Interesting infographic showing by market capitalization the largest courier companies in the world.
It´s no surpirse that the “big three” global couriers, United Parcel Service (UPS), FedEx, and DHL continue to dominate transport services with closer to 70% of market cap.
Kitting is a technique where complementary items are ordered, packaged, or shipped together as a single "kit" with a unique SKU.
Inventory kitting is a method of organizing inventory into kits.
From a production point of view, this would mean putting and storing together
all the relevant ingredients for the manufacture of a given product.
This technique can also be used to pack together individual
complimentary products to create one product that’s ready to ship to a single
customer.
The goal of kitting is to assemble products ahead of time as a way to
streamline the order fulfillment process. Companies can kit together products
in anticipation of customer orders or as a marketing strategy to drive sales
volume.
Before kitting, the traditional inventory model involved packaging separate
SKUs on their own and sending them out as multiple different shipments,
increasing both the cost and time involved for the company and the customer.
Product kitting has numerous benefits, including:
Gartner has once more released the results from its annual Global Supply Chain Top 25, identifying leading supply chain organizations, highlighting trends and sharing best practices.
Schneider Electric mantained the top position in the list this year after crowning the list in 2023, followed in second place by Cisco Systems for the scond year in a row. Colgate-Palmolive, Microsoft and Johnson & Johnson rounded out the top five positions, with PepsiCo dropping from the top 10 in 2024.
Some interesting moves over the years with companies joining the list and some others being relegated; in these links you can check how the ranking has evolved over the last few years:
Gartner continues to recognize sustained supply chain performance via the “Masters” category, introduced in 2015. To be considered Masters, companies must have attained top-five composite scores for at least seven out of the last 10 years (2024-2024). Amazon, Apple, P&G and Unilever all qualified for the category this year once more.
Before we dive into the eight types
of wastes, it is important to understand what waste is.
Waste is any action or step in a
process that does not add value to the customer.
Originally seven wastes (Muda) were identified,
and a methodology was developed by Toyota, as part of the Toyota Production System (TPS).
The seven wastes were; Transportation,
Inventory, Motion, Waiting, Overproduction, Overprocessing and Defects. They
are often referred to by the acronym ‘TIMWOOD’.
The 8th waste of non-utilized talent
or ‘Skills’ of workers was later introduced in the 1990s when the Toyota
Production System was adopted in the Western world. As a result, the 8 wastes
are commonly referred to as ‘TIMWOODS’.
We can now deep dive into each of
these eight wastes and understand how we can reduce or eliminate them as part
of a leaner and more efficient operations.
If
you think Formula 1 races are amazing and the pinnacle of technology applied to
sport, you are probably right.
There is no other sport where machinery and components are as crucial to
the team success as in Formula 1.
But with twenty-one races across five continents every year, the ten
teams that take part on the competition face an astronomical challenge to
ensure all what they need to be competitive during the weekend is ready.
Hundreds of pellets and containers travelling around the globe moving
enough equipment to ensure the comfort of thousands of workers and the
capabilities to assemble and disassemble a racing car every weekend.
We already talked about what happens behind the scenes in the Red Bull air racing competition here, now is time to go even further and watch the logistics miracle that happens in Formula 1!
Enjoy!
Reverse logistics is the movement of goods “upstream” through a supply chain, to return them from the end customer back to a retailer or manufacturer.
Reverse logistics also covers the recycling, repurposing, repairing and resale of
products.
There are several types
of reverse logistics, for different reasons:
Returns management: This is the most common reverse logistics process: when a customer returns an item to a seller because it is damaged, not as expected, doesn’t fit etc.
Remanufacturing or refurbishment: This involves the repairing and rebuilding of products. Retailers and manufacturers may also recover some parts from a defective product to be used elsewhere.
Unsold goods: When a retailer returns unsold goods to the manufacturer.
Delivery failure: In the instance of a failed delivery (for example, the customer was not in to receive the package), products may be shipped back to the retailer.
Rental equipment: This is when rented or leased products are returned to the manufacturer at the end of a defined term.
Repairs and maintenance: The customer will send the product back to the business to be repaired.
End of life: These are products that can no longer serve any purpose, so will need to be recycled or disposed of.
The next video shows how reverse logistics works in
real life and how complex. When the customer returns the product, a new
intricate adventure starts until it reaches its final destination and
potentially a new life!
Good
distribution practices (GDP) and good manufacturing practices (GMP) are quality
standards and guidelines that have the same objective, to ensure medical device
and pharmaceutical products are safe, meet their intended use, and comply with regulations.
GMP focuses
on manufacturing processes, while GDP covers distribution activities.
Good manufacturing
practices involve consistently
producing products that meet quality standards. This requires the
implementation of a system where the aim is to minimize risks, from incorrect
labelling of products to contamination to incorrect ingredients and everything
in between. GMP cover all parts of the production process, from raw materials
through to the production of the finished product.
Good distribution
practices involve maintaining
the quality and integrity of products through all stages of the supply chain.
GDP applies to warehousing, storage, and transportation, and it covers
everything from storing and transporting products under the right conditions
and ensuring product integrity at the correct destination on time.
There are parts of GDP that
are unique, so they don’t apply to GMP. Those unique parts of GDP include
guidance on transportation covering aspects such as temperature control,
vehicle controls, and conducting risk assessments on transport routes.
Price elasticity of demand is a measurement of the change in the
consumption of a product in relation to a change in its price, in other words, how sensitive the quantity
demanded is to its price.
Economists
use price elasticity to understand how supply and demand for a
product change when its price changes.
Depending on its elasticity,
a good is said to have elastic demand, inelastic demand, or unitary elastic
demand.
If demand is elastic, the
quantity demanded is very sensitive to price.
If demand is inelastic, the
good's demand is relatively insensitive to price, with quantity changing less
than price.
If demand is unitary
elastic, the quantity falls by exactly the percentage that the price rises.
Two important special cases
are perfectly elastic demand, where even a small rise in price reduces the
quantity demanded to zero; and perfectly inelastic demand, where a rise in
price leaves the quantity unchanged.
Availability of substitute goods: The more and closer the substitutes available, the more elastic is that good likely to be, as people can easily switch from one good to another if an even minor price change is made. If no close substitutes are available, the demand inelastic.
Breadth of definition of a good: The broader the definition of a good or service, the lower the elasticity.
Percentage of
income: The higher the percentage of
the consumer's income that the product's price represents, the higher the
elasticity (more elastic) tends to be, as people will pay more attention when
purchasing the good because of its cost.
When the goods represent only a negligible portion of the budget the income effect will be insignificant and demand inelastic,
Necessity: The more necessary a good is, the lower the elasticity (more inelastic), as people will attempt to buy it no matter the price.
Duration: For most goods, the longer a price change holds, the higher the elasticity is likely to be, as more and more consumers find they have the time and inclination to search for substitutes.
Brand loyalty: An attachment to a certain brand can
override sensitivity to price changes, resulting in more inelastic demand.
Addictiveness: Goods that are more addictive in nature tend to be more inelastic. This is because consumers treat such goods as necessities and hence are forced to purchase them, despite even significant price changes.
Based on all of
the above, it is important that the demand forecaster is familiar with pricing
actions taken by the company and anticipate their impact on demand.
Kanban is a visual scheduling system for lean manufacturing.
It all started in the early 1940s when the first Kanban system
was developed by Taiichi Ohno for Toyota automotive in Japan. It was created as
a simple planning system, the aim of which was to control and manage work and
inventory at every stage of production optimally.
The Kanban method gets its name from
the use of kanban, visual signalling mechanisms to control work in progress for
intangible work products.
Kanban aligns inventory levels with actual consumption. A signal
tells a supplier to produce and deliver a new shipment when a material is
consumed. This signal is tracked through the replenishment cycle,
bringing visibility to the supplier, consumer, and buyer.
In contexts where supply time is lengthy and demand is difficult
to forecast, often the best one can do is to respond quickly to observed
demand. This situation is exactly what a kanban system accomplishes, in that it
is used as a demand signal that immediately travels through the supply chain.
Kanban cards are a key component of kanban, and they signal the need to move materials within a production facility or to move materials from an outside supplier into the production facility. The kanban card is, in effect, a message that signals a depletion of product, parts, or inventory. When received, the kanban triggers replenishment of that product, part, or inventory.
Three-bin system
An example of a simple kanban system implementation is a
"three-bin system" for the supplied parts, where there is no in-house
manufacturing. One bin is on the factory floor (the initial demand point),
one bin is in the factory store (the inventory control point), and one bin is
at the supplier. The bins usually have a removable card containing the product
details and other relevant information, the classic kanban card.
When the bin on the factory floor is empty (because the parts in
it were used up in a manufacturing process), the empty bin and its kanban card
are returned to the factory store (the inventory control point). The factory
store replaces the empty bin on the factory floor with the full bin from the
factory store, which also contains a kanban card. The factory store sends the
empty bin with its kanban card to the supplier. The supplier's full product
bin, with its kanban card, is delivered to the factory store; the supplier
keeps the empty bin. This is the final step in the process. Thus, the process
never runs out of product, and could be described as a closed loop, in that it
provides the exact amount required, with only one spare bin so there is never
oversupply.
If all this is confusing, and you´re still not clear on how
Kanban works, Im sure the next image will make everything fall into place! One
image is indeed worth a thousand words as they say!
Kaizen is a
business philosophy that focuses on continuous improvement across the entire
organization. The pursue of the kaizen model is to help companies
focus on gradually and consistently increasing efficiency and reducing waste
within processes. That doesn't mean alterations happen slowly. The kaizen
process simply recognizes that small changes now can have huge impacts in the
future.
To achieve all this, kaizen encourages
input from any employee, from the factory floor to the most senior management.
The kaizen method became popular in Japan,
at manufacturers like Toyota. Kaizen can broadly be translated as means continuous
improvement in Japanese.
There are five fundamental Kaizen principles that are embedded in every tool and behaviour:
1. Know your customer
2. Let it Flow
3. Go to Gemba
4. Empower People
5. Be Transparent
Traditionally, kaizen has been known for its events, usually a three- to five-day team workshop in which employees, managers, and sometimes C-suite executives make an actionable plan to improve an existing process. Kaizen events often follow Gemba Walks or the discovery of an inefficiency. We have spoken about Gemba Walks in the past, these are visits to workplaces where management teams can witness processes, talk to employees, gather insights, and identify any issues. You can read more about Gemba Walks in here.
After you’ve identified problems or bottlenecks in a process, start making small, continuous improvements. During the kaizen event, team members collaborate and think of solutions. The ideal outcome of these events is an actionable plan that is ready for implementation.
Kaizen events can take many forms to best serve their business application.
1. Focused-improvement kaizen. A focused-improvement event is a kaizen event centred on a single, known issue. Prioritize your most important losses and develop solutions to eliminate them.
2. Waste kaizen. This type of event focuses on eliminating waste in your processes, as opposed to improving systems that are currently working.
3. Error-proofing kaizen. Use this type of event to reduce human error by improving processes. This could be as simple as standardizing checklists, automating parts of a system or using Poka Yoke which we talked about here.
4. Lead-time kaizen. This kind of event is suitable when you realize one of your processes is taking too long. The event aims to reduce the amount of time it takes to complete a process, like the time from processing an order to the customer receiving their goods.
How to run a Kaizen event:
There is not a unique way to conduct a kaizen event but the plan-do-check-act (PDCA) framework is common and often recommended method.
1. Plan
The Gemba Walk, mapping your value stream, and identifying the
problems in your processes are part of the planning stage in a PDCA cycle.
Follow these steps to get started.
2. Do
Run a small-scale test of your chosen solution. Make sure every team member
involved is aware of the change and let it run long enough to gather meaningful
data and feedback.
3. Check
Collect data from your test and assess its success.
4. Act or adjust
If the test was a success, scale, implement your improved process company-wide
or as a permanent update. However, if you found issues, or if the solution
didn’t work, refine the process, and run further tests or choose a different
solution and try again.
This should be a cyclical process. The kaizen event might be a one-time event
but the process of improving never stops. To keep the continuous loop going,
repeat the cycle. Find more processes to improve or try out other solutions.
