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OM in the News: BMW’s Supply Chain Disruption

June 1, 2017

BMW’s plant in Rosslyn, South Africa.

BMW is halting or slowing production of certain models in response to a shortage of parts caused by delivery problems from first-tier parts supplier, Bosch. “The hiccups show how dependent manufacturers are on a global, smoothly running supply chain,” writes The Wall Street Journal (May 30, 2017). Even small disruptions anywhere along the line can cascade into delays in getting the company’s big money-making products off the assembly line and into showrooms.

In BMW’s case, the culprit is a “Lenkergetriebe,” or steering gear, manufactured by Stuttgart-based auto-parts giant Bosch and used in BMW’s Series-1,2,3, and 4 models. “Our supplier Bosch is not currently able to provide us with a sufficient number of steering gears,” said a BMW exec. Bosch, in turn, said the trouble arose when a 2nd-tier supplier in Italy experienced difficulties in delivering the casing for the steering gears.

As a result of the shortages, production is restricted at several BMW plants in Germany, China, and South Africa. “Automotive value chains are international. An interruption in delivery of parts from a partner in Europe can therefore also have implications in China,” said the BMW exec. “The vehicle is not complete until all parts, most of which are supplied just-in-time, are installed. It is, therefore, understandable how a missing part—even if only a small one, as in this case—can have a major impact.”

Classroom discussion questions:

  1. What can BMW do to prevent such supply chain disruptions in the future?
  2. What are the differences between 1st, 2nd, and 3rd tier suppliers? Provide an example of each in a non-automotive industry.

Guest Blog: Effects of Technology Use on Collaborative Learning Results

May 30, 2017

Our Guest Post comes from Phillip Flamm, who teaches Operations Management in the ISQS department at Texas Tech University. This is his 9th posting on our OM blog.

The Rawls College of Business here at Texas Tech U. has recently added a “technology room.” This room has 9 rectangular tables and will seat teams of 5. Each table has a large monitor at the head of the table. At the front of the room is a podium with a large screen monitor behind it. Having plugged in their laptops to the room’s web site, team members have several options:

  • View the master podium screen on the table’s large monitor
  • View the laptop screen of one of the team members
  • View specific documents

Team members interact as follows:

  • Team members take very comprehensive notes in class (lecture is structured with accompanying power point slides)
  • Team posts one member’s notes from the most recent lecture on the table monitor
  • Members go around the table in order discussing the notes they have for each power point slide
  • Extended discussion may result if there are questions about the content (each member offers their individual understanding of the concepts)
  • Member with their notes on the monitor makes changes or additions based on a clearer understanding of the material (all members can see changes as they are made)
  • After reviewing the most recent lecture they move on to the next most recent, etc., until all lectures (for the next exam) are covered
  • Every lecture is covered every time the team meets (past lecture notes generally go faster than the most recent)
  • The posting member distributes a copy of the updated, more descriptive notes at the conclusion of the meeting

Team members experience faster learning rates, increased retention, and better understanding of quantitative material. To exhibit these advantages the team members’ average exam was 15 points higher than the other 380 course students on exams this semester.

OM in the News: What’s Next–A Robot That Folds Your Laundry?

May 27, 2017

Why am I not surprised that the Start Up Nation (title of a great book about Israel’s inventions), which brought us Mobileye, the Pill Cam, the Intel 8088, Waze, USB flash drives, Viber, drip irrigation, and the cherry tomato, now brings FoldiMate. After all, cars can now drive themselves. Cellphones talk to us. How long will it be until the dreams of every college student and overworked parent come true — and laundry can fold itself?

FoldiMate is about two-thirds the size of a washer or dryer. The user simply hangs or clips the shoulder area of the shirt on 2 hooks and steps back. The device pulls the shirt in. A series of rollers and arms that also move up-down-sideways straighten and fold the item of clothing. A typical laundry hamper of clothes can be folded in about 3 minutes. Laundry is deposited in a tray at the base of the machine.

 FoldiMate works by analyzing each garment it takes in, figuring out its ideal folding shape and delivering a drawer-ready stack of smoothly folded clothes. It look like a mash-up of a clothesline and a plastic oven, writes The New York Times (May 25, 2017).

“The whole idea is to have the experience of handing items over to a friend, who will do that hard labor for you,” says Gal Rozov, the inventor. “My wife claims I’m one of the worst laundry folders in the world, and she’s right. I hate it. We have 3 kids, and laundry folding is tedious, and I wanted some way to help out.”

Via a crowdfunding campaign on its website, FoldiMate has taken in about 8,000 deposits of $85. The company aims to start deliveries of the $850 product next year.

Classroom discussion questions:

  1. What other famous inventions have come out of Israel?
  2. Will this product eventually be like the bread machine–an off gifted but rarely used appliance?


OM in the News: Andons Move to the Office?

May 25, 2017

“Interruptions are the bane of workers in open-plan offices,” writes The Wall Street Journal (May 20-21, 2017), “with some resorting to headphones, busy lights and other paraphernalia to ward off chatty co-workers.” At the engineering giant ABB, a few have even set out small orange road cones to keep visitors at bay. But deciding when to put up a “Do Not Disturb” sign can itself amount to an interruption. People may be reluctant to appear unhelpful, uncollegial or unfriendly.

So ABB developed an automated solution: an andon light that turns red, green or yellow to indicate when interruptions are OK and when they aren’t. The system, known as FlowLight, reduced interruptions by 46%. In general, employees reported becoming more conscious of how disruptive interruptions can be and more motivated to focus.

FlowLight is modeled on Skype’s user-status indicators and consists of a light mounted on a cubicle wall or outside an office. If the light is green, a worker is available. A red light means busy, suggesting that interrupters stay away. A more intimidating, pulsing red means, essentially: Do not disturb except for something crucial. Yellow means that the staffer is away.

The lights are triggered by a worker’s sustained computer activity, based on software that tracks typing and mousing. Algorithms smooth out the data to avoid turning on a red light during a brief burst of feverish activity. For those who want it, the system includes a switch to turn the different lights on manually. But to avoid making red lights into status symbols, they are limited to going on for 9% of the workday, since research suggests that most workers are only truly productive for some fraction of the day.

Classroom discussion questions:

  1. Compare these lights to the andons used in manufacturing and described in Chapter 16.
  2. Do you think ABB’s system will spread to other firms? Why?

OM in the News: IBM Says No to Home Work

May 22, 2017

“IBM is giving thousands of its remote workers in the U.S. a choice this week: Abandon your home workspaces and relocate to a regional office—or leave the company,” reports The Wall Street Journal (May 19, 2017). The 105-year-old giant is dismantling its popular decades-old remote work program to bring employees back into offices, a move it says “will improve collaboration and accelerate the pace of work.” IBM’s decision is a useful resource when you discuss work schedules in Chapter 10.

The shift is particularly surprising since IBM has been among the business world’s staunchest boosters of remote work, both for itself and its customers. It markets software and services for what it calls “the anytime, anywhere workforce,” and has published numerous studies on the merits of remote work. IBM has boasted that more than 40% of employees worked outside traditional company offices, and just posted a May 4th blog that “telework works.”

IBM may be part of a broader rethink of remote work under way at large companies, as CEOs argue that putting workers in the same physical space hastens the speed of work and sparks innovation. Employers tread a fine line, however, since workers rate flexible-work programs highly, and research has found telecommuters often work more effectively than their cubicle-bound counterparts. (Companies began offering generous remote work policies because they expected large savings in office and real-estate costs, but those savings haven’t always materialized).

IBM workers have been given 30 days to decide whether to move to company-maintained office space that can be hundreds of miles away from their homes. Those unwilling to move were also given 90 days to seek another role within IBM.


Classroom discussion questions:

  1. What are your personal experiences with remote work?
  2. What are the advantages and disadvantages of teleworking?

OM in the News: The Solution to the Lost Luggage Problem

May 19, 2017

An unclaimed bag at the Charlotte N.C. Airport

The airline industry says its rate of mishandled baggage is lower than ever, down more than 12% from 2015 and the lowest ever recorded. “Much of the reduction is due to investments by airlines in technology improvements,” writes The New York Times (May 16, 2017).  Still, that is small comfort to the lone traveler waiting by a deserted carousel with a sinking feeling.

There are myriad reasons a bag can go missing. “Weather and missed connections are by far the largest proportion of causes for bags not arriving on time,” says Delta’s VP. “We’ve invested about $50 million in deploying baggage tech across our organization,” he said. That investment includes integrating baggage data into the Delta mobile app. “If you’re traveling and you check a bag, you get a push notification when your bag is loaded.”

New technology and better baggage handling procedures had paid off, but the drop also coincided with the major carriers beginning to charge passenger fees for checking a bag. Those fees reduced the number of travelers checking bags.

Bag tags are now embedded with RFID chips, which means the location of bags is tracked and electronically crosschecked against a database to make sure that they are in the right place at the right time. This increases security, since each bag is linked to a ticketed passenger. It also speeds up the discovery of a bag in the wrong place so the process of reconnecting a bag to its owner can begin sooner.

At most U.S. airports, the airlines have operational control of their terminals, so it is incumbent on them to add new technology. By June, 2018, all airlines must maintain an accurate inventory of passenger baggage by tracking when each piece of checked luggage moves on, off or between planes.

Classroom discussion questions:

  1. Discuss how Alaska Air guarantees its 20 minute baggage delivery. (See the Video Case Study in Chapter 7).
  2. What is the role of RFID in baggage tracking?

OM in the News: The Global Supply Chain for China’s New C919 Jet

May 16, 2017

More than 1,000 flights took off or landed at Shanghai’s vast airport on May 5, 2017, but one marked the beginning of a new era in the aviation business. After years of delays, the nation’s first modern large jet, the 174 passenger C919, made its maiden flight. The C919 brings its manufacturer, Comac, in head-to-head competition with Boeing’s ubiquitous 737 and Airbus’s A320. China is making its boldest attempt yet to break the stranglehold that these two giants have on the market for big commercial airliners.

“Behind the celebrations of a Made-in-China jet is the reality that Comac was able to build its new plane using a string of Western suppliers,” writes Businessweek (May 8, 2107). At least 15 foreign partners such as GE, Safran, and Honeywell worked on components and systems of the C919. Tapping into the supply chains of Airbus and Boeing allowed Comac to bypass many of the technical challenges of making a modern commercial jet from scratch and built up the company’s expertise for future designs. Companies based outside China supply C919 systems for flight control, power, lighting, cockpit control and much more. The engines and landing gear are also from overseas manufacturers.

China will need over 6,800 aircraft valued at more than $1 trillion through 2035, and 3/4 of them will be single-aisle planes. The country’s largest carrier, China Southern Airlines, had ordered more than $15 billion of new aircraft from Airbus and Boeing since 2015. So the C919 should be a game-changer for China’s aerospace industry.

Classroom discussion questions:

1.What is Boeing doing to respond to the C919 threat?

2.Describe the new jet’s supply chain.


Supply Chain Management Research

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

better operations

Thoughts on continuous improvement: from TPS to XPS