The radio frequency identification technology in the supply chain management: a case of a big logistics company

Nowadays global business trends force the adoption of innovative ICTs into the supply chain management (SCM). Particularly, the RFID technology is on high demand among SCM professionals due to its business advantages such as improving of accuracy and veloc-ity of SCM processes which lead to decrease of operational costs. Nevertheless, a question of the RFID technology impact on the efficiency of warehouse processes in the SCM re-mains open. The goal of the present study is to experiment the possibility of improvement order picking velocity in a warehouse of a big logistics company with the use of the RFID technology. In order to achieve this goal the following objectives have been developed: 1) Defining the scope of the RFID technology applications in the SCM; 2) Justification of the RFID technology impact on the SCM processes; 3) Defining a place of the warehouse order picking process in the SCM; 4) Identification and systematization of existing meth-ods of order picking velocity improvement; 5) Choosing of the study object and gathering of the empirical data about number of orders, number of hours spent per each order line daily during 5 months; 6) Processing and analysis of the empirical data; 7) Conclusion about the impact of the RFID technology on the speed of order picking process. As a result of the research it has been found that the speed of the order picking processes has not been changed as time has gone after the RFID adoption. It has been concluded that in order to achieve a positive effect in the speed of order picking process with the use of the RFID technology it is necessary to simultaneously implement changes in logistics and organizational management in 3PL logistics companies. Practical recommendations have been forwarded to the management of the company for further investigation and procedure.

Value of Information Logistics Integration in Digital Business Ecosystem

Digital business ecosystems (DBE) are becoming an increasingly popular concept for modelling and building distributed systems in heterogeneous, decentralized and open environments. Information- and communication technology (ICT) enabled business solutions have created an opportunity for automated business relations and transactions. The deployment of ICT in business-to-business (B2B) integration seeks to improve competitiveness by establishing real-time information and offering better information visibility to business ecosystem actors. The products, components and raw material flows in supply chains are traditionally studied in logistics research. In this study, we expand the research to cover the processes parallel to the service and information flows as information logistics integration. In this thesis, we show how better integration and automation of information flows enhance the speed of processes and, thus, provide cost savings and other benefits for organizations. Investments in DBE are intended to add value through business automation and are key decisions in building up information logistics integration. Business solutions that build on automation are important sources of value in networks that promote and support business relations and transactions. Value is created through improved productivity and effectiveness when new, more efficient collaboration methods are discovered and integrated into DBE. Organizations, business networks and collaborations, even with competitors, form DBE in which information logistics integration has a significant role as a value driver. However, traditional economic and computing theories do not focus on digital business ecosystems as a separate form of organization, and they do not provide conceptual frameworks that can be used to explore digital business ecosystems as value drivers—combined internal management and external coordination mechanisms for information logistics integration are not the current practice of a company’s strategic process. In this thesis, we have developed and tested a framework to explore the digital business ecosystems developed and a coordination model for digital business ecosystem integration; moreover, we have analysed the value of information logistics integration. The research is based on a case study and on mixed methods, in which we use the Delphi method and Internetbased tools for idea generation and development. We conducted many interviews with key experts, which we recoded, transcribed and coded to find success factors. Qualitative analyses were based on a Monte Carlo simulation, which sought cost savings, and Real Option Valuation, which sought an optimal investment program for the ecosystem level. This study provides valuable knowledge regarding information logistics integration by utilizing a suitable business process information model for collaboration. An information model is based on the business process scenarios and on detailed transactions for the mapping and automation of product, service and information flows. The research results illustrate the current cap of understanding information logistics integration in a digital business ecosystem. Based on success factors, we were able to illustrate how specific coordination mechanisms related to network management and orchestration could be designed. We also pointed out the potential of information logistics integration in value creation. With the help of global standardization experts, we utilized the design of the core information model for B2B integration. We built this quantitative analysis by using the Monte Carlo-based simulation model and the Real Option Value model. This research covers relevant new research disciplines, such as information logistics integration and digital business ecosystems, in which the current literature needs to be improved. This research was executed by high-level experts and managers responsible for global business network B2B integration. However, the research was dominated by one industry domain, and therefore a more comprehensive exploration should be undertaken to cover a larger population of business sectors. Based on this research, the new quantitative survey could provide new possibilities to examine information logistics integration in digital business ecosystems. The value activities indicate that further studies should continue, especially with regard to the collaboration issues on integration, focusing on a user-centric approach. We should better understand how real-time information supports customer value creation by imbedding the information into the lifetime value of products and services. The aim of this research was to build competitive advantage through B2B integration to support a real-time economy. For practitioners, this research created several tools and concepts to improve value activities, information logistics integration design and management and orchestration models. Based on the results, the companies were able to better understand the formulation of the digital business ecosystem and the importance of joint efforts in collaboration. However, the challenge of incorporating this new knowledge into strategic processes in a multi-stakeholder environment remains. This challenge has been noted, and new projects have been established in pursuit of a real-time economy.

Logistics Cost Optimization of Road Freight Shipments in a Consumer Goods Company

In the industry of the case company, transportation and warehousing costs account for more than 10% of the total cost which is more than on average. A Finnish company has an understanding that by sending larger shipments in parcels, they could save tens of thousands of euros annually in freight costs in Finland’s domestic shipments. To achieve these savings and optimize total logistics cost, company’s interest is to find out which is the cost efficient way of shipping road shipments of certain volumes; in parcel boxes or on pallets, and what should be the split volume determining the shipment type. Distribution center (DC) costs affect this decision and therefore they need to be also evaluated to determine the total logistics cost savings. Main results were achieved by executing activity-based costing-calculations including DC and road freight costs to determine the ideal split volume with which the total logistics cost is optimal. Calculations were done for Finland’s DC, separately for two main road freight destinations, Finland and Sweden, which cover 50% of road shipment spend. Data for calculations was collected both manually and automatically from various internal and external sources, such as the company ERP system and logistics service providers’ (LSP) reporting. DC processes were studied in practice and compared to model processes. Currently used freight rates were compared to existing pricing models and freight service tendering process was evaluated by participating in the process and comparing it to the models based on literature. The results show that the potential savings are not as significant as the company hoped for, mainly because of packing work increasing DC labor cost. Annual savings by setting ideal split volume per country would account for 0,4 % of the warehousing and transportation costs of shipments in scope of this thesis. Split volume should be set separately for each route, mainly because the pricing model for road freight is different in each country. For some routes bigger parcels should be sent but for some routes pallets should be used more. Next step is to do these calculations for remaining routes to determine total savings potential. Other findings show that the processes in the DC are designed well and the company could achieve savings by executing tenders more efficiently. Company should also pay more attention to parcel pricing and packing the shipments accordingly.

Public-private partnership investments in dry ports – Russian logistics markets and risks

The investments have always been considered as an essential backbone and so-called ‘locomotive’ for the competitive economies. However, in various countries, the state has been put under tight budget constraints for the investments in capital intensive projects. In response to this situation, the cooperation between public and private sector has grown based on public-private mechanism. The promotion of favorable arrangement for collaboration between public and private sectors for the provision of policies, services, and infrastructure in Russia can help to address the problems of dry ports development that neither municipalities nor the private sector can solve alone. Especially, the stimulation of public-private collaboration is significant under the exposure to externalities that affect the magnitude of the risks during all phases of project realization. In these circumstances, the risk in the projects also is becoming increasingly a part of joint research and risk management practice, which is viewed as a key approach, aiming to take active actions on existing global and specific factors of uncertainties. Meanwhile, a relatively little progress has been made on the inclusion of the resilience aspects into the planning process of a dry ports construction that would instruct the capacity planner, on how to mitigate the occurrence of disruptions that may lead to million dollars of losses due to the deviation of the future cash flows from the expected financial flows on the project. The current experience shows that the existing methodological base is developed fragmentary within separate steps of supply chain risk management (SCRM) processes: risk identification, risk evaluation, risk mitigation, risk monitoring and control phases. The lack of the systematic approach hinders the solution of the problem of risk management processes of dry port implementation. Therefore, management of various risks during the investments phases of dry port projects still presents a considerable challenge from the practical and theoretical points of view. In this regard, the given research became a logical continuation of fundamental research, existing in the financial models and theories (e.g., capital asset pricing model and real option theory), as well as provided a complementation for the portfolio theory. The goal of the current study is in the design of methods and models for the facilitation of dry port implementation through the mechanism of public-private partnership on the national market that implies the necessity to mitigate, first and foremost, the shortage of the investments and consequences of risks. The problem of the research was formulated on the ground of the identified contradictions. They rose as a continuation of the trade-off between the opportunities that the investors can gain from the development of terminal business in Russia (i.e. dry port implementation) and risks. As a rule, the higher the investment risk, the greater should be their expected return. However, investors have a different tolerance for the risks. That is why it would be advisable to find an optimum investment. In the given study, the optimum relates to the search for the efficient portfolio, which can provide satisfaction to the investor, depending on its degree of risk aversion. There are many theories and methods in finance, concerning investment choices. Nevertheless, the appropriateness and effectiveness of particular methods should be considered with the allowance of the specifics of the investment projects. For example, the investments in dry ports imply not only the lump sum of financial inflows, but also the long-term payback periods. As a result, capital intensity and longevity of their construction determine the necessity from investors to ensure the return on investment (profitability), along with the rapid return on investment (liquidity), without precluding the fact that the stochastic nature of the project environment is hardly described by the formula-based approach. The current theoretical base for the economic appraisals of the dry port projects more often perceives net present value (NPV) as a technique superior to other decision-making criteria. For example, the portfolio theory, which considers different risk preference of an investor and structures of utility, defines net present value as a better criterion of project appraisal than discounted payback period (DPP). Meanwhile, in business practice, the DPP is more popular. Knowing that the NPV is based on the assumptions of certainty of project life, it cannot be an accurate appraisal approach alone to determine whether or not the project should be accepted for the approval in the environment that is not without of uncertainties. In order to reflect the period or the project’s useful life that is exposed to risks due to changes in political, operational, and financial factors, the second capital budgeting criterion – discounted payback period is profoundly important, particularly for the Russian environment. Those statements represent contradictions that exist in the theory and practice of the applied science. Therefore, it would be desirable to relax the assumptions of portfolio theory and regard DPP as not fewer relevant appraisal approach for the assessment of the investment and risk measure. At the same time, the rationality of the use of both project performance criteria depends on the methods and models, with the help of which these appraisal approaches are calculated in feasibility studies. The deterministic methods cannot ensure the required precision of the results, while the stochastic models guarantee the sufficient level of the accuracy and reliability of the obtained results, providing that the risks are properly identified, evaluated, and mitigated. Otherwise, the project performance indicators may not be confirmed during the phase of project realization. For instance, the economic and political instability can result in the undoing of hard-earned gains, leading to the need for the attraction of the additional finances for the project. The sources of the alternative investments, as well as supportive mitigation strategies, can be studied during the initial phases of project development. During this period, the effectiveness of the investments undertakings can also be improved by the inclusion of the various investors, e.g. Russian Railways’ enterprises and other private companies in the dry port projects. However, the evaluation of the effectiveness of the participation of different investors in the project lack the methods and models that would permit doing the particular feasibility study, foreseeing the quantitative characteristics of risks and their mitigation strategies, which can meet the tolerance of the investors to the risks. For this reason, the research proposes a combination of Monte Carlo method, discounted cash flow technique, the theory of real options, and portfolio theory via a system dynamics simulation approach. The use of this methodology allows for comprehensive risk management process of dry port development to cover all aspects of risk identification, risk evaluation, risk mitigation, risk monitoring, and control phases. A designed system dynamics model can be recommended for the decision-makers on the dry port projects that are financed via a public-private partnership. It permits investors to make a decision appraisal based on random variables of net present value and discounted payback period, depending on different risks factors, e.g. revenue risks, land acquisition risks, traffic volume risks, construction hazards, and political risks. In this case, the statistical mean is used for the explication of the expected value of the DPP and NPV; the standard deviation is proposed as a characteristic of risks, while the elasticity coefficient is applied for rating of risks. Additionally, the risk of failure of project investments and guaranteed recoupment of capital investment can be considered with the help of the model. On the whole, the application of these modern methods of simulation creates preconditions for the controlling of the process of dry port development, i.e. making managerial changes and identifying the most stable parameters that contribute to the optimal alternative scenarios of the project realization in the uncertain environment. System dynamics model allows analyzing the interactions in the most complex mechanism of risk management process of the dry ports development and making proposals for the improvement of the effectiveness of the investments via an estimation of different risk management strategies. For the comparison and ranking of these alternatives in their order of preference to the investor, the proposed indicators of the efficiency of the investments, concerning the NPV, DPP, and coefficient of variation, can be used. Thus, rational investors, who averse to taking increased risks unless they are compensated by the commensurate increase in the expected utility of a risky prospect of dry port development, can be guided by the deduced marginal utility of investments. It is computed on the ground of the results from the system dynamics model. In conclusion, the outlined theoretical and practical implications for the management of risks, which are the key characteristics of public-private partnerships, can help analysts and planning managers in budget decision-making, substantially alleviating the effect from various risks and avoiding unnecessary cost overruns in dry port projects.

Logistics service provider's strategy renewal

Tässä diplomityössä tutkitaan strategian määrittämistä. Tutkimus keskittyy logistiikkapalvelualan yrityksen strategian uudistamiseen ja strategiatyön kehittämiseen. Tutkimus pyrkii selvittämään miten yritys pystyy parhaiten saavuttamaan strategiset tavoitteensa. Lisäksi pyritään selvittämään miten yritys pystyy luomaan ja ylläpitämään kilpailuetua. Tutkimus toteutetaan tutkimalla ensin strategiaa, strategiaprosessia ja logistiikkapalvelualan liiketoimintaa kirjallisuudessa. Empiirinen osuus toteutetaan pääosin yrityksen johtoryhmän jäsenten kanssa strategiatyöpajoissa. Yrityksen hallitus asettaa strategiset tavoitteet ja myös hyväksyy projektin eri vaiheiden tulokset. Strategisissa analyyseissä otetaan huomioon sekä ulkoinen että sisäinen näkökulma, jotta saadaan kattava kuva yrityksen liiketoimintaympäristöstä sekä yrityksen vahvuuksista ja heikkouksista. Analyysejä hyödynnetään strategisten vaihtoehtojen muodostamisessa sekä yritys- että liiketoimintatasolla. Strategiset valinnat tehdään sen perustella, miten eri strategiset vaihtoehdot tukevat asetettuja strategisia tavoitteita. Tutkimuksen tuloksena määritellään yrityksen strategia, joka myös dokumentoidaan. Lisäksi luodaan strategisen suunnittelun ja johtamisen prosessi, joka mahdollistaa reagoinnin liiketoimintaympäristössä tapahtuviin nopeisiin muutoksiin.

Integration of Logistics Systems across Companies’ Borders

The growth of the companies working in the Logistics area has raised the need for using several Logistics systems that can meet the increased requirements in business processes. Different companies may use one or more Logistics systems internally and may use different Logistics systems that other collaborated companies use. Furthermore, these Logistics systems are required to communicate with each other in order to process and manage the flow of the information. Integrating the Logistics systems is beneficial as it allows interaction between the whole systems and services instead of the need to replace them. In addition, it improves the efficiency, lowers the possible errors in the supply chain, reduces the costs and facilitates the access of suppliers and customers to the information. This in turn leads to better relationships with both suppliers and customers. Usually local integration of several Logistics systems is not very difficult, especially that mostly the companies buy their system from a single source. However, the case is different for integrating several logistics systems across the companies’ borders. In this case, there are many factors play major roles in limiting the integration, such as using different systems and different output. This thesis highlights these factors and challenges, demonstrates some solutions for the logistics inter-organizational integration from the perspective of information systems and presents some approaches for integrating these systems. There are many studies about the integration inside a company but fewer studies focused about the technical side and the information systems integration across company’s borders or what is called inter-organizational integration. This study is a literature review that aims at illustrating the challenges, the requirements and some approaches in inter-organizational logistics information systems integration of logistics systems across the companies’ borders.

Product recall process development for exported nonfood consumer products

The purpose of this research is to examine the different opportunities that companies operating on international level has for conducting a product recall. The main subject of the research is strategic decision-making of recall and product recall process. The theoretical framework, core of the research, is based on research questions. The research is performed as qualitative case study and the material has been collected by combining results of previous studies and by observing the case company. Different opportunities for conducting a recall are examined in the empirical part of this study. As a result, different product recall models have been created, which all require deep cooperation between different entities of the supply chain.

Logistics Network Design with Differentiated Delivery Lead-Time: Benefits and Insights

Most logistics network design models assume exogenous customer demand that is independent of the service time or level. This paper examines the benefits of segmenting demand according to lead-time sensitivity of customers. To capture lead-time sensitivity in the network design model, we use a facility grouping method to ensure that the different demand classes are satisfied on time. In addition, we perform a series of computational experiments to develop a set of managerial insights for the network design decision making process.

Intelligent wireless web services: context-aware computing in construction-logistics supply chain

The construction industry has incurred a considerable amount of waste as a result of poor logistics supply chain network management. Therefore, managing logistics in the construction industry is critical. An effective logistic system ensures delivery of the right products and services to the right players at the right time while minimising costs and rewarding all sectors based on value added to the supply chain. This paper reports on an on-going research study on the concept of context-aware services delivery in the construction project supply chain logistics. As part of the emerging wireless technologies, an Intelligent Wireless Web (IWW) using context-aware computing capability represents the next generation ICT application to construction-logistics management. This intelligent system has the potential of serving and improving the construction logistics through access to context-specific data, information and services. Existing mobile communication deployments in the construction industry rely on static modes of information delivery and do not take into account the worker’s changing context and dynamic project conditions. The major problems in these applications are lack of context-specificity in the distribution of information, services and other project resources, and lack of cohesion with the existing desktop based ICT infrastructure. The research works focus on identifying the context dimension such as user context, environmental context and project context, selection of technologies to capture context-parameters such wireless sensors and RFID, selection of supporting technologies such as wireless communication, Semantic Web, Web Services, agents, etc. The process of integration of Context-Aware Computing and Web-Services to facilitate the creation of intelligent collaboration environment for managing construction logistics will take into account all the necessary critical parameters such as storage, transportation, distribution, assembly, etc. within off and on-site project.

PET containers in Brazil: Opportunities and challenges of a logistics model for post-consumer waste recycling

The use of post-consumer materials is directly related to reducing the cost of production and extraction of natural resources. Non-recyclable materials are randomly disposed in the environment. Brazil is one of the largest consumers of PET (polyethylene terephthalate) bottles. The purpose of this paper is to describe the opportunities and challenges of the logistics model for post-consumer PET bottle recycling in Brazil, while providing knowledge of its practices along the recycling chain. The results describe the need to educate those directly and indirectly involved in the process: to reduce consumption in order to reduce the amount of waste generated: to structure the post-consumer reverse chain and engage industrial sectors and government, through public policies, to support cleaner technologies along the PET bottle production chain. (C) 2010 Elsevier B.V. All rights reserved.

Computerization of maritime ports, e-commerce platforms and logistics communities

In the past few years there has been a clear trend of attaching increasing importance to "inforstructures", or the capacity of ports to process the information that accompanies foreign trade flows, so that the processing becomes a facilitating factor for trade, rather than an obstacle.This led to development of the concept of a port community system, which is a computerized system that interconnects all the members of a logistics community, making the exchange of documentation as effective as possible, reducing the volume of data to be re-entered in different systems and ultimately improving the whole process of monitoring an operation until its completion. Computerization of communications between all the actors at the ports facilitates integration of the community, while it also assists interaction between ports, thus forming logistics corridors.

Development of a supplier and purchase order management product/service under the 4PL logistics concept: a case study

Supply chain starts with a demand arisen and ends with material transport and delivery at its final destination. With this in mind, most of manufacturing, processors or distribution companies of consumer goods, spare parts and components for production, processing and finished goods, within national or international markets, may not have information and control over its supply chain performance. This article presents concept and logistics models evolution, purchase order and international supplier management, control tower and its logistics information systems. This also presents a real process implementation for a global high tech manufacturer company.

Models and Algorihtm for the Optimization of Real-World Routing and Logistics Problems

Logistics involves planning, managing, and organizing the flows of goods from the point of origin to the point of destination in order to meet some requirements. Logistics and transportation aspects are very important and represent a relevant costs for producing and shipping companies, but also for public administration and private citizens. The optimization of resources and the improvement in the organization of operations is crucial for all branches of logistics, from the operation management to the transportation. As we will have the chance to see in this work, optimization techniques, models, and algorithms represent important methods to solve the always new and more complex problems arising in different segments of logistics. Many operation management and transportation problems are related to the optimization class of problems called Vehicle Routing Problems (VRPs). In this work, we consider several real-world deterministic and stochastic problems that are included in the wide class of the VRPs, and we solve them by means of exact and heuristic methods. We treat three classes of real-world routing and logistics problems. We deal with one of the most important tactical problems that arises in the managing of the bike sharing systems, that is the Bike sharing Rebalancing Problem (BRP). We propose models and algorithms for real-world earthwork optimization problems. We describe the 3DP process and we highlight several optimization issues in 3DP. Among those, we define the problem related to the tool path definition in the 3DP process, the 3D Routing Problem (3DRP), which is a generalization of the arc routing problem. We present an ILP model and several heuristic algorithms to solve the 3DRP.

Development of a process model for the automatic miniload warehouse expansion

This paper provides an insight to the development of a process model for the essential expansion of the automatic miniload warehouse. The model is based on the literature research and covers four phases of a warehouse expansion: the preparatory phase, the current state analysis, the design phase and the decision making phase. In addition to the literature research, the presented model is based on a reliable data set and can be applicable with a reasonable effort to ensure the informed decision on the warehouse layout. The model is addressed to users who are usually employees of logistics department, and is oriented on the improvement of the daily business organization combined with the warehouse expansion planning.

Development of a novel material flow simulation model for the integration of spatial and process relevant information

Simulation techniques are almost indispensable in the analysis of complex systems. Materials- and related information flow processes in logistics often possess such complexity. Further problem arise as the processes change over time and pose a Big Data problem as well. To cope with these issues adaptive simulations are more and more frequently used. This paper presents a few relevant advanced simulation models and intro-duces a novel model structure, which unifies modelling of geometrical relations and time processes. This way the process structure and their geometric relations can be handled in a well understandable and transparent way. Capabilities and applicability of the model is also presented via a demonstrational example.