3-D Printing–or Additive Manufacturing?

MAY 13, 2014

 

A new way to turbocharge  turbine-making

Engineering companies now prefer to talk about “additive manufacturing” rather than “3D printing,” writes The Economist (May 3, 2014). One reason is that printing is not quite the right word for some of the technologies given this label. Whereas hobbyist-scale 3D printers typically build a product by squirting out drops of plastic, a newer manufacturing technique called selective laser melting zaps successive layers of powder with a laser or ion beam, hardening only certain bits. Larger firms want to stress the “manufacturing” aspect: that technology has moved beyond the development labs and is now being used on the factory floor to make complex metal parts. In Siemen’s gas turbines, for example, elaborately shaped blade components are hard to design and costly to make. But Siemens is using additive manufacturing machines to cut the cost and the time needed to replace the blades on customers’ turbines when they break– eventually from 44 weeks down to 4.

For simpler mechanical parts, the approach allows designers to imagine shapes that would be impossible to create through older techniques, besides greatly speeding up prototyping—for turbine blades and similar parts, from 16-20 weeks to just 48 hours, Siemens says. Additive manufacturing cuts the cost of tooling and materials: a piece can have all of its holes incorporated into it, with great precision, as it is built up from powder, instead of needing to have them expensively drilled afterwards. Siemens hopes to cut the cost of some parts by perhaps 30%.  As it gets easier to make low-volume, specialized parts in-house, Siemens gains bargaining-power when it comes to outsourcing such parts to other firms.

Aircraft engines, subject to even higher standards of reliability than turbines, are another area in which the engineering giants have implemented additive manufacturing. GE is using it to make fuel nozzles for its next-generation Leap engines. GE says the nozzles will be 25% lighter and five times more durable than their predecessors—and since there are 20 or so in each engine, the weight savings are significant.

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.

Zulily’s “Inventory-Lite” Model For E-Commerce

MAY 11, 2014

zulilyOne of the Internet’s fastest-growing retailers is also one of its slowest shippers, reports The Wall Street Journal (May 4, 2014). The mom-focused discount site takes an average of 2-3 weeks to get merchandise to customers, well off the pace of online veterans like Amazon.com and ShopRunner Inc., which have been training shoppers to expect delivery in 2 days.

The slow shipping times are the result of a bare-bones distribution system that is enabling 4-year-old Zulily to turn a profit in an industry where some of its peers have struggled. Zulily’s sales have soared thanks to its ability to get women to browse regularly for deals and make what are largely impulse buys before the sales end.

But Zulily’s Achilles’ heel may be shipping. Last year, it took an average of 11.5 days for items to be shipped from Zulily’s warehouses after customers ordered them. The reason: Zulily doesn’t buy in advance most of the products it offers. Instead, it orders the items from vendors after the sales end. Vendors then ship the merchandise in bulk to one of two Zulily warehouses, where the products are sorted and combined with other orders before being shipped back out.

“It’s more efficient to do it this way,” says the company’s COO. It also doesn’t accept returns. He adds: “The inventory-lite model is why Zulily can afford to sell a wide range of discounted merchandise from more than 10,000 vendors.” The company has been investing in automation at the warehouses so that they can handle more inventory more quickly. “We’re always looking to improve speed and efficiency.”

Customers going to Zulily’s website don’t know ahead of time what deals they will find, and the retailer tries to work the shipping lag into its sales—for example, it is currently selling summer apparel for women and children.

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.

FedEx Jolts E-Commerce Companies

MAY 10, 2014

fedex2“The joy ride is over,” said the president of a shipment-tracking software company. FedEx is changing the way it charges to ship bulky packages, jolting e-commerce companies with price increases for delivering items as diverse as diapers, shoes and paper towels (The Wall Street Journal –May 7, 2014). Instead of charging by weight alone, all ground packages will now be priced according to size. In effect, that will mean a price increase on more than 1/3 of its U.S. ground shipments. The move will greatly affect bulky but lighter weight items which many people have delivered on a regular basis, as well as Zappos.com shoes, which ship for free, including free returns. Indeed, shoe shoppers are encouraged to buy multiple pairs, keep what fits and return the rest. Avid Web shoppers do the same with sweaters, dresses, and jackets at retailers like J. Crew, Macy’s, and Banana Republic.

Under FedEx Ground’s current pricing, a one-pound square package with 12-inch sides—which might hold several shirts would be priced by weight and cost $6.24 to ship. After the changes, the same box would be priced at $8.83, a 41% increase. If an item is heavier than its “dimensional weight,” the customer will be charged the higher amount.

The change in pricing could dramatically affect both online shoppers and retailers. Someone will have to swallow the estimated hundreds of millions of dollars in extra shipping costs. Shipping is already one of the biggest and most rapidly increasing costs for big online retailers. For FedEx, it comes down to efficiency. Lightweight e-commerce orders take up a lot of room in the truck, and Amazon and other shippers don’t always match the box size to what is inside. (Companies like Zappos do use elaborate algorithms to determine exactly how many items should ship in a box to minimize the cost.)

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.