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Join Us for an Old-Fashioned Ice Cream Social at the POMS Meeting

May 3, 2016
Barry

Barry

Chuck

Chuck

Jay

Jay

We are hoping you will be attending the Annual Production and Operation Management Society (POMS) Meeting here in Orlando this week. If you are, please accept our invitation to an ice cream sundae and root beer float reception on Saturday, May 7th, from 4:00-5:45 pm. (The exact location of the Parlor Room will be announced at the meeting. You can also text Barry at 407-579-0600, or Jay at 210-833-1389, or Chuck at 509-715-9652 for the room number). Feel free to rsvp to Barry directly at brender@cfl.rr.com –or just stop in to surprise us!.

Copies of the new edition will be available and we hope you can stop by to meet us and our families. If your family is with you, bring everyone along! Hope to see you there!ice cream

OM in the News: China’s Robot Revolution

April 30, 2016

robot chinaAcross China’s manufacturing belt, thousands of factories are turning to automation in a government-backed, robot-driven industrial revolution the likes of which the world has never seen. Since 2013, China has bought more industrial robots each year than any other country, including high-tech manufacturing giants Germany, Japan and South Korea. This year, it will overtake Japan to be the world’s biggest operator of industrial robots. “The pace of disruption in China is unique in the history of robots,” writes The Financial Times Magazine (April 28, 2016). And it is changing the face of the global manufacturing industry. In the process, it is raising broader questions: in emerging economies, will robots assume many of the jobs that once pulled hundreds of millions out of poverty?

In recent years, China has been promoting automation as a way to fill the approaching labor gap caused by the “one-child” policy. It has promised generous subsidies to smooth the way for Chinese companies both to use and build robots. In 2014, President Xi Jinping called for a “robot revolution” that would transform first China, and then the world. The march of the machines around the world has been accelerated by sharp falls in the price of industrial robots and a steady increase in their capabilities. The price of robots will drop by 20% over the next decade, while their performance will improve by 5% each year.

The stereotypical image of China’s factories can still be found in many places: tens of thousands of people in long lines hunched over sewing machines or slotting components into a printed circuit board. But that mode of manufacturing is starting to be replaced by partially automated production lines, with human workers interspersed at a few key points.  Further, China is developing its own robot makers capable of producing machines that are 20-30% cheaper than those made in Germany and Japan.

Classroom discussion questions:

  1. What are the implications for U.S. manufacturing?
  2. What are the implications for developing nations?

OM in the News: Will Manufacturing Jobs Ever Return?

April 29, 2016
The production line of a lamp factory in China. Despite efforts to revive manufacturing in the U.S., economists say the chances of a recovery are slim, and developing countries face extra challenges as industry fades.

A lamp factory in China. Developing countries face extra challenges as manufacturing jobs fade.

Half a century ago, harvesting California’s 2.2 million tons of tomatoes required 45,000 workers. In the 1960s, though, scientists at U. California-Davis developed an oblong tomato that lent itself to being machine-picked. César Chavez’s United Farm Workers union was furious and made stopping mechanization its No. 1  priority. In 1980, the Carter administration declared that the federal government would no longer finance research that could lead to the “replacing of an adequate and willing work force with machines.” The freeze on research may have slowed the mechanization of California’s harvests, but 20 years later, only 5,000 workers were employed to pick a 12-million-ton crop of tomatoes.

In America’s factories, jobs are disappearing, too. Despite political rhetoric, though, the problem is not mainly globalization. Manufacturing jobs are on the decline in factories around the world, reports The New York Times (April 27, 2016). “Global employment in manufacturing is going down because productivity increases are exceeding increases in demand for manufactured products by a significant amount,” says Joseph Stiglitz, Columbia U.’s Nobel economist.

Will America be able to produce a manufacturing renaissance at home? “The likelihood that we will get a manufacturing recovery is close to nil,” says Stiglitz. Over the course of the 20th century, farm employment in the U.S. dropped to 2% of the work force from 41%, even as output soared. Since 1950, manufacturing’s share has shrunk from 24% to 8.5% of jobs–and is still in decline. But the shrinking of manufacturing employment is global–and a worldwide zero-sum game. Japan’s long stagnation is a consequence of a decades-long development strategy that left it overly dependent on manufacturing. What options does the U.S have? Health care, education and clean energy, to name a few.

I highly recommend you read this thoughtful article. It is a great piece to share with students as you cover Chapter 1.

Classroom discussion questions:

  1. Why are manufacturing jobs important to any nation?
  2. What is keeping the U.S. from regaining millions of factory jobs?

OM in the News: China’s Underwear Cluster

April 27, 2016

In the Chinese town of Gurao, known as the “Town of Underwear,” there are thousands of factories, which churn out 350 million bras and 430 million pairs of underwear a year for sale in China and abroad. china clustersUnderwear accounts for 80% of Gurao’s industrial output. During the past 30 years of rapid economic growth, one-industry towns like Gurao sprang up along China’s seaboard, often in what were once paddyfields. With investment from abroad, and a huge influx of migrant labor from China’s interior, they fueled the country’s export boom. There are now more than 500 such towns, making products such as buttons, ties, plastic shoes, car tires, toys, Christmas decorations and toilets (see map).

“The clustering of similar firms in the same place creates a critical mass of good suppliers and workers with relevant skills,” reports The Economist (April 16, 2016). Niche towns in China produce 63% of the world’s shoes, 70% of its eye glasses and 90% of its lamps.

China’s consumer goods grabbed a huge share of global markets thanks to their low prices. But that advantage is fading. Since 2001 wages have risen by 12% a year. Thailand and Vietnam, where labor is cheaper and taxes lower, now make lingerie for global brands such as Victoria’s Secret and La Senza. China’s biggest underwear firm, Regina Miracle, will open 2 factories in Vietnam this year, its first outside China, and 2 more there by 2018. Cambodia and Myanmar are also joining the underwear fray.

Gurao still has advantages, such as excellent supply chains. Factories there make components for underwear: elastic waistbands, dyed textiles, lace and the foam used to upholster bras are all produced locally.

Classroom discussion questions:

  1. What are the advantages of clustering?
  2. Name several industry clusters in the U.S.

OM in the News: Technology Driving the Farm Tractors

April 25, 2016
Dwindling farm incomes and open-source software are inspiring homespun hackers, helping advance farming technology. In Manitoba, farmer Matt Reimer has created a tractor that drives itself.

Homespun hackers are helping advance farming technology. Farmer Matt Reimer has created a tractor that drives itself.

The green tractor trundling across a Manitoba field with an empty cab looks like it’s on a collision course with Matt Reimer’s combine—until it neatly turns to pull alongside so he can pour freshly harvested wheat into its trailer. The robot tractor isn’t a prototype or top-of-the-line showpiece. It’s an 8-year-old John Deere that Reimer modified with drone parts, open-source software and a Microsoft  tablet. All told, those items cost him around $8,000. “Reimer’s alterations are part of a technology revolution sweeping North America’s breadbasket,” writes The Wall Street Journal (April 19. 2016).

Farmers, many of them self-taught, are building their own robotic equipment, satellite-navigation networks and mobile applications, moving their tinkering projects out of machine sheds and behind a computer screen. This homespun hacking—which sometimes leapfrogs innovations by big equipment companies like John Deere and Trimble Navigation—reflects dwindling farm incomes, the low price of electronic hardware and, sometimes, off-season boredom. Technology is already firmly rooted in modern farming, allowing a shrinking number of farmers to oversee more acres. Advances like auto-steering tractors have freed some farmers to trade futures contracts on their smartphones from inside a tractor cab, pausing only to turn and stop their machines. Defectors from Silicon Valley powerhouses like Google and Yahoo are building software to analyze soil and manage fertilizer use.

With less money to spend, some farmers say they can build their own tools, suited to their farms, at a lower cost. “Poverty is the mother of invention,” said farmer Jim Poyzer, who used to be a programmer. During the winter months Poyzer began tinkering with a microprocessor, eventually developing a system to monitor and adjust how many seeds his planter places in his Iowa fields. The system tailors the flow of seeds to the soil’s ability to produce healthy crops.

Classroom discussion questions:

  1. What other tools of OM can farmers employ to increase productivity and profits?
  2. Why are the large equipment manufacturers leading the technology charge?

OM in the News: Earthquakes in Japan Expose Supply Chain Fraility

April 22, 2016
Toyota is halting vehicle assembly across Japan due to earthquake disruptions at an auto-parts supplier, a move that recalls prior supply-chain interruptions

Toyota is halting vehicle assembly across Japan due to earthquake disruptions at an auto-parts supplier

“The vulnerabilities of the tight production supply chains at Japanese companies including Toyota, are back in the spotlight after earthquakes in Japan forced several to curtail output this week”, writes The Wall Street Journal (April 19, 2016). Toyota’s decision to shut 26 car assembly lines this week nationwide due to production halts by a supplier shows how the auto maker’s lean manufacturing system, often viewed as a model of efficiency, can be impacted by disasters. The latest shutdowns drew parallels to the aftermath of Japan’s 2011 earthquake and tsunami.

This is the second time in 3 months that Toyota has had to stop production in its Japanese plants after supplier troubles. The earthquake-affected supplier, Aisin Seiki, made door and engine components, and Toyota has yet to decide when it would resume operations. In February, Toyota lost production of 80,000-90,000 vehicles over a week-long halt after an explosion at a steel supplier. That shutdown weighed on Japan’s industrial output, which fell 6.2% that month.

Shutdowns occur largely because of Toyota’s JIT inventory system, a philosophy at the core of its efficient production method. By keeping as little inventory on site as possible, storage costs can be cut and component quality can be consistent. Toyota plants hold several hours worth of inventory for many parts, relying on a steady feed from suppliers. If suppliers suffer a disaster, Toyota can quickly run out of components.

After 2011, Toyota ensured that multiple suppliers are manufacturing each component. To assess risks, it built a database on suppliers, including on companies down the supplier chain. It also pushed suppliers to diversify production, and compiled scenarios on how parts production could be shifted to different locations in case of emergency.

Classroom discussion questions:

  1. What are the advantages and disadvantages of Toyota’s JIT system?
  2. Do U.S. firms face the same challenges? How?

OM in the News: Scrutinizing the Scheduling of Workers at Retail Chains

April 20, 2016
Aeropostale workers say they are being put under unnecessary stress.

Aeropostale workers say they are being put under unnecessary stress.

The attorneys general of 8 states are scrutinizing big retailers over their staffing practices and whether they require workers to show up or stay home with little notice, reports Fortune (April 13, 2016). Warning letters have been sent to Target, Gap, Abercrombie & Fitch, Sears, J. Crew, Urban Outfitters, Williams Sonoma, and other chains they believe are using on-call scheduling.

On-call scheduling systems have made big retailers more nimble, allowing them to staff stores during busy times and save on payroll during slow days. The software used by many retailers forecasts staffing needs based on real-time sales and traffic information.

Some employers require on-call workers to check in by phone, email or text shortly before their shift. If the store is expected to be busy, they must come in; if things are slow, they are told not to report for work, and aren’t paid. These systems have been criticized by worker advocates, who say on-call scheduling makes workers’ lives and pay unpredictable.

The retailers are being asked to provide information about how they schedule employees, including whether they use software from vendors such as Kronos and Workplace Systems to schedule labor hours, or penalize employees who don’t follow on-call procedures. Schedule instability has emerged as a public policy issue in recent months, highlighted in hourly workers’ campaigns for higher wages. A 2015 report examined the prevalence of unpredictable schedules among young adults, and found that 41% receive their schedules a week or less in advance, and half have no input into the timing of their hours.

Classroom discussion questions:

  1. What are the advantages and disadvantages of on-call scheduling.
  2. Why has this become a public policy issue?
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