Part 13

In Paris, a retail grocer made merchandising history by displaying more than 3,000 different items in a floor space of only 230 square feet. The trick is in a punched-card system that automatically registers and prices any item the buyer selects. At the check stand the card is run through a computer which figures the bill and orders the groceries, which are automatically selected from the warehouse and delivered in a cart to the purchaser at the door!

A similar automatic supermart system is being pushed by Solartron—John Brown, Ltd., in England. The computerized scheme works much like the French one. The shopper inserts a card in the slot beside the item she wants and a punch marks it in alpha-numeric code for item and price. If more than one item is desired the card is reinserted. With each punch, the machine slices off a bit of the edge of the card so that it slides deeper into the slot next time. At the cashier’s station, the card is placed in a computer. Fifteen seconds after she has paid for them, the shopper is delivered her groceries. Besides the saving in time for the shopper, there is a saving for the grocer in floor space and also the elimination of the loss through shoplifting. About the only thing that might seem to be against the new system is the psychology of the large display, which motivation researchers tell us stimulates volume buying.

With this factor in mind, an official of Thompson Ramo Wooldridge, Inc., has suggested retaining the large stocks on display, but coding them with fluorescent paint of certain wavelengths to correspond to price. The shopper fills her cart even as in the conventional store, but at the mechanized checkstand an electronic eye on the computer scans and prices the items while they are being automatically packaged. The doubting Thomases say of this system that the packager will probably put the eggs on the bottom, along with the tomatoes and ice cream!

The advertising journal _Commercial Art_ comments sadly on this accepted fact of automation in the market place:

The checkout clerk is doomed, that last survivor of human warmth in most 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.