Monthly Archives: May 2013

Convert fuel consumption

Sometimes you may want to convert fuel consumption in different other unit than normal unit measure that you use. For example: you calculate fuel consumption like l/100km and you want to convert in mi./gal. or in mpg (US).

You can use for that the following formula:

mi./gal.= 282.48/(l/100km) or l/100km=282.48/(mi./gal.)

4.546 l is equal with 1 imperial gallon is equal with 1.2 US gallons

If you want to convert from l/100km in US measure unit witch is mpg or if you want to transform mpg (US unit measure) into l/100km, you can made this use the following formula:

mpg = 235.21/(l/100km) or l/100km=235/(mpg)

3.785l= 1US gallon; you can convert electrical energy into

You can use this conversion formulas for vehicles which use diesel or gasoline. If you want to compare or convert the gasoline or diesel consumption with electrical energy consumption for electrical cars you must to know that you can convert kilowatt hours/100km into gasoline liters equivalent /100 km. 1 liter of gasoline contains the energy equilvalent of 8.9 kWh of electricity.

For simplicity you can use this conversion table:

energy conversion table

energy conversion table

Efficiency of a logistic process

In my consultancy project I try to drive the logistic activities of a company to a simple and efficient way. But, what means simple and efficient and how do you know that a process or an activity is simple and efficient? In some small or medium organization the way that they doing things right now is, according to their opinion, the most efficient way to do that thing.

Because of this sometime some of their people are too busy with activities that are not necessary to do it, but they do these activities because they think that is the best and simple way to do it. Few times ago a General Manager of a company asks me how he can know if a logistic process is efficient or not. He is not a logistician, but the logistic is important in hid organization and it is the department which have the largest cost in the company. So, he wants to know a simple way to see if a process is efficient or not without having a professional knowledge in that field.

It is a challenge for me to answer on this question, but I find a simple way to explain him how he can see very easy if a process is efficient or not. The simple way to see this is the scalability of a process.  If the process is scalable without modify the process but modify only the resources of the process then you can consider that the process is efficient. For example: if you load 10 cars per day at this moment and the logistic manager use 3 people in this process, and also the procedure said that the car must be loaded only in the presence of the logistic manager, everything seems to be ok. But if you multiply this with 100 you will see that the process is not scalable. Why? Because when you load 100 cars in the same period of time, you must to load multiple cars in the same time. So, in this case the logistic manager can be on every car to load it, or you must to have multiple logistic managers.  Also if you look on the process when you load 100 car instead of 10 you will realize that I is necessary to modify the process and also sometimes it is necessary to modify the process before this process and after this process. For example if for 10 cars per day driver have time to check all the products and see if it is any mistake between documents and what he put it in the car, when you load 100 cars per day the driver do not have the time to made this check all the time, so you must to find other solution to made the same level of controls in this point of transfer. In this case you it can be necessary to modify the consolidation process in the warehouse.

In the case of my example the initial process it is not scalable because when you have more cars to load you must to modify the process. This way is the simple way to see with no effort and less simulation if the process it is efficient or not.

This principle it also can be apply in other area than logistics. The scalability of a process it is also important when you set-up a software solution, because if you do not set-up a scalable process into the software solution from the beginning, after a period of time the software solution become an operational barrier to your company development.

Inventory

Inventory it is a very important operation. To have real information about the stock it is necessary to organize an inventory from time to time. When you have few SKU in portfolio, the inventory operations it is a simple jobs, but when you have few hundreds or thousands SKU’s the inventory operations may be a really headache. If you have hundreds of SKU, depends on the way that you were organizing the stock, an inventory operation may take you few days.

Some of us are lucky because they have a bar code system and WMS software and the inventory it become a simple operation even if you have thousands of SKU’s in portfolio.

Some of the company does not have bar code or WMS and they must to made inventory manual, so they have a paper and a pencil and start to collect data from the warehouse, and after that they insert this data into electronic format if they want and if they have capabilities. When you insert the manual data into electronic format many mistakes may appear and it is a time consuming operation, but you do not have other choice than doing it.

It also exist other categories:  the companies who have bar codes on the products, but they do not have a WMS, they have only a simple ERP and they do not use bar code system yet. This people made inventory in the same way as the people who do not have bar code system and also do not have any software system. These companies have bar code on the products because their suppliers use bar code system. For these companies i want to provide a simple solution to made inventory and this solution save time and also avoid mistakes that appear when you collect all the data from paper to electronic format.

The solution is simple and consist in having a bar code reader (it is a hardware that cost no more than 100$) and Microsoft Excel (or alternative software like Excel). To use the bar code scanner you connect it to the computer using USB port or Keyboard port, made the adjustment that it is necessary that the scanner communicate with the computer and that it is all. Open an excel file and scan a product and you will see that the numerical code of the product appear in the Excel cell. When you made inventory you go into the warehouse with a laptop and a scanner and start scan products. Near the cell where you have the product code you may put the quantities of the products that you have in the warehouse. In this way you collect the data simple and fast directly in electronic format. The next step is to export the inventory report from ERP and uses excel function (like LOOKUP) to compare and see the difference between warehouse inventory and ERP inventory.

It is very simple and uses this method you save time that you spend collect data on the paper and insert the data collected on the paper in Excel file. Also you avoid the transcription mistakes from the paper to Excel.

Warehouse KPI

All the logistic operations must be executed with high performance to have a good cost. For this reason it is necessary to measure these operations and to set up target for performance. For this it is necessary to have KPI (key performance indicators), a KPI which is necessary to be relevant for the business, to be easy to measure and also easy to understand by the people. A good advice it is to choose the relevant KPI for your business, relevant KPI means that KPI which can be easily connected with the global KPI for business. Also I advise you to not use too many KPI, because you lose the essence of the operations if you setup too much KPI. It is not a fix number of KPI for an area, but, according to my experience, if you have more than 5-6 KPI for an area it is necessary to revise this.

Warehouse it is an important area of the logistics and supply chain operations. In these posts I want to define a few KPI which can be used in this area. It is also important when you define a KPI to define the way that this KPI is measure and also the short definition of the KPI.

It the following section I will define some KPI’s for warehouse operations:

-Number of orders prepare per hours – define how many order is prepare per hour;

-Number of orders prepare by a man – define how many orders is prepare by a single man;

-Number of orders prepare by shifts – define the number of order prepare by a shift;

-Value of the safety stock – define the value (in money ) of the safety stock;

-Total space in warehouse;

-Total available space in the warehouse;

-Total value of stock;

-Total value of stock per SKU (Stock Keeping Unit) or Item;

-Total number of warehouses;

-OOS – out of stock – take care of this parameter because can be define in different ways. The best way to define this KPI is correlated with the service level agreement;

-OOS per item or SKU;

-Average time to process an order;

-Tone in per day;

-Tone out per day;

-No of pallets in per period of time VS no of pallets out per period of time;

-No of SKU in per period of time VS no of pallets out per period of time;

-No of full pallets out per period of time;

-No of mixed pallets per period of time;

-Cost for order management;

-Cost per order;

-Cost per order line;

-Cost per order per client;

-No of order line picked per day;

-Cost per order per every warehouse;

-Cost per stored pallet per day;

-Cost with working materials and package;

-Total no of SKU in warehouse;

-Total n of active SKU in warehouse;

-Days of stock per warehouse;

-Days of stock per SKU;

-Inventory costs;

-Picking mistake per man, per period of time, per warehouse etc;

-No of tone moved by a man per period of time;

-Reception time for one pallet;

-Quality of reception (percentage of wrong receptions for total receptions);

-Average time to process a document and to insert it in WMS;

-Average distance for picking per order;

-Cost per man per hour;

-Working hour for machinery (forklifts etc);

-Fuel consumption for machinery;

-Total value maintenance for machinery;

 

We can define many others KPI’s for warehouse operations. Those are just an example to see how you can measure. Some of those KPI’s is not easy to measure and those KPI have different value for different companies or for different business. Keep in mind that every quantitative KPI’s it must me correlate with a qualitative KPI’s (for example: number of pallets receives per hour can be correlate with quality of pallets reception).

I hope that post can help you and if you like it please share with you friend and colleges.

Route optimization software solution

What is this? This kind of software can help you to optimize your distribution and transport activities. How it works a solution like this? For example: today you must delivery 100 clients, each client with specific volume and weight, you have an available cars and a specific time to work (8 hours per day, for example). This software, use a specific algorithm to load the truck (try to rise the fulfill of the truck) and then split your clients on route dynamically (a client can be on a route today and tomorrow on another route) and calculate the best option to create every route and after that can show this route on the map. This is the basics things that software like this can do.
Start on this basic facility this software solution can have multiple other facilities. For example: software like this can deliver a specific client in a specific time frame (one client wants to be delivery every day in the same time frame, between 10 and 11 AM), a driver can be set-up to deliver the same client every time etc. Also a optimization route software can made different type of optimizations: based on cost (I want to have the lowest cost possible), based on time (I want to deliver all in a specific time or I want that the route can be made in the shortest time possible), based on service level (I do not care cost and time, the single thing that I care is to deliver all goods in the best conditions for my client); use this solution to plan the route and export the result in GPS systems and GPS systems trace every cars and inform you if exist deviation of the plan etc.
All things is good till now and everybody said: great, I want this software. I want to tell you some hidden thing about this software solution because I want to keep you informed. Let see how it works a solution like this:
First of all this kind of solution use a geographical coordinates to position every client on the map. So it is necessary to have all client with his coordinates (this means that you find latitude and longitude for every clients and this operations calls geocode). This can be made use different methods: one is to made manually using tools like Google maps or Bing maps or other tools that is available for free on the internet, other solution which can use is a GPS systems; other solution can be a simple device with a small buttons placed every cars and driver push the bottoms every time that he arrive to a clients etc. All this solution is semi automated, this means that is necessary human intervention to correct the systems mistakes or to correlate the information.
To made optimization the software must use a map (navigation map), map who can provide to the software the information regarding the distance between 2 or multiple points and also time that is necessary to drive between that points. This is a problem, because the map it is not enough accurate to provide this information correctly and give this information with some errors. If we discuss the time this error can be higher because depends on the traffic (which can fluctuate from hour to hour) and the map do not have this information for each hour. In this case the map use an average value and using this value can approximate the time that is necessary to drive between 2 points. If we talk about kilometers or distance the map is more accurate, but also here it can have problems because the map are not updated every day (often the map producers update the map every 6 month or every year), and in this case, a road which was close temporary for repair it will affect the optimization which software solution return, because the map do not know that, and route the car on that close road. This problem was solve partially for the map supplier because they give you the possibilities to block a road temporally or you can draw your own road on the map with basic specification (average speed, type of road, restriction like one way etc).
A thing that is more important than this is the algorithm that the software solutions use to optimize the route. Unfortunately you will not have access to this and nobody will explain you how the algorithm works. If you have less than 8-9 delivery points per route you can be sure that the software can return you the best possible route for all possibilities that exists. If you have more than 10 delivery points you can see that the software can have errors (it will not return every time the best route). You can see this give the software 15 delivery points and place this points around the leaving point, on different distance from leaving points and you see that in this case the software solution it not returns you every time the best route (in terms of time and distance). The software producers of this kind of software knows that and, in most of the case, they are not agree to made a simple test like this, in most of the case they want to made more complex tests because on more complex tests it is more difficult for you (human) to see if that distribution route that solution return is the best one or is only less optimize that the distribution solution that you made it. But, also in this case if the solutions reduce your costs with 5% this is some money that you keep in your pocket and the solution it can be good for you purpose.
Those who wants to discuss more about this, I invite them to comment on this posts and I can provide you more information if you are interested.