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Oct 16 2012

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Applying Nobel-winning Physics to Manufacturing Operations Management

I just read that the 2012 Nobel Prize in physics was awarded to both Serge Haroche of France and David Wineland of the US. Back in the 1990s, they showed how to observe individual particles while preserving their bizarre quantum properties, something that scientists had struggled to do before. While this contribution may seem far-fetching and remotely detached from the daily management challenges of a business executive working at a manufacturing company, I am going to argue otherwise.

The Principle of Uncertainty

Let me first touch on the significance of this discovery. At the beginning of the last century when quantum physics was born, physicists had discovered that classical laws of physics break down at sub-atomic level. Everyday objects that we are used to have deterministic states.  For example, given the starting location and the velocity of a car, we can easily determine its location at any time. Tiny particles on the other hand, behave much differently.

The foundation of quantum mechanics was first built on the Heisenberg’s principle of uncertainty, which describes the possibility of physical objects having multiple states. Given the initial location and velocity of a particle, it is possible for the same particle to be in multiple locations, at least as described by probability functions. This is what makes quantum mechanics such a bizarre subject for most people. Making things worse, it was simply not possible to observe this type of behavior. For example, observing a photon requires lights to be absorbed by our eyes or any other image sensor, hence altering the state of the photon itself. These observer effect and uncertainty relationships have triggered many philosophical studies such as those of Karl Popper and the concept of reflexivity. The latter one was mentioned by George Soros as the principle behind his investment strategy. These two Nobel literates successfully worked their way around these monumental theoretical and philosophical hurdles, thereby attaining a spot in history as Nobel Prize winners.

What can Managers Learn from Quantum Physicists?

While the bizarre world of quantum mechanics may seem distant, the principle of uncertainty for tiny objects prevails well in business management. For example, many companies have installed some type of ERP system to get a real time view of the state of their business. There is a strong belief in the need and existence of a “single version of the truth” of financial data across the enterprise. Day-to-day decisions are made based on this information. I see this is as analogous to management by classical physics.

When it comes down to highly granular enterprise manufacturing intelligence, like events on critical machines, individual operator performance, inventory by SKU and bin locations, or even machine OEE, business executives tend to think of this information in the same way as the bizarre world of tiny particles in quantum mechanics. Under this scenario, it is not uncommon for these executives to make decisions based on multiple “truths” – a less than desirable option.

For example, the reported OEEs from different plants for the same type of machine might be based on various measurement methods or criteria or varying degrees of human error. Different manufacturing departments might have varying recognition of the true state of their operations because their own spreadsheets indicate multiple “truths.” Variable cost by product by shift, however, might be different when measured from a higher, more aggregate cost level, such as what is captured in Enterprise Resource Planning (ERP) systems. By the same token, it is quite common for inventory accuracy of quantity per SKU to be well below the figures reported by ERP, again based on higher level aggregate financial numbers.

Mastering the Quantum Bits of Your Business

It is far too common that business executives work under the principle of uncertainty whereby they operate under uncertain states. This does not have to be the case. Just as the most recent Nobel Prize winners discovered in the Physics world, the technologies to observe and measure quantum bits (i.e. highly granular information) in the manufacturing world this is now possible. Those companies that have already discovered how to leverage their quantum bits of manufacturing information are now reaping huge rewards, including performance and efficiency improvements across their manufacturing operations. For a listing of what benefits are possible, see this post.

In our increasingly complex and turbulent world, a tiny quantum bit of information can explode into a perfect storm of operational disruption in very a short time. While the capability of manufacturers to measure quantum bits of data may not qualify for a Nobel Prize in the near future, it is now distinguishing the winners from the losers in the marketplace, demonstrated by their ability to rely less on the principle of uncertainty while running their business.

Permanent link to this article: http://www.apriso.com/blog/2012/10/applying-nobel-winning-physics-to-manufacturing-operations-management/

3 comments

  1. David Bueford

    The principle of uncertainty AKA chaos. I see much benefit in forwarding this study. However management can at times exhibit symptoms of ADHD when it comes to advanced problem solving. Another issue is admitting there is a problem in the first place. Most companies (manufacturers) believe their Toyota or at least on the path to TPS therefore don’t need help in this area.

  2. Mario Quijano

    Welcome to the world of statistics. We thrive on uncertainty. Like, for example, OEE. You are running at a 65% OEE…but, plus or minus what? Which OEE has the greatest “spread” and contributes the most to the final “spread”? Managers and such types have to get used to understanding stats and the concept of standard deviation. And, please, don’t hold on to that “average” (mean)! Makes my hair curl when I hear folks use it. The “average” is a good representation if the distribution is normal (i.e. a bell curve). But that is hardly the case in statistics.

  3. Hosoitality Industry

    Superb post….nice one.

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