Summary and lesson learned in Logistic Summer 2022

I would like to use my last blog post to share a summary and my personal lesson learned from my summer semester at UPV in Logistic with Mister Garcia, with the blog members. At the beginning of the semester, Mister Garcia introduced us to logistics to get a first overview of the large field of logistics, as we all have different backgrounds in logistics as well.

Gradually, we worked out the topics of inventory control and queueing theory together. It was very interesting for me to learn that you can calculate queues, because like everyone, I have often stood in front of these queues and wasted time unnecessarily. The topic was very understandable, because Mister Garcia always mentioned practical examples from his life, which made the understanding of the topics much easier. From the middle to the end we have worked out the topics: warehousing, transportation and distribution. In these topics, a holistic view of logistics was taken and I understood the interrelationships of various processes better and better.

In summary, the logistics lecture was very exciting because we live in a globalized world and logistics is a very important factor in the current market and will become increasingly important in the future in relation to climate change. Also, the assignments and the improvement in the lectures were always helpful because you could reflect on your own mistakes.

Lesson learned

• Logistics does not consist of rigid numbers and processes that cannot be changed. On the contrary, logistics is a continuous improvement process.
• If you want to find solutions, you need a lot of data, which is difficult to provide in practice. Therefore, it is normal if you do not offer the perfect solution at the beginning.
• Hypothesis generation is a very important process in logistics, as many processes are interlinked. Therefore, it is not enough to just change a formula in Excel to get a solution.
• The topic of communication also plays a major role. At the beginning before the lecture, I thought that logistics only consisted of numbers and formulas that had to be calculated.
• The solution you develop for a company does not mean that this solution will be implemented, because the expectations and wishes are not always in harmony between the logistics manager and the management.
• The lessons with Mister Garcia were more about applying the knowledge in real cases and therefore in the real world. In Germany, my logistics lecture was only accompanied by process improvements and formulas. However, you cannot calculate communication in companies.
• Lastly, I learned that it is important to find pragmatic solutions. That means not always trying to work something out only with the numbers but observing the whole process from a bird’s eye view, because you can see what could go wrong and people are also a very important factor.

From syrup to the supermarket. The way of a Coca-Cola bottle

Everyone knows it, the famous and delicious cola bottle that gives you refreshment in hot summer days. However, only a few know where it is made or how it is delivered. The idea behind this blog was born in the logistics lecture, because none of the students could really tell how coca-cola gets to the grocery store.

Production

In the logistics lecture at Mister Garcia, we saw that the structure and design of a logistics center is very important. Especially in the case of Coca-Cola, the soft drink manufacturer has two delivery processes until it finally reaches the customer. In this process, the giant corporation acts as follows:

1. the syrup is delivered to the production plant.
2. it must be noted that Coca-Cola has specific bottles for each of its drinks.
3. water, sweetener and carbon dioxide are added to the syrup at the production plant.

Source: (1)

The final product is a delicious Coca-Cola bottle. But that’s not the end of the story, because the Coke bottle still has to be delivered to the customer. In 59 plants with a total of 279 production lines, Coca-Cola produces more than 12.5 billion liters of beverages annually. (2)

Distribution

There are few places in the world where there is no Coca-Cola available. Even restaurants in the deepest mountains offer Coca-Cola. Suppliers play a crucial part in Coca-Cola’s value chain. Coca-Cola also divides suppliers into three categories based on criticality and potential opportunities. (3)

Thereby the biggest customers are:

1. grocer
2. beverage wholesalers
3. direct sales
4. international key accounts

where the order indicates who is supplied the most. (4)

References

(1) https://www.theguardian.com/commentisfree/2017/may/02/plastic-bottles-coca-cola-recycling-coke.

(2) https://rp-online.de/nrw/staedte/moenchengladbach/wie-die-coca-cola-in-die-flasche-kommt_aid-16486007.

(3) https://www.coca-colahellenic.com/en/about-us/what-we-do/supply-chain.

(4) https://irf.fhnw.ch/bitstream/handle/11654/8886/OCE2001_Coca-Cola.pdf?sequence=2&isAllowed=y.

Logistics management as a competitive advantage

Logistics management is the process of organizing products and the flow of goods in the warehouse to reduce the time and cost of picking and shipping orders. Excellent logistics and trade management can give companies a competitive advantage.

What is logistics management in a company

Logistics management is a term that covers the planning of storage and transportation of goods to ensure their final delivery. This process includes the operations from the receipt of raw materials for the production of goods – or items shipped by suppliers – to the delivery of orders. (1)

Different departments of a company are involved in logistics. Their position in the organizational chart depends on the type of company and the importance of the supply chain in the company’s strategy. Logistics can be outsourced, integrated into the sales department or form an independent department in coordination with production. (2)

Logistics management roles are diverse and can include occupations such as supply chain technicians who provide the necessary resources to coordinate the movement of goods, operations managers who ensure optimal logistics organization, and warehouse supervisors who organize the daily operations of the logistics facility. (3)

Figure 1: Information and physical flow in Logistics
Source: Pragmatical Solving of Uncertainties on Production Flow, Mirela Teodorescu, July 2015

Logistics management objectives

Proper logistics management strives to create an efficient supply chain for achieving the following goals:

• Reduce costs. The appropriate use of logistics resources leads to a reduction in costs for the company and thus to better control of profit margins. This goal can be achieved by optimizing processes.
• Reducing the delivery time of orders. Fast service with deliveries in the shortest possible time is essential for customer satisfaction. That’s why companies are using methods to speed up the distribution of goods.
• Increasing the company’s competitiveness. Logistics management goes beyond organizing the movement of goods. By prioritizing factors such as flexibility in shipping orders and control of product traceability, companies can add value and differentiate themselves from their competitors.
• Environmental protection. Green logistics is setting the agenda. More and more companies are incorporating processes into their logistics management that help reduce the environmental impact of their operations. (4)

REFERENCES

(1) https://wirtschaftslexikon.gabler.de/definition/logistik-40330#:~:text=Logistik%20als%20Flow%20Management%20zielt,Dienstleistungen)%20in%20die%20Gestaltung%20miteinbezogen.

(2) http://www.wirtschaftslexikon24.com/e/logistik-organisation/logistik-organisation.htm

(3) https://www.logistik-studieren.de/infos/logistik-oder-supply-chain-management/

(4) Fettke, Peter; Supply chain management: State of the art of empirical research; 2007; p. 430

Artificial Intelligence in Logistics: Current Status & Opportunities

Artificial intelligence (AI for short) now offers a wide range of possible applications and opens up numerous new opportunities for logistics companies. Nevertheless, it is far from having arrived in the industry.

Current Status of AI in logistics

In a study by EHI Retail Institute GmbH, experts from various logistics disciplines see the most important areas of application for ML in demand forecasting and sales planning, transport optimization (e.g., through autonomous transport systems), and production optimization .
sales planning, transport optimization (e.g. through autonomous transport systems) and production optimization. AI and ML offer the possibility to data streams in one model and thus discover facts and dependencies. (1)

This results in more accurate predictions that form the basis for planning. The McKinsey Global Institute
estimates that, in most use cases, the application of AI in logistics
and SCM will lead to an increase in resource efficiency. With less manpower required, dependencies implicitly present in the data are identified and better decisions can be made. (2)

Greatest opportunities for AI in logistics

Data and algorithms enable forecasts under the influence of a wide range of parameters. But what can AI bring to logistics in concrete terms? According to the survey, logistics companies see the most potential in the following areas: (3)

• Demand forecasting and sales planning (62%).
• Production optimization (51%)
• Transport optimization (50%)

References

(1)  https://www.mckinsey.com/business-functions/quantumblack/our-insights/global-survey-the-state-of-ai-in-2021

(2) https://www.ehi.org/produkt/whitepaper-ki-im-supply-chain-management-des-handels/

(3) https://www.mckinsey.com/business-functions/quantumblack/our-insights/global-survey-the-state-of-ai-in-2021