The mystery of lost inventory – Inventory Discrepancies

In the last session we were talking about inventory control policies and different types of stocks. Talking about inventory I remembered a problem that I have observed at both companies I have done an internship at. Both times I have worked in the Accounting office and sooner or later we noticed that the inventory in our books and the inventory in our warehouse did not match up. One time this occurred because an employee just had not billed our supplies. The other time inventory had been thrown away which was not recorded in the books. Therefore I figured that this might be a quite common problem that occurs in many companies and is therefore an interesting topic for this blog.

So let’s see: What are the most common reasons for inventory discrepancies?

  1. Stock loss due to damage
  2. Stock loss due to theft
  3. Stock is in the incorrect location
  4. Human error during stocktaking process
  5. Stock is labelled with an incorrect identification
  6. Stock is mistaken for a similar product
  7. Inbound stock was not recorded accurately
  8. Faulty inventory management software or stocktaking equipment
  9. Incorrect unit of measurement was counted

The next question would be: How do you find inventory discrepancies and how can you resolve them? At least once a year every company should do a physical count of all their stock. When doing this all discrepancies should be revealed and afterwards the reconciliation (analysis, explanation, accountability) starts. If inventory discrepancies are found the following steps can be taken to resolve the problem:

  • Re-count the stock in question. To make sure it wasn’t only a simple mistake during the counting process this should be the first step if numbers aren’t matching up.
  • Check if the stock exists in another location. Double checking if the stock can be found in another part of the storeroom, another storeroom or even still on the truck of the supplier is especially important if a large number of items is missing.
  • Make sure the correct unit of measurement was used. Even though all people participating in the count should be trained on the procedure still someone may have counted in liters or pounds, instead of boxes or individual units.
  • Verify that the SKU or product identification number is correct. To make sure products are not labelled with the incorrect SKU check that the description in your inventory management system actually matches the product you’re counting.
  • Ensure the product has not been mistaken for a similar product. This might happen when the counting staff does not realize that a variation in size or color is technically a different product with a different identification.
  • Scan your inventory records for errors. A discrepancy may come down to a simple mathematical error or typo.
  • Confirm that there is no missing paperwork. Search for any missing paperwork, which may not have been entered into your system yet to make sure that sales which have been unaccounted are included.
  • Investigate whether employees or customers have been stealing stock. This is an unpleasant steps but necessary to find a logical reason for loss of stock. Maybe tighter security measures, such as CCTV cameras or security tags on products should be considered.
  • Speak to your warehouse/storeroom managers. Talk to your managers to see if there was anything unusual during the stocktaking process. If so, some staff may need retraining or the entire procedure needs to be revised.

Nowadays many companies use cycle counting for a more effective inventory management. Cycle counting means verifying the on-hand quantity of a specific number of products on a day to day basis. Nevertheless some products might be counted more frequently than others (for example an ABC analysis is conducted to determine products with a high value or turnover rate which are therefore counted more frequently). Compared to a yearly physical inventory, cycle counting is supposed to increase inventory data accuracy and improve customer service levels. The schedules for cycle counting may vary from business to business. They are determined by taking into consideration the inventory value, flow through rate, warehouse activity levels and staff availability.

As I already wrote a lot you might want to get more information about cycle counting by watching the following videos.

https://www.youtube.com/watch?v=He2zvhLANl8

Sources:

https://www.prognostore.com/blog/resolve-stocktake-discrepancies

http://effectiveinventory.com/reconciling-cycle-counts/

http://www.inventeksoftware.com/downloads/Articles/how_to_attack_discrepancies_in_inventory.pdf

Seemoto – Cold Chain Solution

Meshworks Wireless, owner of Seemoto branded solution, and imec Messtechnik announced that they have started a co-operation which aims to provide an end-to-end solution for cold chain monitoring to the Pharma, Food and Transportation industries in Germany, Austria and Switzerland.

cold-chain-4-638

Complete solution for easy and automated tracking of temperatures and locations. Cold Chainers now provides this end-to-end solution for international cold chain monitoring to the Pharma, Food and Transportation industries. Meshworks Wireless (owner of the Seemoto branded solution) is a Finnish market leading vendor of solutions for monitoring assets location, measurements, conditions and environments. Seemoto provides on-line access to real-time and historical data of assets. Seemoto’s solution entails a combination of novel wireless sensors, polymorphic data, internet services, flexible reporting and information sharing. The company is currently expanding its footprint Worldwide.

Cold Chainers is an international oriented company specialized in monitoring and controlling the Cold Chain. The company, which is headquartered in Geldermalsen (The Netherlands), noticed an increased demand for monitoring temperature in the Pharma, Food and Transport industries. By working with Seemoto, Cold Chainers is able to offer a new, high end and flexible cold chain monitoring solution to its customers in these fields. Seemoto provides solutions for end-to-end Health Care cold chain monitoring. It includes comprehensive tools for medical tracking and product safety management creating automated processes with wireless multitasking sensors and cloud based web services. Seemoto enables monitoring and tracking of moving and static assets, like fridges, cold storages, warehouses, transportation boxes, trailers, and even over sea and air transported assets. It is extremely easy to install and scalable from the small businesses to the enterprise ones. Seemoto functionalities have been developed together with pharmaceutical wholesalers, logistical companies, hospitals and other cold chain participants to meet the needs of cold chain monitoring.

  • Seemoto – Reduce risks of non-compliance and product loss in your supply chain.
  • Seemoto solutions are developed for demanding food and pharma cold chain applications.
  • Seemoto provides dynamic and scalable solution for its customers and it is used in five continents by hundreds of companies operating in food, pharma and life science industries.

The future of container ships!?

As we have talked in class, a mayor role in global transport plays the freight container. These normed containers set a new standard and this was the basis for its worldwide success. Nowadays, about 70% of general cargo freight is shipped with containers. And container ships are getting bigger and bigger. This evolution lead to a huge decrease in transportation costs. However, one big problem is still unsolved:

Nearly all container ships use heavy oil for their engines, a fuel that is made out of the left overs of the gasoline production, and extremely hazardous for the environment. There are about 50.000 container ships transporting goods around the world. The biggest 15 of them emit the same amount of exhaust gases as 750 million cars.

In this video, Jorne Langelaan, a Dutch ship owner, explains the problems in detail:

And he not only describes the problem, he also comes up with an innovative solution: The ecoliner. That container ship with a hybrid, it can either be powered by a conventional ship engine using heavy oil or Diesel, or navigate with the wind.

The technique for the sails that are going to be used was already developed in the 1960’s and it is called Dyna-Rigg, however it took a long time to implement it in modern ships and bring the proof that it works. Internet-billionair Tom Perkins ordered an 88m long yacht called Maltese Falcon, its launch was in 2006. Sails can be spread within 7 minutes and they are steered electronically, which allows to include on-time weather forecasts into the navigation plan. That allows to use windpower in a quite efficient way.

Maltese Falcon
Maltese Falcon

This technique shall now be transfered to the ecoliner, which is currently in a prototype stadium. Once it has been built, the ship will be 130m long and have a cargo capacity of around 50.000 tonns. For comparison: the biggest container ship built is 395m long and carries up to 200.000 tonns of freight. So the ecoliner will not be more than an average size container ship, but the architect guarantees the same speed as motor ships and that the ship can be navigated by a comparable crew, so the overall performance will be equal to motor ships.

The great benefit the ecoliner provides is the by far better ecologic footprint. Compared to an equal size motor ship, the ecoliner reduces the amount of CO2 emissions by 30 to 40.000 tonns each year. This is equal to the emissions of more than 20.000 cars. Depending on the weather emissions can be reduced between 50% and 90%.

Though the advantages are clear, a quick realisation of this concept is uncertain due to the fact, that there is currently a big over-capacity of container ships. Besides that a lot of shipping companies are facing losses due to the economic crisis and therefore have no money left for such investments. Regarding the fact that oil prices are rather low, the advantages of the ecoliner becomes smaller. But in order to be ready for the future of container transport, shipping companies have to think about alternatives, and the ecoliner could be one.

BvFcMvFCEAEcT6o

 

Further information:

  1. http://fairtransport.eu/shipbuilding/ecoliner/
  2. https://reset.org/blog/wind-und-segel-greenshipping-dem-ecoliner-12232013
  3. https://en.wikipedia.org/wiki/The_Maltese_Falcon_%28yacht%29
  4. http://www.spiegel.de/auto/aktuell/volkswagen-will-umweltprobleme-mit-erstem-segelfrachter-der-welt-umschiffen-a-1088281.html

Stock Material Management

The most common problem in stock material is the order and clean and the cause is a work and cultural behavior which most of the people have. To solve this problema is necesary to keep a sustained practice to forge a habit in the persons who do not have the habit. For this purpose, methodologies have been developed to bring this attitude based on principles, even to be part of the values and organizational culture.

The 5`s methodology is the most common practice to implement order and clean habits to the workers and is use to keep the order in the work place and detect posible damage in the áreas allowing the participation of all (individual / group level), improving the working environment, safety of people and equipment and productivity. This tool is one of the more common in lean manufacture by the elimination of wastes and unnecessary objects in the work station.

The meaning of 5`s is form japanese languge which are Seiri (Sort), Seiton (Set in order), Seiso (Shine), Seiketsu (Standardize), Shitsuke (sustain). How is the implementation process it can see in the following video.

 

This methodology have been develop following Deming`s cicle (Plan, Do, Check and Act) and is usefull as a tool in quality management for the reason of it could be perfectly adapt to ISO 9001 standards, specifically in the require 7.1.2 of ISO 9001:2015.

The achievements of the successful use and implementation of this tool reach the worker and the difference áreas of the Company to have

  • Fewer accidents.
  • Fewer mistakes in our work.
  • Fewer useless movements and transfers.
  • More space.
  • Pride of place to work.
  • Better image to customers.
  • Greater cooperation and teamwork.
  • Greater commitment and responsibility in the tasks assigned.

 

 

PRIVALIA- LOGISTICS AND MORE

My post of this week is about Privalia – the biggest private club that sales online offering top brand fashion,home, sports & electronics . The company currently has 28 million customers worldwide and is a leader in each of which operates as Privalia (Spain, Italy, Brazil and Mexico), making it an international benchmark for the sector markets.

The leading online fashion outlet , born in Barcelona in 2006 from the hand of Lucas Carne and Jose Manuel Villanueva, offering daily sales of leading brands at exceptional prices and exclusively for it´s customers .

The data provided by ComScore, the main platform for measuring web traffic, the fashion outlet online market place Privalia as a leader in traffic in Spain in 2012, 2013 and 2014. The company was recognized as the Best Website Shopping in Spain by users in the contest Website of the Year in editions 2012 and 2013, Best Webshop Mobile in the Ecommerce Awards 2014 Website most popular shopping on the Website of the Year Edition 2015.

Privalia stands out for its efficient strategy innovation, with pioneering initiatives in social networks and their commitment to sales through the mobile channel. One of the most striking examples is the Fan Shop, a concept created exclusively for the site Privalia in Facebook, which, unlike other existing applications in the social network.

This company it´s utilizing the INVERS LOGISTIC, called also MOLDSTOCK or MOLDEVOLUTION.

This methid solves any problem or situation related to the goods rejected at the point of sale or its final destination. This new division deals with the collection, recycling, treatment and development of the goods, making it available to the manufacturer for further marketing . Moldstock bet for reverse logistics as a service to outsource highlights the importance of taking this type of process in all companies, but especially those dedicated to e- commerce

 

In today’s marketplace, many retailers treat merchandise returns as individual, disjointed transactions. “The challenge for retailers and vendors is to process returns at a proficiency level that allows quick, efficient and cost-effective collection and return of merchandise. Customer requirements facilitate demand for a high standard of service that includes accuracy and timeliness. It’s the logistic company’s responsibility to shorten the link from return origination to the time of resell.”

By following returns management best practices, retailers can achieve a returns process that addresses both the operational and customer retention issues associated with merchandise returns. Further, because of the connection between reverse logistics and customer retention, it has become a key component within Service Lifecycle Management (SLM), a bussines strategy  aimed at retaining customers by bundling even more coordination of a company’s services data together to achieve greater efficiency in its operations.

ID Logistics gestionará la logística de Privalia                                           Privalia-centro-logistico

Here I found some interesting articles about the logistic of Privalia, they are in Spanish 🙂

http://www.modaes.es/empresa/20130122/privalia-externaliza-su-logistica-y-contrata-a-id-logistics-para-gestionar-su-centro-de-barcelona.html

http://www.cadenadesuministro.es/noticias/el-operador-id-logistics-gestionara-para-privalia-el-centro-logistico-de-barcelona/

https://www.alimarket.es/noticia/115028/id-logistics-gestionara-la-logistica-de-privalia

 

Also a nice video about  Privalia´s logistic:

The worldwide tour of components for manufacturing a IPhone

We all know that the majority of our technology gadgets are produced in China, but the supply and manufacturing process isn’t quite as simple as it might appear.

Apple more than most is a master at using the supply chain to its advantage, sourcing suppliers that can turn out parts in the most cost effective way whilst still adhering to the company’s quality requirements.

It estimates that an iPhone would cost $4 more if it was built in the US, but crucially for Apple it would also mean the company had to pay a lot more tax on its profits (35 percent as opposed to two percent).

Imagen1

There are many small components that do not go directly from the supplier to the final assembly, it must first pass through many previous phases where the equipment forming part weapon. A clear example are the pieces of fingerprint sensor of the latest iPhone. For this part of the device is ready to be assembled, there are parts that are traveling more than 19,000 kilometers.

An example of this is the iPhone Home button, as this gives a trip around the world that you could not imagine. It all starts in the Chinese province of Hunan, specifically in the city of Changsha. There is the factory of the company Lens Technology, which is responsible for making the part that touches the user when you activate your terminal. Your employees are responsible for converting the sapphire crystal (as strong as diamond) on the cover of the button.

Then they reach to  that factory the metal rings that cover this element. Production of these is on LY Technology company, which is based in Jiangsu Province, located 885 kilometers over Changsha. When both parties have already been combined, together they must travel 1,600 kilometers to the premises of the firm NXP, where they join a controller chip come from a factory in Shanghai (which has had to travel another 650 kilometers to get there ) and the Touch ID sensor, which is responsible for fingerprint recognition. This component is not developed in China, but comes from the factory that NXP has in Europe. Therefore, it has had to make a trip of over 8,000 kilometers to meet with their peers.

It does not end there. To these elements be joined the button itself, whose production will be commissioned to a subsidiary of the Japanese firm Panasonic located more than 2,400 kilometers. This piece already includes a component known as “booster” that leads behind a journey of 965 kilometers from the American company Molex will package at its factory in Shanghai. All these iPhone parts don’t joined eache other  bind to any of the above factories. It’s Mektec, a Taiwanese company, who is in charge of that and also puts its bit by incorporating a flexible circuit handles.

The result has to travel by boat more than 2,400 kilometers to a call at a laser welding plant located in Japan, owned by the firm Sharp, who takes charge of sealing the Touch ID module. Then, fully functional and ready to be incorporated into the assembly of the iPhone, the component must travel the 2,092 kilometers that separate it from the Foxconn factory located in the Chinese city of Zhengzhou. That is where some of the 128,439 employees of Apple supplier controversial finish assembling the device.

When he joined the other parts of the phone, the iPhone Home button and takes her back more than 19,300 kilometers. But there has not finished everything. Until you reach the end users, we still expect the occasional trip by land, sea and air bound for stores distributors and from there to the pockets of the fanboys.

 

ACQUISITION FM LOGISTIC AND SPEAR LOGISTICS

21 March 2016 RUSSIA

True to its “Ambition 2022” strategic plan, FM Logistic cooperates with major players of logistics markets in emerging countries. A real business launchpad, India offers FM Logistic extraordinary opportunity for its development in Asia. In 2015, the Indian economy experienced a growth rate of over 7%. By 2030, it will be the biggest consumer market worldwide and the third largest economy in the world. Furthermore, the Indian logistics market is at the dawn of an unprecedented move to reorganization and consolidation led by the new tax harmonization law for products and services (GST) and by the swift development of e-commerce.

FM Logistic and Spear Logistics, which is ranked among the TOP 5 Indian providers, will operate in the strategic sectors of e-commerce, telecommunications, retail, consumer goods, industry and automotive.

Together, the companies are going to prepare the groundwork in order to implement a logistics plan in line with tax harmonization in India. This project will lead to the creation of regional distribution centers that FM Logistic and Spear Logistics will manage from multi-client platforms, which will be set up near the main Indian cities.

“This alliance of skills enables us to offer our customers a global and reliable service – from warehousing to distribution and transport, covering all distribution channels, including e-commerce, for industrials and retailers, and for all sectors”, says Gautam Dembla, Managing Director of Spear Logistics.

“With the acquisition of Spear Logistics we are integrating a company of great logistics professionals”, affirms Jean-Christophe Machet, CEO of FM Logistic. “These new teams constitute an extraordinary asset in meeting the requirements of our customers in a major FMCG market”.

In addition to its in-depth knowledge of the diversity and complexity of the Indian market, Spear Logistics brings with it nationwide coverage and a customer base comprised of major national and multinational companies. FM Logistic will be bringing its international network into the partnership, along with its reputation, its cutting-edge working tools and all the latest technologies in logistics innovation.

https://www.youtube.com/watch?v=a5tQZ4TCDSI

https://www.youtube.com/watch?v=hUvpx4IDAwM

 

About Spear Logistics

Spear Logistics was created in 2001 by private investment funds. It is one of the leaders in Indian logistics with a revenue of 18 million euros (by the end of financial year March 2016). It now boasts a surface area of 270 000 square metres and manages 75 warehouses in 23 Indian cities in 12 states: Mumbai, New Delhi, Pune, Hyderabad, Ahmedabad, Bangalore, Chennai, Nagpur, Kolkata and others. As a specialist in contract logistics, the company is ranked among the top 5 providers in the Indian market with a wide range of services: warehousing, distribution, transport management and high value-added services such as co-packing for e-commerce, the automotive sector, industry and telecommunications.

Its customer portfolio includes major Indian and international market leaders : Atlas Copco, Siemens, Cummins, Snapdeal, Honeywell, Indus Towers, Crompton Greaves, Federal Mogul, Castrol, Laboratoires de Dr Reddy, Owens Corning, among others. With several awards under its belt, Spear Logistics is recognised for providing high quality services and for creating added-value for its customers. The company’s vision is to be the most reliable and reactive logistics service provider.

There are 1,600 employees at the company. Thanks to the competency and skills of its expert teams, Spear became a key player, awarded for its operational excellence (three prizes in 2015 including the company of the year award attributed by the Indian Institute of Materials Management).

https://www.youtube.com/watch?v=SF9mzD3xKoc

About FM Logistics

FM Logistic is a leader of the Russian logistics market. Since 1994, the company is a recognized expert in warehousing, transportation, co-packing and customs operations. The group of companies works on the FMCG and distribution market with a wide range of products, industrial and pharmaceutical goods, perfumes and beauty products.

Moreover, FM Logistic provides complex logistics services to producers and distributors of healthcare and home care products, as well as perishable goods. As of now, FM Logistic in Russia has 8,000 employees.

As of 31 March 2015, the turnover was over 14,7 billion roubles, which is 17% more comparing to the previous year. During that period over 93 new contracts for rendering all kinds of logistics services had been signed.

The company continues to develop and negotiates with new potential partners.

image1

References

  • Retail:Auchan, Atac, X5, Billa, Okey, Leroy Merlin, Decathlon
  • FMCG :Mars, Mondelez, Nestlé, Unilever, Colgate-Palmolive, GSK, Henkel
  • Industry & Electronics :Bosch, Phillips, Legrand, Brother
  • Perfumes & Beauty products : L’Oréal, Shiseido, Clarins, LVMH, La Prairie
  • Health :Johnson&Johnson Medical, Medtronic

 

Managing Recalls at Volkswagen

As you all probably know, the Volkswagen group is currently struggling a big crisis due to the so called “Diesel-gate” scandal. There are plenty of articles regarding this topic, so I just want to shortly summarize the main facts: On September 15 in 2015 the US environment authority EPA detected excessively high exhausts in Diesel cars of VW in the United States. Further investigations revealed that a manipulated software was able to detect whether a car is run under normal conditions or tested in a laboratory. In the last case, the engine was regulated in a way that critical values of exhausts were met, while in normal use these values were much higher.

See the following video for technical details:

In the following months the stock price dropped harsh and sales went down. But this is not the only problem Volkswagen now has to solve. Besides big losses in image and trust the company has to develop a plan, how they want to repair all the affected cars. And this is huge logistic challenge.

Let’s have a look at some facts: About 11 million cars worldwide are affected. Sales of these cars are spread among all over the world, as the following table shows

Country Volkswagen Audi Škoda Seat Commercial Vehicals Total
 Germany 1.537.896
(incl. Commercial vehicles)
531.813 286.970 104.197 s. u. VW 2.460.876
United Kingdom 508.276 393.450 131.569 76.733 79.838 1.189.866
France 574.259 189.322 66.572 93.388 24.523 948.064
Italy 385.694 231.729 35.343 39.598 17.348 709.712
Spain 257.479 147.095 37.082 221.783 20.187 683.626
United States 482.000 13.000 495.000
Belgium 197.328 121.712 51.069 23.539 393.648
Austria 180.500 72.500 54.300 31.700 24.400 363.000
Sweden 104.000 57.000 28.000 2.000 33.000 225.000
India 180.000
Netherlands 160.000
Czech Republic 38.000 7.000 101.000 1.800 147.800
Norway 77.580 27.649 19.947 0 21.963 147.139
Polonia 66.870 12.049 58.890 3.694 141.503
Swiss 128.802
South Korea 125.522
Portugal 102.140
(incl. Audi, Škoda)
15.000 117.000
Ireland 47.316 29.169 16.004 5.039 9.224 106.752
Romania 105.000
Canada 100.000
Australia 61.189 16.085 5.148 0 17.256 99.678
Denmark 91.000
Finland 50.000
Slowakia 14.809 3.278 26.000 2.577 46.664
Argentina 42.716
Hungary 40.095
Mexico 32.000
Taiwan 17.744
Brasil 17.057 17.057
Greece 6.362 1.875 0 0 882 9.119
New-Zeeland 4.639 1.600 1.328 0 133 7.700
China 1.950
Cyprus 480 598 103 119 49 1.349
Worldwide 5.000.000 2.100.000 1.200.000 700.000 1.800.000 10.800.000

National authorities urged Volkswagen to recall all affected models to the service centers to repair the cars so that they can guarantee to meet the emission limits under any circumstance. After receiving this request, the company asked for some time in order to be able to develop a solution to fix the problem and to plan a schedule that allows a quick maintenance or repair in the garages.

Volkswagen calculated that the maintenance for each car would take between 30 and 45 minutes. Slight differences may occur between different models. In some cases, cars only need a software update, in other cases the engine has to be modified completely. Once this data was available, the schedule could be planned. Developing this scheduled is a big task, because repairs of the affected cars have to be done alongside the daily business of the garages.

So the scheduling had to be managed in a way that on the one hand, recalls could start as early as possible and quickly, on the other hand there are some capacity constraints in many garages. The overall goal is to plan the recall effectively, so that waiting time for customers is minimized. This is important not only in order to carry out their duty and fulfill the set requirements, but also to put a sign to the public that Volkswagen is treating the subject seriously, which gives the possibility to overcome the crisis and recover trust.

Due to the huge number of manipulated cars the whole recall process will take up to two years, with regional differences. And this date only holds assuming that everything works as expected and that no further problems occur.

Sources:

  1. http://www.handelsblatt.com/unternehmen/industrie/rueckruf-bei-vw-177-000-passats-muessen-zurueck-in-die-werkstatt/13363090.html
  2. https://de.wikipedia.org/wiki/VW-Abgasskandal
  3. http://www.spiegel.de/auto/aktuell/vw-wirft-seine-rueckrufstrategie-ueber-den-haufen-a-1086272.html

 

APPLE, INVENTORY, SUCCESS

Apple is famous for innovation and design. However few people know that the way apple handles inventory is also a factor that led to success. One important fact is that since 2010 till nowadays, Apple has the best supply chain in the world. Classification by Gartner ranks. As you can see in the next picture.

apple. ranking

Tim Cook, the current CEO of Apple believes that when it comes to technology such as Smartphone, tablets and laptops, inventory deprecates very, very quickly, losing 1-2% of value each week  “inventory is fundamentally evil” he says. “You kind of want to manage it like you’re in the dairy business. If it gets past its freshness date, you have a problem.”

Changes that Tim Cook has introduced :

  1. Cut down the number of component suppliers à from 100 to 24
  2. Reduce 10 of 19 Apple warehouses to limit overstocking.
  3. Stock on hand was down from a month to 6 days (at the very beginning 1998)
  4. Turn inventory every 5 days (2012). It is important to keep as little inventory on hand as possible. “Technology manufacturers can’t afford to keep too many products in stock because a sudden announcement from a competitor or a new innovation could change everything and suddenly bring down the value of products in inventory.”
  5. 154 key suppliers, kept only one commercial warehouse ( synchronize with the approximately 250 own stores) (2013)
  6. Foreseeing sales levels accurately and not having excess inventor

Apple’s Secret to Success – Business Quick Tips – Fishbowl Inventory https://www.youtube.com/watch?v=YI9-BoLYmFQ

appel

 

Comparison made of how companies managed their inventory shows that in 2011, Apple using the Inventory Turnover formula (shows how many times the current inventory balances of a company could be sold and replaced over a specific period. The higher the number here, the better) . Also, being focused on “days of inventory” showing how long it would take for a company to sell through all of its inventory) . In other words, days of inventory indicates how much inventory a company holds. Lower the number here is better, the opposite than in the inventory turnover.  These two indicators have made Apple performance:

  • 2 times better than Dell
  • 5 times better than HP
  • 5 times better than Blackberry
  • 5 times better than Motorola

Apple is currently clearly the market leader when it comes to the way it runs inventory. Actually, often times when you order online, the product is shipped directly from China, so Apple doesn’t even have to look at it at all. When demand goes through the roof, Apple reacts relatively quickly with huge hiring sprees over at Foxconn.

In the following graph, you can see a comparison, of Inventory Outstanding.

Sin título

Source: The Motley Fool (http://www.fool.com/investing/general/2012/03/23/apple-lesson-of-the-day-inventory-is-evil.aspx)

Finally, I invite you to see this amazing video about Apple and its Supplain Chain. I believe is a really good video for understand in an easy way all the different elements. https://www.youtube.com/watch?v=YbM_LydRlnM

THE ROLE OF PROCUREMENT OF GOODS AND SERVICES ON PUBLIC ORGANIZATIONS

Due to the provision of services relating to the public sector has a significant weight in the Spanish economy. In this post I would meditate about the role of procurement of goods and services on organizations, especially on public organizations (See Image I). This post collect my personal experience in management, in Spain this topic is not explained to students in Business Administration and Management.

Image I. Scheme of activities and purchase process threads

Logistics 1

Source: Reproduced from: Torralba et al. (2008).

I’m focused on the purchase process of twenty-two underground units of S/4300 (Tuberlink) to Vossloh by Ferrocarrils de la Generalitat Valenciana (see Image II). This is a company of public law with its own independent legal personality under private law and has autonomy in its organization, private equity and full capacity for the development of its purposes (Ley de la Generalitat Valenciana 4/86). To view the delivery process of an Euro 4021 locomotive see Video I minute 4-5.

Image II. Purchasing process of 22 units of meters / 4300 (Tuberlink) to Vossloh

Logistics 2

Source: Own elaboration.

The special significance of the role of procurement of goods and services in both public and private organizations makes this a key component of any organization that is intended to providing services. Therefore the economy, effectiveness and efficiency of this process depend in part on the success or failure of an organization that satisfies market needs.

Then we will describe briefly the buying process (for more information consult recommended references):

  1. Consultation to suppliers and offers and information of providers

The process can be started either by a query of suppliers about their products and trade conditions, or by an offer to providers, they may be already present (current suppliers) or are expected to be in the future (potential suppliers) being able to support information that contribute in a catalog of vendor products.

  1. Carry out of orders to the suppliers

If the acquiring company will agree the conditions offered by the supplier, then asks it that furnishes products, with certain conditions known through information obtained from the activities and sub-processes referred to above and the negotiating it has been made.

It is at this time when the non-acceptance of the order by the supplier may result if various circumstances are given. In these cases it comes back to negotiate the conditions of the order, being able or not conclude with acceptance, with the new conditions.

It is also possible that the buyer decides to cancel the order or modify it, etc.

  1. Reception of products which the company has asked to providers

If the supplier agrees with the conditions, the risk is not exceeded, etc., the products are delivered to the buyer, so the buyer has to make receipt of the products you order to the supplier.

There may also be returned the product to the supplier.

If the products delivered are stored it is produced an entry in the warehouse and the amount that was stored or stock increases.

The order can be delivered by a direct delivery method or by milk run delivery; and in one delivery products can be in one or more orders. Therefore, there can be orders pending to be received on part of some of the product suppliers.

  1. Transportation

Transport activities consist on to move the product from the supplier to the place where the acquiring company is interested and has been agreed in the purchase receiving at this time the buyer the list of packages.

  1. Reception of invoices, debit notes and credit notes

The supplier communicates the monetary amount of products shipped, including tax and other legal requirements, in a document called invoice that the supplier sent to the company which motivates the activity of receiving invoices, expense notes and credit notes.

The invoice amount and other conditions listed in it, if they comply with the conditions of sale done, modify the balance that the purchase company has with the supplier; that is, it modifies the debtor-creditor position with suppliers.

Although it is presumed that the provider controls the customer risk (buyers risk) the buyer must also check the balance with the vendor (seller).

And considering the possible advances that may have been made to providers need to control the debtor-creditor position with them. Other documents may appear as the note of expenses (costs of buying and selling corresponding to the acquiring company but that has paid the vendor) credit note (to collect situations, somehow, contrary to the bill).

We must also say that there may be circumstances for the acquiring enterprise to non-acceptance of the supplier’s invoice. In the supplier invoice, in the note of expenses and the credit note, the amount of value added tax (VAT) appears.

  1. Claims to provider, warranties and maintenance

In case of present the acquired products any defect a complaint will be formulated to the provider may also request take care of the warranty and maintenance, etc.

Recommendede bibliography:

Torralba José María, et al. El proceso administrativo de compra: Un caso de empresa de proyectos informáticos. Valencia, Ed. UPV 2008

Design for Manufacture and Assembly

Design for Manufacture and Assembly (DFMA) is a set of techniques for design or redesign a product with the objective of improve the manufacturability, assemblability and costs, respecting the essential functions of the product. It could be divided in two parts Design for Manufacture and Design for Assembly.

That set of techniques was introduced in 1980 by Geoffrey Boothroyd and Peter Dewhurst, two teachers of engineering from Rhode Island University. Both created a company called Boothroyd Dewhurst Inc. that continues developing the DFMA nowadays and have the possession of the trademark DFMA.

DFMA produce a lower degree of rentability than the innovation but the risk of the application is lower in comparison with the risk that produces the innovation. The principal uses of that technique are the following:

  • Analyze the management chain of cost.
  • Simplify the products and improve the quality.
  • Improve the communication between the departments of design.
  • Decrease the manufacturing and assembly costs.

The next image is a good example of the application of DFMA where Texas Instruments  achieved an improvement of 80% in the efficiency of the design for a M1 tank electronic box. In that operation of redesign they achieved reduce the number of components and fasteners and the volume and weight.

890_DFMA_parts1.png

Figure 1: Example of DFMA
Source: http://www.aptcorp-us.com/dfma.html

 

Potential uses of that methods do not end in the design and redesign of products it can be applied to other sectors like building construction or automotive sector. In the next video is possible to view the construction of an hospital in Sidney by Laing O’Rourke, an international engineering company, and how the company applied the DFMA method to improve the construction of the hospital.

 

Links of interest:

https://www.dfma.com/

http://www.laingorourke.com/

http://www.aptcorp-us.com/dfma.html

Click to access fichero_15_4333.pdf

TECHNOLOGY FACILITATES LOGISTICS

When a business is created, the project must address three key aspects called triple bottom line which are the environmental, social and economic sustainability. In connection with this line of work I defined an agro-food related business called HOF3M.

My project is related with the creation of a garden in the roof of the buildings. This garden would be managed by two workers. The first one is in charge of the irrigation installation and its management. The second one is responsible of planting and caring for plants, this person must plant the seeds of season, set irrigation conditions and reap harvest.

HOF3m

Figure 1. HOF3M proposal. Source: Own elaboration.

This project aims to be:

  • Environmentally sustainable. According with the web page of Plume Air Report (https://air.plumelabs.com/) nowadays it is increasing pollution in cities. By increasing the number of plants in urban areas CO2 can be reduced.
  • Residents can eat health food.
  • Economic. New technology facilitates the management of the crop.

The logistic of this project should be facilitated by the application of new technologies. For example, there are companies such as Phytech and Modpow which provide agricultural sensors. These sensors can study the crop state and send the information obtained to a web application. There are also other companies such as Dynamax (http://www.dynamax.com/products) that allows you to have automated irrigation systems by the use of sensors.

Phytech

Figure 2. Phytech technology. Source: Reproduced from <http://www.phytech.com/>

Modpow

Figure 3. Modpow technology. Source: Reproduced from <http://www.modpow.es/es/tecnologia/>

Aurea Jordán

 

 

IKEA’s inventory management strategy

IKEA as the world’s largest home furnishing retailer has 298 stores in 37 countries. It ranks Number 41 on Forbes’ esteemed World’s Most Valuable Brands list, and took in 35.5 billion in sales in 2013. And this is among others based on its unique and efficient supply chain and inventory management. But what does this mean concretely?

The challenge:

  • Each store holds more than 9500 products in stock
  • The items shown at the IKEA catalog will be stocked for 1 year at a guaranteed price
  • More than 1,800 suppliers in 50 countries, 42 trading service offices to manage supplier relationships

The solution:

  • Sustainable long-term relationships with suppliers ensure quality and low costs
  • All different functions within IKEA work closely together to support the value proposition and guarantee efficiency
  • Products are designed especially for realization of efficient distribution, transportation and warehousing through fewer materials for furniture (–> lower weight –> less fuel and manpower) and efficient packaging (–> less space needed, more room to stock additional items for order fulfilment)
  • Combined retail and warehouse processes: Showroom floor to look and search for products and floor pallet location to obtain products (whereas the lower floors of shelves are for taking and the upper shelves which are impossible to reach for customers are used as reserve racks. Inventory is then let down to the lower slots at night to refill the upper shelves for customers)
  • Cost-per-touch inventory tactic (“the more hands touch the product, the more costs are associated with it”): Every time the product is shipped, moved, and loaded, it costs money. The fewer times someone moves or touches the item, the fewer costs are associated with it –> Customers retrieve furniture and take it home by themselves (IKEA doesn’t have to pay for that) and no staff is needed –> “touches” and money saved
  • In-store logistics personnel to handle inventory management through e.g. monitoring deliveries, checking delivery notices, sorting and separating goods –>  ensuring an efficient flow of goods within IKEA stores
  • Minimum / Maximum settings” as IKEA’s special inventory replenishment management process to minimize ordering too less or too much products:

Minimum settings: The min. amount of products available before reordering.
Maximum settings: The max. amount of a particular product to order at one time.       –> Based on Point of Sales data, inventory and shipping data sales forecasts for the next days possible –> basis for order

  • Separate High-Flow & Low-Flow Warehouse Facilities: automatic storage and retrieval systems in its high-flow warehouses (focused on the 20% of Stock keeping units (SKUs) that account for 80% of the volume) to minimize costs-per-touch. Manual processes in the low-flow facilities where products with lower demands are stocked.

IKEA’s stock management, order fulfillment and supply chain system is one of the basic points of its success. IKEA also sets trends to move away from traditional and out-dated supply chain management and to use creative and better-suited solutions instead to handle inventory. And they will keep improving their supply chain efficiency.

 

To get some impressions there is a nice video you can watch:

https://www.youtube.com/watch?v=11AehTPD-Vg

 

 

https://www.tradegecko.com/blog/ikeas-inventory-management-strategy-ikea

More and more parties getting involved – 3PL and 4PL

As we were talking about the trade-off between transportation and storage costs in the last lecture and shortly introduced the concept of Vendor Managed Inventory (VMI) I wanted to present other related concepts, the Third Party Logistic (3PL) and Fourth Party Logistic (4PL) providers. In the literature you might find slightly different definitions of these concepts. Therefore the author of the following article http://cerasis.com/2013/08/08/3pl-vs-4pl/ uses the definition of the Council of Supply Chain Management Professionals’ (CSCMP) glossary as it seems to be a generally accepted definition amongst practitioners. The CSCMP defines 3PL as the “Outsourcing all or much of a company’s logistics operations to a specialized company.” At the beginning the term “3PL” was used for intermodal marketing companies (IMCs) in transportation contracts. When these companies arouse contracts for transportation had to be extended from two parties (shipper and carrier) to three parties (shipper, intermediary and carrier). Nowadays the definition has broadened and pretty much every company that offers some kind of logistics service for hire calls itself a 3PL. The provided services are transportation, warehousing, cross-docking, inventory management, packaging and freight forwarding.

But let’s get to the important part. Why should companies work with 3PL providers? What advantages can they offer? I found another article (http://cerasis.com/2014/10/15/3pl-providers/) that gives 7 reasons why non-core transportation management functions should be outsourced:

  1. Save time and money: This is kind of the most important reason and some of the following reasons might be necessary to explain why this is really the case. The company clearly saves time as they don’t have to handle transportation anymore. But on the first sight it might seem as it comes with a higher costs. This is where the following reasons kick in
  2. Economies of scale: As 3PL companies have several customers the act on a larger scale which can bring several cost advantages. E.g. when merging loads to achieve FTL.
  3. No need to buy an expensive transportation management system (TMS): Also 3PL providers have all the necessary computer software and again the costs are divided between all their customers.
  4. Utilize more carriers: By using several carriers 3PL providers may be able to always get the best services and prices.
  5. Liability: 3PL providers manage the legal part, carrier contracts and more. This does not only reduce the workload but also shifts the liability to the 3PL.
  6. Visibility of loads: Many 3PL providers offer additional services like on-line tracking to give shippers visibility of their loads. This real-time information provides additional value and helps to improve planning.
  7. Reduce back office duties: 3PL providers have the systems, manpower, and the know-how to process thousands of bills a day at a fraction of the costs.

To see how 3PL providers work you might want to watch this commercial video from a 3PL supplier called Total Logistic Control (TLC) (preferably minutes 0:25 to 0:48 and 2:00 to 7:14)

https://www.youtube.com/watch?v=hddWZ4Olfx0

Now that we know what a 3PL is let’s get to the next PL, the 4PL. 4PL was originally defined by Accenture as “A supply chain integrator that assembles and manages the resources, capabilities, and technology of its own organization with those of complementary service providers to deliver a comprehensive supply chain solution.” The CSCMP differentiates 4PL and 3PL the following ways:

  • 4PL organizations are often a separate entity established as a joint venture or long-term contract between a primary client and one or more partners.
  • 4PL organizations act as a single interface between the client and multiple logistics service providers.
  • (Ideally) all aspects of the client’s supply chain are managed by the 4PL organization.
  • It is possible for a major third-party logistics provider to form a 4PL organization within its existing structure.

Sometimes 4PLs are described as non-asset-owning service providers so their role is to provide broader scope managing of the entire supply chain.

3pl-vs-4pl

Source: http://cerasis.com/2013/08/08/3pl-vs-4pl/

To make the difference more clear you find can find a link to a commercial video from a 4PL supplier called Ally (it’s a short video so from the beginning until minute 3:15)

https://www.youtube.com/watch?v=CiAzgbphzHI

As I said the problem can be like in many other fields that once a term is out in the world it is used in many different ways and may confuse you when you are trying to understand a new concept. So if you are still not really sure what’s the difference between 3PL and 4PL I invite you to watch the following video that has another explanation and also talks a little more about current developments in both fields. (I’m not writing which minutes to watch because it is relatively short and in my opinion worth watching all of it.)

https://www.youtube.com/watch?v=6pNXQEkgbCA

Have you watched it?

What do you think is Amazon a good example for a 4PL provider?

Maritime trasport (part II) example

In the following picture we can find one example. A company in Spain wants to send big quantities of products to Oman. Security, price, and heavy weight are a few reasons why maritime transport the best option.

blog. photo. jpg

Source: own elaboration. Data provided by X company

It is important to consider that the sea freight from one port to another varies over time and fluctuates according to supply and demand for the different routes of international trade. Therefore, distances and travel time do not solely determine the costs.

For instance, the price of maritime freight to Shanghai from Spanish ports is currently cheaper than exporting to Turkey from Spain. The reason that maritime transport from Spain to China and vice versa is cheaper is due to the goal of shipping companies to have cheap freight by returning full containers to China, which is where is greater demand for maritime transport containers (no load must return empty). To perform benchmark price for export or import with origin or destination in Spain, one can use the fair search iContainers for international transport.

Having cheap ocean freight is a positive factor, but i the cost of land transport should be taken into account as well, since in some casesit may be decisive in the overall costs for international transportation

Furthermore, there are different terms for international transport, which are established for the customer and the seller. The most commons ones are:

EXWORKS: the client pays the transport cost

FOB:  the client pays from the suppliers port (in this case from Valencia port)

CIF: the client pays from the destination ports

incoterms

Source: http://www.businesscol.com/comex/incoterms.htm

Maritime trasport (part I)

In this post I would like to go a little bit into detail about the maritime transport. Many reasons encouraged me to research intensively about this topic and let you know.

First of all, I have been living most of my life in Valencia and Valencia´s port is the first in the Mediterranean sea. Since most things that one person uses throughout his or her day have been transported via an ocean freighter, maritime transport seems to be really important. Therefore, it is crucial to know how this way of transport works and how items reach their end users.

Maritime transport is possible thanks to tens of millions of cases of corrosion resistant steel standardized containers. It is the most useful way of transport internationally and finally because although we have already posted about maritime transport in this blog, none of the previous posts explained how it actually works.

The following photo shows the main and the secondary routes around the world, with “the Algeciras” being one of the most used routes.

routs. jpg

Source: http://economia.elpais.com/economia/2015/03/06/actualidad/1425664728_936295.html

The main feature of the maritime transport is the huge weight and therefore quantity an ocean carrier is able to transport from one part of the world to the other. In this Video you can see the biggest carrier in the word.

Boats are becoming bigger each time, in order to create economies of scale. There are a few companies, which control the sector:  the Italian MSC, Danish Maersk, French CMA CGM, Taiwanese Evergreen and the Chinese Coscon. They possess more than one quarter of the boats and transport 43, 2% of the total weight that is carried in maritime transport. In more cases the international transport has arrangement between them, shipping companies and transport.

There are many businesses and industries related maritime transportation, for example companies of containers, shipping companies, and the agency transport companies, responsible for moving materials from the industrial area to the boat and from the boat to its destination. Because of their role, transportation agencies are considered to be the connectors between the firms and the shipping companies.

Ways to go green : Environmentally Frendly packaging

eco-friendly-healthylifesolutions-blog-980x1024

My today´s post is about the last week theme of my OSS presentation. It´s an interesting one and these days more and more prefered way of packaging.

Everything you buy from a store would leave some form of waste, particularly the packaging, which we’d throw away the moment its contents are released. Since it is now more important than ever to be conscious about our environment, many brands and designers have produced eco-friendly package designs that are reusable or recyclable to help reduce our carbon footprint in nature.

From paper bags, boxes and tubes to glass jars, these designs are not only unique and creative, but also eye-catching and versatile. Available in a healthy mix of nature’s colors, these 20 eco-friendly package designs are a great source of ideas for packaging designs, that you don’t want to miss out.

 

More interesting websites  :

https://www.behance.net/gallery/Package-for-two-eggs/6890987

https://www.behance.net/gallery/Eco-Lite-Light-Bulbs/9170201

https://www.behance.net/gallery/Eco-traito/6354911

https://www.behance.net/gallery/INVENT/8673855

https://www.behance.net/gallery/-ORGANIC-MEADOW/924770

And here´s a nice video 🙂 about a company that use eco friendly packaging . Green Century Enterprises is a leader in compostable, recyclable and biodegradable food service packaging in Canada. From disposable hot cups, cold cups, soup bowls, or take out containers, Green Century has what you’re looking for, including customizable options.

Sustainability & Inditex

Many are the topics about Zara, Inditex, its logistic,… but what about sustainable logistic?. Well since 2007 Inditex is making improvements in its logistic centers with the aim of achieve the LEED GOLD  certification (Massimo Dutti’s new logistics platform in Tordera (Barcelona) has already achieved LEED Gold certification, making it the first logistics centre in Spain to achieve this accolade.)

All the logistics centers are in Spain and are built and management by sustainability standards. Each platform has an environmental management system (certificated by ISO 14001 ) and all the employees had received environmental training.

Inditex´s growth comes with an inversion in sustainable logistic operations, that helps to reduce the impact in the environment. Its strategy is based on three different parts which are connected with: the distribution, sustainability in its logistic centers, and in the recycling of packaging

Nowadays, the transportation is made by external agents, that are why Inditex has created a tool to calculate the emission, considering the GHG PROTOCOL, proposing possible improvements to the logistics centers.

Some, of the improvements that had been introduced during the last years are: efficient lighting, climate control systems, renewable energy, eco-efficient ( stores: https://www.inditex.com/en/sustainability/environment/ecoefficient_stores ) or the use of bicycle/ electric vehicles for moving around logistics centres

In reference to the recycling, it is possible find one example in the use of the cardboard boxes. The ones used for the materials transportation from the logistic center to the shops are used between six and eight times. The shops give back to the logistic centers all the boxes and the plastic hangers and alarms. In 2014, 100% of the alarms used in the stores were reused, recycling 672,377,823 units, as well as approximately 79 million plastic hangers used in the shipping of items to the store.

Sin títuloz

The compliance of the suppliers about the packaging following the “Znotmative”, and the commitment of the employees had let Inditex reduce its waste and improve the management, which has allowed re-use almost all the materials, alarms, fabric pieces, paper, plastic, etc. ” the Group’s offices, logistics centres and factories, essentially scraps of fabric, board and paper, plastic, wood and metal, is sent off for recycling. Thanks to this major effort, in 2014 we managed to recover 14,286,773 kilograms of product for subsequent recycling purposes.”

Find more information in its website: https://www.inditex.com/en/sustainability

 

Natural Gas

Recently I received a letter from Gas Natural Fenosa with my itemized bill. This fact leads me to think that could be interesting to write a post about natural gas with the aim to acquire a deeper knowledge of it as it is something present in my life and I supposed that most of you also have natural gas in your homes.

First of all, it is a well-known fact that it is treated of a fossil energy found in the subsoil of earth and comes from the decomposition of organic material. Natural gas is composed by a mixture of gases in variable proportions in which more than 70% is methane and the remainder part can be constituted by nitrogen, carbon dioxide and ethane. The general process of obtainment of this gas starts with the exploration of the soil followed by an evaluation, extraction, purification and liquefaction. In addition, the costs associated with these activities suffer a reduction thanks to the technologic advances.  Therefore, are needed drilling rigs that reach the strata where the deposits are located to extract the gas.

gas natural

gas natural proceso

Figure 1 & 2. Natural gas chain

Another important aspect of the natural gas is the transportation from the production zones to the ones of consume. It can take place through pipelines when is in gas state or ships, in liquid state, when the distance is bigger or is not possible to install a pipeline. This fact increase the diversity of supply sources due it makes possible the gas supplying from remote reserves. Then, the content of ships is downloading in the plant tankers for its posterior regasification and injection in the pipeline network or for its charge and transportation in cistern trucks to satellite plants which allows natural gas regasification and supply exclusively to a client or to a specific area. Therefore, it can be observed that the pipeline network has the advantage that allows a fast, secure and efficient transport. However, distance has a greater impact on this way of transport so when it is higher, ships become a more economic and efficient option. Regarding gas storage, the most common way of this is by underground storage due it presents the advantage of capacity because use the compressibility of gas at low depths to increase the volume of stored gas. Furthermore, natural gas can be stored in already exploited deposits, aquifers, salt caverns and mines.

Taking all this into account, it can be summarized that the logistics management of natural gas involves planning, programming and tracking of the activities of supplying, regasification, transportation, distribution and storage which makes possible the supplying of gas to the final customer. In addition, another important piece of its management is the variety of actives and infrastructures (pipelines, regasification plants, storage, etc.) and the use conditions related with these such as regasification capacity, transport, distribution and storage with operation thresholds.

  • See more:

http://www.diarioinformacion.com/economia/2015/11/13/espanoles-gastan-96-euros-luz/1696497.html

http://www.gasnaturalfenosa.es/es/somos+energia/innovacion+y+futuro/lineas+de+actuacion/eficiencia+energetica/1297118279153/3e-houses.html

http://cienciasnaturales.es/GASNATURAL.swf

http://www.cadenadesuministro.es/noticias/espana-es-lider-en-la-logistica-y-distribucion-del-gas-natural-licuado/

http://blogdelogistica.es/el-gas-natural-licuado-alternativa-en-el-transporte-por-carretera/

The second life of electronic waste

During Easter holidays I visited my parents, and as usual my mother needed some help, this time regarding the purchase of a new printer, since the old one wasn’t doing a good job any more. So we compared some new models and finally agreed on a multifunctional printer. The next question was where to bring the old one, and at that point I remembered an article about the so called “WWWE Directive”.

Following the “Waste Electrical and Electronic Equipment Directive”, introduced by the bodies of the European Union in summer 2012, all member countries are called to pass national laws to reduce the amount of electronic waste and to raise the quota of recycled electronic waste. Another goal is to reduce the amount of such waste shipped to developing countries in Africa.1)

Although forbidden through the “Basel Convention”2) the amount of  electronic goods that are not working anymore exported from industrial to developing countries increases continiously. Only 15% of e-waste  is going to be recycled within the EU.

Unbenannt.PNG(worldwide produced electronic waste, in millions of tons (2012 &2018: estimations))

A big amount of the rest is exported to Africa. In the last years, one place has become the center for the recycling of electronic waste: Accra, the capital of Ghana. About 500 containers of second-hand goods arrive in the port of Accra every months, the majority of them contain old electronic goods from Europe and the USA. Through intermediaries the content of these containers find their way  to small workshops, where components of different old gadgets are used to repair broken ones.

Those devices that cannot be repaired anymore are nevertheless not useless, since they contain a lot of valuable materials such as copper, silver or gold. To extract these metals, the waste gets burned on a big dumb in a district called Agbogbloshie. The so gained recycled metals are then sold to traders and shipped to refineries and factories in developed countries.

See the following illustration to follow the way of e-waste:

image-977668-galleryV9-nrlo1

The circle of electronic goods and their components is a great example of how standardization in logistics helped to speed up the globalization process. Without containers and the surrounding infrastructure such as terminals in the ports it would have been much more costly to ship the electronic waste around the world. Taking into account that modern logistics not only improved cost efficiency, but also time and organisational efficiency, we see the great advantages of the technological progress.

But I don’t want to leave out the drawbacks of this system, which leaves the environmental risks and the danger for the workers’ health in the poor countries in Africa. It may be exaggerated but one could argue that containers also helped developed countries to ship away their problems and responsibiltity for a sustainable world.

http://www.spiegel.de/video/embedurl/video-1664028-640_000_fff.html

 

1) http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32012L0019                            2) http://archive.basel.int/text/17Jun2010-conv-e.pdf

Top European Distribution Hubs

E-commerce-related retailers like Amazon are more and more competing on the speed of their deliveries and thus, they are moving their distribution hubs closer to population centers. But for all kind of companies it is important to decide where to establish distribution centers in the evolving European Union. But where to establish a such a distribution hub?

A research from 2013 states that depending on the companies’ main goals certain regions fit best. They divide in companies focusing on manufacturing, companies focusing on distribution and companies balancing the two activities and their decisions should be mainly based on “Infrastructure & Accessibility”, “Market access” and “Operational Base Costs”.

Post 5_Overview Hubs

  1. Companies with balanced distribution and manufacturing goals – Look to the traditional northern European hubs:

These companies weight all three factors equally for their decisions. Thus, cities like Düsseldorf and a lot of Belgian and Dutch cities offer an excellent level of infrastructure, a favorable business climate and skilled workforce pool, a developed logistics market and the proximity to major European seaports and airports as well as to the largest consumer markets.

–> Best locations for hubs: Dusseldorf, Antwerp, Rotterdam, Brussels, Hamburg

 

  1. Distribution focused companies – Look at the Blue Banana:

For these companies, the proximity to final consumers and a developed infrastructure network is very important. The “Blue Banana” includes cities from Antwerp until Milan which are not only located in the heart of Europe but also in the most densely populated and richest area in Europe and therefore ideal for companies seeking to reach the largest number of customers as quickly as possible. From Antwerp, for example, approximately 143 million people can be reached by lorry within 9-hours. But also high-end manufacturing is getting more important in Western Europe.

–> Best locations for hubs: Antwerp, Rotterdam, Dusseldorf, Brussels, Hamburg

Post 5_Blue Banana

 

  1. Manufacturing focused companies – Look at the East:

As costs is the main determinant in the manufacturing sector, Central Eastern Europe with cities like Kiev or Istanbul is most interesting for manufacturing focused companies like BMW, Daimler or Siemens due to lower labor costs. Although there are relatively low margins, this hub is also suited for pan-European distribution activities.

–> Best locations for hubs: Kiev, Istanbul, Bratislava, Upper Silesia, Sofia

 

Of course, real world decisions like where to locate a distribution center is more complex and influenced by a number of additional factors like trade barriers constraints. But it provides a nice overview of the relative strengths and weaknesses of thelocations.

 

Resources:

Click to access Colliers%20Top%20European%20Logistics%20Hubs%202Q13.pdf

http://www.wsj.com/articles/e-commerce-driving-new-regional-distribution-hubs-1432227873

The Maps That Show Amazon’s Plans to Rule the World

 

Formula One Transport Challenges

Every Grand Prix, the real challenge is not in the race, the teams are who have the real challenge about how transport and move everything to the next grand prix in  other country as fast as possible, there are three modes of transportation that are used by the teams, Roadways, Airways and Waterways.

As all the teams are based in Europe, the transportation during the European races is done by roadway with the articulated lorries, each team has their own lorries with the brand colours.

The picture below shows a team personnel charging the F1 in the lorrie to transport with the rest of the equipment.

F1 coche carga.jpg

The car is transported boxed up in the elevated platform, where fit two cars, and under the platform is where go the aerodynamic parts of the car and the rest of the equipment. The next video shows up how Sauber F1 Team load their trucks with the cars and all the equipment.

 

At the end of the year Each team who competes in Formula One World Championship travels between races and test sessions about 160,000 Kilometres. The logistical effort is so vast, for that reason the sport has its own Logistical Partner DHL.

For the non-European ‘flyaway’ races the logistical effort is considerably more complicated as equipment has to be flown out on transport planes. Rather than use conventional aircraft containers, teams have created their own specially designed cargo crates, designed to fill all available space in the planes’ holds.

 

The equipment parts are classified in two parts, critical and non critical. The critical components are transported using special charter planes provided by FOM with DHL currently serving as the logistics partner. Given the geographic location of all the F1 teams, these planes depart from London and Munich. Teams use specially designed cargo units to transport the delicate parts. The containers that use are designed to take the minimum space and to protect the components from the external forces, these containers are designed to be packed and unpacked in 6-8 hours.

The non-critical parts are components of the garage, like tools, these components can be procured in many sets, there are not so expensive as the rest of the components, The parts are kept in sets of five that are shipped between two global race locations.

Everything has to be planned months before, the logistical effort is not as simple as getting people and equipment in the right  place. Hotel accomodation has to be founded, each team require about 100 rooms, hire cars must be sourced and the teams facilities at the circuit.

As the number of races out from europe continues increasing the logistical effort required to transport the equipment will expand alongside it.

To finish this post i recommend you to watch the video that explain visually all is written above for flyaway races.

 

See more:

https://www.formula1.com/content/fom-website/en/championship/inside-f1/understanding-f1-racing/Logistics.html

http://www.dhl.com/en/about_us/partnerships/motorsports/formula_1.html

Toni Romero Gadea.

Sustainability and the supply chain

These Easter holidays I went to the ABC Cinema in the heart of Valencia, before the film I visited the Taco Bell Restaurant. I love Mexican food! This experience let me meditate about sustainability and the supply chain. Some weeks ago the professor José Pedro introduced the concepts environmental sustainability, social and economic sustainability related with the HOF3M proposal.

First of all, let me introduce my business model. I didn’t have the opportunity of explain the model in class. This model is based on a personal experience. Four months ago a group of old people contact me whith the proposal of dynamise an open call. You can see the results of this meeting in the following link:

http://nouhorta.eu/index.php/horta-oest/alaquas/item/8001-alaquas-participa-celebra-el-v-dialogo-abierto-sobre-cooperativismo-redes-colaborativas-y-solidarias

A piece of the results which were exposed in this open call are collected in this business model. At the first stage I propose an agreement between public and private organizations because the land could be in public or private possession. Later, it is possible identify a network connect the urban vegetable gardens with customer with sustainable channels like bicycles. This business model promotes the self-employment in a cooperative form representing the labor force.

This cooperative experience could be enforced by training/ education, promoting healthy lifestyles, among others. This proposal promote the empowerment of people and a sentiment of local membership ensuring maybe plus benefits and less costs of production and distribution with a return to a sustainable society. This model enhancing the Corporate social responsibility ensuring CO2 low emissions. In conclusion; land, labor and capital are integrated in a social, economic and environmental sustainability way. See Image I.

HOF3M

Image 1. FreshCoop Business Model: Own elaboration. <https://drive.google.com/open?id=0B5GwH0tul_wwM2YyeldBTDJfaTQ>

Now I will integrate this business model in a collaborative group with Philipp and Aurea and I will discuss with them the role of sustainability in a supply chain. As stated in Chopra and Meindl (2016) the key pillars of sustainability are: social, environmental and economic (according with HOF3M proposal). According with these authors the factors boosting and increased focus in supply chain can be divided into three different categories:

  1. “Reducing risk and improving the financial performance of the supply chain,
  2. Community pressures and government mandates, and
  3. Attracting customers that value sustainability.”

From my experiences in Mexican restaurants I can highlight sustainable business models like Chipotle. See Video I (3 minutes).

Video 1. Chipotle adverstisement. <https://youtu.be/lUtnas5ScSE> [Accessed: 04/04/2016].

TYPES OF BARCODES

Today the industry progresses towards automation. For this reason there are symbols that, through the use of electronic scanning laser or cameras, can decode the information they contain. These symbols are called barcodes.

There are different types of barcodes like GS1-128, QR-code, code 39, PDF417, and Maxi Code, among others. Every barcode has different symbols, letters and numbers which encode the information.

barcode

Figure 1. GS1-128 barcode with Application Identifiers. Source: Reproduced from <https://pt.wikipedia.org/wiki/GS1-128>

For more information about the different barcodes you can see the next links:

http://www.barcodefaq.com/BarcodeMatch/

http://www.makebarcode.com/specs/speclist.html

http://www.scandit.com/2015/01/27/types-barcodes-choosing-right-barcode/

Barcodes have many uses. Through these codes you can identify the product containing a container, the expiry date, batch number, date of packaging, among others. In addition they are also used to determine how many products have been sold which facilitates the setting of the conditions to replenish a warehouse.

Some other advantages provided by barcodes and their applications can be viewed on the following video:

An important use of barcodes is in the Spanish health system. Inpatient and outpatient pharmacy by using barcode controlled the drugs that are dispensed to patients. This permits to achieve a complete database which contains the number of medications, treatments and diseases of each citizen. Thanks to these databases the Centre for Health Economics and Management (CIEGS, http://www.ciegs.upv.es/) at the Universitat Politècnica de València (UPV) can study the direct economic cost of the drugs of a particular disease and the treatment used in each case.

drug barcode

Figure 2. A pharmaceutical cut the barcode of a drug. Source: Reproduced from <http://www.elnortedecastilla.es/castillayleon/201505/04/medicos-enfermeros-enfrentados-prescripcion-20150501101326.html>

Aurea Jordán

Types of boxes: Banco de Alimentos

In this post I would integrate knowledge (research) and personal experience (practice). First of all, I interested in identify the different types of boxes available in the market from the lecture of Handbook of package engineering third edition. In the second place, I expose a practice case based on the “Gran colecta” of the Banco de Alimentos de Valencia. Finally, I will introduce some reflexions about packaging in a globalised world.

From the Handbook of package engineering third edition it is possible identify the following types of boxes, among others:

  1. Paper and Paperboard,
  2. Films and Foils,
  3. Coating and Lamination of Flexible Materials,
  4. Bags, Sacks and Pouches,
  5. Folding Cartons and Set-Up Boxes,
  6. Fibre Tubes, Cans and Drums,
  7. Plastics,
  8. Glassware,
  9. Metal Containers,
  10. Pressurized Packaging,
  11. Labeling and Decorating,
  12. Corrugated Fibreboard,
  13. Wood Containers, and
  14. Cushioning.

Types of boxes

Image 1. Types of boxes. Source: Own elaboration from Hanlon et al. (1998).

“La Gran Colecta” del Banco de Alimentos manage directly on the supermarket the food provided by people and institutions with corrugated fiberboard boxes. I collaborate in this experience three times and was a great opportunity for collaborate and manage directly the inventory. On the video 1, minutes 0:11-0:31, it is possible identify different types of boxes like: Paper and Paperboard (1), Plastics (7), Labeling and Decorating (11) and Corrugated Fibreboard (12). In 2015 with “La Gran Colecta” were collected 22 million kilos. See Image 2.

Banco de Alimentos Valencia

Video 1. Types of boxes inside Banco de Alimentos de Valencia. Banco de Alimentos de Valencia. <http://www.bancodealimentosdevalencia.org/> [Accessed: 04/04/2016].

banco-alimentos630

Image 2. Banco de Alimentos distribution. Source: Reproduced from El Economista. <http://www.eleconomista.es/generales/noticias/5860284/06/14/Video-Como-se-reparten-50-toneladas-de-comida-al-dia-Asi-funciona-el-Banco-de-Alimentos-de-Madrid.html>. [Accessed: 04/04/2016].

How can I collaborate in this experience?

-With the university volunteering at the UPV: http://voluntariado.webs.upv.es/booking/

-Contact directly with Banco de Alimentos: http://www.bancodealimentosdevalencia.org

In a globalized world the sustainability is a key element for determining the respect to the environment and ensuring a high quality in the delivery process. The World Packaging Organization (www.worldpackaging.org) has the following mission: “Better Quality of Life, Through Better Packaging, For More People”, this mission enhance the value of a better packaging reducing spoilage and promoting an equal distribution with respect to the environment.

Recommended Bibliography:

Joseph F. Hanlon, Robert J. Kelsey, and Hallie Forcinio. (1998). Handbook of Package Engineering, Third Edition (Vols. 1–0, pp. i–xvii). CRC Press. Retrieved from http://www.crcnetbase.com/doi/abs/10.1201/b18045-1

Other references:

http://bit.ly/1RU5YgD

http://www.abc.es/espana/abci-gran-recogida-banco-alimentos-4637655066001-20151130025000_video.html

http://www.noticiasmercadona.es/mercadona-aporta-2500-carros-comida-banco-alimentos/

Ikea and Logistics

Ikea is one of the best companies in relation with the logistics área, so now I would like talk about his competitive advantages.

  •  Packaging
    • Flat package, this type of package help to reduce his holding cost and also the transport cost (They have more capacity and eassy transport).
    • Ikea uses a really Smart and effiency machine to the packaging, before that, they used people who could package 20 products per hour but now the machine could package 720 products per hour, independency about his size and form, neither the machine has holidays and could work 24 hours and 7 days on a week.
  • Shop-Storage
    • Shopp, in the first part they have expose the product that they want to sell, this is like a road and you have a lot of products and ideas.
    • Storage, at the end of that road you arrive to the storage where you can take whatever product that you have seen before. (It type of shops and storage help to the Company to reduce the holding cost).
  • Know how
    • Designers, all the employees know the necesity to do the product in flat package, because if not have this type the product don’t go to the production chain.
    • Clients, they acept the shops-storage and if Ikea has low Price, they can assemble the product.
  • Environmentally friendly
    • •They always recycle the carton, the wood and the plastic and reuse that.
    • Also Ikea has created new pallet of cardboard that is much more environmentally friendly and reducing costs, space and weigh.

Winter Olympics – A Transportation Challenge

„From a logistical standpoint, the Winter Olympics is one of the largest freight and shipping nightmares to happen on a global scale.“

As the winter is really coming to an end now and I like winter sports a lot I thought this would be the last opportunity to write something related to having fun in the cold snow. When I was looking for concrete subjects that are related to logistics I found something about the Winter Olympics in Sochi. Sochi 2014 took place from February 7 to February 23, 2014 in Sochi, Russia.

From the estimated $51 billion spend on the Winter Olympics about $43 billion were used for the enormous transportation infrastructure. This shows that transportation is a very important issue and a lot more expensive than building the sports facilities itself. To start I will sum up some facts about the transportation infrastructure for humans. One of the most famous projects is the $8.7 billion road and rail infrastructure that was built to transport spectators and everyone involved in the games (athletes and their families, workers, volunteers, the media).  The video https://www.youtube.com/watch?v=N1tHP-WDEBg shows what aspects the Russian Railways company had to consider when building the Adler – Krasnaya railway. The tracks have a length of about 48.3 kilometers and six tunnels and fifteen bridges were built. Per hour 8,500 passengers can be transported.

When building the railroad the key restrictions that had to be considered were:

  • Safety measures
  • Comfort conditions
  • Environmental control
  • Budget control

But not only humans had to be transported. Also goods like sports equipment, food and hospitality goods, medicines and medical equipment, technical equipment, awards, marketing material and gifts needed to be shipped by sea, air, rail and land from all over the world. To ensure that these goods are transported efficiently the Organizing Committee announced an official freight forwarder for every transport mode. For example Aeroflot was the airline responsible for the air cargo freight. Russian Railways handled the transportation on rail. They were responsible for bringing all goods to one of the two distribution centers which house different kinds of goods. The Olympic game-related goods were brought to the 2,700 square meter main distribution center which was the hub for all Olympic’s logistics operations. All broadcasting equipment was brought to the 8,400 square meter IBC warehouse which was the freight operations center for broadcasters.

http://www.supplychain247.com/article/the_logistics_behind_the_2014_sochi_winter_olympics

But all of these are standard logistic tasks, the transportation of goods and humans. The large scale is what makes it a challenge for everyone. But there is something else that needs to be considered: the weather. If it is too warm and there is no snow Winter Olympics can’t take place. For this reason the organizers of the Winter Olympics in Sochi saved 450,000 tons of last winter’s snow under a thermal blanket. This makes it the largest snow warehouse ever. Moreover they positioned 404 snow cannons.

http://www.supplychain247.com/article/how_the_sochi_olympics_skate_around_logistics_hurdles

As the Winter Olympics 2014 are already over the preparations for Pyeongchang 2018 have already started. It will be interesting to see and compare how they handle and logistics and the amount of money they spend.

The Mediterranean Corridor

Today I would like to talk about the present of the Mediterranean Corridor (MEDCORR) and its future.

The MEDCORR is a rail line connecting the South of Spain (Algeciras/Seville) to the Eastern French border through Valencia and Barcelona, like you can see in the following figure:

corredor_mediterraneo

The MEDCORR is one of the major transport routes of the Iberian Peninsula. It connects four Spanish Autonomous Communities: Andalusia, Región de Murcia, Comunidad Valenciana and Cataluña. Economic links are particularly robust especially between Comunidad Valenciana and Cataluña, which together represent almost 30% of Spanish Gross Domestic Product (GDP).

The economy of the area served by the MEDCORR is strongly oriented towards exports, both in agricultural and industrial products: in 2009 the value of exports and imports amounted respectively to EUR 70 and 91 billion in the area, both corresponding to about 44% of national trade. Trade activity is favoured, in particular, by the presence of a large number of ports along the Southern coast of Spain (including Barcelona, Tarragona, Valencia, Cartagena and Algeciras), which link Spain to the rest of the Mediterranean countries and the world.

Tourism is another important generator of wealth in all four regions, which account for approximately half of the tourists visiting Spain each year. Actually, Cataluña, Comunidad Valenciana and Andalusía are amongst the five most visited regions in Spain.

Regarding freight transport, it is important to stress the potential of the region’s ports to attract traffic between the Far East and Southern France. In fact, a substantial amount of goods imported from the Far East currently reach their destination in Southern European countries by a longer route through Northern seaports and, subsequently, rail and road to the destination point. Southern EU ports could also attract more traffic from the North of Africa, which is both growing and increasingly containerised. The modal share of freight rail transport on the Corridor depends mainly on the geographic area of destination, because rail competitiveness is directly related to travel distance, but also on the connections available between the port and the rail network.

There are eleven ports in the Mediterranean Corridor area. All of them, with the exception of Motril and Almería (in Andalusia), have rail access, while in another two, Castellón and Sagunto (in the Communidad Valenciana, within the project’s target area), the access exists but is not currently operating.

MEDCORR commercial ports handle yearly a total of 92 million tonnes. With regard to international transport, ports located on the Mediterranean coast altogether represent around 48% of Spain’s maritime container traffic and, if we consider also Algeciras, where the Mediterranean Corridor ends, this share reaches 74%.

The MEDCORR section between Valencia and Barcelona (approximately 370 km) is currently served by a double track high-performance line between Valencia and Vandellós (230 km). The section Vandellós – Tarragona (47 km) is a single-track line and represents a bottleneck on the Corridor. The Tarragona – Sant Vicenç de Calders (32 km) section has a double-track, after which two separate double-track lines can be used to reach Barcelona (60 km). The rail infrastructure is of a high-performance type (terms used to distinguish it from the High-Speed Lines and conventional lines) and it allows for a maximum speed of 220 km/h.

According to the information about the number of passengers and goods that are in this region and the infrastructures, it is obvious that the current railway infrastructure is clearly inadequate and insufficient.

Since some years ago, there has been some works through the MEDCORR in order to get the final situation, but it is going with delays and it looks like the Public Administration do not give the deserved priority and importance to this project.

In the following figure there is the current situation of the MEDCORR and the future situation when all the infrastructures will be built:

corredor_mediterraneo_actual_futuro

Therefore, in order to act like a lobby to pressure to the Public Administrations, there are several companies and associations (i.e. FERRMED) fighting for more money from the Central Estate to accelerate the construction of new railway infrastructures.

The factory of Ford placed in Almussafes has a big interest on the development of the MEDCORR (http://valenciaplaza.com/ford-aguarda-la-llegada-del-corredor-para-volver-a-exportar-sus-vehiculos-por-ferrocarril), BASF (one of the biggest chemical companies placed in Tarragona) determines its investments depending on the MEDCORR (http://www.lavanguardia.com/economia/20120606/54306799141/basf-condiciona-inversiones-tarragona-corredor-mediterraneo.html).

The reason for these delays is not because of the economic situation, because the railway infrastructure from other Spanish regions is being developing currently (http://www.elmundo.es/economia/2015/09/29/56099c4822601d24138b45a7.html), so, in my opinion, it is due a political reason; but this is not the place for talking about that.

In summary, the development of this infrastructure would accelerate the growth of the economy of the Easter Spanish regions allowing companies to transport their goods all around Europe much faster and efficiently, and also the transport of people from one point to another.

RESOURCES:

http://ec.europa.eu/regional_policy/sources/docgener/evaluation/pdf/projects/mediterranean_corridor.pdf
http://ec.europa.eu/transport/themes/infrastructure/ten-t-guidelines/corridors/med_en.htm
http://www.ferrmed.com/
http://www.ccma.cat/tv3/alacarta/programa/El-Corredor-de-la-discordia/video/3758751/