It is hard to believe that the summer term is almost over but that is the case as we get ready for the fall and look forward to a number of events. First is the alumni conference in Switzerland. I will be there on September 9th and hope to see many of you. We also will be starting two operating committee subcommittees on faculty engagement and student recruitment. Finally we will have our September midstream review meetings the week of September 19, with the Operating Committee meeting on the 21st.
On a more immediate note, I will be in the Bay Area this week and will attend the Sloan Northern California Summer Gathering on Wednesday evening the 3rd.
Donald B. Rosenfield
Senior Lecturer, Sloan School of Management
In a series in which "eminent professors explain their subjects," Don Rosenfield gave a description of Operations Management to The Economist as part of their guide to global MBA programs. Don's core statement, which will be familiar to LGO alumni, was "OM is the basis of competitiveness and the generation of wealth. It represents a significant portion of any society's economic activities. Understanding how to manage it is the key to development."
Read the full article:
This month we continue our series of profiles of LGO students who have benefited from the generosity of graduates through the Alumni Scholarship. Bob Giacomantonio is a member of the LGO Class of 2013 and is a candidate for the MIT Sloan MBA and the SM degree in Mechanical Engineering. He is a graduate in Mechanical & Biomedical Engineering from Carnegie Mellon University, and prior to joining LGO he worked in the Operations Management Leadership Program (OMLP) at General Electric, as well as in Nuclear Power Plants Engineering at Westinghouse Electric Company.
My first one-on-one conversation with Don Rosenfield will be a cherished memory for the rest of my life. I had barely stopped freaking out with excitement from the "You're In!" phone call when the admissions materials arrived at my door. I remember ripping open the package, reading the acceptance letter as quickly as I could, fighting back tears of happiness, and moving on to flipping through the other contents.
My best friend, who was sitting next to me on my couch reading the material after I sped through it, noticed another piece of paper stuck behind the admissions letter. It read that I had been awarded an Alumni Scholarship. I thought it had to be some kind of mistake! Not only was I being accepted into this wonderful LGO community, but the admissions committee had also deemed me worthy of receiving an additional entrance scholarship? I couldn't believe it was actually happening and have perhaps never been more grateful.
Since matriculating, I've made some fantastic new friends, have learned exceptionally relevant and interesting things from brilliant professors, and have been able to physically visit partner company facilities in the Boston area to see operations in action. All of this activity in only two short months!
I still find myself giving pause on an almost daily basis and taking in the fact that I'm living out one of my wildest dreams — being at MIT, studying my field of passion, and investing myself in a community whose richness and diversity seems to be limitless.
I'm so grateful for the generosity of the LGO program and for the opportunity to be an LGO Fellow; the Alumni Scholarship has eased the financial burden of graduate school tremendously. However, more meaningful to me than the nominal monetary value of the Alumni Scholarship is the welcoming acceptance it represents into a community of which I could not possibly be more proud.
With deepest sincerity, thank you.Top
We invite you to learn more about the new LGO class by reading some of the postings by the class bloggers. Top producer Victoria Knight's blog, Let's Get Operating, provides a recap of Arnie Barnett's class, the visit of the China LGO class to MIT, and the daily details of the LGO summer experience. Bob Giacomantonio (who described his Alumni Scholarship earlier in this update) has also written about the LGO summer team experience as well as his first impressions of the program. Erick Corona described his encounter with the LGO leadership curriculum and posted a video of "Harry Potter" author J. K. Rowling's Harvard graduation address on the topic of leadership. Ashleigh Range reflected on her and her husband's decision to join the program and their transition from life in Dallas to Boston. And Liz Sommerkorn, wife (or "S.O." in Sloan parlance) of Peter Sommerkorn '13, has been blogging about the LGO SO experience.Top
Save the date! The 2011 LGO Alumni Conference will be held September 8-9 in Lucerne, Switzerland. This will be our first international conference and the planning committee is working hard to create an amazing event. If you are interested in helping, we are actively seeking volunteers to help with speakers, logistics, marketing, and fundraising (you do not need to be based in Europe to help). Please contact Tanja Vainio (firstname.lastname@example.org) if you'd like to participate. Look for more detailed information coming soon. We look forward to seeing many of you in Switzerland this fall.Top
This fall we look forward to web seminars by alumni including Mark Mastandrea '93, VP Supply Chain at CSN Stores (September 16), Denise Johnson '97, General Manager, Caterpillar (October 28), Vicki DeMatteis '02, Engineering Senior Manager, Boeing (November 18), and Viju Menon '94, VP Supply Chain Management, Verizon Wireless (December 2). More details will be made available in advance of the first seminar and more seminars will be announced.
Please take a moment to browse the collection of archived web seminars and other LGO videos at MIT TechTV:
Your suggestions of speakers and topics for future seminars are welcome. Please send them to Josh Jacobs email@example.com.Top
This month we are looking at internships that developed optimization for inventory management to drive cost savings. Brian Masse did his work for United Technologies Company/Pratt & Whitney working on high-value custom parts, while Min Hsieh did her work at Intel Corporation on high-value CPU units.
If you have companies or areas of research you are interested in having highlighted in the monthly news please contact Ted Equi firstname.lastname@example.org.
Name: Brian Masse
Company: Pratt & Whitney, A United Technologies Company
Supervisor: Jessica Lamb
Academic Advisors: Roy Welsch, David Simchi-Levi
Title: Inventory Management Optimization
Pratt & Whitney strategically manufactures many of its parts in-house. These select components are often used to support both new engine production and in-service aircraft. They are typically high volume, and experience significant consequences if inventory runs low. Safety stocks are necessary to prevent stock outs, but keeping a minimum amount of material on hand is equally important to the financial success of the organization.
Historically, safety stocks of these select high volume components have only been kept at the finished goods stage of the manufacturing process. This internship analyzes the supply chains of several part families and looks for opportunities to hold safety stocks at other locations. This practice would allow for decreased inventory levels without negatively affecting customer service.
An optimization model which determines the ideal safety stock locations and sizes in a supply chain has been developed for use by Pratt & Whitney. Given demand and service targets, it calculates the minimum total inventory necessary by using part-specific financial and manufacturing process data. With this information, Pratt & Whitney can better locate its safety stocks, resulting in lower overall inventory levels and better response to customer demand.
Using this model, a potential inventory reduction of several million dollars was identified across the supply chains of select Pratt & Whitney part families. In each of these instances, finished goods safety stock was reduced while raw material saw an increase in strategic safety stock. Although the total number of units in safety stock may not have experienced large reductions, the transition from high value to lower value locations resulted in a significant decrease in safety stock value.
Name: Min F. Hsieh
Company: Intel Corporation
Supervisor: Maria Mentzer
Academic Advisors: Stephen Graves, David Simchi-Levi
Title: Applying a MEIO (Multi Echelon Inventory Optimization) approach to manage Intel's VMI Hub Supply Chain
To improve customer service levels, Intel implemented VMI (Vendor Managed Inventory) hub process for its CPU (Central Processor Unit) FG (Finished Good) inventory, which allows Intel's customers to pull inventory directly from the hubs. However, this process change resulted in increased inventory in Intel's overall supply chain and thus increased inventory costs.
This internship investigates reducing inventory cost by applying a Multi Echelon Inventory Optimization (MEIO) approach to manage Intel's VMI Hub Supply Chain. The goal of this internship is to evaluate the hypothesis that an MEIO approach for inventory management and replenishment will result in a more efficient use of FG inventory.
To evaluate this hypothesis, we developed a three-step modeling framework (see Figure 1). In each step, we conducted several experiments, applying the MEIO model approach, to determine the optimal CPU FG inventory stocking levels needed to meet customer service level goals for different products and locations.
The MEIO modeling results yield a positive ROI (see Figure 2) and were presented to the VP and Senior Director of Intel Supply Chain. The modeling results were also used to evaluate different network design scenarios for the network design center of excellence team. Based on these modeling results, the Intel management team approved resources to support a "CPU FG Inventory Optimization Roadmap", with a plan to implement expansion of the MEIO model into the VMI and Tray Channel supply chains.
Figure 1 - MEIO Modeling
Figure 2 - ROI of Inventory OptimizationTop
We have begun adding archived LGO Web Seminar videos as well as other notable videos, such as Don Rosenfield's program overview for the Class of 2013 at the recent Open House, to our MIT TechTV collection. Please visit to browse the videos and let us know what other videos would be of interest.Top
Julian Goldman, MD, Medical Director, Biomedical Engineering, Partners HealthCare: Systems Thinking and More Efficient Healthcare
Leena Ratnam, SDM '11: Reengineering Complex Systems to Empower Young Women
Malvern Atherton, SDM '04: Systems Thinking and the Human Components of Flight
Jean-Claude Saghbini, SDM '03: Systems Thinking for Tracking Medical Devices
Ricardo Valerdi, Research Associate: Systems Thinking and the Cost of Emotion
George Roth, Principal Research Associate: Managing Change Requires an Enterprise View
SDM Pulse, Summer 2011
SDM Systems Thinking Webinar Series
August 8, 2011
Anomalies or Leading Indicators? Recent System Failures in IT Security, Manufacturing, and Natural Resource Extraction
SDM Information Evening
Tuesday, September 13, 2011
MIT Faculty Club
Save the Dates!
October 24-25, 2011
2011 MIT SDM Conference on Systems Thinking for Contemporary Challenges
LGO Student Program site: http://lgo.mit.edu
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Josh Jacobs, LGO Director of Operations and Partner Integration
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