the story of eurofruit: a parable of resources and scheduling

Wholesale Telecoms Services Fruit Delivery

This presentation was originally given by Martin Geddes at a client customer event in February 2014. The author emphasises that Eurofruit is a fictional entity, and should not be confused with American Tangerine & Tomato, Lychee3, Global Cucumber, or

other well-known wholesale fruit delivery service providers.

You think I am going to present to you about wholesale telecoms…

…but I am not! Instead we are going to discuss…

Wholesale fruit delivery

This is the fictional story of…

Eurofruit Fastest! Freshest! Frutiest!

Delivering fruit means having fruit delivery routes!

The Belgians have given over their whole land area to growing wheat and barley…

…so they can produce premium Belgian content that the British desperately want.

Meanwhile the British specialise in growing fresh produce…

…as Belgians can’t get nearly enough fabulously fresh British fruit.

Eurofruit Wholesale engages in the delivery of fruit from the UK to Belgium, contracted by

retail fruit suppliers

We ship Apples from Aberdeen

…and strawberries from Sheffield

Plus bananas from Birmingham, where they grow prolifically alongside the canals

The fruit all gets transported to Felixstowe, the fruit port, by local delivery trucks

That’s where Eurofruit’s wholesale fruit delivery division is initially contracted to onward-ship the fruit…

…taking it to its final destination via contracts with other wholesale and retail fruit delivery networks.

#1 rule of fruit transport

Fungus is forever

Freshness can only be lost; fungus cannot.

Value = Freshness Each type of fruit goes off and loses value at different

rates

Retail market structure

? ?

?

What kinds of end consumers of fruit

are there?

Royalty

Royalty eats succulent fresh fruits, and must never go without, or be old & squishy (let along have fungus).

Regular folk

Regular people get processed fruit products (tarts, cakes), occasional seasonal shortages are

OK. Can be squishy, but no fungus.

Rogues

Rogues ferment their fruit and turn it into hard liquor, they’ll take whatever they can make. Can

have fungus, as long as it’s below toxic levels.

Market maturity level

What was the market like at the very beginning?

Meet the wholesailor

MONDAY

WEDNESDAY

FRIDAY

The contract

Low quantity

Fixed timing

Risk of fungus belongs to the end customer

Very high prices

Customer satisfaction

()


()

Only royalty can afford fruit, and even they can’t rely on its freshness & availability

Eurofruit’s profit?

€ (pretty tiny)


Over time the market matured…

Meet the mariner

Eurofruit invested in new

high-capacity transport

MONDAY

WEDNESDAY

FRIDAY

The contract

Reserved quantity

Fixed timing

Fungus risk still belongs to the customer

High prices

The result?

()

The result?

()

Overheads are being spread over more fruit. High volume means rotten fruit can just be discarded.


€ Same basic business model,

but with much bigger volumes. The fixed allocation of fruit to sailings means the ships are often less than full, and the

fruit rots on the trees and in transport.


The management of Eurofruit wanted to expand…

Meet the merchant

Internal use only Slide

43

The merchant innovates in the business model, by adding fruit shipment aggregation,

warehousing, and palette packing.

The contract

High average daily weight delivered

Variable timing

Risk belongs to customer

Low, low prices


At first, everyone is absolutely delighted with this innovation. The ships are all packed with fruit!


€ Profits grow, as the capital resource is being used more intensively, and fruit

has enough freshness…

But…


As demand increases, the high end of the market is not being serviced, as sometimes all the fruit has fungus


As the best customers lose faith in Eurofruit, only the customers & fruits with high fungus tolerance remain

Crisis! Eurofruit’s board has

to react, so they invest…

More frequent sailings!

Faster cranes to load and offload!


This brings back some of the higher-paying customers and more perishable fruits


(€) However, all this capital expenditure

plunges Eurofruit into a loss


The Board decided to hire outside advice…

Meet the management consultant

wi

#2 rule of fruit transport

Rot is tradeable

Their valuable insight is that by carefully selecting which palettes to put on which ships and when, you could

maintain adequate freshness for more fruit. The rot could be re-allocated to where it did least harm.

The contract

Minimum average daily quantity

Multiple timing levels

Risk belongs to customer

Price to freshness


The ‘fast fruit lanes’ ensured that freshness was kept for the segments who were willing to pay for it


The consultants sure earned their hefty fees!


The Board wanted to optimise this model…

Meet the mathematician

The mathematicians looked at how the whole end-to-end chain of fruit

delivery worked, and where the fungus was found.

They came up with ‘fruit transport agreements’ that told everyone exactly

how fresh the fruit needed to be at every stage of its journey.

They also devised different ‘classes of freshness’, with a special low-cost delivery class for mouldy fruit to satisfy

the Rogue market.

The contract

High quantity

Guaranteed timing

Risk belongs to wholesaler

Priced to value Value-added is in removing rot risk from customers.

We do this by making better ‘rot trades’ (at all timescales)


At last it was possible to sustainably service all of the different fruit market segments (ho ho)

Now, we aren’t really in wholesale fruit delivery

We actually work in wholesale telecoms

Freshness Performance

We’re in the distributed computing performance management business.

#1 rule of data transport

Loss and delay are

conserved

If there are not enough ‘fresh’ packets you get…

Value = Performance

Demand is heterogeneous

2-way video, small cells, gaming

Interactive web, file downloads

Storage Area Networks, CDN pre-caching

Willingness to pay varies

Critical infrastructure, safety-of-life

Low-end consumer

Enterprise SMB SoHo

Performance is determined by

Geography Packet serialisation

Variable contention

SCHEDULING CHOICES

#2 rule of data transport

Networks are resource

trading spaces

Circuits

Broadband

Digital logistics

Supply chain management

Maturity levels

How mature is our industry?

Packet networking is a pretty

immature industry still

Our reality today

() ()

Our reality today

() ()

We have a variety of products that are able to satisfy some of the market needs, often at high cost

Those gaps mean there is an opportunity for growth

By using better scheduling to align supply and demand, we can both

deliver better experiences, and use resources more efficiently

Our opportunity

Our three challenges

Marketing Characterise demand & sell assurance

Design Fit-for-purpose supply chain with trading space

Operations Manage QoE hazard space and exploit trades

Wholesale is the

key to the future of telecoms

Why so?

Only wholesale can… manage the end-to-end

QoE hazards

for all quality needs

Only wholesale can… address the complete

set of market segments for price sensitivity

Only wholesale can… fully exploit statistical

multiplexing by scheduling to get optimum QoE & cost

Thank you

Martin Geddes www.martingeddes.com [email protected]

If it was easy, everyone would already be doing it. If you want to learn more about how to express ‘performance budgets’ and measure, model and manage that digital supply chain, then please do get in touch.

the story of eurofruit: a parable of resources and scheduling

Business

delivery of fruit

fruit port

fruit rots

rotten fruit

type of fruit

fruit delivery routes

fresh british fruit

retail fruit suppliers