of today’s supermarkets. His eventual executioner will be the electronic
computer, of course. Pilot systems using computers for automatic
checkouts are already drawing a bead on the jovial little man in the
green smock. Eventually even he will disappear from the faceless canyons
of our sleek supermarkets.
But the writer finds a ray of hope in the conclusion of his editorial.
Skilfully designed packages can strike an emotional chord in the
consumer, can create strong brand preferences even in the absence of
product differences. Supermarkets can give the appearance of being a
friendly, “human” place to shop even if the only humans visible are the
customers.
To make more complete the rout of conventional merchandising by the
computer-oriented system is the plan to automate even the trading stamp.
American Premium Systems, Inc., a Texas firm, is developing a plan in
which the customer receives a coded plastic card instead of a stamp
book. When he makes a purchase, a card is punched with the number of
credits he has earned. By means of a centralized computer, an IBM 1401
in this instance, records are kept continuously, and when the customer
has accrued 1,500 points he receives a premium automatically. The
obvious advantage here is to the customer, who is spared the messy task
of licking thousands of evil-tasting multicolored stamps, and the danger
of losing the book before redemption. But the storekeeper profits too.
He does not risk the loss or theft of stamps, nor does he buy stamps for
people who are not going to save them. The complete system will call for
an IBM 7074 and represents an outlay of about $3 million to service some
6 million customer accounts.
Before leaving the area of merchandising, it might be well to mention
inventory management in general and the effect of the computer upon it.
Applying what is known as “conceptual order analysis,” one marketer who
is using computers in his business talks of “warehousing without bricks
or mortar.” With a confidence born of actual testing, his firm expects
one day to have _no_ inventory except that on his production lines or in
transit to a customer. This revolutionary idea is based on practically
instantaneous inventorying, production ordering, and delivery
scheduling. While the warehouse without bricks or mortar is not yet a
fact, research discloses many manufacturers who have already cut their
standing inventories, from small amounts to as much as 50 per cent,
while maintaining customer service levels. This was done using what by
now are “standard” electronic information-handling methods. The
implication here is of the computer not merely as a data-handler, but as
a business organizer and planner as well.
_Electronic Ticker Tape_
The stock market lends itself to the use of high-speed data-processing,
even though a Wall Street man achieved notoriety some time back as the
first embezzler to use computer techniques. Admittedly it is harder to
track down the hand in the till when it pushes buttons and leaves no
telltale fingerprints or handwriting, but computerization continues
despite this possible drawback. The same firm has added digital
computers to one of its offices for faster service. The American Stock
Exchange installed $3 million worth of new processing equipment to
provide instantaneous automatic reports on open, high, low, close, bid,
asked, and volume-to-the-moment figures.
[Illustration:
_International Business Machines Corp._
On the floor of the New York Stock Exchange, representatives of
Thomson & McKinnon and IBM discuss a model of the computing system
which will speed transactions from the offices of the brokerage
houses in 41 cities to the New York and American stock exchanges.
]
The stock market’s need for the computer lies in the usual two factors:
tremendous paperwork and increasing pressure for speed. Trading of stock
amounts to about three-fourths of a billion shares in a year, and
occasionally 3 million shares a day change hands. A major brokerage
house has confirmations to handle on thousands of trades, dividends to
credit to nearly half a million active accounts, and security position
and cash balances to compute for each customer. The increasing amount of
business, plus the demand for more speed and accuracy, make the computer
the only solution.
Simply reporting the results of the day’s marketing in the newspapers is
a monumental task. The Associated Press is installing a system based on
an IBM 1620 computer, in which ticker information will also be given in
the computer for sorting, comparison, tabulation, and storage. At the
correct time, the machine will print out the format for publication in
the press at the rate of 4,500 words a minute. With a memory of 20
million characters and a capacity for 600,000 logical decisions each
minute, the computer keeps up with stock information practically as fast
as it is received, and even a late ticker will not mean a missed
newspaper deadline. Associated Press expects to be able to transmit the
stock-market results to its papers within fifteen seconds after the
ticker closes. Not just in the United States but in Japan as well, the
computer is invading the stock market. The abacus is out, and now the
exchange in Tokyo is using an advanced UNIVAC solid-state computer to
process transactions.
_Versatile Executive_
It is this high-volume capacity, speed, and accuracy that makes the
computer a welcome new employee in most business operations. An example
is the Johnson’s Wax system linking its facilities for rapid management
reaction to changing conditions. Headquarters is linked to twenty three
warehouses and sales offices, and today’s work is based on yesterday’s
inventory instead of last month’s.
Computers schedule hotel reservations, and handle accounts payable and
receivable for the hotel industry. Auto-parking, now a $500 million a
year business, leans ever more heavily on computers for ticket-issuing,
car-counting, traffic direction, charge-figuring, and collection. The
freeway too has its computers, though there have been minor setbacks
like that on the New Jersey Turnpike where an automatic toll-card
dispenser was mistaken by slow-thinking people for a collector and its
working was jammed with coins and battered by abuse when no change was
forthcoming! Man will take some educating as the machine finds wider
employment.
The computer has been seen in the publishing business primarily as a
tool for searching lists and printing addresses. Now it is beginning to
take over more important duties such as typesetting. The new daily
_Arizona Journal_ is the first newspaper to make use of this technique.
From use in other businesses, the computer has grown to fostering a
business of its own. An example is in the production of payroll checks
by specialty firms, and safeguarding against bad checks with such
services as Telecredit, a computer-run system that spots bad checks upon
interrogation from its member stores.
In Waterbury, Connecticut, a computer helps home-buyers and realtors by
listing all available homes in the area. Three reports are produced: a
total listing, a listing by style, and a listing by price. Bell
Telephone in New York uses a computer system to deliver its 9 million
directories to subscribers in the city and suburbs. The rapid system
permits changing of delivery orders even while the books are at the
printers. A computer method of making sausage recipes is now available
to all packers. Remington Rand developed this application at its UNIVAC
Center on the campus of Southern Methodist University.
_Communication_
Communication is a vital part of all business, and the digital computer
finds another application here. A technique known as adaptive control
was recently presented at a symposium by scientists from IBM.
Special-purpose computers integrated into communication networks would
make possible the “time-sharing” of channels and cut costs per message
sharply. Another digital computer, an inexpensive “decision threshold”
device, is being pushed as a means of reducing errors in the
transmission of messages. These logical uses of the computer were
presaged in the 30’s when Shannon wrote his pioneering circuit-logic
paper, and in the late 40’s with his work on information theory.
TV Station KNXT in Los Angeles uses a digital computer to control the
complicated switching necessary during station breaks. This electronic
juggling of live shows, commercials, and network programming is called
TASCON, for Television Automatic Sequence Control. It can be programmed
hours before use, and then needs only the push of the button instead of
frantic manual switching that occasionally throws the human operator.
Not just the mechanics of transmitting the commercials on TV, but even
the billing and other accounting functions are a major computer project.
To handle close to $700 million a year in payments, an IBM 7090 computer
is being used. There are more than 5,000 TV stations in the country,
with billings dependent on a complicated structure of 180 different
rates. As a result, there is an undesirable lag in payment. Putting
records on tape and feeding them to the computer is expected to clear up
the trouble and provide a bonus in the form of advising stations on
discount rates for programming on a current basis.
The computer isn’t content with skirting the edges of the advertising
game, of course. A heated battle is going on now in this industry over
the growing use of the computer to plan campaigns and actually evaluate
ads, a task held by some to be the exclusive domain of the human adman
with his high creative ability. The Industrial Advertising Research
Institute triggered the fight by using a computer to study 1,130
advertisements appearing in the industrial journal _Machine Design_ and
select the best black-and-white and the best color ads.
While diehards snorted ridicule, the computer made its choices. IARI
then compared its selections with those made by two of the largest and
most experienced rating firms. On color ads, the computer scored 66 per
cent, rating two out of three ads practically the same as the human
selectors. With black-and-white it did even better, scoring 71 per cent.
Its detractors, assuming of course that the human raters were
infallible, gloated that the computer was a flop, that it could pick
only the average ads accurately and fell down on excellent and poor
ones.
The agency of Batten, Barton, Durstine & Osborn thought otherwise and is
using the computer in its advertising. As a tool for media selection and
scheduling, BBDO likened the computer to a power shovel instead of a
spade. The new method makes it possible to compare thousands of
combinations a second. Another firm, the Simulmatics Corporation, agrees
with BBDO. The computer, it says, will permit advertising campaigns far
more effective than those waged at present, since the most efficient
campaign may be too complex to be devised without artificial aid. The
key to the Simulmatics system is the “media mix model” in which a
hypothetical campaign can be tried out in advance in the computer.
Young & Rubicam differs hotly with computer advocates. A spokesman
leveled a low blow at the computer, suggesting that it will have
difficulties forming motivational research based on Freudian analyses!
The firm says no way has yet been found to transpose “Viennese
fatuities” into Arabic numerals. It deplores the turning of a
media-planner into a rubber stamp as media selection becomes an
automatic reiteration which “those with an abacus could pipe to a stale
and sterile tune.” The battle rages, but the outcome seems to be a
foregone conclusion. Either the computer will sway Madison Avenue from
Viennese fatuities, or it will learn about sex.
_Industry_
We have discussed the computer in business; perhaps it would be well to
stress that this includes industry as well. The computer not only
functions in the bank and brokerage house, insurance office, and
supermart, but also is found increasingly in jobs with oil refineries,
chemical plants, surveying teams, knitting mills (a likely application
when we remember Jacquard), and steel mills. As automation takes over
factories, it brings the computer with it to plan and operate the new
production methods. Transportation too is making good use of the
computer. Freight-handling in the United States, Canada, England, and
the U.S.S.R. is using machine techniques.
Our high-speed airplanes are already more aimed than flown, and less and
less seen and seen from. Mach-3 aircraft are on the drawing boards now,
aircraft that will fly at three times the speed of sound or about 2,000
miles per hour. An airliner taking off from London must already be
cleared to land in New York. So authorities on both sides of the ocean
are concerned. In England, giant computers like the Ferranti Apollo and
others are on order. There is talk in that country too of integrating
military and commercial aviation into one traffic control system. In the
next ten years the sky population may double again, in addition to
flying faster, further crowding the airlanes and particularly the space
adjacent to airports. The only solution to this aerial traffic jam lies
in the electronic computer.
Not as spectacular as air traffic control, but important nonetheless, is
the job of planning the route an airliner will fly. United Air Lines
uses a Bendix G-15 to select flight plans for its big DC-8’s. In a
manner similar to the NANWEP course-planning described for surface
vessels, the computer examines a number of possible routes for the big
transports, considering distance flown, wind, temperature, weight and
fuel requirements, and time schedules.
This flight-planning was originally done by manual computation and
required an hour to work out details for only one possible flight plan.
The computer method was demanded because of the increased speed of the
big jets and their sensitivities to weather conditions en route. The
computer examines a number of tentative plans in minutes and selects the
one which will make the optimum use of winds aloft, temperatures,
weather, and so on. If weather changes en route require it, the pilot
can call the planning center no matter where he is and request that the
computer work out a new flight plan.
Once the optimum flight plan has been figured, an electronic computer in
the aircraft itself may one day assure that the desired flight path is
actually flown. The ASN-24 computer, developed by Librascope,
Incorporated, and the Air Force, weighs only thirty-one pounds, yet
performs more than 20 million computation steps in a six-hour flight.
The electronic navigator, with information from Doppler equipment and
other navigation aids, evaluates which is the best “fix,” weighing for
example the relative accuracies of a Loran fix and a dead-reckoning fix.
The computer even shoots celestial fixes and plots the results!
Obviously faster than its human monitor, the electronic navigation
computer solves navigation problems with an error as small as one part
in 32 million.
A broader use of the computer in aircraft is proposed by the Convair
Division of General Dynamics. Because today’s airplane is far more
complicated than those ten years ago, and those ten years hence will
extend this trend, the firm feels that checkout of the aircraft will
require electronic computers. While adding about 3 per cent to the total
cost of the plane, such equipment could perform a variety of functions
including maintenance analysis and would add an hour a day to the
profit-making flight time.
There would be no profit for the airlines with the best flight planning
and in-flight control in the world if there were no passengers aboard;
the “traffic problem” extends from the sky to the ticket counter. For
this reason most airlines have already recruited the computer for
another important job—that of ticket reservation clerk. An example,
recently installed by United Airlines, is the “Instamatic,” a giant,
far-flung system weighing 150 tons and requiring 12,000 miles of
circuits. Instamatic cost $16 million and can handle 540,000
reservations in a single day. So complex is the computer system that it
requires 40,000 printed-circuit boards, 500,000 transistors, and
2,000,000 ferrite memory cores. But it gets the job done, and any one of
3,000 agents all over the country can confirm space on any flight,
anytime, within seconds!
There are other systems used by competing lines, systems called Sabre,
Teleflite, and so on. But Remington Rand UNIVAC has proposed an over-all
system that will make any of them look like a child’s do-it-yourself
walkie-talkie. The UNIVAC plan is for a single interline reservation
system, used by all twenty-four domestic airlines. Called AID, for
Airline Interline Development, the new scheme would cost the airlines
only 12 cents per message, and could be tied in with foreign carriers
for international bookings.
[Illustration:
_Remington Rand UNIVAC_
Console for airlines reservation system permits pushbutton booking of
space.
]
Present methods of reservations among airlines require from less than a
minute for easy bookings to several hours for the tough ones. The AID
system uses a dial phone, with direct lines to a central computer in
Chicago. The response to the dialed request is an immediate voice
answer. If space is available, the computer also stores all the needed
information for the reservation and transmits a teletype message to the
boarding point of the proper airline.
To go back another step, the aircraft on which the computer confirms
seat space was most likely built with the help of another computer. A
typical production system is that used by Lockheed in its Marietta,
Georgia, plant. There an IBM 305 RAMAC computer keeps track of 45,000
parts orders continuously. The result is better and faster operation,
and a saving to Lockheed of $3,500 a month. In California, Lockheed is
using a computerized data acquisition system called EDGE, for Electronic
Data Gathering Equipment, that feeds production information directly
into a computer memory for analysis and action orders. Remote reporting
stations can be operated by production-line workers and will relay
production data to the central computer. Although the Lockheed EDGE
system will cost more than $600,000 a year, officials feel that it will
save the company three times that at the outset, and perhaps more when
wider use is made of its potential. An interesting feature is the tying
together of Lockheed’s widely separated plants at Sunnyvale, Palmdale,
and Van Nuys, California.
North American Aviation links its complex of plants in the Los Angeles
area by microwave, even bouncing beams of data from reflectors atop Oat
Mountain where there is no direct line-of-sight path between the
different locations. Douglas Aircraft maintains a data link between
California and Charlotte, North Carolina, to permit use of computers
over a distance of 2,400 miles.
The airlines are also using computer inventory systems to control their
stock of spare parts. Material costs represent 60 per cent of airline
revenue and are rising; some larger carriers have investments of as much
as $75 million in spare parts. It takes the computer to control the flow
of repairable parts through the shop efficiently, schedule the removal
of those requiring periodic checks, spot high-use items, and so on.
As an example of the complexity a large airline faces in its
maintenance, TWA stocks 8,000 different replaceable items. When such
parts are needed, they must be on hand _where_ they are needed, but
overstocking can lead to financial ruin. To match increasing
competition, airlines find it necessary to resort to the laws of
probability and other sophisticated statistical techniques in stocking
parts. Fed such equations, the computer can match ten to twelve
man-years of work in three hours, and mean the difference between an
oversupply of parts in New York with outages in Los Angeles, and
properly balanced stocks.
The ramifications of the computer in the airplane industry are
far-reaching. For example, Boeing has recorded the lessons it learned on
its Bomarc missile program in computers so that it can retain and apply
them on its Minuteman and Dyna-Soar programs. The computer will thus
keep track of men and their projects and warn them of previous mistakes.
Modern management techniques such as PERT and PEP, favored by the
government, make good use of the computer.
The McDonnell Aircraft Corporation is primarily a builder of planes and
space vehicles, but it has found itself in the computer business too as
a data-processing center. Installing computers for its own engineering
and business uses, McDonnell soon began selling computer time in off
hours to banks and other businesses. It now has a computer valuation of
about $10 million and operates around the clock.
_The Designing Computer_
It seems strange that the computer was a bookkeeper and clerk for years
before anyone seriously considered that it might be an engineer as well,
yet the men who themselves designed the computer were loath to use it in
their other work. Part of this resistance stems from the high premium
placed on the creativity of research and design work. The engineer uses
science in his work, to be sure, but he professes to use it as an
artist, or with the personal touch of, say, a brewmaster. There is
another possible reason for the lag in computer use by the men who
should appreciate its ability the most. In the early days of the
computer, it clacked away all week figuring payrolls, and perhaps
writing checks. That’s what it was ordered for, and that’s where the
money was—in the businessman’s application of the computer.
To be sure, the military was using the computer for other purposes, but
the average scientist or engineer not employed by Uncle Sam had access
to an electronic computer only on Sunday, if at all, when the big
machine had done its primary work and could take a breathing spell. To
further compound excuses for the foot-dragging engineer, there was a
difference in needs in payroll computation and scientific mathematical
calculation. Commercial computers are designed for a high rate of input
and output, with a relatively slow arithmetic going on inside. The
engineer, on the other hand, might need only several minutes of computer
time, but it could take him a couple of days to put the problem into a
form the machine could digest.
Slowly, however, enough engineers fought the battle of translation and
forewent Sunday pursuits like church, picnics, and golf to learn
haltingly how to use the electronic monster. It took courage, in
addition to sacrifice, because the computer was pooh-poohed by some
sharp scientific brains as an _idiot savant_ at best. Behind the inertia
there could have been a touch of concern too—concern that the machine
just might not be as stupid as everybody kept saying it was.
Heavy industry made use of the machines. The steel plants, petroleum and
chemical plants, and even the designers of highways were among the early
users of computer techniques. There was of course good reason for this
phenomenon. Faced with problems involving many variables and requiring
statistical and probabilistic approaches, these people could make the
best use of machines designed for repetitive computations. The refiner
with a new plant in mind could simulate it in the computer and get an
idea of how, or if, it would work before building his pilot plant. Today
the notion of dispensing with even the pilot plant is getting serious
consideration.
One program used by a gasoline producer analyzed thirty-seven variables
and thirty-seven restrictions, a matrix that could never be evaluated by
ordinary methods. Textile fiber research is another example, with thread
tests run on dozens of samples and averaged statistically for valid
conclusions. B. F. Goodrich put the computer to work in its laboratories
at such tasks as multiple-regression studies of past production of
processes like polymerization and the running of a batch of new material
on the computer.