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Wednesday, May 26, 2010

Material Flow vs. Information Flow

Logistics is the task of managing two key flows: material flow and information flow. The logistics task of managing material flow and information flow is a key part of the overall task of supply chain management.

In the last logistics class on 14/05/2010 we have talked about material and information flow.

I have found a book that gives a very comprehensive example on this topic.
Logistics Management and Strategy: Competing Through The Supply Chain

  • Alan Harrison, Cranfield School of Management

  • Remko Van Hoek, Professor of Supply Chain Management at The Cranfield Centre for Logistics and Supply Chain Management and Vice President Procurement at Nuon in the Netherlands

A preview on this book can be found here:,3110,0273712764,00.html

The example for material flow and information flow is described as follows:
The concept of a supply chain suggests a series of processes linked together to form a chain. A typical Tresco (UK's largest food retailer) supply chain is formed from five such links.

Sunday, May 23, 2010

Mercadona - Our Personal Perception

We love to go shopping at Mercadona because of the excellent price policy (SPB) and the products from Hacendado, Deliplus and so on are of a great quality.

So far we have tried many different products from Mercadona’s suppliers and we have only been disappointed by one product, which is muesli. The other kinds of muesli, however are very tasty.

Also, it is noticeable that the fresh leche semidesnatada is often not available when we go shopping late. This is also a little disappointing.
Nevertheless we like Mercadona very much as a supermarket and for sure, we will miss Mercadona when we go back to Germany :-)

Mercadona's Logistics Blocks

Sina and I did some research on Mercadona and its logistics system. This post is about Mercadona's Logistics block in general.

A 620,000-square-metre network that supplies 1,264 supermarkets daily

Logistics Blocks

At the end of 2009 Mercadona had 1264 supermarkets that need to be supplied. In order to do this Mercadona uses a 620.000 square-metre logistical network.
One of Mercadona’s main goals is to reduce the impact of transportation on the price of products. They call this “transporting more for less” which also has the positive side effect of having a smaller impact on the environment.

In order to ensure the efficiency and optimization of its logistical network Mercadona plans to construct new facilities and to upgrade and improve existing structures during the following years. In order to do this more than 600 million euros are going to be invested.

Integrated Suppliers

Sina and I did some research on Mercadona and its logistics system. This a post about Mercadona's integrated suppliers.

The suppliers play a key role in Mercadona’s Total Quality Model.
Mercadona’s philosophy is to base their relationship with their partners (Mercadona has more than 100 of them) on trust, stability, constant work and joint commitment. Their common goal is to satisfy the needs of the customers by providing the best quality-price ratio on the market. They reach this goal by eliminating everything that does not provide any value.

Square olive oil bottle which optimizes logistical processes. Integrated supplier Sovena.

Wine bottle stack that increases palletizing capacity. Integrated supplier Bodegas Ontanón.

Concept Innovation - Stores by Ambience

Sina and I did some research on Mercadona and its logistics system. This a post about Mercadona's stores by ambience.

Concept innovation for Mercadona, involves incorporating everything that adds value to their customer’s shopping experience.

Therefore, in 2000, the most important component of concept innovation has been launched, Stores by Ambience.

The goal of Stores by Ambience is to provide Mercadona’s customers with more spacious stores that have a warmer ambience and a more logical product arrangement. In general, the intention is to optimize the customer’s purchases while making the experience more pleasurable.

By 2009 there were a total of 1184 Stores by Ambience.

If you want to learn more about Mercadona and it's activities during the year 2009 have a look at their annual report.

Thursday, May 20, 2010

Austrian Company Provides Rolldocking for Mercadona Warehouses

Sina and I did some research on Mercadona and its logistics system. This post is about the Rolldocking system of Mercadona.

An Austrian company called TGW Logistics has developed a new system called Rolldocking for Mecadona. The company describes its solution in a document that is only available in German

In this blog, we have summarized the main facts about this new technology.

Mercadona's requirements:

  • Delivery of articles in single-origin truck loads using europallets or half pallets

  • Maximum weight per pallet: 1000 kg

  • Minimizing the employment of staff

  • Buffering at leat 1,5 truck loads per article

  • First in - first out

  • Loading up to 800 pallets daily

Mercadona Builds Kindergarten into Logistic Blocks

Sina and I did some research on Mercadona and its logistics system. This is the second post about Mercadona's kindergarten in the logistic blocks.

A German newspaper has reported that Mercadona makes place in its logistic blocks for kindergarten:

In this block we have translated the most impressive facts:

In 2001 Mercadona inaugurates the first kindergarten in the logistics block in San Sadurní D'Anoia (Barcelona). Mercadona calls it also "nursurey". It is a place where trained personal looks for the children of employees for free. As it has been a successful venture, Mercadona concluded to build a kindergarten into all logistic blocks that are newly opened up.

The kindergarten of the logistics block in Albatera/ San Isidro (Alicante) provides 82 spaces per shift. A shift either takes from 6 to 2 or from 2 to 10 at night. To guarantee a proper child care, there are 14 educators with various qualifications (kindergartener, educator, pedagogue, and teacher) per logistic block.

Introducing Mercadona

Sina and I did some research on Mercadona and its logistics system. In total we have prepared 4 posts. This is the first one to introduce Mercadona.

Mercadona is a Spanish family-owned supermarket company whose objective is to fully satisfy the grocery, home cleaning, hygiene and pet products’ needs of its "Bosses". To this end the company has 1,264 local stores

  • averaging between 1,300 and 1,500 square meters of retail space,

  • representing a market share of 12.8% of the total food store retail space in Spain and

  • contributing to the business dynamics of the areas in which they are located.

  • Every one of these supermarkets has an ample and efficient selection that includes up to 8,000 different items located within easy reach of the over 4.3 million households that place their trust in the company every year.


Jochen has found the "canción de Mercadona", which we can always hear when we go shopping at Mercadona (and which we still sing 3 hours after shopping):

SPB = Siempre precios bajos

Mercadona has a special business model that is called siempre precios bajos, it means always low price in English. It is a formula that allows Mercadona's customers ("The Bosses") to buy products of the highest quality at the lowest prices on the market. That strategy matches what has always been the company’s motto for over 16 years: "Quality doesn’t have to be more expensive".

In total Mercadona works with more than 2,000 trade suppliers and service providers, over 100 of which are integrated suppliers, manufacturers of th Hacendado, Bosque Verde, Deliplus and Compy brands. Mercadona has long-term mutual cooperation and commitment relationship regulated by way of a Sound Business Practices Framework Agreement. This results in "contracts for life" and all of them are committed to the total customer satisfaction philosophy that is so important to Mercadona and which applies to both quality services and products.

Total Quality
Since 1993, Mercadona’s management model has been one based on Total Quality. Through this method Mercadona satisfies the company’s five components with equal dedication: ‘The Boss’, The Employee, The Supplier, Society and Capital.

Thursday, May 13, 2010

Comparing the Distribution Systems of Dia and Carrefour

This post compares the distribution systems of Dia and Carrefour, which have been introduced in the previous posts. The comparison is based on Sina's and Janina's own interpretation of the collected information.

Carrefour’s Distribution System

This post is also done by Sina and Janina and it deals with the distribution system of Carrefour.

  1. Introducing Carrefour

  2. To find out information on carrefour's business, we had a look at the "at a glance" presentation of Carrefour
    Boasting four hundred parking spaces and 2,500 sq.m of sales floor area, the first Carrefour hypermarket opened in 1963 in Sainte Geneviève-des-Bois, close to Paris.
    The concept was entirely new -

    everything under one roof

    in a self-service environment - and was an overwhelming success.

Dia’s Distribution System

This post is about the distribution system of Dia, which Sina and Janina prepared in collaboration.

  1. Introducing Dia

  2. First of all, let us introduce Dia.

    Dia stands for "Distribuidora Internacional de Alimentacion".
    Wikipedia says that Dia

    is an international hard-discount supermarket chain of Spanish origin, which is part of the Carrefour Group.

Thursday, April 15, 2010

Inventory Control: Vendor Managed Inventory

When using google I have found a funny picture about Vendor Managed Inventory (VMI):


But what does it tell us? What is Vendor Managed Inventory?

According to 12manage VMI is a supply chain practice. The inventory is monitored, planned and managed by the vendor as ordered by the consuming firm. It is "based on the expected demand and on previously agreed minimum and maximum inventory levels."

On it is explained in similar words. For them VMI means to have an optimized Supply Chain with higher performance in which the manufacturer is responsible for maintaining the distributor’s inventory levels. It can be reached by giving the manufacturer access to the distributor’s inventory data and by making him responsible for generating purchase orders.

Inventory Control & Just-in-Time

As I have studied Computer Science before, I know the information technology company Dell Inc:

According to their website Dell is an American company selling information technology products such as Desktops, Servers, Notebooks, Netbooks, Televisions, Scanners and others. It is one of the biggest companies in the U.S. and they are "the preferred desktop and laptop provider of enterprises in the US". Moreover, they have been the "No. 1 PC supplier to small and medium businesses in the United States for 10 years in a row".

I have often heart about their just-in-time manufacturing process but I have never learnt about it. I would finally like to take the chance to have a look at Just-in-Time Inventory Control and how Dell manages to build its computers just in time.
I will start with an introduction to Just-in-Time:
Sometimes it is a good idea to have a look at Wikipedia (

They say that Just-in-Time is an
inventory strategy that strives to improve a business's return on investment by reducing in-process inventory and associated carrying costs.

An "inventory strategy" is a way of viewing inventory and how it relates to management.

Sunday, March 28, 2010

Transportation Method: Air transportation & UPS

Transportation is defined by the Oxford English Dictionary as
  1. a system or means of transporting.
  2. the action of transporting or the state of being transported.
  3. a large vehicle, ship, or aircraft for carrying troops or stores.
  4. (transports) overwhelmingly strong emotion.
For this blog the first three definitions are of interest.

This video serves as a very good introduction to Logistics, it sees Logistics as a pipeline. "A pipeline that controls the flow of gods" (at 2:30)

Wikipedia ( says that transportation throughout Europe can be divided into:
  • Road transportation
  • Rail transportation
  • Air transportation and
  • Water(sea and river) transportation.

Those transportation categories are predominant and very important for Europe.

I wanted to have a deeper look at air transportation to find out how air airfreight works. I have read an interesting article on "How Airline Freight Works" ( and I would like to summarize it in this post:

Today it is possible to transport a lot of things by air: Letters, packages, cars, horses, construction equipment and even, what I think is most impressive: Other airplanes!

This picture shows an air-freight plane that can move anything that can be bought or sold. (

According to this article, air freight can be divided into four main categories:

Thursday, March 11, 2010

Value in use

This figure (from the lecture) shows that not only manufacturing creates value. During the whole process value is added and from value, some satisfaction of the customer is generated. From the satisfaction some behaviour follows. From the behaviour in turn the companies earn the money.

The following video is done by some students to explain the concept of customer value in Marketing. It is a very funny video, with serious content.

This video contains important information:
- Starting at
3:00 the term "customer value" is defined
- After that "total customer benefits" and "total customer costs" are analysed
- At 5:50 a definition of "customer satisfaction" is provided

What is the relationship between price, value and cost?

Definitions according to Cambridge Advanced Learner's Dictionary:

Price is defined as "the amount of money for which something is sold" (

Value is "the amount of money which can be received for something" (

Cost is "the amount of money needed to buy, do or make something" (

In the article "Cost, Value, and Price" ( the relationship between the three terms is explained very well. In this article, I will try to summarize the most important facts.

Sunday, March 7, 2010

My first Logistics Class

On February 26th, 2010 I attended the first lessen of Logistics given by Jose P. Garcia within the Master degree course International Product- and Service Management.

One of the first tasks we had to do was defining Logistics:

My Personal Definition is:

Logistics is the art and the technique on how to move and store goods and items in an efficient way. It includes a process of continuous improvement on how to manage Logistics in order to control it precisely.

However, we have also been given a definition by our teacher:

Logistics management is that part of the Supply Chain Management process that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services, and related information between the point of origin and the point of consumption in order to meet customers' requirements.

What is important to mention about this definition is:

  • Supply Chain Management is not Logisitcs! It is something more since Logistics is only part of Supply Chain Management
  • Product by definition is "Good, idea, method, information, object, service, etc." (see That is why in the definition it says "goods, services, and related information" and not just "product".
After having Logistics defined we have talked about World trade and GDP. The following figure is a summary of the results od our discussin in class:

click on the picture for zooming