"simulation, elogistics and the supply chain."
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SIMULATION, eLOGISTICS AND THE SUPPLY CHAIN
Eberhard Bluemel,Fraunhofer Institute FhG/IFF,
Sandtorstrasse 22, 39106 Magdeburg,Germany,
email: [email protected]
Felix A Schmidt,Maritime & Supply Chain Solutions
(Europe) Ltd.,4 Redhall Close, BALLYCARRY,
BT38 9HZ, UKemail: [email protected]
Laura Rasinskyte,University of Ulster and Kaunas
University of Technology,Shore Road, NEWTOWNABBEY
BT37 0QB, UKemail: [email protected]
KEYWORDSSimulation, Supply Chain, Logistics
ABSTRACTThe paper discusses modelling and simulation of a supply chain extending from the Far East to NW Europe. It briefly reviews and implies the needs of logistics provision within the framework of modular balance and sustainable growth as proposed by the EC in its paper “Transport 2010: Time to Decide”. It is based upon RTD work carried out and IT solutions proposed and supported by the EC in the projects of AMCAI, DAMAC-HP, SPHERE, BALTPORTS-IT, ITeLS supported by EPSRC, UK and the now running EC supported project of ‘eLOGMAR-M’. ‘eLOGMAR-M’ is the natural extension of pervious work carried out by the members of this consortium ‘away’ from port related logistics into those more closely allied with supply chains extending globally from seller to buyer with particular emphasis on the link referred to as ‘Move’. The sample supply chain of eLOGMAR-M and that used in ITeLS are similar and comprise of the links of one ‘seller’, one ‘buyer’ and ‘movers’ active in all surface modes of transport. A modular approach to modelling was adopted, in line with Incoterms, using initially flowcharts and subsequently GPSS block charts. Both spreadsheet simulation and GPSS simulation runs were carried out to validate and compare results as well as to visualise the processes, associated KPIs and their distributions of, e.g. time and costs. The simulation results demonstrate the substantial benefits that can be gained by the extensive use of IT in the exploration and management of supply chains.
INTRODUCTIONThe European Commission (EC) in its publication “European Transport to 2010: Time to Decide”, the White Paper, of September 2001, reviewed the results of the implementation of the Common Transport Policy (CPT) and revealed its plans of how the CTP could be further and successfully implemented within the framework of ‘Sustainable Development’ and actions to achieve the all important ‘Balance of the Modes of Transport’. In this respect the development of “Freight Corridors”, “Motorways of the Seas” and
the “removal of bottlenecks”, were identified as being of particular importance. It is an easy step to combine the Motorways of the Seas and the Freight Corridors with ports as nodes between the links of rail, road and / or inland waterways to follow the concept of the TEN of an integrated intermodal freight transport network over which supply chain related logistics activities do take place, i.e. the combination of ‘Deep Sea Shipping’, ‘Short Sea Shipping’, ‘Inland Waterway’ and ‘Rail’ for long-haul with ‘Road’ and possibly ‘Rail’ offering pre- and post-carriage. Similarly to the freight route that has been proposed in the EU sponsored project eLOGMAR-M. This supply chain along this route extends from the Baltic States via the ports of Western Europe – Hamburg - and the Mediterranean to China. Figure 1 below illustrates this (Schmidt, F.A., 2003)
Figure 1: The selected Route of eLOGMAR-M
Ports, associated freight transport logistics processes and information requirements were considered in substantial details in the EU funded projects of AMCAI, (Bluemel, E. et. al., 1997), DAMAC-HP, (Bluemel, E., et. al., 2000), SPHERE, (Schmidt, F. A., et. al., 1997) and BALTPORTS-IT, (Bluemel, E, and Novitski, L., 2005). Aspects of this work are further discussed in “Introduction to BALTPORTS-IT: Applications of Simulation and IT-Solutions in the Baltic Port Areas” and will be presented at ESM 2005. The above named research programmes were targeted at the industrial utilisation of ports, cargo transfer technologies, simulation models to mirror and mimic activities and evaluate the performance of ports and related information systems. Information, information systems, information transfer and the timely availability of the correct information were identified
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as being paramount to the efficient operation of ports. The frequent unavailability of information was also identified by both industry and the EC as a bottleneck to improved efficiency and a major challenge in the promotion of short sea shipping and intermodal freight transport (COM(2003) 155 final 2003/0056 (COD)).
One of the project proposals under the umbrella of the EU’s IST programme that took up this challenge in 2004 was eLOGMAR-M. It proposed the development and use of Web-portals for freight transport services along the logistics supply chain using the routes (sea and / or direct rail) from the Baltic States to China in its demonstration. The use of Web portals as part of information systems relating to the activities of the port community has been successfully explored in BALTPORTS-IT and forms one of the assets of the Baltic Sub-Regional Competence Centre (BSRCC) where it is used in distributed and Web-based simulation of port operation aimed in particular at container transport (Bluemel, E., Babot, J., and Novitsky, L., 2003). It is a natural progression from the consideration of ports and their operations to the wider picture of supply chains and related activities with emphasis on associated information requirements and systems supporting and enabling the availability and the transfer of information.
BACKGROUNDThe above deliberations beg the clarification of ‘transport logistics’ versa ‘supply chain’, or more correctly, ‘logistics management’ versa ‘supply chain management’. In short, logistics management is concerned in the main with the management of inventory, warehousing and distribution. Supply chain management encompasses and addresses all aspects of procurement, manufacture, inventory management, warehousing, distribution, sales, order processing and customer services across all industry sectors and all companies from large multi-nationals to indigenous SMEs. Figure 2 below illustrates a typical supply chain (IBEC-CBINI; Anderson, B.; Schmidt, F.A.; Fynes, B,; 2002).
Figure 2: Typical land-based Supply Chain
Figure 2 traces the flow of products from sourcing or buying raw material through manufacturing or
making, distributing or moving to customer or selling. In simple terms, a typical supply chain can be considered in terms of its four key functions of buying, making, moving and selling as Figure 3 below shows under the title of ‘Traditional Functions’. Historically, these functions were managed independently and due to their potential impact may be in conflict rather than in conjunction. Managing the ‘chain’ of these functions rather than a ‘link’ or a particular function in isolation, requires means that strengthen the linkages between these key functions enable them to pull together. This proved to result in an organisation able to provide a superior level of service at lower costs. To highlight this, Figure 3 outlines the functional objectives of the supply chain as well as their potential impact.
The EU sponsored projects of DAMAC-HP, AMCAI, BALTPORTS-IT and SPHERE concentrated their RTD activities on the link described as ‘Move’. Considering Figure 3, the natural development from addressing one key function of the supply chain to encompass all four of them, becomes evident.
Figure 3 The Conflict of Functional Objectives
The questions now arising are those of: How can the linkages between these four key
functions of the supply chain be strengthened? and What means are needed to achieve this?
The direct activities of buying, making, moving and selling do not necessarily overlap as the key functions indicate. The information required to implement them, however, most certainly does. This indicates that it may be beneficial if the information flow within the supply chain is strengthened, that information is more freely shared and, that the correct information required at the various steps within the supply chain is more readily available. The combination of information and information technology is the key to answer the above questions.
The identification of the correct information required, yet restricting the amount of this information to the bare minimum begs to consider the way international business is generally conducted within the framework of legislation, regulation, available transport infrastructure and freight transport logistics service provision. In the end all of this affects the
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Key Functions:
Functional Objectives: Best price
= Quantity
Lowest unit cost
= Long runs
Lowest transport cost
= Slowest mode
Potential Impact: High raw material stocks
High risk of obsolescence
High finished goods stocks
Limited flexibility= poor service
Slow response to customer demands
High raw material and finished goods stocks. Increased manufacturingcosts
These Functional Objectives are in Conflict
MakeBuy Move SellKey Functions:
Functional Objectives: Best price
= Quantity
Lowest unit cost
= Long runs
Lowest transport cost
= Slowest mode
Potential Impact: High raw material stocks
High risk of obsolescence
High finished goods stocks
Limited flexibility= poor service
Slow response to customer demands
High raw material and finished goods stocks. Increased manufacturingcosts
These Functional Objectives are in Conflict
MakeBuy Move SellMakeBuy Move Sell
competitiveness and the economic viability of enterprises, the members of the supply chain, through generally the costs of their goods, the price their customers are asked to pay, the lead time to delivery as well as customer services offered. It also places obligations on buyer, seller and freight transport logistics service providers. The most convenient way to summarise these as proven by industrial practice are the Incoterms, (ICC, 2000), i.e. the terms of trade developed and recommended for use by the International Chamber of Commerce in Paris. The reason for this is simple. Incoterms and their application are unambiguous, internationally understood and have been interpreted by the courts. Figure 4 below outlines and represents Incoterms in conjunction with the concept of the supply chain but, putting emphasis on the freight transport logistics services and allied documentation including packaging, insurance, export and import clearance.
Figure 4: Incoterms and the Supply Chain
The terms are applicable to all modes of freight transport and take account of the requirements of modern surface transport, i.e. intermodal-, through-, and combined transport. The legend shown in Figure 4 clearly indicates the obligations of the seller. What the seller is not obliged to do, the buyer has to take care of.
Formalities, duties, licences and taxes including the modes selected for transport imply mode specific information, documents and schedules. Schedules imply existing combinations of service provision, routes and as a result, route, mode and service specific times and costs. The task of the supply chain manager now is to identify and select most beneficial combination of route, mode and service provision, costs and time within the kaleidoscope of continuously changing circumstances. As the situation is totally dynamic, the most convenient way to explore this is by means of computer modelling of possible supply chains of interest followed by simulation of their performance. The key performance indicators (KPI) from the point of view of service provision are expressed by time and costs. This is followed by the
selection of the most beneficial option. Unfortunately not every member of the supply chain or user of freight transport logistics services is able to model supply chains and simulate their performance. This indicates a need for specialist- and Web-based services as those offered by the Baltic Sub-Regional Competence Centre (BSRCC) using Web-portals as proposed in eLOGMAR-M based on supporting work done in AMCAI, DAMAC-HP, SPHERE and BALTPORTS-IT.
Bluemel, E., Vinichenko, S. and Novickis, L. in “Model-based Essential Logistics Principles for Creating a Web-Portal of Transport Services’ Consumers”, (ESM 2005), model the business process involved in international freight transport along the route indicated in Figure 1, with a view towards the development of the above indicated Web-portal(s). It is intended that the Web-portal offers the potential user a choice between the services on offer thereby assisting the supply chain manager with the all important task of routing taking account of, e.g. the buyer’s requirements and the conditions of the order, the terms of sale affecting the division of freighting costs, the speed of delivery requirements, the destination and possible routes available as well as merchandise and packaging characteristics, (Downs, D.E., 1992 and Willmott, K. 2001). The RTD work on the business process of international freight transport is ongoing and is further discussed during ESM 2005.
MODELLING AND COMPUTER SIMULATION OF AN INTERNATIONAL SUPPLY CHAIN
The Modelling of an International Supply Chain using Incoterms
Modelling and formalisation are prerequisites to computer simulation and the Incoterms, their ongoing development, interpretation and global application by buyers, sellers, importers, exporters and extensive use in international trade, proved to offer an ideal framework to start this task. The work about to be discussed does not form part of eLOGMAR-M and was concluded before eLOGMAR-M started. Industry together with the Physical Science and Engineering Research Council (EPSRC) in the UK sponsored this RTD programme called ITeLS (Integrating Transport and eCommerce in Logistics Services) over three years. ITeLS terminated on August 31st 2004. One of the largest internationally operating freight forwarders in Northern Ireland was one of the industrial partners. The firm is active in sea-, air-, road-, and to a lesser extent, due to a restricted local rail network, in the transport of rail freight. They assisted substantially with the validation of the modes, the provision of data as well as with the evaluation of the results of the simulation. One point that became clear very early in the project was that information technology (IT) has
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been used to transfer data (EDI) in international freight forwarding since the mid 199ties. What is continuously changing though is the extent of the use of IT, the sophistication of software systems and supporting hardware as well as the application of the work of the UN’s Facilitation Committee, and procedures involved in complying with legislation and regulation, e.g. the New Export System of the UK and the new Transit System of the EU as well as the efforts of the combined might of the World Trade- and World Customs Organisations to harmonise import- and export procedures are cases in point.
Similarly to the supply chain selected in eLOGMAR-M, the international supply chain to be modelled extended from North-West Europe to the Far East and included just one buyer and one seller.
The model of this, generic, supply chain based on Incoterms was developed in the form of 16 sub-modules. They address the following items and activities taking place within the supply chain:1. The purchasing contract.2. The preparation of the cargo for export.3. Selection of transport mode and routing.4. Insurance for pre-contractual carriage.5. Export documentation including customs
declaration.6. Delivery of the cargo from the exporter to a freight
forwarder (pre-contractual carriage).7. Consolidation, groupage and delivery of the cargo
from freight forwarder to the main carrier.8. Loading of the cargo at the point of departure for
the main carriage.9. Delivery of the cargo delivery to port/airport or
inland depot close to importer and end of main carriage.
10. Activities of the break-bulk agent (de-consolidation).
11. Insurance for post-contractual carriage.12. Import documentation including customs
declaration.13. Collecting of the cargo from the port/airport or
inland depot.14. Post-contractual carriage and delivery to the buyer.15. Cargo inspection by the buyer.16. Buyer/Importer completes the transaction/contract.
Modelling by flowcharting started the task of making the business processes implied in the links of ‘buy’, ‘make’, ‘move’, and ‘sell’ of the supply chain visible.
Figure 5: Summary of Main Module based on Incoterms
Corresponding to the list of sub-modules, Figure 5 shows the ‘Purchasing Contract’ and the ‘Preparation of the Cargo for Export’ as components of ‘Ex Works’ in the first two modules. Preparation of the cargo for export is one of the obligations of the exporter under the Incoterm of ‘Ex Works’. It includes packaging unless specifically excluded by the contract of sale between buyer and seller. Of particular interest is Module 3 concerned with the selection of the transport mode based on available service options and routing of the consignment from origin to destination. Figure 6 below shows some details. It is a task generally performed by a freight forwarder either as part of the seller’s or buyer’s organisation or as an independent agent of either of them.
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0: START
1: Purchasing contract (Exporter, Importer)
2: Preparation of Cargo for Export (Exporter)
7: Cargo delivered from Exporter to Forwarder
11: Agent
12:Cargo Insurance (Agent)
13: Customs Clearance( Agent)
17: END
6: Customs Clearance (Exporter/Forwarder)
3: Transportation Solution (Exporter, Forwarder)
4: Packaging (Exporter) 5: Cargo Insurance
(Exporter/Forwarder)
8: Cargo delivered from Exporter or Forwarder to Main Carrie r
9: Cargo loading at Point of Departure (Main Carrier)
10: Cargo delivered to Destination (Main Carrier)
14:Cargo pickup from Point of Delivery - Airport/Port (Agent)
15: Cargo delivered to Buyer (Agent)
16: Buyer completes the Transaction (Buyer)
Road
Sea
Air
Rail
YES
YES
YES
YES NO
NO
NO
Start/End
Action Cargo
Decision
Flow Direction
Action Information
Document
Legend:
0: START
1: Purchasing Contract (Exporter, Importer)
2: Preparation of Cargo for Export (Exporter)
7: Cargo delivered from Exporter to Forwarder
11: Agent
12:Cargo Insurance (Agent)
13: Customs Clearance (Agent)
17: END
6: Customs Clearance (Ex-/Importer/Forwarder)
3: Transportation Solution (Ex-/Importer, Forwarder)
4: Packaging (Exporter) 5: Cargo Insurance
(Ex-/Importer/Forwarder)
8: Cargo moved from Exporter/Forwarder to Main Carrier
9: Cargo loaded at Point of Departure (Main Carrier)
10: Cargo transported to Destination (Main Carrier)
14:Cargo Collection from Point of Delivery - Airport/Port (Agent)
15: Cargo delivered to Buyer (Agent)
16: Buyer completes the Transaction (Buyer)
Road
Sea
Air
Rail
YES
YES
YES
YES NO
NO
NO
Start/End
Action Cargo
Decision
Flow Direction
Action Information
Document
Legend:
Start/End
Action Cargo
Decision
Flow Direction
Action Information
Document
Start/End
Action Cargo Action Cargo
Decision Decision
Flow Direction Flow Direction
Action Information
Document Document
Legend:
Figure 6: Selection of Mode of Transport and Routing
Cargo insurance according to the Institute of Cargo Clauses is optional, though strongly recommended according to the risk the cargo will be subjected to en route. Depending on the mode of transport it covers the terms of ‘CIF’ using water-borne transport and ‘CIP’ corresponding to integrated-, through-, and combined transport. Module 5 concerned with export documentation is another interesting one due to the numerous and transport mode dependant alternatives. Figure 7 provides some indication on export and Customs procedures. The most important aspects being whether the destination of the goods is within the EU or outside of it and whether the goods are in free circulation. Export documentation and Customs clearance can be an obligation of either the buyer if he buys ‘Ex Works’ with the seller assisting with information or that of the seller under the other terms.
Figure 7 An Outline of the Export Procedure
Module 7 is concerned with pre-contractual carriage and from the supply chain’s point of view with the link of ‘Move’. As such it covers the Incoterms of FCA for both FCL but, more likely under today’s industrial practice of JIT, LCL using consolidation and groupage at the forwarder’s premises to achieve a FCL travelling under the forwarder’s house bill of lading to a break bulk agent near the destinations of the groupaged consignments. It also covers the traditional maritime transport related term of ‘FAS’.
The Modules 8 and 9 cover the loading of the cargo, in this case a container, by or on behalf of the main carrier and the transport of the cargo to the port / airport / inland port or agreed place of delivery. As such it covers the Incoterms of ‘FOB’, ‘CFR’, ‘CIF’, ‘DES’, and ‘DEQ’ relating to purely water-borne transport, as well as the terms of ‘CPT’, ‘CIP’ of modern surface transport.
The activities of Modules 10, 11 and 12 are again related to logistics services performed most likely by a freight forwarder. Deconsolidation – Module 10 – is used as part of LCL services. Who arranges for post-carriage insurance and import documentation including import customs clearance however depends upon the agreement between buyer and seller. The Incoterms covering these aspects are ‘DDU’ and ‘DDP’. These two terms further cover the activities of Modules 13 and 14 concerned with the collection of the cargo and post-contractual haulage.
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Customsprocedures6.0:START
6.5:Post-entry(Exporter)()
6.11: Turn to step 9Cargo loading for departure
6.9:Applicationforclearance (Customs)()
6.2WithinEC?
6.1Iscargoready?NO
YES
Applicationapproval
6.10:Customsclearance(Exporter)() Customscertificate
Destination
.
YES
6.4:Pre-entry(Exporter)()
YESNO
NO
Applicationform
Applicationform
6.8:T1(SAD)
6.6Goodsinfreecirculation?
6.7:INTRASTATS
YES NO
STEP2Cargopreparation
6.3 UrgentDelivery?
Customsprocedures6.0:START
6.5:Post-entry(Exporter)()
6.11: Turn to step 9Cargo loading for departure
6.9:Applicationforclearance (Customs)()
6.2WithinEC
Customsprocedures6.0:START
6.5:Post-entry(Exporter)()
6.11: Turn to step 9Cargo loading for departure
6.9:Applicationforclearance (Customs)()
6.2WithinEC?
6.1Iscargoready?NO
YES
Applicationapproval
6.10:Customsclearance(Exporter)() Customscertificate
Destination
.
YES
6.4:Pre-entry(Exporter)()
YESNO
NO
Applicationform
Applicationform
6.8:T1(SAD)
6.6Goodsinfreecirculation?
6.7:INTRASTATS
YES NO
STEP2Cargopreparation
6.3 UrgentDelivery?
3.1 Is Cargo ready? NO
Transportation Solution 3.0: START
Sub - Module 2 Cargo preparation
3.2: Request for Transportation Solution & Quotation (Ex/Import er) YES Quotation Request:
Commercial Invoice, Cargo, Weight, Volume, Value, Origin, Destination, Dangerous Goods List, Arrival Date at Buyer
3.3: Request for Transportation Solution & Quotation (Forwarder ) Quotation Request and Availability Check
3.4: Air Carrier 3.5:Road Carrier 3.7:Sea Carrier 3.6:Rail Carrier
3.8: Solution & Quotation to Client (Forwarder) Quotation: Collection Date, Carrier, Name, Mode of Transp. Route and Schedule
3.9 Quotation acceptable? (Ex/Importer)
NO YES
3.11 By Road? 3.10 By Air? NO NO
YES YES
YES
3.15: Turn to Module 7 Cargo Delivered from Exporter to Forwarder
3.14: Solution Confirmation (Ex/Importer)
3.12 By Rail?
NO
3.13 By Sea?
3.1 Is Cargo ready? NO
Transportation Solution 3.0: START
Sub - Module 2 Cargo preparation
3.2: Request for Transportation Solution & Quotation (Ex/Import er) YES Quotation Request:
Commercial Invoice, Cargo, Weight, Volume, Value, Origin, Destination, Dangerous Goods List, Arrival Date at Buyer
3.3: Request for Transportation Solution & Quotation (Forwarder ) Quotation Request and Availability Check
3.4: Air Carrier 3.5:Road Carrier 3.7:Sea Carrier 3.6:Rail Carrier
3.8: Solution & Quotation to Client (Forwarder) Quotation: Collection Date, Carrier, Name, Mode of Transp. Route and Schedule
3.9 Quotation acceptable? (Ex/Importer)
NO YES
3.11 By Road? 3.11 By Road? 3.10 By Air? NO NO
YES YES YES
YES
3.15: Turn to Module 7 Cargo Delivered from Exporter to Forwarder
3.15: Turn to Module 7 Cargo Delivered from Exporter to Forwarder
3.14: Solution Confirmation (Ex/Importer)
3.12 By Rail?
NO
3.13 By Sea?
3.12 By Rail?
NO
3.13 By Sea? Instruction, Collection Date, Carrier’s Name, Mode of Transport, Route, Schedule, Cargo, Weight, Value, Volume, Origin, Destination, Dangerous Goods Note if required.
Instruction, Collection Date, Carrier’s Name, Mode of Transport, Route, Schedule, Cargo, Weight, Value, Volume, Origin, Destination, Dangerous Goods Note if required.
Instruction, Collection Date, Carrier’s Name, Mode of Transport, Route, Schedule, Cargo, Weight, Value, Volume, Origin, Destination, Dangerous Goods Note if required.
Transportation Solution - Route Selection
Modules 15 and 16 complete the activities involved in the supply chain links of ‘Move’ and ‘Sell’ and are intrically linked to ‘Buy’ by the contract of sale. The only link of the supply chain that was not used is that of ‘Make’ as it is mainly related to manufacture and even though they form part of the supply chain, production logistics were deliberately excluded form this work. The activities and relationships within each one of the 16 modules have been visualised and sequenced using flowcharts similarly as presented in Figures 5 to 7.
Simulating the Performance of the Supply Chain
The translation of the flowcharts of the modules into both MS Excel and GPSS block charts was the next task. The flowcharts of the modules clearly indicated that the processes involved were sequential and in some cases could be running in parallel, e.g. the selection of the route, the preparation of the cargo for export, packaging, and the preparation of the documentation. The processes also are stochastic and random particularly with respect to the KPIs representing time and costs of the supply chain. For simplicity and reduction of work, it was decided to express time taken and costs incurred by activities as ‘observed’ distributions to be used in conjunction with random numbers rather than to translate them into mathematical expressions. For this reason spreadsheet simulation was selected for ease of application and comparison of the results of the two simulation systems. GPSS WORLD was readily available and could be used to develop simulation block charts to assist with the application of distributions based on industrial observations and experience as well as for visualisation of the processes and identification of bottlenecks in the selected supply chain extending from the Far East to North-West Europe to as shown in Figure 8 below.
Figure 8: The selected Supply Chain from the Far- East to North-West Europe
Figure 9 below shows an extract from the spreadsheet whilst Figure 10 offers an appreciation of the GPSS model.
Figure 9: Spreadsheet Model of the Supply Chain Simulation
Figure 10: GPSS Simulation Model of the Supply Chain
Extracts of screen prints taken during the performance of the GPSS simulation are shown in Figure 11. The input data for all distributions used in the model is industry based and has been extensively checked and rechecked with the help of internationally active
freight forwarders.
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MakeBuy Move Sell
Far EastIntegrated Transport
Road – Rail - MaritimeNorth-West
Europe
Movement of Goods
Flow of Information and Documents
Movement of Money
MakeBuy Move Sell
Far EastIntegrated Transport
Road – Rail - MaritimeNorth-West
Europe
MakeBuy Move Sell
Far EastIntegrated Transport
Road – Rail - MaritimeNorth-West
Europe
Movement of Goods
Flow of Information and Documents
Movement of Money
Extract from
a Time- and
Cost-based
GPSS
Model of an
Intermodal
Supply Chain
from the
Far-East to
NW-Europe
Extract from
a Time- and
Cost-based
GPSS
Model of an
Intermodal
Supply Chain
from the
Far-East to
NW-Europe
Figure 11: Extracts of Screen Shots of the GPSS Simulation
As indicated at the start of this section, the purpose of ITeLS was to incorporate eCommerce into freight transport as part of the supply chain. As IT has been used in international freight forwarding and freight transport logistics for a considerable time with varying extent and sophistication, the purpose of the simulation of the supply chain was to explore the influence of the use of eCommerce, basically the use of IT in the provision of freight transport logistics services. This has been achieved. The effects of the extensive use of IT on time and costs in the selected supply chain from the Far East to NW-Europe are presented in Figure 12 below.
Figure 12: The Influence of IT on the Supply Chain
CONCLUSIONSThe potential effects of IT on the supply chain have been amply demonstrated using a simple model of one buyer, one seller and a combination of intermodal ‘moves’ as illustrated in Figure 8. Production logistics and associated storage have been deliberately excluded from the model even though Module 2 concerned with the ‘Preparation of the Cargo at the Exporters’ whether the goods ordered aught to be made or bought by the exporter or seller. It also has been demonstrated that, even at this simplified level, modelling and simulating
the activities of a supply chain is a specialist task at present best left to research organisations and consultants using specialist software systems. Further, supply chains do not operate in isolation similar to the example chain used in this research, but in the form of networks of suppliers, manufacturers and customers as illustrated by Figure 13 below (IBEC-CBI, Anderson, B.; Schmidt, F.A.; and Fynes, B.; 2002).
Figure 13: The Interaction between Supply Chains and Elements of Supply Chains
This prompts the question of: “How could IT be applied to make this rather powerful tool to explore the effects of different logistics service providers on time and costs involved in a supply chain and, according to reality, within a network of interacting supply chains and links, available to consumers of logistics services?”
The answer to this is believed to lie in extensive and complex Web-based portals as instigated by eLOGMAR-M, offering access to distributed computing. This will enable a remote member of the port and cargo community to use a combination of tools to model, simulate and evaluate supply chains of his or her choice.
REFERENCESEuropean Commission 2001 “Transport 2010:
Time to Decide”, Brussels, September
Bluemel, E. et. al. 1997 AMCAI
Bluemel, E. et. al. 2000 DAMAC-HP
Bluemel, E. and Novitski, L, 2005 “BALTPORTS-IT Application of Simulation and IT Solutions in the Baltic Port Areas”, Conf. Proc. ESM 2005, Riga.
Giannopoulos, G. 1997 SPHERE “Small to medium sized Ports with Effective Re-engineered Processes”, EC, DG TREN, 1997 – 1998.
Lalwani, C. 2004 ITeLS “Integrating Transport and eCommerce into the Logistics Supply Chain”, EPSRC, 2000-2004.
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The Influence of e-Commerce on the Supply Chain
Min 21 952 27 955
Max 38 2792 54 3210
Average 30.5 1958 41.5 2311
Reduction 30 – 61% and 13 – 70%
With e-Commerce Without e-CommerceTime (d) Costs (£) Time (d) Costs (£)
Itinerary: FEU from the Far East to NW Europe
The Influence of e-Commerce on the Supply Chain
Min 21 952 27 955
Max 38 2792 54 3210
Average 30.5 1958 41.5 2311
Reduction 30 – 61% and 13 – 70%
With e-Commerce Without e-CommerceTime (d) Costs (£) Time (d) Costs (£)
Itinerary: FEU from the Far East to NW Europe
MakeBuy Move SellMakeBuy Move Sell
MakeBuy Move Sell
Suppliers
Manufacturers Customers
MakeBuy Move SellMakeBuy Move Sell
MakeBuy Move Sell
MakeBuy Move SellMakeBuy Move SellMakeBuy Move SellMakeBuy Move Sell
MakeBuy Move SellMakeBuy Move Sell
Suppliers
Manufacturers Customers
European Commission 2003 “Programme for the Promotion of Short Sea Shipping”, COM2003 en final, April 2003.
Schmidt, F.A. 2003 “New Logistics Solutions for Freight Forwarders”, Conf. Proc. Logistics and Transport in International Trade, Tallinn, December 3-4th.
International Chamber of Commerce 2000“Incoterms 2000”, Paris.
Bluemel, E.; Vinichenko, S. and Novickis, L. 2005 “Model-based Essential Logistics Principles for Creating a Web-portal of Transport Services’ Consumers”, ESM 2005, Riga.
Downs, D.E. and Willmott, K. 1992 “Understanding the Freight Business”, London.
CBI-IBEC, Anderson, B.; Schmidt, F.A. and Fynes, B.; 2002 “Supply Chain Logistics and Transportation on the Island of Ireland”, InterTrade Ireland.
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