FEATURE — Summer 2009


(Photo: Joe Angeles)

Taking Stock of
Business Operations

Professor Tava Olsen links operations management research to real-world business and back to the classroom.

By C.B. Adams

New Zealand is perhaps best known for kiwi fruit and the Lord of the Rings film trilogy. In the world of supply chain and operations and manufacturing management, though, one of that country’s most important exports may well be Tava Lennon Olsen, a professor of operations and manufacturing management in the Olin Business School. Olsen joined the Olin School in 2000 and is part of the School’s increasingly recognized faculty in this field. Her specific research interests include supply chain management, pricing, inventory control, and stochastic (random) models of production and service systems—all of which are providing the business community with previously unavailable management tools.

When asked what these arcane terms mean, Olsen replies: “The super short answer is I teach business. A level above that is I teach business operations. And a level above that I say: ‘It’s what makes a company run. It’s all the scheduling, logistics, inventory, capacity setting, and staffing decisions. It’s all the processes in a company that make it run.’”

According to Olin Business School Dean Mahendra Gupta, “Tava has been a great researcher and teacher, developing new courses and bringing new knowledge to our students.” Here, she meets with Xingxing Chen, a Ph.D. student studying operations. Joe Angeles

Olsen began her examination of what makes a company run with her doctoral dissertation, which was titled “Response-Time Approximations for Multi-Server Polling Models, with Manufacturing Applications.” After graduating with honors from the University of Auckland with a degree in mathematics and computer science, Olsen came to the United States and Stanford University, where she earned a master’s degree while working toward a doctorate in operations.

“I have always been committed to research that is directly applicable to the real world,” Olsen says. “I was involved in a summer project with a local company that manufactured heat shrinkable tubing. They had a problem with scheduling and managing their orders. I worked with them, and they implemented some of my suggestions. Their issues became my thesis topic on managing made-to-order systems with setups.”

In 1994, she accepted a position in the industrial and operations engineering department at the University of Michigan, where she served as assistant professor for six years. During her time in Michigan, she became intrigued by the real and complex issues faced by the auto manufacturers, because they rely on setup operations. To explain, she describes just one component: a bumper.

“You make it, you paint it, but how do you schedule these systems when you have a special order and short lead-times? How do you manage them most effectively? To help answer these questions, my goal was to work toward an overarching theory on how to manage made-to-order (manufacturing) systems,” she says.

Since then, Olsen has been conducting research into how firms trade off service quality and pricing structure, so different lead-times and availability can be offered to their customers.

“The companies I have worked with have been very open to conversing with me about how they do business,” she says. “They usually are open to my thoughts and ideas, but getting stuff implemented can sometimes be a bit of a hurdle.”

Olsen has continued her research most recently by working with two local start-up companies that are both in the early stages of development. One is a made-to-order swimwear manufacturer, and the other specializes in gene sequencing. In both cases, she is examining how to organize and sequence the production process to accommodate regular delivery as well as expedited or rush delivery that comes with a higher price tag for this service.

“The challenge is actually expediting it in the production process without messing up everything else,” Olsen says. “You don’t want to make everyone else’s order late just because you put in an expedited order, and you don’t want to be running around doing lots of overtime, either. So how do you basically reserve capacity for these top-priority orders without wasting capacity?”

The issue is more complex than simply developing a production process that delivers all swimsuits on an expedited first-in-first-out schedule, according to Olsen. That solution would involve a larger workforce and create a backlog. Instead, Olsen is studying how to balance issues, such as reserving a majority of the capacity for normal delivery and a smaller percentage for the top-priority orders.

“That way, you reserve space for the priority order so it can go to the head of the line. There is space left for that order in the schedule, and it gets delivered faster,” she says. “This solution might push the ‘normal’ delivery time from five days to six days, for example, so there is a trade-off there. Those are the types of issues with which we are dealing.”

Even though gene sequencing would seem like a completely unrelated process, the local company faces many of the same challenges as the swimwear manufacturer. For instance, different clients have different lead-time preferences. Some are satisfied with a long lead-time because the gene sequencing is part of a much larger research project. Others have very specific—and shorter—lead-times because they need the data for a grant application or other deadline.

“We are very early in our discussions, but we are looking at how you balance different lead-times, increasing the utility of their customers so that they are receiving the lead-times they want and perhaps increasing their revenue by charging for the extra flexibility of faster service,” she says.

Olsen also recently has begun to apply her research from manufacturing to health-care operations. Her work is especially relevant considering President Barack Obama’s comments during his White House Health Summit in March: “Health care is no longer just a moral imperative, it is a fiscal imperative. If we want to create jobs and rebuild our economy—and get our federal budget under control—then we have to address the crushing cost of health care this year, in this administration.”

Health-care providers are facing increasing pressures to reduce costs and improve quality. Based on accurate, real-time data made possible by recent information-technology breakthroughs, Olsen can create mathematical models that can give health-care organizations new management tools to control costs and improve quality of service.

“Health-care providers now realize that it would be good for them to better manage their processes,” she says. “Since there have been significant success stories in the industry recently, they are more open to having conversations about how we can help them improve these processes.”

“Health-care providers now realize that it would be good for them to better manage their processes,” she says. “Since there have been significant success stories in the industry recently, they are more open to having conversations about how we can help them improve these processes.”

Olsen’s activities with health care dovetail nicely with her teaching responsibilities. She currently co-teaches a course in health-care management and teaches an M.B.A. elective on operations management in the service industry. Olsen and Jackson Nickerson, the Frahm Family Professor of Organization and Strategy, developed the new core course, Critical Thinking for Leaders, which is part of incoming M.B.A. students’ GO! Program. They also created a new M.B.A. elective, Critical Thinking Processes and Modeling for Effective Decision Making, which teaches students how to apply problem-solving skills to unstructured problems.

“Tava has been a great researcher and teacher, developing new courses and bringing new knowledge to our students,” says Mahendra Gupta, dean of the Olin Business School and the Geraldine J. and Robert L. Virgil Professor of Accounting and Management. “She is passionate about teaching critical thinking, and the result is a very important course that enhances students’ abilities to examine complex business problems and address and synthesize them in a careful and meaningful manner. That is an invaluable skill as they develop professionally.”

In September 2008, Olsen was appointed to be the first faculty development chair at the Olin School, the first school at Washington University to create such a position. The position is an outgrowth of the business school’s long-range strategic plan to attract, develop, and retain exceptional faculty members who embody the diversity inherent in the business world. She is charged with enhancing the development of junior faculty.

“I’m working with the senior associate dean for faculty to support the faculty mentoring program and solicit feedback on ways to improve it,” she says. “We are to identify areas in which faculty may need guidance or resources to enhance their development, encourage collaboration and institutional support among faculty and other Olin constituents, and identify ways to promote a diverse and inclusive environment among the faculty.”

After the mentoring program matures, Olsen says she will turn her attention to other issues that she will cultivate from the faculty, such as conducting teaching workshops or ways to promote interdisciplinary research.

As someone who is just as good at applying her knowledge of business operations to her own career, Olsen will no doubt continue to improve her work inside the classroom, throughout the Olin School, and outside with the business world.

C.B. Adams is a freelance writer based in St. Charles, Missouri.