Presentation of the company UNITEC D GmbH
UNITEC D (High Tech Industrieprodukte Vertriebs GmbH), is a limited liability company, based in Augsburg (Germany), founded at the end of the 1980s on the initiative of the Italian entrepreneur Vincenzo Marino, who had gained important experience in the sector of large automation systems for the construction of cars worldwide. This work experience led him to identify a whole series of operational and management deficiencies in logistics and supplies in those companies that began to forge new commercial relationships with companies located in geographically distant markets. The most visible problem of these shortcomings, in fact, concerned the fragmentation of supplies and the almost impossibility of coordinating supplies even from a temporal point of view. UNITEC thus created new services, with high added value, which were of extreme importance for these companies. Thus was born the concept of integrated supply, through which client companies were allowed to delegate procurement activities so as to obtain supplies in more effective and efficient ways than the methods traditionally used. UNITEC therefore positioned itself as a sort of foreign purchasing office on behalf of these companies and where the assistance activity offered was justified by the fact that the aforementioned, having a whole series of resources and knowledge, effectively facilitated the low-cost implementation of commercial relationships with new suppliers. The companies were in fact lacking specific knowledge of the new market in which they were going to operate, as well as linguistic knowledge and, therefore, it was essential to have a whole series of management resources useful for implementing an integration of operational, logistical and administrative processes (think in this case of the various legal and customs regulations necessary for the customs clearance of purchased products). UNITEC's customer base, by virtue of the offer of these services and therefore of the value that companies obtained thanks to the new methods of outsourcing and integrated supply, thus being able to manage and organize all phases of procurement, immediately began to increase, recording a progressive increase in its workforce, made up of professionals in the sector, which was around 40% per year. Further recognition of the activity carried out by UNITEC occurred with the participation in the activity of the DIN, "Deutsche Institut Für Normung", desired by the organization itself, which operates worldwide for the definition of general safety standards in relation to the construction and maintenance of production plants and of which UNITEC is an active member, exercising decision-making power within it, through the formulation of its vote, as well as offering technical consultancy. As regards the choice of the company's geographical location within the German area, it is explained by the fact that precisely in this area, defined by Marino himself as a primordial melting pot, there was a high concentration of companies at the beginning of the 1980s, operating mainly in the automotive sector (Mercedes, BMW, Porsche, Audi, Volkswagen, Grob, KuKa, MAN, Siemens...), within which the production of components and products with high content technological, in relation to which European companies were particularly interested in terms of supply. For these companies, the need arose to have a point of reference to rely on for the development of commercial relationships with foreign companies. UNITEC therefore prepared a dense network of innovative logistical and administrative services such as to allow these companies to delegate, in whole or in part, the activities necessary to organize the entire logistical and administrative flow of sub-supply relationships. In fact, these activities, not being of a core type, would have generated internal coordination costs higher than those of the market. Instead, by delegating the same activities to UNITEC, the client companies actively participated in a dense network of trade exchanges with foreign countries at low costs.
Geographical location of UNITEC GmbH
(Source UNITEC GmbH, 2001)Currently, UNITEC's reference markets are expanding not only in Europe, thanks also to the opening of the Single Market which has favored both the free movement of goods and a reduction in risks associated with exchange rates with the introduction of the Euro, but also in the international context, where objective difficulties still persist for companies belonging to the different countries, taking into account the different languages not yet fully shared
Application of new technologies in UNITEC activities
As seen in the previous chapters, UNITEC was created to respond to the need of companies to communicate with the various suppliers present throughout the international territory, with the greatest possible degree of efficiency and effectiveness.
The concept of networking and inter-company networking have always been the basis of UNITEC's activity, where the use of computerization and industrialization systems have allowed it to obtain the advantages associated with the use of new IT tools for some time now.
The company therefore has the merit of having identified and exploited well in advance the possibility of obtaining significant reductions in costs related to the management of procurement processes, through the use of the network, the concepts of outsourcing and industrialization in the management, reception, processing and transmission of information. The lack of such innovative concepts and, therefore, of products and software solutions on the market, pushed the company to develop such solutions on its own, thus gaining experience in the sector, which later proved fundamental for its birth. UNITEC, in 1995 released the first version of a management software for the process workflow, subsequently improved until it found application in all areas of the company's activity.
With the advent of the Internet, UNITEC immediately identified the importance and value offered by this tool and, therefore, the new added value for companies that may have exploited it. In UNITEC, the desire and need to invest in this area was therefore born, thus creating a division specialized in the IT sector. This external division then leads, in 1997, to the establishment of UNITEC Service & Web based in Sabaudia (LT), whose management and operation is completely independent of UNITEC GmbH.
The new IT division, in addition to providing services directly within UNITEC, also begins to study and offer services for client companies, producing both software tools for all networking., and consultancy and assistance activities in a completely innovative way. UNITEC is therefore able to make the most of the possibilities offered by new technologies, where all company processes can be defined as paperless (for which it obtained a quality certification as "The first company to operate without paper" already in 1998). The solutions proposed by UNITEC have in fact been certified by the ISO 9001 standards in terms of quality and innovation. This has allowed it to be recognized at a premium price by the customer market, also constituting a reference model for other companies interested in implementing similar solutions. UNITEC has for some time had an ERP software system created entirely on its own needs, through which it manages to obtain complete computerization of the company workflow, so as to manage the entire procurement process in real time, achieving considerable savings on information management (being close to "zero error" levels), in the organizational and administrative sphere. With its activity, UNITEC therefore also allows client companies to re-engineer procurement procedures, so as to immediately generate economic returns due to the elimination of costs connected to the procurement of supplies through conventional procedures and tools (transforming fixed costs into variable ones and reducing them). The mission that UNITEC has decided to pursue is therefore the transformation of company fixed costs into variable costs and, at the same time, their reduction. To guarantee this, the company, in addition to offering the useful means for re-engineering company procurement procedures, supports continuous company improvement with the application of the Quality Management concept, so as to allow client companies to obtain new added value linked to cost reduction. Client companies can thus dedicate themselves exclusively and peacefully to their strategic core business activities and, therefore, delegate all the management processes that normally absorb economic and professional resources effectively taken away from other company activities.
Through these solutions, companies obtain an immediate reduction in the activities and processes necessary to manage the various supply relationships with their suppliers. These savings are obtained both in the supplies relating to non-production goods, (understood as MRO necessary for the production plants of different industrial types, such as automotive, printing, household appliances, chemicals, etc.), as well as for materials with a higher strategic content. Client companies also achieve a whole series of cost savings through an aggregation of shared purchases, by virtue of the industrial brokerage activity delegated and promoted by UNITEC itself.
The activity delegated to UNITEC therefore allows the client company to maintain a stable relational relationship with its suppliers, outsourcing only those complex management activities that generate a waste of resources.
One of the most recurring difficulties that companies encounter in procurement processes can be found in the need to uniformly organize and integrate the various expected supplies. For each procurement process, there are in fact, throughout the year, multiple administrative, accounting and control procedures relating to the different commercial relationships, in relation to the organization of deliveries, payments, etc.
(Source UNITEC D GmbH, 2001)
UNITEC has therefore allowed all client companies to reduce the costs associated with the management of these procurement processes by 50%, precisely by studying customized outsourcing procedures.
The customization of the service offering is based on the analysis carried out by UNITEC regarding the costs that the company incurs for the management of the procurement processes. Through the Activity Based Costing and Business Process Outsourcing models, all the costs incurred for the procurement processes are associated with the complex of activities generated within the company itself. UNITEC searches, in agreement with customer management and on the basis of appropriate cost-effectiveness calculations, which management processes can be delegated in outsourcing (scope of UNITEC's consultancy service).
Well, the management phase of the procurement process represents the "passive cycle" of the entire production chain and therefore, the more company structures are responsible for these activities, the more there will be a waste of economic and professional resources which could instead be allocated to more profitable company areas and functions. Through delegation, the client company achieves an improvement in its performance, outsourcing the activities that do not contribute to offering greater value to production. UNITEC distinguishes the concept of the purchasing process, as an activity with a high strategic content that requires know-how, from the procurement management process. In fact, this last process takes the form of an activity devoid of know-how contents and industrial secrets and therefore, following the same procedural and therefore repetitive step, represents a mechanizable management process.
With outsourcing, therefore, the supply management process is not only less expensive, but even more convenient, as UNITEC is able to aggregate all the different steps into a single process of higher quality and with particular characteristics that remain constant over time.
To this end, the company interprets the outsourcing process by making a clear separation between procedural and administrative activities. As regards the concept of procedural outsourcing, UNITEC's primary objective is to make the management cost of the procurement function flexible. Companies, under normal conditions, are forced to use huge economic and professional resources for the conclusion of commercial relationships, for the organization of the relative transport and delivery of the goods, for the management of warehousing.
By delegating to UNITEC instead, companies transform the fixed costs relating to these operations into variable costs, directly proportionate to the actual needs of the moment. With administrative outsourcing, however, UNITEC offers companies the possibility of obtaining a drastic reduction in costs associated with internal administration, delivery and control of goods. In fact, once the client company has indicated to UNITEC the type of goods it wishes to purchase, the various suppliers to turn to and the delivery times, it will entrust UNITEC with the task of coordinating the necessary relationships, thus optimizing the logistical process and administrative management.
This integrated supply system, which is based on the use of the most modern technologies, allows the client company to plan the various supply activities, usually organized with a plurality of sellers. The plurality of requests will therefore merge into a single supply order addressed to UNITEC, which has been delegated the relevant process and which will therefore organize all the consequent activities with unique order, invoicing and payment and regardless of the supply conditions established by the various suppliers, thus obtaining a single delivery. This last point is of fundamental importance for the company that seeks cost savings in supplies. In this way, in fact, the company also obtains a significant reduction in the costs associated with the transport of goods since UNITEC, by managing a plurality of supplies and also relating to different companies, is able to optimize the coordination of logistical flows. In conclusion, the client company incurs costs relating to transport for different supplies, as if the order had been forwarded to only one supplier."Integrated supply" concept
(Source UNITEC D GmbH, 2001)
The reduction of costs relating to the transport of goods is based on the concept of "logistics hub". In practice, imaginary transversal lines are drawn for each company that connect it with its suppliers spread across the territory. Strategic logistics points are then studied on these lines, where all the supplies requested by the company can be brought together and where each supplier will therefore deposit the goods. In this way, the cost relating to the delivery of the various supplies will be reduced as the path of the goods from the logistics hub to the company warehouse, being shared between multiple deliveries, follows a common path and in an aggregated form. In this way, the partial sum of the costs relating to each delivery will always be lower than the cost of transporting the goods from supplier to customer, considered individually.
Shared logistics nodes
(Source UNITEC GmbH, 2001)In the supplies common to a plurality of companies and which also follow the same route, real virtual purchasing and transport consortia are actually generated (almost as a side effect) so that UNITEC, by aggregating the management processes, offers the possibility of obtaining further cost savings and economies of scale compared to those of transport, thus associating the reduction, not with an intervention on the suppliers' profit margins, but attributable to the effective elimination of company waste, transformed into resources.
Then, through an IT system, "NETSOURCING", UNITEC offers its companies the possibility of following in real time the progress of the shipment and the day of delivery, thus allowing the organization of the production flow (therefore compliance with the delivery terms of supplies to its customers).
Functional diagram of the integrated supply
(source: UNITEC D GmbH, 2001)
The concept of integrated supply for UNITEC, however, is not anchored exclusively to the supply of non-strategic goods, but also for goods with a higher know-how content, thus offering client companies the possibility of multiplying the advantages obtainable from this management system also for strategic supplies, creating the conditions to further improve company efficiency and freeing up further resources to invest in activities closer to the real company business. The integrated supply, designed by UNITEC, conveys and includes within it, the various supply requests from the client company, thus allowing the latter to obtain the goods at the desired time and with a single paper document issued by UNITEC. The client company obtains benefits deriving from a recovery of efficiency in its core activities, an extreme simplification of the procurement processes, where otherwise the overall purchase cost is in the majority of cases particularly high as the use of company resources in secondary activities determines a disproportion between the value of the purchased good and the cost of the activated procedures.
Supply cost analysis
(Source UNITEC D GmbH, 2001)
The operating principle of integrated supply, described in the following figure, provides for a reduction of that part of the cost incurred for the purchase of the product, relating only to the procurement process and where, by virtue of the outsourcing delegation of the process itself, as the level of delegation increases, the company's economic return corresponds proportionally.
Integrated supply logic
(Source UNITEC D GmbH, 2001)
The client company, turning to an outsourcer who offers it a targeted and personalized solution for procurement procedures, therefore channels a whole series of activities into a single operation, also managing to obtain regularization of delivery times.
In the graph, the part of the cost of the product that cannot be traced back to the actual value of the purchased good is highlighted (dark part) which, thanks to UNITEC, is significantly reduced.
Outside the framework of this supply system, the company, in concluding commercial relationships with its suppliers, is forced to bear administrative costs relating to each individual relationship, when instead no administrative costs can be eliminated or, at least reduced, if outsourced.
Supply diagram of a traditional company
(source UNITEC D GmbH, 2001)
With the implementation of the integrated supply concept, the company instead turns to a single interlocutor, UNITEC, which processes all the different supply requests, distributing them to the various suppliers, for which it issues a single paper invoicing document. In this way, the company administration frees itself from the work overload associated with managing the administrative and accounting relationship with multiple suppliers. Subsequent to the implementation of the integrated supply solution created by UNITEC, the company administration is able to streamline all the procurement management procedures, so as to be able to dedicate more resources to strategic activities and, therefore, more closely connected to its core.
Streamlining of administrative activity allowed by UNITEC
(source UNITEC D GmbH, 2001)
Inventory management
Of particular corporate importance is the virtual warehouse service offered by UNITEC in relation to inventory management. We have seen how the company allows client companies to outsource the entire process of managing procurement, payment of the related supplies and delivery of the same. UNITEC in fact studies and organizes the logistics service for the delivery of goods according to terms and methods previously agreed with the client company. The service allows the aforementioned companies to better manage their production process and, therefore, more effectively satisfy the requests made by their customers. In this way, each client company in turn manages to retain its customers, while also relying on organized supplies, it will also be able to reduce the quantity of stocks of goods (strategic or otherwise) usually accumulated in its warehouse. The main problem, relating to inventory management, concerns two essential points:
- how much to order
While admitting the usefulness, if not even the necessity, of the existence of a minimum safety stock (prevalent orientation in Western-style economies, unlike the Japanese ones which, following the Just in Time philosophy, have developed new solutions, such as that of the "inter-operational warehouse on trucks"), the company must be able to establish, with a certain margin of approximation, the exact moment of arrival of the materials to be ready to immediately provide the service to its customer, so as to be more functional and timely compared to the competition. The answer to "how much to order" can be found in the so-called "reorder point", i.e. that quantitative value expressed by the company's rate of use of materials, multiplied by the supplier's order processing time. As regards the quantity to order, the company has the possibility of using special software which allows it to identify, based on the consumption of the materials themselves, the exact amount of stocks that it will have to replenish to reach that "minimum" stock level previously established. Since the existence of stocks in the warehouse represents a business cost, management must necessarily carry out careful management of them. The prerequisite for their existence is the time lag between the flow of deliveries and that of their use (both physical and informational). Therefore, companies are able to obtain a reduction only when they achieve information sharing, permitted by new technologies, between the supplier and the company itself, or through a service provider to whom they delegate the task of ensuring this information exchange. Starting from the ABC analysis of the products held in the warehouse, it is in fact possible to obtain a typical classification of the goods to be managed in stock for production, therefore based on the importance they assume in the company environment. The products in class "A" are then identified as strategic materials which absorb 80% of the costs incurred in the procurement function and held at 20% of the total inventory, the goods in class "B" as "intermediate" goods which absorb 15% of the warehouse costs with a volume equal to 30%, and the goods in class "C" which represent the remaining 5% of the warehouse costs with a volume equal to 50%. The products in the "A" range, being strategic, are usually managed by companies with greater care than those in the "B" and "C" ranges which have little impact on the formation of costs and turnover (Pareto's 80/20 principle applies). The latter can therefore be easily managed through outsourcing delegation in a shared manner between multiple companies, so as to obtain savings with respect to the cost of purchase, transport, ordering and control. Well, client companies achieve optimization of inventory management through a continuous logistical and information flow shared between them and suppliers. The sharing of resources and information is certainly achievable with regard to "B" and "C" range products, as these do not represent strategic materials, even if nothing precludes similar projects also applied to "A" range products. The service provider and therefore UNITEC, in addition to integrating the supply orders relating to these goods, managing to obtain more regular supplies and at more advantageous price conditions, offers the participants both the possibility of progressively reducing their stocks while increasing their availability (lemma of the virtual warehouse), and the achievement of positive effects on the turnover indices of the stored goods. In fact, UNITEC, through the use of new technologies, is in continuous connection with its suppliers (its partners) and client companies, so as to optimize the times and procedures necessary for the management of supply based on the consumption habits and needs of the client companies themselves, their territorial location and, last but not least, with respect to the road conditions of the geographical area of reference.
In this regard, UNITEC has created a new e-tool, "NETSOURCING", as an internet-based tool that allows an effective connection between its purchasing office and that of its customers and suppliers. In this way, each client company has the possibility of formulating a supply request in real time, based on the product catalogs present in the UNITEC database, or by formulating requests for products which are then found by UNITEC itself, also associating requests relating to different supplies. This system allows the company to carry out continuous tracking activities, so as to obtain, at any time, information relating to the progress of the supply, delivery, shipping and invoicing terms.
As is known, the delivery of the goods follows a procedural process which sees its implementation coincide with the moment in which the supplier has the availability of the entire quantity of goods ordered, or the last type of goods requested. In practice, until the entire quantity of goods is available, the delivery of the same does not take place, as the supplier avoids bearing the cost of transport several times. This delay has a negative impact on company production.
Well, the company, distinguishing urgent deliveries from those that can be postponed over time, agrees with UNITEC on the best solutions so that deliveries are optimized and organized based on the actual needs of the moment. In this way, the risks linked to delivery delays are eliminated and, at the same time, a concentration and reduction of the time necessary for warehouse management is achieved, consequently eliminating downtime and simultaneously increasing the efficiency of the structures in charge.
(Source UNITEC D GmbH, 2001)
The continuous search for stock reduction within each company (fig. A), however, has caused, as a direct consequence, a disproportionate numerical increase in procurement operations and, therefore, in the costs associated with them (fig. B).
With the integrated supply and virtual warehouse solution offered by UNITEC, however, a possible balance point is studied between the minimum level of stocks (calculated on the basis of their use in relation to the company's production capacity and the time it takes to process orders from suppliers) and the number and cost relating to supplies (fig. C).
Optimal relationship between stocks and number of supplies
Logistics and new network technologies constitute real strategic infrastructures through which, especially SMEs, can redesign their production organization.
Companies can establish remote communication with their partners, establish new commercial and collaborative relationships even with companies belonging to different geographical contexts and this thanks to ICT.
The flow of goods between the different places of production, however, requires new tools to reduce the operational barriers that have traditionally represented a limit to the development of the economic activities of SMEs on a global scale. The new conception of logistics, thanks to new technologies, has allowed companies to make spatially differentiated production processes more fluid
In fact, through an outsourcing delegation of all those activities that do not fall within the area of excellence, the company can concentrate resources on the production of goods and services, on their quality, on design and therefore on the distinctive skills with which to create useful value for client companies (in practice the company manages to reorganize its structure with a new network organization of the division of labor). In the concept of extended enterprise and, therefore, of extended supply chain, logistics is to be understood as that set of activities that guides the entire movement of the physical and informational flow of goods within a production network (as it could be in the case of a production district).
From this perspective, therefore, logistics must no longer be considered as a subsidiary activity, but rather a new operational modality that allows the redesign of supply and distribution relationships, as well as the coordination of production and service activities between companies located in different geographical areas.
We therefore understand the great importance that logistics organization has as a competitive strategy for all those small and medium-sized enterprises and local production systems (districts) that have a strong propensity for exports. Taking the case to be analyzed as a reference, we can see how logistics, associated with the use of new technologies, therefore becomes a real strategic infrastructure that companies should be able to exploit in order to achieve economies of scale and scope in the shared use of their warehouses.
However, it should be noted that, for smaller companies, the evolution of logistics risks turning into a threat rather than an opportunity, both due to the lack of means, infrastructures, resources and technologies capable of guaranteeing the pursuit of these strategies at low costs, and due to the difficulties inherent in sharing resources between multiple companies, in particular, within those districts that can be defined as competitive, i.e. where it is particularly difficult for the companies themselves to organize teamwork.
Taking the importance and necessity of inventories for granted, companies that exploit the opportunities offered by new technologies continually tend to move towards the objective of "zero inventories" both to progressively reduce the amounts of fixed capital and to make the response to the growing variability of (ever shorter) production cycles more effective.
However, barriers persist which make the implementation of solutions in this sense difficult due to the lack of personnel with specific skills in the field and equipment suitable to support such strategies.
Outsourcing therefore represents an opportunity that allows companies to obtain at the same time both the economies associated with the reduction of process management costs and the advantages of operating in real time, so as to process orders from client companies in increasingly shorter times. To this end, new operators are appearing in this panorama offering radical solutions for e-logistic.
UNITEC therefore represents an Information based integrator which offers client companies the possibility of also using services that allow common supplies and shared warehouses. The "Virtual Warehouse" represents a possibility for optimizing the management of company warehouses. This solution has been designed especially for all those companies that operate in industrial districts. The idea of using a single warehouse to serve multiple companies was not welcomed, clashing with management problems. In fact, many companies tend to want to maintain their management autonomy (irreplaceable source of versatility), and therefore do not want to share strategic information on their markets (whether procurement or distribution) or high value-added information about their production with their competitors.
A first initiative in this direction took place in the Valpolicella marble district, where some of the companies belonging to the cluster, activated a logistics consortium, through coordination activities of infrastructure investments for the creation of a common logistics platform, with the aim of rationalizing the movement and storage of incoming and outgoing goods for groups of companies which, in addition to being located in the same territorial area, share goods belonging to the same sector commodity.
Another very important example is that relating to the Montebelluna district (the ski boot district), where companies are beginning to develop and undertake investment strategies in shared communication elements.
To this end, a management platform has been created which will allow, over time, the implementation of shared design and rapid prototyping solutions for the ski boot. The new technologies, however, in addition to the possibility of sharing information, also allow, through the construction of virtual platforms, the sharing of company stocks in a virtual warehouse, where a specialized operator, neutral with respect to all the district companies and therefore able to ensure a certain guarantee of transparency for all the participants in the project, UNITEC precisely, manages all the information on the status of the individual company warehouses and the reordering activities relating to the shared purchases.
The condition for the success of this initiative, however, is subordinated both to the adoption of a logistical and communication standard in which this virtual platform materializes, and to a geographical proximity of the companies themselves for a better organization of goods deliveries.
In fact, the sports footwear area is located in a territory of small dimensions, homogeneous and well defined from a functional point of view. The district extends over 15 municipalities, with a total surface area of 320 square kilometres. The companies belonging to the district are around 400, including industrial and artisanal companies, characterized by an extraordinary capacity for product and process innovation. Logistics, however, continues to represent a crucial issue for the district. The rapidity of the circulation of information and goods is therefore one of the aspects on which all companies should think and invest.
The advantages of the virtual warehouse can be explained with the lemma coined by the UNITEC Administrator himself, Vincenzo Marino.
The stocks of each company participating in the project immediately decrease but, paradoxically, their availability increases. The transformation of a "physical" object into a "virtual" one is certainly an impossible activity, but the developments in communications and the computer network are in fact tools that allow this "metamorphosis".
The Virtual Warehouse is in fact an expression of the use that can be made of these possible transformations. Both the physical state of the objects and their virtual state are considered within the M.V. therefore, we can define it as a physical-IT hybrid. The sharing of information, made possible by network technologies, allows us to rationalize and outsource the management of stocks, physically present in company warehouses. Through the M.V. in fact, stocks are represented by the sum of the components made available by the companies participating in the M.V. same and operating in the same territory.
The model therefore finds its particular point of reference in industrial districts, where the possibility of sharing raw materials, semi-finished products and spare parts is maximum.
In fact, the warehouses of companies operating in the districts most often present redundancies in stocks, as well as a whole series of problems linked to the operational and logistical confusion that is created between incoming and outgoing goods.
These phenomena concern all companies without distinction which are forced to bear the consequent management costs, as "structural duplicates" exist in these economic realities. A sharing project therefore allows these companies to eliminate waste and obtain new economic resources.
Inside each industrial warehouse there is normally a certain quantity of spare materials, useful for guaranteeing production continuity especially in the event of faults or peaks in demand. However, if they are not used, these stocks must be disposed of without ever having been used, thus creating forms of economic waste (think also of cases connected to the replacement of systems and/or obsolescence of components).
With the M.V., UNITEC offers all the companies in the district a reduction in the stocks to be stored, without however giving up their ready availability in case of need and, this, thanks to a software system that allows you to always have under control and in real time, all the information necessary for the coordinated and global management of the use of the stocks themselves. In case of use of stocks by a company, beyond the limits of its availability, UNITEC, through the IT system, immediately proceeds to collect the goods from the warehouse of a nearby company, and reorder the goods themselves to the supplier. The entire district therefore functions as a single factory and where the M.V. it is physically made up of a set of warehouses owned by the various companies, whose management, however, is entrusted to UNITEC.
The economies obtainable within the industrial districts would therefore have a great impact on the entire national value chain.
Industrial districts in which to implement solutions logistics interconnection via a service provider
(Source UNITEC D GmbH, 2001)
The installation and operation of a Virtual Warehouse is depicted in the following illustration:
District virtual warehouse
(Source UNITEC D GmbH, 2001)
The participating companies transmit to the M.V. manager, UNITEC, all the information about the contents of the company warehouse that they wish to share with the other companies operating in the district, so that the manager generates a M.V. which contains the description of the materials, the quantities available and the procurement and reordering times. Companies can consequently reduce their inventories based on the availability of the M.V. and its operational needs. Participants can thus request online delivery of the materials they need, 24 hours a day. UNITEC itself then organizes the collections and deliveries of materials throughout the district territory and, therefore, the related reordering processes from suppliers. In the M.V. therefore, inventory management is normalized and obsolescence recycled, so as to allow an increase in warehouse rotation and capital availability, previously tied to the existence of traditional management. Let's say they participate in the M.V. project. three companies belonging for example to the industrial marble district of Massa Carrara.
The three companies each reduce their stocks of marble and granite (the companies all have the same type of stocks) by 33%, so as to each hold 66% of their stock and, at the same time, make it available for the others as well.
Reduction of stocks and shared availability
(Source UNITEC D GmbH, 2001)
In practice, the costs connected to the existence of a warehouse are canceled (the sum of the costs of 33% of each company warehouse corresponds in fact to the total cost of an entire warehouse) where, however, the availability of sharing of goods given by each company determines a doubled availability compared to the consistency of the stocks before participation in the M.V. project.
The saving for the three companies is therefore equivalent to the cost of an entire warehouse paradoxically associated with the 100% increase in the stocks that can be used by each of them.
The companies interconnected in this system therefore have the guarantee of an availability of materials, which even goes beyond that previously held, even though the stocks are not present in their warehouse. Obviously, the more companies participate in the implementation of these solutions, the lower the shares of materials to be stored will be, and at the same time, the higher the shares of available materials will be. In the specific case of the Montebelluna ski boot district, where companies, being in strong competition with each other, operate individually with a plurality of suppliers, they incur a whole series of costs, not only logistical but also administrative and organizational, which can be eliminated or, at most, significantly reduced. Let's imagine the district as an apartment building made up of ten apartments (businesses). Each condominium owner keeps a set of 10 spare standard bulbs in their home, in case a replacement becomes necessary.
The total stock will therefore be 100 bulbs. Assuming an average cost of 50 Euros per set of bulbs, the overall cost of the stock will be equal to 500 Euros. It is decided to reduce the individual stock to 2 light bulbs with the possibility for each of the condominiums to turn to their neighbor for the surplus.
The task of managing the stock of light bulbs is then entrusted to a custodian (UNITEC in reality), who, thanks to a list of condominiums and the related sets of light bulbs made available, collects the necessary light bulb from the set of the nearest condominium owner, organizing its transport and delivery, and then taking care of its reinstatement. The saving for each individual condominium owner is in this case 80%, while the availability of stocks is doubled (the condominium owner has 20 light bulbs compared to the 10 M.V. doors). The companies in the district can therefore move from conventional management, which is associated with the existence of considerable waste of resources, to one which involves the participation and use of a virtual warehouse, through interconnections and logistical services provided by the provider.
If particular variations occur in the requests for goods by one company, and the warehouses of the others are not able to satisfy this need (limit case), UNITEC will immediately carry out new supplies. The provider can operate with extreme promptness, as the supply request from the company arrives in real time and the state of warehouse availability is monitored 24 hours a day.
For their part, companies can reduce their inventories without compromising their availability and, therefore, the risk of losing potential orders.
Warehouse management costs, as is known, grow proportionally as stock availability increases. Well, with this solution, costs will tend to decrease. We can graphically observe the curve of warehouse management costs (Stockholding costs), which tends to shift downwards, while the curve of costs associated with the loss of any sales (Potential low sales costs), tends to flatten.
(Source UNITEC GmbH, 2001)
Flattening the cost curve of any lost sales
(Source UNITEC GmbH, 2001)
Participating in a Virtual Warehouse also allows you to:
- eliminate management overheads;
- adapt warehouse costs to the company's economic trend;
- make use of negotiating and organizational synergies;
- take advantage of scale discounts multiplied according to the large purchase volumes generated;
- guarantee better availability of supplies associated with an increase in quality standards;
- minimization of structural costs;
- safeguarding the environment through a reduction in traffic generated by long-distance transport.
It should be underlined, however, that the future development of similar solutions will strongly depend on the desire of district (and non-district) entrepreneurship to achieve an effective sharing of resources.
The fundamental obstacle is in fact represented by the fear of losing that managerial and operational autonomy that has always characterized the versatility of SMEs, especially when the sharing itself concerns the supply of strategic products, through which it offers its customers that added value that manages to distinguish the company from direct competition.
In some cases, in fact, the competitive dynamics within the district have created manifest forms of conflict which, despite their positive effect at a system level, have however created a strong aversion towards possible forms of collaboration and cooperation between the various district actors, thus revealing all the difficulties inherent in projects based on the aggregate sharing of goods, resources and information.
It is therefore necessary for management to understand the importance of a company path based not only on competition, but also on collaboration to obtain economies of scale and scope from a global economy perspective.
