Author Archives: AccountMate

Shipping Bottleneck Hit UPS on Xmas Eve

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DECEMBER 29, 2013

ups deliveryIn the earliest hours of Dec. 24, packages poured into UPS’s main hub, called Worldport, in Louisville, Ky. And they were piling up. Employees responsible for sorting packages—already deep into a 100-hour week—were furiously getting them ready to be sent on to their destinations. But dozens of other workers responsible for loading those packages into planes to be shipped out were left standing around idle, because the unexpected glut of packages from last-minute shoppers had swamped the company’s air fleet.

The dearth of planes stranded a large volume of packages in Louisville that day. Many of those that did make it out were shipped too late to make delivery trucks’ pickup schedules and were left sitting in warehouses not far from their destinations. By sundown, UPS was forced to tell many Americans that the gifts they had ordered wouldn’t arrive before Christmas as promised.

“The bottleneck was largely in UPS’s air business,” writes The Wall Street Journal (Dec.27, 2013), ”which retailers leaned on heavily in the past week as they scrambled to fill down-to-the-wire orders.” UPS originally expected to ship about 3.5 million packages at Worldport. The facility handles on average 1.6 million packages a day. Likely double that many packages arrived during the last-minute crush. On Christmas Eve UPS admitted that the volume of air packages in its system had exceeded its capacity.

UPS carefully plans how it will handle the holiday peak. Extra resources such as additional cargo planes had been lined up as “hot spares”— aircraft that could be fired up quickly in case of a logistics emergency. But it ran into a confluence of factors. Retailers have been encouraging online sales, and they likely contributed to the logjam by offering some of their best discounts late in the season in a final push for sales.

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

The Explosion of 3D Printing at GE

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DECEMBER 11, 2013

GE produces one of the world's most powerful engines

GE, on the hunt for ways to build more than 85,000 fuel nozzles for its new Leap jet engines, is making a big investment in 3D printing, reports BusinessWeek (Dec. 2-8, 2013). Usually the nozzles are assembled from 20 different parts. Also known as additive manufacturing, 3D printing can create the units in one metal piece, through a successive layering of materials. The process, discussed in Chapter 5,  is more efficient and can be used to create designs that can’t be made using traditional techniques. The finished product is stronger and lighter than those made on the assembly line and can withstand the extreme temperatures (up to 2,400F) inside an engine. There’s just one problem: today’s industrial 3D printers don’t have enough capacity to handle GE’s production needs.

“With today’s technology, it would take too many machines,” as many as 60 to 70, to efficiently make the nozzles, says GE. As part of a $3.5 billion investment in its aerospace supply chain, GE will spend tens of millions of dollars to invest in new technology and, over the next five years, triple the size of its 70-person 3D-printing staff and expand its factory floor fourfold.

The company’s embrace of 3D printing throws the weight of the world’s largest jet-engine maker behind the technology. Today, Boeing uses the process to make plastic air-conditioning ducts for its 787 jet, and Nike has a football cleat made on 3D printers. But “GE’s investment changes everything, and it’s also unprecedented,” says an industry expert. Expanding 3D printing will give GE clout with manufacturers, an opportunity to guide the growth of the industry. “There doesn’t exist a supply chain out there right now for this kind of work,” a GE VP says. “GE has to be involved in developing it.”

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

From Navy Oil Tankers to Amazon’s Diapers

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NOVEMBER 27, 2013

8 ships returning to Caroline Islands anchorage, 1944

Amazon’s online diaper sales and the U.S. Navy’s refueling protocol for World War II appear unrelated and worlds apart. Nevertheless, they are both answers to an identical logistics problem: how can an organization shorten the time between a customer’s order and a supplier’s response?

Amazon is seeking a way to decrease its response time to online buyers. In the case of diapers, this means encouraging a supplier such as P&G to relocate its operations adjacent to Amazon’s warehouses. With co-location, both firms presumably can reduce their shipping costs, better manage their inventories, and speed up deliveries.

The Navy experienced a similar logistics problem during World War II, writesThe Wall Street Journal (Nov.25, 2013). In the early months of the war, the Pacific fleet engaged in hit-and-run tactics; it had to return to Pearl Harbor, where its oil supply tanks were located. When the Navy launched a 1943 offensive in the central Pacific, the geographical distance between consumer (fleet) and supplier (Hawaii) widened. Refueling consumed a precious commodity—time.

One  logistic solution: seize an enemy-held island, convert the island into an advanced base and construct oil-storage facilities for the fleet. That worked, but as the Navy accelerated its offensive, it outran the advanced base network. By 1944, the Navy introduced floating bases at Pacific anchorages. Commercial tankers delivered fuel oil to the anchorage, storing oil in barges. A gap, though, between oil demand and supply still persisted.

Then the Navy turned logistics on its head, dispatching 36 oilers to meet carrier task force units at prearranged locations in the forward area. Oilers now refueled fleet units on the move in “underway replenishment.” The results were dramatic. A carrier task force could remain free from a fixed base for 3 months. Fleet Admiral Nimitz termed the Pacific just-in-time supply chain as his “secret weapon.” Naval historians would describe Nimitz’s logistic plan as a “fleet within a fleet.” Amazon’s co-location has been called a “plant within a plant.”

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