All posts by cmerizaldea

Restaurants and distribution network adversities during quarantine

Big Fast Food Chains, as McDonalds – have its business circle completed. McDonald’s replaces most of its suppliers through backward vertical integration (Buying Suppliers Companies) in order to reduce cost and ensure that its products are of top quality. They also have their own fleet of transportation, warehouses to manage stock and distribution to its restaurants (Franchisees). Financial muscle and well-structured distribution network, will allow this type of companies to overcome and easily keep on during quarantine.

However, small restaurants (entrepreneurs) are facing difficult times and even have a potential risk to go bankrupt, the situation will affect its distributors (That are losing fresh products) on their warehouses (Stock Keeping Unit) as the producers – who are also losing, as no many could purchase – have harvested or produced in advance products to keep food market running and stocked. At some point, if the quarantine gets expanded, we will face shortage of some products, as the producers are not able to keep producing as they used to.

Said so, after quarantine, both; big and small restaurants will face adversities on running their business as they were doing it, product variety will be quite hard to overcome, as distributors will principally focus on supplying large chains of restaurants, that will affect customer experience and probably return ability of its clients.   

It is advisable to proper tele work and start planning ahead with partners (Suppliers, Producers, clients, etc.) in order to have everything ready to go after the crisis is overcome, as many will go out and fill restaurants. As per the News, many entrepreneurs have fired its employees as strategy to survive, nevertheless, after quarantine, and having in mind that they could not properly train staff, losses in terms of bad service will be notified.

Companies shall take this period in order to re-establish strategies, check new systems for inventory control, developing new communications channels, offer mew marketing campaigns and properly study where to reduce cost.  

MERCADONA’S Inventory Control during state of emergency

Since COVID 19 has aggressively reach Spain, Mercadona, and others, have been, quite often, running out of stock, after couple of ours of being opened. Poultry, fruits and primary food shelves are emptied due to people over buying and stocking its places. Shelves are left unfilled during the day.

Reconciling, has become a primary task for Mercadona, and they have to carefully increment the review period every day in order to fill shelves at the prior present, but having in mind the safety stock, in local warehouse or transit – overseas and mainland – that they hold will be enough for the coming weeks.  

Holding cost has reduced, but set up and acquisition cost has risen; 20 % of salary increment due to the effort placed by the servers and more much for emergency acquisition orders. Even though Juan Roig has announced that Mercadona has enough goods and won’t be stockout, people still complaining for empty and unfilled shelves.

Stock and logistics managers are facing hard-hitting time to solve complains, whether clients are right by complaining, without fully understand the situation, or overwhelmed with the crisis; will be judged, as preferred supermarket, at the near future by its chiefs, as Mercadona call its clients.

Passion fruit // PRODUCTS AND LOGISTICS

Exotic nontraditional fruits are blooming in EU, and the producers keep improving logistics in order to export its product to different markets. Yellow passion fruit should be stored at 7°C to 10°C with 90% to 95% relative humidity, now a days there is containers that could fulfill those requirement, and if the exporter follow the cooling procedures, there is a potential storage-life of 3-5 weeks.

Exporters could send these type of fruit by container if the destiny is quite close, however, most of the time and for long distances this fruit shall be exported by plane, using a cooling storage, in order to deliver the fruit in adequate conditions. Normally it could be more expensive to transport a fruit in a plane, since it take lower days to arrive, yet in this type of fruits it is worth it to do it, as the client is willing to pay fairly more to other fruits.

Arranging logistics depend on the distance, durability and urgency of the client, if there is a possibility to draw a delivery plan schedule is essential for a producer and exporter company, however, if the relationship with the client won’t allow it, it is mandatory to have a closer look to logistics with regards, time table of the vessels, estimated time of departure and arrival, and nationalization process, before reach the warehouse and later the shelves.

IKEA’s Swedish Restaurant and its Queuing system

Since I have learned about Queuing Theory and its advantages, I was able to fully understand what was going on during rush hour at the IKEA’s Swedish restaurant with many people waiting to be served. As explained by our professor – Queues grow due to variability and they cannot be eliminated due to high utilization.

Last Friday I went to purchase furniture, after a while, me and my family, had also to stop by the restaurant; while I was waiting on the long queue, which has two different enters to separate customers and made them follow the unique line until the servers, I was realizing that the variability of many people arising at the same time has provoked a rush hour and a long queue, nevertheless, and even though IKEA’S restaurant manager called another server, for each enter, the queue was getting bigger and bigger.

They have optimized the way of self-serving for a quicker and smooth experience. As a costumer you can filled your tray with many types of foods, until you reach the main station for the main dish, where you definitely need to be served.  I have used Allen-Mceen approximation theory to calculate the time I will spend on the queue before served – even though I did not as fact, how it will take to serve each person – by using utilization levels, the number of servers and the variability at the entry and at the service, having as a result a close guess of the time that I did spend there.

After spending 15 minutes (Aprox) in a queue of 25 + I have realized that not necessarily a queue is a bad situation, and if managed properly, like Ikea does, by making their clients being occupied while they are waiting, it could also be a good experience.