Logistics_Jorge Leon Bello

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Famosa S.A.
Full Speed Supply Chain
Jorge León Bello__Master GEPS
The company
 Company name: Famosa S.A.
 Location: Spain, Onil (Alicante)
 Product offered: Toy industry sector (games, dolls, soft toys,
puzzles, toys for babies, etc.)
 Activity: Toy manufacturer and distribution company
 Two main production locations: China and Spain
 Employees: 700
Jorge León Bello__Master GEPS
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Logistics factors at Famosa
 Toys are strongly season products: sales are concentrated
between 3 or 4 months.
 Toys life cycles are very short: arrive at the sales point at the
beginning of October and have become obsolete by the end
of December.
 Manufacturing process needs to be “stock to order” which
implies high risks in stocking inventory.
 Since China is its largest supplier and lead times are long,
Famosa is dependent on the intensive use of forecasting.
Jorge León Bello__Master GEPS
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Problem Description
IMBALANCED SUPPLY CHAIN:

In 2003 the company could not deliver orders
effectively due to stock outs, ignorance of the existence
of orders, lack of warehouse management and control
tools, etc.
Jorge León Bello__Master GEPS
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Problem Description





Not structured production plan.
Operational and logistics costs were too high.
High level of capacity with huge semi-finished inventories.
Products suffered high rates of obsolescence.
Outsourcing in China used only as a source of components;
products were still finished in Spain.
 Production in Spain gave flexibility but incurred high cost
inefficiency.
 Distribution carried out from a single point only.
 Dispatch of products packed loose, without using pallets.
Jorge León Bello__Master GEPS
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The solution
REDESIGN OF THE SUPPLY CHAIN:
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

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Changes in Organization and Information Technologies
Reactive planning processes
Collaborative planning with China
Total redesign of distribution network
Jorge León Bello__Master GEPS
6
Changes in Organization and
Information Technologies
 Creation of and independent organization to manage a
global and integrated supply chain to became more agile and
capable in decision making.
 Integration of the procurement process into operation
management moving from a simple price negotiation to
negotiation of business rules.
 Integration of the operations in China into the company’s
operations management, to improve quality and the
reliability of production planning.
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Reactive Planning Processes
 The main objective was to reduce the variability of forecasting
accuracy due to market uncertainty.
 This involved the creation of a planning department and
transformation of speculative capacity (which involved
purchase orders to enlarge capacity which ignored customer
demand) into reactive capacity (which is more reliable).
 Adaptation of the supply chain to the production cycles of the
suppliers in China.
Jorge León Bello__Master GEPS
8
Reactive Planning Processes
 Lowering the lead time of products classified as very
important, to permit product to be launched with significant
changes implemented as late as possible.
 Giving priority to launch products which have a lower impact
if forecasting proves to be wrong.
 Rewarding customers who confirm their purchasing intentions
in advance.
Jorge León Bello__Master GEPS
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Collaborative Planning with China
 Famosa decided to produce 80% of its end product in China.
 The company’s relationships with suppliers are close:
Famosa carries out production planning, and negotiates a
Master Production Schedule with its given supplier, which
launch its on Material Requirements Planning.
 Famosa has at its disposal the capacity necessary during
peak seasons and is able to postpone loading through a more
efficient planning and negotiations process.
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Distribution Network Redesign
IMPLEMENTATION OF CENTRAL AND REGIONAL DC´s:
 Goods are dispatched direct from the DC in China to the market
and to the central DC in Spain.
 Some goods are also dispatched from Onil (Alicante) to
important customers, and small orders from Madrid.
 Famosa operates warehouses in all the principal European
markets.
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Distribution Network Redesign
CREATION OF A CONSOLIDATION CENTER IN CHINA:
 The objective was to take advantage of logistics and fiscal
benefits, including the potential of consolidating products
from different suppliers.
 The supply chain consolidation center is an export bonded
warehouse.
Jorge León Bello__Master GEPS
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Distribution Network Redesign
ADAPTATION OF LOGISTICS PROCESSES:
 Adaptation of logistics processes to consumer goods sector
standards: coding and labeling, Electronic Data Interchange
EDI messages, barcodes and RFID in SAP and the use of
pallets.
Jorge León Bello__Master GEPS
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Thanks for you attention!
Jorge León Bello__Master GEPS
14
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