Tag Archives: Zaragoza

ZLC, a safe bet

The crisis forces us to establish priorities when deciding what to do with public money. ZLC is one of the most promising bets to achieve economic growth.

Alejandro Serrano – Heraldo de Aragón, Sep 1, 2012| Spain

Original article is aquí (in Spanish)

The years of economic bonanza drew many public and semipublic initiatives to our region geared to incentivizing economic growth in the region. Aramón, walqa, and Motorland are all examples of initiatives of this kind. In the university realm, the existing infrastructure was extended to create new campuses in Huesca and Teruel. Lastly, as a result of an agreed commitment to logistics, given our region’s potential in this industry, we witnessed the creation of PLAZA—with its younger brothers PLHUS and Platea—on the one hand, and the establishment of Zaragoza Logistics Center (ZLC) by  MIT (the world’s leading school of engineering), on the other. Years prior to joining this latter project, I already praised its creation and the commitment shown by the regional government to this project  in this newspaper (April 2004, May 2005).

Source: Heraldo de Aragón

With the advent of the economic crisis, the rules of the game have undergone a profound change. It is no longer about achieving all the goals established at a lower cost, but rather about achieving the greatest number of goals on a restrictive budget. In other words, it has become necessary to establish priorities, because it is impossible to achieve everything, which implies abandoning certain commitments viable in the boom years in order to commit firmly to others. In this regard, it would be disastrous for our region to apply a ‘one size fits all’ economy, attempting to keep all the projects running by reducing the budget of all initiatives, good ones and bad ones, by a similar percentage.

What criteria should be followed to establish which projects should be given priority? Logically, focus should be placed on those projects that are aligned with the strategy of the region, which can be inferred from the electoral program presented by the governing party last year. It stated that Aragón should be a “territory of excellence in teaching”, “achieve an optimal collaboration between companies and University”, “attract international teachers and researchers” and seek excellence “in those areas of knowledge susceptible to becoming niches of excellence comparable with the best in the world”, mentioning logistics as the first example.

In this regard,  Zaragoza Logistics Center has many of the attributes required to be part of the group of initiatives to be focused on. Some examples: The ZLC international masters course has been ranked the best logistics program in Spain in the last two years (El Mundo newspaper ranking). As to collaboration with companies, ZLC worked both with Aragon companies (two consultancy projects currently under way with Saica; seventeen alumni contracted by Transportes Carreras to date, …) and multinationals (the list is long: companies such as Adidas, Amazon, BASF, Caterpillar, Cummins, DHL, P&G or Roche have come to Zaragoza to finance projects or hire students). These brilliant students (from Aragón or from elsewhere) will eventually reach decision-making positions in the multinationals that are now hiring them. And it is then when the investment made will more than yield its return, in the form of job creation, projects or research centers.

The first significant initiative of this kind that comes off shall justify economically the existence of ZLC for more than a hundred years. But we have to give it more time. It is not fair to demand from  ZLC in 10 years of existence something that nobody has demanded from the University of Zaragoza in 450 years. ZLC is still a “start-up” in the academic sector. MIT has just celebrated its 150th birthday. Harvard Business School celebrated its centenary in 2008. Excellence in academia takes its time. It is tempting to forget priorities and focus on short-sighted, short-term projects. But if we really want our region to become a reference for others and not turn it into a piece of land with no hope, we should continue to give our firm commitment to ZLC and other similar initiatives.

To know more about ZLC please follow the link www.zlc.edu.es

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ZLC, una apuesta segura

La crisis obliga a establecer prioridades y a decidir qué hacer con el dinero público. El ZLC supone una de las apuestas con mejores perspectivas para el futuro desarrollo de Aragón

Alejandro Serrano – Heraldo de Aragón, Sep 1, 2012| España

Accede a la noticia de Heraldo de Aragón pulsando aquí

     Read it in English

Los años de bonanza trajeron a nuestra comunidad autónoma multitud de iniciativas públicas o semipúblicas para incentivar el crecimiento económico en la región. Así nacieron por ejemplo Aramón, walqa, o Motorland. En el ámbito universitario se desdobló la infraestructura existente para crear nuevos campus en Huesca y Teruel. Finalmente, en una clara apuesta por la logística, y dado el potencial de nuestra región en este capítulo, se impulsó la creación de PLAZA—con sus hermanos menores PLHUS y Platea—por un lado y del Zaragoza Logistics Center (ZLC) de la mano del MIT (primera escuela de ingeniería del mundo) por otro. Años antes de unirme a este último proyecto ya alabé en este periódico (abril 2004, mayo 2005) la creación del mismo y la apuesta que el gobierno regional había hecho por él.

Fuente: Heraldo de Aragón

Con la llegada de la crisis económica las reglas del juego han cambiado profundamente. Ya no se trata de conseguir todos los objetivos marcados al menor coste, sino de conseguir el mayor número de objetivos dado un presupuesto restrictivo. Es decir, hay que marcar prioridades porque no todo se puede conseguir, lo que implica desechar algunas de las apuestas que podían ser sostenidas en los años de bonanza para apostar decididamente por el resto. En este sentido, sería nefasto para nuestra comunidad aplicar una economía de “café para todos”, tratando de mantener todos los proyectos en marcha reduciendo un porcentaje similar el presupuesto de todas las iniciativas, buenas y malas.

¿Cuál debe ser el criterio para marcar qué proyectos potenciar? Lógicamente es preciso seleccionar aquéllos que estén alineados con la estrategia de la región, que puede inferirse del programa electoral que el partido en el gobierno presentó el año pasado. En él se habla de que Aragón debe ser un “territorio de excelencia en la enseñanza”, “alcanzar la óptima colaboración entre empresas y Universidad”, fomentar “la atracción de docentes e investigadores internacionales” y buscar la excelencia “en aquellas áreas de conocimiento que sean susceptibles de convertirse en nichos de excelencia equiparables a los mejores del mundo”, poniendo como ejemplo de esto último en primer lugar la logística.

En este sentido, el Zaragoza Logistics Center posee muchos de los atributos requeridos para estar dentro del grupo de las iniciativas por las que apostar. Algunos ejemplos: el máster internacional de ZLC ha sido considerado como el mejor programa de logística en España en los dos últimos años (ranking del diario El Mundo). En cuanto a la colaboración con empresas, ZLC trabaja tanto con empresas aragonesas (dos proyectos de consultoría actualmente en marcha con Saica; diecisiete exalumnos contratados por Transportes Carreras hasta la fecha, …) como multinacionales (la lista es larga: empresas como Adidas, Amazon, BASF, Caterpillar, Cummins, DHL, P&G o Roche han venido a Zaragoza a financiar proyectos o a contratar alumnos). Estos alumnos brillantes (aragoneses o no) llegarán con el tiempo a los ámbitos de decisión de las multinacionales que ahora los contratan. Y es entonces cuando retornará con creces la inversión efectuada, en forma de creación de empleo, proyectos o centros de investigación.

La primera de estas iniciativas de calado que cristalice justificará económicamente  la existencia de ZLC durante más de cien años. Pero hay que darle tiempo al tiempo. No se le puede exigir a ZLC en 10 años de existencia lo que por ejemplo no se le ha exigido a la Universidad de Zaragoza en 450. ZLC es todavía una “start-up” en el sector académico. El MIT acaba de cumplir 150 años. La escuela de negocios de Harvard celebró su centenario en 2008. La excelencia en el ámbito universitario toma su tiempo. Es tentador olvidarse de las prioridades y apostar por políticas miopes y cortoplacistas. Pero si de verdad queremos hacer de nuestra comunidad un referente para otras y no convertirla en un solar sin esperanza debemos seguir apostando firmemente por ZLC y otras iniciativas similares.

Para saber más sobre ZLC www.zlc.edu.es

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Bizi-Zaragoza: A Supply Chain View

How to mitigate the “rush hour effect” using Supply Chain Tools

Alejandro Serrano – . Apr 19, 2012 | Spain

Bizi-Zaragoza rents bikes to users who need to ride for short periods of time within the city. Bikes are located in 130+ stations in the city, mainly downtown. To get a bike, a user goes to a station and unlock the desired bike with his or her user card. To return it, he or she has to find a station with an empty slot and identify him or herself again.

Bizi Station. Source: http://www.heraldo.es

The idea is very interesting, and has been proved successful in several cities. The system in place, however, is far from perfect, since users face two major challenges. On the one hand, a user looking for a bike may find the nearest station empty (see black dots in the picture below). On the other hand, a user looking for a slot to leave a bike may find the nearest station full (see purple dots). Furthermore, stations downtown tend to fill quickly in the morning and empty in the afternoon/evening. Good on-line information may be helpful to find a bike or a spot, but still the bottom line is that the typical user my find the service unreliable when his meeting with her boss starts at 9am, and he has to plan for extra 20 minutes of safety time to park his bike so as not to be late.

To mitigate this situation, and according to today’s Heraldo de Aragón(*), a local newspaper, Bizi managers constantly check on-line those stations with no bikes, and send vans with additional bikes to “replenish” those empty stations in no more than 10 minutes. Here is some anecdotal evidence that this may not be the case. The following picture (borrowed from the company web site) shows the map of all stations at 10:02:45 am today. There were 13 empty stations (marked in black in the map), mainly in the periphery.

Ten minutes later, the picture was the following

As it can be observed, 12 of those 13 stations were still empty. Twenty minutes later, there was a new picture.

In this case, 8 of 13 stations were still empty. Thirty minutes later (picture not reported) still 8 of 13 stations were still empty. A similar problem can be observed with full stations (purple dots in the maps).

The question that arises next is how to mitigate this problem. A feasible option is to place stock (i.e. bikes) according to demand patterns to obtain a given service level. For instance, let us say that for the last 50 Mondays, between 7:30 am and 9:00 am, station#77 has observed a demand pattern that can be considered normally distributed, with mean 10 and standard deviation 2 (that implies that roughly 2/3 of the days demand is between 8 and 12 bikes). How many bikes are needed to guarantee an average service level of, say, 99%? The answer is

ROUNDUP(10+2*NORMSINV(0.99),0)=15 bikes

Therefore, rather that being reactive, Bizi managers could be proactive by replenishing inventory at night before users go to work early in the morning. The previous analysis is quite simple and can be easily extended for all stations and for full stations. The good news is that the company should have a lot of data, given that users sign in every time they take or leave a bike. To improve forecasting methods, individual patterns can be studied, since the system knows the ID of the user that takes or leaves a bike.

Finally, there is the problem of devoting workforce to move bikes from one station to the other. A potential solution may be to charge more to those users who do not make “return trips” within a day. If so, users have incentives to return bikes to where they were in the evening, significantly reducing the amount of bikes to be moved at night.

To know more about Supply Chain www.zlc.edu.es

(*) The piece of news is here (in Spanish)

The web page of Bizi Zaragoza is here

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Zaragoza vs Madrid, where to place a Distribution Center in Spain?

Why Zaragoza is a better location than Madrid to place a Distribution Center

Alejandro Serrano

If your firm is looking for a location to place a distribution center in Spain, Madrid looks like a natural choice. It is on the centroid of Spain, and is very well communicated by truck with all the Spanish regions, given the radial structure of the Spanish route network. Indeed, Madrid can be considered as the center of gravity of the Spanish GDP. When compared to Zaragoza, Madrid is closer to the average customer (as weighted by GDP) by 56 km (own calculation).

Source: own calculation

However, average distance should not be the key criterion when making such a decision, total cost  should be used instead. Total cost can be split into three main portions: inbound logistics (from suppliers to the DC,) warehousing (cost of running the DC,) and outbound logistics (from DC to customers.)

As for inbound logistics, the actual cost for each alternative will depend on the transportation mode. If goods come by ship, Zaragoza is closer than Madrid to Bilbao, Barcelona, and Valencia ports, and moving containers to the DC by either truck or train will be in general cheaper. If goods come by truck from Europe, distance to Zaragoza will be shorter by roughly 300 km., what represents about 300 € per truck.

As for outbound logistics, Zaragoza is more expensive as noted, but not that much; 56 additional kilometers may represent around 50 € per truck, according to the CEO of a well-known transportation company in Spain.

Although these two portions may seem important at first sight, they become almost irrelevant when compared to the cost of running the DC. Running a DC implies paying workers payroll and space rental. Salaries in Zaragoza are, on average, 17% cheaper than in Madrid (source: INE 2011); Logistics space in Madrid strongly depends on the distance to the city center (there are up to four rings in Madrid with large price differences,) but specialists who give data of both Madrid and Zaragoza show that the latter is clearly cheaper than the former (by an average of almost 50%)

Considering the cost break-down presented, a basic analysis for a standard DC yields the following graph

Drivers assumed normally distributed with standard deviations being either 10 or 20% of the mean

where it can be noted that Zaragoza is always a better option than Madrid.

Finally, a sensitivity analysis shows that only labor and rent costs are relevant, with the number of workers and rent unit cost being the main drivers, and equally important (both in favor of Zaragoza.)

In sum, cheaper labor and space rental clearly outweighs the longer average distance from Zaragoza to customers, which makes Zaragoza, by and large, a more appropriate location than Madrid area for setting a distribution center.

Learn more about Supply Chain Management at www.zlc.edu.es

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Un colegio inglés internacional

Alejandro Serrano – Heraldo de Aragón, Oct 2011| España

La larga crisis económica en la que continuamos inmersos continúa enviándonos señales sobre qué fórmulas ya no funcionan en nuestra particular búsqueda del crecimiento económico, como prolongar el gasto público en construcción o tratar de atraer inversión extranjera ofreciendo al inversor salarios competitivos. El consenso generalizado es que el nuevo modelo económico debe basarse en la I+D y la innovación. Esto es más fácil de decir que de hacer, y quizá por eso nuestra comunidad no ha tenido demasiado éxito hasta ahora tratando de atraer empresas internacionales en estas áreas.

La verdad es que para atraer a Aragón a los Googles y los Amazons de este mundo (ese, no menos, debe ser el objetivo), es preciso crear las condiciones apropiadas para que las multinacionales decidan venir. Esto incluye un aspecto esencial, y es que los directivos de estas empresas también deben tener los incentivos para venir. Y ahí, admitámoslo, es donde comienzan nuestros problemas. Zaragoza no es Madrid o Barcelona, no tiene las ventajas de una gran metrópolis, y éste es un inconveniente que no puede ignorarse.

Es cierto que se han hecho mejoras significativas en este sentido: Zaragoza está bien comunicada por autovías, podemos llegar por AVE a Madrid o Barcelona en menos de noventa minutos y volar directamente a varias ciudades europeas, aunque sea à la Ryan Air. Además, debido parcialmente a la EXPO 2008, Zaragoza es bonita de ver, está bastante limpia y es una ciudad muy segura.

Pero aún hay mucho camino por recorrer. Cuando las multinacionales deciden dónde poner sus cuartes generales regionales o sus centros de I+D, una de las preguntas clave es si la ciudad candidata tiene un escuela internacional. Una respuesta negativa descalifica inmediatamente la propuesta. Un problema que Zaragoza tiene hoy es que carece de una escuela internacional en inglés. Lo más cercano que existe son los llamados colegios bilingües, pero estos no están bien vistos por las empresas porque los alumnos deben aprender español, que es un requisito que no siempre los padres ejecutivos perciben como deseable. Lo que necesitamos es la versión inglesa (quizá pública, quizá privada) del colegio Molière.

El nuevo colegio crearía además demanda local, dado que un número cada vez mayor de padres se da cuenta de la importancia de que sus hijos hablen un nivel muy alto de inglés, algo todavía inusual en Aragón. Esta demanda local hará la inversión aún más atractiva, pero debemos tener en cuenta que esta escuela debe crearse pensando en el lucro cesante actual, es decir, en el dinero que no está llegando a nuestra región por carecer de ésta.

¿Queremos realmente atraer a las mejores empresas del mundo a Aragón? Entonces pongámosles las cosas fáciles. Los nuevos consejeros de Educación, Tecnología y Economía deben recoger esta iniciativa y ponerla en marcha. ¿Difícil de conseguir? Quizás, pero si la DGA ha decidido contar con un alto cargo irlandés y este periódico ha publicado este artículo también en inglés, significa que algo está cambiando en Aragón, y hay razones para creer en la creación de un colegio internacional en nuestra comunidad, que nos lleve a dar un paso de gigante en la dirección adecuada.

Para saber más sobre cadena de suministro www.zlc.edu.es

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Why Zaragoza needs an international English School

A necessary condition for economic growth

Alejandro Serrano

The long economic crisis we are going through keeps sending signals about what formulas do not work any longer regarding our particular quest for growth, such as prolonging government expenses on construction or attracting foreign direct investment based on lower wages. The consensus of opinion is that our new economic model should be grounded on R&D and innovation. Easier said than done, and thus it is that our community has kept struggling trying to attract international companies on these areas.

The truth of the matter is that drawing the Googles and the Amazons of the world to Aragon (that, and not less, should be the goal) requires creating the appropriate environment for companies to come. A key issue, which can make or break a deal, is that the executives working for those firms should also have the appropriate incentives to live in our region. And, let us admit it, here it is where our challenges start. Zaragoza is not Madrid or Barcelona; it has not the advantages of large metropolis, and this is a major drawback that cannot be ignored.

It is true that some significant improvements in this regard have been made: today we can drive almost everywhere from Zaragoza along highways, reach Barcelona or Madrid by AVE in less than ninety minutes, and fly directly to some of the large European cities, even if it is à la RyanAir. Furthermore, and partially due to the International Exposition of 2008, these days Zaragoza looks very nice, is quite clean, and happens to be extremely safe.

But there are still some gaps to fill. When corporations make decisions about where to place regional headquarters or R&D centers, one of the key questions to ask is whether the city under scrutiny has an international school or not. Only if the answer is in the affirmative may the city remain on the short list. As of today, a major issue is that Zaragoza does not have a true English international school. The closest we have is what we call bilingual schools, but these are assessed as inadequate by companies, because children are required to know or learn Spanish, a requisite which, admittedly, is not always perceived as desirable or even feasible by their parents. What we need is the English version (maybe public, maybe private) of the Aragonese Molière School.

Such a new school will also create local demand, since an increasing number of parents are aware of how important it is for their children to speak fluent English, an oddity still today in Aragon. This local demand will make the investment even more attractive, but we should keep in mind that the focus has to be on the current opportunity cost, i.e., on recovering the huge amount of money that is left today on the table for not having such a school in the region.

Do we really want to attract top-notch companies to Aragon? If so, then let us pave the path for them to come. The new consejeros of Education, Technology, and Economy should pick up the baton and move this initiative forward. Difficult to achieve? Maybe, but if an Irishman can become an official at the DGA and this newspaper can publish this article in English, it means that something is changing in Aragon, thus there is some hope that an international school becomes a reality and our autonomous region be moved to the next level.

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