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OM in the News: Tesla Suspends Production (Again)

April 19, 2018

Tesla is temporarily suspending production of the Model 3 sedan for at least the second time in 2 months, just after Elon Musk admitted to mistakes that hindered his most important car. The company informed employees that the pause will last 4-5 days. The hiatus is another setback for the first model Musk has tried to mass manufacture, writes New Equipment Digest (April 17, 2018). In addition to trying to bring electric vehicles to the mainstream, Tesla had sought to build a competitive advantage over established automakers by installing more robots to quickly produce vehicles. Last week, Musk acknowledged “excessive” automation at Tesla was a mistake.

“Traditional automakers adjust bottlenecks on the fly during a launch,” said an industry analyst. “This is totally out of the ordinary.” The shutdown is taking place a week after Musk gave CBS This Morning a tour of Tesla’s assembly plant and said the company should be able to sustain producing 2,000 Model 3 sedans a week. He said manufacturing issues that had been crimping output were being resolved and that Tesla probably will make three or four times as many of the cars in the second quarter.

Tesla built 9,766 Model 3 sedans in the first quarter. The company said in an April 3 statement that the process of boosting production and addressing bottlenecks during the first three months of the year included “several short factory shutdowns to upgrade equipment.” But shutting down for days on end during ramp is far from normal.

Getting Model 3 output up to speed is crucial to generating revenue after the billions of dollars Tesla has spent to manufacture, recharge, service and repair more cars.

Classroom discussion questions:

  1. What is the problem with shutting the factory for 4-5 days?
  2. How does Tesla differ from a traditional auto manufacturer?

 

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OM in the News: Apple’s Sustainability Move

April 17, 2018

Apple’s new HQ features rooftop solar panels.

“Apple has just announced,” writes The Wall Street Journal (April 10, 2018), “that it has achieved a decade-old goal of having its facilities world-wide powered exclusively by renewable energy, an achievement that will shift the company’s sustainability efforts to its supply chain, where about 10% of suppliers have made a similar commitment”.

The tech giant said it has improved to be 100% reliant on clean energy from 96% last year in part by contracting renewable energy for the first time in India, Turkey, Brazil and Mexico. The figure covers all of its retail stores, offices, data centers, as well as its new California headquarters, Apple Park, the spaceshiplike structure that is one of the largest on-site solar installations in the world.

Apple is just one of many global corporations trying to cut energy consumption and shift to renewable power including wind and solar, both to cut costs and slow climate change. More than 100 companies world-wide, including Apple, IKEA, Anheuser-Busch and Starbucks, pledged in 2014 to shift to 100% renewable energy. Many of these companies are now trying to accelerate efforts to convince their suppliers to join them.

Environmental experts said the bigger challenge will be making the manufacturers of the more than 200 million iPhones and 43 million iPads it sells annually wholly dependent on renewable energy. “We’re not going to stop until our supply chain is 100% renewable,” said Apple’s VP. Apple, which set that goal two years ago, said 9 more of its suppliers have committed to powering all production with 100% clean energy, bringing the total to 23 out of more than 200 suppliers. Apple also will be challenged to keep its own facilities at the 100% level in the years ahead, especially as it looks to add a new campus in the U.S. and $10 billion in data centers.

Classroom discussion questions:

  1. Why is Apple’s drive an OM issue?
  2. Why is the firm’s movement so important to industry?

OM in the News: The Quest for Rare Earths Leads to Japan

April 13, 2018

Rare earth mining can be a dirty and ecologically damaging business. Here, a rare-earth metals mine in China.

“Japan has discovered hundreds of years’ worth of rare-earth metal deposits in its waters,” writes The Wall Street Journal (April 12, 2018). Why is this important? It reflects Tokyo’s concern about China’s hegemony over minerals used in batteries, x-rays, TVs, cell phones, electric vehicles, and 100s of other electronic devices.

The deposits were found about 1,150 miles southeast of Tokyo. Extracting them will be costly, but resource-poor Japan is pushing ahead in hopes of getting more control over next-generation technologies and weapon systems. A 965-square-mile seabed contains more than 16 million tons of rare-earth oxides, estimated to hold 780 years’ worth of the global supply of yttrium, 620 years’ worth of europium, 420 years’ worth of terbium and 730 years’ worth of dysprosium.

The U.S. Department of Energy and the E.U. have issued warnings about shortages of rare earths as China’s own consumption of them increases. “This is a game changer for Japan,” said an industry expert. “The race to develop these resources is well under way.”

In 2010, China pushed rare-earth prices up as much as 10 times by cutting its export quota on 17 rare earth elements by 40% from the previous year. It said it wanted to clean up a polluting industry, but the move left Japan and other nations seeking more independence from prices dictated by its neighbor. It is important for countries’ supply chains to secure their own source of resources, given how China controls the prices.

Classroom discussion questions:
1. Why are rare earths important to OM?

2. Where else can supply chain managers turn to procure these critical minerals?

OM in the News: Tech + Fast Fashion = Mass Customization

April 11, 2018

A computer screen showing a 3-D body scan with body measurements in custom software

Style trends are moving faster than ever in an age when a shopper can spot an outfit on Instagram and buy it with just a few clicks, writes The Wall Street Journal (April 10, 2018). That immediacy is prompting the fashion industry to experiment with a business model called “click, buy and make.”

Today, Hong Kong clothing maker Bespokify’s customers, anywhere in the world, can order professional women’s clothing. Customers input their measurements, generating a digital pattern for clothes manufactured in China, and receive their orders within 2 weeks of purchase.

“Consumers are now shopping 24 hours a day and are being trained to expect new styles all the time,” says an industry analyst. Big retailers also are looking into the click-buy-and-make model. A year ago, Amazon won a patent with which it could take a customer’s order, print a pattern on fabric and send it to be cut by a robot before being assembled by another robot.

Hong Kong’s Li & Fung Ltd., one of the largest supply chain managers in the global garment industry, thinks new technologies could ultimately mean that more companies would be able to place small orders and avoid being stuck with extra inventory. “Just look at the average size of orders—it’s been going down for years,” its CEO said. “It went from hundreds of thousands to tens of thousands. And it will keep going down until it approaches a unit of 1.”

Software and robotics have been in use in fashion for some years. Companies like Proper Cloth use technology to predict a customer’s ideal shirt measurements without having to measure them in person.

Classroom discussion questions:

  1. What is keeping this technology from wider use?
  2. Name some other industries moving toward mass customization.

Good OM Reading: Seven Technologies Remaking the World

April 9, 2018

A new report by MIT Sloan Management Review (March, 2018) identifies 7 core technologies and describes their implications for commerce, health care, learning, and the environment.  You can use it as a guide  for discussion with your OM students to understand today’s business frontiers.

“Technology provides the spark that enables us to push beyond the established boundaries of our world,” says the report. The mechanized spinning of textiles, large-scale manufacturing of chemicals, steam power, and efficiencies in iron-making sparked the first Industrial Revolution (1760-1840). Railroads, the telegraph and telephone, and electricity and other utilities sparked the second Industrial Revolution (1870-1940). Radio, aviation, and nuclear fission sparked the Scientific/Technical Revolution (1940-1970). The internet and digital media and devices sparked the Information Revolution (1985-present). In each instance, appearance of new technologies fundamentally reshaped key aspects of the OM world.

Here are the 7 technologies in brief:

Pervasive computing delivers information, media, context, and processing power to us. It is characterized by vast networks of connected microprocessors embedded in everyday objects.

Wireless mesh networks are ad hoc loops of wireless connectivity in which only one device requires an internet connection. These are smart networks of wireless devices that can form, disperse, and re-form at the user’s command.

Biotechnology is the use of living systems and organisms to develop or make products. Today, advances in digital technology, genetic engineering, informatics, cell technology, and chemical sciences are greatly expanding its boundaries.

3D printing, or additive manufacturing, transforms a digital blueprint of an object into a physical finished good.

Machine learning covers a broad context of technologies and capabilities, including cloud computing, big data, and AI.

Nanotechnology is a radical engineering science that is designing and manufacturing incredibly small circuits and devices that are built at the molecular level of matter.

Robotics is the design and development of mechanical systems that can operate autonomously or semi-autonomously.

This report, about 20 pages long, might be the basis for student reports on specific applications to operations.

OM in the News: 3-D Printed Homes

April 6, 2018

A 3-D printed home in Austin, Texas

“3-D printing is scaling up,” writes The Wall Street Journal (April 2, 2018). All over the world, an impressive diversity of people and organizations, ranging from startups to construction and engineering firms, are successfully prototyping 3-D-printed buildings. Prototype single-family dwellings have been 3-D-printed in China, Italy, Russia—and Texas. Global infrastructure firm AECOM uses 3-D printing to prefabricate jail cells and hospital rooms.

The technology is still nascent and it isn’t about to disrupt the $10 trillion global construction market. But the technology looks like it can save energy, materials and time. CLS Architetti in Milan has just finished 3-D-printing an 1,100-square-foot, single-family dwelling, using a portable concrete 3-D printer.

Using traditional methods, El Salvador’s People Helping People has already built more than 800 homes for families who previously lived in single-room shanties made of timber and sheet metal. Currently, a cinder-block house requires about 15 days and $6,500 to build. Printing a home instead is projected to take 24 hours, cost $4,000 and use half as much iron rebar.

Fundamentally, 3-D printing with concrete is a modern update of incredibly old building technologies. Worldwide, our prehistoric ancestors made homes from mud, adobe, cob and similar materials, building up their walls one layer after another. Their structures shared many of the same advantages of modern 3-D-printing: They were strong, cheap, locally sourced and minimized waste.

While concrete is by far the most widespread architectural-scale additive-manufacturing material, it isn’t the only one. In France, a home has been printed out of both concrete and foam. Researchers elsewhere are attempting architectural-scale building with cellulose, glass and a variety of novel composite materials.

Classroom discussion questions:

  1. What are the advantages and disadvantages of using 3-D printing to construct buildings?
  2. Is this technology really going to change the construction industry?

 

OM in the News: Ford Goes Greener for Plastics

April 4, 2018

By 2011, all North American Fords have used soy-based foam in their seats

“What does Heinz Ketchup have to do with plastics and Ford Motor,” asks Plastics Technology (March 1, 2018). It’s not that the squeeze bottles used for the condiment are found throughout Ford cafeterias. Rather, the automaker and the ketchup maker are working together on finding the ways and means to use the skins from 2 million tons of tomatoes that Heinz processes each year as fillers in composite materials that would be used by Ford for vehicle components.

Looking for alternatives for “conventional” plastic materials is nothing new at Ford. Back in the 1940s Ford experimented with using soy beans as a source of plastics. Now, there isn’t a single new North American-produced Ford vehicle that doesn’t use soy oil for the production of foam that is used for seat cushions, seat backs and headrests. The company started using soy oil for the seats in the 2008 Mustang. This is non-trivial, because on average there are 40 pounds of foam in a vehicle.

Ford has been developing a variety of materials that are: (1) natural, and (2) not typically otherwise used. It started working with forest product giant Weyerhaeuser, which had seen the use of its pulp products in the U.S. diminish as paper production moved off shore. They began testing the use of cellulose fibers from trees, and in 2010 those fibers replaced glass in the Lincoln armrest. Not only did the material meet the functional and aesthetic requirements, but because the natural fibers are less dense, they were able to reduce the weight of the part. There are now 8 bio-based materials used in Fords. These include coconut-based composite materials and recycled cotton used for carpet and seat fabrics.

Classroom discussion questions:

  1. What other components are carmakers using that are sustainable?
  2. What are the driving factors in this endeavour?
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