Roundtable Profile By Jonathan H. Owen, David J. VanderVeen and Lerinda L. Frost
Editor’s note: This is another in a series of articles profiling members of the INFORMS Roundtable .
General Motors Using O.R. to meet auto industry challenges and provide value to customers and the company.
In today’s world, where globalization is a fact of business life, where competition is fiercely intense and where concerns such as energy security and climate change are glob - al in scope, a science-based approach to deci - sion-making and problem-solving is essential. At General Motors, operations research provides that framework, particularly for complex issues and systems that involve mul - tiple objectives, many alternatives, trade-offs between competing effects, large amounts of data and situations involving uncertainty or risk. In truth, for an entity the size of General Motors, these are the only kind of challenges the company faces because GM is huge and no issue is simple! With products that range from electric and mini-cars to heavy-duty full-size trucks, monocabs and convertibles, GM offers a GM Chairman and CEO Dan Akerson (fourth row, third from left), GM CTO and Global R&D Vice comprehensive range of vehicles in more President Jon Lauckner (fourth row, fourth from left) and Global R&D Executive Director Gary than 120 countries around the world. Along Smyth (top) with the GM R&D Operations Research team. with its strategic partners, GM sells and ser - vices vehicles under the Chevrolet, Buick, cles and product technologies to designing Considering the complexity of the GMC, Cadillac, Opel, Vauxhall, Holden, and engineering state-of-the-art plants, challenges in the auto business and the Baojun, Wuling and Jiefang brand names. organizing and managing the company’s speed at which change is occurring in GM also has significant equity stakes in vast global supply chain and logistics sys - every arena – technology, business, mate - major joint ventures in Asia, including tems, building new markets and creating rials and resources, governmental policies SAIC-GM, SAIC-GM-Wuling, FAW-GM new business opportunities. and regulations – it is critical to employ and GM Korea. The work is multifaceted, but whether a scientific approach in thinking about GM has 212,000 employees located in in Detroit, Frankfurt, Sao Paulo or Shang - and attempting to understand problems nearly 400 facilities across six continents. Its hai, the goal is straightforward: offer products and implement viable solutions. Today, employees speak more than 50 languages and services that establish and maintain a no area of GM is untouched by analyti - and touch 23 time zones. The work they do deep connection with customers around cal methods. demonstrates the depth and breadth of the the world while simultaneously generating auto business – from developing new vehi - revenue and profit for the company. The Early Years Even before the industry entered the current period of globalization and pro - found technological change, operations research was valued within GM. As early as the 1960s and 1970s, GM employed analyt - ical techniques for transportation studies and Figure 1: GM vehicle brands. traffic flow analyses. In the 1980s, GM
22 | OR/MS Today | December 2013 ormstoday.informs.org All About the Roundtable developed analytical principles and used The Roundtable consists of the institutional members of INFORMS with member company representatives typ - ically the overall leader of O.R. activity. The Roundtable is composed of about 50 organizations that have mathematical optimization methods to demonstrated leadership in the application of O.R. and advanced analytics. The Roundtable culture is peer-to- improve assembly line job sequencing. In peer, encouraging networking and sharing lessons learned among members. the 1990s, it patterned warranty cost reduc - The Roundtable meets three times a year. Roundtable goals are to improve member organizations’ OR/MS tion analyses after Centers for Disease Con - practice, help Roundtable representatives grow professionally and help the OR/MS profession to thrive. Fur - ther information is available at http://roundtable.informs.org. trol epidemiology studies. The Roundtable also has an advisory responsibility to INFORMS. According to its bylaws, “The Roundtable In 2005, GM won the Franz Edelman shall regularly share with INFORMS leadership and advise the INFORMS Board on its views, its suggested ini - Award from INFORMS for its work on tiatives and its implementation plans on the important problems and opportunities facing operations research and the management sciences as a profession and on the ways in which INFORMS can deal proactively with production throughput analysis and opti - those problems and opportunities.” The Roundtable meets with the INFORMS president-elect each spring to mization. Even when overall industry pro - discuss practice-related topics of interest to him or her, and with the entire INFORMS Board each fall to discuss duction capacity is above demand, it is usual - topics of mutual concern. ly the case that demand for certain “hot” This series of articles aims to share with the INFORMS membership at large some information and insights into how O.R. is carried on in practice today. vehicles exceeds planned plant capacities. In such cases, an increase in production capacity will generate larger profits via more sales rev - enue and/or overtime cost avoidance. GM’s operations research team analyzed production throughput using math models and simulation, identified cost drivers and bottlenecks, and developed a throughput improvement process to increase productiv - ity and reduce costs. The resulting software has been enhanced over a 20-year period to extend GM’s capabilities, enabling it to accommodate product and manufacturing flexibility, variable control policies and more complex routing. The software is used glob - ally in GM plants, as well as to design new production systems and processes. This long-term effort is just one example 2014 Chevrolet Corvette Stingray. that demonstrates how GM has applied O.R. methods to change the way it leverages oper - and executive leadership experience in key on improving vehicle efficiency, quality and ations research and advanced analytics on a areas of the business, such as manufacturing, diagnostics, as well as more deeply under - continuing basis. The importance of activities supply chain, engineering, quality, planning, standing customers so GM can provide dif - like this in a company the size of GM cannot marketing, and research and development. ferentiated value through new automotive be fully measured. For plant throughput Projects are aligned with top company products and services. The team’s imple - alone, the savings are estimated at more than priorities, which are based on a combina - mentation model comprises a mix of: $2 billion over the past two decades. But just tion of business performance drivers and • analysis by internal consultants to as important as the economic benefits is the senior leadership input. The work may start understand the issue, mindset – the scientific approach to problem- with targeted questions, e.g., what’s the • capability development, including solving, decision-making, scheming the busi - opportunity of (fill in the blank), or it can analytical principles, math models ness, and identifying new opportunities. focus on improving operational effectiveness and tools, and through process improvements in areas such • partnering with stakeholders and O.R. at GM Today as manufacturing productivity, capital or decision-makers early to scope and Given the success of the work described supply chain management, or dealer inven - maximize the potential impact of above, the R&D Operations Research team tory management. Many opportunities to implemented solutions. broadened its mission about five years ago improve revenue management exist through and today provides a research capability the application of tools and systems that O.R. Drives Transformation within the company focused on tackling help decision-makers optimize portfolio The R&D Operations Research team long-term strategic challenges. With the planning, reduce complexity, target incen - recently received two “teamGM Trans - wide-ranging scope of potential assign - tives, or optimize content and packaging. In former” Awards for developing business ments, the O.R. team is composed of Ph.D. addition, given the large new data streams tools that use “big data” and analytics to and master’s-level technical experts, along coming from the intelligence available in improve decision-making. This is an internal with subject-matter experts with hands-on today’s vehicles, new emphasis is being put award that rewards employees who are lead -
December 2013 | OR/MS Today | 23 Roundtable Profile
ing change across the company by finding is always mindful of the characteristics that is something that takes place significant and innovative ways to drive GM are key to successfully applying O.R. meth - between consenting adults; and business priorities. ods and achieving organizational excellence, • deliver an O.R. solution to decision- One of the O.R. team’s Transformer including the ability to: makers in a form or format that they Awards recognized new analytic tools to • choose the right problem to address; can understand and act upon. support GM’s Product Development activ - • see and convince others that a ity. These include a range of tools that help complicated problem is important O.R. practitioners who embody these guide engineering decisions to reduce and solvable; characteristics can have a profound impact on complexity in the vehicle and powertrain, • work as part of a team toward a their organization, help their company rise apply market research to vehicle attribute common and well-defined goal; above the competition, and most importantly balancing and optimize portfolio planning • have tenacity in chasing down provide increased value to customers. As the in light of greenhouse gas performance details and data, and then equal world goes global – as innovation strives to objectives. The other award was for devel - tenacity in the implementation of a create more, faster, better and at less cost; as opment of a new approach to optimizing solution; new business and technology paradigms inbound logistics. This tool is being • get the model to the right level of emerge – endless opportunities abound to expanded to support its use by all vehicle detail for the purpose at hand so it is take advantage of operations research and programs early in the vehicle development not too complex, nor too data reap the substantial good that can be realized process. intensive, but sufficiently detailed to from its practice. OR MS With the exponential growth in data, the capture the salient characteristics and Jonathan H. Owen is Director of Operations ever-expanding digital connection to cus - trade-offs; Research at GM R&D. David J. VanderVeen , tomers and the introduction of exciting • engage the key stakeholders in the now Director of Analytics in GM Global Product new vehicles technologies, this is an exciting process of development and Development, was formerly Director of GM R&D time for operations research at GM. With so implementation, in order to gain Operations Research. Lerinda L. Frost leads executive communications and business support at many research-rich opportunities, the team joint ownership. Technology transfer GM R&D.
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24 | OR/MS Today | December 2013 ormstoday.informs.org