Global Challenges in Industrial Engineering and Operations Management for the 21 st Century

1. Global Challenges in Industrial Engineering and Operations Management for the 21st Century Ronald G. Askin, Professor and Director School of Computing, Informatics, and Decision Systems Engineering Arizona State University Tempe, AZ 85287-8809 USA Ron.Askin@asu.edu

2. Overview • On-going global manufacturing and economic activity trends • Where US manufacturing research and activity are headed • What are the implications/opportunities for IEs globally? • Where is IE’s future

3. Arizona and ASU

4. Shaping the World Environment and Nature Politics and Cultures Economics and Ingenuity

5. Manufacturing Trends and Status Today • Global Production/Supply Networks • Transit costs and speeds changing slowly • Raw material availability, labor costs, markets vary globally • Information access is level; education becoming level • Transition from Mechanical/Physical to Electrical/Info Dominance • Green for Sustainability (Financial and Environmental) • Health applications are growing markets • Nanomaterials are solutions on the horizon Manufacturing Creates Wealth! Services fleetingly facilitate life but limit wage growth due to standardization, scalability and automation difficulty.

6. Globalization!

7. Intel Wafer Fab and Test/Assembly Facilities It’s Markets, Resources and Economics Region Revenue Asia/Pacific 51% Americas 20% Europe 19% Japan 10% Fab Assembly/Test www.worldatlas.com

8. WTO: Peace and Prosperity Through Cooperative Commerce WTO: A system of trading rules and forum for intergovernmental negotiation 153 Member Countries, 30 Accessions (in process) in 2009

9. Why is US IE Changing So Much So Fast? • Thomas L. Friedman, Hot, Flat and Crowded • Level playing field through logistics and global connections (web) • American expectations for good wages, clean jobs/environment • High competition outsourcing, off-shoring • Opportunity of new science – bio, info, nano • Growth of service expenditures (health care, finance) • Dragged along by our engineering counterparts

10. But are We Changing? • Of Top 20 Ranked Schools • Industrial and Systems Engineering Industrial and Operations Engineering • Industrial Engineering and Operations Research Industrial and Manufacturing Engineering Management Science and Engineering Industrial Engineering and Management Science Operations Research and Information Engineering Industrial and Systems Engineering • Industrial and Systems Engineering Industrial and Systems Engineering • Industrial and Systems Engineering Industrial and Systems Engineering • Industrial and Systems Engineering Industrial and Systems Engineering • Industrial Engineering and Operations Research Industrial and Systems Engineering • Industrial and Enterprise Systems Engineering Industrial Engineering • Operations Research/Industrial Engineering Industrial, Systems and Operations Engineering • IIE Members vote Down Name Change in 2009

11. Industrial Engineering in the US – Past and Present 1910 2010 New Markets Outside of Manufacturing Logistics Info Services Entrepreneur Healthcare Homeland Security Finance We’ve grown out but have we grown up?

12. The Scientist/Engineer Today The Doctor The Civil Engineer Realtime tracking (Cameras, GPS) CAT Scan PET Scan Embedded structural health monitoring/control

13. Revolutionary Change in Technology Moore’s Law Human Genome Decoding 1990: $3B, 13 yrs 2009: $350k, 13 weeks 2015: $300, 13 min. Gordon Moore's original graph from 1965

14. The IE Today http://www.strategosinc.com/value_stream_mapping1.htm Subject to: Methods have stagnated. Remaining traditional Manufacturing opportunities in US are limited.

15. IEs Improve Integrated Systems How must faster/better/cheaper can we define, model, and improve a system today than in 1979? Today’s systems are complex and integrated. Why aren’t we flourishing most in complex environments? Have we changed at the same rate as others over the past 30 years? While the world became a ubiquitous information, global society, IE found better icons for flowcharts!

16. Where Could/Should We Be? • Virtual Reality Models of Systems – miniature Ron sits on the part and flows through the machine and plant • Virtual Reality Models of datasets with automated coloring, sizing for outliers • Automated Simulation/Optimization Models from Capital Asset files • Automated model decomposers, data cleaners and preprocessors • Full data history on shop and order status with real-time planning updates – customers manage their orders. We’re too Cheap!

17. The Prevailing Business Attitude Phil Knight, Founder of Nike “There is no value in making things any more. The value is added by careful research, by innovation, and by marketing.” Deputy Director, DARPA 7/19/2010 “To innovate we must make.”

18. World Gross Domestic Product Data Source: http://unstats.un.org/unsd/snaama/dnlList.asp

19. GDP – Asia

20. GDP per Capita-Global Wealth Distribution

21. GDP/Capita – Asia and US

22. GDP Growth Rate: Current GDP/1970 GDP Asia Rising, Europe Falling

23. Export Dependence by Region Asia growing rapidly

24. Export Importance by Country

25. Trends in Interdependency

26. Import Percentages by Country

27. Import Export Growth Rates Central America Gaining Net SurplusAsia Expanding Activity Rapidly

28. Observations • US has room to consume more of the world’s goods • US spends most on services, not products • Central America and Europe highly dependent on trade • US, Japan and South America too insular? • Japan continuing to wane • Growth linked to global trade, particularly for small economies

29. What’s the Role and Impact of Manufacturing?

30. Global Manufacturing Growth Europe, No. America losing ground; Asia gaining

31. Manufacturing Activity by Country

32. Manufacturing Importance by Region Asia Gaining No./So. America , Europe losing ground World relatively constant

33. Manufacturing Production per Capita Surprising relative growth consistency except Africa

34. Manufacturing per Capita by Country

35. Population Growth Rates Despite problems, Africa is growing fastest

36. Population Growth Rates – Focus on Asia

37. The Rapidly Changing Landscape Companies brace for end of cheap made-in-China era By ELAINE KURTENBACH, AP Business Writer Elaine Kurtenbach, Ap Business Writer – Thu Jul 8, 12:57 pm ET SHANGHAI – Factory workers demanding better wages and working conditions are hastening the eventual end of an era of cheap costs that helped make southern coastal China the world's factory floor. A series of strikes over the past two months have been a rude wakeup call for the many foreign companies that depend on China's low costs to compete overseas, from makers of Christmas trees to manufacturers of gadgets like the iPad. Where once low-tech factories and scant wages were welcomed in a China eager to escape isolation and poverty, workers are now demanding a bigger share of the profits. The government, meanwhile, is pushing foreign companies to make investments in areas it believes will create greater wealth for China, like high technology. shifting production to the inland areas …Massive investments in roads, railways and other infrastructure are reducing the isolation of the inland cities. Maybe, but the growing market is still there!

38. US Industry Activity – Percent of GDP* Where will these lines go from here? * US Dept of Commerce, Bureau of Economic Analysis

39. US Manufacturing Future • Focus on design (shorter product life cycles, more customized demands as choices proliferate) • Focus on green manufacturing (sustainability) • Focus on low volume, high precision, high tech products • Focus on developing and using nanomaterial processes – atomic scale layered composites • Focus on renewable energy power sources • Focus on defense industry • High volume only when automated (low volume and product flexibility relative to labor at least for awhile longer)

40. World wide Opportunities –Successful Approaches (Business 101) • Identify competitive advantage (low cost of labor, primary materials) • Identify market needs and means • Ensure adequate infrastructure • Find investors – gov’t, banks, parent companies • Focus on a core • automotive parts assembly in Mexico first, • then build up to aerospace parts • Low Cost Assembly originally in Asia (Is Africa the future?) • Global Production  Global Wealth  Logistics Dominance

41. Where Do Manufacturers Build? • Close to Raw Material and Parts Suppliers • Close to Customers • Adequate Labor Supply and Low Labor Rate • Adequate Transportation Network (Air, Rail, Shipping, Roads) • Favorable Community/Tax Situation • Access to Utilities (power, water) • Possible risk mitigation driven facility distribution • Limited cultural/political hurdles

42. US National Academy of Engineering Grand Challenges • Web page: http://www.engineeringchallenges.org/ • View video (6 min) 14 Grand Challenges for the 21st Century • Make solar energy economical – less than 1% today but large potential • Provide energy from fusion – develop scalable, envir. benign method • Provide access to clean water – affordable and available for all • Reverse engineer the brain – combining engineering and neuroscience • Advance personalized learning – speeds, styles, content for individual • Develop carbon sequestration methods – capture and store excess CO2 • Restore and improve urban infrastructure – better design and materials for transportation, water, waste, power, etc. for livable cities

43. NAE Grand Challenges cont. • Engineer the tools of scientific discovery – blending of engr. & science to explain nature • Advance health informatics – better everyday care and preventing bio attacks/pandemics • Prevent nuclear terror – protect society from increasing risks and proliferation • Engineer better medicines – body sensing, personalized drugs, delivery methods • Enhance virtual reality – for training, treatment, communication, and entertainment • Manage the nitrogen cycle – better fertilization techniques and recapture/recycle • Secure cyberspace – protect essential infrastructure

44. IIE Fellows: Grand Challenges for Industrial Engineering Fellows Report: http://www.iienet2.org/uploadedfiles/IIE/News/Grand%20Challenge%201.pdf • Reengineering Health Care Delivery • Creating a Technology Oriented Culture • Engineering a Sustainable Society • Developing Better Decision Tools • Mitigating and Responding to Disasters • Point of Use Manufacturing • Infrastructure • Food Security

45. 1. Reengineering Healthcare Delivery: An Integrated Approach The Problem • Demographics: Young and poor are fastest growing segment, U.S. and worldwide • Number of senior citizens growing fast (and baby boomers won’t go gently into the night) • Healthcare is largest U.S. industry • Health care inflation rate 3 times overall rate • Woeful under investment in info technology • Excessive waste • Medical info and treatment increasingly technology-enabled

46. 1. Reengineering Health Care The IE Role • Individual care needed – risk analysis, modeling/mining genomic info, personalized treatment scripts, safety/quality in individual led treatment • System improvements needed – QC, logistics, info technology, provider collaboration hierarchically and vertically, financial system and models • Science advances needed – treatment protocols, data mining/bioimaging, human sensing

47. 2. Creating a Technology Oriented Society The Problem • Body of tech knowledge growing rapidly • System size and complexity growing rapidly • (U.S.) relatively wealthy – life is easy • Many of brightest youth pursue pursue law, business • U.S. youths perform poorly in math/science

48. 2. Creating a Technology Oriented Society • Get the word out about opportunities and need • Optimize available human resource • Jazz up what we do The IE Role

49. 3. Engineering a Sustainable Society • U.S. population will double this century • World population will more than double • Over 50% now live in urban areas • Wealth increases ecological footprint • Climate change will change geographic resource availability The Problem What’s Your Carbon Footprint?

50. 3. Sustainable Society The IE Role • Need sustainable transportation systems • Efficient/effective governmental services – judicial, social security, police/fire • Designing scalable urban environments • Designing efficient community structures connecting urban (production, consumption) to rural (raw materials) Is there an optimal city size? Can you live a healthy happy virtual life at home? How to tradeoff privacy and security?