A pallet order card

Mastering the Logistics Game

The watchword for UK educators, nowadays, is employability. We need to ensure that our students have better prospects as a result of the time they spent with us (not least because of debts that they commonly acquire during their studies) but how do you prepare a student for a career as a supply chain professional?

The Very Enterprising Community Interest Company think they have the answer – along with a pretty silly name, obviously – and their solution is an educational board game, Business on the Move.

Will we end up calling it BOTM, for short? Not on this blog… but school kids everywhere probably just started sniggering.

Every once in a while there’s an article (e.g., this one) in which those in the know fret that children didn’t know where their food came from. Inner city kids are horrified that eggs come out of a chicken’s backside, that vegetables grow in mud and so on. Trouble is, it’s not just food: young people are hazy on where manufactured goods come from, too – and how they are made to arrive. That’s where Business on the Move comes in: the game’s creators (Andy Page and Patricia Smedley) have used it with children as young as nine, which is pretty clever when you consider the complexity of the real-life systems that it represents.

Game board with vehicles in place

Planes, trains and automobiles. Oh – and ships.

This is a big game, in a big box that’s bursting with supply chainy goodness! Literally, in the case of my copy, which was damaged in transit. Plumbers have leaky taps; supply chain professionals have bad logistics. In fact, the whole game is an embodiment of the global supply chain that it describes: a sticker on the edge of my box reports that it was made in Ningbo, China (a quick shout out to old friends at the University of Nottingham in Ningbo…) so the game was imported in just the same way that the little counters on the board make their way from China to the UK.

Business on the Move - contents may settle in transit!

My copy of Business on the Move arrived somewhat scrambled, but the game box was the only casualty. With a somewhat squishy box measuring 61cm by 44cm, this isn’t a game that I’m going to be taking with me to Botswana on teaching trips.

In Business on the Move, virtually everything comes from China. There is a single domestic manufacturer, “the UK Factory” on the board but it comes into play only rarely, on the turn of a card. That’s a little unfair because UK manufacturing has grown tremendously in productivity: the “decline” of British manufacturing has really only been one of employment – not output.

UK Manufacturing output

UK manufacturing output [source: ONS via this BBC article]

At this point, let’s have a look at what you get for £60, plus shipping. The first thing we have to do is pause for a giggle at the world map that completely omits the Americas. (Are the authors getting the Americans back for the map in Avalon Hill’s ‘Diplomacy’ – the one that famously refers to the whole of the British Isles as ‘England’?) Beneath the game board, we find a large collection of counters that players of all ages will be itching to play with, featuring containers that fit into trucks and trains – although, sadly, not aboard ships and aircraft.

Detail from the centre of the Business on the Move game map

It’s like Christopher Columbus never sailed west: Business on the Move omits the Americas.

Closeup of the contents of the box

You get a lot of bits and pieces in Business on the Move: probably more that you’ll ever need, which is useful for a classroom setting where a few bits can be lost over time.

In game mechanics, Business on the Move is reminiscent of an old fantasy quest board game called Talisman, in that it features a board with looped, concentric playing areas where the player can choose to move either clockwise or anticlockwise after the dice are thrown. It’s a simple but workable system. In this game the player must declare at the start of their turn that it will be an ‘air and sea turn’, or a ‘road and rail turn’. The fairly simplistic air and sea stage involves bringing containers of goods from China to the UK: aircraft take a direct route and are likely to arrive sooner, but each only delivers a single container’s worth of goods. When a ship arrives in the UK, it delivers three containers of goods.

(Yes, the idea that a container ship carries only three times as much as an aircraft is ludicrous, but it’s a game. You’ll need to tell yourself that from time to time as you buy cargo ships for £20,000 and aeroplanes for £30,000, but it’s really no worse than buying Whitehall for £140 in Monopoly, and building a house on it for a hundred quid…)

Having purchased any new vehicles and paid for their upkeep (more on this later…) you’re almost ready to “roll your dice and move your mice”, as board game enthusiasts say. First, you must take a card, and again these are split into ‘air and sea’ or ‘road and rail’. These introduce a random element, detailing events such gridlock on the roads, piracy on the high seas, or the opportunity to buy an extra vehicle at a reduced price. At last it’s time to roll the dice: the number thrown matches the number of vehicles that are eligible to move, up to a maximum of four. All are thrown at once, and the player chooses how to allocate the results between those vehicles.

These aren’t standard dice, however. Instead of generating a number from 1–6, these only go up to five, with an additional result of ‘CO2’ – which is somewhat like rolling a zero. The player is then given the option of paying £5,000 to purchase carbon credits, permitting a result of ‘CO2’ to be re-rolled. It’s a simplistic system – all goods movements are assumed to have the same carbon footprint – but it’s good to see that the contribution logistics makes to climate change isn’t introduced in some game variant or optional rule: it’s built right into the fundamentals of the game.

Carbon credits game mechanic

When a ‘CO2’ result is rolled, the player can pay into a carbon credits system for another chance to move. Later, a player may be able to collect the accumulated carbon credits money.

Players will always begin with an air and sea turn, because all goods start in China. Will you choose to buy pricey aeroplanes with their limited cargo capacity, or will you choose the slower but more capacious ships? Will you buy some of each, reasoning that if certain random events mean that one kind of vehicle is delayed or sent back to base, the other one still has a chance of getting through? This is an example of the strategic decisions that players face as they play through the game. Some such dilemmas aren’t always terribly realistic: after all, most real companies don’t find it necessary to own a vehicle of any sort in order to get a container to the UK: they leave that job to a third party – and pay a bit less than you end up paying in the game, when you take all the risks yourself.

Logistics was never so multimodal as it is in Business on the Move: the Green player is supposedly Eddie Stobart… but this is a parallel universe incarnation of Eddie Stobbart where the company is also a shipping line and/or an airline. It would make more sense if players were able to negotiate deals to carry each other’s cargo, or to have a non-player entity take on some elements of the overall logistic system, but… it’s a game. By forcing players to move goods at both the intercontinental and national level, a more educational experience results.

With the goods now sitting at ‘Container Handling’ it’s time to get them on their way to the recipient. A player’s obligations to deliver are shown on cards with the CILT logo: for example, £30,000 will be received for delivering a container of microwaves to Tesco Extra, or £12,000 for delivering cuddly toys to Home Bargains. This is a nice touch because the anonymous container token can become something recognisable, that players feel a connection with. They get a sense of achievement in addition to some money.

Will the player choose to buy a train, or a fleet of trucks? Vehicle pricing continues to be artificial, with a train costing £40,000… and again, who actually buys trains? You’d pick up the ’phone and call Freightliner to get your goods moved, surely?

Rail transport is going to end up with a bad reputation because trains are relatively expensive, and a train only moves twice as much cargo as a truck. They move around the board slightly faster (fewer spaces on the inside track) but this advantage is dissipated by the need to move goods onwards from the railhead with a truck: trains seem like a bit of a bad bargain. Upon each turn, either ‘air and sea’ or ‘road and rail’, players have to pay for the upkeep of all relevant vehicles at £2,000 per vehicle – which includes those that you no longer have a use for. Since goods going overland must complete their journey by road, trains are going to be dead weight at least some of the time, and there’s no mechanism within the rules for selling off an asset that isn’t working well.

The game can be played at varying levels of detail because the rules are split into seven distinct levels: you can get players started quickly and then introduce more realism later. At the most basic level a ship that arrives at ‘UK air and sea terminals’ is immediately converted into three containers, and the vessel is sent to the company base, ready to be reused. There is no requirement to sail back to China… but since the basic game is a race to deliver four containers of goods, there isn’t much more sailing to be done anyway. Some of the simplistic game mechanics are addressed as the level of complexity is ramped up in subsequent games. For example the Monopoly-style business of handling money in the form of high-value banknotes is done away with in later games, in favour of company accounts: this will be great for our module on finance and decision making. At another level comes the opportunity to take “pallet orders” instead of container lots: containers are split into three pallet loads at distribution centres and then sent on for final delivery. With this comes the option of buying into a pallet pooling scheme… or not. Real-life decisions reflected in a board game: excellent!

Some other simplifications remain throughout the game’s seven levels, though. Insurance could have been made interesting, but instead it’s a mere vestigial stub of what it might have been. Buying insurance costs £5,000 regardless of how many vehicles you have and what cargo they might be carrying. Insurance is not per-period but lasts indefinitely, until a claim is made: you hand over the card when you invoke the insurance to avoid certain mishaps. Having handed over the insurance voucher, you’re in the clear. Given that a vehicle costs at least £20,000, the uninsured player would be daft not to renew their insurance at the start of the very next turn. The message that you’d be wise to take out insurance is valid but in a system as simplistic as this, it’s reduced to a no-brainer. (We’ve been teaching a lot more about risk and the value of insurance, just using Monopoly.)

A simplification that I really find it hard to like is that any container can satisfy any one order – there’s no such thing as traceability. If you lose two containers off your ship in a storm, for example, it’s a very non-specific setback. You haven’t lost the consignment of lipgloss, push chairs, laundry detergent, or whatever: you can move any one of your remaining containers to any destination represented on one of your orders cards and collect some money. Thus, on a bad roll of the dice you might still manage to make a short move and declare that the goods have arrived at Home Bargains – or on a good die roll you could forge on up the board towards Marks & Spencer and a more valuable payoff – with the same container. Real life doesn’t work like this. Or have we invented Shroedinger’s shipping container, where the contents are undetermined until it is opened? Fascinating.

An ‘air and sea’ event card

I lost some containers, swept off one of my ships in a storm – or would have, but the “i” symbol denotes an event where my insurance can be invoked.

Actually, we need to talk about Marks & Spencer. Clearly, they sponsored the development of the game – just as a lot of organisations did: the game positively drips with logos. That was a good way to fund the game’s development, I suppose, but why were Marks ’n’ Sparks allowed to feature on the board in three places? The distinction between ‘Your M&S’ on the north side of the board and ‘Your M&S Online – Mobile’ on the west side is insufficient – in fact just plain confusing. It could lead to frustrating mistakes, or even accusations of cheating. Perhaps M&S have convinced themselves that they really do have three distinct, strong and popular brands… but it doesn’t work for the purposes of a board game. Fortunately, such a problem is easily remedied with some laser printed stickers: simply replace the indistinct or unfamiliar logos on the board and on the order cards with those of a different organisation. I thought it would be nice to have IKEA in the game: everybody likes IKEA. A lot of the entities represented in the game don’t really have a recognisable brand in the eyes of the common man. If you’re already a supply chain professional you might know who Bisham Consulting are, but for most players the game would be far better if the container of goods went to a well known recipient like Toys ‘R’ Us or B&Q – neither of whom are represented. (You might object that I’m covering up the logos of the sponsors that made Business on the Move possible, in favour of companies that didn’t, but so what? They sponsored the Very Enterprising Community Interest Company – not me and my teaching.)

Two orders with different destinations, but very similar logos

Weak differentiation between objectives could cause players some frustration.

Before we leave the subject of Marks & Spencer (having replaced two thirds of their territory on the game board with something more distinctive) one thing that needs to be discussed is the notion of importing foodstuffs from China. With the apparently endless succession of food scares and scandals coming out of China, food from that source is thankfully rare in the UK. The Food Storage & Distribution Federation are mentioned on a few cards, but these can be picked out and disposed of easily enough. One of them is a bit silly anyway, in that it implies that all containers in the game are temperature controlled.

None of these gripes should be seen as insurmountable problems with Business of the Move: unless you’re competing in the world championships[1], you should always feel free to fix anything that you don’t like in a board game. Out of the box, Talisman (mentioned earlier) is a pretty awful game – but if you throw out certain cards that wreck the game mechanics and make a few other tweaks, it can be improved no end. Few people play Monopoly according to the rules as written. Similarly, Business on the Move is a very promising kit of bits: it has a few quirks, but nothing that can’t be fixed with ease.

Surprisingly, I have been unable to find a web-based forum that allows owners of the game to share experiences, and perhaps resolve the occasional ambiguities that are found within the rules. Perhaps the Very Enterprising Community Interest Company don’t have the resources to moderate a forum, but it seems a major oversight in these days of Web 2.0. (If you can find an online community that discusses how to get the best out of the game, please let me know?)

Meanwhile, I think one of the best ways to resolve the limitations of the game will be to have the students take care of them. For example, after introducing the students to the game, why not turn them loose with instructions to write rules for a game variant of their choice?

One thing a modified game might benefit from is rules for vans. If you’re playing the variant where you get to split a container into three pallet-loads for different recipients, it’s a shame that you’re left delivering those pallet loads using the standard truck: a fleet of vans could be made to dash off in all directions. Other student projects might add a set of rules that address warehousing, or replace the simplistic rules for insurance with something that teaches more about risk and decision management. How about adding a ‘nearshoring’ option whereby the player gets to consider procuring goods from the European Union – less profitable but with items available sooner? You could have UK manufacturing play more of a role, too.

Business on the Move needs a few tweaks to really get the best from it, but it’s oozing with possibilities.

 

 

 

 

[1] If ‘World Championships’ and ‘board game’ seems too embarrassingly nerdy, bear in mind that the Monopoly World Championship is played with real money – winner take all.

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Faster than a Speeding Bullet

I was doing a bit of teaching recently, and we turned to discussing speed of delivery as a basis for competition. We watched one of the Next TV advertisements where they promise next-day delivery (subject to some fine print) and show off what appears to be a somewhat fictionalised supply chain.

See what you think of the implausibly shiny supply chain, where the chosen dress is apparently untouched by human hands, automatically wrapped on demand before being whisked on its way to the customer along roads that feature no other traffic, just a fleet of modern and clean Next delivery trucks.

Hmm. And yet this is a good strategy for online retail. You can’t really advertise the quality of the fabric, because the buyer can’t touch it. You can’t offer alterations or made-to-measure flexibility, because you can’t touch the customer. So what does that leave? Price-based competition is always going to hurt… so speed is the logical choice. Next day delivery (six days a week, subject to stock and courier availability, as the weasel words at the bottom of the screen explain) is an impressive thing to deliver.

Amazon went one better, and moved towards same-day delivery, in some cities… and then they went better still, if speed is your thing, with ‘Prime Now’, for one-hour delivery.

Stephen Armstrong for the Guardian was unimpressed when he tried ‘Prime Now’ in June 2015, finding the website glitchy and ultimately failing to get the goods. A little over three months later, Steve Myall for the Mirror got a delivery of groceries in 39 minutes. (Regular readers of Capacify might find their hackles rising at Myall’s statement, “Everything was in a paper bag so no environmental concerns.”) There was a minimum spend, and the cost of delivery was £6.99 plus an optional-but-included-as-standard £2 tip for the person making the delivery.

Andrew Hill for the Financial Times drew a valuable historical comparison with Victorian efforts to achieve fast and cheap parcel delivery services in London, concluding that the same factors that caused the London Penny Parcel Delivery and Automatic Advertising Company to disappear without trace are still in force.

Now, there’s always the risk of being proved wrong, but I think that the pursuit of speed has gone about as far as it can go. The logistic control and coordination required for same day delivery are impressive – even amazing – but if ‘within an hour or two’ becomes the new norm, it’s no longer a basis for competition: it’s just a qualifier. That leaves companies with additional expense to recoup, while chasing the same business as everybody else… unless this spells the end of the high street, and the market town.

Beverley, Yorkshire

Does same-day delivery spell the end of the British high street?

Is that a good thing? Is this what citizens want?

Then there’s the big rival: delivery at the speed of light. When I was a teenager, I’d occasionally buy computer games by mail, so as to save money. The first few cheques I wrote were all for mail order computer games, and the advertisements always advised the customer to “allow 28 days for delivery”, which led to a lot of wistful days spent waiting for the postman to come. Nowadays, if I wanted a computer game it would come from an ‘app store’, no disk or postage required. As soon as I click ‘buy’, the download can begin.

Computer game on cassette

Back in the days when it took six minutes to load 48K of data off a cassette, it took up to four weeks to get the cassette in the post.

I told my students that there was once a plan to deliver post by guided missile. That got a laugh, but it’s entirely true. Some research (and this excellent history by Duncan Geere) revealed that rocket mail has actually been attempted quite a few times, over the years. There were proposals to use artillery for postal delivery as early as 1810, and later in the century Congreve rockets were used in an experimental postal application in Tonga, although the residents ultimately floated their post on the sea instead (just as the people of St Kilda did). Then there was Herman Oberth (1894 – 1989) the rocket enthusiast who advocated rocket mail from 1927. Countries experimenting with rockets for post in the 1930s included Austria, Germany, the United Kingdom, India and the United States.

This business of pyrotechnic postage appears to have been common enough to give us a new word: astrophilately, meaning stamp-collecting relating to post that has travelled via rockets and missiles. Honestly!

Cover flown on space shuttle mission STS-8 and sold to the public after landing.

Astrophilately. All the cool kids are doing it.

This was in no way a precursor to the web-based e-mail called ‘RocketMail’, originating in 1996 and subsequently bought out by the ill-fated Yahoo, although perhaps with rocketmail.com they were trying to achieve a blend of retro-cool and futuristic.

Meanwhile, things had got serious. In June 1959, a Regulus cruise missile containing mail in place of a warhead was launched by a Navy submarine, the USS Barbero. US Postmaster General Arthur E. Summerfield witnessed its arrival, commenting: “before man reaches the moon, mail will be delivered within hours from New York to California, to Britain, to India or Australia by guided missiles. We stand on the threshold of rocket mail.”

Let’s not smirk too much at the Postmaster General: we have the unfair advantage of hindsight – and it was nice to see a cruise missile employed in such a ‘swords to ploughshares’ fashion: for the next five years, the Regulus missiles carried by the USS Barbero and her sisters constituted the US Navy’s nuclear deterrent force.

Regulus cruise missile launch

USS Barbero’s twin, the USS Tunny, launching a Regulus cruise missile. The Navy called their first and only postal experiment ‘Missile Mail’.

One organisation that needs a different kind of missile mail is NATO: a Hellfire missile that had been employed during a recent training exercise in Spain was due to be returned to Florida via Paris Charles de Gaulle… where they mistakenly loaded it on an Air France flight to Havana, Cuba. If you’ve ever felt that sinking sensation when your ball goes over the fence and you realise you’re going to have to go next-door and ask the grumpy old man if you can have it back, you will sympathise with the United States military.

Ultimately, it may be that Missile Mail was impractical for the same reason that Concorde never caught on: not because there was no need for something that quick, but because it wasn’t fast enough when compared to the speed of light: telexes, e-mail, telephone and videoconferencing, instead of physical post and physical presence.

Yet Amazon, and others, are said to be experimenting with delivery by drones: pilotless machines that rely upon much the same guidance technology as missiles. Perhaps, once again, “we stand on the threshold of rocket mail.”

And you know how well that worked out, last time.

A Very Peculiar Patent

I’ll be off to Malaysia for a teaching commitment tomorrow. I frequently enjoy the comfort of an Emirates A380, but boarding the aircraft is not an appealing part of the journey.

At Manchester Airport, A380s always depart from Gate 12, where the ‘holding pen’ for passengers isn’t really big enough for the superjumbo, despite the addition of a funny little overflow room. I’ve never yet seen any evidence that the good people at Manchester Airport actually know how to get everyone aboard an Airbus A380 in a timely manner, and their efforts can get a little bit frantic as the time of departure draws near.

That’s where a recent patent for Airbus (filed in February 2013 and approved in November last year) comes to the rescue. Patent US 9,193,460, catchily titled “Method for Boarding and Unloading of Passengers of an Aircraft with Reduced Immobilization Time of the Aircraft, Aircraft and Air Terminal for its Implementation”, proposes a detachable cabin module that passengers would be able to board before the inbound aircraft arrives at the gate. The outbound pod takes the place of the inbound pod and as soon as the aircraft has refuelled it’s up, up and away. Cleverly, pods may have a different configuration, such as altering the blend between economy and business class seating. 

Airbus modular aircraft

An illustration from the Airbus modular aircraft concept [US patent 9,193,460]

It’s to be hoped that the removable pod concept allows better cabin cleaning than present day efforts, too.

Higher aircraft utilisation is the best way to achieve profit. It’s one reason why low-cost airlines managed to run rings around their full-service counterparts in the 1990s, remaining profitable while charging a fraction of the ticket price. Put simply, an aircraft doesn’t earn money while it’s on the ground, so airlines are looking to minimise the turn-around time: hence the Airbus patent.

As ideas go, passenger pods aren’t really all that new. Back in March 1960, Mechanix Illustrated ran a cover story that showed a passenger module detaching from a doomed airliner, with parachutes streaming behind it. “Escape pods can prevent needless air crash death,” the article announced.

Mechanix Illustrated cover

Mechanix Illustrated cover,  March 1960

Internal arrangement of escape pods, Mechanix Illustrated

Tough luck if you were visiting the galley or the washroom at the moment of separation, by the way.

There was also the Sikorsky S-64 Skycrane (or, for the military, the CH-54 Tarhe), a helicopter that could carry a variety of cargo pods. It first flew in 1962.

S-64 Skycrane / CH-54 Tarhe

S-64 Skycrane / CH-54 Tarhe

Far from being outdone, Boeing recently came up with a monstrous freighter that could be taxied into place above a row of shipping containers, after which it would squat down into place like a hen settling on a clutch of eggs. US 9,205,910 is dated December 8th of last year.

Aircraft designed for intermodal containers in transverse orientation. [US patent 9,205,910]

Aircraft designed for intermodal containers in transverse orientation. [US patent 9,205,910]

Too bad that the most famous pod-swapping modular aircraft of them all had arrived way back in 1964, albeit only in a TV show…

Thunderbird 2

Thunderbird 2 and a selection of pods.

There really is nothing new under the Sun, is there? Well, it worked for Malcom P. McLean, back in the 1950s, when he was looking for a more efficient way to load and unload freight from ships… so why can’t the “box that changed the world” also work for air transport?

Of course, if Manchester Airport won’t invest in decent facilities to accommodate five hundred passengers in comfort while they wait to board an A380, they certainly aren’t going to invest in a special gantry that lifts tubes full of people and clips them into aircraft… which renders the Airbus thing a little bit pointless.

Airport terminal equipped with pod swapping machinery

Airport operators are going to love paying for all this extra infrastructure… [Airbus illustration from US patent 9,193,460]

Meanwhile, perhaps the neatest idea to cut turn-around times was the flip-up cinema-style aircraft seat. If fitted on the seats adjacent to the aisle, it meant that the passenger need not hold up everybody else while he or she tries to get organised before sitting down.

Those haven’t seen the light of day, either.

No way to treat an old lady

As I departed Kuala Lumpur recently, our ’plane taxied past a very forlorn looking Boeing 747. It’s abundantly clear when a ’plane is never going to fly again: grime accumulates on all the upper surfaces, while the tailfin is painted in a drab, uniform colour that conceals the branding of the aircraft’s former owner – because a ’plane at the end of its life is a poor advertisement for the airline. Often, the nacelles are left gaping after the engines have been removed, too.

That ’plane, and two others like it, are in the news this week: Malaysia Airports have taken out newspaper advertising, inviting the unknown owners to claim their aircraft within fourteen days or see them disposed of.

Malaysia Star newspaper notice

Eviction notice: substantial landing and parking fees are owed.

It’s easy to talk about the end-of-life for vehicles, appliances and the like, but it’s more complicated for aircraft. Some are parked up in deserts for years, where the dry conditions minimise corrosion. In a changeable business climate, the hope is that some will return to service later on. Others are are stripped of valuable parts (nowadays, that mostly means engines) and then broken up for scrap. Where an aircraft is stranded at an airport, though, with parking charges accumulating daily, it’s simply not possible to be sentimental: if a buyer can’t be found an excavator or two will make short work of the ‘Queen of the Skies’.

Boeing, boeing... gone in 3-4 days [image: Daily Mail]

Boeing, boeing… gone in 3-4 days [image: Daily Mail]

This is going on all the time, and the recycling rates are actually quite impressive… but the speed with which Boeing 747s are now disappearing from our airports and our skies is surprising – and the 747 isn’t just any old aeroplane. When the 747 goes, it marks the end of an era. This was the ubiquitous ’plane that became a unit of measure in its own right. (What would British journalists do if they couldn’t describe the size of things by inviting comparison with Jumbo Jets, football pitches and double-decker buses?)

For a machine that first flew in 1969 it’s had a good run, with 1,519 aircraft delivered – at a present-day list price of over $350 million a pop. Not bad for a machine that can trace its roots back to 1963, and design work done for a military project where Boeing didn’t succeed: it was the requirements of the CX-Heavy Logistics System that gave the later 747 its distinctive ‘hump’ – originally because of the need for a cavernous cargo bay on the main deck, with front loading. The contract for the military transport aircraft went to Lockheed, as the C-5 Galaxy… but some aspects of the CX-HLS design can still be seen in the DNA of the 747.

An early campaigner for the large passenger jet was Pan Am’s president, Juan Trippe. He saw large capacity aircraft as a solution to airport congestion (sound familiar?) and ordered the first twenty-five, back in 1966. Back when the 747 only existed on paper, that is – and when the company didn’t have a plant big enough to assemble it, either. The difficulties they had to overcome were staggering… but they managed it, and 747s began to carry passengers in 1970.

Forty-five years is a long time in aviation, and even with a relatively recent upgrade in the form of the 747-8, it seems that the writing is on the wall. Just two were ordered this year, and none at all the year before. Peak production occurred in 1980, with 73 aircraft delivered; peak orders were 122, in 1990. With just twenty outstanding orders, now, Boeing probably won’t be able to keep the production line open for much longer.

So what new aeroplane has stolen away the market for the 747? Actually, it’s an aeroplane that’s already twenty years old: the Boeing 777. It’s smaller than the 747, but not by much, and it incorporates two engines (with very large turbofans) instead of four. That means airlines save on fuel usage and maintenance costs, as well as paying a lower price to acquire a ’plane. I was in a 777 when we taxied past that clapped-out old 747 in Kuala Lumpur. Thus far, Boeing has delivered 1,355 of the smaller jet, and there are hundreds more on order. This is the ’plane I used to refer to frequently when teaching Concurrent Engineering, thanks to Karl Sabbagh’s book, 21st Century Jet: The Making of the Boeing 777. (Boeing called it “working together”, but it was classic Concurrent Engineering, and the result was a world-beating aeroplane.)

Formerly, when an older aeroplane was no longer wanted for use on passenger routes, it stood a good chance of putting in a few years of service as a freighter. Now, that’s by no means guaranteed. Again, the 777 is the culprit. The freighter variant of the 777 scores over the 747 for the same reasons as it does in passenger usage, but there’s also the issue of belly cargo capacity for passenger flights. A passenger airline can squeeze 202 cubic meters of freight (or luggage) into a 777-300ER, as well as carrying passengers, so that’s a valuable additional revenue stream.

By contrast, an upper deck full of passengers on a 747 (or an A380 for that matter) adds weight, but does nothing to improve the cargo capacity… and you’re still stuck with those four expensive engines.

Relative size of the 777, 747 and A380

Relative size of the Boeing 777 and 747, and the Airbus A380

A dedicated freighter benefits from larger doors and the option of flying routes and times that aren’t attractive to passengers, but there’s no opportunity of cross-subsidy: the freight must pay its way, every time. This article in Supply Chain Brain described the air-cargo freighter as an ‘endangered species’… and that means fewer freight conversions, and faster retirements for converted aeroplanes now in service. All this accelerates the process by which the 747 will become a rare bird indeed.

Even at a time when oil is crazy-cheap (Brent crude is under $40 a barrel as I write this), it seems that for most applications four-engined aircraft are out, and two-engined is the way to go. There’s only one customer I can think of who absolutely demands four engined aircraft, and that’s the U.S. Presidential Airlift Group. They recently brought their replacement process forward, to ensure that they would still be able to obtain 747s: this purchase was the source of the order for two 747s in January of this year.

The simple fact is that engines have come a long way since the 1960s, and nowadays two are plenty. ETOPS (Extended Time On Partial Systems) rulings determine what routes an aircraft can fly, taking into account distance from airports that might be diverted to in an emergency. If you’re an industry insider, you probably refer to the standard by its other name: Engines Turn Or Passengers Swim. It’s an important historical detail because of the US Civil Aviation Authority’s “60-minute rule” of 1953: that the flight path of twin-engined aircraft should not be farther than 60 minutes of flying time from an adequate airport. Thus, in the 1960s and 70s an airline wanted three- or four-engined jetliners if it was to cross oceans and the like, but this requirement is now greatly reduced.

Some 747s will still be in service for a good while yet. Some will find niche jobs such as the former Virgin Atlantic 747-400 recently announced as due for conversion into an airborne satellite launcher… but many are disappearing. Air France, once a major user of the 747 has only a single 747-based service on their schedule this winter, going between Paris and Mexico City. Passengers reports (available on SeatGuru, if you’re feeling nerdy) include failed in-flight entertainment, and a recent cancellation due to engine failure: symptoms of an aircraft approaching the end of its useful life.

Sure enough, Air France just announced that a special tribute flight on January 14th next year will mark the end of the 747 era for them. British Airways have chosen to refurbish eighteen of their Boeing 747-400s… which is a nice way to say they’re halving the size of their present-day fleet. That’s another batch of 747s for the breaker’s yard, then. Perhaps some of them will find new life, one way or another…

The 747 Wing House

American architect David Randall Hertz Turned a former Pan Am 747 into ‘The 747 Wing House’, in the Santa Monica Mountains.

 

Need affordable yet distinctive accommodation in Stockholm? Look no further than the Jumbo Stay hostel...

Need affordable yet distinctive accommodation in Stockholm? Look no further than the Jumbo Stay hostel… it’s handy for the airport, too!

 

Table featuring an upcycled turbofan

Or you could always make some furniture out of aircraft parts…

 

Lufthansa, Korean Air and Air China will continue to operate the updated 747-8s that they bought more recently, but the price of oil won’t stay low forever: not least because its current low level is preventing oil industry investment, and that hints at a future shortage.

If, presently, we see another price spike like the one that peaked in July 2008… what would you make out of an unwanted 747?

Peg Doubt

In early May 2012, a decision was taken to end the practice of pegging the Malawian Kwacha to the US dollar, instead allowing the exchange rate to be determined in the foreign exchange market. There were some good reasons for abandoning the currency peg – not least because it was a precondition for international aid payments – but what supply chain effects would the new floating currency have?

When you adopt a floating currency, a reasonable supposition is that it will actually float. Bobbing up and down between known limits is acceptable behaviour for a floating currency: sinking like a stone, less so.

Origami boat made out of Euro banknotes

A floating currency?

By the time the new president (Her Excellency Dr Joyce Banda) ended the currency peg, the Kwacha was substantially overvalued. Imports were growing faster than exports, and even while the peg was in place there was a thriving black market in foreign exchange. Downward pressure on the Kwacha was made worse by what economists call depreciation: a fall in the unofficial value of the currency.

On May 7th, the pegged rate of 165 Kwacha to the US dollar ended, and the rate slipped at once to more than 250. This led to panic-buying – and why not, when imported goods are seen to become more expensive overnight? As hard-working and inventive as the Malawians may be, there’s simply no way for an agrarian economy to react quickly to the price of virtually all manufactured goods going up by a third, or more.

BBC News of panic buying as the Kwacha is devalued

May 7th, 2012: Devaluation begins [BBC News]

In October of that year, Malawi Institute of Management asked us to organise a seminar discussing the implications for the supply chain. Understanding these economic issues wasn’t an easy task, given that I was (a) visiting the country for the first time, and (b) a manufacturing engineer, not an economist. Still, I reasoned that a seminar is all about listening, not telling. We had a marquee full of supply chain professionals, and a couple of hours to put the world to rights. (Or at least, the economy of one small nation.)

The seminar involved a number of activities, the first of which was listing the advantages and disadvantages of having a floating currency… but it seemed that the audience were still smarting from the sudden removal of the currency peg: they had nothing good to say about the floating currency. (Bear in mind that anybody who had savings in the bank will have seen them reduced in value, and businesses that had liabilities expressed in US dollars would be finding it desperately hard to service their debts.)

Economic theory says that a currency peg is good in that it increases investor confidence and imposes price discipline (at least until the point when the government ends the practice) but the disadvantage of a fixed exchange rate is that it requires vast stocks of foreign exchange. Basically, the core job of the central bank is to maintain the currency peg: there is limited freedom to address domestic economic priorities. Also, when the International Monetary Fund suspends a major aid programme, suggesting that liberalisation of the foreign exchange market would unlock donor cash… that’s a powerful argument in favour of the floating currency.

So, on May 7th 2012, everything changed. At our seminar, we learned from the delegates exactly what the changes meant for supply chain professionals…

The Difficulty of Budgeting

Budgeting was reported to have become virtually impossible. For example, the budget for a government department had to be planned such that payments could be released throughout the year, but exchange rate changes meant that any sum set aside for purchases in subsequent quarters was likely to be inadequate. This tended to force managers to be reactive, rather than proactive. Long-term plans involving cash flows have very limited value during a time of high inflation, the delegates said.

Procurement Complexity

This was reported to be particularly difficult, since a request for quotation was likely to produce a time-limited offer, often being valid for as little as 24 hours, because suppliers were equally inconvenienced by variable exchange rates. Where an organisation’s purchasing procedures require that three quotes are obtained it was virtually impossible to get all three within the same 24-hour period, and impossible to compare them thereafter, since one or more would have expired… at which point the quotation process had to begin again.

Transportation Difficulties

Delegates reported logistics to be tremendously more complicated as a result of scarce supplies of petrol, and in particular diesel. (Fuel was also reported to be a problem for the construction industry.) This is not merely an issue of high price, but one of availability, with fuel at times not being available at all… or of those who have fuel choosing not to sell it, since they seemed not to want the Kwacha that they would obtain in return. Transportation difficulties were thus compounded by increasing prices in the global market, reduced local buying power, and panic buying. The result – reduced transportation capability – further impacted upon trade, and thus harmed the economy.

Warehousing Issues

This was frequently mentioned by delegates, in the context of preferring to stockpile raw materials or supplies in order to offset price increases by buying early, and in bulk. Some delegates mentioned the danger of spoilage rates increasing as a result of inventory levels being increased, however.

Inability to Save

It was felt to be very difficult for families to set money aside to deal with price fluctuations (for example, by buying in bulk), at a time when any unspent money was liable to be reduced in value if it wasn’t spent immediately. This “living in the now” made major purchases harder to save up for, and was consequently bad for the nation.

Falling Incomes

Some delegates discussed industrial unrest caused by increased wage demands resulting from devaluation. After all, if you only get to renegotiate your salary once a year or so, how do you know how much to ask for?

The Situation Today

The slide of the Kwacha continues. As an occasional visitor, I notice it in things like a laundry list that has a sticker on it, replacing the printed prices with updated ones… and a heftier price for a bottle of Carlsberg ‘Green’.

Value of the Malawian Kwacha over the last 5 years

MWK/USD exchange rate over the last five years [xe.com]

It’s not hyper-inflation of the kind that some nations have demonstrated: you don’t need a shoebox full of banknotes to pay for lunch, as was the case in Zimbabwe recently. Demonetization of the Zimbabwean dollar came to an end in September this year, at an exchange rate of 35 quadrillion Zimbabwean dollars to US$1… which at least has the virtue of being educational: I learned how many zeroes there are in a quadrillion. (If you’re interested, a quadrillion is 1,000,000,000,000,000.)

Sweeping up unwanted currency

The Hungarian Pengö performed even worse than the Zimbabwean Dollar, and by 1946 they were nothing but litter.

Wherever it is found, though, a softening currency is a headache for supply chain professionals, and a burden for families… and I don’t have many answers to offer. “Export or Die” might have been the advice of the British Ministry of Information, back in 1946… but what do you do when your principal export is the increasingly unfashionable tobacco?

We shall see.

Coca Cola "hotel"

A Gap in the Market

I’ve written before about Design for Logistics: how products themselves can ease or complicate their shipping, or the environmental impact of their packaging. I object to shipping large quantities of fresh air along with the product, and I suppose we all do, but not everything in the world nests together nicely for efficient shipping.

Once in a while, though, there comes along some holistic packaging design that’s so elegant as to take your breath away. If you haven’t already seen it, meet Kit Yamoyo: oral rehydration salts, zinc, soap and a leaflet of instructions for the care of a person with diarrhoea. The outer packaging also serves as measuring device and cup, and – here’s the clever part – it’s shaped to fit in between the bottles in a crate of Coca-Cola.

Inventor Simon Berry had observed that he could get a bottle of Coke just about anywhere, and yet far more important products such as basic medicines weren’t available. Wouldn’t it be possible to piggyback medicines onto the Coca-Cola supply chain? It was an idea that took twenty years and a lot of persistence to realise… but eventually it took off, as a result of social media.

“What about Coca Cola using their distribution channels (which are amazing in developing countries) to distribute rehydration salts? Maybe by dedicating one compartment in every 10 crates as ‘the life saving’ compartment?”

That was Simon Berry’s original Internet posting on the subject, back in 2008. Somewhere along the way, the idea was transmuted: instead of requiring the good folks at Coca-Cola to give up a fraction of their capacity in order to ship the rehydration salts, the innovative design meant that there would be no bottom line impact for purveyors of fizzy drinks. Everybody wins: it generates good press for the Coca-Cola Company (which makes a nice change from their product being criticised for being cheaper than milk)… and children don’t have to die for the want of a simple, cheap treatment.

Kit Yamoyos in a crate

Kit Yamoyos in situ, in a crate. (Photo: Colalife)

Although it’s the idea of fitting medicines into the space in a crate that brought the product and the newly-formed Colalife charity to the attention of the media, there are at least two other key components that make this grassroots supply chain work: micro-enterprise, and the use of mobile phones (specifically, SMS messages) to confirm delivery and make payments. Anybody could join in this distribution network – and earn money in the process. 

My Supply Chain Management students are already acquainted with Kit Yamoyo: I even made it the subject of one of their exam questions, last year. From a supply chain perspective, I wrote, critically discuss the approach taken, whereby the charity works with microbusinesses rather than simply giving the product away.

Students were divided on this point: some felt that a charity in possession of a life-saving treatment ought to be giving it away… and that’s the kind of aid model that I grew up with, back in the days of Bob Geldof. With a few wealthy sponsors and the assistance of the government, you probably could shift an awful lot of rehydration salts. You could just pitch the things out of the back of low-flying army transport ’plane, or something… but the purpose here wasn’t to deliver a life-saving product once: it was to change the economics of basic medicines fundamentally and permanently. With the ‘AidPod’ as a commercial product (albeit as inexpensive as possible) it gets treated differently. Stocking it at a sensible level is incentivised: tracking, and avoiding spoilage and pilfering becomes everybody’s concern. Manufacturing more ‘AidPods’ becomes something that companies want to do… and at some point between now and 2020, the whole venture becomes commercially sustainable.

Kit Yamoyo packaging

Like many really great ideas, it seems obvious afterwards. (Photo: Colalife)

Funny thing is, having created an award-winning package, Colalife are largely turning away from that design: a survey revealed that only 8% of retailers made use of crates of Coke to carry the kits. (Elsewhere in their published stats, Colalife report that they found just 4% of kits actually went into a Coca-Cola crate.)

In an effort to drive down the cost of Kit Yamoyo still further, a regular plastic ‘jar’ like the kind of thing you and I get peanut butter in has been tried… with the clever packets that fill the voids in drinks crates not entirely being phased out, but becoming rarer in the future.

“It was the space in the market, not the space in the crates that was important,” Colalife say. The Colalife website reports that approximately 60,000 Kit Yamoyos have been sold to date. Academics estimate that three lives have been saved per thousand kits used: if that’s correct, well… do the maths. While I was trying (and failing) to persuade the fishing industry to use crates made out of Pykrete, the Colalife team were saving dozens of lives – and they’re still ramping up the operation.

Let’s finish with what might be a particularly relevant message for our new MSc Supply Chain students in Botswana, Malawi, and Zambia:

“You can get any commodity/service to anywhere in the world by creating & sustaining demand & making it profitable to supply that demand.” – Simon Berry (Twitter: @51m0n)

As Idle as a Painted Ship

Over at ’The Disorder of Things’, guest blogger Charmaine Chua presented a fascinating piece of ethnographic research, detailing her travels as a passenger on a container ship. The researcher’s journey was from Los Angeles, USA to Taipei, Taiwan. At €100 per night, given that it takes around a month to make a one-way trip, this is never going to challenge business class air transport… but I have to admit that I’m envious. Just imagine how much writing you could get done in all those days of sea and sky! Above all, though, it’s a window on the fascinating and seldom-seen world of the merchant marine. Few jobs have changed as much as this one, where sailors once talked of shore leave in exotic destinations and now grind their way endlessly around the globe, on bigger ships with smaller crews…

Chua anonymised the vessel that transported her, and its crew, which is a good thing for a researcher to do when describing how the people she studied earn their livelihood. For the ship, she chose the fictional name ‘Ever Cthulhu’, which I have to admit grew on me as I read my way through the five-part series. There should be more ships named after Lovecraftian monsters.

The life of a modern-day seaman, as described, doesn’t appear to be an attractive choice. As Samuel Johnson once said, “Being in a ship is being in a jail, with the chance of being drowned.” It seems the largely Filipino crew concur as they liken a typical cycle of six months at sea to being incarcerated. I already knew that a shipboard life could be grim (I spent some time studying the lot of workers in the cruise industry last year…) but I think that life on a cargo vessel is possibly worse, because there’s less of a requirement to keep up appearances.

Of greatest interest to me was the description of the “traffic jams” and delays experienced at the west coast ports of Tacoma, Oakland and Los Angeles, with many ships waiting days to dock and then suffering through a lengthy process of unloading and loading. It appears that while bigger and bigger ships make sense from a purely economic viewpoint, what works on paper doesn’t always work in the real world. Even with a gargantuan effort to modernise ports in order to accommodate the new generation of megaships (because no port wants to find itself sidelined) the efforts to dredge channels deeper and raise cranes higher doesn’t guarantee success. The whole logistic system needs to keep pace, including the road and rail services… and something isn’t working.

Cargo ships at anchor

Cargo ships at anchor near Los Angeles [photo: Los Angeles Times]

“Day after day, day after day, We stuck, nor breath nor motion; As idle as a painted ship Upon a painted ocean.”

This little bit of Samuel Taylor Coleridge (as you might expect, it’s from the Rime of the Ancient Mariner) gave me the title for today’s blog post. Anyway, back to Chua and her observations:

“Imagine the ripple effects of all this congestion: if a single ship takes six days longer than the usual 2½ to be unloaded at berth, and ships that have been waiting experience those same delays when their turn at berth arrives, those backlogs reverberate outward in unfathomable ways, affecting ships’ travel times to other ports around the world, trucking rates inland, air freight pricing, rail service delays across the U.S., and the availability of empty containers in China.”

As a person who likes to use simulation to investigate logistics problems, this is fascinating. I’m itching to construct some models, and investigate the bottlenecks in a system that is worsening as a result of ever-larger ships introducing increasingly lumpy arrival patterns. It’s a problem that might get still worse with the completion of a third set of locks on the Panama canal; present-day vessels taking that route are constrained to specifications that have remained unchanged since the canal opened a century ago, but the new construction will permit an increase from the present Panamax constraint of around 5,000 TEU to a new limit of perhaps 13,000 TEU. There is also work underway to construct another canal, cutting through Nicaragua… and there are plans afoot to expand the Suez canal as well.

Panamax ship

Panamax

In Tacoma, when no dockworkers arrive to unload the Ever Cthulhu, Chua opines that “a quiet port is logistics’ nightmare”. More accurately perhaps, it’s the simultaneous arrival of 8,100 twenty-foot equivalent units at a single berth that is the nightmare. If everything was to be loaded onto trucks, you’d have a queue almost sixty-five kilometres long… but that isn’t to say that trucks are always the bottleneck. If anybody that’s reading wants to offer some data (or assistance, or funding!) for a piece of research by simulation, consider me interested.

Chua claims that a failure to shift cargo at the rate that port employers would like to achieve is down to problems of infrastructure, and that dockworkers are scapegoated. This is borne out by observers such as Bloomberg Business, who report:

“While most of the attention around the port crisis has focused on labor, the cargo bottlenecks predate the labor stalemate and will outlast a settlement … Backups began in August, about two months before the Pacific Maritime Association accused unionized dockworkers of deliberately slowing down cargo movement.”

It seems that nobody is terribly happy in the 21st century box-shifting industry, and that’s important. Along with a failure to handle all the goods now arriving, and the facts and figures detailing environmental concerns such as the toxicity of heavy fuel oil, the toxic nature of “sludge” and the disposal of grey water and food waste by offshore dumping, there’s a human cost being paid by those who perform lonely, often menial and sometimes dangerous jobs, with little or no job security. In the industry we depend upon for the transportation of 90% of the world’s freight, that’s something that needs to be understood.