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Posts Tagged ‘Supply Chain’

Here is an interesting factoid for you: 24% of all the vehicles manufactured right now are built on just ten platforms. What’s more, by the end of the decade that number is expected to grow to 30%. The number comes from an Automotive News article that looks at some of the consequences of the trend (With the push for standard parts, quality is key, Aug 6).

First, why automakers are trying to move in this direction is clear. Being able to build multiple model off one basic platform saves a ton of money in product development as well as tooling and build manufacturing facilities. Further, they benefit from a bit of risk pooling; if one model is not selling particularly well, that may be offset by another that can be built at the same plant. Thus, even if a model slumps, all that expensive capacity is till being used. (See this post from last fall on how Ford is cutting its number of platforms from 15 to 9.) Globalization also plays a part in this. What kinds of vehicles sell well might vary across different continents, but if European, Asian and North American models can all be built on the same platforms, manufacturers with a global footprint can be ever more cost competitive.

But what about suppliers? With purchased components making up a significant chunk of the cost of a vehicle, car makers would like standardization there. In a perfect world, you would have the same break system on every model built on a platform, but that brings challenges.

“The requirement that we face is clearly to develop products from the outset in such a way that they can be used in all the platform derivatives without the expense of making changes,” said Sabine Woytowicz, regional quality director at Valeo in Germany.

But with mass standardization, a part with a quality problem can now be supplied to millions of vehicles. That puts a premium on quality. …

Martin Thier, director of corporate quality management at the Mahle Group, said: “When obtaining an order, we check its feasibility for both product development and manufacturing even more closely.”

It comes down to “knowing precisely what you do, what you can do and how good you are at it.”

For example, he said, there is now a more intense interest in investigating how an inconsequential error in one part would produce an effect in a different component.

(more…)

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Would you be more likely to go to fast food restaurant if it guaranteed how long you wait at the drive thru? Some McDonald’s in South Florida are doing just that (McDonald’s offers a 60-second lunch guarantee on weekdays, Aug 4).

McDonald’s guests at participating South Florida restaurants will receive timers when paying for their order in the drive-thru. The timers are then returned to the McDonald’s crew member when their food is presented. This guarantee promises that customers will receive their meal within 60 seconds of paying for it, or receive a complimentary lunch item on a future visit.

The guarantee doesn’t apply all day. Indeed, it is only in effect for an hour — but it is the hour that matters, noon to one.

Let me acknowledge upfront that this is clearly a gimmick. McDonald’s has been in a funk and their drive thru times have been climbing (along with the time of many in the industry). So this offers customers some assurance and maybe puts a little competitive pressure on some of the other players in the industry.

But as gimmicks go, I kind of like this one. (more…)

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How to get people onto planes is an interesting topic. It is a process most of us go through with some regularity and it is hard not to think that there has to be a better way. There are many articles in the popular press explaining that in many ways airlines are doing it wrong (for an example, see this recent Quartz article). Academics like publishing papers on new methodologies that purport to work better — even if their approach is at best whimsical (would an airline assign seats based on who has carry on luggage?). But what if the secret to a smooth boarding process was really in the gate area not in the jet bridge or plane aisle?

That essentially is the premise of some work reported in the Wall Street Journal (In Tests, Scientists Try to Change Behaviors, Jul 28).

At the Copenhagen airport, Dr. Hansen recently deployed a team of three young researchers to mill about a gate in terminal B. The trio was dressed casually in jeans and wore backpacks. They blended in with the passengers, except for the badges they wore displaying airport credentials, and the clipboards and pens they carried to record how the boarding process unfolds. …

The researchers are mapping out gate-seating patterns for a total of about 500 flights. Some early observations: The more people who are standing, the more chaotic boarding tends to be. Copenhagen airport seating areas are designed for groups, even though most travelers come solo or in pairs. Solo flyers like to sit in a corner and put their bag on an adjacent seat. Pairs of travelers tend to perch anywhere as long as they can sit side-by-side.

For the next stage of the project, the airport has given the researchers permission to change seating configurations at some terminal gates to figure out which arrangements are most likely to encourage greater numbers of passengers to sit down and help make the boarding process more orderly. Among possible ideas the team is considering are expanding the number of spots that could encourage single travelers to sit and placing signs with updates about the status of the boarding in key locations.

When people are uncertain about the process, they tend to follow each other, and that can lead to a large group of people clogging up the boarding, Dr. Hansen says.

(more…)

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Have you ever wished you could tell the TSA what to do with itself? Now, you have that opportunity — at least when it comes to how they organize and manage their queues. To make things even better, they might actually pay you! The Transportation Security Administration has posted a challenge asking for people to develop a simulation model to tackle the capacity management issues of getting people through airport security. If you are interested in the challenge, the official call is here. Here are some of the specific considerations that need to be tackled:

TSA is looking for the Next Generation Checkpoint Queue Design Model to apply a scientific and simulation modeling approach to meet the dynamic security screening environment. The new queue design should include, but not limited to the following queue lanes:

  • TSA Pre✓™
  • Standard
  • Premier Passengers (1st class, business class, frequent fliers, etc.)
  • Employee and Flight Crews
  • PWD (wheelchair access)

The Challenge is to provide a simulation modeling concept that can form the basis to plan, develop requirements, and design a queue appropriately. The concept will be used to develop a model to be applied in decision analysis and to take in considerations of site specific requirements, peak and non-peak hours, flight schedules and TSA staffing schedules. Solvers are expected to provide the concept and provide evidence that it works as described in the requirements.

According to Nextgov.com, there are specific performance targets for different classes of customers (Attention, Passengers: $15,000 Prize for Whoever Can Speed TSA Screening, Jul 18)

The line, in this scenario, extends from the point where a passenger joins the end of the queue to the metal detector or body scan machine.

The rules for the challenge state wait times cannot be more than 5 minutes for PreCheck and 10 minutes for standard lines.

(more…)

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Have you ever thought about pallets? You know, those wood contraptions that can hold a pile of stuff off the floor while letting a forklift easily scoop up said pile? Here’s a snapshot of one that just happened to be lying around the Northwestern campus.

IMG_0863

So in many ways, there is nothing particularly special about pallets except that they play a key role in logistics and supply chains. They basically make schlepping stuff modular. What is actually stacked on the pallet doesn’t matter; a guy with a forklift can just pick it up and put it on or take it off a truck. Which is not to say that pallets are uninteresting. The people at Planet Money did a whole episode on pallets (Episode 545: The Blue Pallet, Jun 11) that makes for great listening. Here, check it out:

The key point is that there has in fact been innovation in the pallet market. What you see above is your basic stringer pallet. It consists of 15 pieces of wood and a bunch of nails. Note that with those three pieces of wood sandwiched between the other twelve, a forklift can only pick it up from two sides — either the front or back in the picture above. The alternative is to have a block pallet. A block pallet replaces that those three pieces of wood with nine blocks. Those blocks give extra spacing on the other two sides and a forklift can hoist the thing from any side. That additional flexibility increases efficiency. Go to a Costco. They have essentially mandated all their suppliers send stuff on block pallets. If you unload as many tractor trailers as Costco does, the productivity boost from block pallets really adds up. (more…)

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Wearable computing is often talked up as the next big thing. So how hard can it be to build a smart watch? Pebble, an independent (i.e., not owned by an existing tech company) competitor had some significant delays as it moved from Kickstarter campaign to actual product. It essentially underestimated complications of sourcing materials and getting things built. But it doesn’t have to be so hard (Shanzhai: China’s Collaborative Electronics Design Ecosystem, The Atlantic, May 18).

A different story emerges in the burgeoning wearable electronics market of Southern China, one that is based on a rapid, flexible and open ecosystem called shanzhai 山寨.

Take, World Peace Industrial (WPI), a Taiwanese electronic sourcing company located in Shenzhen, as an example. The company’s application technology unit (ATU) spends millions annually to develop reference circuit boards, called gongban 公板 (“public board”). A gongban can be used by a variety of different companies, who either incorporate it in their products directly or build atop it as they please via modifications. ATU develops 130 gongbans annually in areas ranging from smart phones, tablets, smart watches, smart homes, and industrial controls—and distributes the designs for free. WPI then makes money by trading in the boards’ components.

“We call this shanzhai in Shenzhen. It’s a mass production artwork,” explains Lawrence Lin head of the Application Technology Unit at WPI. Thirty some companies in Shenzhen are shipping their own smart watches with gongban from ATU and gongmo (‘public case’) sourced from the massive shanzhai ecosystem, which consists of tens of thousands of companies that manufacture and distribute goods. …

In the emerging area of smart watches, WPI and other solution houses create gongban, which provide common electronic functions including Bluetooth connectivity to mobile phones, and sensors to measure the wearers’ movement, as well as monitor heart rate and other vital bodily statistics. These gongban are designed to fit into a variety of gongmo that are ready to be branded on order. The flexibility to mix and match gongban and gongmo enable companies to quickly put together their own smart watches with customized functions and styles for various niche markets. Today, customers of WPI ship close to 100,000 smart watches per month.

What do a gongban and a gongmo look like? Take a gander:

54b8dfc5f

(more…)

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When you thing of the auto industry, you likely focus on big players like Ford, General Motors, Toyota and Mercedes. Names like Magna International and Denso may not mean a whole lot to you. But you should know those names. They likely make more of your car than you realize. “Mega suppliers” like Magna and Denso have been growing for years and in the process have been sifting the balance of power in the industry (Age of mega supplier heralds danger for carmakers, Financial Times, May 18).

There are now 16 major car manufacturers that sell more than 1m vehicles a year. But those cars are built from parts supplied by just 10 major component makers – meaning that under the individually styled bodywork, cars are sharing more parts.

Whether a driver chooses to buy a BMW, an Audi or a Mercedes-Benz five-door saloon, the chances are high that the anti-lock brakes will be built by Continental, the battery will come from Johnson Controls, and Denso will have provided the exhaust

Bosch, the world’s largest automotive supplier by revenue, reckons that at least one of its parts is built into almost every new car sold anywhere in the world – regardless of brand, market, price point or geography.

The article goes on to note that the top ten suppliers capture 60% of the revenue generated by the top 100 suppliers.

Given this situation, two questions seem relevant. First, how did automakers find themselves in this situation? Second, what are the implications for how the industry functions? (more…)

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Check out this spiffy graphic from Automotive News on the evolution of auto assembly in Mexico (Japanese automakers march into Mexico, set up export base, Mar 10).

0310-MEXICO-MAP

That expansion has to a large extent come at the expense of the rest of the North American industry as this graph from the Chicago Federal Reserve demonstrates.

AOS-Chart-1

Note that overall assembly capacity has declined. That’s not too surprising. The industry was generally seen as being overcapacitated, and the Big Three took the never-let-a-crisis-go-to-waste route to reduce the number of factories and resize their business. But Mexico clearly gained and it is forecasted to gain even more. Here’s another graph from the Chicago Fed.

AOS-Chart-2

It should be noted that this growth is driven by Japanese brands. GM is the only US or European firm to open a new plant following NAFTA. All the action lately has been due to the likes of Honda, Mazda and Nissan. Given this growth in capacity, it is not too surprising that Mexico is expected to pass Japan this year and Canada next year to become the top source of imported cars in the US. But why has there been such a rush invest there? (more…)

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Given that it is Valentine’s Day, it seems appropriate to consider the supply chain for roses. So behold this wonderful graphic from Supply Chain 24/7 (The Logistics of Delivering Fresh Roses In Time for Valentine’s Day, Feb 13).

CHRobinson_Valentine_Rose

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Flexitanks

I keep an empty wine bottle from Chateau de La Rivière in my office. It says right on the front label “Mis en bouteille au chateau,” that is, that the wine was bottled at the winery. It turns out that at least in the British wine market bottling at the winery is becoming the exception, not the rule. According to the Financial Times, a large numbers of wines imported into the United Kingdom are now imported in plastic bladders (see the image above) and bottled in the UK (Crate expectations, Jan 31).

In the past few years there has been a huge structural change in how wine is delivered to those who drink it. The UK, for example, is the most important market for one of the world’s most enthusiastic wine exporters, Australia. In 2008, fewer than three in every 10 bottles of Australian wine on British shelves contained wine that had been shipped from Australia in bulk rather than in bottle. Four years later that figure was eight in every 10, and the total amount of wine shipped out of Australia in bulk overtook the volume exported in bottle.

Australia is far from the only country to ship substantial quantities of wine sloshing around in a tank inside a container rather than neatly sealed in bottles. Spain and Italy export far more wine in bulk than any non-European wine producer, and 65 per cent of all South African wine exports were bulk last year. (Chile is an enthusiastic exporter of bulk wine and earns the highest average price per litre for it.) According to the OIV, the global wine statistics-gatherer, the total volume of wine shipped around the world in bulk rose 61 per cent between 2005 and 2012 to represent more than 40 per cent of all exported wine.

So what is driving this rapid conversion from bottle to bulk? (more…)

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