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).
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Santa’s warehouse logistics: Things just got serious

A quick analysis of the Santa Claus’ huge warehouse

We all know Santa Claus, also known as Saint Nicholas, or Papá Noel here in Spain. He delivers presents (or coal) to all the kids around the world the night of the 24th of December. But… have any of you ever thought about the facilities he must have to storage all the presents he manufactures in his toy factories? Well, you don’t need to, as in a moment of boredom I have already done it!

It is well known that Santa lives in the Pole North, so we can assume he has there also the warehouse where he stores the presents. I tried to do some digging in the internet about land prices in the Pole North, but sadly it does not appear. Anyway, we can safely assume it must be really cheap the cost of the land over there, so the space in the warehouse is definitely not a problem.

As Santa only needs to deliver once a year his whole inventory, a LIFO storage system, with all the pallets on the floor would be the most suitable and easiest arrangement. No aisles needed neither, remember you are delivering all your storage at once, once a year, no need of picking in between. So just a big island of pallets on the floor. Because of the cheap prices of the land, automatization would significantly increase the costs due the high ammount of pallets Santa handles, and would suppose a incredible high investment he can easily avoid by just storing at floor level.

Sin título-1
Santa’s warehouse arrangement. He likes keeping things simple.

But, how many pallets? Lets assume the mean number of present boxes per pallet is of 50 units. Just one level of pallets, to avoid crushment (in Pole North we have plenty of space anyway). Based on the global ammount of kids (0-15 years old), delivering a present per kid, it would be needed just around 45.7 million pallets. Taking into account the proportions of an europallet (Saint Nicholas is european after all), it is translated into a pallet island of 43.87 square kilometers. That is around one third of the city of Valencia, or 13 times Central Park.

excel santa
Calculations for the pallets needed

This calculations only lead us to many more questions. How many elves (the Santa’s pickers) would he need for Christmas? What would be the holding costs? Which picking methods does he use? How many SKUs is he holding?

I think we should skip the Ford’s visit and go to the Santa’s warehouse.

World Hunger is a Logistics Issue

World_hunger_Solution_Borgen

Once, I went to a restaurant called Flam’s, eating a traditional Alsatian cuisine: the Flammkuchen (it is REALLY good, I advise you to try it out sometimes… 😉 ). We picked a menu where we can have unlimited amount of this dish and the waiters kept bringing more food on the table, up to a point where we had to tell them to stop. But they were already done so they had to throw it away, and they do this every day. This made me think of the problems that we have with hunger and food waste in the world and what could be done to prevent this from happening. In the World, more than 795 million people do not have enough food to live a healthy life. This is around one out of nine person. This number affects mostly developing countries, where poor nutrition is the leading cause of death among children: each year 3.1 million children aged from 0 to 5 die from hunger in the world. The United Nations have been able to collect many statistics regarding world hunger and the potential solutions that could help to reduce this problem. But Hunger is not a food problem, it is a Logistics issue. (https://wfpusa.org/articles/tedups-why-hunger-logistics-problem/) The issue is to bring the appropriate food to the people who need it the most.

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One third of the amount of food produced every year in the World is wasted, which is around 1.3 billion tonnes. If we could save only a third of that amount, that would be enough to feed the World. Logistics, which is the services, knowledge, and infrastructure that allow for the free movement of goods and people, has been recognized to be a key element in achieving sustainable food security, and thus a driver of competitiveness and economic development. Scientists have developed the term of agro-logistics, which can help, for example, to address the food security challenge: from “farm to fork” and all the stages in between.

It is believed that the biggest part of the waste is happening during the production stage, but the FAO (Food and Agricultural Organization) has found out that it was mainly happening during the consumption stage. Thanks to the advances in logistics and supply chain, a lot of progress has been done and food waste has been cut in the production stages. Studies have shown that the more complex a supply chain is, the more likely it is to have a huge waste. It is also due to the fact that poor storage can deteriorate the quality of the food and thus it has to be thrown away. This is why sustainable logistics is more than ever needed! Many governments have created a program designed to help developing countries to strengthen food security and reduce food losses. For example, the USA have helped to finance projects consisting of creating better storage facilities throughout the country, so that food could not rot. A proper storage facility can reduce waste up to 98%, which is phenomenal!

Gandhi: “The world has enough for everyone’s need, but not enough for everyone’s greed.”

If you want to learn more: http://blogs.worldbank.org/transport/feed-future-let-s-make-logistics-and-transport-sustainable😉

If you want you can also watch this Ted Talks about how logistics is at the roots of world hunger and how it could be solved:

https://www.youtube.com/watch?v=oXlMn3WGHkE

 

Why VeChain blockchain will disrupt the logistics process

Since probably the hype of bitcoin last year we all heard of the blockchain technology. However still the majority of people only see blockchain as an equivalent to bitcoin and a asset to invest in to earn money, but nothing is less true. Bitcoin is only one really limited application of blockchain technology and focusses only on financial transactions without any extra intelligence. Thankfully, blockchain technology has plenty more to offer and obviously will disrupt many industries, including logistics!

What is blockchain:
Blockchain is not bitcoin, blockchain is a way of working, the blockchain technology works as a decentralized database for handling divergent types of data. All applications we use eventually work on an information database, whether it is Whatsapp, online banking or Facebook, in the end they all rely on an information database which provides the correct data on the right time. However before the era of blockchain those were all centralized databases in the datacenters of for example Facebook and our financial institutions. Those centralized databases are a single point of failure and we all just have to trust that those institutions handles our data safe and correct, all the power is in the hands of the institutions. The blockchain is different it is decentralized over a worldwide network of computers in a peer-2-peer network and all data is separated all over the biggest network (blockchain) of the world. The most important part of this decentralized database is that every node in the network has a copy of the database and if someone adds, edits or deletes data the whole network has to agree on the fact that that person can adjust the data, which makes the system very trustful. It is just spreading the risk resulting in the fact that there is no single point of failure anymore in where cyber thiefs can hack. If you want a more comprehensive explanation of blockchain please view the following video.

Bitcoin was just the beginning
Bitcoin is only just a limited first generation financial decentralized database system which can handle only financial information. At the moment there are plenty of second/third generation blockchain initiatives which are way more intelligent databases and can handle way more extensive data, and one of the biggest supply chain management blockchain initiatives is VeChain.

What is VeChain?
VeChain is a logistic leading blockchain platform for luxury products and data. VeChain strives for a self-developed blockchain platform based on an ecosystem of transparency and distributed companies.

As mentioned above, VeChain develops a blockchain with mainly logistical purposes. The VeChain smart chip is one of these developments. The purpose of this chip is the authentication process of all kinds of products. In addition, the chip gives background information about the relevant product. But how does this work exactly? As an example we take a nice brand coat. For years, many brands have been copied worldwide. These products are often indistinguishable from the consumer. VeChain wants to put an end to this by means of the smart chip. The chip is processed in the product. When the product is scanned, the chip gives all information about the product. Consider the authenticity of the product but also the maker, the material, the country of origin and the production date. A complete digital profile of a product is created, as it were. As you can understand, this is a very big development in the field of product authentication. If VeChain succeeds in setting this up, this can be very interesting for the complete project.
All this chip data is handled on the fast, safe and reliable blockchain databases which makes it a future proof solution for efficient, effective handling of the product/logistics data.

The following video simply explains the VeChain products. If you are curious in the project and you want to invest in blockchain technology don’t hesistate to ask me!

 

Will the middle east be the future operations center of world logistics?

The relocation of the logistics operations centre by Nestlé highlights a couple of elements that demonstrate an upward trend today.

The first relates to the trend of large-scale operational centres towards relocation to the eastern parts of the country. In the case of Nestlé due to its globalization process and its proximity to raw materials, and the current growth trend of countries such as the United Arab Emirates.

The strategic position of countries such as the United Arab Emirates, thanks to their access to the Persian Gulf and their location midway between Asia and the West, makes them a very interesting option for the establishment of world logistics centres. This is complemented by the implementation of economic policies to attract this kind of centre by the government, which makes the Persian Gulf a very interesting option. In addition, maritime and airport infrastructures are being improved to facilitate transactions.

Another important element is related to the logistics centre per se as it is based on the latest technology and automation standards. Highlighting the trend towards computerisation of logistics processes.

This element is reflected in all types of industries. From the producers themselves to the distributors that are carrying out a process similar to Nestlé through the implementation of new digital systems ranging from picking to distribution.

And finally, the efficiency with which the process of transporting the equipment from one logistics centre to another must be highlighted. This titanic task has been carried out by Mohebi Logistic, a company focused on Middle East logistics… The task was completed quickly and efficiently without any delays or setbacks.

http://mohebilogistics.com/nestle-middle-east-relocates-new-logistics-hub/

Fine Art Logistics

Three weeks ago I got back from a trip to Vienna where due to the weather conditions my friend and I had to spend a lot of time in museums. Belvedere is one of the most famous in Vienna with its incredible collection of Klimt works. Some of the paintings that were presented in the museum I had seen before in other cities. At that moment I started to wonder how the pieces of art are transported and what is behind that logistics process.

After a little research, I found a list of leaders who specialize in fine arts transportation. They all describe the process, as extremely complicated and delicate, that entails a lot of resources.

First of all, scientific pre-planning and program scheduling are needed as fine art pieces must be transported in special temperature and climate control vehicles equipped with security web-enabled cameras in humidity controlled storage facilities.

Secondly, only highly qualified and experienced art handlers can work with art pieces by following a certain packing and crating international fine art standards.

Thirdly, international transportation requires a lot of documentation work. At the beginning insurance should be issued and not every transportation company can be accredited. Then customs permission for temporary imports must be granted and at destination swift customs clearance must be performed.

Some of the links that visually demonstrate the process:

https://www.youtube.com/watch?v=iGZSL-_VOYU

https://www.youtube.com/watch?v=5yIOsLwWrWw

Picking area: The importance of designing the best order picking system

Trying to understand the case “Papeleria DotCom” I have asked myself many basic questions.   The problem we had to solve this week was about picking. Before demoralizing me trying to solve the problem, I learned the meaning of this term, and I want to write about this.

In the logistics, warehousing and distribution of merchandise services of a company, picking is the process of selecting and collecting material from the warehouse efficiently and effectively. In other words, it consists of collecting the goods from the warehouse (stored in different locations), which must be used to prepare orders and transport them to the area where the customer will pick them up.

Given the exigency of consumers, the activity of picking is essential, while the customer wants a fast service, without errors and that preserves the quality of the product. For the advantages offered by this system it is clear that the preparation of orders consumes up to 2/3 of the operating cost. Therefore, it is important to analyze the procedure followed in the storage, studying the reason why orders are delayed, see the shortest routes for operators, place the goods according to the frequency in which they are requested and adjust them according to the demand. Without a doubt, reducing the impact of picking can mean becoming a competitive company in the market.

The biggest impact is on the preparation of orders. For this it is convenient to optimize the collection flow of the products, in an orderly manner and with the help of the use of technology. This will result in lower costs, faster order delivery and greater customer satisfaction.

In order to reduce the movement of workers and make the best use of space some equipments can be implemented, like the vertical carousel. This equipment is usually made up of a load-bearing structure in which the entry and exit of the goods are automated thanks to an extractor and lifting mechanism. Furthermore, the implementation of the carousel vertical is recommended for homogeneous loads, high quantity of references, and high complexity orders and and the main disadvantage of this system is that it is expensive and it needs reliable information systems.

So, maybe, this is not the best equipment for the case “papeleria Dotcom”, although this system is widely used in the pharmaceutical and electrical components industry.

This video has helped me to understand the basic operation of this equipment:

Undoubtedly, the issue of picking is very interesting, because it allows companys to apply different strategies as well as technologies depending on the warehouse and types of products.