OR/MS Today - April 2000 - President's Desk

April 2000

President's Desk

Creating Some Buzz

By John Birge
jrbirge@nwu.edu

As an operations researcher/management scientist, you have probably been frustrated, as have I, at trying to demonstrate the value of your work to your boss (whether he or she is a manager, dean, department chair or academic advisor). You might also have had that rare experience where you see that your boss actually understands something about what you do, but then you wonder how to carry that further. I recently had such an experience with my boss (the provost at my university), but then I wondered how to expand on this glimmer of hope for our visibility and place OR/MS into prominence in the buzz-word land of globalization, e-commerce and dot-coms. I will share some of my thoughts on our potential in that world, but I look forward to hearing your ideas as well.

I saw the ray of enlightenment in my boss during my institution's annual administrative retreat, where participants look at the major problems facing the organization. A chief issue for everyone has been lack of space for expanding and enhancing our research enterprise. The provost decided to deal with this issue in a novel way, not by committing to new buildings (as the deans were all hoping), but by challenging the deans for the inefficient use of classrooms.

The provost described the low usage rates for classrooms outside of "prime-time" hours between 10 a.m. and 3 p.m. He then came upon a solution by analogy to another industry. "Remember," he said, "when every time you flew, the plane was virtually empty. Now, the planes are packed. We have to do the same with our classrooms. Let's use the same mechanisms the airlines have used to fill those seats, vary prices, and still make money. That way, we'll reduce our need for classrooms and have plenty of space free for additional research facilities."

As soon as I heard this remark, I felt proud of our profession's influence on society so that airline revenue management was even noticed by our provost. I also felt an overwhelming OR/MS professional responsibility to remind my boss that a market with competition and customers with varying payment capabilities was necessary for creating the incentives to adjust occupancy times and reduce peak-time pressures. I played out several potential mechanisms in my head that I was about to foist upon the provost. Reason, however, prevailed. I simply thanked my boss for his insight (always a good thing to do), explained a little about revenue management and its origins, and suggested that we start to look at creating an environment that might indeed improve room efficiency.

After this experience, I wondered what might be OR/MS's next big impact that would be as visible to the general public as we have seen with revenue management. Would large industry trends, such as globalization and total enterprise management, be the vehicle for success? Would whole new industries such as electronic commerce and its multiple high-rolling dot-coms be the source? If so, what would the consumer see from OR/MS?

Globalization is certainly changing the structure of companies today. OR/MS has also most definitely played a role in decisions to merge resources, to use global capacity to meet worldwide demand, to reduce delay times along all stages of the global supply chain, and to reduce risks in managing assets with varying currencies, liquidity and tax structures. How visible has this been to consumers? They might have noticed name changes in the brands they buy. They might see some reduced costs in certain items, and better availability worldwide for many products, but these characteristics are not too obvious and not so clearly the result of OR/MS.

From these observations, I thought it might not be possible to find a niche in the consumer's mind for OR/MS's impact on globalization or total enterprise systems. E-commerce, however, presents other possibilities that might have potential for further exploitation and a visible OR/MS presence in the consumer's mind. The consumer experiences e-commerce as a new method for finding, buying, servicing and ultimately discarding or selling products (and services). I can see an OR/MS role in each of these areas.

In terms of finding products, the consumer certainly sees the impact of search vehicles and perhaps we can claim some OR/MS credit in their creation. We also see companies that suggest products to consumers and use OR/MS methodology to tailor those offerings. We might see more in this respect and (with hope it does not become so invasive that it develops a negative connotation) possibilities for consumer awareness that some mechanism knows what they need (or at least what they would like).

In buying products, consumers certainly see the effects of rapid delivery systems. Sustaining such possibilities and achieving even shorter lead times will be a challenge, but may again give possibilities for consumer awareness. Service presents opportunities with smart homes that can diagnose problems and respond to service needs. Discarding a product at the optimal point or selling with the aid of an auction assistant might also be roles for OR/MS that are visible to consumers (if only to the real auction enthusiasts).

The new buzz words of today's markets certainly present opportunities for OR/MS to be visible in the consumer's mind. Whether any will be as visible as the presence of many paying customers in airline seats is an open question. If you have other thoughts, let me know at jrbirge@northwestern.edu.

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