Introduction: This report covers 4 major logistics centers visited in Barcelona and Zaragoza, respectively, over a period of 7 days.

This log records my understanding and reflection upon the operations and certain strategic aspects of the enterprises visited. Upon discussion with Stephane, I was able to observe elements of vertical integration in the corporate strategy as well as certain aspects of the functional strategy. Day 1 Mango Activity: Logistics (Distribution Centre) Strengths: Very efficient, organized system, adherence to economies of scale Weaknesses: Large dependency on automation, lack of contingency scenario planning Description: The Mango Distribution Center (Barcelona, Spain) is spread over 20,000 sq. m. It can hold around 3, 42,000 boxes. The facility boasts of a rotation rate of 8000 boxes per hour (4000 boxes each way i.e. in and out) and a current error margin of 0.02%. The facility has a reception area which receives pre-packaged consignments via a supplier. Supplies are transported across the facility using a conveyor belt mechanism and an interlink is deemed as the most important part of the entire process that receives as well as dispatches the boxes to and from their respective areas. The garments are then dispatched to the respective clients. To manage over-production (if any) Mango then releases it via promotions and/or outlets. Analysis and recommendation: The very first thing that caught my attention was the reception area. Trucks could unload the supplies directly to the conveyor belt, thus effectively reducing the waste of transportation and motion. Secondly, folded garments meant effective management of space. Third, the boxes were of standard size, thus helping in storage and transportation. Fourthly, all boxes had bar codes which contained details of that box which eased the stocking process as well. Defective garments are returned to the facility in a different kind of box. We learned in ALE3 how demand-supply relationship can be fluctuated via lack of communication; Mango addresses the issue by open communication channels and letting the production managers control the push and pull. The interlink plays an important part and thus uses 55 engines for operating as it uses some of its engines as a backup. The facility is air conditioned which not only helps to keep the machines cool and running but also helps the employees by providing them a better ambience to work. While Mango is looking forward to even more automation, they havent invested equally on backing it up. For example, they have had a power failure when the entire facility was shut down for 30 minutes. Even after this, they havent installed a backup power supply facility.

For improvements, one suggestion is using pallets of same dimensions instead of boxes. This will not only reduce the cost (as the cost of a pallet < cost of a box) but also help address the issue of big garments which use the entire box despite having some extra space inside the box. Also, the elimination of a box will increase surface area, resulting in increased storage i.e. more garments per pallet. Condis Activity: Logistics (Warehousing and Distribution) Strengths: Using 3PL and preferential stacking Weaknesses: Less automation Description: Condis is a supermarket chain located in Spain. The logistics division is spread over 19,600 sq. m. Condis has classified its goods as dry goods, refrigerated goods, meat and online (ecommerce) goods. With a pallet (i.e. pack of any good) capacity of 14,000, about 1800 pallets are received per day, filling almost 120,000 boxes a day. Pallets are transported using manually operated vehicles. Pallets help transporting as irrespective of the size of the goods individually, pallets offer a uniform size. Analysis and recommendation: Goods are classified as Fast movers, standard and slow movers in order to increase efficiency. The good thing is that Condis takes into account the effect of season on these goods, e.g: Demand for milk goes high in winters and that for water is high in summers. Also, Condis keeps the e-commerce goods near the exit bay for faster transport thus reducing waste of time. Condis practices lean management and also 3PL i.e. using third party logistics for managing certain goods. Also, their 5S approach (Sort, Set in Order, Shine, Standardize, Sustain) helps improve their efficiency. Also, they use software for preferential stacking and Real Time Information system for keeping track of the activities. The 3 shifts system helps Condis make the most of their resources. Also, in order to save waste of time, Condis has enforced a self-explanatory pay when you need a smoking break system. Currently, Condis uses carts to transport pallets and the carts are usually empty on their way back to collect pallets. This can be improved by adopting appropriate re-stacking to maximize utilization of resources. Also, they miss a system like Mango where they can unload boxes directly to a conveyor belt. Reducing trips can also help improve the efficiency. Also, in the future, Condis plans to use low emission CO2 vehicles and also automation in terms of palletization and stacking. While this would definitely improve efficiency, the implementation costs are going to be high.

Day 2 CAF (Construcciones y Auxiliar de Ferrocarriles)

Activity: Logistics (Manufacturing, assembly and distribution) Strength: High Quality control Weakness: Less automation Description: CAF is an international player in the design, manufacturing, maintenance, supplier of equipments and components for railway systems. It builds high speed trains, commuter trains, articulated units, subway trains, street cars/ light rails, etc. It has client across the globe including India, USA, Sweden, France, Italy, Ireland, Britain and so forth. It also has assembly centers in Belfast, Rome, New Delhi, Sacramento, Buenos Aires, Santiago de Chile and over 40 maintenance centers across the world. Analysis and recommendation: CAF has high Quality Control standards, even with less automation which can be attributed to its organized labor. Their core competency is flexibility and understanding and adapting to customers demand(s). To date, CAF follows a manual system to paint the trains. While automation is possible it will involve high costs. Instead, CAF can opt for a partial automation system by using a fast drying system for paint which will in turn save them time and associated costs. Also, CAF does not have a simulation routine i.e. a test track wherein they could study the train in real-time conditions. A smart thing however is that CAF does not manufacture engines; it uses engines which are pre-manufactured to fit on a platform specified by CAF. The bargaining power of suppliers of Aluminum is very high in CAFs case as there are very limited suppliers. CAF covers this up in terms of customers as customers can not exercise any bargaining power.

Day 3 Enate Winery Activity: Logistics (Manufacturing, processing, assembly, packaging, distribution) Strength: Very few suppliers, consistent demand Weakness: Too much capital investment on blending the soft, artistic elements of wine with the manufacturing

Description: Enate Winery identifies itself as a winery for 21st century. Encompassing 12,000 sq. m., Enate Wineries focuses on the artistic element of wine which is evident from the fact that they have an art gallery in the winery as well as a sculpture in the middle of their grapevine field. Enate deals with red and white wines which are made from red grapes and white grapes respectively. In terms of suppliers, Enate has limited suppliers for seeds, manure, fertilizers, equipments and labor. Also, the tanks for red wine have a separate compartment to take out the leftover pulp-mash, thus making it efficient. Red wine needs to stand for 7-10 days for the fermentation and centrifugation whereas white wine needs 12-15 days for the same. The bottling process is almost totally automated and is has a capacity of 6000 bottles per hour. Stage 1: The bottles are kept on a belt manually Stage 2: A circular arrangement picks up bottles, cleans them with water and drys them with a pressurized air-jet. Stage 3: The bottles then move to another circular assembly where the bottles are filled with wine. The wine is supplied from storage tanks to this assembly with the help of pipes. Stage 4: In this stage, the bottles are corked using a wooden cork. Stage 5: The bottles are now cleaned from outside with a water jet and are dried using an air-jet after which they move to the labeling area. Stage 6: The bottles are now labeled with an Enate sticker and are moved forward. Stage 7: The bottles are finally transported to an area where they are stacked an automatically put into a box for transportation. Analysis and recommendation: For Red wine, the seeds are not separated and are instead used for flavouring, thus eliminating the need to use a new process to remove seeds. Also, grapes are tested using a refractometer which determines the sugar levels of the grape. This not only serves as a quality control measure but also helps in selecting the right grapes for the wine in a much faster way. Also, a machine separates the sticks from the grapes, thus improving efficiency. Enate faces a challenge as they have a long inventory time which in turn means high inventory costs, culminating into high operational costs. Inventory time is increased due to

legal restrictions i.e. there is a legal period for which wines have to be kept in order to comply with the health and safety regulations. However, the nature of the wine requires the wine to stay in the barrels for a certain amount of time, usually 6-8 months. Also, during this time, certain temperature and lighting conditions have to be controlled, adding up to the cost. A good thing about storing wines in barrels is the reusability of the barrels along with their long life, thus reducing costs. One process which can be improved is the yeast removal process, which is a manual process which involves inserting a stick in the barrel and shake up the yeast. The same result can be attained by using a mechanical arm and a conveyor belt assembly. Another issue is the location of the storage unit. It is situated behind the bottling unit and is sound-proof and also, wine is transported via trolleys and then onto an exit transportation bay. Sound-proofing is again a factor that adds to the cost. While Enate believes that the spirit of the wine is to be conserved by sound proofing the storage area, the scientific reason is that old wines may face a problem dude to vibrations as the cork can loosen up and fall into the bottle and/ or affect the sedimentation. However, Enate doesnt have very old wines so this measure has basically added up to their costs. We did not get any information on whether Enate practices forecasting or not. However, from my understanding, I can deduce that in the wine industry, a little over-production is good. The rationale behind this is as follows: The price of a wine bottle manufactured in 2010 is 7 euros. A 5 year old wine bottle by Enate costs 200 euro. With such a high rate of return, a directly proportional relationship between age and price is formed. So, lets say that for a given year, the forecast for wine demand was 100 but Enate could sell only 70. Now the 30 remaining wines will add to the inventory costs but will also carry a higher price tag, thus covering up the difference, and over time, generating profit. Also, Enate does not distribute its wine to massive consumption outlets like retial outlets, supermarkets, stores, etc. This in turn helps them maximize their profit margin as it eliminates the share of wholeseller, retailer, etc. Last but not the least, Enate has created an entire art gallery inside the winery to capture the artistic element of wine, which in turn adds to the cost. A better move can be to combine the art gallery with the retail outlet located in the winery which would serve the purpose and allow the current art gallery to be used for other purposes like storage, etc. The recommendation would be to reduce the spending on the art element in the winery and using the same resources instead in marketing i.e. in terms of direct, visible communication to customers which would help increase brand visibility and generate sales.

Conclusion: The entire study trip was very exciting. The staff at all the facilities very warm and helpful and helped us understand their operations better by answering our queries. We got to understand the differences and similarities between the operations of these 4

giants, how the approach changes with the nature of goods and external environment. We were also able to understand challenges faced in terms of managing logistics and how these organizations were able to overcome them. We also met the key personnel of these companies and had an understanding of their leadership styles and skills which emphasized that despite software and automation, manual competence is still essential to creating efficient systems.