THE BULLWHIP

SPRING 2016

A n executive. An accountant. A factory floor manager. A truck driver. They're seemingly unrelated

careers, but they all share something in common. They're in the field of operations, and operations is

the backbone of every business.

What is operations?

Operations is the field of changing inputs into outputs. It's a broad definition, but a field as broad as operations re-

quires such ambiguity. A historic example of operations is Henry Ford and his creation of the assembly line1. This

process revolutionized the realm of operations and allowed businesses to streamline their manufacturing processes.

Today, for companies like Amazon who handle a massive volume of packages every day, efficiency must be one of

the firm's top priorities. Because of this evolving need for efficiency, companies are always looking to trim fat from

their operations, and programs like Six Sigma, a statistical approach to streamlining processes, have been developed2.

That's the definition of operations in the traditional sense, but operations is everywhere in the business world. One

example of non-traditional operations is sourcing, the act of obtaining product for a business. Think about a catering

company who needs to buy food. Getting food to create dishes involves operations. Transporting these goods,

through ways such as plane, train, or ship, is operations. Finally, the process of hiring workers to carry out these

tasks is also operations. These fields may not involve cardboard boxes or factory conveyor belts, but they do deal

with the operations of the business, which is what a business needs to function.

Career Opportunities

U.S. News and Reports puts three careers directly related to operations in the top ten of their list of "Best Business

Jobs.”

1. "Just in Time." Shmula. Shmula LLC, 23 Mar. 2007. Web. 12 Oct. 2015. <http://www.shmula.com/fords-contribution-to-just-in-time/371/>.

2. "What Is Six Sigma?" ISixSigma. N.p., n.d. Web. 12 Oct. 2015. <http://www.isixsigma.com/new-to-six-sigma/getting-started/what-six-sigma/>.

3. "Operations Research Analyst." US News Money. U.S. News & World Report LP, n.d. Web. 11 Oct. 2015. <http://money.usnews.com/careers/best-

jobs/operations-research-analyst>.

4. "Logistician." US News Money. U.S. News & World Report LP, n.d. Web. 11 Oct. 2015. <http://money.usnews.com/careers/best-jobs/logistician>.

5. "Business Operations Manager." US News Money. U.S. News & World Report LP, n.d. Web. 11 Oct. 2015. <money.usnews.com/careers/best-jobs/

Operations Research Analyst3 Logistician4 Business Operations Manager5 Position

#4 #6 #10 Rank

The people who break down ex-

isting systems and look for oppor-

tunities to improve the efficiency

of the business.

The workers responsible for be-

hind-the-scenes planning of

transporting materials. Heavily

involved with supply chains.

The point person in any busi-

ness, managers oversee the op-

erations of any business, includ-

ing hiring and contracting.

Description

$74,630 $73,400 $96,430 Salary

27% 21.9% 12.9% Growth Rate

Above Average Above Average Above Average Upward Mobility

Average Low Above Average Stress Level

Bachelor’s Bachelor’s/Master’s Degrees & Experience Qualifications

1 | THE BULLWHIP | SPRING 2016

THE BULLWHIP | SPRING 2016 | 2

THE BULLWHIP

“There are two kinds

of companies, those

that work to try to

charge more and

those that work to

charge less. We will

be the second.”

- Jeff Bezos

Founder & CEO of Amazon

In This Issue

The Link between

Industrial Engineering

and Business

A Deeper Look into

Big Brown

Internet of Things and

Applications in the

Modern World

Third Edition— A Word from the Executive Team

Dear Reader,

Preview of content within.

Our Vision & You Thank you for supporting The Bullwhip! Our hope is that reading about the excit-

ing things Operators—that is operations students—have done or learned will

inspire you to join The Bullwhip team and contribute what makes you, your

club, and university special. Our earnest desire is that this newsletter would

create something rare—a bullwhip effect of students having an increasingly

greater impact on their peers, schools, and workplaces, supported by the best

knowledge other students and schools around the world have to offer.

Contribute to the Fall Edition by October 1 Space in the fall edition of The Bullwhip has already begun to fill up! Reach out to

us by October 1st if you are interested in contributing or have an idea for an

article. Our contact information can be found on page 6. We look forward to

hearing from you!

Sincerely,

Abdulaziz Shemna | Geoffrey Bell | Grady Hale | Maria Blanchard | Ryan Wydra

The Bullwhip Executive Team

Elliot Orenstein

Editor-in-Chief

A global newsletter collaboration of undergraduate operations students Volume 1 | Edition 3

Engineering, at its core, is the science of improving the world around us. Whether it’s a civil engineer laying down roads to help people get around more easily, an electrical engineer s o l d e r i n g t o g e t h e r a microprocessor to make a computer run more quickly, or a mechanical engineer building an engine that helps your car drive faster and longer than usual, the effects of engineering can be felt in every aspect of our lives. Yet there is one branch of engineering that many either do not acknowledge or are not aware of: industrial engineering.

Industrial engineering — sometimes referred to as operations research — is the study of using data and modeling to create solutions to products or optimize performance. It is used in practically every industry in the w o r l d , f r o m i m p r o v i n g manufacturing processes to removing inefficiencies from supply chains to making better business decisions in the world of corporate finance. The decisions made by industrial engineers (IEs) affect practically every part of our

statistical analysis and perform market research to estimate supply and demand for a given period so that managers can make informed decisions on how much to produce and how much to sell.

The work done by IEs plays a large role in many of the decisions that businesses make every day. One of the most common sectors for IEs to work in is the consulting industry and in particular with companies like McKinsey & Company or Manhattan Associates. Many IEs naturally gravitate to this field because of the chance to apply their skills to a variety of different s i tua t i ons and indus t r i e s . Furthermore, IEs are also common in the service industry. For example, many IEs work in hospitals where they work to make sure that doctors do not get overwhelmed by too many patients.

Needless to say, the work done by industrial engineers and operations researchers can be felt in countless ways, both in the business world and in our regular day to day lives.

everyday lives. For example, let’s say you’re reading this article on a computer. Though your computer may have been designed by an electrical engineer and the programs you use were designed by software engineers, the materials used in it such as the silicon in the chip or the metal in the keyboard were most likely procured by IEs, who also estimated the demand for the computer and then decided how many computers to produce as well as the optimal unit price for each.

Of course, IEs do not work in just the corporate world. Many work in factories or on production lines to eliminate inefficiencies like bottlenecks. The novel The Goal: A Process of Ongoing Improvement, regarded by some as the bible for the operational research field, describes a fictional engineer who comes up with innovative ways to deal with such inefficiencies and ensure that his plant does not go out of business. In addition, other operations researchers in manufacturing industries use

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The Link between Industrial Engineering and Business

Suneet Mishra, Georgia Institute of Technology

Internet of Things and Applications in the Modern World Michael Beer Sohum Daftary Brian Farchione, Tatiana Gedeon Adam Nissionoff Pavan Patel

Members of the Wharton Supply Chain Organization (WSCO) Research Team have spent the semester learning about the Internet of Things (IoT). They wanted to write a paper – which includes a brief overview of the IoT as well as possible applications and concerns in the future – with the goal of learning more about the technology as well as crafting a paper to provide value to others interested in this subject. This article highlights excerpts from the research paper. Introduction to IoT “The Internet of Things (IoT) allows items to be recognized and even controlled remotely across existing networks creating various opportunities for immediate or close to immediate integration of physical entities into computer-based systems and programs. This often results in improved efficiency, accuracy and profit for the company, but also for countries as a

For non-investing-gurus, an appendix of related vocabulary is listed on page 4

We all know that feeling when the large, brown UPS delivery van comes flying down the street: joy (or perhaps disappointment if the van drives past your house to your neighbor's). Whether it's a new TV from Amazon or some pecan muffins from Grandma, UPS gets it to you. Of course, UPS is not the only option for shipping packages. Government competi-tor USPS and private competitor FedEx make up UPS's main competition, but a number of o t h e r p a c k a g e - h a n d l i n g

THE BULLWHIP | SPRING 2016 | 4

A Deeper Look into Big Brown Grady Hale, UNC-Chapel Hill

companies exist. UPS, however, is the largest package-handling company in the world, moving an astonishing 4 billion packages every day10. 4 billion — that's 4,000,000,000 — over half the world's population! This article will shed some light on UPS's operational practices and its financial backbone.

Comparison to FedEx

Investopedia.com provides a comparison between FedEx and UPS, and we summarized some of these key differences below.

€ $

5 | THE BULLWHIP | SPRING 2016

whole. When IoT is supplemented with nodes and sensors, the programmed items often become cyber-physical systems, which encompasses various technologies such as smart homes, smart roads and even smart cities… Efficiency is maximized in IoT and connected smart technologies because each individual item can be uniquely identified with its embedded computing system that is able to interoperate within the existing IoT infrastructure. It has been estimated that the IoT will consist of almost 50 billion objects by 2020.” Commercial Applications “An object-network is found in Bic, a razor manufacturer. Bic’s manufacturing equipment can communicate with each other to adjust to the environment. For example, equipment in the later portion of the manufacturing line can detect defects in razor blade quality and transmit that information to equipment at the beginning of the line so that adjustments can be made instantaneously.” The paper also outlines military as well as city applications for IoT.

Share. Measure of a stock's bang-for-buck, but not the only measure

Earnings/Share3: (net income - dividends) / number of shares

Annual Dividend9: dollar amount of dividends paid for one share of a stock to holders

Dividend Yield9: dollar dividend amount / price of the stock

Debt Ratio6: liabilities / assets. Indi-cates how much a company leverag-es its debt compared to assets

ROA7: net income / assets. Demonstrates bang-for-buck, how much income a company is getting out of its assets

N O T I N T E N D E D A S FINANCIAL ADVICE

Key Financial Findings

As of March 16, UPS is trading right around $101. Its 52-week range goes from around $87 to $107. Relative volatility is low, and its Beta value is 0.948. With a Beta value of 0.94, UPS's stock would theoretically move 94% for a 100% change in the market, meaning it is less volatile than the market1. Further, its Price/Earnings ratio is at just under 198. While a lower P/E ratio does not always mean a healthy stock, UPS's low ratio is another good sign of the company. Furthermore, UPS pays approximately $3.10 per year in dividends, which is proportional to a 3 percent return considering UPS's stock price 9.

UPS's Balance Sheet could raise some questions since its debt ratio (liabilities/assets) is around 0.938. Ideally, a company's debt ratio should be under 0.50, meaning a company should have much more assets than liabilities, but, in UPS's case, having a high debt ratio leverages resources and ultimately promotes growth. This growth is indicated by its ROA (income divided by assets), which increased from 9% in 2014 to 13% in 20158. Looking at UPS's Income Statement, its net income increased from $3 million in 2014 to $4.8 million in 20158. While this kind of growth cannot be expected from year-to-year, this figure shows that UPS is a growing company.

Glossary:

Beta1: measure of a stock's volatility compared to some standard index, such as the S&P. A Beta value of 0.95 means that the stock changes 95% if the standard index changes 100%.

P/E Ratio5: price-to-earnings ratio. Divide Price/Share by Earnings/

References

1. "Beta Definition | Investopedia." In-vestopedia. 2."CH Robinson Worldwide Inc." Yahoo! Finance. 3."Earnings Per Share (EPS) Definition | Investopedia." 4."FedEx Corporation." Yahoo! Finance. 5.Gallant, Chris. "Stocks with High P/E Ratios Can Be Overpriced. Is a Stock with a Lower P/E Always a Better Investment than a Stock with a Higher One? | In-vestopedia." 6. Kurt, Daniel. "Understanding Leverage Ratios | Investopedia." Investopedia. 7. Return On Assets (ROA) Definition | Investopedia." Investopedia.” 8."United Parcel Service, Inc." Yahoo! Fi-nance. 9."UPS: Dividend Date & History for Unit-ed Parcel Service." 10. Wei, Jay. "UPS Vs. FedEx: Comparing Business Models and Strategies | In-vestopedia."

Photos:

Engineer (p. 2): Georgia Tech Professional Education—Industrial Engineering

UPS Plane (p. 3): Denver Post Business

Cover: Gray Engineering, Architecture and Con-struction

Causes for Concern “Companies’ uses of the IoT for efficiently regulating their supply chains and workforce clash with society's’ needs for privacy (Cavico). Implementing the IoT on a national scale compromises the welfare of citizens by facilitating omnipresent government surveillance. While RFID tags seem innocent enough, if implemented on a wider scale, their use could feasibly lead to the creation of a surveillance state and facilitate the implementation of dictatorships, as governments appropriate the information on the tags and violate the privacy rights of their citizens that are unable to control the disclosure of their confidential information (Atzori).” For the rest of the research paper or if you are interested in contributing or learning more about the WSCO, please contact Pavan Patel at pavan.n.patel@gmail.com.

About The Bullwhip The Undergraduate Operations Club at Kenan-Flagler Business School is a student-

led organization that serves the needs of undergraduate students interested in the

operations discipline or operations-related careers.

Our goal is to educate students on operations careers, provide connections to

potential employers and faculty resources, and foster an environment of intellectual

curiosity and practical guidance to better prepare them for their careers and lives

beyond college.

The operations concepts and knowledge students gain in the classroom are

complemented by the club with hands-on, real-life experience through facility tours,

guest speakers, recruiting events, interactive activities, case competitions, and meet-

and-greets with Operations Department faculty and alumni in the field.

A Special Thanks UNC Operations Club and The Bullwhip could not exist without the faithful support

of its members, sponsoring professors, and partners. We’d like to thank the

following individuals and partners for their support of the club and of The Bullwhip:

Professor Anne Marucheck Jacob Baldwin

Professor Lauren Lu Professor Bin Hu

Professor Nur Sunar Wendell Gilland

Contact Us!

UNCKenanFlaglerOp-

erationsClub@gmail.com

TheBullwhip@kenan-

flagler.unc.edu

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