Google and It’s Robotic Operations

moffett_field

The Google Company signed a 60 year, 1.16 billion dollar lease to renovate three large hangars at a NASA airfield outside of San Francisco, to create a facility for research and development of robotics, aviation and space exploration. In a press release, NASA announced that “Planetary Ventures LLC, a shell organization operated by Google for real estate deals, will contribute $1.16 billion over the course of the lease, while reducing the government agency’s maintenance and operation costs by $6.3 million annually” (Lawler, 2014). Since 2013 Google acquired many companies that specialize in the production of robot, robotic technologies and other parts.  Some of these companies include Japan-based, Schaft Inc. which makes humanoid robots; US-based, Industrial Perception makes robot arms and robot vision or the Titan Aerospace in the US produces solar-powered drones. The reason why Google decided to make this investment in these facilities is due to the increased demand for industrial robots. This is a new market that is rising. Google took advantage of this, and decided to lease this site that provide Google an ability of greater production of industrial robots. The use of industrial robots that are connected to a control system enables companies to use apps to personalize the robots to perform specific tasks. In 2013 about 179,000 industrial robots were sold. Out of those 100,000 alone went to the Asian market. The largest current market for these robots is China.

The reason that there is a higher demand has to do with capacity. We talked specifically in class about capacity and determining capacity requirements. In this scenario, “a combination of rising wages and the need for new production capacity that can manufacture products to global standards is driving this demand” ( Banker, 2014). Google is an example of engaging in strategic capacity planning. They are matching capacity with the anticipated demand requirements which is the increasing demand of industrial robots in the global market. They probably asked themselves what kind of capacity they need and how much they need, which led them to decide to expand their headquarters. Google understands the technology and capacity increments. They understand the opportunity they have for change to dominate this new developing market. Therefore Google is targeting the Chinese market for industrial robots since they see the highest opportunities there. Google has already made plans to cooperate with Chinese contract electronics manufacturer Foxconn, who want to purchase 10,000 robots. Google is taking the right steps and engaging in long range planning, by addressing the needs of a new production capacity.

Do you think Google is doing a good job matching capacity with demand requirements? Do you agree with Google’s decisions to take over the operations at these facilities? Do you think robotics is in our near future?

Sources:

Banker, Steve. “Google’s Robot Strategy.” Logistics Viewpoints Logistics Supply Chain and 3PL Executives RSS. N.p., 11 Nov. 2014. Web. 11 Nov. 2014. <http://logisticsviewpoints.com/2014/11/11/googles-robot-strategy/>

Gibbs, Samuel. “Google Leases Nasa Airbase for Robots, Planes and Space Exploration.” The Guardian. Guardian, 11 Nov. 2014. Web. 11 Nov. 2014. <http%3A%2F%2Fwww.theguardian.com%2Ftechnology%2F2014%2Fnov%2F11%2Fgoogle-nasa-airbase-hangers-robots-planes-space-exploration>.

Lawler, Ryan. “Google Takes Over Operations Of Moffett Airfield From NASA, Will Invest $200M Into The Site.” TechCrunch. N.p., 10 Nov. 2014. Web. 11 Nov. 2014.< http://techcrunch.com/2014/11/10/google-moffett-airfield-nasa/>

World’s Largest Vehicle Manufactures

Toyota Motor Corporation is Japanese globally automaker headquartered in, Japan. Toyota Motor Corporation has about 325,905 employees working worldwide and was third-largest automobile manufacture in 2011 by production behind General Motors and Volkswagen Group. Toyota Motor Corporation is in top eleventh largest company in the world by revenue. The world’s largest vehicle manufactures, Toyota Car Company was having issues with recall. This issue is going around all over the world as well as in USA, Europe and China. This issue makes the consumer loss their confidence and as well as corporate image dropped. Toyota Motor Corporation their recall was nearly one million vehicles around the world, on top to replace damaged parts that could cause drivers to lose control of the steering wheel. There were total of 10 models affected, including the popular Prius. Prius recall more than 200,000. Due to defective gas pedals Toyota lost a lot of customers. But, to be in market and not to lose customer they are still in game.

Toyota Motor Corporation blamed that the floor mats was the problem, then it came to the gas pedal was the actual cause. But, when car owners they don’t know personally what was causing the gas pedal to accelerate and stick, without releasing. Not only Toyota had recall problems, but cars like Honda and Nissan recall over 3 million vehicles globally due to air bag problems. Not only these two cars had recall problems with their airbag, Toyota recall 1.3 million cars due to this airbag problem. Toyota FJ Cruiser recall affects seat belt retractors on 209,000 vehicles. Still, the numbers are getting bigger and bigger.

To chase the maximum profit and cost minimization, suppliers pay more attention on how to reduce cost. By using raw materials quality Toyota Motor Corporation was over confidence with their suppliers, that they changed their design without taking permission. Toyota Motor Corporation their biggest suppliers changed the pedal design that leading to the pedal problem.

Toyota Motor Corporation lack of an effective quality control cause them recall happening. They did not do enough test of their design before they produced. Their biggest mistake was they did not use quality check after the production they did not even do better quality check. This is a big embarrassment for the world’s largest automobile manufacture, that lack of negligence and having over confidence could cause them big problem in future.

Now the big question is that, let’s see that tomorrow morning you sit in your car to drive to work or anywhere and you are driving, down the road and suddenly you notice that your car breaks are not working fine. What would be your reaction? Are you still going to keep buying the same car brand you were buying before? What do you think that Toyota Motor Corporation should do to keep their name back in world’s largest automobile manufacture?

Sources:

  1. http://www.caranddriver.com/news/toyota-recall-scandal-media-circus-and-stupid-drivers-editorial
  2. http://money.cnn.com/2013/06/05/news/toyota-recall/index.html
  3. http://en.wikipedia.org/wiki/Toyota
  4. http://www.nydailynews.com/news/money/toyota-recalls-2-17-million-cars-jammed-accelerator-pedals-article-1.135025
  5. http://crownheights.info/general/25720/toyota-recalls-sienna-minivans/
  6. http://topics.nytimes.com/top/news/business/companies/toyota_motor_corporation/index.html

 

Is The “Dreamliner” Still a Dream?

Finally, “after months of headaches brought on by its 787 Dreamliner jet, Boeing Company is now back on track and even speeding up the production rate of the new airliner.”

This is fantastic news for the Dreamliner program being that starting from January 16th until late April of this year, all of the Boeing 787s had been grounded due to some safety concerns with the plane’s lithium-ion battery system. The influential aerospace company has stated that they have since increased the jet production rate to seven airplanes per month at one of its factories in Everett, Washington, and claims that the Dreamliner program is set to reach a further increase to ten per month by the end of the year.

Before the grounding, Boeing had delivered fifty of the Dreamliner planes to eight different airlines worldwide, including United Airlines, which is the only U.S. carrier that operates 787s currently. Today the Dreamliner program has more than 800 unfulfilled orders to 58 customers worldwide. Hence, the immediate need for Boeing to fix the jet’s design flaws and production challenges they were facing. The Federal Aviation Administration grounded Boeing’s newest and most technologically advanced jetliner until the risk of battery fires was resolved. During the time of the grounding order, Boeing had not been allowed to deliver any new 787 Dreamliner’s but continued building them. The company had to seriously look at the jet program’s operations and reevaluate some of their critical decisions.

The final assembly of the Dreamliner’s takes place at the Everett facility, but the bulk of the jet’s large components come from numerous suppliers around the world so the time putting these planes together is influenced heavily on the getting the parts in quickly. “There are about 50 suppliers in California alone.” But the major production slowdown was due to Boeing having to redesign the 787’s battery system due to some overheating incidents that had occurred. One incident even resulted in a fire.

Although “Boeing will not say how much redesigning, testing, and retrofitting the battery system has cost the company,” officials have stated that the cost was absorbed into spending $705 million in research and development during Boeing’s first quarter. The three-month grounding period of the Dreamliner created a 2.5% downturn in revenue for the company, which came out to be around $18.9 billion. Despite all the production troubles Boeing has encountered recently, the company now firmly states it is back on track to deliver more than 60 of the planes during this year as originally planned. But the question is whether the Dreamliner will now stick in the pubic’s mind as a troubled aircraft?

In addition to the increased production of the Dreamliner jet, Boeing has also increased production of its 737 and 777 jets and is forecasting to deliver as many as 645 planes this year, making this a record for the company.

Which types of critical decisions did Boeing have to reevaluate? Do you think that the grounding of the Dreamliner will or has had any effect on the company or the plane’s reputation? Which types of forecasting methods do you think Boeing is using in regards to their production ability and what other factors does Boeing need to consider?

Article Reference: http://www.chicagotribune.com/business/breaking/la-fi-mo-boeing-787-production-rate-20130510,0,6024577.story

 

My Old Kentucky Home: Lexus Production Moves to US

This past week Toyota announced that it will begin producing its Lexus luxury car in the United States for the first time. The company will invest over $500 million to move production of the Lexus ES 350 luxury sedan to its existing plant in Georgetown, Kentucky. Until now the plant in Kentucky, Toyota’s oldest and largest in the United States, produced the flagship Toyota Camry, as well as the Avalon and Venza. The Lexus ES 350 shares underpinnings with the Camry and Avalon, making the transition somewhat easier. This aspect is just one of several strategic implications of the move of Lexus production to the United States.

While it’s parent is fully Japanese, Lexus is an American child, for many years the luxury car was available only in the United States. This focus on the American market led Lexus to the top of luxury car sales every year from 2000 to 2010. In recent years, however, Toyota has watched BMW and Mercedes Benz pass it in luxury car sales and showing little evidence of slowing down. In my opinion this factor played a role in Toyota finally deciding to move the production of Lexus to the United States. As the president of Toyota, Akio Toyoda, said, the company plans to “give regions greater autonomy to make the products their customers want.” By moving the production of the ES 350 to the United States, I believe Toyota will be able to more closely monitor how Lexus is doing compared to BMW and Mercedes Benz. The company can also make production changes more effectively and efficiently at its plant in Kentucky. This high involvement with its target consumers should aid Lexus as it tries to regain its spot as the top luxury car in the United States. The move of production also helps protect Toyota from the Japanese economy and possible disastrous production issues.

From an operations management viewpoint, I think that Toyota is much better off by moving the production of the Lexus to the United States. The ES 300 is essentially an American car, it is not nearly as popular in Japan as it is in the US, therefore it made little sense to have it produced half a world away from where it was being sold. There are no economic benefits since there is an exchange rate penalty for Japanese automakers. Additionally, the 2011 earthquake and tsunami in Japan had devastating effects on production. This disaster revealed just how vulnerable Toyota and other Japanese automakers are, and in my opinion, played a key role in Toyota moving the production of Lexus to the United States. By having all of it’s operations and production in one place, Toyota can become more efficient and continue being a leading automaker.

Do you think it was a good decision by Toyota to move the production of Lexus to the United States?

Will this lead other foreign carmakers to move to America and what affect will that have on the production of American cars?

 

Sources

http://www.nbcnews.com/business/toyota-investing-over-500m-launch-us-lexus-production-1B9519106

http://www.nytimes.com/2013/04/20/business/toyota-will-make-lexus-es-350-in-kentucky.html?_r=0

http://www.bloomberg.com/news/2013-04-19/toyota-to-make-lexus-in-kentucky-amid-localization-push.html

 

Forecasting Failure?

Analysts have forecasted Caterpillar, Inc. (CAT), the industry-leading construction equipment manufacturer, to decrease in production this year. The company has been relying in foreign markets such as Asia and in the Pacific to keep them afloat after the 2008 recession. Looking at the decline in spending and cut backs in these foreign markets, analysts are forecasting rough weather in the upcoming quarters for CAT.

One of the biggest hits for Caterpillar was in purchasing Bucyrus International Inc. for $8 billion in 2011. This Chinese mining company was overvalued by $580 million, due to what Caterpillar thinks, were inflated profits by managers. Since China, the world’s largest exporter, has slowed down in production, Caterpillar is suffering as well.

According to the Wall Street Journal, CAT has announced 11% decrease in sales from this past quarter. This slow down, however, was not what Caterpillar had expected. In January, Caterpillar gave an outlook report for 2013 where they forecasted an increase in revenue of $8 billion and a $2 earnings per share increase. On the other hand, analysts are predicting that they will decrease in revenue from $65.2 billion to $62.1 billion by end of 2013.

Halting demand for mining equipment in Australia and Indonesia have also taken a tole in Caterpillar’s forecasting plan. With all markets slowing down, except for in Latin America, Caterpillar’s opportunity will be in these upcoming quarter. Caterpillar and other companies in the same situation will all be keeping their fingers crossed for  the US economy to pick up and start new production of construction and mining equipment to get back on track.

Another threat to Caterpillar is the more favorable use of natural gas to produce electricity. This causes a decrease in use of mining equipment and slows down equipment production. The narrowing use of CAT products has forced them to lay off the workers in the assembly plants.

Competitors of Caterpillar, like Komatsu, (the world’s second-largest seller of construction equipment) has also been struggling in the same markets and has already decreased their sales and profit forecast for this upcoming year. If Komatsu seen this coming, why didn’t Caterpillar?

With all these factors coming into play, Caterpillar should be reconsidering their forecasting plan and cut back on production as well as profit expectations for 2013. Will they heed this information or continue with their plan?

Do you think Caterpillar should have planned for this pause in production? Maybe Caterpillar should start producing new equipment for a new kind of consumer.

source: http://www.foxbusiness.com/news/2013/04/21/caterpillar-expected-to-cut-2013-guidance-in-first-quarter-report/

2015 = First US Lexus Production Plant

Many people know that Lexus is the luxury brand that Toyota owns. The company is planning on opening a new production plant in 2015. The plant will be located in United States. Although, Toyota does have plants make Toyota brand cars, this will be the first US plant that Lexus will open. It will also be the very first time the Lexus ES will be produced outside of Japan. This is very interesting because most companies would look to go to countries with cheap labor and flexible labor laws. In the US, there are a lot of regulations that protect workers. What would cause Toyota to bring Lexus in the US?

Just as we learned in class, there are a couple reasons why companies would globalize. Some of the reasons are to reduce costs, improve their supply chain, and provide better goods and services.

It is reported that “[Lexus] will receive as much as $146.5 million in tax credits, significantly bringing down the overall cost of the investment. Bloomberg reported earlier this week that Toyota would have to invest $531.2 million and add 570 full-time jobs in order to yield the full value of the package”. The tax credit is definitely one of the main reasons why Lexus would want to come relocate in America. This move will help reduce costs such as shipping the cars from overseas by improving their supply chain. Also it will help provide a better service for Lexus owners because the plant is not located domestically.

Not only does Lexus benefit from this new plant but so does the people of Kentucky. In order to be efficient and complete their goal of producing 50,000 per year, they will need to hire a lot more workers. This will create a lot of new jobs for the people of Kentucky. Everyone seems to be pleased with the move and there have been no ethical problems with it. Even the state governor said, “This is a great day for Toyota and for the commonwealth of Kentucky”.

Toyota is also looking to retain its title as the “world’s biggest carmaker” because Volkswagen is closing the margin between them. If the opening of the North American Production Plant, this will give them the edge they need. Hopefully with the success of the new US plant, this will cause more companies to relocate here.

 

Do you think this was a will be a smart move for Lexus to produce their cars for the first time outside of Japan? What would some of the concerns be for the carmaker?

Do you think the US government is giving these large tax credits to help stimulate the economy by creating new jobs?

Will other carmakers follow?

 

Sources:

http://www.forbes.com/sites/michelinemaynard/2013/04/19/the-sweetheart-deal-toyota-got-to-build-an-american-lexus/

http://blog.caranddriver.com/lexus-to-refresh-ls-for-2013-with-spindle-grille-previews-it-2013-es-and-2014-is-in-video/

A Craft Beer Pioneer Begins Again

As I was browsing through last week’s edition of Bloomsberg Businessweek magazine, I stumbled upon an interesting article entitled “A Craft Beer Pioneer Gets a Second Chance,” detailing the rebirth of one of the original American craft beers.

During the 1970s, Jack McAuliffe, a former submarine electrical technician in the U.S. Navy, began his own brewery. Jack tasted flavorful beers in Scotland while serving and was no longer satisfied with the selection offered in America. McAuliffe began New Albion Ale in 1976, using dairy equipment and Pepsi-Cola syrup drums. While in business, the brewery offered pale ale, porter, stout and draft ale, all of which sold quickly. The problem was that Jack McAuliffe had not planned for such success, which forced him to spend the brewery’s cash on an expansion plan. To his demise, no investor would finance such an outlandish concept. The craft brewery, New Albion, filed for bankruptcy in 1982 and left McAuliffe searching for stability. Could bankruptcy have been avoided if Jack McAuliffe had created a better business plan, strategy or operational structure?

The first microbrewer in America turned away from the beer industry after filing bankruptcy. For years, he designed control systems for sewage treatment facilities and manufacturing factories.  Although his brewery failed, he served as motivation, courage, hope to the founders of the 2,360 U.S. microbreweries in business today. Because McAuliffe failed, Jim Koch, founder of Boston Beer, “realized he needed to quickly produce a lot more beer if his company was to survive and prosper.” He also produced Samuel Adams beer in his facility before beginning his own brew, so that he would have plenty of financial resources once he began his own line.

Koch recently contacted McAuliffe, informing him that Boston Beer had purchased the New Albion trademark and wanted to assist McAuliffe in restarting the beer production. Koch felt as though he owed his success to McAuliffe and planned to offer him all profit from the New Albion beer. Sadly, McAuliffe’s spirits were crushed by the beer industry when his original brewery failed, so it took persistence for McAuliffe to agree to Koch’s proposal. In January, McAuliffe and Boston Beer produced and shipped 6,000 barrels of New Albion Ale, more than was ever produced by the original brewery. Jack McAuliffe is now leaving the brewery in the hands of his daughter. It is her turn to learn from her father’s original mistakes.

I believe that Jack McAuliffe made an incredible impact on the American microbrew industry, bankruptcy or not. He stepped out as an entrepreneur, and created something on which our country is still building. If he had initially focused on items like facility location and size, inventory management and process and capacity design, New Albion would have been successful. If he had started with more knowledge of operations management, New Albion would not need a second chance. What hurt McAuliffe’s brewery most significantly? Would a stronger knowledge of operations management have kept the brewery alive? Should he have entered into the industry again after failing in the past?

Leonard, Devin. “A Craft Beer Pioneer Gets a Second Chance.” Bloomsberg Businessweek April 8-April 14, 2013: 17-18. Print.

Is Baxter Increasing Production or Replacing Humans?

Baxter is a new manufacturing robot from Rethink Robotics. It is created to perform the menial repetitive tasks that occur at an assembly line such as picking items of a conveyor belt. Baxter is expected to increase the productivity of U.S. manufacturers and help them retain business that would otherwise migrate overseas.

Rodney Brooks with Baxter

The red and charcoal-gray Baxter goes on sale October 2012. Baxter has five cameras, a sonar sensor that detects motion 360 degrees around it, and can learn tasks within an hour. It is also very cheap in comparison to other assembly-line robots which can cost $200,00 each. At $22,000 a unit, Baxter is the equivalent paying a human $4 an hour for three years of eight-hour shifts.

Other assembly-line robots can be dangerous, so they are often isolated in cages away from employees. Baxter however, is designed to work safely alongside workers and can be set down safely almost anywhere on a factory floor. Its eyes are on a swiveling computer screen and greet any worker who approaches. To teach Baxter a job, a human simply grabs its arms, simulates the desired task, and presses a button to set the pattern. Baxter will also be upgradable. The company plans to update Baxter’s software for free every few months, enabling more complex behaviors such as two-handed manipulation.

Rethink Robotics’ origins date back to the 1990s when founder Rodney Brooks got an unwelcome taste of the realities of the global supply chain as the cost of shipping products overseas rose along with the price of oil. Rethink Robotics was conceived as an attempt to change the economics of manufacturing.

Baxter is designed to make U.S. workers more productive than their foreign rivals. However, worker production is not really a problem. According to IHS, U.S. companies produce about $2 trillion worth of goods annually while China produces $2.2 trillion. U.S. companies also do it with a tenth of the manpower as China. America’s manufacturing issues are more than just productivity. Companies use overseas manufacturers because they’re cheaper and nearer the rest of their supply chain.

There is also the fear that Baxter could replace U.S. workers. Rethink Chief Executive Officer Scott Eckert compares Baxter to the arrival of the personal computer. He says it effectively turns workers from menial laborers into robot managers. So the question remains. Is Baxter really going to keep jobs in the U.S. or will companies continue to use overseas manufacturers. If U.S. companies do decide to use Baxter instead of overseas manufacturers, then will U.S. workers simply be replaced? Its tough to say but Rodney Brooks seems to believe Baxter is the future to saving U.S. jobs and manufacturing.

Businessweek Article  http://www.businessweek.com/articles/2012-09-18/smarter-robots-with-no-pesky-uprisings#p1