Mercadona: XXI century warehouse

Mercadona is a company that with its methods, administration, logistics and others has achieved the success it currently has, being the example to follow not only for many companies, but also that has been taken as a case study in universities.

Now I want to talk about the store of the 21st century as it is known. Looking for a better manner that its employees make the least possible effort and this causes fatigue, in the logistics center located in Ciempozuelos, Madrid, the whole process is automated.

What has been achieved with the new software is that the machine is able to depaletizar the shipments of the manufacturers and organize the orders for the stores in multi-reference pallets without the need for the employees have to be loading them.

With this, Mercadona not only has reduced the organize pallets’ time from 45 to 12 minutes, also has reduced work accidents because employees don’t have to carry anything.

In this center there are 4 buildings: dry, cold, containers and services. In the cold one there’re 3 temperature but one of them (-23) is totally automatic because is so difficult if not impossible for a human being there.

Here a video that most of you have seen in JP’s presentation but for those that haven’t watch it:

 

Sources:

http://blogdelogistica.es/el-almacen-del-siglo-xxi/

http://www.eleconomista.es/empresas-finanzas/noticias/4547920/01/13/Asi-funciona-el-corazon-logistico-de-Mercadona.html

Triple sustainability

As we have to choose a triple sustainability company to our final project I decided to talk about this topic.

Sustainability is to manage today’s resources in the most efficient way without involving tomorrow’s resources. When we talk about triple sustainability we are talking about social, economical and environmental aspects.

Social/people: pertains to fair and beneficial business practices toward labor and the community and region in which a corporation conducts its business.

Environmental/planet: refers to sustainable environmental practices. An environmental company endeavors to benefit the natural order as much as possible or at the least do no harm and minimize environmental impact.

Economical/Profit: is the economic value created by the organization after deducting the cost of all inputs, including the cost of the capital tied up. It therefore differs from traditional accounting definitions of profit. In the original concept, within a sustainability framework, the “profit” aspect needs to be seen as the real economic benefit enjoyed by the host society. It is the real economic impact the organization has on its economic environment.

So, today many companies are seeking triple sustainability because this not only helps our environment and society, they also help the company to have a better reputation and with that greater benefit.

Source:

La triple sostenibilidad, clave para la competitividad de las ciudades

https://en.wikipedia.org/wiki/Triple_bottom_line#Definition

“The world’s largest seed warehouse”

The world’s largest seed warehouse appears fictional and is located in Norway. It was designed to be indestructible and last for eternity, since it can withstand earthquakes and missile impacts. This construction is 130 meters deep in the mountain in Svalbard, 130 meters above sea level and almost 1300 km north of the arctic circle 130. It is also known as “the vault of the end of the world” or “the ark of Noe of the seeds “

From the entrance vestibule a corrugated steel pipe of about 100 meters goes into the interior of the mount and connects at the end with three vaults that contain seeds of about 865,000 varieties of different seeds. The main objective is to store all the possible seeds of the world in case of any disaster, scarcity or apocalypse, local or international. Those who have deposited their seeds there will be able to collect their samples once everything is finished.

It has a capacity for 5 million seeds and its vaults are kept at a temperature of -18 degrees. It is freely accessible to governments of all the countries of the world and any country is excluded.

 Source:

https://es.wikipedia.org/wiki/B%C3%B3veda_Global_de_Semillas_de_Svalbard

FedEx Logistic

In the last class we worked with Moon chem case and we were asking to our-self if there was any company that would stock for another one.

FedEx brings to their customers many logistic solutions. These services are divided depending on the customer’s needs. Now we will see three of those services:

1. FedEx’s distribution centers:  these centers offer companies strategic storage services, recurring to a network of storage in the U.S. and the foreigner. The goods held in these centers are available continuously for 24 hour delivery.
2. Management of FedEx returns: FedEx return solutions are designed to fit the return area of a company in the supply chain. These intelligent processing tools give customers services that offer collection, delivery and online tracking for the items that it is necessary to return.
3. Other services with added value: FedEx offers to its clients many other services to add value. An example of these is a combination service in transit rendered to many clients who require for a quick delivery. For example, in the transit combination program for a computer picker, FedEx may store peripheral  products as monitors and printers at its Memphis air center and to join those products with the computer during its shipment to the customer.

Differences between Logistic and Supply Chain

All we have learned that this subject is oriented mainly to logistic and supply chain but is important to know that there are not the same thing.

Supply Chain is an integrated method to manage all the distribution channels flow and information flow inside the organization or out of it, such as: supplier, manufacturer, distributor and final consumer.

Logistic is an operative function that includes all the processes and activities necessaries to manage the storage of raw materials and components, stock in process and final products to bring them in the right quantity, in the correct place and at the appropriate time. Also to order and purchase planning is a logistic task. Logistic is part of the Supply Chain.

The main differences between them are:

• Logistics seeks to offer the best service at the lowest cost, to deliver quality products to the customer. In the supply chain are already in charge of finding raw materials of quality at a good price, so that the costs are not high.
• The logistics delivers the product on time; The supply chain seeks to improve those times and that of other activities.
• Logistic is part of the supply chain, but supply chain is a much wide process.

Sources: https://www.youtube.com/watch?v=-7SfaBD1bVo.  https://youtu.be/K3YY8rHehNg. https://youtu.be/pvtw-EEc4VE.

 

Three marketing strategies that made companies lose millions of dollars.

3. Silo: electronic market.
They had the promotion “a stereo for 299 bananas”, because in this time (1986) dollars were also called bananas. They transmitted the offer around 21 cities. The problem was that cities such as Washington took it literal and bought 299 bananas for 35-50 dollars and brought them to the store. To hold goodwill they gave the stereo with bananas. At the final of this day 35 stereos were delivered and Silo lost 10,465 dollars. They retired the advertising of all places and donated all the bananas to the zoo where there just used 1000 in a week and donated the others to a food bank.

2. Pepsi
In 90’s Coca Cola was over Pepsi in Philippines and to get market Pepsi launched the promotion “number fever” It consisted that under the caps of it favorite beverage (Pepsi, 7up, mountain drew) there was 3 number digits and consumer could earn from 1000 to 1,000,000 Philippines pesos. The 1,000,000 was for the number that Pepsi announced when the campaign finished. The problem was that there were 800,000 caps with this number. Was impossible to pay to everybody and Philippines people made a disturbance where there were also dead people. Pepsi had to pay 10,000,000 dollars for legal taxes and restitution.

1. Hoover: household cleaning equipment.

Hoover was number one in cleaning market for many years, but then they had many stock because of the competence of new companies. In 1992 they created the promotion “buy over 100 pounds and get a free flight for two people” first was successful because flights were just in Europe but then they gave the same promotion but travelling to the US. The idea of Hoover was to attract 50,000 clients but finally they attracted 540,000, they didn’t have to pay all these flights. In 1998 they had to pay 50,000,000 pounds, but they didn’t have enough money,  so they had to pay all the flights.

Source: https://www.youtube.com/watch?v=dKZ6Tb7IAAo

4 things that make the Walmart supply chain successful.

Walmart is one of the most important retailer, mainly in US. Here we have 4 strategies that make it successful:

1- Few intermediaries in their supply chain: Since 1980 Walmart began working directly with manufacturers to lower costs and better manage the supply chain. Manufacturers were responsible for managing their products in Walmart stores. As a result, Walmart was able to expect about 100% of the re-supply of all merchandise.

In 1989, Walmart was named the retailer of the decade, with an unparalleled distribution cost estimated at 1.7% of its cost of sale – far superior to its competitors like Sears (5%) and Kmart (3.5%). Since then, the company’s supply chain has done nothing more than improve.

2- A strategic and efficient partnership: Walmart establishes strategic alliances with most of its suppliers, offering them the possibility of large and long-term purchases in exchange for the lowest possible prices. In addition, Walmart improved its supply chain by building communication networks with its suppliers to improvise the flow of materials with low inventories.

All the intermediaries in the chain are connected through technological tools, which include a central database, point-of-sale systems at the store level and a network of satellites. In recent years, Walmart has used radio frequency identification (RFID) tags, numerical codes that are scanned from a distance to track the movement of goods along the supply chain.

3- Cross Docking as a method for inventory tracking: Cross-docking is a logistics practice that is a key part of Walmart’s strategy to replenish inventory efficiently. It refers to the direct transfer of products from one truck to another output, without using extra storage.

The suppliers deliver their products to Walmart distribution centers, where they are transferred to another truck, which will be responsible for delivering them to stores. Cross-docking maintains reduced inventory and transportation costs, reducing transit times and eliminating inefficiencies.

Using cross-docking allows you to avoid keeping your inventory stationary for long periods of time; since, the products are shipped by the suppliers to the Walmart stores, and then, automatically, they are re-shipped to the stores. This process is usually done in 24 hours or less.

4- Technology: Walmart has the longest technological infrastructure that any private company in the world. Its state-of-the-art technology and network design enable Walmart to accurately predict demand, control and predict inventory levels, create high-efficiency transportation routes, and manage logistics for customer relationship and service.

Source: https://cloudadmin.mx/blog/post/una-cadena-de-suministro-increiblemente-exitosa-Como-lo-hace-walmart

Why is important to have an appropriate Layout?

Although we had change our classroom layout to have a better way to work, every class there are little inconvenience with it.

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Having a proper layout is very important for many factors. In my last job I was process engineer and I was in charge to modify the layout of the production lines if it was necessary. Also when a line would start to produce a new design I had have to create the most appropriate layout for it.

A correct layout determine in some cases the efficiency in long term of many operations. It can helps to balance the production line. The main objectives of having a good layout are the following:

1-Greater and better use of space, people and equipment

2- An improvement in the flow of information, people and materials

3-A greater flexibility, that is, the layout must be prepared to be changed with agility at any time

4-Provide to the employees safely areas of work

A good layout follows rules and has a logical structure. Doesn’t matter where we are, all places are created by a layout and depending on it, it would be: office, warehouse, production line, and others such as our classroom case. Having U’s cells is most of the time the most successful way. Now we know why is important to have a good layout to reach more productive results.

 

 

 

 

What stressful are queues!

All of us in any moment of our life have been in a long line that make us stressful, angry and also uncomfortable. At the first years of my college I used to be more than two hours in a line to pay the semester. Here a real image of it:

 

It was obviously that they didn’t analyse how to solve this problem during many years that occurred this amazing situation. Now the lines are not that long because we can pay by an electronic system. The queue system is influences by three factors, those are: length, number of lines and queue discipline, but this factors are not only in this case, are in all cases in any place.

Length: refers to lines finite or infinite, finite is a limited set of customers who use the system and occasional would create a line. An infinite one is a very long line related to the service system.

Number of lines: refers to have just a line because you have just a person who can provide the service or have many line (2, 3, 4, etc.) to bring a better customer service.

Queue discipline: refers to a rule or a set of rules that determine the priority order that will be provide to all the customers in the line. The most common rule is the first inside, the first outside, but also people with special conditions would be part of this rule.

Long queues are difficult problems not only to the customers that are waiting in it, also for the person in-charge to solve it is a frustrated situation. But all company that wants to be every day more competitive have to work with this uncomfortable moment. They should not just analyse the factors before mentioned, they also can try with the different queue models and apply the most suitable depending of the kind of service.

 

 

 

Inventory

As we were talking about distribution network in the last week, I want to talk about inventories because it a part of the supply chain cost that is affect it by the distribution network design.

Some authors define inventory as the stocks of a piece or resource used in an organization. We can control inventory by an inventory system, that is the set of policies and controls that monitor the levels of inventories and determine those to maintain, the time when it is necessary to supply it and how big the orders should be. Inventory purposes are maintain independence between operations, cover the variation in demand, allow flexibility in production scheduling, and others. It important to control inventories because inventory is money!

Depending of the company and the production model that they prefer, it necessary to has a different amount of stocks in their warehouses, but is necessary analyze an inventory system that covers the necessities of the company.

Here we have an interesting video about inventory management: