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How Famosa distribution network is working

Famosa is a Spanish toys manufacturer. Jorge León did a presentation about this company and how their distribution network is working. Logsitics factors at famosa are:

  • Toys are strongly season products: sales a re concentrated in 3 months
  • Toys life cycles are very short
  • 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.

They had some problems to manage their logistics:

  • Not structured porudction plan.
  • Operational and logistics costs were too high
  • High level of capacity with huge semi.fnisihed inventories.
  • Products suffere 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.

The redesign of the supply chain was the solution. And new distribution network appeard:

  • Implementation of central and regional distribucion centres:
    • Goods are dispatched direct from the DC in China to the market and o the central DC in Spain.
      Some goods are also dispachned form Onil.
    • They have warehousing accros Europe.
  • Creation of a consolidation center in China:
    • The objective was to take advantage of logistics and fiscal benefics.
  • They adapt logistics processes to the consumer goods sector standards.

It’s important to think that distribution networks never are designed. From time to time they are re-evaluated, like what Famosa did on 2003. Many factors change son distribution networks are usually adapted.

Some years ago I did an study together with other colleages an study about the Spanish Industry of toys. You can download it by clicking in here. You can find below the presentation (it’s in Spanish):

 

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