Case Studies 1: Cases of General Motors : OnStar is GM's two-way vehicle communication system that provides a variety of services

enhancing safety, security, entertainment, and productivity. In 1 communications services to cars$. GM had to decide whether to view OnStar as a car feature or as a service, and choose %etween an evolutionary and a revolutionary strategy. &omplicating the decision-ma"ing process was the almost complete uncertainty GM faced regarding technological approaches, ma'or competitors, and what competitive and complementary technologies would emerge. (he challenge re)uired operations research e*pertise in developing decision support systems, creating mathematical models of uncertainty, and strategic planning. (he impact of solution is so dramatic that in !, GM faced fundamental strategic decisions with respect to OnStar and the mar"et for telematics #the provision of

+,,1, OnStar had amassed + million su%scri%ers - an .,/ mar"et share of the emerging telematics mar"et - and had %een valued at %etween 01 and 01, %illion.
2t a time when General Motors was facing increasing competitive pressures, higher )uality demands and a sluggish economy, the giant automa"er was una%le to effectively analy3e the productivity and throughput of its manufacturing operations. Many of its factories during the late 1 .,s and early 1 ,s were missing production goals, wor"ing unscheduled overtime and e*periencing high scrap costs. 2lthough GM overall had e*cess production capacity at the time, production %ottlenec"s and other pro%lems were causing the company to lose money even on high-demand products. In addition to creating pro%lems for e*isting products, the lac" of an effective throughput analysis capa%ility was impeding the launch of new products, resulting in lost sales. In 1 1, GM reported a 01.4 %illion loss - a %usiness record at that time. (he impact

of change in strategy leads 5or GM, the )uantitative %enefits of the (hroughput Improvement 6rocess and its underlying O.7.-%ased analytics include a +8/ increase in manufacturing productivity %etween 1 ! and +,,1 and ongoing annual com%ined savings and incremental revenue improvements of over 0+ %illion.

Q.1 What are the major decisions taken by operations research experts regard General
Motors two way !ehicle communication system "nStar in order to stay competiti!e#

$ns: (he GM9OnStar O.7. team developed a multi-method modeling approach to evaluate
strategic alternatives. (hey used dynamic modeling to address some of the critical decisions GM faced in 1 !, such as the company's choice %etween incremental and aggressive mar"eting strategies for OnStar. (hey also used an integrated simulation model for analy3ing the new telematics industry, consisting of si* sectors: customer ac)uisition, customer choice, alliances, customer service, financial dynamics, and dealer %ehavior.

Q.2 %iscuss the problem face by General Motors about producti!ity and throughput of its manufacturing operations& $ns: 7ecogni3ing the %road scope of the pro%lem:
1' (hree )ronged "&*& +ased ,ffort :

GM responded with a three-pronged O.7.-%ased effort focusing on production line data collection, throughput modeling and algorithms, and throughput improvement processes.
-' GM *ecogni.ed the /mportance of 0imiting %ata /nputs :

In tac"ling the production data collection component, GM recogni3ed the importance of limiting data inputs from the massive universe of production data availa%le, to avoid %ogging down the analytical processes. (he goal was to develop models and algorithms with modest data re)uirements that still produce meaningful results.
1' *epeated (rial and 2alidation ,fforts :

7epeated trial and validation efforts esta%lished the appropriate data inputs in the areas of wor"station speed changes, scrap counts and classification of wor"station stoppages #such as e)uipment failure and safety stops$.
3' GM +uilt $nalytic Simulation Models :

In the interest of ma"ing analysis %e fast, accurate and easy to use, GM %uilt analytic simulation models for simpler situations, as well as detailed discreteevent simulation models for more comple* situations. (hey were %uilt into an analysis tool that revealed, for each production line evaluated, the hidden %ottlenec"s that were impeding throughput.

4' GM;s <(hroughput Improvement 6rocess= #(I6$ is a procedure where%y plant-

floor personnel and management can use the O.7.-%ased analyses to study and remove %ottlenec"s. (I6 steps include identifying the pro%lem, analy3ing it, generating action plans, implementing the solution, and su%se)uent evaluation. Q.3 What are the effects of decisions taken by operations research experts in both the
problems regard General Motors#

$ns: (he effects of decisions ta"en %y operations research e*perts in %oth the pro%lems regard
General Motors two-way vehicle communication system OnStar are as follows:

1' In +,,1, OnStar had amassed + million su%scri%ers - an .,/ mar"et share of the emerging telematics mar"et - and had %een valued at %etween 01 and 01, %illion. (he OnStar pro'ect set the stage for a %roader GM initiative in service %usinesses that ultimately could yield %illions of dollars in incremental earnings. >ven more important than its financial %enefits for GM, OnStar has saved lives that otherwise would have %een lost in vehicle accidents. -' 5or GM, the )uantitative %enefits of the (hroughput Improvement 6rocess and its underlying O.7.-%ased analytics include a +8/ increase in manufacturing productivity %etween 1 ! and +,,1 and ongoing annual com%ined savings and incremental revenue improvements of over 0+ %illion. ?ualitative %enefits include creating standard data definitions and manufacturing performance measures, facilitating communication and transferring lessons learned throughout GM;s glo%al operations