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OM in the News: RFID and Luggage Tracking

August 26, 2016
Radio chips are embedded in the tags being used at Las Vegas' airport ensure that suitcases move more quickly and accurately through the system.

Radio chips are embedded in the tags being used at Las Vegas’ airport ensure that suitcases move more quickly and accurately through the system.

One of my favorite new video cases for this edition is called Alaska Airlines: 20-Minute Baggage Process–Guaranteed! in Chapter 7. This is great example of process analysis and how OM can be applied in a way to improve customer service in the airline industry.  And industry-wide, airlines show a steadily decreasing likelihood of bags going astray. Last year had the lowest rate of wayward luggage — 6.5 bags per 1,000 — in the past 12 years. Why?

Various advances in technology and bag-handling procedures deserve credit, including improvements over the years in the bar-coded tags and optical scanners that have long been in use for identifying and sorting checked luggage. Where bar-coded tags fall short is if the tag is wrinkled, smudged or torn, or not in line of sight of the scanner. If the tag is not readable, the bag can get lost without being noticed. Bar code readers have a “read rate” of only 80%- 95% of baggage tags.

“That is why the industry is intent on improving the tracking rate by looking beyond the 30-year-old baggage bar code,” writes The New York Times (Aug.23, 2016). They are adopting RFID tags that do not need to be seen to be read. Embedded chips can store travel information and need to be only close to radio scanners along the way for the bag’s progress to be recorded. Fliers can use travel apps to keep track of their bags. Delta is spending $50 million on the necessary scanners, printers and radio tags, which look little different from conventional bar-code tags. The system is now in place at all of the 344 airports into which Delta flies.

R.F.I.D. technology is hardly new, of course. But updating to the latest technology requires infrastructure changes that can be expensive and disruptive. And because most airports leave it to each airline to handle its own bag-checking system, the technology and procedures vary widely.

Classroom discussion questions:

  1. What are the advantages of RFID over bar codes?
  2. What does Alaska Air do to make sure bags arrive in 20 minutes?

MyOMLab: Home Page and Student Review Updates

August 24, 2016

myomlabUPDATED PORTAL HOMEPAGE: The MyCourses portal is the page you see after logging in and before you enter your MyOMLab course. New updates to the MyCourses portal and course creation process will streamline the interface and provide more personalization for instructors.

  1. A streamlined course listing interface offers increased insight into course types, course details, and the ability to re-order courses.
  2. The simplified, guided course creation process allows instructors to see new and current editions of each product and allows the creation of roles such as coordinator courses or member sections.
  3. An improved catalog search with sorting and filtering helps instructors more easily find correct course materials.
  4. Enhanced third-party LMS integration resources and functionality now provide student registration handouts specific to the LMS in use and offer longer access to integrated courses.
  5. Improved functionality for managing section instructor access allows section instructor to enroll as a section instructor after logging in to MyLab/Mastering account. In addition instructors now have the ability to hide section instructors and teaching assistants from student course details.
  6. Course dates and subscription access lengths have been updated to remove the 90-day restriction between course creation date and course start date and now allows visibility into students’ subscription end dates in the course roster.

STUDENT REVIEW: Default MyOMLab setting for student review will now enable students to see any available answer feedback when they review their performance on tests, quizzes, and homework. The default setting will also allow feedback for all parts of homework questions to be accessible to students at all times so they can see at what point their errors occurred.

OM in the News: China’s Factories Turn to Robots

August 22, 2016

china robotsA Chinese factory near Shanghai is relying on a new breed of workers to maintain its competitive advantage in assembling electronics devices: small robots designed in Germany. China’s appetite for European-made industrial robots is rapidly growing, as rising wages, a shrinking workforce and cultural changes drive more Chinese businesses to automation. The types of robots favored by Chinese manufacturers are also changing, as automation spreads from heavy industries such as auto manufacturing to those that require more precise, flexible robots capable of handling and assembling smaller products, including consumer electronics and apparel.

“At stake is whether China can retain its dominance in manufacturing,” writes The Wall Street Journal (Aug.17, 2016). The rush to buy robots comes in part because China’s population of workers aged 15 to 59 is starting to shrink, forcing manufacturers to turn to automation. The number of the country’s workers peaked in 2010 at more than 900 million and will fall below 800 million by 2050. In addition, the average hourly labor cost of $14.60 in China’s manufacturing heartland has more than doubled as a percentage of U.S. manufacturing wages, from 30% in 2000 to 64% in 2015.

China, in 2013, became the world’s largest market for industrial robots, surpassing all of Western Europe. In 2015, Chinese manufacturers bought roughly 67,000 robots, about a quarter of global sales, and demand is projected to more than double to 150,000 robots annually by 2018. China originally started adopting automation en masse in response to concerns over the quality of goods manufactured in the country. Now, however, Chinese factories—including those that make consumer goods—are buying robots to fill positions that would otherwise sit empty because of high job turnover rates.

Classroom discussion questions:

  1. How does this impact the U.S. drive to regain manufacturing through automation?
  2. How does automation impact the role of OM managers?


Guest Post: Future Research Themes in Supply Chain Management

August 19, 2016

andreas wielandToday’s Guest Post comes from Andreas Wieland, Assistant Professor of Supply Chain Management at Copenhagen Business School. This is his 4th posting.

What are the future dominant research themes in supply chain management? With my coathors Robert Handfield and Christian Durach, our new article, “Mapping the Landscape of Future Research Themes in Supply Chain Management” (see Journal of Business Logistics, Aug., 2016), answers the question. The results are based on survey data collected from 141 leading academics from the SCM discipline.

The respondents were presented a list with 35 topics that are potentially important in SCM. They were then asked to assess to what level they believe these topics will become important in the next years and to what level they think these topics should become important. The will– and should-become-important top 10 lists do not differ substantially. Both of them include the following topics: sustainability & green issues, analytics, risk management & disruption, health care, and innovation. Interestingly, big data, the topic ranked 1st on the will-become-important top 10 list, does not appear on the should-become-important top 10 list. Instead, the people dimension of SCM appears in the should-become-important top 10 list.

We also calculated the differences between the will- and should-become-important survey data. We find that the people dimension of SCM, ethical issues, internal integration, transparency/visibility, and human capital/talent management are the five topics that are expected to be most under researched in the next couple of years. So, if you are planning to start a new research project or a Ph.D. related to SCM, these topics could be good choices. On the other end, big data and analytics turn out to be the topics that are expected to be most over researched.

We also linked the topics that top the should-become-important list to each other. This has led to a table containing ideas that could lead to innovative and cross-disciplinary research questions.

OM in the News: It’s Getting More Expensive to Make Cars in Mexico

August 17, 2016

mexico 2mexico 1When car companies began flocking to Mexico more than two decades ago, the big lure was labor, which was plentiful and inexpensive. “Today,” writes The Wall Street Journal (Aug.15, 2016), “with an auto-production boom in high gear, those advantages are being chipped away.” Toyota, BMW, Ford, and several other auto makers have committed to spend a combined $15.8 billion to build new assembly plants or expand existing factories. That is on top of the more than a dozen plants already in operation and billions more being spent by auto-parts suppliers to keep pace.

The competition for employees—both finding and retaining them—is nudging up labor costs. The going rate ranges from under $1 an hour at some parts factories to nearly $3 an hour at the large assembly facilities. That is well above Mexico’s minimum wage of 73 pesos, or $4 a day. Still, it is too low to attract the quantity and quality of workers needed to fill the surging number of openings. Retention and retraining programs are becoming the norm as are bonuses for employees who agree to stay in place, especially those with valued skills. Some factories are luring recruits with perks such as a new cowboy boots. Vacancies are becoming the norm.

Auto-industry investment in the country accelerated in the 1990s after the signing of Nafta. In the lead were Detroit car makers and parts suppliers looking to avoid high labor costs at their unionized plants in the U.S.

Classroom discussion questions:

1.Why did so many auto manufacturers select Mexico?

2. What can OM managers do to retain employees?



OM in the News: Amazon’s New Delivery Strategy

August 15, 2016
An Amazon Prime Air drone.

An Amazon Prime Air drone.

“Over the last few years, Amazon has left a trail of clues suggesting that it is radically altering how it delivers goods,” writes The New York Times (Aug.11, 2016). Among other moves, it has set up its own fleet of trucks; introduced an Uber-like crowd sourced delivery service; built many robot-powered warehouses; and continued to invest in a plan to use drones for delivery. It made another splash last week, when it showed off an Amazon-branded Boeing 767 airplane, one of more than 40 in its planned fleet.

These moves have fueled speculation that Amazon is trying to replace the 3rd-party shipping companies it now relies on — including UPS, FedEx and the U.S.P.S. — with its homegrown delivery service. Its logistics investments have also fed the theory that Amazon has become essentially unbeatable in American e-commerce.

The company, it appears, has a 2-tiered vision for the future of shipping. First, it’s not trying to replace 3rd-party shippers. Instead, Amazon wants to add as much capacity to its operations as possible, and rather than replace partners like UPS and FedEx, it is spending heavily on delivery services to add to its overall capacity and efficiency. Amazon’s longer-term goal is more potentially transformative. It wants to escape the vicissitudes of roads and humans, going fully autonomous in the sky. The company’s drone program could be combined with warehouses manned by robots and trucks that drive themselves to unlock a new autonomous future for Amazon.

If Amazon’s drone program succeeds (and Amazon says it is well on track), it could fundamentally alter the company’s cost structure. A decade from now, drones would reduce the unit cost of each Amazon delivery by about half.  According to Amazon, we will see drones in action within 5 years.

Classroom discussion questions:

1. Why does Amazon wish to enhance its shipping strategy?

2. What are the advantages and disadvantages of the drone program?

OM in the News: The Productivity Challenge

August 12, 2016

productivityWhat better way to start the fall semester but with a discussion of the importance of productivity (see Chapter 1, pages 13-18). There we write: “only through increases in productivity can the standard of living improve.” For well over a century, the U.S. has been able to increase productivity at about 2.5% per year, meaning U.S. wealth doubled every 30 years. But in the past decade, the news is not good. As The Wall Street Journal’s (Aug. 10, 2016) front page headline declares: “Productivity Fall Imperils Growth.”

This longest slide in worker productivity since the late 1970s is haunting the U.S. economy’s long-term prospects. Productivity in the 2nd quarter was down 0.4% from a year earlier, the first annual decline in 3 years. That was a further step down from already tepid average annual productivity growth of 1.3% in 2007 through 2015, itself just half the pace seen in 2000 through 2007, and the trend shows little sign of reversing. Productivity has slowed dramatically since the information technology-fueled boom of the late 1990s, when strong productivity gains translated into robust growth for household incomes and the overall economy.

Adds Fed Chair Janet Yellen: “the outlook for productivity growth is a key uncertainty for the U.S. economy and a very difficult question that has divided the economics profession. Some are relatively optimistic, pointing to the continuing pace of innovations that promise revolutionary technologies, from genetically tailored medical therapies to self-driving cars. Others believe that the low-hanging fruit of innovation largely has been picked and that there is simply less scope for further gains.”

Throughout our text we examine how to improve productivity through operations management.

Classroom discussion questions:

  1. Why is productivity important to OM managers?
  2. What can be done to raise productivity levels in a company? In a country?
Supply Chain Management Research

Andreas Wieland’s supply chain management blog for academics and managers

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Thoughts on continuous improvement: from TPS to XPS


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