THE ENVIRONMENTAL IMPACT OF FOOD DELIVERY

During the pandemic and due to the impossibility of leaving home due to the mandatory quarantine orders issued in a large part of the world, many businesses went bankrupt; however, there were many others who, on the contrary, raised their sales and recorded records. This is the case of delivery companies, which had to expand their operations due to the increase in demand for home deliveries, especially food. For example, in the case of Just Eat, Glovo or Deliveroo in Spain, they each added more than 1,000 new restaurants in just three months.

Given this new environment, logistics necessary to move food from restaurants to houses had to move fast and suddenly, delivery drivers were managing themselves in bicycles, mopeds and cars.

According to a study conducted in London with a database of 40,941 meal deliveries made by 195 couriers over 3 months, it was concluded that mopeds and cars had more environmental impact in in terms of GHG emissions per tonne delivered compared to bikes (340kg of CO2e for mopeds, 716kg of CO2e for cars and 64kg of CO2e for bikes) and this numbers will continue to increase since meal deliveries are forecasting to continue increasing.

But, how to understand those numbers? Firstly, it is important to know that GHG is the acronym for Greenhouse gases, which are gases that trap the heat in the earth’s atmosphere. One of those gases is CO2, the one measured by the study shows that in a ton of gases emitted by mopeds, 34% is made up of CO2. The same way for cars, which make 71.6% and bikes, 6,4%.

Since there is increase in the food delivery industry and the numbers shown are significant, there is a need for policy makers to promote the use of electric vehicles in this sector to reduce CO2 and look froward to maintain a sustainable delivery market.

Universitat Oberta de Catalunya (2021). La COVID-19 aumenta el ‘boom’ de la comida a domicilio y de las ‘dark kitchens’. https://www.uoc.edu/portal/es/news/actualitat/2021/058-crecen-dark-kitchen-covid.html#ot-pc-content

Alle, J., Piecyk, M., CherretT, T., Nabil, M., McLeod, F., Piotrowska, M., Bates, O., Betkas, T., Chelitis, K., Friday, A., Wise, S. (2019). Understanding the transport impacts of on-demand meal deliveries: A London case study. Retrieved from https://eprints.lancs.ac.uk/id/eprint/148600/1/Cities_paper_Meal_deliveries_FINAL_EDITED_full_paper.pdf

WHAT ARE INCOTERMS?

FOB? CIF? DAP? EXW? What does it mean? I was wondering when I started working in an elevator company, I never heart about those terms before and I was listening to them very often when the import analyst made arrangements to import the elevators.

Then she explained to me that those words where actually acronyms, which were all INCOTERMS, rules used to operate international commerce to delimitate responsibilities and define negotiation terms.

So now I am looking forward to get to know a little more about INCOTERMS, and I found an interesting article at DHL webpage. INCOTERMS are defined “as a set of norms for international deliveries, in order to guarantee the smooth sailing of international trade”.

I also found out that there are 11 INCOTERMS and that they follow the structure of a three-letter acronym followed by a location name. Four are designed specifically for ocean freight and the seven remaining are used to cargo delivered via any type of transport.

This INCOTERMS set the standard on the responsibilities of the seller and the buyer in a transaction. For example, they define who will take care of the insurance, to what location, who will take care of the transportation, to what extent, etc.

It is also important to mention that INCOTERMS had some changes and the latest version is the 2020 edition where basically it is pointed out that INCOTERM DAT (Delivered at Terminal) is renamed to Delivered at Place Unloaded (DPU) and that INCOTERM FCA (Free Carrier) now allows for Bills of Lading to be issued after loading.

To get to know all these INCOTERMS, the following infographic is very helpful.

UNDERSTAND & MAKE THE MOST OF INCOTERMS® 2020. https://www.dhl.com/global-en/home/our-divisions/global-forwarding/forwarding-insights/linkedin/understand-incoterms.html

INVENTORY LEVEL IN WAREHOUSES IN AN ELEVATOR COMPANY

During my working experiences in an elevator company, I struggled with many “problems” every day. However, the most painful was not having components in stock.

My job was to give support to operations, son whenever they had a defective piece, a broken component or due to human error, a damaged device, supervisors asked me for a new one. And for sure, the need of this component was in many cases urgent because not having it meant that the elevator was not about to work for a while, so the installation and programming will take more time and the delivery date of it would be delayed.

Unfortunately, in most cases the component was not available in our warehouse, so I had to make an order to import it from the central warehouse in Brazil and depending on the urgency of the need, the component we asked for it to be delivered by truck, ship, or plane. If it was delivered by truck it took 10-15 days, if it was delivered by ship, 20-30 days and by plane, 2-5 days.

But, why were not all these components available in our local warehouse? Something is failling with inventory level. According to Chopra, S. (2019) “the optimal level of product availability is one that maximizes expected supply chain profits”. So here is the answer, since every component has particularities (they all vary on cost, size, volume, etc.) the logistic department needs to make sure that there is no risk of deterioration due to storage time, obsolescence, or having a stock of very expensive parts and having “saved money” in vain, overstock of not highly demanded components, etc. Therefore, there is a need of having an optimal level of product availability for each product in each warehouse in order to maintain the right stock level of each component. This indicator would be very helpful because it aims to maximize the profits by analyzing the tradeoff between cost of overstocking and understocking against the probability of the demand.

Hence, correctly controlling an optimal level of product availability could be a in important issue to incorporate to the company so that the demanded products with highly importance to the production process (which can be easily recognized by the history of orders placed) could be available in local warehouses.

Chopra, Sunil, (2019), SUPPLY CHAIN MANAGEMENT 7ED. Madrid, España: Pearson Global Editions. Obtenido de https://www.ingebook.com/ib/NPcd/IB_Escritorio_Visualizar?cod_primaria=1000193&libro=12768

LOCAD. How to Determine Optimum Inventory Levels. https://golocad.com/inventory/inventory-level/

REVERSE LOGISTICS IN COCA-COLA

Reverse logictics refers to the process of recovering products or materials from customers to extract value or as after-sales services. There are various definitions of reverse logistics, which generally focus on the collection, disassembly, and processing of used products or materials to maximize their value and sustainable use. Reverse logistics is considered a business activity that encompasses operational, administrative and IT processes to manage the return of merchandise and/or logistics support within the supply chain in the most effective and efficient way possible.

Being said this, we can find a clear example of reverse logistic with The Coca-Cola company. They have returnable process line that consists of the reuse of PET and glass bottles, they take the responsibility of the collection of the containers for its subsequent reuse. In this way, the use of single-use bottles is largely avoided, reducing the amount of waste. It also allows them to save costs because they reuse the containers and at the same time, they allow themselves to offer a lower price to their products offered in these presentations.

With this simple example of Coca-Cola, we can see that the reverse logistics process implies managing the used products and that it is possible to efficiently reuse them. In the video we can appreciate what Coca-Cola calls the “returnable cycle”, which is the reverse logistics process that they apply with their line of returnable products.

https://dialnet.unirioja.es/descarga/articulo/3346655.pdf

Understanding the supply chain: and overview of Chapter 1 of Supply Chain Management book.

First it is important to have clear concepts of supply chain and SCM. Supply chain consists on the interaction of all parties involved in fulfilling a customer request, while supply chain management (SCM) refers to the coordination and management of activities involved in the production and delivery of products and services to fulfill customers’ needs. The objective of a supply chain is to obtain a high profitability, which will show how successful a supply chain is. The higher the customer value (assets) and the lower the supply chain cost, the better the supply chain is, this is why it is so important to correctly manage it.
There is a huge importance on making good decisions in a supply chain because it determines the way it will work because it determines the way in which work will be done to achieve a product or service and its respective delivery to the client. SCM is in charge of making these decisions and the author defines three phases.

DECISION PHASES IN SUPPLY CHAIN

1. Supply chain strategy or design
   Corresponding to the strategic part of the decisions, since the long-term structure and ways of working are established, defining processes and policies for several years.
2. Supply chain planning
   Corresponding to the tactical part of the decisions, in this phase the definition of: which markets will be supplied, from which locations, the subcontracting of manufacturing, the inventory policies to be followed and the timing and size of the marketing and price promotions are made.
3. Supply chain operation
   Corresponding to the operational part of the decisions, this focuses on working in the short term with activities like the allocation of inventory to individual orders, set of dates when an order needs to be filled, generating picklist at the warehouse, setting delivery schedules for trucks, etc.

PROCESS VIEWS OF A SUPPLY CHAIN

As mentioned before, a supply chain is a sequence of flows and processes given by the interaction of stakeholders, and these processes can be understood from two points of view the cycle view and the pull/push view.

The cycle view in a supply chain depends on the interaction of all actors in the process. These cycles are:

1. Customer order cycle
2. Replenishment cycle
3. Manufacturing cycle
4. Procurement cycle

However not every supply chain has the four cycles occurring one after the other, sometimes they occur simultaneously or simply do not occur.

Chopra (2019). Supply Chain Process Cycles.

The pull/push view refers on how the supply chain operates depending on the demand of the end customer. In a push view the production process starts before the demand and ensures to have an offer available when the consumer requires it, on the other hand, the pull view occurs when the consumer requests a product or service and from that moment the production process begins to meet the customer’s need.

Chopra, Sunil, (2019), SUPPLY CHAIN MANAGEMENT 7ED. Madrid, España: Pearson Global Editions. Obtenido de https://www.ingebook.com/ib/NPcd/IB_BooksVis?cod_primaria=1000193&codigo_libro=