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Supply Chain Risk Management

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While globalization, extended supply chains, and supplier consolidation offer many benefits in efficiency and effectiveness, they can also make supply chains more brittle and can increase risks of supply-chain disruption. Historic and recent events have proven the need to identify and mitigate such risks. That the reason that Supply Chain Risk Management (SCRM) is essential to a successful business. It is also a competence and capability many enterprises have yet to develop.

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The Supply Chain Risk Leadership Council (SCRLC) defines Supply Chain Risk as the likelihood and consequence of events at any point in the end-to-end supply chain, from sources of raw materials to end use of customers, and SCRM as the coordination of activities to direct and control an enterprise’s end-to-end supply chain with regard to supply-chain risks.

SCRM focuses on:

  • Identifying internal and external environments
  • Risk identification and assessment
  • Risk treatment
  • Continual monitoring and review of risks and their treatment.

The efforts to implement SCRM must address four principles:

  1. Leadership
  2. Governance
  3. Change Management
  4. The Development Of A Business Case.

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In the following table is demonstrated the potential risks to an organization and its Supply Chain by categories.

 

Category

Potential Risk

Samples

External, End to End Supply Chain Risks

Natural disasters

  • Epidemics
  • Earthquakes
  • Tsunamis
  • Volcanoes
  • Weather disasters (hurricanes, tornados, storms, blizzards, floods, droughts)

Accidents

  • Fires
  • Explosions
  • Structural failures
  • Hazardous spills

Sabotage, terrorism, crime, war

  • Computer attacks
  • Product tampering
  • Intellectual theft
  • Physical theft
  • Bombings
  • Biological and chemical weapons
  • Blockades

Government Compliance and Political Uncertainty

  • Taxes, customs, and other regulations
  • Compliance issues: Regulatory and restrictions
  • Currency fluctuations
  • Political unrest
  • Boycotts

Labor Unavailability and Shortage of Skills

  • Availability
  • Quality
  • Cost
  • Unrest
  • Strikes and slowdowns

Market challenges

  • Capacity constraints
  • Unstable prices
  • Lack of competition
  • Entry barriers
  • Capital requirements
  • Specific assets
  • Design patents
  • Process patents
  • Shrinking industry
  • Low supplier profitability
  • Certification
  • Cost trends
  • Recessions/Inflation

Lawsuits

  • Environmental
  • Health and safety
  • Intellectual property

Technological trends

  • Emerging technologies (pace/direction)
  • Obsolescence
  • Other technological uncertainty

Supplier risks

 

Physical and regulatory risks

  • Key Suppliers Located in High Risk Areas
  • Material Unavailability/Poor Planning
  • Legal Noncompliance / Ethical practices
  • Regulatory Noncompliance

Production problems

  • Capacity
  • Inflexible Production Capabilities (Long setup times)
  • Technological Inadequacies or Failures
  • Poor Quality
  • Lead Times

Financial losses and premiums

 

  • Degree of Competition/Profitability
  • Financial Viability

Management risks

 

  • Planning
  • Management Quality
  • Substituting inferior or illegal materials/parts
  • Lack of Continuous Improvement
  • Dependence on One or a Few Customer(s)
  • Poor Communication

Upstream supply risks

 

  • Any of the above external/supplier risks
  • Lack of visibility into subcontractors
  • No or poor relationships with subcontractors
  • Diminishing sources of supply
  • Transition “costs” for new suppliers

Distribution Risks

 

Infrastructure unavailability

 

  • Roads
  • Rails
  • Ports
  • Air capacity/availability

Assets-Lack of capacity or accidents

 

  • Containers
  • Trucks
  • Rail cars
  • Ships Airplanes

Labor unavailability

 

  • Truck drivers
  • Rail operators
  • Longshoremen Pilots

Cargo damage or theft

 

  • Physical damage
  • Theft and other security problems
  • Tracking the damage
  • Environmental controls (e.g., temperature, humidity)

Warehouse inadequacies

 

  • Lack of capacity
  • Inaccessibility
  • Damage
  • Environmental controls (e.g., temperature, humidity)
  • Lack of security

IT system inadequacies or failure

 

Long, multi-party supply pipelines

  • Increased chance of all problems above
  • Longer lead time

Internal Enterprise Risks

 

Operational

 

  • Loss of Inventory (damage, obsolescence)
  • Equipment loss, mechanical failures
  • Process Issues: reliability, robustness, Lead time variability, Inflexible Production Capabilities (long set up times, etc)
  • Capacity
  • Poor Quality
  • Environmental performance to permits / other

Government Compliance and Political Uncertainty

  • Taxes, customs, and other regulations
  • Currency fluctuations
  • Political unrest
  •  Boycotts

Demand Variability/Volatility

  • Drawdown of the stockpile
  • Exceeding maintenance replacement rate
  • Shelf life expiration
  • Surges exceed production, repair, or distribution
  • Shortfalls

Personnel Availability/Skills Shortfalls

  • Sufficient number
  • Sufficient knowledge, skills, experience
  • Union contract expiry
  • High turnover rate

Design uncertainty

 

  • Changes to requirements
  • Lack of technical detail
  • Lack of verification of product
  • Changes to product configuration
  • Poor specifications
  • Reliability estimates of components
  • Access to technical data
  • Failure to meet design milestones
  • Design for supply chain (e.g., obsolescence, standardization, and commonality)

Planning failures

 

  • Forecast reliability/schedule availability
  • Planning data accuracy
  • Global visibility of plans & inventory positions
  • Competition/bid process
  • Acquisition strategy
  • Manufacturability of a design
  • Program maturity
  • Subcontracting agreements

Financial Uncertainty/Losses

  • Funding availability
  • Workscope/plan creep
  • Knowledge of supplier costs
  • Strategic risk

Facility Unavailability/Unreliability/ Capacity

  • Facility breakdown
  • Mechanical failures
  • Sites located in high risk areas
  • Adequate capacity

Testing Unavailability / Inferiority / Capacity

  • Unreliable test equipment
  • Operational test qualifications
  • Operational test schedule
  • Integration testing
  • Transition from first test to mass production

Enterprise Underperformance/Lack of Value

  • Customer satisfaction/loyalty
  • Liability
  • Cost/profit
  • Customer demand
  • Uniqueness
  • Substitutability
  • Systems integration
  • Other application/product value

Supplier relationship management

  • Contract/supplier management availability and expertise
  • In-house SRM expertise
  • Lack of internal and external communication/coordination
  • Supplier development and continuous improvement Supplier communications

To summarize the SCRM is an integrated sub-process of a company-wide risk management process. The coordinated goal definition, risk identification, risk analysis, risk management, and monitoring and control of the efficiency of systems and measures make up the key elements.

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The proactive phase involves developing a corporate strategy that is in line with the objective to achieve a defined delivery capability in case of a harmful event, while striking an efficient balance between required capacities for recognizing and managing supply interruptions, and susceptibility to disruptions in the supply chain. 

References: 

Learning more about Supply Chain from LEGO, the world famous toy manufacturer.

Resultado de imagen para LEGOLEGO is a leading company in the toy-making industry and the sixth-largest enterprise in the field. The word “lego” is an abbreviation of two Danish words, “leg godt,” which means “play well.” In Latin, the word means “I put together.” The Danish company was founded in 1932 by Ole Kirk Kristiansen, whose small carpentry workshop failed at providing wood supplies. She switched from the workshop business to wooden toys. Then, he bought an injection-molding machine and started to create toys using plastic materials. Nevertheless, Brick-toy manufacturing was launched in 1958, giving the company more ways to compete and opening the door to unlimited building capabilities.

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The company has more than 5,000 employees around the world, and its main facilities are located in LEGOLAND in Denmark. The company has 12,500 warehouses and more than 11,000 suppliers. In addition to the production location in LEGOLAND, production sites are located in Switzerland, Czech Republic, the US and South Korea. Since the start of the company, LEGO has maintained a clear vision of “inventing the future of play.”

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Universities, companies and supply chain institutions incorporate the use of Lego into curriculum or program, especially for Supply Chain simulations, to provide hands-on learning opportunities. These simulations allow professionals and students to go through a process, apply fundamental principles to a situation, for example Lean Manufacturing, and then see the outcome and benefits of operational excellence.

One of the simulation game is the Lego Truck Game that demonstrates the relationship between material and production control through a number of departments in a total supply chain. During the workshop, the key of Lean is taught the concepts and then illustrated them with the simulation or game. Moreover, the simulation game help to create teamwork and delegation skills.

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Lego changed marketing  a toy to an educational tool. This strategy has been effective as it shows in the following videos. 

References:

Business Process Excellence BPE

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The last few decades, we have seen a lot of companies have implemented a host of different methodologies to improve the quality and efficiency of their outputs: Lean Manufacturing, TQM, Business Process Reengineering, Six Sigma, BPM, Business Performance Improvement, and so on.  What all these methodologies have in common is a focus on PROCESS: An activity through which something, tangible or intangible, is transformed into something else.

At its most fundamental level, BUSINESS PROCESS EXCELLENCE is NOT a methodology, it is about IMPROVING THE WAY THAT BUSINESSES CREATE AND DELIVER VALUE TO THEIR CUSTOMERS.

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Meanwhile, Lean and Six Sigma give companies supported tools and techniques to solve problems, and Business Process Management (BPM) looks at how aligning people, process and technology and automating key tasks can take business performance to the next level. However, the key is not just changing processes, is to change the way that people within a company work and behave.

That’s why BPE is about so much more than process improvement techniques. It’s about learning to solve problems and manage change, performance, and workplace culture to align with overall BUSINESS STRATEGIES.

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The BUSINESS PROCESS EXCELLENCE has become a key factor for success, next to the sustainability, organizational change management and quality management.

References

Logistics Performance Index

 

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One of the most salient benchmarks in supply-chain management is the World Bank’s Logistics Performance Index (LPI), which has received wide acceptance and coverage. Its goal is to assess how countries rank in the managerial and physical effectiveness of their logistics.

The LPI is an interactive benchmarking tool created to help countries identify the challenges and opportunities they face in their performance on trade logistics and what they can do to improve their performance, its main objective since it was created in 2007. The LPI 2016 allows for comparisons across 160 countries.

The LPI is a composite index based on proxy measures for transport and information infrastructure, supply chain management (SCM), and trade facilitation capabilities, which are calculated based on a world survey of international freight forwarders and express carriers. Therefore, it consists therefore of both qualitative and quantitative measures and helps build profiles of logistics friendliness for these countries. It measures performance along the logistics supply chain within a country and offers two different perspectives: international and domestic.

International LPI:

Provides qualitative evaluations of a country in six areas by its trading partners—logistics professionals working outside the country.

Domestic LPI:

Provides both qualitative and quantitative assessments of a country by logistics professionals working inside it. It includes detailed information on the logistics environment, core logistics processes, institutions, and performance time and cost data.

In 2016, more than 7,000 country assessments were made by logistics professionals, in line with the past two years. Moreover, this year covers 160 countries in the international LPI, whereas the domestic LPI covers more than 125 countries.

LPI

The World Bank’s LPI analyzes countries in six components:

  • The efficiency of customs and border management clearance
  • The quality of trade and transport infrastructure
  • The ease of arranging competitively priced shipments
  • The competence and quality of logistics services
  • The ability to track and trace consignments
  • The frequency with which shipments reach consignees within scheduled or expected delivery times

The Top Ten 

LPI

Spain and DR are in the position 23 and 91, respectively. 

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The LPI Methodology

Because logistics has many dimensions, measuring and summarizing performance across countries are challenging. Examining the time and costs associated with logistics processes—port processing, customs clearance, transport, and the like—is a good start, and, in many cases, this information is readily available. But even if complete, this information cannot be easily aggregated into a single, consistent, cross country dataset because of structural differences in country supply chains. Even more important, many critical elements of good logistics such as process transparency and service quality, predictability, and reliability cannot be assessed using only time and cost information.

The following tables show how they group the countries and the results of 2016. 

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Sources:

 

CAUCEDO LOGISTICS CENTER First Logistics Center inside a port in the America Regions!!!

CLC

How does Dominican Republic offer a powerful combination of logistics services?

planeta_w1024_elipse-2As retailers and other logistics experts understand, global logistics planning is all about efficiency, and that’s what Caucedo offers. The Port of Caucedo is only one component of the Caucedo Logistics Center, where seaport, airport, and warehousing operations are combined in a single site. The entire zone was designed to serve near-sourcing and multi-destination shipments in a strategic Caribbean location that is 27 days, or more, closer to the final market than Asia.

So, What is Caucedo Logistics Center?

CLC is undoubtedly the best integrated logistics solution in the region, located at the midpoint of the Americas and center of the Caribbean, its strategic location provides the best platform for regional distribution and a perfect opportunity for companies to enhance the efficiency of its supply chain.

Providing up to 300,000m² of built-to-suit warehouses available for lease inside DP World Caucedo Port, allowing for unparalleled savings in transportation costs and offering efficient customs procedures.

Multimodal Connection

Right next to Las Americas International Airport, its position increases the flexibility for companies to quickly expedite their cargo either by air or sea.

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Competitive Advantage

Caucedo is already one of the major transshipment port of the region, serving as hub for 16 of the major shipping lines in the industry. Its location provides the least standard deviation for the main East-West and North-South shipping routes.

DR has a population of over 10.5M and is currently the #1 economy in the Caribbean and #1 recipient of FDI in Central America and the Caribbean.

Our robust Free Zone law offers unparalleled incentives allowing for more than 55 Free Zone parks and over 533 multinational companies to use the DR as their manufacturing and logistics hub.

With advanced road infrastructure and an availability of well-trained, multi-skilled and competitively priced labour force, the DR is the ideal location to develop your logistics infrastructure.

Adding to that, the location of the CLC makes it ideal for multimodal operations being located inside the port and roughly 5 minutes away from the Las Americas International Airport. In a second phase, the project will include an airport expressway running directly from the project to the cargo terminal of the airport.

Benefits of CLC

  • Significant reduction in supply chain costs
  • Improved product availability and visibility of inventory
  • Improved time-to-market of key product lines
  • Increased efficiencies “DC bypass” and cross-docking
  • Reduction in transportation costs
  • Reduced inventory across the supply chain
  • Reduced road congestion and environmental pollution

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Specifications

  • High quality class A warehouses
  • Modules available starting at 890m² (column free)
  • 10m clear height
  • Precast concrete beams structure – Less columns than average warehouse allowing more efficient use of space

Opportunities

  • Free zone benefits for users 
  • Multimodal connection 
  • Available for immediate construction
  • Excellent multi-modal national and international transport connections
  • Direct access to DP World Caucedo Port
  • Inside Primary Customs Area

The CLC will offer all services needed for companies to effectively run their operations:

  • 24/7 operations
  • Recruitment and selection of personnel
  • Waste/garbage disposal
  • Fiber optics connections
  • Electrical sub-station and backup generation
  • Technical vocational training centers
  • Banks, food service and shipping agencies
  • Security patrol 24/7 – Connected to Port’s CCTV monitoring system

IKEA

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On July 11th of 2016, IKEA and Caucedo Logistics Center (CLC) celebrated the start of construction of the new IKEA regional logistics operations building, strategically located in the facilities of Caucedo. This logistics center will be the main logistics redistribution platform of IKEA for the Caribbean and America, receiving goods from different geographical areas for consolidation and redistribution from DR.

 

References: 

DP WORLD CAUCEDO

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DP World Caucedo is a world-class marine terminal and free zone, located in Punta Caucedo, 25 km from the city of Santo Domingo which is the commercial and political capital of the Dominican Republic. 

The Caucedo´s Port main driver is in the combination of land, air and ocean transportation with the objective of projecting the DR as a strong competitor in international markets and to be an example of development on a national and regional level.

This port is part of the DP World portfolio of marine terminals. This company is a global leader in Operations, terminal development, logistics and other related services. With more than 65 terminals on 6 continents, including new development projects in India, Africa, Europe and Middle East.

Caucedo´s operations started in December 2003 and works under the highest standards with quality and operational efficiency, providing the cornerstones of its success and development.

Strategy

Its strategy is all about making the best use of the resources at their disposal in order to obtain a predetermined goal. It describes their plan to maximize value through leveraging their world-class infrastructure, to strengthen global supply chains and to generate sustainable economic growth.

Recently, they introduced the concept of the Balanced Scorecard Framework to communicate their strategy, with the aim of communicating a clear, consistent and shared vision of DP World Caucedo for a sustainable future. This Balanced Scorecard Framework defines strategic pillars to be implemented across the company and strategic priorities which are measured against KPIs.

Port Services

Their main activity is the loading and unloading of container ships visiting the port, as well as break-bulk cargo. This activity is carried out in an efficient, effective and continuous manner, during 24 hours a day, 365 days a year. DP World Caucedo offers a wide range of port services for importers and exporters in DR.

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Some of these services are:

  • Secure storage of loaded containers.
  • Assistance in customs/verification area, of personnel trained and/or forklift.
  • Re-stowage of containerized goods.
  • Electricity and monitoring services for refrigerated cargo.
  • Handling of oversized/out of gauge cargo.
  • Vehicle Discharge.
  • Storage of imported vehicles, monitored by a CCTV system.
  • The parking area is managed and controlled by ZFMC.

Caucedo Routes

  • To North America
    • MEDITERRANEAN SHIPPING COMPANY
    • HAPAG LLOYD
    • NIPPON YUSEN KAISHA
  • To Central America
    • HAMBURG SUD
    • HAPAG LLOYD
    • X-PRESS FEEDER
    • MEDITERRANEAN SHIPPING COMPANY
    • MAERSK LINE
  • To Caribbean Islands
    • TROPICAL
    • CFS
    • MEDITERRANEAN SHIPPING COMPANY
    • MAERSK LINE
    • HAPAG LLOYD
  • To South America
    • MEDITERRANEAN SHIPPING COMPANY
    • HAPAG LLOYD
    • NIPPON YUSEN KAISHA
    • CMA CGM
    • CHINA SHIPPING
  • To Europe
    • HAPAG LLOYD
    • HAMBURG SUD
    • CMA CGM
    • MAERSK LINE
    • MEDITERRANEAN SHIPPING COMPANY
  • To Asia
    • CMA CGM
    • HAPAG LLOYD
    • CHINA SHIPPING COMPANY
    • HAMBURG SUD
    • ZIM 

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Source: https://www.marinetraffic.com/es/ais/details/ports/1486

Infrastructure

Proyecto Dragado - Seccion Proyectos-min

  • 922 meters of berth
  • -13.5 meters of depth (-15 meters Q2 2015)
  • 50 hectares of container yard
  • 800 Reefer plugs
  • 5 Post-Panamax cranes
  • 1 Super Post-Panamax cranes
  • 23 Rubber tire gantries (RTG’s)
  • 2 mobile harbor cranes
  • 13 inbound yard lanes
  • 5 outbound yard lanes
  • 24/7 operations – 365 days
  • X-rays scanners at gates
  • Radioactive detection portals
  • CCTV surveillance system
  • Biometric access

Security Accreditations 

  • Caucedo was the first terminal in the DR to be ISPS certified.
  • Caucedo is a member of the US Customs-Trade Partnership Against Terrorism (C-TPAT), a voluntary program that aims to enhance the security and efficiency of global supply chain operations through active collaboration with US Customs and Border Protection (CBP), shipping lines and end-customers.
  • Caucedo participates in the Megaports and US Container Security Initiative (CSI), which deploys US Customs officials in the port.

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To continue: DP World is building a 40 acre free zone Logistics Centre next to the terminal. In the next blog, I will talk about this Caucedo Logistics Center, where seaport, airport, and warehousing operations are combined in a single site.  

References: 

Pros and Cons of CROSS DOCKING

Cross dockingCross Docking is to transfer the goods and materials from an inbound carrier to an outbound carrier without storing it at a warehouse. ( Ray Kulwiec)

It can help the company lessen the need for materials storage, speed deliveries and generally improve your supply chain management. In summary, Cross Docking  helps improve the Inventory and Operation, to be more efficiency.

When a company implements a Cross Docking, the distribution operation would reduce normal processes to just:

  • Receiving
  • Staging
  • Shipping

 

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Advantages of Cross Docking including:

  • Reduce the inventory and safety stocks.
  • Reduce the cost of inventory on hand, as well as labor costs and the number of part damage
  • Reduce the number of touches applied to materials, reducing the cycle time.
  • Improve the flow of the material in the network
  • Expediting the customer order
  • Customer Satisfaction

Nonetheless, implementing Cross Docking is not easy, and needs a lot of consideration and preparation. It must be programmed and monitored carefully, and requires a good collaboration among all members of the chain.

The basic steps involved in implementation of Cross Docking are:

  • An awareness of the demand at customer level (point of sale)
  • Knowledge of the destination of incoming items even before their arrival at distribution centers, and
  • The same unit of measure from both inbound and outbound carriers.

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Be carefull, the Cross Docking should not be used to replace inventory. Late changes in customer order, disruption in production planning, and shipment disorder are all examples that make the inventory inevitable in supply chain network.  But if it implements correctly then it improves the flow of goods in the network and will reduce the holding inventory.

 

 

Reference:

Crossdocking as a supply chain strategy, Ray Kulwiec , target volume 20, Number 3.

http://searchsap.techtarget.com/answer/How-can-SAP-cross-docking-optimize-my-supply-chain

https://blog.kinaxis.com/2016/11/crossdocking-for-supply-chain-network-efficiency/

Walt Disney World now testing virtual queue system at water parks

The objective of a queuing system is to find out the optimum service rate and the number of servers, so that the average cost of being in queuing system and the cost of service are minimized.

By nature, the service companies most affected by queues and the waiting time of the customers, are those which offer services of entertainment and more if they are for the children´s market. This is the case of Walt Disney. 

“Virtual queue” is not literally a new concept for Walt Disney, in Universal Studios Tour in Hollywood they had used a FastPass,  boarding pass for the World Famous Studio Tour where guest would be given “return times” when entering the park to encourage guests to experience other shows and attractions in the park as opposed to waiting for hours in line.

Now as Universal Orlando sets to opening Volcano Bay Water Theme Park in late may they are introducing another concept “Virtual queue” hat has been floating around small parks for years but this will be the first large scale use in the United States, TapuTapu a wearable pager of sorts that will let guests know when it is time to head to which ever water slide with no wait.

A virtual queue allows guests to “save a spot” in the line for an attraction without physically standing there, so they can enjoy the wave pool or lazy river while waiting their turn on a wristband. Current virtual queue testing includes Downhill Double Dipper, Slush Gusher and Summit Plummet at Blizzard Beach, and the new Miss Adventure Falls at Typhoon Lagoon.

TapuTapu Wearable bands

The guests should visit a  distribution table as the walk up the mountain and are given a return time to Summit Plummet later in the day. They need to used a wristband, that is just a hard plastic card on a rubber band with the attraction name, return time window, and legal jargon on the back; that is, instead of a paper ticket, the time will be printed on a waterproof card attached to the wristband. When guests return during their appointed 15-minute window, they should experience a nominal wait before riding.

The current test of this virtual queue system is set to run through April 7th.

Reference:

http://attractionsmagazine.com/walt-disney-world-introduces-virtual-queue-water-parks/

http://www.laughingplace.com/w/articles/2017/03/29/walt-disney-world-water-parks-virtual-queue-testing/

The logistic transportation race wins with LNG

One of the most expensive aspect in the logistic indicators is the price of the fuel used in the fleets.

In December of 2016, Scott Perry, who is chief technology and procurement officer at Ryder Global Fleet Management Solutions, wrote an article in APICS Magazine about how this decision is fueling to make the switch.

Quote the relevant point of the publishing:

These days, most people at the pump are celebrating the continuation of inexpensive oil. However, many transportation and logistics professionals are cursing the low prices because they complicate the choice between diesel and natural gas as well as related fleet equipment-purchasing decisions.

Of course, today’s low diesel prices will not last forever. Furthermore, from year to year, emissions rise and fall because of changes in the economy, the price of fuel, weather, and other factors. No matter the current state, being fuel efficient is a key performance indicator for natural gas vehicles (NGVs).

Smart fleet managers focus on miles per gallon all the time, one fleet at a time. They think about the longer-term benefits of switching truck fleets to natural gas. Potential benefits include fewer carbon emissions, a lower price per gallon, and public recognition that you are doing your part to help reduce greenhouse gas (GHG) and carbon dioxide emissions.

 

Transportation and logistics professionals have an important role to play. In fact, the US Environmental Protection Agency reports that the US transportation sector is the nation’s second-largest contributor of GHG emissions, accounting for 26 percent from 1990 to 2014. The total rate for 2014 was 6,870 million metric tons of carbon dioxide equivalent (MtCO2e), with medium- and heavy-duty trucks composing 23 percent of that segment. Emissions by these trucks increased 76 percent during that time—much more rapidly than that of passenger cars.

Compressed natural gas (CNG) vehicles produce 40 percent fewer GHG emissions than diesel and 80 percent fewer GHG emissions than certain renewable natural gas (biomethane from landfills) vehicles. However, because oil prices have fallen, diesel trucks cost the same as CNG vehicles to operate, so fewer companies are making the switch. In the long term, CNG trucks should be less expensive.

Other alternative fuel sources for commercial transportation, such as propane, also are evolving. There is evidence of propane gaining traction in the lighter- and medium-duty industry, but CNG continues to find applications across the entire portfolio of passenger; light-, medium-, and heavy-duty; and commercial vehicles.

CNG vehicles

Ryder is a provider of transportation and supply chain management products, including critical fleet functions, for more than 50,000 customers. Its NGV solutions for the commercial transportation industry encompass more than 100 million miles of experience, 22 NGV maintenance facilities, and more than 5,500 NGV-trained maintenance and support personnel. Along the way, the company has eliminated 35,269 MtCO2e GHG emissions and replaced approximately 15.4 million gallons of diesel fuel with lower-emission, domestically produced natural gas.

Ryder was an early mover toward natural gas because company leaders believe it is part of an energy-diversification strategy that will drive the continued evolution toward more advanced fuels. The company has deployed its NGVs into customer fleets in 16 US states and two Canadian provinces. To offer renewable natural gas—the cleanest fuel available today— Ryder also operates liquefied-to-compressed natural gas fuel stations at two service locations through a partnership with Clean Energy Fuels.

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A greener green

UBCR is one company enjoying the long-term benefits of Ryder NGVs. This Michigan-based beverage container recycler has a container recovery rate of 97 percent, the highest in the nation. Its role in the deposit system is to collect, transport, and process empty beverage containers for large retailers. UBCR picks up more than 100 million cases from more than 600 stores and 100 wholesalers.

UBCR has operated its Ryder NGV fleet across more than 7 million miles since 2011. The business has reduced its GHG emissions by approximately 2,704 MtCO2e and replaced more than 1 million gallons of diesel fuel with lower-emission, domestically produced natural gas. In addition, UBCR announced earlier this year that it would be renewing its NGV lease agreement with Ryder for its entire truck fleet, becoming the first Ryder customer to transition from first-generation NGVs to the latest available technology. Now, 16 CNG vehicles, designed with the latest modifications and technological advances, are replacing the entire truck fleet.

“As a leading recycling company, this important carbon-reduction initiative complemented our long-standing growth strategy, which is grounded in sustainability,” says Nick Kronsbein, general manager for UBCR. “Ryder made it easier for us to jump-start our sustainable transportation program and convert our entire UBCR fleet to abundant, clean, and efficient natural gas. In the process, UBCR has gleaned financial benefits, including gaining more control over our costs and budgets by investing in a predictable and stable fuel source, while contributing to the wellbeing of our environment.”

 

A matter of maintenance

News about fueling infrastructure and new technology advancements continues to capture most of the headlines, but one of the most critical—and most often overlooked—elements for a successful natural gas fleet operation is maintenance. Well-maintained vehicles reduce emissions and improve fuel consumption; thus, they are unquestionably better for the environment. To meet stringent industry and government safety standards for NGV maintenance, traditional shops must go through a modification process, and technicians must receive extensive, specialized training.

Ryder trains technicians on the latest NGV technologies in order to help develop a best-in-class workforce. In fact, in 2015, Ryder announced the launch of a new online NGV maintenance training program for its North American maintenance network. The initiative provides the company’s entire technician workforce with knowledge of a wide array of NGV platforms and configurations in order to better serve customers that commit to converting all or part of their fleets to natural gas.

One of Ryder’s first natural gas customers was Willow Run Foods, a fast-food systems distributor in the US Northeast and Mid-Atlantic. Serving customers in 14 states, Willow Run Foods provides one-stop shopping for chain restaurant operators. The company has significantly benefited from having well-maintained natural gas and diesel vehicles. It currently leases a fleet of 124 tractors from Ryder, 15 of which are CNG vehicles.

Ryder’s on-site maintenance operation and team of technicians ensure optimal fleet performance. The natural-gas-vehicle-lease component is expected to reduce GHG emissions by 500 tons and save Willow Run Foods more than $100,000 annually through a reduction of 175,000 gallons of diesel fuel consumption.

“Ryder made a commitment to provide and maintain a fleet that would ensure the integrity of transporting time-sensitive products from our facility to customer locations,” says Len Basso, vice president of operations at Willow Run Foods. “We receive quality equipment and an extended commitment that we’d never have a truck down for more than two hours.”

Looking forward

This certainly isn’t the first time—and it won’t be the last time—that volatile oil prices affect the alternative fuel market. As transportation and logistics professionals look to the future, energy diversification and natural gas should play major parts. More investment also should be made in commercial vehicle technologies, such as engines, fuel storage, and fuel stations. This will serve as an essential springboard for the overall success of the heavy-commercial industry.

 

References:

Article: http://www.apics.org/apics-for-individuals/apics-magazine-home/magazine-detail-page/2016/12/21/win-the-logistics-race-with-natural-gas

Video: https://www.youtube.com/watch?v=YU48AirLRC4