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Vestas Wind Systems transports wind turbines from Aarhus, the manufacturing location, to different markets including South Africa, Philippines, and United States. This massive logistical work requires high-level expertise and huge financial obligations.
Logistics refers to the processes of ensuring that a given product is taken from one location to another in order to bridge the gap between the suppliers and the firm, and that of the firm and the market. Murphy (2010) defines logistics as “A business planning framework for the management of material, service, information, and capital flows.
It includes the increasingly complex information, communication, and control systems required in today’s business environment”. The definition highlights a process involving management of resources, service, and communication. Additionally, it emphasizes the fact that logistics goes beyond the physical delivery of a product or raw material from one point to another. It also entails management of information.
Kreowski (2011), on the other hand, defines logistics as “The process of planning, implementing, and controlling the efficient and effective flow and storage of goods, services, and related information from point of origin to point of consumption for the purpose of conforming to customer requirements”.
This definition compares closely to that of Dyckhoff (2004), who defines logistics as, “The process of planning, implementing, and controlling the efficient and cost-effective flow and storage of raw materials, in-process inventory, finished goods, and related information from point of origin to point of consumption for the purpose of meeting customer requirements”.
These definitions clearly elaborate what should take place in a logistical process. This research paper focuses on the strategy that Vestas adopts to transport wind turbines from their place of manufacture in Aarhus, Denmark, to the market in United States of America.
Logistics of Vestas Energy Wind Turbines from Europe to USA
Understanding logistics is paramount in the current competitive global market. Vestas is the largest manufacturer and distributor of wind turbines in the world. The company is known for its creative production of wind turbines that help in production of energy used for domestic and commercial purposes. The company has been very active in the European market.
Europe was its primary market during its early days of expansion. However, the firm has expanded to other continents that look more lucrative. Currently, the main markets for this firm are the Chinese, the EU, and the United States.
These three regions have increased their dependency on the wind energy as a way of boosting usage of renewable energy in a sector that has received a lot of controversy, especially with environmental conservationists. The markets in the United States and China have been growing consistently.
In China, the main consumers have been organizational buyers such as the government and some large energy organizations. In the United States, however, the consumers are individual buyers who are interested in developing renewable energy in their homes or places of work as a way of protecting the environment from the effect of petroleum products.
The company ships turbines to USA. Once in the shoreline, the turbines are transported by road in a time-consuming and highly taxing adventure. Vestas has been planning to establish its own production units in its main markets in order to eliminate the complex and costly process of moving the turbines from Europe to the United States.
However, the firm has not developed its plants in the United States, and for this reason, it is forced to find a way of taking its products from the manufacturing plants in Aarhus, Denmark, to the American markets.
In this case, this firm has the responsibility of organizing its logistical processes that will ensure that its oversized wind turbines reach the American market safely and on time to meet the demand of customers.
The logistics unit must develop clear mechanisms through which the product can be delivered overseas on time and in the right shape. The company can achieve this as explained below.
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The first stage in logistics process is the planning process. Planning is very important when the management of Vestas is moving the large wind turbines from Aarhus to the United States. Planning process will involve a detailed definition of every activity that will be carried by relevant authorities in the process of delivering the product to the market.
Defining these activities helps in knowing how the whole process will be made a success. It also helps in identifying the costs involved, and the specific individuals that would be assigned various duties. When planning the logistics process, the team must understand the nature of the products that should be transported.
The management of this firm in the logistics department should understand that the shape and size of the turbines might not make it possible to use some of the normal equipments used in transporting other smaller turbines.
Containerization has become very crucial for any commodity that is to be transported to the oversea markets using ships. This is because of the ease of packaging them into the ship, security of the cargo while in the sea, and the ease of identification and offloading at the destination. The smaller turbines can be arranged into the containers with a lot of ease.
However, the larger turbines may require a new approach of packaging before they can be loaded into the ship for the purpose of transportation. This is what the logistics management should clearly plan for before the products can be released to the market.
The management should then decide on the right shipping company that would help in delivering the product from the manufacturing plant to the desired market. When making this decision, some of the factors that should be considered are the price charged by the logistics company, its record of accomplishment in delivering products on time and in good shape, and the ability to deliver the current cargo.
Vestas energy contracts the services of DHL as its fits the bill perfectly and the company has used its services for a long time and built some trust. This is because its services in transporting large turbines have been proven. This company has ships with Custom-designed barges, which have the capacity of transporting 100 complete 250-foot-tall turbines. This makes it the best solution for Vestas large wind turbines.
At Vestas, documentation plays a very important role in ensuring that cargo is transported and delivered timely in a desirable manner. The documentation would start at the planning stage. During the planning stage, the Vestas management documents all the agreed issues relating to the transportation of the products. One of the most imperative documents that Vestas prepares at the planning stage is the budget.
The budget clearly states the amount of money that the management is allocating to the transportation of the cargo. Vestas files the budget and factors it in when the firm sets the price of their products in the market. Upon choosing the right logistics company, Vestas management signs an agreement with this firm and documents the agreement.
The management should then have a document of the cargo that will be given to this logistics firm. The top management of DHL will sign the document, and Vestas will retain a copy. When the products reach the destination safely, both the relevant officials of Vestas and the shipping company signs a confirmation that the product has been delivered safely.
Vestas’ logistics department keeps these documents for filing the cost of shipping these products, and the effectiveness of the shipping company for possible future referrals.
Copies of these documents are availed to the finance and accounting departments to help in developing various books of accounts and for payment to the shipping company. This helps in improving accountability at every stage of product development until it is delivered to the consumers in the market.
Methods of Transport
For a long time, transportation of wind turbines was easy because the turbines were smaller. However, this is not the case currently. The turbines are currently larger, demanding better transport methods. Selecting the best method of transport can be one of the biggest challenges for the management of Vestas, especially when the turbines are large. These turbines are not only bulky, but also heavy.
Hence, the only means of transport available is by sea. Vestas transports the using special ships from Aarhus in Denmark to the United States and other overseas destinations such as South Africa. The turbines are packed in special ships that are able to transport them from the manufacturing plant to the destination.
Vestas cannot transport these unusually large turbines using containers. For a long time, DHL has been the preferred logistics partner for Vestas in transporting the wind turbines to the American market. Despite the increased demand for turbines, Vestas partnership with DHL has been greatly symbiotic.
Vestas’ management organizes with DHL the packaging of its turbines in the ship and delivery plans. The ship also has a relatively high speed, which ensures that Vestas meets its time-bound demands. Therefore, the journey from Aarhus in Denmark to various destinations (including USA) takes a relatively short time than if the ordinary ships were used.
Additionally, DHL assumes the safety of the turbines’ because the custom-designed barges are specifically designed for this job. DHL ensures that the blades are safe from any possible damage that may be caused by constant physical handling.
The agreement that DHL enters into with Vestas transfers all handling of shipping logistics to the shipping company. The transfer of the responsibility of the products (in this case, wind turbines) can take place at different stages and with differing costs. For instance, the management of Vestas has the option to transfer the responsibility of shipping and all logistics to DHL while the wind turbines are within the premise of Vestas.
Another alternative for Vestas is to transport the wind turbines to the harbor and transfer all responsibility to the logistics firm. When the wind turbines reach the oversea destination, the management of Vestas decides to receive the products at the harbor or wait for the merchandise to be delivered to the premises of this firm overseas.
Vestas chooses between these two options for its global logistics network. Under normal circumstances, the best approach would be to transfer the responsibility of the products while they are still at the premise of the firm, and wait for the delivery in the premises of Vestas in the oversea market. However, this method is very costly, though it also helps in reducing the number of workforce that this firm would require.
In the USA case, Vestas employs the latter option. All the risks involved in the transportation of the turbines are also transferred to DHL. Given the fact that these logistics firms (including DHL) are always insured, any cases of destruction, loss due to accidents or criminal attacks would be fully compensated. This eliminates any possible loss that Vestas might incur if it were to bear such costs.
Innovative Ways to Ship Oversized Blades
Large wind turbines present great complexity in transportation to the relevant market. Vestas develops innovative ways of shipping these oversized blades. There is ongoing research that seeks to come up with a sleek airship to help in the transportation of the oversized wind turbines. The airship has smooth curves of river stone that helps it glide easily in the air.
The airship is expected to sustain up to one thousand tons of the wind turbines in air. This would eliminate the need to use large trucks and ships to transport these turbines. This new strategy does not only reduce time and cost of transportation, but also reduces the carbon blue print that is always left when large trucks are used. These large turbines can be transported through other innovative ways.
Given the oversized blades of some of the newly developed turbines, the firm must come up with innovative ways of shipping them. This innovativeness can either be implemented during the manufacturing stage or when packaging the product. For instance, the firm currently develops blades that can be dismantled. The dismantled blades are easy to package in the containers and take lesser space.
Although the bolts bring extra costs, the structuring is helpful in eliminating the costs associated with wastage of space during shipment. It also eliminates the possible damage to the extra large blades. Alternatively, the innovation can be brought to the packaging stage. This requires specialized skills to ensure that the blades are packaged in a way that eliminates possible breakage and optimally uses the available space.
Vestas enjoys a wide network across the globe. In UK, Denmark, and the whole of Europe, the Port of Sheerness and Esbjerg’s East Port handles the majority of the wind turbines. In USA, the turbines enter through the port of Vancouver.
The 2009 Census listed the port as leading in handling cargo related to wind energy. In Columbia and surrounding areas, Vestas uses Vancouver port exclusively as entry point. Vestas has leased Esbjerg’s East Port over a 25-year period for assembly and exit point for the turbines.
Logistics is currently a crucial business function. To Vestas, it represents one of the costliest functions. Wind turbines, manufactured in Denmark and unusually large, present a complex logistical problem to the company. Through a sustained and beneficial partnership with DHL coupled with in-house innovativeness, Vestas has been able to overcome this hurdle and meet an ever-increasing global demand.
In USA, a production of turbines in Colorado has stalled leading to the need for shipping and subsequent road transport of wind turbines that takes months. The company is however, exploring new ways where the turbines will be transported via aircrafts specifically designed for the purpose.
Additionally, the company has already explored structural and design reconfiguration options where the turbines are assembled at destination after been manufactured in parts.
Dyckhoff, H. (2004). Supply chain management and reverse logistics. Berlin: Springer.
Kreowski, H. (2011). Dynamics in Logistics: Second International Conference, LDIC 2009, Bremen, Germany, August 2009, Proceedings. Berlin: Springer.
Murphy, P. (2010). Contemporary logistics. Upper Saddle River: Pearson Education.