Pgbarranca's Blog

May 26, 2010

Free Trade Zones (FTZ)

Filed under: Uncategorized — by pgbarranca @ 10:05 pm


A free trade zone (FTZ) or export processing zone (EPZ) is an area of a country where some normal trade barriers such as tariffs and quotas are eliminated and bureaucratic requirements are lowered in hopes of attracting new business and foreign investments. It is a region where a group of countries has agreed to reduce or eliminate trade barriers. Free trade zones can be defined as labor intensive manufacturing centers that involve the import of raw materials or components and the export of factory products.

Most FTZs are located in developing countries: Brazil, Indonesia, El Salvador , China, the Philippines, Malaysia, Pakistan, Mexico, Costa Rica, Honduras, Guatemala, Kenya, and Madagascar have EPZ programs. In 1997, 93 countries had set up export processing zones (EPZs) employing 22.5 million people, and five years later, in 2003, EPZs in 116 countries employed 43 million people.

Corporations setting up in a zone may be given tax breaks as an incentive. Usually, these zones are set up in underdeveloped parts of the host country; the rationale is that the zones will attract employers and thus reduce poverty and unemployment, and stimulate the area’s economy. These zones are often used by multinational corporations to set up factories to produce goods (such as clothing or shoes).

I found a video about Lekki FTZ (Nigeria)

FTZ sources

Purpose of International Free Trade Zones

The main idea behind creation of free trade zones is to facilitate cross-border trade by removing obstacles imposed by customs regulations. Free trade zones ensure faster turnaround of planes and ships by lowering custom related formalities. FTZs prove to be beneficial both for the importers and exporters, as these zones are designed to reduce labor cost and tax related expenditures. Free trade zones help the traders to utilize the available business opportunities in the best possible way. FTZs promote export-oriented industries. These zones also help to increase foreign exchange earnings. Employment opportunities created by free trade zones help to reduce unemployment problem in the less developed economies.




Filed under: Uncategorized — by pgbarranca @ 9:42 pm

In my job (architect), I very often see pallets in building works, this is something I´m curious about. That´s why I looked for some information about it.


A pallet is a flat transport structure that supports goods in a stable fashion while being lifted by a forklift, pallet jack, front loader or other jacking device. A pallet is the structural foundation of a unit load which allows handling and storage efficiencies. Goods or shipping containers are often placed on a pallet secured with strapping, stretch wrap or shrink wrap and shipped.

While most pallets are wooden, pallets also are made of plastic, metal, and paper.


Containerization for transport has spurred the use of pallets because the shipping containers have the clean, level surfaces needed for easy pallet movement. Most pallets can easily carry a load of 1,000 kg (about 2,000 lb). Today, over half a billion pallets are made each year and about two billion pallets are in use across the United States alone.

Skids and pallets were slowly introduced throughout the early 20th Century.

Pallet development

The pallet was developed in stages. Spacers were used between loads to allow fork entry, progressing to the placement of boards atop stringers to make skids. Eventually boards were fastened to the bottom to create the pallet. The addition of bottom boards on the skid, which appeared by 1925, resulted in the modern form of the pallet. With the bottom deck, several problems common to the single faced skid were addressed.

Effect on rail transport

Pallets and forklifts also provided much quicker turnaround of rail cars and ships. In 1931, it took three days to unload a boxcar containing 13,000 cases of unpalletized canned goods. When the same amount of goods was loaded into the railway trucks on pallets or skids, the task took only four hours.

Standardization and regulation


In a pallet measurement the first number is the stringer length and the second is the deckboard length. Square or nearly-square pallets help a load resist tipping.

– Two-way pallets are designed to be lifted by the deckboards.

– Four-way pallets, or pallets for heavy loads, or general-purpose systems that might have heavy loads are best lifted by their more rigid stringers.

Pallet users want pallets to easily pass through buildings, stack and fit in racks, forklifts, pallet jacks and automated warehouses. To avoid shipping air, pallets should also pack tightly inside intermodal containers and vans.

No universally accepted standards for pallet dimensions exist. Companies and organizations utilize hundreds of different pallet sizes around the globe. While no single dimensional standard governs pallet production, a few different sizes are widely used. There are:

– ISO pallets

– North American pallets

– European pallets

– Australian Standard pallets

Types of pallets

Stringer pallet

Stringer pallets use a frame of three parallel pieces of timber (called stringers). The top deckboards are then affixed to the stringers to create the pallet structure. Stringer pallets are also known as “two-way” pallets, since a pallet-jack may only lift it from two directions instead of four. Forklifts can lift a stringer pallet from all four directions, though lifting by the stringers is more secure.

Block pallet

Block pallets (also referred to as Manoj pallets) are typically stronger than stringer pallets. Block pallets utilize both parallel and perpendicular stringers to better facilitate efficient handling. A block pallet is also known as a “four-way” pallet, since a pallet-jack may be used from any side to move it.

Perimeter base pallet

All stringer and some block pallets have “unidirectional bases,” i.e. bottom boards oriented in one direction. While automated handling equipment can be designed for this, often it can operate faster and more effectively if the bottom edges of a pallet have bottom boards oriented in both directions. For example, it may not need to turn a pallet to rack it, and operation is less sensitive to pallet orientation.

Pallets can be made of many materials

Pallet Sources

May 24, 2010

Dry ports and Inland Ports

Filed under: Uncategorized — by pgbarranca @ 10:16 pm

Dry ports


A dry port (sometimes inland port) is an inland intermodal terminal directly connected by road or rail to a seaport and operating as a centre for the transshipment (shipment of goods or container to an intermediate destination, and then from there to yet another destination) of sea cargo to inland destinations.

In addition to their role in cargo transshipment, dry ports may also include facilities for storage and consolidation of goods, maintenance for road or rail cargo carriers and customs clearance services. The location of these facilities at a dry port relieves competition for storage and customs space at the seaport itself.

How they make import and export easier, and increase trade

– Better customs checking/clearance/easier collection of taxes/revenue

– Better transport links/easier transport to the associated sea port/cheaper transport to associated sea port

– Container facilities

– Better management

– Storage in sheds and open areas

– Refrigeration available

– Quicker processing/less time lost/avoid delays at associated sea port

– Less congestion at associated sea port/eases pressure at associated sea port

Dry ports sources

Inland ports


“An Inland Port is a physical site located away from traditional land, air and coastal borders with the vision to facilitate and process international trade through strategic investment in multi-modal transportation assets and by promoting value-added services as goods move through the supply chain”. — Center for Transportation Research, University of Texas.

The term inland port is used in two different but related ways to mean either a port on an inland waterway or an inland site carrying out some functions of a seaport.

As a port on an inland waterway

An inland port in the wide sense, as used in common speech, is simply a port on an inland waterway such as a river, lake or canal.

As an inland site with seaport function

An Inland Port is just such an inland site linked to a seaport. This kind of inland port does not require a waterway. It is often written with initial capitals to indicate a difference to the common usage. Key features of an Inland Port are the transfer of containers between different modes of transportation (intermodal transfer) and the processing of international trade. This differentiates an inland port from a container depot or transport hub.

Advantages of inland location

The idea is to move the time-consuming sorting and processing of containers inland, away from congested seaports.

An inland port could also speed the flow of cargo between ships and major land transportation networks, which would carry goods to the rest of the country.

Benefits to customer by such distribution

–        Tailored offerings from Dell in terms of add-on products and services

–        Very customizable systems at an affordable rate, since Dell manufacturing builds specifically for each customer

An example: Winnipeg Inland Port Manitoba

Manitoba is becoming one of the North America´s most important trading centres. The Government of Manitoba and Canada will invest over $460M into Winipeg´s CentrePort Canada and related projects. This incluyes the development of a high-speed transportation corridor for the Inland Port.

The Government of Manitoba is building an “inland port” around Winnipeg´s International Airport, intending to take advantage of the city´s proximity to the geographic  center of North America. It´s the result of a dynamic partnership between governments and the private sector.

These improvements will emphasize highway and rail linkages, which would facilitate the shipping of goods flown into Winnipeg on massive cargo planes.

Inland Ports sources

Inland Port Manitoba

May 23, 2010

DELL business model and distribution network

Filed under: Uncategorized — by pgbarranca @ 3:28 pm

DELL business model and distribution network

In the following video we can see Dell´s global network.


–        Dell was founded in Texas by Michael Dell in 1984

–        Revenue of $52.9 billion in 2009

–        Net operating income of $ 2.1 billion in 2009

–        Had 96.000 employees in 2009

–        Operates in 34 countries

–        Slogan: “Uniquely You”

–        Products: desktops, servers, notebooks, netbooks, peripherals, printers, televisions, scanners, storage, smart phones


–        Dell grew through the 1980s and 1990s to become at one stage the largest seller of PCs and servers

–        In 1992 Dell entered into the Fotune 500 list

–        In 1996 Dell began selling computers via its weg site

–        In 1999 Dell overtook Compaq to become the largest seller of personal computers in US

–        In 2006  Dell was 25th in Fortune 500 list

–        It currently holds the second spot in the hardware computer industry behind HP

Traditional business model

Dell sold its product to End user customer or corporate customers using direct sales model via Internet and Telephone network


From its early beginnings, Dell operated as a pioneer in the “configure to order” approach to manufacturing — delivering individual PCs configured to customer specifications. In contrast, most PC manufacturers in those times delivered large orders to intermediaries on a quarterly basis.

To minimize the delay between purchase and delivery, Dell has a general policy of manufacturing its products close to its customers. This also allows for implementing a just-in-time (JIT) manufacturing approach, which minimizes inventory costs. Low inventory is another signature of the Dell business model — a critical consideration in an industry where components depreciate very rapidly.

Dell’s manufacturing process covers assembly, software installation, functional testing (including “burn-in”), and quality control. Throughout most of the company’s history, Dell manufactured desktop machines in-house and contracted out manufacturing of base notebooks for configuration in-house. However, the company’s approach has changed. The 2006 Annual Report states “we are continuing to expand our use of original design manufacturing partnerships and manufacturing outsourcing relationships.” The Wall Street Journal reported in September, 2008 that “Dell has approached contract computer manufacturers with offers to sell” their plants.

Dell on line

–        Dell online started in 1996 in its website

–        Dell online is a high success story – industry analyst

–        Millions of people visit the website each week and generate millions of dollars revenue

–        Dell´s business model is to let the customer configure the product on the web and fulfill within 36 hours.

–        Customers can check the order status and also get the technical help online

Component supplier

–        The high-tech components, such as microprocessors and software are provided by firms as Intel and Microsoft, they rely on big players.

–        The low-tech components are provided by small multiple players who compete on prices and availability

Original Equipment Manufacturer (OEM)

The OEMs traditionally would receive all the parts from their suppliers, assemble the computers in their production lines and ship them over to their distributors, or Corporate resellers.

For example, Company “XYZ” receives parts from Intel (processor), Microsoft (software), then this company assemble the computer to Santech computer


–        They generally supply to corporate resellers and other distributors

–        They carry large quantities of different products to increase their leverage when dealing with their customers

–        They also provide specific software, peripherals, furniture, etc, as well as service

–        For example: Ingram Micro, Tech Data, Computer 2000, and Santech.

Corporate resellers / System integrators

–        The corporate resellers or system integrators buy systems directly from manufacturers and install these systems at their corporate clients

–        These are firms whose main purpose is to provide customization to their clients

Dell´s model looks surprisingly simple, but behind this simple model it is the complex and hard to imitate core capabilities developed over 15 years.

Benefits to company by such distribution

–        Cash: Dell maintains a negative cash conversion cycle, that means the payment receive for the product before it has to pay for the material

–        Cost: Dell´s direct sales and build-to-order model has achieved superior performance in the PC industry in terms of inventory turnover, reduced overhead, cash conversion, and return on ivestment. Bypassing the reseller channel that causes further cost reduction to the company

–        CRM: Direct customer relationship is the key to Dell´s business model, and provides distinct advantages over the indirect sales model

–        Demand forecast: Dell has additional advantages over PC vendors who must try to forecast demand and ship products based on those forecasts

Benefits to customer by such distribution

–        Tailored offerings from Dell in terms of add-on products and services

–        Very customizable systems at an affordable rate, since Dell manufacturing builds specifically for each customer

Executive summary:

What is corporate responsibility at Dell? It’s about being a trustworthy partner for our stakeholders, our customers, our employees and the world at large. We’re focusing on three key areas — environmental responsibility, corporate accountability and social responsibility. The World Business Council for Sustainable Development calls this the “triple bottom line.“

Those three key areas, combined with our overall commitment to employees, are our FY09 Corporate Responsibility priorities and are shown here:

Dell´s Corporate responsibility priorities in 2009:

* Aspiring to be the Greenest Technology Company on the Planet

* Making a Meaningful Difference Today – Inspiring a Better, Connected Tomorrow

* Acting with integrity, Inspiring trust


Dell webpage

Dell slide share


May 14, 2010

Warehousing and logistics centers

Filed under: Uncategorized — by pgbarranca @ 10:32 am

LIDL Picks Orders With Schaefer Case Picking System

The food trade company is the first German discounter who opted for the innovative order-picking system by SSI Schaefer

The food trade company LIDL expands its logistics center in Kirchheim/Teck by an automated order-picking warehouse. SSI Schaefer Noell of Giebelstadt was awarded the contract for the logistics components. The intralogistics specialist will establish an amply dimensioned high bay warehouse with five aisles and approximately 15,000 pallet storage positions as well as equip it with the respective pallet conveyor technology. Next to it, a tray-warehouse (STS) with approximately 16,000 storage positions on five levels will be built. It serves to buffer the items by layer after the pallets passed through automatic de-palletizing in goods receiving.

The Schaefer Case Picking (SCP) with its order-related picking of individual packages in parallel multi-access mode provides for efficient order-picking processes. In view of transport as well as replenishment in the stores, the system guarantees ideally packed pallets. Up to 70,000 packages a day are processed that way. Despite the high order picking performance, the system ensures gentle handling of all items.
Civil works have already started and are to be completed in just under two years.

lidl picking system


Improved throughout, operating efficiencies and stock management, together with significant cost savings, are some of the benefits from a new automated warehouse, opened recently by Coca-Cola Enterprises and designed, manufactures and installed by FKI Logistex.

The facility provides on-site storage for the first time at CCE’s Edmonton production unit, eliminating double-handling operations when shipping stock off-site to local warehouses. The unit, which has 25,224 pallet locations, is designed to accommodate future expansion of the factory to meet sales growth forecasts.

The warehouse is linked to five bottling production lines, handling primarily 500-ml and 2-litre plastic bottles of soft drinks for customers throughout London and the south of England and can receive 200 pallets and despatch 300 pallets every hour. Interfaced to the CCE host WMS, the Logistex Warehouse System handles every movement from receipt to despatch.

Following CCE’s philosophy of never stopping production, FKI Logistex employed its handling technologies, plus testing and simulation, to meet targets of 98.5 per cent to 100 per cent full system availability and 65 per cent throughput even when “down”. The resilient overall design avoids risk of single failure points.

coca cola sources


This is an automated retrieval system which gives solutions to high density storage. It has a sofisticated degree of automation, with a high number of simultaneous movements, in vertical and horizontal axis at the same time.



BonnySA is a company dedicated to exportation of tomatoes, which has introduced an automated warehouse for pallets.

Since they have implemented the system they have increased the product control.

April 13, 2010


Filed under: Uncategorized — by pgbarranca @ 8:04 pm


Single Minute Exchange of Die (SMED) is one of the many lean production methods for reducing waste in a manufacturing process. It provides a rapid and efficient way of converting a manufacturing process from running the current product to running the next product. This rapid changeover is key to reducing production lot sizes and thereby improving flow (Mura).

The phrase “single minute” does not mean that all changeovers and startups should take only one minute, but that they should take less than 10 minutes (in other words, “single digit minute”). Closely associated is a yet more difficult concept, One-Touch Exchange of Die(OTED), which says changeovers can and should take less than 100 seconds.

This is the SMED concept

History – Toyota

An increase in effective operating time caused by the change-over. SMED is the key to manufacturing flexibility.

Changeover time Lot size Process time per item Operation time Ratio
8 hours 100 1 min 5.8 min 480%
8 hours 1,000 1 min 1.48 min 48%
8 hours 10,000 1 min 1.048 min 5%

Toyota’s additional problem was that land costs in Japan are very high and therefore it was very expensive to store its vehicles. The result was that its costs were higher than other producers because it had to produce vehicles in uneconomic lots.

The “economic lot size” (or EOQ) is a well-known, and heavily debated, manufacturing concept. Historically, the overhead costs of retooling a process were minimized by maximizing the number of items that the process should construct before changing to another model. This makes the change-over overhead per manufactured unit low. According to some sources optimum lot size occurs when the interest costs of storing the lot size of items equals the value lost when the production line is shut down. The difference, for Toyota, was that the economic lot size calculation included high overhead costs to pay for the land to store the vehicles. Engineer Shingo could do nothing about the interest rate, but he had total control of the factory processes. If the change-over costs could be reduced, then the economic lot size could be reduced, directly reducing expenses. Indeed the whole debate over EOQ becomes restructured if still relevant. It should also be noted that large lot sizes require higher stock levels to be kept in the rest of the process and these, more hidden costs, are also reduced by the smaller lot sizes made possible by SMED.

Over a period of several years, Toyota reworked factory fixtures and vehicle components to maximize their common parts, minimize and standardize assembly tools and steps, and utilize common tooling. These common parts or tooling reduced change-over time. Wherever the tooling could not be common, steps were taken to make the tooling quick to change.


Toyota found that the most difficult tools to change were the dies on the large transfer-stamping machines that produce car vehicle bodies. The dies – which must be changed for each model – weigh many tons, and must be assembled in the stamping machines with tolerances of less than a millimeter, otherwise the stamped metal will wrinkle, if not melt, under the intense heat and pressure.

When Toyota engineers examined the change-over, they discovered that the established procedure was to stop the line, let down the dies by an overhead crane, position the dies in the machine by human eyesight, and then adjust their position with crowbars while making individual test stampings. The existing process took from twelve hours to almost three days to complete.

Toyota’s first improvement was to place precision measurement devices on the transfer stamping machines, and record the necessary measurements for each model’s die. Installing the die against these measurements, rather than by human eyesight, immediately cut the change-over to a mere hour and a half.

Further observations led to further improvements – scheduling the die changes in a standard sequence (as part of FRS) as a new model moved through the factory, dedicating tools to the die-change process so that all needed tools were nearby, and scheduling use of the overhead cranes so that the new die would be waiting as the old die was removed. Using these processes, Toyota engineers cut the change-over time to less than 10 minutes per die, and thereby reduced the economic lot size below one vehicle.

The success of this program contributed directly to just-in-time manufacturing which is part of the Toyota Production System. SMED makes Load balancing much more achievable by reducing economic lot size and thus stock levels.

Effects of implementation

Shigeo Shingo, who created the SMED approach, claims that in his data from between 1975 and 1985 that average setup times he has dealt with have reduced to 2.5% of the time originally required; a 40 times improvement.

However, the power of SMED is that it has a lot of other effects which come from systematically looking at operations; these include:

  • Stockless production which drives capital turnover rates,
  • Reduction in footprint of processes with reduced inventory freeing floor space
  • Productivity increases or reduced production time
    • Increased machine work rates from reduced setup times even if number of changeovers increases
    • Elimination of setup errors and elimination of trial runs reduces defect rates
    • Improved quality from fully regulated operating conditions in advance
    • Increased safety from simpler setups
    • Simplified housekeeping from fewer tools and better organisation
    • Lower expense of setups
    • Operator preferred since easier to achieve
    • Lower skill requirements since changes are now designed into the process rather than a matter of skilled judgement
  • Elimination of unusable stock from model changeovers and demand estimate errors
  • Goods are not lost through deterioration
  • Ability to mix production gives flexibility and further inventory reductions as well as opening the door to revolutionised production methods (large orders ≠ large production lot sizes)
  • New attitudes on controlability of work process amongst staff

reference link

SMED Benefits

Now a day, SMED is offering a number of benefits to the manufacturing organizations. Commonly benefits obtained are as follows:

– Improved safety of systems and processes

– Reduction in lead time and hence improved and faster delivery

– Improved quality of product and service

– Almost zero inventory of work in process

– Reduction in working capital

– Lot size reduction

– Increase in profit margin, without any substantial investment.

– Improved equipment utilization.

SMED in Health Care

SMED is being utilized in various sectors of service organizations like health care, maintenance service, hotels and food industry etc. 
Its use in health care has proven good results and reduced many bottlenecks. It is being applied for acquisition of operation instrument, medications, setting of operation theaters, setting of private rooms for patients and doing paper work. All these activities are now being performed in very small considerable amount of time. SMED application in health care has given following benefits:

– Enhanced satisfaction level of Doctors, Surgeons, Physician and Nurses.

– Reduced inventories of medicines and consumable equipments

– Enhanced Satisfaction level of patient and their caretakers.

– Increase in operation and service productivity along with professional competitiveness

– Reduction in un-necessary wastes and non value-added activities

– Less time is required for treatment of patient and hence speedy operations

– Improved system capacity and enhanced volume of services

– Increased flexibility of systems and processes

– More profit and business due to higher productivity and less inventory and wastes.

– So by applying principles of SMED, so much productivity is increased that organization can – take care of more patients without hiring more doctors, surgeons and nurses. Also this does not require that you hire more space or extend your existing one.

I found this very short and illustrative video about SMED in Ferrari.

There´s also an interesting explanation, but it´s in spanish, sorry!!

March 21, 2010


Filed under: Uncategorized — by pgbarranca @ 4:23 pm


“Multi-modal simulation” describes the ability to simulate more than one type of traffic. All these types can interact mutually. In VISSIM the following types of traffic can be simulated

reference link

Multimodal transport (also referred to as combined transport) is the transportation of goods under a single contract but performed with at least two different means of transport. I.e. the carrier (in a legal sense) is liable for the entire carriage even though it is performed with several different means of transport (e.g. rail, sea and road). The carrier, however, does not have to be in the possession of all of the means of transport and in practice usually is not. The carriage is often performed by using sub-carriers, in legal language often referred to as actual carriers. The carrier that is responsible for the entire carriage is referred to as a multimodal transport operator (MTO).

The U.N. Multimodal Convention (which has not entered into force and most likely never will) defines in article 1.1. multimodal transport as follows: “‘International multimodal transport’ means the carriage of goods by at least two different modes of transport on the basis of a multimodal transport contract from a place in one country at which the goods are taken in charge by the multimodal transport operator to a place designated for delivery situated in a different country.”


In practice freight forwarders have become important MTOs as they have moved away from their traditional role as mere agents for the sender and accepting a much wider liability as carriers. Also large sea-carriers have evolved into MTOs as they provide their customers with so-called door-to-door services, i.e. the sea carrier offers transport from the sender’s premises (situated somewhere inland) all the way to the receiver’s premises (also often situated somewhere inlands) instead of just offering more traditional tackle-to-tackle services or pier-to-pier services. MTOs that are not in the possession of a sea vessel (even though the transport includes a sea-leg), are in common law countries, in the United States especially, referred to as Non Vessel Operating Carriers (NVOC).

Historically multimodal transport developed in connection with the so called container revolution during the 1960s and ‘70s and today containerized transports are by far the most important multimodal consignments. One must however always bear in mind that multimodal transport is not equivalent to container transport and multimodal transport is just as feasible without any form of containers.

Legal impact of multimodal transport

From a legal point of view multimodal transport create several difficult problems. Currently unimodal transports are governed by different, often mandatory, international conventions. These conventions stipulate different basis for liability and different limitations of the liability for the carrier. Currently the solution to this problem has been the so called network principle. According to this the different conventions exists unchanged side by side and the carrier’s liability is defined according to where the breach of contract has occurred (e.g. where the goods have been damaged during the transport). However, problems tend to arise if the breach of contract is unlocalized.

reference link

What is multimodal transport?

The most authoritative definition of the term “international multimodal transport” is provided in article 1 of the United Nations Convention on International Multimodal Transport of Goods 1980:

“ ‘International multimodal transport’ means the carriage of goods by at least two different modes of transport on the basis of a multimodal transport contract from a place in one country at which the goods are taken in charge by the multimodal transport operator to a place designated for delivery situated in a different country…”

This definition should be read in conjunction with the definition of the term “multimodal transport operator” (MTO) provided in article 1 of the MT Convention:

“ ‘Multimodal transport operator’ means any person who on his own behalf or through another person acting on his behalf concludes a multimodal transport contract and who acts as a principal, not as an agent or on behalf of the consignor or of the carriers participating in the multimodal transport operations, and who assumes responsibility for the performance of the contract.”

Thus, the main features of a multimodal transport are: the carriage of goods by two or more modes of transport, under one contract, one document and one responsible party (MTO) for the entire carriage, who might subcontract the performance of some, or all modes, of the carriage to other carriers. The terms “combined transport” and “intermodal transport” are often used interchageably to describe the carriage of goods by two or more modes of transport.

reference link

Multimodal transport

Definition. Multimodal Transport is commonly known as referring to a transport operation that is carried out using different modes of transport and organised by a single operator. Multimodal Transport is also a legal concept strictly defined in the United Nations Convention on the International Transport of Goods and other international instruments, where the specified liability regime of the operator differs from those applicable in modal operations.

Overview. Whether seen from a legal point of view or from an operational perspective, Multimodal Transport is generally considered as the most efficient way of handling an international door to door transport operation. This is so because Multimodal Transport allows to combine in one voyage the specific advantages of each mode, such as the flexibility of road haulage, the larger capacity of railways and the lower costs of water transport in the best possible fashion. Multimodal Transport also offers the shipper the possibility to rely on a single counterpart, the multimodal transport operator who is the architect of the entire journey and only responsible party from pickup to delivery, rather than having to deal with each and every modal specialist of the transport chain.

While Multimodal Transport seems to offer only benefits to all parties, shippers and service providers, it is also very difficult to achieve. Multimodal Transport requires a thorough control over all the steps involved in international transport, including multiple storage and handling stages; this means extensive use of information technologies and carriers networks and regulatory frameworks that can provide freedom to plan and operate to carriers and reliable liablity regimes to customers. On top of that Multimodal transport needs to be competitive in markets where unimodal operations not only have been there for a long time but also are simpler to handle and, most of time, more cost effective.

reference link

As a complementary matter:

Intermodal freight transport involves the transportation of freight in an intermodal container or vehicle, using multiple modes of transportation (railship, and truck), without any handling of the freight itself when changing modes. The method reduces cargo handling, and so improves security, reduces damages and losses, and allows freight to be transported faster. Reduced costs versus over road trucking is the key benefit for intracontinental use. The negative, is that it takes longer then normal truck delivery would.

reference link

March 17, 2010

Just in time

Filed under: Uncategorized — by pgbarranca @ 5:16 pm


Just-in-time (JIT) in its simplest form refers to a method of inventory control with a focus on waste elimination. The visible performance improvements of some firms adopting JIT led to a great deal of excitement. Implementing JIT at the operational level and creating competitive advantage through JIT became topics of widespread interest. Yet despite its popularity, clinical analysis of JIT at the organizational level has been sparse. One can ask, for example, exactly how and to what degree does JIT impact the organizational design of the logistics function, the management of logistics, and the performance of the firm.

reference link


Just In Time (JIT): An inventory control system that controls material flow into assembly and manufacturing plants by coordinating demand and supply to the point where desired materials arrive just in time for use.  An inventory reduction strategy that feeds production lines with products delivered just in time. Developed by the auto industry, it refers to shipping goods in smaller, more frequent lots.

Just in Time II (JIT II): Vendor-managed operations taking place within a customer’s facility.  JIT II was popularized by the Bose Corporation.  The supplier reps, called “inplants,” place orders to their own companies, relieving the customer’s buyers from this task.  Many also become involved at a deeper level such as participating in new product development projects and manufacturing planning (concurrent planning).

Just-in-Time Logistics (or Quick Response): The process of minimizing the times required to source, handle, produce, transport, and deliver products in order to meet customer requirements.

reference link

“Just-in-time” and its Logistic

This figure illustrates a relatively recent concept in the domain of industrial manufacturing; “just in time”. This new notion amplifies the role of freight transport, particularly trucking and containers when global supply chains are concerned. It involves the delivery of a component just before the assembly line requires it. Consequently, freight forwarders must respect tighter delivery schedules and must plan their operations accordingly in order to avoid strict delay penalties. The production unit (the factory) assumes a lower level of warehousing. As a result, the trucks (vehicles) themselves assume the task of moving storage units, thus the inventory is constantly in circulation.

reference link

March 1, 2010

Price, value and cost

Filed under: Uncategorized — by pgbarranca @ 8:56 pm


Price is typically defined as the sum of the costs plus overhead plus profit or the quantity of payment or compensation for something.

Price is also defined as the amount of money expected, required or given in payment for something.

Economists view price as an exchange ratio between goods that are exchanged for each other. This however has not been used consistently, so that old confusion regarding value frequently reappears. The value of something is a quantity counted in common units of value called numeraire, which may even be an imaginary good. This is done to compare different goods. The unit of value is frequently confused with price, because market value is calculated as the quantity of some good multiplied by its nominal price.

Confusion between prices and costs of production:

Price is commonly confused with the notion of cost of production as in “I paid a high cost for buying my new plasma television”. Technically, though, these are different concepts. Price is what a buyer pays to acquire products from a seller. Cost of production concerns the seller’s investment (e.g., manufacturing expense) in the product being exchanged with a buyer. For marketing organizations seeking to make a profit the hope is that price will exceed cost of production so the organization can see financial gain from the transaction.


Cost is the amount of money needed to buy, do or make something. It can also be defined as the effort or loss necessary to achieve something.

In business, retail and accounting, a cost is the value of money that has been used up to produce something, and hence is not available for use anymore. In economics, a cost is an alternative that is given up as a result of a decision. In business, the cost may be one of acquisition, in which case the amount of money expended to acquire it is counted as cost. In this case, money is the input that is gone in order to acquire the thing.


Value is the quality (positive or negative) that renders something desirable or valuable. It is the importance or worth of something for someone.

The value of a product is the mental estimation a consumer makes of it. Formally it may be conceptualized as the relationship between the consumer´s perceived benefits in relation to the perceived costs of receiving these benefits. It is often expressed as the equation  :

Value = Benefits / Cost

Value is thus subjective (i.e., a function of consumers’ estimation) and relational (i.e., both benefits and cost must be positive values).


Most poorly trained salespeople tend to lower the price when they receive price resistance. The price will always seem high to a customer if the perceived value is low. The key to effectively handling price resistance is to understand this simple concept. People say they want low price, but what they really want is low-cost. What is the difference? Low price is what the customer pays for your product or service now. Low cost is what they pay for it over time. For example, if they buy an inexpensive piece of equipment to save money, and it is in constant need of repair because it breaks down a great deal, they may have saved money initially, but their cost over time will be much higher than if they had invested more in a better piece of equipment. In most cases we get what we pay for. Buy cheap and you get less value or higher cost. Buy expensive, and you get higher value or lower cost over time. What are you selling, high value or low-cost? It is better to sell high-priced product or service than a low-priced one. It is much easier to justify high price if the value is there, than poor quality and constant product/service problems. The key to success in selling is building strong relationships. Poor quality, even though the customer saved money, is not in its best long-term interest. It is better to be remembered by customers for good value at a fair price, than low quality at low price.

This is an extract of something said by Tom Connor.

February 28, 2010


Filed under: Uncategorized — by pgbarranca @ 6:48 pm

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