Thursday, February 06, 2014

Supply Chain for the 2014 Olympiad

From a logistical standpoint, the Winter Olympics is one of the largest freight and shipping nightmares to happen on a global scale. There will be packages, parcels, and pallets of goods shipped from other countries to one central location -- en masse -- for the athletes, spectators, media representatives, and workers. These goods will be shipped by sea, air, rail, and land as all transportation routes will be monitored by the Federal Customs Service and managed by the Sochi 2014 Organizing Committee.
Due to the complexity of the logistics, any company or individual planning to bring goods into Sochi should prepare well in advance. For example, only a few checkpoints can pass certain types of goods for entry to the country. It is imperative that you work with freight forwarder and customs broker familiar with both the region and the new regulations pertaining specifically to moving goods to the region before and after the event.
You will want to familiarize yourself with Russian government Decree 911, dated November 3, 2011 and Eurasian Economic Community Customs Union Decision Number 663, dated March 14, 2011. While there are other regulations that may apply, these two speak specifically to the Sochi Olympics. Working with an experienced freight forwarder is crucial to guarantee your goods reach the venue without incident, delays, or fines.
While there are specific marking and labeling requirements for importing goods to Russia for the Olympics, there are extensive regulations regarding cosmetics, hygiene products, food, and certain types of equipment. No rapid-fire guns, long guns, armor piercing ammunition, switchblades or other similar weapons can be imported. If you are responsible for ensuring firearms and ammunition reach the site for use in the games, you must have a special permit.
 
·   Managing assets through customs and into Russia. There will be a tremendous volume of materials brought into Russia for the 2014 Winter Olympics. Skis, bobsleds, electronics, training equipment, and more will all need to pass through Russian customs, be stored appropriately, and be sent back to their originating countries. Customs management into Russia depends largely on how the items are transported, the goods transported, and where the items are transported. All customs regulations should be thoroughly reviewed and followed to ensure there are no delays or additional fines regarding transportation. If possible, items should be sent in advance.
·   Types of assets moving into Russia. A large volume of the assets moving into Russia are not Olympic equipment, sports training equipment, or professional equipment, but rather marketing materials, promotional goods, consumable items, gifts, and other similar items. The 2014 Winter Olympics will be an incredible marketing platform, and thus a large volume of items will be shipped and will require tracking. There are many merchandising and marketing opportunities during the games and most of these goods will be imported rather than locally sourced.
·   Asset management challenges in Russia. With widespread corruption now plaguing the region , asset management becomes even more difficult. Not only do assets need to be tracked as they enter and exit the country, but it also needs to be certain the assets will be safe throughout the 17 days of the event itself. It becomes necessary to verify the presence of the assets at every turn and to constantly check they have reached their destinations. Not only do large items, such as sports equipment, need to be tracked but smaller items, such as merchandising material, needs to be both tracked and verified by quantity. This is an incredible enterprise that, without the proper tools, may ultimately lead to theft and loss. This is especially true if goods are transferred early on, as they will need to be stored.
During the entire first quarter of 2014, the area around Sochi will be under tight security; requiring deployment of more than 37,000 security personnel. Every delivery vehicle must be registered and have a special permit. The cargo must be screened and sealed and the vehicle must have an assigned slot on the master delivery schedule to prevent undue congestion on roadways and docks. There are similar requirements for removing goods after the event.
The logistics for this event are as complicated as logistics can ever be, so it’s important to be aware of the regulations and to ensure your goods are marked properly. After all, it takes a lot of beets to create the 70,000 gallons of borscht that the 7,000 chefs and waiters expect to serve during the Sochi Olympics - not to mention all the other food, equipment, and personnel necessary for the event.

Submitted by Brian Sutter 

Sunday, January 05, 2014

The Supply Chain of My Underwear

It's been a while since I've been inspired this much about a pair of underwear. I recently purchased a pair of Icebreaker GT Spring Boxer Briefs. It's ski season here in Europe and I wanted a little extra warmth and you can't go wrong with merino wool. It's a perfect, natural material for insulating the body and keeping it dry.
But besides the product itself, the New Zealand-based Icebreaker Ltd., offers an intimate peek into its supply chain for every garment using a serial number, which it calls a "baacode" -- I guess "baa" refers to the sound of the sheep, unless these New Zealanders are originally from Boston.

The baacode enables consumers to trace the supply chain path from the sheep in New Zealand to the manufacturing plant in China.
As explained by Icebreaker:

"Icebreaker Baacode lets you trace your garment back through the transparent supply chain to the farms that grew the merino fibre it was made from. We believe that the best way we can use this land is for fine wool production. Its more sustainable, and it uses resources in a low-impact way. We take great pride in sustaining the resilience of the natural resource base, including the air, waterways, soils, tussock rangelands, and native scrub. Merino are an interesting breed of sheep and are best suited to the unique character of our land."

Each of the "growers" who raise the sheep are interviewed in a series of videos on YouTube. While this isn't the first firm to open up its supply chain, I recall McDonald's as well, it is the first small business to do so. If there are other examples please send them my way.

Nice job Icebreakers.






Friday, December 20, 2013

Plausible Claus: Santa's Possible Distribution Network

Skeptics argue that Santa Claus's worldwide Christmas Eve delivery isn't possible, citing some arcane laws of physics that would need to be bent or bypassed altogether. Most of these arguments, however, don't take into account the complexity of Santa's possible distribution network that would make his annual globetrotting trek more plausible.
What follows is an outline of how Santa's network might be organized and used to make the greatest single-night delivery service work.
The facts
We all know that Santa has to deliver a lot of toys to millions of children, but exactly how much is a lot?
  • The world population is approximately 7.132 billion.
  • About 25 percent of the world's population is under age 14 (Santa's target audience).
  • So, in the best-case scenario — that all the children made it onto the “Nice” list — Santa must deliver toys to 1.783 billion children.
  • If Santa delivers a modest 5 pounds of toys to each child on the list, he must be prepared to deliver 8.92 billion pounds of toys — that's the weight of more than 54,000 space shuttles!
Carrying tons of toys on a sleigh is a big problem, but one that could be worked around.
Aside from the weight problem (the weight of the toys, not of Santa), time is also an important factor. Common folklore says that Santa Claus delivers toys to good little girls and boys all over the world "in one night." Although we normally think of "one night" as six or eight hours, Santa has a lot more time than that.
Taking into account the 24 time zones and the International Date Line, Santa can take as much as 32 hours to make his deliveries.
If he starts just west of the International Date Line (in, say, Kiribati) at 10 p.m. local time and travels west, spending an hour and 20 minutes in each time zone, he will finish his delivery route at 6:30 a.m. (in American Samoa). Further subdividing the planet between northern and southern hemispheres results in 48 delivery quadrants, and Santa gets a whole 40 minutes in each one!
The distribution network
As most people tell it, Santa loads up his sleigh at the North Pole with all the toys he needs to deliver to the children. This, of course, makes no sense. Not only is it inefficient, but the wear and tear on his sleigh would be atrocious, not to mention the strain it puts on his nine flying reindeer.
A more efficient system would rely on strategically placed distribution centers for each time zone or 15 degrees of longitude — perhaps one massive warehouse at the North and South Poles and 24 smaller centers near the equator — dividing the planet into 48 "delivery zones."
On the evening of December 24, Santa Claus sets off from the North Pole along the western side of the International Date Line, his sleigh laden with toys intended only for the first delivery quadrant. Nearly 40 minutes later, he arrives at the first equatorial distribution center, probably somewhere in northern Tonga, having delivered all the toys in the batch. Quick as a flash, his Tongan elves hoist the next batch of deliveries onto the sleigh and "refuel" his reindeer with a mixture of grasses, grains and Red Bull.
Then Santa continues south, disappearing down chimneys and filling stockings and arrives at the South Pole warehouse about 40 minutes later, where his sleigh is again reloaded and his reindeer refueled (or relieved, as the case may be). Then he takes off north through the next quadrant west, stops to refill the sleigh at the second equatorial distribution center hidden in the Solomon Islands, and continues north.
Meanwhile, at the North Pole, the elves have had two hours and 40 minutes — plenty of time — to prepare the delivery batch for the fifth quadrant. When Santa arrives in his now empty sleigh, that bag of goodies gets hoisted onto the sleigh and he takes off south again.
In this way, Santa crisscrosses the globe from north to south to north, ensuring that his reindeer remain well-fed and that his sleigh is never overloaded.
Remaining issues
Granted, flying from one of the poles to a distribution center in Sri Lanka, Gabon or Ecuador in under 40 minutes isn't exactly a cakewalk, even if you aren't stopping at every child's household along the way. Certainly some magic is involved in the process (we don't often see flying reindeer, after all).
But magic or not, a systematic delivery route with regular stops at strategically placed distribution centers can turn what seems like an impossible mission into (at the very least) a plausible one.
About the author: Andrew Hollandbeck is a professional writer and copy editor – as well as a semi-professional bringer of mirth – living and working in Indianapolis, Indiana.

Friday, November 29, 2013

Santa Claus: Master of Supply Chain Management

You may be facing stiff competition in your industry, but on your most stressful days take a moment to feel grateful that you aren’t competing against the ultimate all-time master of supply chain management. No question, the Santa Claus operation would easily crush the efforts of any small or large company — with nary more than twinkling wink and a cheerful swipe with a white-gloved fist.

Thankfully, for you and everyone else in business, Santa isn’t interested in competing for profits. But we can all learn a little something from the man who single-handedly delivers presents to most of the world’s children each year. Here are the things that impress me most:

Taking orders

Anyone not impressed with the way Santa appears in malls and other public places — all around the world — is kidding themselves. Duplicating your body probably isn’t going to work, so stop trying; it’s an inefficient use of your time. Instead, consider the possible validity of a small, shunned school of thought that posits Santa may be using helpers to take orders from children in malls. However he does it, Santa’s process for order intake is incredibly productive.

Malls actually pay him to take orders at a certain location! This alone may be the best inbound marketing effort known to mankind. But Santa also takes orders via mail, email, Twitter and Facebook. And these orders get processed in time to gather raw materials and allow elves to produce the products long before December 24 rolls around.

Santa Lesson: Outsource smaller tasks when you need to. Having one person do the work of hundreds of people will only end badly — unless of course you have access to magical hot chocolate or some other concoction that wildly improves productivity without resentment.

Motivating production staff

Santa’s masterful use of an unsaturated labor force — Do you see anyone recruiting the elves away from Santa’s workshop? — allows him to hire an entire population to complete high-quality production quickly. Though it all sounds a bit shady, Santa’s bringing work to people who wouldn’t otherwise have it … no doubt a downside to the workforce’s remote town. One has to assume that the elves are grateful and happy. After all, they produce an average of 1.05 million gifts each year!

Santa Lesson: Motivate your workforce and keep them happy with the workplace. Positive motivators often lead to greater productivity.

Completing on-time distribution

Even Santa isn’t exempt from the use of electronic fleet management tools. To fulfill the desires of today’s plugged-in-children, he needs to stay on top of the technology world, so it just makes sense that he also makes use of GPS tracking. Tracking technology not only helps the elves in the shop monitor his location throughout the night and provide alerts regarding weather and air traffic; it also lets recipients know when he’s coming so they can be prepared for his arrival. He likes them to be sleeping so he can make a quick exit to the next house. That’s efficiency!

Santa Lesson: Knowing where your inventory is located at any point in time allows you to deliver quality results to customers in a timely fashion.

Managing customer expectations

No question: Santa has the toughest crowd to please — ever, in the world. He’s dealing with kids who believe he can do magic and work miracles. Sure, he usually pulls through, but some things just aren’t in his wheelhouse. But he does his best.

Santa Lesson: Even if you can’t deliver on a customer’s unrealistic expectation, you can be clear about why it can’t happen and give them the best quality product that you can offer.

Santa will always be better than you at supply chain management, but don’t be discouraged. Instead, sharpen your skills by learning from him!

Thanks Danielle M. for the article.

Friday, November 01, 2013

Finding the Supply Chain Sweet Spot

Figure 1 - Finding the Sweet Spot
In any supply chain, manufacturing operation, or field deployment of equipment, ‘time is money’ when it comes to detecting quality problems. Even small delays in detecting these issues can result in large costs, such as rework, scrap, product recall, product defect and associated brand damage, legal liability, and the list goes on.

Manufacturers have a large incentive to detect quality concerns before they become actual problems. I call this ‘Predictive Quality Management.’ It’s best to detect these issues on any incoming parts or assemblies before they are built into your product, but it’s critical to detect problems before shipping finished products to your customers.

Finding the Sweet Spot
Most of us have relied on Statistical Process Control (SPC) tools to detect when processes are out of control, thus portending bad quality. But, these tools have limitations. For subtle emerging problems, SPC provides a poor tradeoff between timeliness and statistical confidence. Namely, credible results are late (or require lots of information), and early results are fraught with false positives. The ‘sweet spot’ is early and accurate!

To get there, IBM harnessed Cumulative Sum (CUSUM) mathematics which provide highly sensitive and accurate change detection, even with smaller data sets. CUSUM applied to quality management is an innovation from IBM, with very large implications for industry. Our high-performance CUSUM detection engine can be applied to just about any data where it’s important to quickly and reliably understand if the underlying system is ‘out of control.’


Big Data & Big Value at IBM
We apply our Quality Early Warning System (QEWS) to a huge, cascading waterfall (think big: Niagara, Victoria, Iguacu…) of quality data relating to purchased assemblies, our own manufacturing shops, and on our products deployed in the field. When a QEWS alarm sounds in our upstream supply chain, for example, we quickly alert our supplier and work with them to understand the root cause and resolve the issue. This proactive detection and resolution keeps our total cost of quality as low as it can be, minimizes our warranty exposure and protects the reputation of our brand.

Imagine the Possibilities
Recently, we have begun working with a multi-billion dollar global automaker to apply QEWS to pressing business challenges around product warranty. We engaged in a friendly challenge with our client to see who could detect an emerging quality concern earlier based on the client’s detailed warranty data. We both analyzed many years of data starting from when this particular vehicle model was launched. And guess what.. QEWS won! We spotted the ominous trend over 3 years earlier than the client did, which translated to 170,000 vehicles earlier. These stark results even took us by surprise.
We are now working with this same client on a quality transformation initiative, where the proposed final vision includes performance data streaming from vehicles to a big data analytics environment where QEWS will help spot worrisome trends – early and accurately. One can easily imagine big benefits to all the players in this scenario; the vehicle owner (a safer driving experience), the service repair shop (additional services to customers, operational efficiencies), and the automaker (early detection of warranty exposure, vital vehicle performance information to improve vehicle component design, and brand protection).

I find it to be a great privilege, as well as a responsibility, to work at IBM on such impactful projects as QEWS. As the word gets out, and this new approach to quality is applied throughout the economy (electronics, automotive, pharmaceutical, consumer products, call center management, and beyond), I expect to be surprised time after time by the very powerful value proposition of early and accurate problem detection through the advanced analytics of QEWS.