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F1 Logistics October 29, 2011

Posted by Ramnath Rangaswamy in India, Logistics, Supply Chain.
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The Formula F1 is coming to India for the 1st time. A great event and a something that India should be proud of.  Holding such a magnificent sports spectacle requires excellent logistics.

There is a lot of talk in the media about F1 logistics issues. But the logistics that the newspapers and media are talking about are hotel rooms, traffic, parking – not the real hardcore logistics.

I was reading the details of the Formula F1 logistics –“ Five Boeing 747-400F jets will descend at the T2 terminal at Indira Gandhi International Airport” , and this set me thinking into what are the lessons that one can learn from the Formula F1 logistics.  After all the logistics that we handle in our day to day working, is nowhere as stringent and complex as the F1 logistics.

In my humble opinion, the lessons to be learnt are

Detailed Planning: All the 20,000 items required for each race is packed, barcoded and shipped to the race track. Some of the items are shipped in advance by sea. Some of the critical items reach the race track just 24 hours before the race.
The entire route from the port or airport to the race track is surveyed and mapped to ensure that there are no surprises.
This kind of detailed planning is done by many companies. The automobile sector logistics is a good example of meticulous detailed planning. ODC [ Over Dimensional Consignments] carriers also do very detailed route planning before despatching any consignment.

Inventory Management:  The inventory management is smart. Low cost items are shipped in advance. There are multiple items of the low cost items (like kitchens, stationery) which are sent direct to the track rather than shipping the same item straight one race to the next one and hurrying for it. The high cost items (cars) are shipped JIT by air.

Good partners: Formula F1 has chosen DHL as their Logistics Service Provider (LSP). DHL has been chosen because of their expertise, infrastructure and reliability.
Formula F1 must be paying a huge premium for this world class logistics service. But Formula F1 understand the value of logistics and the premium to DHL is worth paying as the financial risk of parts not reaching is huge.
Contrast this how we appoint our service providers. It is based on perhaps lowest cost. Logistics in India is treated as a low-class function, with very little importance given to logistics. It is expected that the logistics will somehow happen – management by muddling around!
Formula F1, I guess  would be treating DHL as a partner, working closely with DHL and sharing with him all the plans and details, so that together Formula F1 and DHL achieve the goal of flawless Formula F1 Grand Prix races.

Information System: The tracking system with RFID and barcodes allows all parts and pieces to be tracked and accounted for. Without a good IT track and trace system, it would be difficlut to manage the complex logistics of the Formula F1.
Contrast this with our logistics where trucks do not have GPS systems and so there is no way of knowing where a truck is, except if and when the driver calls. In our day to day logistics barcodes usage is not very widespread [ I am not talking about scanning barcodes at checkout counters, but using barcodes across the supply chain from the factory to the retail outlet] are rarely used and RFID is still rarely used.

Logistics Team: There is a central team to monitor the logistics. They have an update of all the parts and ensure that the right parts reach the right place at the right time.

Infrastructure: The Formula F1 hires jets and trucks for their logistics. It invests in infrastructure to support the logistics. Having dedicated infrastructure is important to support the complex logistics.
Contrast this with huge multi-million dollar plants in India that do not have the basic infrastructure to support the logistics to run the plant. All cost cutting and cutting corners is done with logistics infrastructure. Logistics is seen as a necessary evil and an avoidable cost, not as a support to business and something that can be a source of competitive advantage.
You just need to look at our Railways and Ports (and roads in our cities) to understand the importance given to infrastructure in India. Quality of most of our warehouses  is bad.

For more details on F1 Logistics click on the links below;

I would love to hear from all of you sharing your views and opinions about  lessons and learnings from F1 Logistics.

The art of war teaches us to rely not on the
likelihood of the enemy’s not coming, but on our own readiness to receive him;
not on the chance of his not attacking,
but rather on the fact that we have made our position unassailable.

– Sun Tzu [Art of War]