This article was very interesting for me, to understand how the luggage handling actually works in the airports. It is a main service for us, students in different cities than our own, that we use airplanes many times in the year to go back to our homes.
Every year, more than 20 million passenger bags are mishandled, frustrating both passengers and airlines. In 2015, the airline industry spent over 2.3 billion dollars on mishandled bags alone. Luggage handling is a very complex process, making it important for airlines and airports to continuously work to improve the system. With over two billion bags carried through airports each year, it is vital to focus research to technological advancements to promote a more efficient and reliable process for travellers and airlines.
A lot of examinations made to gain an understanding of the way luggage travels through airports and research technological advancements to help the industry. To reach its final destination, luggage travels through a series of conveyors within an airport. Baggage handling systems read barcode tags, which many times are the source of many mishandling issues, as they fall off or cannot be read by scanners if they are dirty or facing the wrong direction. Many airlines are improving this specific part of the process to improve the overall system.
The researched technologies are currently being tested and implemented by airports and airlines. Many airlines, can report less mishandled luggage numbers with the implemented technologies, a fact that shows in a way, that we can hope the problem to be basically handled in the future.
If we think for a moment of our favorite store or restaurant, perhaps the concept of logistics doesn’t come to mind at first. But if we contemplate how that particular establishment obtains the products and materials needed to conduct business each day, the importance of logistics to our consumer lifestyle are undeniable. This post is just a reminder, of how important logistics are in our every day life.
Logistics management is that part of the Supply Chain Management process that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services, and related information between the point of origin and the point of consumption in order to meet customers’ requirements. (Maciek Nowak, 2015). Logistics can also be applied to business activities other than transportation, such as warehousing and material handling. Management is a critical element in successful logistics, due to the high degree of coordination and collaboration required among supply chain members.
The transportation and logistics industry is one of the most important industries in the entire world. Anything that can be found in a shop, was once loaded in a truck and transported from one location to another. If there was not a logistics network, it would not be possible to purchase items across the nation from their location of origin. Thanks to the interstate system, each state is able to specialise in certain products and services from which all citizens can benefit.
There are certain products, that are more time sensitive than others. Like fresh products and frozen food. Each day millions of goods, travel billions of miles through precise transportation networks in order to reach their final consumers in a timely manner. The fast and efficient nature of logistics, make customers able to purchase these goods in the ideal time.
Maciek Nowak, (2015). Trends in Supply Chain Management. Quinlan School of Business.
When we talk about logistics, Walmart comes in our mind. The American multinational retail corporation, that runs chains of large department and warehouse stores. The company that started with a single store and grown to the world’s largest and emulated retailer.
The following words, made the initiative for me to write this post, and talk about this well-known and respected company. “I don’t believe there is a university in the world that doesn’t talk about Walmart and the supply chain,” said James Crowell, director of the Supply Chain Management Research Center at the Walton College of Business. “They are just so well respected because they do it so well.”
Walmart began with the goal to provide customers with the goods they wanted whenever and wherever they wanted them. The company then focused on developing cost structures that allowed it to offer low everyday pricing. Walmart then concentrated on developing a more highly structured and advanced supply chain management strategy to exploit and enhance this competitive advantage and assume market leadership position. The entire organisation is committed to a business model of driving costs out of supply chains to enable consumers to save money and live better.
Cross docking
This is a logistics practice, to replenish inventor. It means the direct transfer of products from inbound or outbound truck trailers, without extra storage. This happens by unloading items from an incoming semi-trailer truck or railroad car and loading these materials directly into outbound trucks, with no storage in between. This is the center piece in Walmart’s strategy. Cross docking keeps inventory and transportation costs down, reduces transportation time, and eliminates inefficiencies.
Technology
In its pursuit of low consumer prices, Walmart embraced technology to become an innovator in the way stores track inventory and restock their shelves, thus allowing them to cut costs. Technology plays a key role in Walmart’s supply chain, serving as the foundation of their supply chain. Walmart has the largest information technology infrastructure of any private company in the world.
Supply Chain
Suppliers and manufacturers within the supply chain, synchronize their demand projections under a collaborative planning, connected through technology that includes a central database. What made Walmart so innovative, was that it has been sharing all these information with all their partners and back in the days, a lot of companies weren’t doing that. In fact, they were using third parties where they had to pay for that information.
Finally, Walmart streamlined supply chain management by constructing communication and relationship networks with suppliers to improve material flow with lower inventories. The network of global suppliers, warehouses, and retail stores has been described as behaving almost like a single firm.
From all the above we understand, that Walmart’s supply chain management strategy has provided the company with several sustainable competitive advantages, including lower product costs, reduced inventory carrying costs, improved in-store variety and selection and highly competitive pricing for the consumer.
This strategy has helped Walmart become a dominant force in a competitive global market. As technology evolves, Walmart continues to focus on innovative processes and systems to improve its supply chain and achieve greater efficiency.
In this post, I decided to write about a case I read, about a large manufacturer of safety products which wanted to reduce the costs and free up some space in the plant with better logistics. The company creates products for military vehicles, aircrafts etc. They approached Kanban Logistics, with a need to free up some floor space in its manufacturing plant. After several discussions about the options and capabilities, the company decided to offer a comprehensive inbound logistics solution, including inventory management, packaging and transportation.
The strategy Kanban offered, included the storage of all parts used in the final product. Each day, Kanban provided the exact number of parts required for that day’s production run. Parts were organised, to minimize time and effort for assembly workers, greatly increasing productivity. Furthermore, Kanban created some kits for end customers on behalf of the company and shipped them directly, avoiding the time and cost of doing it at the factory.
As for the quality assurance, it was done by members of the company’s quality team, who maintained an office within Kanban’s facilities. When units were completed, workers simply insert them into the ready boxes and seal them up, freeing up significant space and labor. Other finished units, were sent back to Kanban for storage and order fulfilment.
As we see from all the above, Kanban helped the company to handle the product and arrange outbound transportation using pre-approved carriers. They reduced significantly the price of storage and labor costs by all the services, and increased the throughput and productivity.
PepsiCo, The Problems of a Wrong Distribution Strategy.
When a company enters a foreign market, the keys to its success is the distribution strategy, the channels it uses, as well as market know-how and customer knowledge and understanding. The case study of PepsiCo, provides evidence of the situation that a company faces when its distribution strategy is not correct.
PepsiCo accessed the Ukrainian market, back in 1968 and since then has been trying to sustain its position in the market. Despite the fact that the supply-chain management has led Pepsi to gain local fame and popularity, it is inefficient in terms of cost, which reduces the ability of the company to earn higher profits. Pepsi needs to redefine and redesign its supply-chain strategy to meet the challenges faced in the market and sustain its position in the country, especially with these huge competitors joining in (f.e Coca – Cola).
Some possible solutions for Pepsi, if they want to gain competitive advantage in the market, is to invest further in its supply-chain management. Emphasis in research has been placed upon global supply-chain management, where the notions of channel strategies have been drawing the interest of all. Pepsi needs to incorporate these concepts and tools into its marketing strategy in order to enable efficiency in supply-chain management. Its focus needs to be on customer satisfaction in the market and cost efficiency along with a leadership strategy that takes into account cultural gaps that are affecting its ability to reach all customers.
Logistics is the process that ensures that goods or services are available where and when they are needed in good condition and at competitive prices. This post is about Kane, a company who provides third-party logistics services in the United States. It was founded in 1930 and in this is how it helped a global wine brand, to reduce its costs and its product damage.
Kane has grown from humble origins. Edward Kane founded the company during the Great Depression. He traded his car for a used truck to provide local cartage to shippers in the valley regions of Northeast Pennsylvania. Kane has grown organically realizing 2005 revenues of $108 million from a workforce of 1,000 associates. Kane’s quality focus and owner-driven culture make them a good choice for shippers seeking a logistics partner that combines the flexibility and personalized service of a smaller provider with the information systems and capabilities of larger logistics firms. (Armstrong, 2006)
A global wine producer was experiencing high damage rates due to its use of multiple partners for warehousing, packaging and transportation. The company decided to integrate these services with a single company distribution, Kane. The company now manages all distribution services, as well as administration of required tax payments in each state in the distribution area. That solution helped them to reduce transportation costs by a lot and of course, the damage rates. From this small case, we understand how important distribution is, and how a company can fix important costs with a good logistics plan.
With a motive from my favourite iced hazelnut latte, I chose to wrote about the famous Starbucks Corporation. It is a very well-known American coffee company, founded in Seattle in 1971. The company operates 27,339 locations worldwide. Starbucks is distinguishing itself from other coffee-serving venues by taste, quality, and customer experience. It first became profitable in Seattle in the early 1980s and the first Starbucks location outside North America opened in Tokyo in 1996. Nowadays, overseas properties constitute almost the one-third of its stores.
Starbucks is pretty much a household name. But like many of the most successful worldwide brands, it has been through its periods of supply chain pain. During 2007 and 2008, Starbucks leadership began to have serious doubts about the company’s ability to supply its 16,700 outlets and therefore, sales were falling. At the same time though, supply chain costs rose by millions. When the supply chain executive team began investigating the rising costs and supply chain issues, they found that service was indeed falling short of expectations. Problems were included like slow deliveries and poor outsourcing decisions. Starbucks’ leadership had three main objectives in mind to achieve improved performance and supply chain cost reduction. These were to reorganize the supply chain and reduce the cost of serving. In order to meet these objectives, Starbucks divided all its supply chain functions into key groups, known as “plan” “make” and “deliver”. Next, the company set about terminating partnerships with all but the most effective. When the supply chain transformation program was completed, the company had made savings of more than $500 million.
What we can learn from this example, is that in order to make significant and sustainable cost improvements, substantial change must take place. Starbucks had to shake up its third party relationships and increase production capacity. None of the changes took place overnight. These issues were tackled in phases. When it comes to making supply chain cost reductions that stick, each and every avenue must be explored. The only way to see sustainable cost reductions, is to see the big picture from a new angle and be prepared to step outside of the comfort zone.
Intel Corporation, an American multinational corporation and technology company, is the world’s second largest and highest valued semiconductor chip makers. It’s also the world’s largest supplier of CPUs (Central Processing Units) for personal computers with about 90% market share. That 10% market share that the intel doesn’t owe, is extremely important to the pricing and therefore, the gross margin structure of the business. Intel supplies processors for computer system manufacturers such as Apple, Lenovo, HP, and Dell. Intel also manufactures motherboard chipsets, network interface controllers and integrated circuits, flash memory, graphics chips, embedded processors and other devices related to communications and computing. The reason I chose to write about this company, is because it was very interesting for me to see how a company of this size can focus and apply cost reduction actions in their supply chain and make them work.
For more than 45 years in the semiconductor business, Intel has always been at least one process node ahead. Node size reductions are generally a 1/3 of reduction from the linear dimension, resulting in approximately a 50% reduction in the area and therefore, a doubling of the units produced on the same cost. The company needed to make a lot of supply chain cost reductions after bringing its latest, low-cost chip to market. They had to reduce somehow, the supply chain costs for the chip, but they had only one area of leverage, the inventory. The chip had to work, so there were no service trade-offs that could be made. Intel had already whittled packaging down to a minimum and the chips’ distribution costs could not really be pared down any further. The only option was to try and reduce levels of inventory which were very high.
Intel decided to try what was considered an unlikely supply chain strategy: a true make-to-order scenario. The company began with a process of iteration, they gradually sought out and eliminated supply chain inefficiencies to reduce order cycle time. Through this incremental approach, to cycle time improvement, Intel eventually drove the order cycle time for the chip down from nine weeks to just two. As a result, the company achieved a supply chain cost reduction of more than $4 per unit.
The blog of Logistics at MGEPS at UPV 