The New Industrial Revolution

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JUNE 16, 2013

The upper for Nike's Flyknit shoe

The upper for Nike’s Flyknit shoe

“Welcome to the New Industrial Revolution,” writes The Wall Street Journal (June 11, 2013)—a wave of technologies and ideas that are creating a computer-driven manufacturing environment that bears little resemblance to the gritty and grimy shop floors of the past. The revolution threatens to shatter long-standing business models, upend global trade patterns and revive American industry.

“Manufacturing is undergoing a change that is every bit as significant as the introduction of interchangeable parts or the production line,” says the head of GE’s global research lab. “The future is not going to be about stretched-out global supply chains connected to a web of distant giant factories. It’s about small, nimble manufacturing operations using highly sophisticated new tools and new materials.” The upheaval is accelerating thanks to the convergence of a number of trends: the low cost and accessibility of Big Data associated with cloud computing; the plummeting cost of electronic sensors and microprocessors that can be used to make machines more adept; and software advances that allow a whole new level of manufacturing precision.

To get an up-close look at how the new technologies are already disrupting the old ways of doing things, consider Nike’s Flyknit shoe. As high-tech as some sneakers may be in materials and appearance, almost all of them are still made on assembly lines that put heavy emphasis on human labor. Workers sit side by side in enormous facilities, cutting material and stitching and gluing shoe components together. But with new technology, Nike has begun to make a shoe with just a few parts instead of dozens– and with up to 80% less waste. Out of the blue, the reason for making shoes in low-wage countries begins to evaporate and the advantages of locating the machine closer to the customer—in part for faster delivery—begin to loom much larger.

Boston Consulting Group just published a report predicting that as much as 30% of America’s exports from China could be domestically produced by 2020.

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.

Jumping the Queue at Universal Studios

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JUNE 13, 2013

Universal StudiosSince I live in Orlando, the theme park capital of the world, the recent New York Timesarticle (June 10, 2013) “At Theme Parks, A VIP Ticket to Ride”, caught my eye. Theme parks have traditionally been the ultimate melting pots. Tourists, retirees, rowdy teenagers, families and fathers who would rather be golfing are all thrown together in an egalitarian experience in which the queue for one is the queue for all, and cotton candy is the food of the masses. Not anymore.

As stratification becomes more pronounced in all corners of America, from air travel to Broadway shows to health care, theme parks in recent years have been adopting a similarly tiered model, with special access and perks for those willing to pay. Now Universal Studios has pushed the practice to a new level. It has introduced a $299 V.I.P. ticket (the regular admission is about $85), just in time for the summer high season, that comes with valet parking, breakfast in a luxury lounge, special access to Universal’s back lot, unlimited line-skipping and a fancy lunch.

Fearful of puncturing its utopian image, Disney has stuck to a single class of ticket. V.I.P. tour guides are available, but Disney charges an exorbitant price — $380 an hour, with a minimum of six hours — to limit demand. Business is good at both companies. Universal’s 3 theme parks in the U.S. attracted 20 million people last year, a 19% increase from 2010. The Magic Kingdom at Walt Disney World recently recorded the busiest day in its 41-year history.

The amusement park industry urgently wants to expand profits without introducing costly new rides every summer. Universal, which recorded $953 million in profit from its parks in 2012, has no major new attractions planned until next year; the V.I.P. Experience, in the meantime, is a relatively low-cost way to generate revenue and send a message of bigger and better into the marketplace.

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.

Barbies, Auto Parts Hot Off the 3-D Press

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June 11,2013

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Ford forges ahead with 3-D printing of this engine cover

Ford forges ahead with 3-D printing of this engine cover

Companies such as GE, Ford and Mattel are pushing 3-D printing further into the mainstream than most people realize, writes The Wall Street Journal (June 6, 2013). Unlike traditional techniques, where objects are cut or drilled from molds, resulting in some wasted materials, 3-D printing lets workers model an object on a computer and print it out with plastic, metal or composite materials.

Ford Motor The auto maker sees a future where customers will be able to print their own replacement parts. A customer could log onto the Web, scan a bar code or print up an order, take it to a local 3-D printer, and have the part in hours or minutes. Ford is currently using 3-D printing to prototype automobile parts for test vehicles. Ford engineers use industrial-grade machines that cost as much as $1 million to produce prototypes of cylinder heads, brake rotors, and rear axles in less time than traditional manufacturing methods. Using 3-D printing, Ford saves an average of one month of production time to create a casting for a prototype cylinder head for its EcoBoost engines. The traditional casting method, which requires designing both a sand mold as well as the tool to cut the mold, can take 5 months.

General Electric GE’s Aviation unit prints fuel injectors and other components within the combustion system of jet engines. Building engine airflow castings by melting metal powders layer by layer is more precise than making and cutting the parts from a ceramic mold.

Mattel The toy maker used to sculpt prototypes of toys from wax and clay before building the production models out of plastic. Today, Mattel engineers use any of 30 3-D printers to create parts of virtually every type of toy that it manufactures, including popular brands such as Barbie, Max Steel, Hot Wheels cars and Monster High dolls.

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.