Radio frequency identification (RFID) chips are small chips that can convey information to a reader even if the reader does not have a direct line of sight to the chip. If a veterinarian ever convinced you to put a chip in your dog just in case Fido wandered off, you have in your house. In the retail industry, RFID chips have long been held up as a godsend — the fast track to more accurate inventory records updated in real time. Or at least they were ten years or so ago. But since then there have been challenges with costs as well as the underlying technology. Now, however, it appears a major retailer, Zara, is taking the plunge into RFID in a big way (Zara Builds Its Business Around RFID, Wall Street Journal, Sep 16).
By the end of this year, more than 1,000 of the 2,000 Zara stores will have the technology, with the rollout completed by 2016, Mr. Isla said.
The scale and speed of the project is drawing notice in the industry. The Spanish retailer says it bought 500 million RFID chips ahead of the rollout, or one of every six that apparel makers are expected to use globally this year, according to U.K.-based research firm IDtechEX. …
One benefit was on display on a recent morning, when store manager Graciela Martín supervised inventory-taking at one of Zara’s biggest outlets in Madrid. The task previously tied up a team of 40 employees for five hours, she said. That morning she and nine other workers sailed through the job in half the time, moving from floor to floor and waving pistol-shaped scanning devices that beeped almost continuously while detecting radio signals from each rack of clothing.
Before the chips were introduced, employees had to scan barcodes one at a time, Ms. Martín said, and these storewide inventories were performed once every six months. Because the chips save time, Zara carries out the inventories every six weeks, getting a more accurate picture of what fashions are selling well and any styles that are languishing.
This all raises the question of whether there is any reason to believe that it will be different this time. That is, is there any reason to believe that Zara’s implementation of RFID will be more successful than other big retailers who have gone done this road? (more…)
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It is tempting to label everything involving data as big data these days as if the qualifier makes the topic inherently sexier. The Wall Street Journal is guilty of this in recent headline on “manufacturing execution systems” (How Many Turns in a Screw? Big Data Knows, May 15). While the headline may be hyperbole, the basic idea of these systems is pretty cool.
Raytheon is one of many manufacturers installing more sophisticated, automated systems to gather and analyze factory-floor data. The company uses software known as manufacturing execution systems, or MES, which has been around since the 1980s. Semiconductor and other high-tech companies were early adopters, but now “others are catching up,” says Tom Comstock, an executive vice president at Apriso Corp., one of the suppliers of this software. …
Manufacturers are looking harder at data partly because of increasing pressure from customers to eliminate defects and from shareholders to squeeze out more costs. Regulators are also demanding more data collection to trace safety problems. The cost of computers, scanners and other hardware has also come down, and technology for storing and moving data has improved.
At the same time, factory equipment has “got smarter,” says Mike Lackey, a vice president at SAP. The newest equipment comes with computerized controls that make it easier to collect data and share it with the rest of the company or suppliers.
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We would be remiss if we did not note that this weeks Economist has a special series of articles on outsourcing and offshoring. The general theme is that after rush to send a variety work to cheaper locations, many firms are reconsidering and bringing some work back home. The rationales range from underestimating the impact of long lead times and the difficulty of coordination across continents to a belief that doing work in-house allows for greater flexibility. On the whole, the report is well worth reading. One article, however, stood out for me. It looks at the increasing use of automation in service centers (Rise of the software machines, Jan 19).
IPsoft is a young company started by Chetan Dube, a former mathematics professor at New York University. He reckons that artificial intelligence can take over most of the routine information-technology and business-process tasks currently performed by workers in offshore locations. “The last decade was about replacing labour with cheaper labour,” says Mr Dube. “The coming decade will be about replacing cheaper labour with autonomics.”
IPsoft’s Eliza, a “virtual service-desk employee” that learns on the job and can reply to e-mail, answer phone calls and hold conversations, is being tested by several multinationals. At one American media giant she is answering 62,000 calls a month from the firm’s information-technology staff. She is able to solve two out of three of the problems without human help. At IPsoft’s media-industry customer Eliza has replaced India’s Tata Consulting Services. …
A small British start-up, Blue Prism, has developed a software-development toolkit that allows people within a company to create their own software “robots” to automate business processes. … An onshore information-technology worker may cost $80,000 a year and an offshore one perhaps $30,000, wrote James Slaby, HfS’s research director, in a recent report. But Blue Prism’s robots cost at most $15,000 a year. They can perform only routine, rules-driven tasks, but there are plenty of those about.
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So what are reasonable steps a firm may take to personalize its service offering? Clearly some on-line businesses record every link a customer clicks and serves up information based on those choices — one need to look no further than one’s Amazon recommendations to see that. But that setting is self-contained; a customer comes to Amazon.com and Bezos’ minions only use what he or she does on the site. Customers generally value the recommendations they receive but might feel differently about it if Amazon actively tracked what they did away from Amazon’s web site.
Which gets us to British Airways. They have been in the spotlight the last few days as a program they call “Know Me” has gotten some press. Here is how it is explained on Marketplace (Your usual extra pillow, Ma’am? British Airways mines passenger data, Jul 10).
Stacey Vanek Smith: British Airways is getting some flak from privacy watchdogs about its new Know Me program. BA will create a little database about business class and first class passengers, including photos from Google images and information gathered during previous flights. Things like the seat or drink you prefer or if you like an extra blanket. BA says it’s just trying to provide better service. This is nothing unique according to Bob Sullivan, a tech reporter with MSNBC.com.
Bob Sullivan: What they’re doing here is taking data that they already own, because they have a relationship with a customer, and data that’s publicly available, and they’re marrying it to find out interesting things, which, frankly, every company is doing right now. …
You and I, and I bet all your listeners out there, you know how often have they really gotten an ad when they were surfing online that was JUST what they wanted? The success rate is actually much lower than the big data people would have us believe. But on the other side the privacy invasions are enormous. And so the cost-benefit to me is really unclear.
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How could I pass on blogging about the Wall Street Journal reporting on May 21 that 100 U.S. engineers and managers were flown across the Atlantic and told: “Do as the Belgians do!”?
The article, titled “Indiana Steel Mill Revived With Lessons From Abroad ,“ is part of their series on how globalization can improve local organizations and may be one reason why American manufacturing is growing again. “Some steel mills are destroyed by globalization, others reborn.
Left for dead a decade ago, this 50-year-old facility on the shores of Lake Michigan has been rejuvenated thanks to an unusual experiment by its owner, Luxembourg-based ArcelorMittal.
In 2008, Burns Harbor was “twinned” with a hypermodern mill in Gent, Belgium. Over 100 U.S. engineers and managers, who were flown across the Atlantic, were told: Do as the Belgians do.
Burns Harbor now enjoys record output. Its furnaces, where steel is made out of iron ore, coal and limestone, are run with software developed in Belgium. Robots are in. Pencils are out. Workers are learning to make the same amount of steel with nearly half the people it employed three decades ago. Productivity is nearing Belgian levels.
Burns Harbor, according to the WSJ, is a case in point of the “upsides of globalization: … it puts pressure on U.S. factories to become more efficient to keep up with global competition, making it possible for them to survive.” There are a few observations to be made: (more…)
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I just finished teaching Operations Strategy where we discuss many interesting decisions, including the impact of design complexity on outsourcing and the mechanisms to foster innovation in existing organizations. The StreetScooter is a project that hits on both these topics: this is a modular car (not a scooter!) that is designed and manufactured in Germany through collaboration by more than 50 companies. A prototype of the 5,000 euro vehicle with a 120km/hr top speed has been presented and production in Europe is slated for 2013. Here’s the 1min promotional video:
In class we discuss electronic designs as perfect candidates for modular design: after all, each electrical connection only needs a few variables (e.g., volt, amps, and frequency). These variables are easily specified and define the interchangeable interfaces that then form the input or constraints in the design of each module (using, say, CAD programs). This gave rise to the disintegration of the computer industry and all the wonders that followed.
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How should airlines get passengers through airports with minimal delay? One possibility is to provide loads of capacity. There are two ways to do that. One is hire lots of staff or put out lots of kiosks. That requires both money and space. The Wall Street Journal reports (The Trump Card at Check-In, Dec 29) that Qantas has found an alternative way to expand check-in capacity on its domestic routes: Use technology to greatly reduce the processing time so the same number of kiosks can process far more customers. This graphic summarizes their revised process.
Radio-frequency ID cards (RFID) chips are key to making this work.
The system, built around radio-frequency ID cards (RFID), is similar to toll tags used on highways and bridges. Top-level frequent fliers get an ID card that is flashed at a kiosk in the ticketing area. In seconds, the system finds the reservation for that day, assigns a seat based on personal preferences if one wasn’t pre-selected and checks the passenger in. When everything is good to go, a beacon illuminates.
To check luggage, the passenger goes to a baggage drop point, flashes the frequent-flier card in front of a reader and drops luggage on a baggage belt. The bag is weighed, and lasers measure its dimensions to make sure it complies with limits.
Top-level frequent fliers have heavy-duty RFID tags called “Q Bag Tags” for their bags that replace paper luggage tags. The technology reads the bag’s “identity” as it moves from luggage belts to carts to airport tarmacs. This ensures luggage gets loaded on the same flight as its owner. Other travelers get a paper tag for their bag with an imbedded RFID chip.
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