Amazon.com is one of the largest Internet sellers of media in the world today, and has expanded its selections to include clothing, beauty products, house wares, and thousands of other items.  

Jeff Bezos founded Amazon.com in 1994. Originally the business was based out of his garage in his Bellevue, Washington home. A businessman by the name of Nick Hanauer believed in Bezos’ idea and decided to invest $40,000 in the venture.  When Amazon first decided to go online, its layout was not as flashy as it is today. In fact, the site looked very plain and unattractive to most visitors, causing the business to start out on shaky ground. A man by the name of Tom Alburg decided to invest $100,000 in Amazon in 1995, which helped the company fund a better looking website and hosting capabilities. When people began purchasing books from Amazon, Bezos was in awe that he had customers from all over the country, not just Washington State, purchasing books.

Bezos decided that he had to create more than just a bookstore if he wanted people to come back as customers. He added the option of buyers to write their own book reviews, which is a huge credit to Amazon.com’s success. People began to look at Amazon as more of an online community and not just a place to purchase things. By 1997, Amazon.com had generated $15.7 million in revenue. Once the company went public the same year, they decided to add CDs and movies to the website. In 1998, Amazon added some new items to the roster: software, electronics, video games, toys, and home improvement items. Once the company began showing signs of success, people became skeptic and claimed that Amazon was getting too large in too short an amount of time. 

Despite these crytics in 2006, Amazon.com sells a lot more than books and has sites serving seven countries, with 21 fulfillment centers around the globe totaling more than 9 million square feet of warehouse space. 

Indeed the above as an interesting case of study, but of our topic, Logistics, I thought would have been interesting how does this company manage the warehouse and the delivery process of thousands items per day, millions per week. 

Following is a good video which explain us how the warehouse is done in an Amazon distribution center. The speaker explain us as after receiving the order all items are picked up by pickers (persons) scanned and put into boxes, and dropping these to the packaging area where different orders are packaged and ready to be distributed. 

A question came up to me after seeing this video: wouldn’t be much cheaper for a company as Amazon to implement an automatic warehousing as we’ve seen Mercadona, for example, is doing in Ciempozuelos??? 

And also a video where its explaines us how with this service, customers send inventories directly to Amazon where it these are stored and managed in a secure, climate controlled facility. When orders are received, Amazon will professionally pick, pack and ship the product directly to their customer:

And to conclude a final video on news and politics on Amazon which basically gives us an idea of the importance that Logistics have on the labour market. 

Did you never thinked on how would work out a company like UPS?

UPS is the largest packages delivery company in the World, deliveryng 3,5 billions packages around the World, which means more than one package for every two people in the World.  It has more then 17 hundred operating centers troughout the World with 70 thousands UPS drivers interacting with more than 8 million customers EVERY DAY.

When talking about this kind of companies we’re talking about firms which are offering a complex service of last mile delivery in most of the countries of the World.

Indeed it’s a complex and complicated essay, where new technologies play a core and relevant role. Could be said that technology powers every service the company offers and every operation it performs.

Following two interesting video:

The first one answer to the question “What happens to your packages after you dropped them off to UPS?

The second after rapidly gives us a clear idea of the use of technologies in the last mile of logistics in UPS and the importance of these.

Have a look, they’re pretty interesting!

As Professor Dr. José Pedro Garcia Sabater suggested us during one of his class, this past week-end I took my girlfriend and went to IKEA at Murcia.

I had already been at IKEA but I wanted to go seeing it with this new “logistics” perspective.

Well, we drove a lot and walked even more but indeed the prices tha IKEA offers are really competitive, even if you have to go from Valencia to Murcia.

Anyway IKEA is not that perfect it seems. There are several things it could be improved in my opinion.

Once you go there, as seen in class, in order to visit the exposition is there a route you have to follow, and if you forget  and have to come back, I assure you that you start getting nervous.

Here above the IKEA store in Murcia  and in the image below on the right side the trolleys used in the exposition area:

 

Once at the recollecting area, if you go during the week and you are a man, then there would be no problems, bur if you go there on week-end or if you’re not a man you’re should have serious problem in buying most of the IKEA furniture. Why? Simply because, even if the FLAT PACKAGES are indeed really well engineered, these packages are still really heavy, which means most of the women could not effort to bring and load them in their trolleis. And the IKEA staff that could help you is really reduced in this area.

One of the others things I noticed is that for example the opening time is different from Italy where IKEA is open all the year’s sundays and indeed this is the day when they sell the most.  In Murcia they don’t open on Sundays.

 By the way,  we bought some furniture, which I had than to assembly. Well, I can assure you that the instructions were really easy to understand and the furniture to assembly, much more than those all others furniture shops.

Just to conclude that apart from the mega shelves they have,  always impressing, and the way IKEA run its business, what catched-up my attention this time was a “QUARTER PALLET” of which existence I read in on efeedback the teacher gave in on eof my colleagues’ blog and that I saw for the first time.

 Following some pictures of my visit to IKEA:

In these two first images some shelves at the recollection area:

 

 

 And also, the QUARTER PALLET:

  

And to conclude one of the key of IKEA, which is the base of their strategy, the “DO IT YOURSELF”. Below two images of the papers you have to use while passing trough the exposition ot get note of the furniture youwould like to have and where to recollect it later on at the recollection area:

Dear readers,

as one of my collegues stated in one of his blog-posts, please allow me to remember you that this blog is “alive”. Old posts have been continuously rewieved and improved, and so it would be for the future. This means that old post could change during the time, thanks to the new informations, and feedback the writer (me) will recollect.

So those subscribed via RSS, please note that you might not get a notification for the changes done in old posts, neither for added information. My suggestion is than that of keeping revising the all blog, especially the posts you liked the most, and rememember that your feedbacks are always more than welcomed.

 

As some of you would probably know by reading the news, in these days (25th and 26th of May) has taken place in Barcelona the 8th Mediterranean Transport and Logistics Forum which has been held within SIL 2010 framework and with the collaboration of the Association of Mediterranean Chambers of Commerce and Industry (ASCAME), the Consorci de la Zona Franca and Barcelona’s Chamber of Commerce and with the impact of the Free Trade Mediterranean Area foreseen for the next year 2010. At the same time, the 3rd Mediterranean Ports Summit, 1st Port de Barcelona Conference -which have been held the second day (yesterday 26th of May) –  has focused its interest in the Port management and logistics infrastructures financing; the Mediterranean ports contribution towards a logistics system more sustainable and efficient; and the Sea Mediterranean Highways Development.

Within the 8th Mediterranean Transport and Logistics Forum have been held a session on the 25th May focused on Business Meetinngs (B2B), where trade agreements, foreign investments and cooperation among companies of both Mediterranean shores will be taking part.

Furthermore during the meeting have been approached issues related to the new boost given to the Euro-Mediterranean association and its integration through Union for the Mediterranean and the importance of the transport and logistics sector as economic pillars and determining factors for the integration into a single united Mediterranean market. An analysis have been made of the different results arising from the implementation of different European projects for the development of the Mediterranean logistics area and the status of the port infrastructures.

The new infrastructures plans, situation and the financial mechanisms for Union for the Mediterranean has constitute the focus of debate during the opening session of the 8th Mediterranean Transport and Logistics Forum. At this moment in time, promoting the Mediterranean Sea as the epicentre of the world can provide a decisive cooperation model within the current global economic situation.

And who is acting the best? It seems that my home country: Italy. Here following an interesting article on the results tha comes out at the MEDA (unfortunately is in spanish):

Last Friday, after our Logistics Class I came back home and had a Coca-Cola on my sofa. But Indeed my brain was still in class and it was still thinking on Logistics and came to my head an image of ten years ago: while having an excursion with chamels in the middle of the Sahara desert, after more than one hour riding on board the chamels, in the middle of nowhere, came out a man with a chamel and what did he offered us? A Coca-Cola! Unbelievable but truth.

And her is when on my sofa I start thinking how will work out the distrbibution network of this huge company. By now I have only discovered that is a pretty comple matter.

Anyway by searching on the net I found out an on a Logistic review (Logistics Today) an interesting article on Coca-Cola distribution in Mexico. Here I attached it:

Coca-Cola Mexico

In the other day post on Zara, meanwhile writing about dynamic assortment capability of this brand and its capacity of reduce the lead time and fast fashion I was thinking on another manufacturer company: Benetton.

Benetton for several years have been a reference in the assortment capability and have put a lot of effort on study clients garments colors choice during the pre-season period and adapted to these during the same season. Furthermore this brand have been revolutionary for using the same room for stocking selling merchandise and displying it.

I decided than to investigate a bit on the Logistics and organization of the company and found the following interesting information.

As stated in the benetton webpage (http://www.benettongroup.com/en/whoweare/distribution.htm): “Benetton has direct control of the logistics phase for both own manufactured and sourced products, and has invested in modelling, organization, and automation of logistic processes in order to completely integrate the entire production cycle, from client orders, to packing and delivery.

The state-of-the-art logistics operation at Castrette (Italy) has a fully automated innovative sorting system, whose propulsion is based on electromagnetic fields, capable of handling individual orders for over 6,300 Benetton shops worldwide.

Folded and hanging garments are automatically sorted, packed into boxes and sent through a one-kilometer tunnel to the Automated Distribution Center. This covers an area of 30,000 square meters, has a total capacity of 800,000 boxes and can handle 120,000 incoming/outgoing boxes a day with a workforce of only 28 (compared to the 400 required in a traditional operation).

The European Platform optimizes delivery and quality of service to the store network, thanks to its geographical position, close to the domestic market and European countries, and to the use of innovative technologies.

The functionality, effectiveness and efficiency of our logistic organization is completed by the Company’s hubs in Shenzehn and Mexico City; the multi-hub model is supported by a centralized IT system which is able to coordinate and optimize product deliveries customized according to required dates and destinations worldwide.

This system assures timeliness of information and better control of the business.”

Here above an interesting video on Benetton. Of Special interest for our subjetc is especially from minute 4:00 when are shown the Benetton distribution center which cover an area of 20,000 square meters, handle 40,000in & out boxes, and need only 24 workers. Is laso shown the innovative automated sorting system, which allows the company to hold the direct control of the logistics and send directly its products to the group’s 5000 retails outlets in 120 countries. 

CURIOSITY:

In view of the expected increase in the number of items being shipped, in 2007 Benetton Group started to invest around 50 million euro in the automated hub at Castrette. The strategic geographical position and use of innovative technologies confirmed the functionality, effectiveness, efficiency of Castrette in the centralized receipt of goods.

The investments allowed the distribution capacity of the Group to almost double, thanks to the development of new warehouse areas within the existing structure, and an innovative sorting system using electromagnetic propulsion.

Mercadona is probably the most famous distribution company in Spain with base in Valencia. It’s name comes from mercado (market in valencian) and dona (women in Valencian).

Mercadona S. A. born in 1977, in the Group Cárnicas Roig, propiety of Francisco Roig Ballester and it’s wife  Trinidad Alfonso Mocholi with the objective to expand the comapny.

In 1981 Juan Roig, one of his sons, buy the company to its father wich at that moment counts with 8 shops in Valencia and with the collaboration of his wife and his two brothers starts the expansion.

Following the number of supermarkets owned by mercadona in different years, which cleraly underlines the company fast growth:

• 1980–>>3 supermarkets
• 1990–>>30 supermarkets
• 2000–>>600 supermarkets
• 2010–>>1200 supermarkets

Infact the tactic that Mr. Roig wanted to implement was that of growth rapidly. Let’s say it wanted to growth in a OIL SPREAD STRATEGY, which put in practice by buing small supermarkets companies chain in different areas of Spain.

Accordingly to this strategy in 1988 the company adquired 22 Supermarkets of Superette, in 1989 the companies  Cesta Distribución y Desarrollo de Centros Comerciales, in 1991  Dinos y Super Aguilar and in 1998 the ctalan chain Almacens Paquer y Supermercats Vilaró. También se firman alianzas como la aAlso alliances were signed in 1997 with Almacenes Gómez Serrano in order to introduce the comoany into the andalucian market. 

This tactic is much different from the natural way of growth, which consists in buying shops close to your base. Compared with the first this last is much slower.

Nowadays Mercadona covers most of Spain except Galicia, the farest region from the Valencia. It’s true that in Galicia Mercadona is present, but with a really low density compared with the rest of Spain.

As announed in it sinternal review, Mercadona in December 2007 opened its last Distbution Center in Ciempozuelos (Madrid), in which inverted 300 million €. The new centre was inaugurated by the President of the Madrid Region, Esperanza Aguirre (following a video of the inauguration), accompanied by the president of Mercadona, Juan Roig. This centre covers 200.000 square meters and is composed by 9 pavillion of cold and dried products (note: supply chaing are divided in 3 flows: dried products, refrigerated products and frozen products). Within the 9 pavillons results more than 80.000 square meter of contrsucted space and more than 20 floors.

Here above a video of the inauguration of the new distribution center in Ciempozuelos (Madrid) with the Madrid community President Esperanza Aguirre and Mercadona President Mr Roig.

With this new distribution center, Mercadona reinforce its presence its bet for the Region of Madrid, with a center which alone is able to provide more than 400 supermarkets. At present Mercadona counts in Madrid with 75 supermarkets, 22 inside the capital and the rest in the surrounding areas.

In this platform with the modern tcnological support a new logistic concept have been created. While people are buying at the cash of the differents supermarkets, the platform is immeditaly receving data of what is being buy. Goods movement is all automatized, workers don’t have to do nothing, just supervised. The pallets are prepared by the machines themselves, allowing a preparation of 20.000 pallets everyday.

This distribution center is the seventh, after those of Riba-Roja del Turia (Valencia), Antequera (Malaga), Sant Sadurni d’Anoia (Barcelona), San Isidro (Alicante), Huévar (sevilla) y Granadilla de Abona (Tenerife)

Below a link to the video of the Spanish television La Sexta on the ditribution center of Mercadona in Ciempozuelos:

La Sexta – Ciempozuelos distribution center

On eof teh interesting things underlined by the professor is the facts that same goods are stores in different areas, so also in case a machine broke down, they’re always able to serve that good. 

One of the KEY things Mercadona intrroduced in Spain  have been the intersupplier (inteproveedor) a white label producing only for them. Mercadona flow is teh following:

INTERSUPPLIER—>>>(T1)—>>> DCs—>>>(T2)—>>>SHOPS

They realised that trucks of their suppliers were coming back empty after have served the product, so in some way obliged some of their intersupplier to move in the area which was interesting for the company, in order to be moving goods back and forward.

This is somehow the reason why Mercadon is planning the new distribution center in Bilbao.

But, what about the future of Mercadona? Is possibel to affirm that for example Valencian Community is a mature market, cnsumers start to be quite exhausted of the same products of all the life of Hacendado.

This is the reason why the distribution chain will have to change and DISTRIBUTION NETWORKS HAVE TO BE REDESIGNED ALL THE TIME.

Our colleague Jorge Leon, made in yesterday’s class a very good presentation on FAMOSA distribution network design.

FAMOSA  (Fábricas Agrupadas de Muñecas de Onil Sociedad Anónima) for those who doesn’t know is a valencian games producer company located in the village of Onil (Hoya de castalla, Comunidad Valenciana, España).

Here attached its presentation:

logistics_jorge-leon-bello

Today our colleague Rosa Ruiz made a brilliant and interesting presentation on the IKEA distribution network design case.

Here is a link to her work:

The teacher then remarked the following facts:

• is a huge company with a huge distribution network
• 296 stores with 27 distribution centers, which means a ratio of approx 11 stores per distribution center, while for example Mercadona have approx 200. The ratio is highly dependant on the Product commercialized
• 9500 products portfolio (almost the same of Marcadona), most of them produced in Europe
• Products are directly delivered form the suppliers to the stores in order to reduce costs
• and as we all know they’re speciaized in the best practice in packaging to save space and reduce costs
• products have to be self assemblied; IKEA products are the easiest to assembly

And to conclude just to say what we have all experienced while visiting IKEA, and on what I’ve saw myself reflected when the teacher has explained it the class. The states of animum that you pass trough while walking on the IKEA long corridors that drive you from the entrance until the warehouse, where all the products are recollect, and the cash.

You enter happy with your couple and with a linemeter in your hands. Start measuring and want to buy all the wonderful products that they have. You keep on walking trough the corridors, while your girlfriend is looking at all the things sshe may buy and you start thinking on your poor credit card and at when it would be switched. You keep walking and a bit tired you go down the stairs and arrive at the gadget area where your girlfriend, which at this point really want to buy something, to notice something in her hands, shows clear signals home-gadgets illness and start buying as many thing as she can.

You keep walking and with plenty of things you arrive at the warehouse and start picking up what you signed on your paper, go to the cash, and is when the cashiers tell you the counts. Andhere is when you start thinking:  “why did I come here?!!!”

You’ve just spend a lot of money and have just carton packs into your hads, that must fit into your car and once back at home you will have to assembly them…but you look at your girlfiend and the smile on her face pay-off..and you start thinking on how beatiful will be your home ad how much you will have payed by goig into another furniture shop. And at the END dear teacher, this is also in my opinion the ESSENCE of IKEA.

Following a nice funny video in spanish which resumes (more or less) what said above:

But also the interesting video saw in class on the IKEA flat pack warehouse: