All posts by johannesma10

Vision Picking – the ultimate “operator to product approach”?

In the last logistics lectures, a strong focus was on the picking activity in warehouses. Seeing the technological and highly automated approaches of “product to operator” just as the KIVA System – or now called Amazon robotics – that are used by the big companies, is very impressive. But these solutions driven by digitalization are not realizable for all warehouses, especially when a lot of flexibility is required. So, I asked myself: What about the traditional “operator to product” approaches? Do they have a future?

And yes, they have! A few days ago, one of the most important logistic service suppliers, DHL Supply Chain, announced that they will foster the use of smart classes in their warehouses and hubs. The use of smart classes is part of an approach called “vision picking”.

Traditional approaches:

The traditional paper pick list was replaced a long time ago by electronic systems. The hand-held scanner has the disadvantage that the picker´s hands are not free. Pick by light approaches are inflexible and expensive, especially when warehouses are rearranged. Pick by voice solutions require an intense concentration of workers and are not efficient for high picking densities.

Vision picking:

Pick-by-vison is an “operator to product” approach where smart glasses help the picker with doing his job. The smart glasses use “augmented reality” in order to display the needed information in the visual field of the operator with the help of Wi-Fi. This means that virtual images are built in the visual field of the operator.

Check out the following video at 1:18 min to see how the smart glasses work:

The glasses not only supply important information about the
picker´s actual task, they also…

  • …indicate in which shelve or on which pallet the target product is.
  • …show the fastest and most efficient route to the location of the product.
  • … allow the operator to scan the barcode by just looking at it by using an integrated scanner.
  • … indicate if the picker has identified the right product.
  • … tells the picker how many items should be picked. 
  • … can integrate voice inputs and have integrated headsets.

In the following video, you can see through the eyes of a picker wearing the smart glasses and pick goods:

Example DHL:

As mentioned above, DHL Supply Chain is using the smart glasses since 2015. After first test, the company rolled out the “vison picking” in almost every region. Also, DHL Express used the smart glasses at its most important hubs in Brussels, Belgium and at the airport of Los Angeles. The implementation at the US-airports New York, Cincinnati and Chicago are planned. Also, big production companies like Samsung, Volkswagen and Opel are already using this technology.

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Kiva systems – a revolution in warehousing

In the last lecture about warehousing, our Logistics Professor mentioned the company “Kiva Systems”. I found it very interesting that amazon bought this start up for $775 million in 2012. I was wondering why amazon would spend that much money for a warehousing system which by the way was amazon´s second largest acquisition at that time. So it did more research on it.

How does the system work?

Traditionally, goods are moved around in a warehouse using conveyors or forklifts which is called “operator to product approach”. With Kiva´s approach, items are kept on portable storage units and automated guided vehicles move the storage units to picking stations where the pack worker picks the items of the storage (“product to operator approach”). The software coordinates the robots and allows wifi communication for path planning and route management. The robots move around the warehouse orientating themselves on many 2D barcode stickers on the floor. Sensors prevent the collision of robots.

The following video shows how amazon uses the system.

History

Kiva Systems” is a US start up that was founded in 2003 by Mick Mountz and Pete Wurman. By fundraising the company got over $18 million of capital until 2006. Follow this link for details on the fundraising. The company was very successful and by 2012, its revenues passed $100 million and the company hat 240 employees. In the same year – as mentioned above – amazon bought “Kiva Systems” for $775 million dollars which was its second largest acquisition at this time. Since then, Kiva Systems has stopped its marketing activities, as amazon is using it exclusevily for their warehouses.

What are the robots doing?

  1. Customer submits order and order gets into database.
  2. System identifies target storage units where items are located.
  3. System selects the closest free bot and sends the direction of target storage unit.
  4. Bot drives to target storage unit by tunneling the storage units (driving underneath them) leaving the highways free for inventory traffic.
  5. Bot lifts the storage unit with a cork screw motion some centimeters from the ground so it can be carried.
  6. Bot drives on small streets to the highway on the side of the building.
  7. Bot drives on the highway until the queue at the picking stations.
  8. Bot returns the storage unit to a free place in the warehouse depending on what is left on it and dropped it.
  9. If necessary, bot drives to the charging station.

See pictures of the different steps by clicking through the gallery and watch this 3 minutes video where the founder explains the “working day” of a robot.

What are the advantages?

Quantity of orders:
The “Kiva System”can handle “two-to-four times as many orders per hour as they have done the old way” (dispatching workers to find products). This link leads you to a video on a test of the speed of the system at minute 4:51.

Benefits for workers:
Workers have constantly tasks to do and do not have to wait. The system is ergonomically, and workers do not have to walk in the warehouse. The training circle time for new employees can be reduced to less than half a day. To see how a worker picks the items, see the video above at minute 1:34.

Safety, security and inventory accuracy:
As no humans have to move in the storage, the rates of accidents are very low. The security of goods in the warehouse is higher, as no humans are there. The rate of inventory accuracy is at almost 100% as human mistakes are avoided.

Energy savings:
As no workers are in the storage area, light and climate does not need to be adapted to humans what saves energy.

Moving the whole system on a weekend:
In contrast to “old-fashioned” warehouse, the whole “Kiva System” can easily move to another warehouse over one weekend if the old warehouse gets to small.

Customer service:
The customer service increases as the delivery time decreases as the picking can be done much faster.

If you are interested on the advantages, in the following video a company explains how the implemented the Kiva system and how the profited from it.

The underestimation of the influence of the supply chain on customer experience

In my last post, I wrote about the advantages of outsourcing logistic services to Third Party Logistics Service providers (3PLs) and the extra value that is created for customers.As my professor said, outsourcing logistics services is a very intelligent decision in many cases. 
But companies need to do this carefully andnot underestimate the influence of the supply chain on the customer experience.

For example, especially online shops often outsource logistics to 3PLs. The influence of the logistics chain in the customer experience is often underestimated. It is no that much about the client getting his goods fast, complete and undamaged. This is obligatory nowadays!

The big challenges for both company and 3PL are for example that the status-mails of the shipping company appears in the corporate design of the retailer, when the packaging has the same design frames as the shop and also the invoice. The client should be sure at every point of time that he is in direct contact with the retailer.

Of course, the details of the interaction depend on the business model of the retailer: For example, clients who order perfumes online attach more importance to an elegant packaging than those who buy washing machines. For these clients, it is more important that the machine is delivered in time, without any damage and that the shipping company takes the packaging and the old machine with them.

Another aspect that is underestimated about outsourcing is the danger of losing the contact with the clients. Only the companies that are doing the picking and consignment by themselves, can always be sure how the package is going to the clients. If such processes are outsourced to 3PLs, exact agreements with the 3PLs about packaging, filling, documents and attachments have to be done and the compliance with them has to be tracked in order to avoid failures as in the picture.

The same is important for communication that accompanies the shipping. If the shipping is outsourced, a good reporting is essential. If not, criticism about too long lead times, unclear invoices or bad support never gets to the retailer itself.

In order to make sure that a good customer experience is maintained, even if logistics services are outsourced to 3PLs, a company can undertake certain measures like agreeing on exact contract with 3PLs and conducting blind test orders.

Creating extra value for customers by outsourcing logistics services

In the last session of our Service & Sales course, our professor stated that “partnerships with distribution channels and suppliers create extra value for its customers”. And also, our Logistics Professor said that outsourcing of logistic services as a very intelligent decision in many cases. So, I asked myself, what exactly are the advantages of outsourcing logistics external companies and how can extra value for the customers.

Third Party Logistics Service Providers (3PLs)

First of all, different classifications of Logistics Service Providers have to be understood. In this case, I am talking about “Third Party Logistics Service Providers” (3PL).
The 3PLs offer complex solutions, they do not only take care of transportation and distribution, but also of warehousing. Because of the high complexity of logistics, in many cases 3PLs are also providing additional tasks, so called “value-added-services”. 
The can integrate parts of the supply chain, for example the customs clearance, order taking, or billing. They can also offer the assembly, packaging and labeling.
There do also exists “Fourth Party Logistics Service Providers” (4PLs) which can be defined as supply chain integrators. The different layers of logistic service providers are explained in this video, the focus on 3PLs is at minute 2:37.

So, what are the advantages of outsourcing logistic services to 3PLs?

Companies can…

  • … save costs and time as 3PLs can work significantly more efficient due to their size and experience.
  • … reduce the committed capital by using the 3PLs warehouses, fleets, technology, etc.
  • … focus on their core-competences as 3PLs take care of logistics.
  • … create flexibility when the customers demand is fluctuating as they us3 the 3PL´s warehouse
  • … profit of the experience, know-how and networks of the 3PLs.

All these advantages seem quite logical and are the obvious consequence of using the whole logistic resources of a “Third Party Logistic Service Provider” which basically uses the concept of Economies of Scale.

But, how can a company create extra value for its customers by outsourcing logistic services to 3PLs?

The extra value for customers is basically created due to two main topics: Geographical coverage with fast deliveries and customer service improvements.

Geographical coverage with fast deliveries:

By outsourcing the logistic services two a big 3PL, smaller companies that may even be located in other countries can cover other regions and countries as well. Due to that, they can not only reach more clients but also deliver much faster to their customers. 3PLs can offer flexible models like express delivery for additional charges. The following image show online shops from Austria and Switzerland that can quickly deliver to customers in Germany.

Customer service improvements:

Big 3PLs usually provide access to advanced logistics technology for the companies. By using this technology, the can improve visibility, create aid-process efficiency and meet the customers demand for real-time information. An example for this is real-time order tracking. Also reverse logistics can be realized very easily via 3PLs and so creating extra value in speed and efficiency for customers.
Another example how customer service can be improved by outsourcing logistics services to 3PL is the customer service on shipping. A small or mid-size retailer does usually not have the means to provide a multi-lingual customer service – 3PLs do.

Facilitating transportation systems: The world´s first beer pipeline

In the last lesson we were speaking about transportation and different transportation modes. One of these models is a pipeline that usually transport liquids (e.g. water, oil), gases (e.g. natural gas, carbon monoxide) or slurry (e.g. carbon with water). During the lessons, our professor mentioned a beer pipeline in Belgium. This sounded interesting and strange at the same time, so I did a deeper research on this.

And he was not kidding:
in 2017, the world´s first beer pipeline was opened in the Belgian city of Bruges.

The first thing you may think now is the following: Oh cool, can I get beer out of the tub in my home?
But as this is a logistics blog, of course the reason for building this pipeline is a logistical one. The pipeline does not connect private homes or restaurants.

What can we learn from a beer pipeline?

From this very special case, many things about pipelines in logistics can be learned. The main reason for using pipelines in general is the fact, that even besides the high construction cost, usually they are more economical than using tank ships or tank trucks and simplify complicated transport systems.

The problem

So what is the reason for the pipeline? The traditional brewery “De Halve Maan” had a logistical problem: The historic oldtown of Bruges had not enough space for an extension of the brewery´s facilities. As it was the oldest brewery in Bruges´ oldtown, they wanted to stay there. So, they build a bottling plant in a suburb, 3 kilometers away from the brewery. From then on, every day 4 or 5 road tankers, which carried 30.000 liters of beer, had to bring the beer from the brewery in the old town to the bottling plant. And here is the problem: The old town of Bruges which has very narrow little streets that are full of tourists. So, it was very difficult for the tankers to move forward and of course, this was not very economic neither.

The solution

As the owner was searching for a more practical solution, he came up with the idea of a pipeline. As mentioned before, it brings the freshly brewed beer from the brewery in the old town to the bottling plant in a suburb. I hour, about 5.000 liters of beer are flowing through the pipeline. This is enough to fill 12.000 bottles an hour. And besides the easier transport, the pipeline works as a big marketing tool for both the brewery and the city of Bruges.

The pipeline is 3.3 km long and at its deepest point 34 meters under the surface as it has to pass a parking garage. It was constructed using the latest technology and for that reason the road surface had to be opened only at two big spots as the digging was down from little holes automatically by special robots. The pipeline has also a cleaning and flushing system.

But not only the construction is similar to bigger water pipelines. Also, the rate of flow remembers of an oil pipeline which usually has a flow velocity of 3 to 5 km/h. The beer in the pipeline flows also pretty slow, it needs approximately 1 hour for the 3 km. This equals about 5000 liters per hour. For details, watch the video at minute 0:55:

Financing

The “De Halve Maan” brewery spend about 4 Million € for the project. A quite big part – 300.000 € – has been crowdfunded. By paying the top rate of 7.500 €, sponsor would get one beer per day for the rest of their lives for free and this way are getting close to the dream that was mentioned in the beginning: an inexhaustible flow of beer.

Product placement in supermarkets – or: „eye level is buy level“

Doing the research for an Unit Load analysis for products in supermarkets for the logistics course, I came over a really interested, related topic: the product placement in supermarkets.
I was aware of the fact that supermarkets do place their products with a certain strategy, but I never thought how detailed these marketing strategies are and which factors they include.

Supermarkets usually have a planogram that is a “diagram or model that indicates the placement of retail products on shelves in order to maximise sales”. 

The set-up of the shelves:
In the middle of the shelves there is the “view zone” (at about 140 to 180 centimeters) and the “grab zone” (60 to 140 centimeters). At this level the top sellers are placed, meaning the products that usually are selling themselves very good and are more expensive. The sentence “eye level is buy level” describes exactly this aspect. Sometimes this zones actually are planned in the way that they take into account the difference in height between women and men of about 10 centimeters. The less popular shelve zones also have a name they are called “bend or stretch zones”.

different zones in supermarket shelves

In return for extra payments, companies can even get their products placed at the “good zones”. The following video gives more details towards this topic:

The blocking:
Experts use this expression for the fact that often there are placed boxes or tables at free spaces next to the shelves with pretended special offers. They shell signalize to the clients that they can make some great deals here. Especially when the clients see products in big packages on pallets – like for example 1-kilogram packages of pasta they instinctively think that this must be super cheap. Sometimes it is, sometimes not. Or sometimes the product next to it is expensive but gets a lot of attention because of the deal besides it.

The arrangement of products:
One might think that putting similar products together is the best option. For example, there is baked goods area, bathroom area or a sweets area. But supermarkets sometimes are placing complementary goods together, like for example beer and crisps. So, if you buy beer, you see the crisps and take them with you because they match to the beer. And maybe you just see the high price crisps next to the buy, but you take them anyway because you don´t want to search for cheaper crisps.This was just a short introduction to the psychological tricks that supermarkets use to make more profits. If you are interested, you can read more in these articles:
– http://theconversation.com/the-science-that-makes-us-spend-more-in-supermarkets-and-feel-good-while-we-do-it-23857
– https://www.dailymail.co.uk/news/article-3418623/Supermarkets-laid-shoppers-buy-explained-video.html
– https://traxretail.com/2017/11/22/eye-level-buy-level-importance-store-product-placement/