limbo — and made it even more difficult to forecast. Planning is essential to farmers because they have to anticipate their customers’ demand months, and sometimes years, ahead of when they deliver so that they have enough time to grow crops or raise animals, writes CNN Business (July 16,2020).
Uncertainty “is really what’s causing the problem,” said a union exec. “There’s no end in sight. That makes it “really hard to plan for the future.” If the uncertainty drags out for another year or two, he said, some farms and restaurants will go out of business. It also means that some restaurants that make it through this dark period won’t have a steady source of supply at the other end.
Classroom discussion questions:
1   Should demand during the pandemic be excluded from future time-series forecasts?
2.  With so much uncertainty, is it better to raise or lower production for the next agricultural cycle?

OM in the News: A Safe Return to Manufacturing Productivity

July 19, 2020

COVID-19 is changing everything in manufacturing. Companies face a long journey to the “next normal,” one that will likely have far-reaching financial and operational implications, writes Industry Week (July 14, 2020). Immediate priorities include creating a safe work environment for production employees. Missteps could invoke legal or regulatory actions, something all companies want to avoid. As many manufacturers enter the Recover phase of COVID-19, one that is marked by restarting production at plants in regions that have been impacted differently by virus outbreaks, workforce safety becomes a critical priority. The restart/ramp-up should generate considerations across the work itself, the workforce, and the workplace.

Work: How will new physical distancing constraints and supply/demand variability be incorporated into operations? Are there opportunities to remove humans from processes through automation and/or robotics?

Workforce: How will workers “feel” safe and come back to work willingly? What new policies and procedures are required to protect employees, reduce risk of spread (e.g. personal protective equipment (PPE), break room policies)?

Workplace: What physical/operational changes are necessary to meet health and safety requirements? What technologies and solutions could create a safer work environment in plants and facilities?

A holistic approach toward the recovery phase should include solutions that address all three of these areas. It will likely blend strategy and process changes with advanced technologies, which can hold the key to a robust recovery for manufacturers. Some of the smart factory technologies that many manufacturers have already been piloting, such as data analytics–71% in a recent study, sensors–54% and wearables–29%, could dramatically accelerate the pathway to recovery.

Classroom discussion questions:

  1. What other complications will operations managers face when reopening factories or service facilities?
  2. What role can sensors play?

OM in the News: “Slave Wages” Haunt England’s Online Retailer Boohoo

July 17, 2020

“I’d rather manufacture in Bangladesh than in Leicester, because they’re far further advanced in terms of labor protection,” says the CEO of the retailer Esprit in Financial Times (July 10, 2020). Adds the former CEO of New Look, “In Leicester . . . it’s slave-like conditions. Everybody knows about it and some firms are clearly ignoring it.” They are referring to the $5 billion fast-fashion business Boohoo, located in Leicester, England. Boohoo is the biggest buyer from garment workshops (over 75%) in a city battling claims over poor working conditions.

The garment industry area of Leicester

“We’re kind of put into a cage and we have to run around like rats,” said the GM at Top Fashion, a local clothing manufacturer. Leicester’s problem of illegal factories has been an open secret for almost a decade, with police this week walking the dilapidated factory corridors looking for evidence of modern slavery.

Over the past 15 years, the revival of Leicester’s textile trade has been the story of Boohoo’s rise. Abandoned by big retailers 3 decades ago, Leicester’s industry splintered into 1,500 mini-factories, typically employing fewer than 10 people. This flotilla of small workshops competed with rivals in Bangladesh and Turkey by offering an ultra-flexible service, handling small orders in quick time. It helps Boohoo test almost 3,000 lines of clothes every week and ramp up production of trends that catch on.

One study found below minimum wage employment to be “endemic”. More than 3/4 of garment workers earned $4.40 an hour–half the minimum wage. So cheap were rates that agents directed work to Leicester that was supposed to be completed in Romania.  Some employers preyed on the vulnerability of local workers who are often South Asian immigrants with poor English and few options. And to make matters worse, the pandemic has Leicester under lockdown because of the virus’ spread in the garment industry.

Boohoo’s practice of throwing new clothes out (at low prices) to see what sticks is a great OM story of speed and flexibility, tying to our discussion of achieving competitive advantage in Chapter 2.

Classroom discussion questions:

  1. How is Boohoo able to adjust its offerings so quickly?
  2. What is the ethical dilemma that Boohoo competitors in Leicester face?

 

OM in the News: COVID-19, Force Majeure and Supply Chains

July 15, 2020

Global industry is now 6 months into the COVID-19 pandemic and its effects on supply chains, and the broad features of the event are becoming clearer. As the first wave of the pandemic has washed around the world, few businesses have been unaffected.  About 75% of American companies, and 97% of international firms, have experienced  some supply chain disruptions, writes IndustryWeek (July 9, 2020).

Some sectors, such as agriculture and food processing, have seen sharp increases in demand and pivoted swiftly into new opportunities. Others, such as aviation and apparel, have encountered demand collapses and faced extremely difficult supply chain management challenges.

Nearly 1/3 of companies reported that they had already faced a claim that a supplier or customer was excused from performing their obligations under an agreement because of the law of force majeure. This concept allows one party to a contract to claim a right to suspend, or stop, their fulfillment of their end of the bargain, because of an intervening event that is outside of their control and that overcomes their ability to perform as both parties had expected.

The COVID-19 pandemic is unlike the sorts of events to which force majeure law usually applies, and presents multiple risks.  The “usual” force majeure event – like a facility fire or a hurricane – is limited in time, scope, and geographic place. The current pandemic, however, is persistent and worldwide. It can seem as if a global pandemic and state-ordered shutdowns must qualify as “acts of God.”  But the law on the subject differs widely from place to place, and is flexible.  Most cases will be highly fact-specific, and subject to maneuvering.

The COVID-19 pandemic will be with us for some time, and for business the waters will remain between choppy and treacherous. Careful, systematic and forward-looking management of the supply chain disruptions that are occurring now may make the difference in results.

Classroom discussion questions:

  1. Why is force majeure an OM issue?
  2. What other supply chain risks are companies facing today? (Hint: see Chapter 11’s Table 11.3 in your Heizer/Render/Munson text)

OM in the News: Why We Ran Out of Meat

July 13, 2020

Workers donned protective gear at a Tyson poultry-processing plant in Camilla, Ga.

The Covid-19 pandemic has been a debacle for the $213 billion U.S. meat industry, writes The Wall Street Journal (July 10, 2020). For the first time in memory, there wasn’t enough meat to go around. Reduced production forced grocery giants such as Kroger, Costco. and Albertsons to limit how much fresh meat shoppers could buy. Wendy’s had to tell customers that some restaurants couldn’t serve hamburgers.

Deboning livestock and slicing up chickens has long been hands-on labor. Low-paid workers using knives and saws work on carcasses moving steadily down production lines. It is labor-intensive and dangerous work. and remains one of the more hazardous jobs in the U.S. With 4.3 workplace injuries or illnesses per 100 workers in 2018, the industry’s rate is nearly 40% higher than the national average for all industries, surpassing logging, mining and construction.

And factory floors have been especially conducive to spreading coronavirus. In April and May, more than 17,300 meat and poultry processing workers in 29 states were infected and 91 died. Plant shutdowns reduced U.S. beef and pork production by more than 1/3 in April. The companies are searching for a solution–and they think the found one: robotic butchers.

Over the past 3 years, Tyson, the biggest U.S. company (with 122,000 employees out of 585,000 industry-wide) has invested about $500 million in technology and automation. It plans to increase the shift to robots in the aftermath of the pandemic. While some of these robots, such as automated “back saw” cutters that split hog carcasses along the spinal column, labor alongside humans in plants, the finer cutting, such as trimming fat, for now largely remains in the hands of human workers, many of them immigrants. Annual turnover in meat plants ranges from 40% to 70%, versus 31% average for manufacturers.

Yet a growing consumer appetite for products such as deboned chicken and skinless meat has required more people on processing lines. Decades ago, most Americans bought whole chickens. Now, 85% of chicken eaten is parts like breasts and wings or products such as chicken finger.

Classroom discussion questions:
1. Which of the 9 production technology tools described in Ch. 7 in your Heizer/Render/Munson text could be applied to this industry?

2. Why have robots not made a greater headway in meat plants?

 

OM in the News: Chinese Form Blockchain on the Sea

July 10, 2020

China’s state-run container line Cosco Shipping will work with Alibaba and Ant Financial, on using blockchain technology to track goods across seaborne supply chains, reports The Wall Street Journal (July 8, 2020). The initiative is the latest in a string of agreements in the shipping sector aimed at connecting cargo owners, vessel operators, ports and logistics companies through digital platforms that use blockchain technology.

Blockchain allows trusted participants to share information as goods move through supply chains. The system promises to reduce the cost of administering shipped goods, cut down on paperwork and speed the flow of goods by letting companies transmit information quickly and reliably. Ant Financial Services runs the biggest business-oriented blockchain platform in China, processing payments and other services for as many as a billion users a day.

Denmark’s Maersk, the container shipping giant, and IBM in 2016 introduced a blockchain platform for container ships called TradeLens, which other big operators such as Switzerland’s Mediterranean Shipping, France’s CMA CGM and Germany’s Hapag-Lloyd have since joined.

It’s unclear so far whether significant freight flows have been handled through the platform. Use of the blockchain platform has waned during the coronavirus pandemic because global trade flows have fallen sharply while shipping lines have dropped hundreds of port calls, paring down and effectively simplifying many supply chains.

Large companies such as Walmart and Procter & Gamble, along with hundreds of ports, have been testing the technology to get a better view of their supply chains, from raw materials to finished goods.

Classroom discussion questions:

  1. Why is a firm like Walmart implementing blockchain? (Hint: See Ch. 11 in your Heizer/Render/Munson text)
  2. Describe how the concept of blockchain works.

OM in the News: China’s Chokehold on Medical Supplies

July 8, 2020

A fabric-cutting machine from China

Alarmed at China’s stranglehold over supplies of masks, gowns, test kits and other front-line weapons for battling the coronavirus, countries around the world have started to set up their own factories to cope with this pandemic and outbreaks of the future, writes The New York Times (July 6, 2020). But when the outbreak subsides, those factories may struggle to survive. American companies have been reluctant to make big investments in fabric manufacturing because they worry that mask demand will be temporary.

China, however, has laid the groundwork to dominate the market for protective and medical supplies for years to come. Its market grip is a testament to its drive to dominate important cogs in the global industrial machine.

Before the pandemic, China already exported more respirators, surgical masks, medical goggles and protective garments than the rest of the world combined. Beijing’s coronavirus response has only added to that dominance. It increased mask production nearly 12-fold in February alone. That is 5 times what China could make before the outbreak, and 15 times the output of U.S. companies even after they ramped up production this spring. The Chinese government played a major role in this year’s medical-equipment build-out with cheap land, subsidies, and a demand that that its own hospitals buy locally.

The U.S. has begun a push for the federal government to buy American-made pharmaceuticals and medical supplies. Likewise, France pledged to produce homegrown masks and respirators by the end of this year. But Chinese pharm companies supply 40-45% of heparin (a blood clot medicine), 70% of acetaminophen, and over 90% of antibiotics, vitamin C, ibuprofen and hydrocortisone to the U.S. About 80% of the active ingredients used in U.S. drugs also come from other countries.

Thus, it begs asking: Is it time for America to take control of its pharmaceutical and medical production?

Classroom discussion questions:

  1. This article suggests risks in outsourcing. Relate this to the pandemic.
  2. How does the theory of comparative advantage stand up in this situation? (See Ch. 2 of your Heizer/Render/Munson text).

OM in the News: How Applications, Automation, Analytics and AI Transform OM

July 6, 2020

Digital transformation, writes the INFORMS magazine Analytics (June 2020), is leveraging modern technology and innovation so that an organization can help its people achieve maximum capability and the company processes can run optimally. Digital transformation also helps a business focus on its greatest means of success: its customers. Its main technology drivers come from the “Straight A’s”: applications, automation, analytics and AI. Technology, which we discuss in Chapter 7, is a great enabler for organizational productivity, creativity, efficiency and improved profits.

Applications: Ideal business applications help organizations manage business processes and enhance productivity. There are cloud-based business application platforms that provide solutions for end-to-end business processes right from strategy development, product development, work management, project management, field services, customer services, and operations.

Automation: Automating business processes to remove manual, redundant tasks, which can free staff from repetitive, time-consuming work items.

Analytics: Using actionable analytics, organizations can access relevant data and relationships to take immediate action on business initiatives to achieve stronger outcomes.

AI:  With AI, companies can literally transform business processes into intelligent systems that will help identify patterns, gain deeper insights from data, and leverage data science to improve fact-based decision-making.

Classroom discussion questions:

  1. What is data analytics, and why is it an important OM tool? (Hint: see Module G in your Heizer/Render/Munson text)
  2. Why is automation so important to U.S. supply chains?