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World Expo supply chain management
Publish time:2010/8/18 0:00:00

Distribute against time within 6 hours


Devise multiple plans


“devise multiple plans through estimate system to handle any uncertainties of Word Expo and also carry out pressure test to ensure the supply chain system could operate upon max. value of demands”.


As a global partner and an exclusive beverage supplier of Shanghai World Expo, Mr. Pan Qiusheng, vice general manager of Coca Cola World Expo Project Team said that no one knows what will happen before opening of the expo although they have rich operation experience in Beijing Olympic Games.


Compared with Olympic Games, more uncertainties may appear in the World Expo. For example, the capacity of the game site can be predicted in Olympics while it can not be realized due to long duration and large passenger traffic. In Olympic Games, the games are held in fixed time which allows us to replenish the goods while beverage needs are always in changing state from 9 am to 12 PM each day in World Expo.


Prior arrangement is an effective measure to handle such uncertainties for enterprises. “The most difficulty is how to distribute and replenish the products within the park” Zhang Jianqiu director of China dairy giant Yili Group told China Management Newspaper. Yili group has made much preparations: they, on the one hand, increase the storage in proper way to lay good foundation for product distribution within park; through prior efforts and multiple communications, three warehouses are added respectively in Pudong and Puxi within the park whose supply could be extended to the whole park area. Meanwhile, small size warehouses are added close to sales points to ensure timely supply. On the other hand, they intensify the precision management to realize the unified arrangement to ensure timely supply of goods with proper quantity. They also could prepare the most proper ordering points, ordering quantity and buffer stock based on seasonal changes, sales records and market situations. In this way, Yili could one product could be replenished in time once sold out.


Take cold drinks business department as example, this business department takes charge of direct marketing system within the park, namely, directly face 43 fixed sales points and 100 plus mobile sales wagons. They will be responsible to unify the full-line products within the systems including the supply, sales and replenishment of cold drinks, liquid milk and sour milk etc. while other business departments should be available to provide assistance.


Additionally, prediction also is a kind of important work for supply chain management. Our prediction system is very complex that includes person flow, quantity of bottles to be consumed by each person each day. We have designed several different plans. Previously, we predict that the average daily visitor flow rate is 380 thousand persons. If each person drinks 1, 1.5 or 2 bottles each day, how should we adjust the supply chain system and retail system? After that, we calculate the extreme values. The relative extreme is that there are 550-600 thousand persons each day and the most extreme is 800 thousand persons each will drink 1, 1.5 and 2 bottles each day, under which we should confirm if our supply chain system could operate normally. This is basically equal to pressure test conducted by banks. Generally, our system could operate for 2-3 days under the situation where 800 thousand persons each drink 2 bottles. Meanwhile, we have conducted low-level estimation as well as high level estimation. We may suffer high costs in case of low visitor flow rate if our human resources, warehouse area and vehicles are prepared based on high level. Pan Qiusheng said Coca Cola has made multiple flexible systems.


Coca cola thinks that the most uncertainty is the influence of visitor flow rate and weather on the drinking rate. After operation in hot days since Aug. Coca Cola realizes that their supply will be sufficient. When temperature reaches absolute peak value, the flow rate of visitor will decrease while the temperature is usually not at peak value when visitor flow rate reaches absolute peak value.


Additionally, the Coca Cola has made prediction for the preference of consumers to determine the product mix entering the park. “The product mix used for trial operation of Apr. is estimated value which is determined mainly based on market shares of various products in Shanghai, and then they correct the supply based on the data of previous month” said Pan Qiusheng. There is a slight difference between the consumptions of World Expo Park and Shanghai City. For example, the demand for water and functional water exceeds the estimate, up to 50% while the sales of fruit juice and tea beverages are not up to estimated value, respectively accounting for less than 5%.


The plan for each link of supply chain is prepared based on the prediction. The whole supply chain of Coca Cola World Expo Project is made up of production, inside-park storage and vehicle and personnel arrangements. Regarding production, the soda drinks are supplied by Shanghai Bottling Factory and fruit juice and tea are supplied by non-soda drink suppliers. Regarding inside-park storage, Coca Cola rented 3000 sqm of area from No. 2 Warehouse of main warehouse of the park and set up four branch warehouses in different areas inside park to realize emergency distribution upon high visitor flow in hot days. Regarding vehicle and personnel arrangements, the Coca Cola World Expo Project Team is made up of up to 2000 persons including 400 plus for logistics work.


Although Bondex Logistics had accumulated rich experience in operations of Guangzhou Trade Fair and 29th Olympics Sailing Regatta, yet president Harold Tang said, “our team will be sent to World Expo site to attend intensive training because the business volume of World Expo is not a continuous and gradually progressive process but an intermittent explosive process which requires our personnel to make extensive communications with our clients to make proper estimates and master the cargo transportation.”


Logistics fight within 6 hours.


The distribution work must be finished between zero am to 6 am which will test our coordination of supply chain.


Due to low carbon concept of Shanghai World Expo, the trucks are not allowed to enter park in day time except for electric car. Therefore the electric cars alone can be used to replenish the goods in the park. Various enterprises start their work between zero am to 6 am.
  

Our target is to finish the distribution work within 6 hours and deliver all the goods to customers and self-operated sales points including catering customers, enterprises pavilion, state pavilion, and fixed retail points, automatic vending machine and handcarts etc. Additionally, the network points to be replenished are distributed in 5.28 square kilometers area. So, we usually sort out the goods and load them to truck before zero am and then move out quickly at zero am. That is a very splendid scene. These trucks will deliver the goods to the customers along the preset route and quickly go to next customer after unloading and signing. When the trucks finished the all delivery, they will return for reloading. They usually repeat this 2-3 times one night.


In order to ensure the delivery could be finished before 6 am, Coca Cola has designed a clear order flow to define what time the order will be delivered. The purchase orders are received through telephone and email etc. and answered quickly.


Bondex Logistics undertook the logistics work which was designated as one of logistics suppliers for Shanghai World Expo together with Sinotrans, Fanlian International Freight to provide logistics guarantee for the world expo. Bondex Logistics mainly focus on general cargo logistics of foods, beverages etc. and a small amount of cold chain logistics besides equipment transportation for over 100 shows each day while Fanlian International Freight mainly undertook cold chain logistics. Harold Tang said “The distribution volume for the park is about 2000 tons each day, 1200 tons of which are undertaken by us and should be finished within 6 hours.”


The booking system of World Expo Administration requires the customers to notify the plan of next day to booking team before 5PM each day. Bondex Dispatching Center will arrange the best distribution plan based on the plan of customers to define what route to travel and when to deliver and what goods to deliver to what customers or even including parking position, estimated unloading time etc.


Actually, the preparatory work has been started long before outside park. “we set up external warehouse covering an area of 10 thousand sqm in the outskirt of Shanghai due to traffic control in the duration of World Expo to transport the lot cargo from outside to the external warehouse and then deliver them to dispatching warehouse (20 thosuand sqm warehouse rented in park) according to the need of customers and then deliver to each dining hall, retail points etc. namely, our drivers set out from external warehouse at 7PM each night and unload the cargo into dispatching warehouse at 9 PM and then sort them out in 2-3 hours and then start to deliver them to retail points or other customers at zero am.”  Said Harold Tang.


Meanwhile, the enterprise must be ready to carry out emergency replenishment outside these 6 hours. Hu Gang director of Xinri Electric Vehicle World Expo Offices and vice general manger of Xinri Electric Vehicles Company told the reporter that Xinri Company provides many four-wheel electric vehicles including refrigerator vehicle and insulated vehicles etc. therefore, enterprises can apply to World Expo Administration Dispatching Center to carry out emergency distribution by electric vehicles outside these 6 hours.


Supply chain responds to changing demands.


The prior normal demands also may take changes. For example, the foods delivery period will be shortened accordingly in case of hot days. The provision of individualized services to the customers reflects the supply chain management capability of enterprises.


Zhang Jianqiu, top official of Yili Group, said, “We prepare management manual for each link of World Expo Supply – Logistics Distribution Management Manual; each link has its own emergency plan such as Logistics Distribution Emergency Plan; in case of breakdown of trucks during distribution process, the manual can be referred to handle such problems. ” These emergency plans include Emergency Communication Response Plan, Emergency Logistic Distribution Plan, and World Expo Personnel Distribution plan etc.
  

We all know the emergency plans can not eliminate all problems. The demands of customers are always changing.


During these hot days, the main supply to World Expo Park is cold drinks including Qiaolezi, Binggongchang and Dahuoju etc. The product mix to be supplied will be adjusted at any time. During the summer, we decreased the supply of cream products and increased the supply of binggongchang series and have achieved excellent sales performances. Meanwhile, Yili Group increased the supply of meal-substitute milk in the times of breakfast, lunch and supper based on the sales records, including pure milk, breakfast milk, and Guliduo etc. to meet the needs of visitors.


Pan Ping vice general manager of Guarantee Supply Department of Bondex Logistics World Expo Project made fast response to the changes of food needs. In Aug, supply needs take change due to high temperature such as easy spoilage of foods, which increase demand for cold chain. Meanwhile we should shorten the storage period from 2-3 days to current day especially for bread and desserts etc. and also intensify the delivery of daytime. Additionally, we launched door-to-door pickup service to reduce the distribution processes and deliver them directly into the dispatching warehouse in the park. We will carry out temperature control for the products inside the warehouse according to their properties. There are different temperature-control zones inside the warehouse to store different products with their records maintained.


Epilogue: non-normal management system


In fact, the largest challenge posed by such large activity as World Expo to the enterprises is that how to cater to customers through supply chain. A good supply chain management should be good at finding the changing needs of customers and provide corresponding services to them.


Pan Qiusheng said they encountered unprecedented challenges in Coca Cola freezing marketing tactics in World Expo Park, and added that the best drinking temperature for Coca Cola is 3℃ and we sold about 40-50 thousand boxes equal to 600-800 thousand bottles each day, then how can we ensure the drinks are always at 3℃? We could realize freezing treatment in fixed sales points by using a given amount of freezers plus some instant dispensers. This dispenser has a function of temperature control to ensure the drinks always at 3 degrees in 1000 consecutive cups. But it is difficult to handcart to realize heat insulation. So, we put forward a method to put a large quantity of ice blocks into the cart. We assigned dozens of workers to deliver the ice blocks to the handcarts 5-6 times each day. Additionally, we rented freezing warehouse to store 20 tons of ice for emergency.
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