Editor’s Note: Today’s blog is from Connie Benton who discusses the state of supply chain logistics and how they keep the lights on in Las Vegas.
Las Vegas location isn’t exactly conducive to building a city. The Mojave Desert is in one of the hottest, driest and least humid places in all of the US. That means that the logistics of this city of dreams can be an absolute nightmare.
This is particularly true since as a place of excess it uses more energy and water per capita than most than most other places. Take energy. The city’s industrial consumption of electricity is almost twice what other cities use. The worst culprits by far in this regard are the 40 casinos. Together they consume 20% of the city’s energy consumption. And that’s just one problem. Others include water, food, transportations and so on.
Why is There a Supply Chain into the Mojave Desert?
Before we start asking how Las Vegas keeps the lights on, the ice machines working and the buffets filled, it’s enlightening to know why there are lights, ice machines and buffets in the first place.
Las Vegas started down its current path when it began to cater to the men who were sent in to build what is today known as the Hoover Dam. These young men wanted company and entertainment. The city saw profit in getting that for them.
Once the dam was completed, the men went but the cheap electricity came. This, along with recent legislation that legalized gambling, laid the foundation for a city in the desert.
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Of course, as the city grows the demands get greater. Reports state the city on its own already uses 15% of the dam’s output and that it won’t be enough in the future. The city has some solar plants but needs dozens more according to some.
The rest of its needs are met with natural gas. This has a lower environmental impact than coal or oil but still does not (as some belief) Las Vegas is green and full many a safe casino. That looks to be a problem – especially as environmental concerns move toward center stage.
Similar problems exist in terms of other resources. Opposite these problems stand two advantages which from the city’s counterweight and keep the city’s supply chain humming along.
The Two Advantages
The first advantage is the incredible profitability of each Las Vegas’ casino, with reports stating that each casino pulls in about 630,000 dollars a day. That’s enough to absorb the high supply chain costs and still turn a profit.
The other advantage is the nature of the casino industry. Their consumption is predictable, has limited peaks and dales and – as a final bonus – is more oriented towards the night time, when most other businesses are closed and consumption costs (at least for electricity) are notably lower.
The Nature of Las Vegas’ Supply Chain Logistics
Las Vegas’ economy is mainly service-oriented. This includes a group of key stakeholders, including casino service delivery, environmental construction and maintenance, and equipment and technology.
- Service providers: Las Vegas employs a lot of people including card dealers, chefs, entertainers, cleaners, busboys, security and more. As a happy customer spends more, these people need to be top notch. There is also a lot of turnovers. So, service companies who do the recruiting have networks across the whole country.
- Construction and maintenance: Las Vegas casinos are all about their flashy lights, decors, and comfort. And so, everything to do with these elements forms another big part of the logistics chain. Unlike, say, if they were running online slot machines, these are labor intensive to build and high maintenance. All of which brings with it a significant flow of staff and materials.
- Equipment and technology: In modern casinos, you can’t gamble without the machines to do so. And as this is the main way these casinos make their money, this is another area where a great deal of effort and money is invested. This ranges from the machines on which punters gamble to the software which identifies card counters and cheats.
Streamlining Supply Chain Logistics to Reduce Overhead
With the growth of casino incomes limited over the last decade, the main way Las Vegas has been increased its income is by reducing leakage and overhead. In terms of supply chain logistics, this amounts to making things run more effectively at lower costs.
This amounts to embracing such innovations as just in time (JiT) and the Internet of Things (IoT). Both of these are vital in an environment like Las Vegas. JiT food delivery means less money has to be spent on storage and refrigeration. The IoT, in the meantime, helps track the needs and wants of every aspect of the casino. This includes inventory, maintenance schedules, individual gambling tables, staff effectiveness and so on.
Throw on top a layer of computer-driven analysis to watch out for bottlenecks, cash flow and cheats and it is easy to see how the current technological revolution is helping casinos boost their effectiveness and reduce overhead.
Will all this be enough to keep the lights on? It seems likely. After all, opposite the hostility of the desert stands the same powerful motivator that originally built the city – substantial profits. And that can overcome some impressive obstacles.