Artificial Intelligence Thriving the Supply Chain

At the beginning of class, Jose told us that logistic is often associated with “non-adding-value” activities. I was reflecting in what sense can this be changed, and the answer was quite clear: The magic word “Artificial Intelligence”.

AI bears a huge potential, which we still are not exploiting enough, since AI is in a development stage and the current apllication is quite unspectacular.

However, in the future prospect, AI stands to transform the logistics industry into a proactive, predictive, automated and personalized branch. With the help of AI, the logistics industry will shift its operating model from reactive actions to a proactive and predictive paradigm, which will generate better insights at favourable costs in back office, operational and customer-facing activities.

In my opinion especially the decision-making process during the time a product is shipped will be possible and allow us to add value during this process. The following aims to provide an example on that idea:

AI as Decision Support System
The Supply Chain of Fresh Food

Let’s assume:

• We deliver oranges from Valencia to Frankfurt
• Our truck needs 3 days in order to drive more than 1.600 km
• We have some quality determinants of our product = The shelf life: Influenced by humidity and temperature
• SUDDENLY our truck ends up in a traffic jam, the delivery has delay!

→ Net present value (NPV) of cargo decreases

→ Threat to deliver rotten products (we may have more rotten products than agreed on in the contract)

Solution: AI as Decision Support System

• Use of smart devices in the trucks: Sensors which make use of IoT, they constantly measure the quality determinants and report the state. The IoT is providing us with alternatives.
• Make an investment decision: Search for closer markets OR renegotiate with  existing customer in Frankfurt and provide them a discount of the cargo.

 

Drone Food Delivery

While watching the football match of Real and Barca, I got very hungry and noticed that I still have a discount available on deliveroo which soon will expire. So, since it’s lazy-sunday I decided to order some food. Unfortunately, I have to wait now 40 minutes until the Indian food will be delivered…

November 2016, Domino’s tested for the first time the new delivery innovation: drones. In New Zealand the first flying pizza touched the ground near Auckland, the delivery flight took under 5 minutes for 20 miles. Please, watch the video 🙂 :

Can drones revolutionise traditional logistics and supply chains? And can we soon expect to get our pizzas delivered within 10 minutes in front of our doorsteps?

Some basic facts on the pilot project:

• Drone delivery offers tremendous benefits in the form of cheaper, faster shipping. This could accelerate the growth of online retail sales as free and fast shipping are the most enticing factors drawing consumers to shop online more often.
• There are two main types of drone delivery companies are exploring: home drone delivery and supply chain delivery. Although home drone delivery receives the bulk of public attention, using drones to make deliveries within the supply chain can smooth out the fulfillment process and increase efficiencies.
• Mainstream adoption of drone delivery will take place in stages over the next few years as regulations are put in place and drone technology improves. Right now, most tests are extremely limited in scope, take place in rural areas, and do not actually deliver packages to customers’ front doors. These tests will gradually progress, eventually bringing drone delivery to more customers in populated areas.

 

Who will be Europe’s logistics giant? DHL vs. Amazon – Partners or Competitors?

Last summer I was working for 2 months in a letter distribution center of Deutsche Post DHL. People are working there in 3 shifts. I had the night shifts from 0.00 to 7.00 because it was the best paid and allowed me to gather a lot of money in a short time. The perfect summer student job 😉 ..

However, my team and me, being responsible for the delivery of letters  and small parcels, faced huge problems to process the whole amount of post delivered by various trucks during the night. I remember that at 6.30 we stopped to accept “new post” and finished to process the letters  we put in the machine (carousel machine sorting every letter to its corresponding postcode and the belonging district to deliver to) and we handed over the processed post to the outbound logistic team.

The working area+carousel machine of letters and small parcels

The interesting thing was, that every night the amazon parcels got a special treatment. The shift manager advised us to process all amazons the same night they arrived to the distribution center. If not, amazon would have penalised Deutsche Post because of the agreement putting Deutsche Post in charge to deliver the huge majority of Amazon parcels in Germany.

I wanted to investigate a little more in depth the special relationship between the two big  player regarding Amazon’s expansionary plans of the “last-mile delivery”:

SUMMARY OF FACTS

• Nationwide, Deutsche Post DHL’s parcel delivery market share is a reported 44%. It is the world’s largest courier company and one of Germany’s largest employers with 497,745 staff members.
• Amazon parcels account for 30% of DHL’s German deliveries.
• 2016 Munich: Amazon is using more than 200 delivery vans operated by a subcontractor to offer last-mile delivery to customers. That is a 25 to 30% drop in the number of packages delivered by Deutsche Post’s DHL service.
• Amazon officials have said they don’t plan to do away with express delivery partners such as Deutsche Post DHL entirely.

–> However, if Amazon continues to grow in Germany at this rate, DHL is likely to lose some of the roughly 50 percent market share it enjoys in its home market.

–> Deutsche Post answers with “late delivery”plans, offering the service to delivery from 6pm to 9pm parcels to its clients, in order to stay competitive and maintain the position as market leader in the market.

 

IKEA DORTMUND: Europe’s Warehouse

The world’s largest distribution centre of IKEA is located in the surroundings of Dortmund in Germany. It covers a total area of 135 hectares – larger than 200 football pitches. It houses approx. 800.000 palette spaces in fully automatic, high-bay warehouses. Products are shipped from here to all Ikea furniture shops in Europe.

IKEA wants to doble its revenues by 2020 and one key challenge builds the distribution. Accompanied by the success of e-commerce, customers gets more and more demanding referred to short-time delivery, ordering via any technical device and from any location. Now the distribution center in Dortmund fulfils up to 50.00 orders per day.

Link to PapeleriaDotCom Picking Class: Automated Warehouse

Please have a quick look at the following video, from 1:16 to 3:13 :

• The warehouse uses “normal” shelves with pallets on, in the hight of round about 30 meters. There is no carousel or any conveyor involved in the picking process.
• As you can see in the video, they work with fully automated fork lift trucks using the whole aisle that are connected with a server (which you can see at the end of the video).

STADLER: Tram Oversea Delivery

I am currently working at STADLER, a Swiss train company with international production, locations and clients, in the After-Sales department. We are weekly sending spare parts to Germany, Israel, Norway, Spain, etc. However, what me made thinking the last month was the following media release:

“Stadler wins contract to manufacture 12 trams for the Metropolitan Train Project of Cochabamba, Bolivia”

“For the first time electric trams will be operating in Bolivia. The METELITSA type model will have a capacity of up to 200 passengers and will be in commercial service by 2020.”  

“The trams will be assembled in a European factory and, once verified, disassembled by modules and shipped to Cochabamba. The shipment of the tram modules is estimated to last one and a half month.”

The vehicle data is the following:

• Vehicle length: 33,5 m
• Vehicle width: 2,5 m
• Vehicle height: 3,6 m
• Number of sections: 3 sections

https://wwwstadlerrailcom-live-01e96f7.s3-eu-central-1.amazonaws.com/filer_public/57/43/574363fd-bc8f-41cb-ac29-f2f3142d4321/t0816_856e.pdf

HOW TO DELIVER A TRAM OVERSEA? SEARCH OF A SOLUTION:

So, I was thinking how do they realise to send a product whit that size, since the whole tram is assembled in European factories.  Since the media release did not mention in how many parts they will ship the product, we can assume that they will split the tram at least in its 3 sections (11×2,5×3,6m).

I was searching further information about containers which are extra-wide and can support heavy products and I found the following construction for the specialised ship container that fits the requirements:

Seacom – Roll Trailer 40 ft / 100 ton

https://www.forkliftcenter.com/forklifts/files/1080-5148SpecificationRT40100t-3122-s2c.pdf

Dimensions (approx.):

• Platform length: 12,4m
• Platform width: 2,59 m
• Capacity: max 100 tons

–> That was the only kind of container which are able to support a whole section of tram. High cube containers, which are completely closed and extra-high having one of the largest container specifications, could not fulfil the requirements of the width. Under the simplification of our requirements, STADLER would need at least 36 roll trailers in order to fulfil the oversee delivery.

Shot by a Bullet made in Germany

Yesterday evening I watched as usual the daily news on the internet and it has touched me emotionally to see the current situation of Syria. The newsreader reported that the Syrian government and Russian airstrikes started a new offensive against the rebels in East-Ghouta and even worse than this fact is that there are still thousands of civilians cut off and stuck in the battle zones.

Behind all these victims there are companies making profit with the supply of firearms and other war machineries. Besides the ethical topic of whether supplying weapons to third countries or not, the supply of these products often went wrong and the weapons never reached their customers or planned destinations. There is not enough security which prevents the cargo during the transportation and distribution of robbery for example. There is only a lose track of weapons and often a missing supervision by the delivering party.

The following video will give you an example of how the ISIS got delivered unintentionally by the U.S. air force with shells and other arms (I recommend watch the whole video, it’s short and very illustrative):

But how to ensure the supply chain?

Recently, the German government introduced a pilot project: post-shipment controls for German arms exports. This mechanism supports the actual tracking of the products and ensures that during and after the transportation (shipping) the firearms will be distributed to its destination. It is an inspection with stricter standards that requires certificates of the end-user and on-the-spot checks. The project in details: https://www.bmwi.de/Redaktion/EN/Downloads/eckpunkte-einfuehrung-post-shipment-kontrollen-deutsche-ruestungsexporte.pdf?__blob=publicationFile&v=2