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ON BUSINESS EFFICIENCIES

TWO ARTICLES offered related examples of how today’s businesses are enhancing their efficiency. An OpEd piece by Thomas L. Friedman in The New York Times, September 27, 2017, discusses, among other things, how algorithms are changing our lives. An item from friend Ray DeTournay shares insights on chaotic storage as practiced by retail giant Amazon.

Both are fascinating.

Thomas Loren Friedman, Minnesota-born 1953, American journalist and author, three-time Pulitzer Prize recipient.

Friedman’s piece, “Folks, We’re Home Alone,” describes six things that algorithms do. I add here commentary on several of these that are clearly beneficial and others, perhaps less so. To wit:

Friedman notes that computer algorithms provide analysis that reveals previously hidden patterns. In a world of data mining, this can be both good or bad. What about a Wall Street algorithm making essentially instantaneous decisions on stock sales? Or Cambridge Analytica influencing a particular voting block on some issue?

Miners with a future: a typical computer bank mining data. Image from Reuters/Brenden McDermid.

Algorithms, Friedman notes, also offer optimization of complex interactive processes. Commercial jets, for example, get their best fuel efficiency when route and altitude are optimized. The classic salesman problem, of how many to employ and where to base them, admits optimization as well.

Friedman cites prophesy as another algorithmic benefit. Data mining can predict failure rates of complex hardware or customer preferences of products. Some of these predictions are cause and effect; others are identified only by correlation.

Friedman’s next algorithmic achievement is customization, related to prophesy and directed to individual tailoring. A trivial example is your initializing an order, with the algorithm completing the rest of address, credit card, and the like, all from its memory.

Friedman’s last two, digitization and automatization, are intimately related. Computers, after all, count on only two fingers, 0 and 1, albeit very quickly. Digitization of data makes it accessible to algorithms and other computer nuances. Last, once digitized, a process can be automatized, working amazingly quickly and repeatedly. A caveat, of course, is the old computer truism: GI/GO or Garbage In/Garbage Out.

It’s an interesting assessment of business and modern technology. Friedman concludes this part of his essay with, “Any company that doesn’t deploy all six elements will struggle, and this is changing every job and industry.”

This battle of Chomp vs Disk O’Inferno has little to do with either Friedman or Amazon, but it sure is fun. Image from BattleBots. [Ha! Inexplicably, its linking algorithm locks my vintage iPhone into a Disney Halloween ad. The link works fine on my desktop computer!]

Amazon’s chaotic storage exemplifies how this company efficiently delivers its wealth of offerings, in a process that’s markedly different from that of traditional retail.

It begins with 80 huge warehouses located strategically around the world. (Be assured that a salesman-like algorithm helped decide their locations.) More than 65,000 Amazon employees are involved with a system known as chaotic storage. Here are its features.

There’s no “book area” nor “T-shirt area.” Instead, each product entering the warehouse gets a unique barcode identifier. The product is then placed in the next available shelf space, the latter identified by another unique barcode. (Think digitization par excellence.)

It might be that a particular incoming batch of XXL T-shirts gets shelved atop toothpaste or next to ratchet wrenches. No problem, because the data base keeps track of product and shelf barcodes.

There are several advantages to this seemingly chaotic system.

Amazon chaotic storage. Image from roboticbusinessreview.

Amazon’s chaotic storage is flexible. Any freed-up space can be reused immediately. There’s no reason to leave vacancies in the T-shirt shelves until the next batch of XXLs arrive.

A second benefit is simplicity. Human workers don’t have to learn shelving locations for clothing, books, small appliances, and the other multitudes of Amazon offerings. All that’s required is entering and reading barcodes. Also, this arbitrary location makes mixups of fulfillment less likely. Those XXL T-shirts may be nowhere near the XXS ones.

A third advantage is optimization of the whole process. The warehouse data base keeps track of inventory and can communicate with other warehouses. Knowing where each product is located, it can also define optimal retrieval routes for filling customer orders.

A fourth advantage is automatization. With chaotic storage defined, the placement and retrieval of products can be relegated to automation. Robots do the storing and fetching; humans do the thinking.

Amazon robots at work in Tracy, California. Image from businessinsider.com.

This Wired Business Conference video shows how chaotic storage interfaces with Amazon’s robots and real people. ds

© Dennis Simanaitis, SimanaitisSays.com, 2017

2 comments on “ON BUSINESS EFFICIENCIES

  1. jlalbrecht64
    September 29, 2017

    It was a little tough to “like” this article, as I’m neither a fan of Thomas Friedman (big war hawk and friend of the MIC) nor Jeff Bezos (monopolist, unfair business man, etc.). The writing gets the “like” as well as a like for the concepts (I work in optimization).

    • simanaitissays
      September 29, 2017

      Sometimes the message is more important than the messenger….

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