The purpose of this work is to develop a framework for Smart Logistics Systems (SLS). The framework aims at increased precision, reliability and efficiency in transportation execution by improving information exchange and capability of data retrieval from RFID tagged goods and load units. The framework is developed from a requirement analysis based on empirical data collection within a complete logistics setup involving 13 different companies. The work is a part of a large research project aiming at developing a high-end solution for logistics management. The results of the study reveal needs for increased sophistication in collaboration between different partners as the identified problems are mainly due to poor information exchange and lack of process synchronization between the parties.
Keywords: Smart freight, Logistics, Information system, Information technology, RFID
In quest for higher efficiency in supply chains, new business models are increasingly applied based on outsourcing of manufacturing and services where manufacturer outsource component production and obtain various logistics services from Logistics Service Providers (LSPs). The LSPs in turn frequently outsource warehouse operations and transportation services to carriers. By employing such complex business models, a need for more customized logistics solutions increases and a need for more efficient execution arise. Efficient execution relies on better planning which in turn calls for better information and by that better monitoring and controlling of transportation. The complex services that are given and the problems of data exchange makes execution of value added services difficult. To be able to solve some of the shortcomings in today’s logistics setups, a framework for Smart Logistics Systems (SLS) has been developed in this work. The backbone of this framework is the need for increased information accessibility and capability to retrieve data and information on site which opens up opportunities for local decision making addressing the main operations of any LSP.
To design the SLS framework, a scenario of transportation and logistics setup has been developed out of identified user requirements. Based on this scenario, the potential of a SLS setup has been identified from in-dept interviews with the involved LSPs including different mode operators and shippers of the goods in question. The future concept, that is to be developed out of the SLS framework, includes a high-end system solution that includes different state-of-the-art components such as: identification system based on Radio Frequency Identification (RFID) technology, on-board vehicles information system that enables data and information execution, embedded computer system that is integrated with many of the vehicle functions, communication system based on several of the existing telecommunication solutions to secure data exchange and distributed decision making.
The result of this work is a design of a framework for the SLS concept that has several benefits beyond traditional transportation and logistics management concepts. This SLS framework enables local decision making as much of the information is available at site in the RFID tags that can interact with the local information system, warehouse management system, and similar. This will allow effective decision making although access to central databases is not available. Hence, the concept will support extended logistics services and can ensure a proper execution of typical LSPs operations.
2. Literature framework for Smart Logistics Systems
Logistics management encompasses management of activities involved in sourcing and procurement, conversion and distribution activities (Christopher, 1998; CSCMP, 2006; Lambert, et al., 1998). It also includes coordination and collaboration with channel partners that can be suppliers, intermediaries, third-party service providers, and customers (Bagchi and Virum, 1998; Sink, 1997). The framework for the SLS involves description of these parties, technologies that are utilized and information setups that are needed to get the whole system to work as well as interoperability to ensure successful data exchange.
2.1Collaborative logistics management
The roles of third-party service providers of all kinds varies according to the level and type of outsourcing, from only transportation services to complete integrated-logistics value-added services and global management of the customers’ logistical setups (Cooper, 1994; Delfmann, et al., 2002; Langley, et al., 1999; Lieb and Randall, 1996; Sink, et al., 1996). The collaboration of the different parties; a Carrier, a Logistics Service Provider (LSP), and a Logistics Service Intermediary (LSI) can be pictured in a three-stage model as shown in Figure 1.
Please insert Figure 1 here
Carriers, ferry and rail operators and transport operators alike mainly perform haulage of products from one point to another (McFarlane and Sheffi, 2003; Sink, et al., 1996). Road carriers, in a multi-stop network setup, haul full truckloads or less than truckloads with many stops throughout a predetermined route. Transport operators can provide a transshipment function in transportation setups where load units are shifted from one transport mode to another. Larger carriers can even run cross-docking terminals where load units, pallets or similar, are shifted from one truck lane to another.
Logistics Service Providers (LSPs) provided diverse services in addition to transportation services. These are cross-docking at terminals or consolidation services at distribution centers, storage or integrated-logistics, value-added services at warehouses and distribution centers (Cooper, 1994; Delfmann, et al., 2002; Langley, et al., 1999; Lieb and Randall, 1996; McFarlane and Sheffi, 2003; Sink, et al., 1996) These services enable the producers and the distributors to outsource distribution activities, if desired; keep stock in a warehouse or distribution center, perform value-added services before delivery, and finally transport the goods to the shippers’ customers.
The operations of Logistics Service Intermediaries (LSIs) are often highly customized and spans the administrative activities that need to be carried out such as design the distribution setup, find the right contractors, carriers or LSPs, to implement the setup and they operate the logistics setup by using the chosen contractors. (Cooper, 1994; Delfmann, et al., 2002; McFarlane and Sheffi, 2003; Sink, et al., 1996; Skjoett-Larsen, et al., 2003)
The interfaces between the parties (indicated by dotted lines in Figure 1 need to be defined for all logistics setup. The definition must not only deal with processes, activities and technologies that are to be used, but also the content of the messages sent between (Stefansson, 2006).
Nobel prize awarded Akerlof pointed out the disadvantage for different parties, when facing asymmetric information of traded goods (Akerlof, 1970). The importance of information exchange in customer-supplier relations (Closs, et al., 2005; Lamming, et al., 2001; Lee, et al., 1997b and 1997a; Narasimhan and Kim, 2001) as well as in the distribution setup (Alshawi, 2001; Landers, et al., 1999; Stefansson, 2004; Walker, et al., 1996; Kanflo, 1999) has been amply researched.
The availability of information and its quality, determines the performance of operations planning (Ross, 1996; Tilanus, 1997). Timely accurate and adequate information in the distribution setup is a prerequisite to perform JIT (Just-In-Time) or JIS (Just-In-Sequence) deliveries (Kanflo, 1999). As the logistics flow becomes increasingly complex, it becomes harder to manage the assets. Track and trace systems, where the logistics operator shares status and location information of the goods transported, is no longer a competitive advantage, but is requested as a real-time service by customers (Holmqvist and Stefansson, 2007) and is a necessity for logistics providers wanting to be globally competitive (Trappey, et al., 2004). This development has pushed for the use of modern information and communication technology.
2.3Technology for supporting information sharing
The ability to link and to effectively monitor, in real or near real-time, disparate remote assets and devices of all kinds, from inventory in-transit to sensor devices out on remote grids, is on the horizon and achievable in the short-run. This ability will flow from the following developments (Boyson and Corsi, 2002; Power, 2005; Karimi and Martinsson, 2006; Linthicum, 2004):
Spread of protocols for pervasive device intercommunication and networking, such as Jini and Bluetooth, that enable a device to register itself on a network and update its location and systems status in real time
Advances in Internet technologies and software, including spreading of standards for industry-wide transactions processing, such as different XML formats
Rise of new, integrated operating platforms for electronic processes
Rise of more reliable and RFID tags, Internet (I)-buttons and other field sensors.
Rise of technologies enabling geographic positioning, such as GPS
Unlike barcode-based tracking systems, an RFID system can read the information on multiple tags without necessarily requiring line of sight and without the need for a particular orientation. That means RFID systems can be largely automated, greatly reducing the need for manual scanning and automatically transfer information such as information on transports and goods. In addition, RFID tags can hold extensive amounts of data. RFID tags can be used for identification of objects in different hierarchies. A sample hierarchy of objects is shown in Figure 2.
Insert Figure 2 here
The tags can be programmed to hold information such as an item’s serial number, colour, size, manufacture date and current price as well as a list of all distribution points the item touched before arriving to the customer (Lumsden and Karimibabak, 2005). Mobile devices are increasingly used throughout supply chains to support logistics operations (Alshawi, 2001; Hultkrantz and Lumsden, 2001).
Radio Frequency Identification has been the subject of a growing interest in recent years, partly because the technology makes it feasible to link the necessary information directly to the objects. The use of RFID in the supply chain has the potential to provide real benefits in inventory management, asset visibility, and interoperability in an end-to-end integrated environment (Lamming, et al., 2000; Holmström and Främling, 2006; Singer, 2003; Twist, 2005; Vaughan, 2003) According to Accenture (Boushka, et al., 2002) the primary benefits of adopting RFID within the freight transportation will come from three key areas, asset utilization, operational efficiency, safety and security. They see also when the critical mass is reached in a supply chain the freight transportation companies will obtain benefits in the areas of, quality control, financial management and improved profitability. The benefits can be summarized as shown in Figure 3.
Please Insert Figure 3 here
The business benefits of these rising technologies outlined in the previous section, can only be achieved when properly integrated into the information systems of the operators in the supply chain, to support business processes (Linthicum, 2004). Information systems that use tracking technologies enable information for dynamical scheduling, full visibility and optimal decision support (Lee and Whang, 2001; Lee and Özer, 2005). Freight transportation companies, deal with many vehicles, containers and assets and many of these are replaced due to damage or loss. One of the strongest factors affecting resource utilization is the capability to coordinate the usage of existing resources: people, equipment and facilities. Suitable information technology, which includes administration systems with planning modules and proper communication technology that transfer the information efficiently between different parties, both stationary and mobile is necessary (Stefansson, 1998; Lasschuit and Thijssen, 2004; Lee and Whang, 2001). The adaptation of RFID tags will help to identify where in the chain these vehicles and containers are being held or lost, providing better control over the significant recurring cost (Karimi and Martinsson, 2006). With GPS (Global Positioning System), control of the geographical location of the assets and dynamic fleet management is enabled. By tagging the vehicles and containers with RFID tags with unique product codes and integrate them into the operators information system, the possibility is given to identify and track these throughout the shipment cycle, through multiple facilities and vehicles. The tagging of items will give the transportation companies the opportunity to maximize the fleet utilization and also be able to monitor the use of assets over time (Karimi and Martinsson, 2006).
2.5Decentralized information setup
A central concept in the literature on smart freight is the decentralized decision making concept (Lumsden and Stefansson, 2007), which means that information follows the freight, rather then being centrally stored in one database. The main characteristic of the decentralized concept is that the freight will carry its own information tags and the different parts that belong to the SC will have access to the relevant information by retrieving information from these tags. The introduction of this system has potential to reduce the actual mismatch between material and information flow. One of the advantages to move to a decentralized system is that many vertical transactions between a central system and the moving object will be avoided and this will contribute to the synchronization of material and information flow. The decentralized concept is shown in Figure 4.
Please insert Figure 4 here In order to achieve the decentralized information setup, it is necessary that each level stores an amount of information proportional to its capacity. A three level hierarchical model has been developed for thee decentralized information setup.
In order to achieve a decentralized system it is necessary that each level store an amount of information proportional to its capacity. The different levels are shown in Figure 5.
Insert Figure 5 here The information levels have different characteristics as given below:
Information at a label level (First level)
First level (information at a label level) will be formed by the lower unit of freight, as for example one item or one IBC-container. The information stored in each item will be related with the production characteristics. In other words, place, date, time of the production and other details about the item will be contained and therefore, it will be easy to track any anomaly that appears in the item.
Information at a freight level (Second level)
Second level (information at a freight level) will be necessary to store more details about the freight because it will contain several items. What is more, cartons, boxes and pallets will form this second level, but for some kind of products also containers could be included in this list. First of all, it should include information about the number of IBC-containers and size of the cases (in different units if possible). It would also be interesting to store a weight marking that permits the content of the pallet, box, etc. to be verified. Other interesting information to store at this level will be the following destination, labels for hazardous materials, cautionary information, country of origin, etc.
Information at a resource level (Third level)
Third level (information at a resource level) is the last level that would be composed for containers and resources. As for the information related to this level, it will be like the one stored in freight documents, such as consignment notes, address of shipper and seller, invoices, delivery terms, loading instructions etc. Other useful information will be an insurance certificate, an inspection certification, and an export license (for exporting freight).
Smart freight, smart goods and intelligent goods are used interchangeably in the literature and are partly synonyms. The concept of Smart freight was introduced by Lumsden and Stefansson (2007).Lumsden and Stefansson suggest the following capabilities of smart freight:
process a unique identity;
is capable of communicating effectively with its environment;
can retain or store some data about itself;
deploys a language to display its features, production requirements, etc.;
is capable of support local decisions making.
Assuming that the consignee has implemented a dock-door reader infrastructure, the readers will capture the information embedded in the tag of the products being delivered, providing an automated record of inventory delivery, and enabling a quicker turnaround of the delivery vehicle. Faster pickup and delivery times will also be beneficial for vehicles waiting to be processed, the docks are more utilized which reduces the drivers waiting which results in a better vehicle utilization. Due to this the delivering capacity can be increased with existing assets and personnel or that the same volume can be handled with fewer resources (Karimi and Martinsson, 2006).
Preparation of this paper involved a literature study and collection of empirical data through a single-case study. The literature study uses secondary sources such as books, Internet and scientific articles within the areas of logistics and distribution, information science and transportation planning. The case study is a single-case study with a complete transportation setup involving in total 13 different parties that are a part of a scenario that is used in a Swedish research project named CASSANDRA. Participant in the project are, among others, logistics service providers and technology providers that have made possible in-dept interviews, review of documents and access to facilities for direct observations. A part of the observation was to follow the goods and the containers through the transportation chain, from supplier to customer, and back to supplier.
Single-case studies are not suited for generalization purposes (Yin, 1994). However, their richness of data lends themselves well for the inductive process of theory building. It is precisely this ‘intimate connection with empirical reality that permits the development of a testable, relevant, and valid theory’ (Eisenhardt, 1989). The purpose of the case study has been to understand the involved logistics setup and the needs and requirements of all involved parties. The scenario and the straightforward access to all involved parties have given the authors exceptional opportunity to investigate the processes, activities, technologies, and information exchange. Consequently, a rich description of the units of analysis has been achievable and thereby a platform for generating a model of smart logistics setup has been set.
4. The empirical study
The case includes a transportation setup where a washer fluid is transported from a supplier outside Gothenburg in Sweden to a receiver in Gent, Belgium. The fluid is stored in designated bottles, so called IBC-containers, and run in a closed loop between Sweden and Belgium forth and back.
4.1Description of the supply chain participants´ involvement
The transport setup involves 13 main actors, but more are involved as the specific trailer operator can vary from time to time and in addition are involved in several steps of the chain. The goods and empty IBC-containers flow is illustrated in the Figure 6.
Please insert Figure 6 here
The physical flow begins at that the supplier of the washer fluid in Sweden. There the fluid is produced and bottled into bottle containers before the distribution begins to an automotive plant in Belgium. Each IBC- container can be filled with 1000 litres of washer fluid liquid. The supplier prepares the freight documents before the washer fluid liquid is picked up by a carrier and transported to the terminal of the LSP, situated close to the Gothenburg harbor.
When the carrier has arrived to the LSPs terminal it awaits entrance granting. After the documents have been handed over and processed, an entrance is granted and the arriving goods is unloaded. The truck driver waits for return IBC-containers and leaves the terminal after they have been loaded onto the truck.
The unloaded goods is loaded onto trailers and registered in the LSPs logistics information system. A list of trailers departing to Belgium is prepared and sent to the Gothenburg port operator and to the ferry operator. Freight documents are sent with express courier to a Belgian office of the LSP (that operator is only involved in the information flow, not in the physical flow). A second carrier pulls the trailers from the LSPs terminal to the port of Gothenburg which is near.
Port and ferry staffs now prepare a loading plan for the ferry. The ferry route is Sweden-Belgium-Norway-Sweden, hence the loading plan has to take into account that no trailers are loaded and unloaded twice, due to the different destinations. The Belgian office of the LSP prepares the freight documents of the trailers arriving from Sweden and forwards to the Belgian port authorities.
The RoRo-ferry is now loaded with trailer heading to Belgium and the ferry departs from Gothenburg, Sweden, to Gent, Belgium.
Trailer pullers picks up the trailers unloaded from the RoRo-ferry and pulls them to the manufacturing facility of the customer. The customer unloads the bottle containers. Empty IBC-containers material is then fetched from the production site and loaded onto the trailers. The trailers are pulled to a Warehouse operator that consolidates the bottles and other IBC-containers material into a single shipment and loads onto trailers that are pulled to the Belgian port. The trailers are loaded onto the RoRo-ferry and transported back to Port of Gothenburg.
The trailers are unloaded and transported to the LSPs terminal close to the harbour and finally transported back to the manufacturer facility.
4.2Information availability in the distribution setup
Different information is needed to operate the logistics and transportation setup. Table 1 shows the available information that is necessary and available for the logistics and transportation execution.
Insert Table 1 here Information and data is mainly accessible in paper documents and data from documents is manually entered into the information systems in all instances of the studied distribution setup. Only information in documents was considered reliable by the interviewed companies, due to the high error frequency in the manual data entering. In the LSPs Belgium terminal, 3 people in each shift performs the unloading – 2 forklift drivers unload the goods from the trailers and 1 terminal worker compares documents to the goods that is unloaded, which is necessary due to the high error frequency. Freight documents are sent from the LSPs terminal in Sweden with express courier to the Belgian arrivals administration department, in order for them to manually check for errors. Special goods (e.g. dangerous or sensitive) required several additional phone calls, emails and faxes when handled.
5. Framework for Smart Logistics Systems
To be able to develop the framework for the SLS setup, the requirements from the case study have to be analyzed. Below the main problems, needs and requirements, as well as the proposed framework are discussed.
5.1Needs and requirements
Interoperability is a major problem in the studied logistics setup. The information systems are not exchanging data and information is manually keyed in. This results in poor information quality, partly because the information is wrongly or not completely keyed in and partly because the information is not available when needed.
The ferry operator experienced problems with security, since they had no real-time control over dangerous goods, neither were they able of creating a fully optimized loading plan, since system did not support individual trailer loading, but rather grouped trailers together in load groups.
The LSP faced problems in providing the customers with adequate information on deviations and changes in schedule, due to the low visibility on goods movements in the transport setup. This is the results of missing real-time exception information from the carriers and the ferry operator.
The information flow has been analyzed and Table 1 in Chapter 4 above has been developed further. In addition to describing the main information flows and accessible information, description of the missing and not adequate information is shown.
Please insert Table 2 here Information in a column “Available” means that the operator has the information necessary to carry out his operations in an efficient way. On the other hand, “Not adequate” indicates the information is either not timely available, not complete or has a quality problem and needs manual verification. Finally, “Not available” means that the operators have no access to the information or needs a lot of work to contact some other partners to receive the information.
The studied case revealed that both adequate and timely information was to a large extent not available to the actors. The supplier faced problems due to inadequate information on the status of IBC-containers. Sometimes damaged IBC-containers arrived that were planned for immediate use. This situation causes production time loss at the supplier’s site. Carriers did not have access to information on departure times from the terminals and were thereby unable to do a proper planning of their routes. The LSPs could not convey proper arrival and departure times for the carriers due to missing information on location of return IBC-containers and no or inadequate information on arriving volumes being handled, hence unable of planning the correct number of fork lift drivers in operation in the terminal.
5.2The proposed framework
To be able to solve some of the identified problems, a framework for SLS will be put forward below. The framework consists of attributes that have been developed by studying literature and analysing empirical data from the involved case study.
Collaborative logistics arrangement between the partners is a starting point for the transportation setup. Contracts have to be made that identifies the mutual processes that are carried out, the technology for data exchange must be agreed up on and the data content or messages must be commonly determined. Standards for RFID tags have to be established for increased interoperability, not only in reading frequency and such but on data contents. The case study revealed a lot of situations where information was missing, mainly due to lack of agreement on that specific information exchange.
Information sharing between partners must be extended to not only allowing data and information to be exchanged by common data server or message exchange but to include more data and information in RFID tags that follow the goods throughout the journey. As mention earlier, data exchange, except between the supplier and the final consumer, was troublesome and involved a lot of paper document exchange and manual key-in of information to be able to process in dedicated information systems.
Technology for supporting information sharing needs to take into consideration interoperability and each participants´ capability to operate the specific technology. The RFID tags needs to be defined so they can be read and written into throughout the transportation setup without any difficulty. The absent of technology for data sharing as shown from the case study supports the value of this part of the framework. The bar codes used are not sufficient as they are not used anyway for goods identification nor validation of goods specifications.
Information systems are used to different extent in logistics and transportation setups. For execution of various activities, planning and monitoring systems need to be in place and be able to give support for decision making in various instances in the supply chain. Any exceptions and deviations from schedule have to be notified to other partners in the chain to allow for changes. The lack of information on deviation in the case study shows that the value of this issue is high, missing IBC-containers or lack on information about the status, both location and even if need for maintenance has occurred, could have serious effects on the flow.
Decentralized information setup does facilitate local decision making as more information needs to follow the goods, either in labels (information on first level), or on second level (information on freight level). The infrastructure has then to be equipped with facilitators that can read the data and have preprogrammed logic that gives opportunity to support decision making on site (information on third level). The situation where the ferry operator had difficulties generating loading plan shows the importance of local decision making and the benefits of decentralized information setup.
Smart freight is finally the key for storing data and information at either first or second level and by that allows data and information to follow the goods on its way to final destination. This makes the decentralization of information possible, sufficient data to be recalled from the goods or the load unit for storage in local information systems for processing and verification, and finally sharing of data without access to central databases.
6. Implications and conclusions
A growing number of participants in outsourced logistics operations has led to increasingly complex distribution setups with augmented information flow of both paper documents and electronic messages. This development calls for a framework that move forward more efficient data and information exchange and better visibility of freight movements and involved activates. The Smart Logistics System´s framework proposes numbers of attributes that have to be specified to be able to increase precision, reliability and efficiency in transportation execution. The framework mainly deals with advanced information technology but even takes into consideration existence of robust collaborative logistics model to support contracting and negotiation between partners in a supply chain setup.
The SLS framework suggests improving information accessibility and capability of data retrieval from RFID tagged goods and load units. To enable such data retrieval, the RFID tags need to carry extensive data that allows each partner in a distribution setup to share data that is relevant for each decision that has to be made. This concept allows local decision making as a complement to centralized planning and decision making. Therefore, the decision process will not be as dependent on access to central data and information revival as it is in most logistics management setups.
To make such a framework possible, a new infrastructure for data communication must be implemented, not only in warehouses and terminals, but even in vehicles that transport the goods. The vehicles and the goods or the load units have to be equipped with communication technologies that indicate position and status of the goods and vehicle. Such technology enables supply chain operators to react on deviations from schedules and change their plans in accordance to the new situations. The technology implementation does not come free of charge but cost savings in form of more efficient transportation execution, capability to react upon delays and exceptions, increase in resource utilization due to more reliable operations and many more factors will compensate somewhat for high costs of implementation. Other issues of relevance are possibilities to increase customer service as well as safety and security as in this case where dangerous goods is involved.
The framework for the SLS has been developed from requirement analysis, examination of available technologies and relevant discussion from the literature. The setup has been tested in a small pilot and demonstration study and revealed great potential for better logistics management. Direct measurements of efficiency was not done but information availability for both vehicle operators as well as LSP increased, loading and unloading process was much more secure as good was identified during the process, and navigation and exception management became easier. The framework will be developed further and tested in a demonstration environment in the near future. The necessary technologies and information systems are to be implemented and adapted to the suggested framework and tested with the case that has been described in this work. The aim of the demonstration and the work in its whole is that the concept of SLS will move forward efficiency in operations of distribution setups and increase the sophistication of logistics management.
The empirical evidences in this work have been collected in a project financed by the Swedish Foundation for Innovation, Vinnova. The authors are grateful for the support from Vinnova and the collaboration with our partners in the project; Volvo Technology, Volvo Logistics, and Ericsson Microwave Systems. In addition we would like to thank the involved case study companies, especially Volvo Logistics, Volvo Car Corporation and DFDS Tor-Line as well as the carriers and other involved operators.
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Figure 1 The Collaborative Logistics Management model (Source: Stefansson, 2006)
Figure 2: Hierarchies of identified objects (Source: Transportation, 2005)
Figure 3: RFID benefits to freight companies (Source: Boushka, et al., 2002)
Figure 4. Decentralized information and decision making concept
(Source: Lumsden and Stefansson, 2007)
Figure 5 Decentralized information levels (Source:(Lumsden and Stefansson, 2007)
Figure 6: The physical goods flow and empty IBC-containers return flow setup
Table 1: The available information for each operator
Table 2: The information needed by the different parties in order to prevent execution hurdles