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Will London Take the Gold for Logistics?

by APICS CEO Abe Eshkenazi CSCP, CPA, CAE | N/A 2012 | 0 | 0

APICS Operations Management NowToday the Olympic torch arrives in London for the 2012 Summer Olympics opening ceremonies. The ceremonies themselves are shrouded in secrecy, but one UK newspaper reports the show will include 10,000 performers, 70 sheep, 12 horses, 10 chickens, and more. Add to those figures more than 60,000 spectators and 16,000 athletes, and supply chain and operations management professionals surely start thinking about logistics.

In the Forbes article “The Logistics of the Olympics is a Marathon, not a Sprint,” Richard Howells describes what’s going on behind the scenes throughout the United Kingdom to ensure Olympics participants are able to “keep calm and carry on.” 

Howells highlights the following:

  • UPS has 80,000 square meters of warehouse space and is responsible for getting all necessary goods to starting lines and managing outbound shipments, as well.
  • Transportation is playing a very visible role in the Olympics. For example, 30 miles of London’s roadways are reserved for the transport of athletes, officials, and other special traffic.
  • Manufacturers, such as food and beverage suppliers and athletic clothing makers, worked to get goods where they needed to be. Howells also mentions the last-minute need for sunscreen or umbrellas.
  • There is no historical way to anticipate demand in this instance. “When it comes to forecasting demand, manufacturers and retailers are entering unchartered waters. They can’t exactly leverage their sales forecast history, as the last Olympics in London were in 1948!”

The Olympics is like a stadium-sized newsvendor problem, which is defined in the APICS Dictionary, 13th edition, as: “a problem in inventory management dealing with determining the single period (e.g., day or week) order quantity, which will minimize the cost of sometimes having too much inventory and sometimes having too little.”

Inventory and production planning related to specific events is particularly tricky. Decision makers must rely on forecasting and actual sales. Take, for example, soccer jerseys. Spain was a favorite to win the men’s soccer gold medal. Therefore, manufacturers produced and retailers stocked Spanish soccer jerseys to capitalize on the anticipated win. However, yesterday, the Japanese soccer team defeated the Spanish team 1-0. With things looking less hopeful for Spain’s soccer team, manufacturers and retailers face more questions about their Spanish soccer jerseys. Chances are they will start to cut back.

APICS has resources for professionals at every level of inventory planning. Less experienced professionals will benefit from APICS Principles of Inventory Management. Experienced planners can validate their knowledge by pursuing their APICS Certified in Production and Inventory Management designation. Additionally, individuals who are managing suppliers across the distribution channel will gain from APICS Certified Supply Chain Professional courses.

Good luck to all the athletes in this year’s games. If yesterday’s soccer match is any indication, the 2012 Summer Olympics should be exciting.

Idea exchange

 Now, you can take the APICS Operations Management Now discussion to your social networks on LinkedIn, Facebook, Twitter, and the APICS Supply Chain Channel. Be sure to use the hashtag #OMNow and include @Tweet_APICS in any tweets to have your words featured on the APICS homepage.

  • Has your company been challenged by large-scale, unexpected demand changes like those happening in London? How have you designed your network in order to minimize response time and better meet the needs of your end customers?
  • How are your logistics processes structured in order to compete effectively in terms of time, cost, quality, and sustainability?
  • Different supply chains adopt different strategies for aligning logistical capabilities with business priorities. How does your supply chain use logistics to achieve company objectives?
In other news
Related APICS education
  • On the Map
    By Darren Pitts, CPIM, CSCP
    March/April 2012, APICS magazine
  • Out of Stock
    By Janet Hessler
    March/April 2012, APICS magazine
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