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OM in the News: Life and Death on the Third Shift

January 15, 2018

Every day at Tyson Foods’ cavernous meatpacking plant in Holcomb, Kansas, 6,000 cows clamber off waiting 18-wheelers. They’re watered, then ushered into the kill box. After the heads, hides, and hooves are removed, the carcasses are sawed in half, checked by U.S.D.A. inspectors, and sent down conveyor belts to be butchered, boxed, and bar-coded by 3,800 workers in 2 shifts. The journey takes 40 minutes.

After 11 p.m. the procession halts, and the sanitation crews move in. The only slaughterhouse job worse than eviscerating animals is cleaning up afterward. These “third-shift workers” wade through blood and grease and chunks of bone and flesh, racing all night to hose down the plant with disinfectants and scalding water. The stench is unbearable.

The cleaning crew is not employed by Tyson, however. Packers Sanitation Services, the nation’s largest cleaning contractor to the food industry, staffs the hard-to-fill night shift jobs. Packers pays their workforce $11.86/hour, 1/3 less than what production employees earn.

“Such is the genius of outsourcing,” writes Businessweek (Jan.8, 2018). In an era of heightened concern about food safety, meat and poultry producers are happy to pay sanitation companies for their expertise. The sanitation companies also assume the risk of staffing positions that only the desperate will take—largely undocumented immigrants. And they relieve the big producers, such as Tyson and Pilgrim’s Pride, of responsibility for one of the most dangerous factory jobs in America.

No one knows exactly how many sanitation workers get injured on the job, as OSHA doesn’t require plants to report contractors’ injuries. Judging from Packer Sanitation’s record, the nightly storm of high-­pressure hoses, chemical vapors, blood, grease, and frantic deadlines, all swirling around pulsing belts, blades, and blenders, can be treacherous. Packers has the 14th-highest number of severe injuries—defined as an amputation, hospitalization, or the loss of an eye—among the 14,000 companies tracked by OSHA. Adjusting for size, Packers tops the danger list by a wide margin, with a rate of 14 severe injuries for every 10,000 workers. Its amputation rate of 9.4 dismemberments per 10,000 workers is 5 times higher than for U.S. manufacturing workers as a whole.

Classroom discussion questions:

  1. As the boom for cheap protein creates yet more demand, how can operations managers deal with the 3rd shift issue?
  2. Who is most responsible? OSHA? Tyson? Packers?

OM in the News: Taking to the Sky to Deliver on Time

January 12, 2018

Shoppers accustomed to getting e-commerce orders in 2 days or less are adding to the pile at airport cargo terminals

Companies are shipping more items by plane to meet customers’ rising expectations for rapid delivery, prompting a scramble for cargo space that has sent airfreight rates soaring and pushed Amazon and others into the airline business. Global airfreight traffic climbed almost 9% this past year.

The cause is twofold: As online shoppers come to expect faster home delivery of everything from smartphones to paper towels, passenger jets and dedicated cargo planes are picking up more kinds of cargo traditionally carried by container ships, trains and trucks. At the same time, strong global economic growth also is spurring demand for goods long ferried by air, such as automotive and manufacturing parts.

Those factors are creating some of the stiffest competition for air-cargo space in years, reports The Wall Street Journal (Jan. 10, 2018). To meet the rising demand, Amazon has started its own airline and some air-cargo operators are searching for older, idle jets to convert into freighters. Amazon has used its current fleet of about 30 use Boeing 767 jets primarily for its fastest Prime delivery service, and is adding 10 more planes this year. The dedicated fleet has allowed it to extend the window for guaranteed 2-day delivery from 6 p.m. on the East Coast to as late as 11 p.m.

Demand for new smartphones from Apple and Samsung last year pushed up airfreight costs. Elevated semiconductor shipments, an airfreight mainstay, also have been gobbling up cargo space. And increasingly, manufacturers are loading toys, clothing and other products onto planes to meet shorter delivery windows and leaner retail inventories.

Airport cargo terminals are now teeming with items such as dog food and spaghetti sauce. “We’re shipping more and more of what you might consider to be everyday basics,” said a UPS spokesman.

Classroom discussion questions:

  1. What can operations managers do to better control shipping/logistics costs?
  2. What technique in Supplement 11 (Supply Chain Management Analytics) could be used in this situation?



OM in the News: Kroger Thrives on OM Innovation

January 9, 2018

Kroger was able to decrease average check-out wait times from 4 minutes to 30 seconds with no additional labor.

Back in 1883 when Barney Kroger invested his life savings of $372 to start his first store, the second purchase he made was a horse and carriage so he could deliver goods to his customers. One could make the argument that Barney knew the importance of delivery before Domino’s, Amazon or Blue Apron ever existed. OM innovation has long been a tradition at Kroger, writes ORMS Today (Dec., 2017). In the early part of the 20th century, Kroger was the first grocery store to introduce self-shopping and the first to surround its stores with parking lots. It became the first company to test electronic scanners in the 1970s, and in the 1990s, one of the first with self-checkouts. Now, with 2,800 stores, Kroger serves 9 million customers a day. Here are just 2 of its latest OM advances:

Kroger developed the industry’s first real-time solution for queueing to answer the question, “What if we could open another lane the moment queueing conditions required it?” Simulation models led to a system of sensors above each entrance and register that measures the number of customers walking into stores, as well as the number of customers standing in line at each lane. Combined with a real-time POS feed, Kroger is able to make predictions on the number of customers arriving at the front end by day of week and time of day. The system tells managers on a big screen hanging above the registers how many lanes are open, how many lanes should be open now, and how many should be open in 30 minutes, in order to proactively meet the rush of customers about to arrive.

Its inventory control model, Pharmacy Inventory Optimization, helps set Min/Max re-order points for the ordering system, reducing annual out-of-stocks by 1.7 million prescriptions, labor ordering costs by $10 million, and annual inventory costs by $120 million, while increasing sales by $80 million. It was a finalist for the INFORMS Franz Edelman award.

Classroom discussion questions:

  1. How has OM helped Kroger become an innovator?
  2. Where else can OM tools be used to increase productivity in a supermarket?

OM in the News: Machines are Making Your Sushi, and That’s Good

January 7, 2018

In the belly of a machine about the size of an office printer, a plastic roller presses sticky rice onto a bed of seaweed. The oxygen-to-grain ratio has been precisely calibrated with the aid of X-ray tests. A razor slices the sheet into a flawless rectangle, which plunks down onto a steel tray ready to be stuffed with ruby-red tuna or smoked eel.

The $14,000 robot can help a food prep worker churn out 200 sushi rolls an hour—up from the 50 or so a chef could make by hand, according to its maker, Autec USA. Autec says orders have quadrupled over 5 years amid rising sushi consumption and a growing chef shortage. Among its customers is Whole Foods.

Service industries have lagged other sectors in spending on labor-saving equipment during this economic expansion, because as long as workers were plentiful and wages stagnant, it made more sense to hire than to invest in automation. Services make up a growing share of the U.S. economy—64% of gross output last year, up from 40% in the 1950s—but their share of capital expenditures has been relatively flat over time.

“Now, many businesses are going beyond replacing old equipment,” writes Businessweek (Dec.25, 2017). They’re also pouring money into new technology, along with buildings and production equipment. For the first time since 2000, service sector investment in intellectual-property products (think software and R&D) has surpassed 4% of GDP.

Autec expects demand for its robots to stay strong. Its most popular machines are an example of the kind of automation that can make life easier for workers—rolling out rice over sheets of nori is one of the most difficult, and tedious, parts of sushi making—rather than make them obsolete. Customization—inserting different kinds of filling—still requires humans.

Classroom discussion questions:
1. Why did service sector investment lag behind the industrial sector?

2. Why is efficiency improvement important in the service sector?

OM in the News: The Challenge of Socially Responsible Sourcing

January 5, 2018

Cobalt metal is a crucial component of lithium-ion batteries, which are used to power electric vehicles as well as portable electronic devices due to its ability to conduct electricity when stacked with other metals such as lithium and nickel. And it is in high demand, as the price of the metal has soared to $75,000 a metric ton, more than double the price from the start of 2017. Cobalt prices are further expected to double in the next 2 years as demand for electric-vehicle batteries continues to outstrip existing supply of the metal.

The problem, reports The Wall Street Journal (Jan. 3, 2018), is that most cobalt currently comes from the Democratic Republic of Congo, where supply is threatened by political, legal and labor issues. The Congo produces 2/3 of the world’s cobalt, (about 66,000 metric tons a year), but mines there have been criticized over reports of child labor and unsafe conditions. Thousands of children, some as young as 7 years old, mine cobalt in the country and work in perilous conditions without basic protective equipment.

Volkswagen and 9 other leading car makers, including Ford and Mercedes, whose supply chains include cobalt buyers, just set up a “raw materials observatory” that aims to address ethical and labor-rights issues in sourcing raw materials, including cobalt. One Canadian battery maker’s CEO said: “All of our customers want ethical sourcing.”

Child labor is a difficult issue in developing countries, usually caused by poverty.

Classroom discussion questions:

  1. What is “socially responsible sourcing”?
  2. What are the alternatives to sourcing from the Congo?


Video Tip: How Baseballs Are Made

January 2, 2018

Despite its uncomplicated appearance, the baseball is in fact a precision-made object, and one that has often been the subject of heated controversy throughout its history.

An official Major League baseball consists of a round cushioned cork center called a “pill,” wrapped tightly in windings of wool and polyester/cotton yarn, and covered by stitched cowhide. Approximately 600,000 baseballs are used by all Major League teams combined during the course of a season. The average baseball remains in play for only 5-7 pitches in a Major League game. Each ball must weigh between 5 and 5.25 ounces and measure between 9 and 9.25 inches in circumference to conform to Major League standards. Your students will enjoy this 5 minute video showing the manufacturing process.

Such uniformity was nonexistent in the early years of baseball’s history, when balls were either homemade or produced on a custom-order basis as a sideline by cobblers, tanners and other small business owners. In 1872, the modern standard for the baseball’s weight and size was established. The production of balls became more consistent during the remainder of the decade, thanks largely to the demands made on manufacturers by the newly formed National League, the first professional baseball league.

At the turn of the century, the baseball had a round rubber core. This gave way in 1910 to the livelier cork-centered ball, which was itself replaced two decades later by the even more resilient cushioned cork model. The baseball has undergone only one significant change since that time, when a shortage in the supply of horses in 1974 prompted a switch from horsehide to cowhide covers.



Guest Post: Temperatures–A Decision Table Example

December 28, 2017

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

I use the following example in my OM class to discuss maximin and minimax in a context the students readily understand and to demonstrate several Excel functions to my student. (It is based on a piece in Interfaces in 1990). Prior to class I search for the daily high and low temperatures in the previous month and copy them into a spreadsheet. The results appear in columns A and B.

Ultimately, I will ask my students which day was the hottest in that month and which day was the coldest. First, though, the average highs and lows in column B need to be converted to individual numbers which will be placed in columns D and E. Identifying the High temperature from column B gives me the opportunity to
• Show students Excel’s LEFT function
• Show students that the results of the LEFT function are characters, not numbers
• Show students Excel’s VALUE function to convert the characters to numerical values.
Identifying the lows is slightly more complicated due to the degree sign on the right of the values in column B which precludes us from using Excel’s RIGHT function. This gives me the opportunity to show students Excel’s MID function to pick out characters 5 and 6 from the high/low string and convert it to a numerical value.
At this point, I ask the students which date was the hottest and which was the coldest. Several use Excel’s MAX and MIN functions to find the date with the highest high temperature and lowest low temperature. Some average the high temperature and low temperature for each day and base their answer on the highest and lowest of the averages.
I then suggest that perhaps the hottest day is the day with the highest low (maximin) temperature because it is most difficult to sleep on those nights (without AC) and that the coldest day is the one with the lowest high (minimax) temperature because it is the worst day to go swimming. I also show them how to use Conditional Formatting to identify the highest and lowest temperatures in columns D and E as shown to the left.

Finally, I have the students graph (not shown) the temperatures in these two columns. It gives me the opportunity to show that it can be valuable to modify the minimum and the major units on the y-axis to make it easier to find the highs and lows.

I really like using an exercise that gives me the opportunity to display a maximin and minimax explanation and to show the students some Excel functions and features.

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