Delta’s Unorthodox Scheduling System

APRIL 11, 2014

Delta's Control Room

“The crew of Delta Air Lines Flight 55 last Thursday couldn’t legally fly from Lagos, Nigeria, to Atlanta unless they waited a day due to new limits on how much pilots can fly in a rolling 28-day period,” writes The Wall Street Journal (April 3, 2014). The trip would have to be canceled. Instead, Delta headquarters told the captain to fly to San Juan, which they could reach within their duty limits. There, two new pilots would be waiting to take theBoeing 767 on to Atlanta. The plane arrived in San Juan at 2:44 a.m., quickly took on fuel and pilots, and landed in Atlanta only 40 minutes late.

The episode, unorthodox in the airline industry, illustrates the fanaticism Delta now has for avoiding cancellations. Last year, Delta canceled just 0.3% of its flights. That was twice as good as the next-best airlines, Southwest and Alaska, and five times better than the industry average of 1.7%.

As it cut cancellations with a more-reliable operation, overall on-time arrivals improved and Delta has fewer delays. Managers in Delta operations center (featured in our Global Company Profile  in Chapter 15) move planes, crews and parts around hourly trying to avoid canceling flights. How well an airline maintains its fleet and how smartly it stashes spare parts and planes at airports affect whether a flight goes or not. Delta’s new analytical software and instruments that can help monitor the health of airplanes and predict which parts will soon fail. Empty planes are ferried to replace crippled jets rather than waiting for overnight repairs. Typically the airline has about 20 spare airplanes of different sizes each day. About half are stationed in Atlanta and the rest spread around other domestic hubs and two in Tokyo.

This post provided courtesy of Jay and Barry’s OM Blog at www.heizerrenderom.wordpress.comProfessors Jay Heizer and Barry Render are authors of Operations Management , the world’s top selling textbook in its field, published by Pearson.

 

The Danger of Workplace Noise

APRIL 9, 2014

Extremely loud noise on the job, as well as hearing loss from noise exposure, may cause workers to miss danger warnings, reportsNewsmax Health (April 3, 2014). Workers regularly exposed to noise levels of 100 decibels – about the volume standing next to a lawnmower – have more than doubled risk of being hospitalized for a workplace injury. Workers with hearing loss were also more likely to be seriously hurt.

“Noise induced hearing loss is a public health issue – in the US, up to 30 million workers are exposed to noise,” said a Canadian researcher. “From an occupational safety perspective, work-related injuries remain an important issue that generates significant costs for businesses, workers and compensation organizations.” Exposure to high noise levels increases fatigue, decreases the ability to concentrate and impairs the quality of communication between workers.
Both noise and noise-induced hearing loss could be involved in the occurrence of accidents. For every decibel of hearing loss, the risk of hospitalization due to work-related injury increased by 1 percent. Workers exposed to noise levels above 100 decibels had 2.4 times the risk of being hospitalized for work-related injuries compared to workers not exposed to loud noise. Workers with the combination of severe hearing loss and working in an environment where noise exposure is overly intense the risk of being hospitalized with a work-related injury is 3.6 times that of workers with neither factor.
Workers who can’t hear properly, either because of hearing loss or wearing hearing protection that’s too strong, might miss important communications and signals on the job. One thing that might help is if workers and supervisors devise special safety signals that don’t rely as much on hearing.
This post provided courtesy of Jay and Barry’s OM Blog at www.heizerrenderom.wordpress.comProfessors Jay Heizer and Barry Render are authors of Operations Management , the world’s top selling textbook in its field, published by Pearson.

Laying Out the Bank of the Future

APRIL 7, 2014

bank“JPMorgan’s banks of the future will fundamentally upend Americans’ relationship with banking,” writes The New York Times (April 2, 2014). They will offer more services for customers in far less space. The layout of the new banks has gained urgency across the industry as a growing number of customers use mobile technologies to conduct many traditional banking functions, like check deposits and paying bills, without ever stepping into a branch. Either the bank branches adapt or they go the way of video stores.

JPMorgan is not the only institution trying to reimagine the traditional bank branch with its long rows of tellers standing behind glass. Across Wall Street, banks are looking to slash expenses and wring more profit from retail banking. Banking giants like Bank of America and Citigroup are working to overhaul branches with the goal of more closely resembling an Apple store, where employees holding tablets and other high-tech gadgets tend to customers.

Last year, Wells Fargo opened a 1,200-square-foot “minibranch” in Washington. JPMorgan, whose legacy bank branches averaged about 4,400 square feet several years ago, has already slimmed them down to 2,500 to 3,500 square feet. That firm began by convening focus groups to determine what customers wanted. The findings: space and simplicity.

Within the new branches, the teller line is no longer the centerpiece. That has been moved to the side. The focal point is now occupied by express banking kiosks, a kind of souped-up A.T.M. Aside from their new look, the machines allow more customized transactions. Customers can, for example, opt to get cash in any amount and any denomination, not just in $20 bills or $50 bills. The new machines are safer, too. Unlike traditional A.T.M.s that must be restocked with cash, these units replenish their own supplies from deposits, cutting down on the amount of times that employees have to ferry money to the vaults

This post provided courtesy of Jay and Barry’s OM Blog at www.heizerrenderom.wordpress.comProfessors Jay Heizer and Barry Render are authors of Operations Management , the world’s top selling textbook in its field, published by Pearson.

The Credit Card of Tomorrow

APRIL 4, 2014

credit cardSINCE the 1970s, paying with plastic has been pretty standard everywhere: Customers swiped their cards, signed receipts and took home their purchases. But after security breaches at Target last year led to the loss of personal data from as many as 110 million customers, the financial industry is racing to adopt technologies that will alter that decades-old ritual. To many, it is about time. The roots of the magnetic strip on credit cards extend back to World War II, ample time for thieves to learn to hack and steal those black lines of account information.

Credit card fraud totaled $5.3 billion in the U.S. alone in 2012, reports The New York Times (April 2, 2014), giving the industry plenty of incentive to devise a better system. The amount lost to fraud continues to grow 30-50% a year. Europe and parts of Asia have already used the system for the better part of a decade, while American merchants and issuers have balked, largely because of cost. Chip-equipped cards (called “E.M.V.” technology for “Europay, MasterCard, VISA”) cost $1.30 each to make, while a standard plastic card with a magnetic stripe on the back costs 10 cents. Retailers, too, have been loath to update their systems to accept chip technology because of the added cost.

“E.M.V. is going to cost billions of dollars to implement in this country,” says one analyst. But the system works. In 2005, when Britain fully phased in the E.M.V. technology, credit counterfeit card fraud was 25%; such fraud plummeted to 11% seven years later.

Visa, MasterCard and American Express all recently announced road maps for adopting smart chips, with the aim of forcing retailers and issuers to put E.M.V. in place by October 2015 in the U.S. By then, the liability for any counterfeit fraud will fall on whoever has not adopted the chip technology. From 17 million to 20 million chip cards have been issued in the U.S. But that represents just 2% of the 1 billion cards in use.

This post provided courtesy of Jay and Barry’s OM Blog at www.heizerrenderom.wordpress.comProfessors Jay Heizer and Barry Render are authors of Operations Management , the world’s top selling textbook in its field, published by Pearson.

Southwest Air’s Operations Problems

APRIL 3, 2014

Upstart Southwest Air in 1971

At Chicago’s Midway Airport on Jan. 2, Southwest Airlines canceled a third of its flights, lost 7,500 bags and, at one point, had 66 aircraft on the ground—about twice as many as the carrier has gates. Passengers were stuck on the tarmac late into the night.  A severe snowstorm was the main culprit, but Southwest managers also blamed ramp workers, suggesting that 1/3 of them called in sick to protest slow contract talks. The workers say they are chronically understaffed and are being blamed for executives’ mismanagement.

Maybe  Southwest is showing its age–43, writes The Wall Street Journal (April 2, 2014). Once the industry’s brassy upstart, the airline has begun to resemble the rivals it once rebelled against: carriers that were slow-growing, complex and costly to run. As we point out in Figure 2.8 on page 42, to help keep things simple and cost-effective, the airline flies one model of plane— 737—with lean, highly productive employees. Southwest employees do have a more demanding workload compared with others. The airline carries about 3,000 passengers per full-time employee, compared with 1,350 passengers per employee at its bigger rivals. But the average Southwest worker earned nearly $100,000 in 2012– compared with $89,000 at a traditional airlines.

The OM challenges are many.  Southwest is flying fuller planes, connecting more passengers and serving bigger airports that are prone to delays. As a result, some of its operational ratings have plummeted. Last year, it lost more bags per passenger than any other carrier. And after years as one of the most punctual airlines, just 72% of Southwest’s flights were on time in the 4th quarter—dead last in the industry. Further, from 2007 through 2012, Southwest’s cost to fly a seat one mile rose 42%—more than any other major U.S. airline. Southwest also faces costly upgrades to its outdated computer systems—a holdover from its simpler days—to bring them in line with industry standards.  After snowstorms forced airlines to cancel thousands of flights this winter, other carriers’ computers automatically rebooked many customers. But at Southwest, employees had to manually reschedule each disrupted passenger.

This post provided courtesy of Jay and Barry’s OM Blog at www.heizerrenderom.wordpress.comProfessors Jay Heizer and Barry Render are authors of Operations Management , the world’s top selling textbook in its field, published by Pearson.

 

Rise of the Robots

APRIL 1, 2014

robots industrial

The exponential growth in the power of silicon chips, digital sensors and high-bandwidth communications improves robots just as it improves all sorts of other products,” writes The Economist’s special report (March 29-April 4, 2014).  Three other factors are also at play.

One is that robotics R&D is getting easier. New shared standards make good ideas easily portable from one robot platform to another. A robot like Rethink Robotics’s Baxter, with two arms and easy, intuitive programming interface, would have been barely conceivable 10 years ago. Now you can buy one for $25,000. A second factor is investment. (The biggest robot news of 2013 was that Google bought eight promising robot startups.) The third factor is imagination. In the past few years, clever companies have seen ways to make robots work as grips on film sets and panel installers at solar-power plants. Aerial robots—drones– let farmers tend their crops in new ways, give viewers and broadcasters new perspectives on events, monitor traffic and fires, look for infrastructure in need of repair, and more.

While society may benefit greatly, robots’ growing competence may make some human labor redundant. Aetheon’s Tugs, for instance, which take hospital carts where they are needed, are ready to take over much of the work that porters do today. Kiva’s warehouse robots make it possible for Amazon to send out more parcels with fewer workers. Click here to watch a great 3 minute video on Amazon’s robots. Driverless cars could displace millions of people employed behind the wheel today.

The advent of robots that are cheap and safe enough to be used outside big factories is one reason for a resurgence of interest in robotics over the past few years.  Foxconn, a Taiwanese company that manufactures and assembles electronics, is aiming to robotize much of its operation with hundreds of thousands of its own relatively cheap Foxbots.  Car companies use the lion’s share of industrial robots; they account for over 50% of robot installations in the U.S.

This post provided courtesy of Jay and Barry’s OM Blog at www.heizerrenderom.wordpress.comProfessors Jay Heizer and Barry Render are authors of Operations Management , the world’s top selling textbook in its field, published by Pearson.