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OM in the News: Poor Countries and Manufacturing Jobs

November 29, 2015
Cows on the streets of Ahmedabad, India. India has vowed to build better roads and clear red tape to pull it into the leagues of Asia's industrial powerhouses.

Cows on the streets of Ahmedabad. India has vowed to build better roads and clear red tape to pull it into the leagues of Asia’s industrial powerhouses.

The U.S. and Europe—and East Asia more recently—first got rich because of their factories. Over time, as incomes rose and their economies became more sophisticated, they shifted into modern services like health care and finance. But today, parts of South Asia, Africa and Latin America are failing to create thriving manufacturing sectors even though their wages remain low. Manufacturing employment and output are peaking and declining at vastly lower levels of income and development than they did in the West. When manufacturing peaked as a source of jobs in the U.S. in 1953, it employed 26% of American workers, and overall per capita income was around $17,700 in today’s dollars. By 2010, manufacturing accounted for around 9% of U.S. jobs.

Factory automation and robotics are reducing the need for unskilled workers from the countryside to staff assembly lines.  Industrial latecomers now have to compete against China, whose massive, integrated manufacturing machine has made it the world’s factory floor and created a huge barrier to entry. Lower trade barriers and better communication have made it easier for supply chains to be spread over farther-flung locales, bringing more countries into direct competition for factory investment. “The factory-led model of advancement—which, for more than a century, has offered the quickest route out of poverty—is simply no longer available to today’s poorest nations,” writes The Wall Street Journal (Nov. 25, 2015). India must joust more often with other cut-rate producers like Bangladesh or Vietnam for slices of the manufacturing process—a component or an assembly here, some product development there—rather than for “start-to-finish industry.”

More factories also might not translate into as many jobs, at least not for humans. Sales of industrial robots shot up by 29% last year to a record of nearly 230,000 units and are expected to keep climbing, to 400,000 units shipped by 2020, especially in Asia.

Classroom discussion questions:

  1. U.S. ever recoup the manufacturing jobs it lost since 1950? Why?
  2. Why is it harder for India to catch up with China?

Teaching Tip: A New Way to Look at Student Evaluations

November 26, 2015

doonesberryIt is that time of year again–student evaluations. The comic strip Doonesbury hit on it last week in a sad sort of humorous way.

Most student evaluation forms are summative, writes Faculty Focus (Nov. 23, 2015), concentrating on teacher characteristics: “Was the teacher organized?” or “Did the teacher explain things clearly?” By the end of a semester, we have a sense of how a course went and what activities and actions supported student learning. But through some painful experiences we’ve learned that sometimes what we thought happened was contradicted by what students experienced.

Here is an alternative “course experience” evaluation approach:  Begin by telling students that you’re asking questions only they can answer. Explain that this is feedback that can help you become a teacher who helps students learn more effectively. Below are some examples of sentence stems that can yield useful information.

Your insights into your learning in this course can help me see our course from your side of the desk. Please respond anonymously to any 3 of the statements below to help me plan for next semester: 

In this course …

  • it most helped my learning of the content when…because…
  • it would have helped my learning of the content if…because…
  • the assignment that contributed the most to my learning was… because… 
  • the kinds of homework problems that contributed most to my learning were…because…
  • the biggest obstacle for me in my learning the material was… because…
  • during the 1st class day, I remember thinking…because…
  • what I think I will remember five years from now is…because…

OM in the News: Exciting New Changes in 3-D Printing

November 24, 2015

carbon 3DThe promise of 3-D printing is the ability to produce a solid part on the spot based on any digital 3-D file. While some of the highest end machines can precisely print small batch items such as hearing aids and artificial joints, the vast majority of 3-D printers in use today are slow and capable of making only trinkets and small prototypes. The early hype around 3-D printing peaked a couple of years ago, and now shares of the two big publicly traded printer manufacturers, Stratasys and 3D Systems, are 80% off their highs. But Carbon3D, a California startup, is reinjecting excitement into the field with a new way to print objects in 3-D quickly and precisely, writes Forbes (Nov.23, 2015).

Most 3-D printers use a technique known as fused deposition modeling, which is basically a hot-glue gun controlled by a robot arm that zig-zags back and forth depositing layers of plastic to make a solid object. A Carbon3D machine pulls a solid object from a small tub of liquid plastic–akin to the way the killer robot in Terminator 2 lifted itself out of liquid-metal puddles. It’s a variation on a decades-old technique called stereolithography, or the use of light to solidify liquid plastic. Carbon3D can produce objects of higher resolutions at speeds 25 to 100 times faster than traditional stereolithographic printers. Because the action of the machine is so smooth, it allows manufacturers access to a wider variety of performance materials such as stretchy elastomers and high-temperature-resistant resin.

A dozen companies, including Ford Motor and Hollywood studio Legacy Effects, are testing Carbon3D machines, each of which will cost about $10,000. Legacy, which worked on the Iron Man and Avengers movies, uses it to print prosthetics and props. The studio cut the time it took to print one crucial job from 16 hours to 2 hours.

Classroom discussion questions:

  1. Why did 3-D printing peak a few years ago?
  2. How does Carbon3D’s product change printing?

OM in the News: The Last Mile at UPS is by Golf Cart

November 21, 2015

upsWalking down the street today here in Winter Park, FL (temperature 83 degrees), I chatted with my local UPS driver. But, as you see in the photo, it is not a big brown truck he is driving–rather a golf cart. A large storage pod, next to my gym and about a mile away, is his supply depot and he makes several runs a day to replenish his cart and small trailer. It turns out that UPS uses pods throughout the state of Florida where it makes the most sense for golf cart deliveries.

Here are some of the advantages:

(1) Part-time employees are hired to help with this effort, creating jobs.  (2) The environmental benefit to the community includes reduced noise. (3) Customers and employees like the approach. (4) UPS reduces energy usage, fuel consumption and emissions while providing an economical way to conduct business. (5) Golf cart helpers provide earlier delivery times. The majority of golf cart deliveries are made prior to 4 p.m. During the holidays, residential deliveries made using a UPS package truck driver are generally made in the late evening due to the additional volume spikes. (5) Golf carts pose an environmentally friendly method of delivering packages–the average golf cart gets 20+ miles per gallon.

A local UPS manager said: “It’s a lot more effective. We can keep the big, noisy trucks away at night by making holiday deliveries during the day. Safety is the main reason why we do it. And with blended in savings of fuel costs, we figured why not?”

Classroom discussion questions:

  1. From an OM perspective, what are the advantages and disadvantages of the golf cart approach?
  2. Should they be used all year round–or just seasonally?


OM in the News: A Touch of Green at the JFK Airport

November 19, 2015
Herbs and vegetables at JFK's terminal 5

Herbs and vegetables at JFK’s terminal 5

“JetBlue’s farm, positioned on the JFK airport grounds, takes up half a football field of space which once sat as an empty eyesore to travelers zipping by on moving walkways,” writes The New York Times (Nov.17, 2015). Now, this area is blooming. It had adopted a color that is becoming more familiar to contemporary airports: green. JetBlue’s project — replete with 26 varieties of plants, including potatoes, kale, dill and oregano — is perhaps the most extreme illustration of airports’ efforts to infuse natural elements into sites that have been more commonly associated with asphalt, canned air, loud machinery and noxious emissions.

In Chicago, O’Hare Airport features a soilless aeroponic garden springing up vertically from the mezzanine level of Terminal 3. Schiphol Airport in Amsterdam includes an indoor “mixed nature” park, with ivy-covered chairs and piped-in bird sounds. And Changi Airport, in Singapore, offers weary travelers rooftop cactus and sunflower gardens, and a two-story butterfly house. These themes are becoming more commonplace, and more creative. JetBlue’s new terminal farm is just the latest example.

The chef at Bar Veloce, at JFK, has been known to pick fresh vegetables for his restaurant, but for the time being JetBlue is not serving any of its crops to passengers. The produce is instead hauled off in trucks and distributed to food banks in Queens and Brooklyn. “Airports realize that if they green, it can curry favor with the community, build good will, and it makes them a more welcomed part of the community, beyond just the function they provide,” says one industry expert. Adds JetBlue’s head of sustainability: “You cannot impress customers with a Santa Claus at the T.S.A. line anymore. They have higher expectations when they’re here.”

Classroom discussion questions:

  1. What are sports arenas across the country doing to go green? Why?
  2. Is sustainability a critical issue at airports? Why?

OM in the News: Wal-Mart’s Green Revolution

November 17, 2015

walmart“For a company that has been lambasted for a range of corporate sins, from low wages and deplorable working conditions to accusations of predatory pricing and monopolistic behavior, Wal-Mart’s energy initiative sometimes smells a little like greenwashing,” writes Forbes (Nov. 23, 2015). But Wal-Mart has installed 105 megawatts of solar panels–enough to power about 20,000 houses–on the roofs of 327 stores and distribution centers (about 6% of all its locations). That’s enough to make Wal-Mart the single biggest commercial solar generator in the country. And it intends to double its number of arrays by 2020. It’s all part of a goal that former CEO Lee Scott set in 2005 for Wal-Mart to be powered entirely with renewable energy. (See our 2011 blog regarding the excellent book about Scott: Force of Nature).

Wal-Mart uses an incredible amount of electricity–29,000 gigawatt-hours per year, and its U.S. electric bill is around $1 billion per year. The firm now gets 26% of its worldwide power from green sources, including wind, solar, fuel cells and hydropower. “To make it harder on ourselves,” says Wal-Mart’s energy chief, “everything we do has to make business sense.” If Wal-Mart were worried about making the business case for green energy, it could just follow the lead of other retailers like Kohl and Starbucks, which brag of running their operations 70%-plus carbon-free. But they do so by buying carbon credits or “offsets” to balance out their greenhouse-gas emissions. Instead, Wal-Mart has reduced its energy costs per square foot of retail floor space by 9%.

Wal-Mart gives access to its roof space to SolarCity or other installers, which pay to put up the panels (at a cost of about $1.2 million for the average array). SolarCity then sells the power generated to Wal-Mart under a long-term deal–at a price often cheaper than what the local electric utility would charge. The bad news for Wal-Mart and the entire green energy industry is that the federal green energy tax credit is set to expire in 2017.

Classroom discussion questions:

  1. What is the genesis of Wal-Mart’s green revolution?
  2. Why is sustainability an important operations issue?

OM in the News: Toyota’s New “Quiet” Plant in Kentucky

November 15, 2015

Lexus’ “quiet” plant in Kentucky

Last month, a switch was flipped at a sprawling auto factory in Georgetown, Ky., and with it, Toyota started building Lexus cars in the U.S. for the first time.  Adding the 50,000 Lexus ES 350 models to be produced each year will transform the Kentucky plant into the largest Toyota factory in the world. That Toyota will have its largest factory in the American South is only the latest example of a building boom here by foreign automakers, writes The New York Times (Nov. 13, 2015).

Domestic automakers, by contrast, have resisted building new plants here. They have taken steps like adding shifts and hiring more workers at existing American plants, but building new ones is the purview of foreign automakers like Mercedes, Toyota, and VW, that are taking advantage of the lower shipping and trade costs, currency stability and largely nonunion work force that American factories provide.

Getting the new Lexus production line ready meant an expansion of machinery to create an almost completely separate operation from the rest of the Toyota factory. It also meant training workers in the Lexus quality control methods, which require tighter tolerances for fitting parts compared with regular Toyotas and more meticulous painting. The 750 new workers spent a total of 1.5 million hours training. Some even traveled to Japan to train with Lexus workers at plants there.
Then there is the noise at the plant — or lack of it. The quest has been to create what was unimaginable not too long ago: a largely noiseless, hushed atmosphere to house the new assembly line. “We want our team members to be able to hear a click,” says Lexus. “It is not just enough for a worker to see a potential problem; the worker should be able to hear it, too.”
Classroom discussion questions:
1. Why a quiet plant?
2. Why is Lexus manufacturing in the U.S.?


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