INFORMS conducted a competition for the Franz Edelman Award for Achievement in Operations Research and the Management Sciences at its national convention in Salt Lake City earlier this month. The six finalists for the award, all of whom were recognized by the judges, were Air New Zealand, Fingerhut, the Federal Aviation Administration, IBM, Jeppesen Sanderson, and Ford Motor. The winner of the Edelman Award was Jeppesen Sanderson.
INFORMS recognized IBM for a project entitled "Matching Assets with Demand in Supply Chian Management with PROFIT at IBM Microelectronics." The authors are Peter Lyon, R. John Milne, Robert Orzell, and Robert Rice.
IBM Microelectronics faced the challenge of reengineering its supply chain management system to support the company’s transformation into a world class provider of leading-edge semiconductor and packaged solutions to the whole networked world. In late 1994, IBM Microelectronics created its PROFIT (Planning Resources Optimally for IBM Technology) team to apply operations research to the development of flexible, practical applications for matching supply with demand. In response, the PROFIT team developed a suite of decision technology tools to accomplish its goals.
The resulting improvements have been in asset utilization, customer relationships, and customer responsiveness.
In asset utilization, the company enjoyed 1999 asset utilization improvements of $80 million, thanks in large part to the PROFIT technology. The gain came from inventory turns on costs of goods sold and improved tool utilization. The plans for the year 2000 are an 0.4% increase in inventory turns and a 5% increase in tool utilization, which are expected to yield $200 million.
In customer relationships, the average order response time was reduced from close to 4 days to under one day. In 30% of the orders, the response time is in hours and for many Internet orders, the order commit occurs within minutes. On-time delivery has increased from 90% in 1998 to 97% last year. Customer satisfaction has increased 20%.
The advances made by the PROFIT team in conjunction with other IBM teams helped IBM Microelectronics meet customer responsiveness expectations. During 1999, a new area of customer responsiveness emerged, sharing pertinent data with customers through emerging e-business relationships. The initial response from customers was satisfaction.
29th Year of Competition
This is the 29th year that the prestigious $15,000 competition has been held. The award is jointly sponsored by INFORMS and CPMS, the Practice Section of INFORMS.
The INFORMS Edelman Award recognizes outstanding implemented work that has had a significant, positive impact on the performance of the client organization. The top finalist receives a $10,000 first prize.
The judges of the Edelman competition were Russ Labe; Joseph Discenza, Wagner & Associates; Howard Finkelberg, BBDO; H. Newton Garber, Garber Associates; Stephen C. Graves, Massachusetts Institute of Technology; Yoshiro Ikura, Saitech; Peter C. Bell, University of Western Ontario; and Donald Smith, Lucent Technologies.
All the finalist papers will be published in the January 2001 issue of Interfaces: An International Journal of the Institute for Operations Research and the Management Sciences.
The Institute for Operations Research and the Management Sciences (INFORMS®) is an international scientific society with 12,000 members, including Nobel Prize laureates, dedicated to applying scientific methods to help improve decision-making, management, and operations. Members of INFORMS work in business, government, and academia. They are represented in fields as diverse as airlines, health care, law enforcement, the military, the stock market, and telecommunications. The INFORMS website is at http://www.informs.org.