Digiscan: a tool to find made-to-measure solutions for improving efficiencies in transportation

Transcription

1 Digiscan: a tool to find made-to-measure solutions for improving efficiencies in transportation Stef Weijers Reinder Pieters Leo Peeters Didier Piets Eduard Vooren Institute for Logistics HAN University for Professional Education Postbus ED Arnhem, the Netherlands Abstract: Logistics should always be in search for improvement. Digiscan is a tool which can help any company which deals with a substantial amount of freight transport flows, to choose and implement the most effective way to improve its transport efficiency which really suits this specific company best. The tool is developed to the order of the Dutch Ministry of Transport, Public Works and Water Management on the basis of many years of practical consulting to transporting companies, resulting in really large efficiency gains. At the same time the tools helps companies and students from universities for professional education that help these companies, to make a sound analysis of the company. The tool now appears to be a successful instrument both for students and companies in The Netherlands, but could be used as a basis for setting up similar tools for other countries, providing the data and algorithms are easy transferable for other situations. I. Introduction Logistics is something which comes naturally to the Dutch. This is helped by the location of the Netherlands, situated at the North Sea and at the estuaries of three main rivers; Schelde, Maas and Rhine. In recent history the Dutch concentrated on trade, and in its slipstream on shipping, storage, distribution and refining products from various countries like China, Indonesia and the Baltic Countries. In modern days, logistic service providers (LSP) concentrate on trying to become best in one specific aspect. This specialization has caused many companies outsource their own private shipping department and to contract logistic service providers for their transports. This outsourcing in principle may help companies to get: Better services due to a professional network and professional skills; Lower costs due to better use of transport capacities and higher efficiencies; No need to invest in trucks and garages; No need for manpower for transportation and No hassle with changing regulations and insurances. By outsourcing transports, companies made themselves leaner and more flexible but also may encounter: Loss of control of physical distribution; Loss of contact with final customers and Loss of knowledge and experience of transport processes. II. Changes within the transportation sector Within many companies, transportation too often has been considered as to be taken for granted. In the past most attention has been played to production, production techniques, and since the 1990 s on demands of customers. But for the transportation sector transport is the core of their existence and during the last decades the sector has seen some changes for the LSP s. The sector s main concern should not be the improvement of just its own effectiveness, but to improve efficiency for both shippers and LSP s. With a greater impact of logistics costs in the total cost of introducing a product to the market, more attention is paid on trying to

2 control these costs and to search for opportunities for cost reduction. For shippers manufacturers, retailers, etc the most important drivers for improvements in efficiency are: More emphasis on transportation and value chain logistics; Distribution often takes up 10-15% of the total costs; Costs always return as a board room issue; External developments like technology and changes in laws and regulations allow for more efficiency within transport; Increased road congestion and Green awareness amongst customers. For LSP s, the most important drivers for improvements in efficiency are: Due to fierce competing powers the pressure to gain lower prices increases; Due to the labor intensive nature of logistics, the costs go up; Shippers are not prepared to transfer this cost increase over to their customers in fear of losing trade; The Dutch (and Western European) distribution sector feels the pressure from competitors from the new member states of the European Union (EU) like e.g. Estonia, Lithuania, Bulgaria and even non-eu member states like Belarus and Ukraine; External developments like technology and changes in laws and regulations allow for more efficiency within transport. As logistics forms a major part of the Dutch economy, it should not come as a surprise that the Dutch government views this sector with keen interest. The Dutch Ministry of Transport has setup a program which helps companies to detect possible synergy and savings for their transport. It is in fact a scan of the present (or potential) situation and suggests possible improvements and the expected impact of actions within distribution. For this it was named Digiscan. To the order of the Ministry we have worked out the Digiscan in such a way that also small and medium sized companies may use the tool, helped by our students. During the first phase after the team has started, an inventory should be taken of all possible improvements. This should be done in a free for all session and should not be hindered by obstructions like lack of fantasy or a feeling of a potential lack of support by senior management. In this way ideas get funneled in a similar fashion as shown in the next figure: Figure 1 structure for selecting ideas The size of the input and output depicts the amount of money involved in this suggestion. As is shown by the figure above, this critical approach could be taken into account in the next step when asserting the attainability of these suggestions. Some suggestions will be highly profitable but will lack potential to be accepted. Other ideas will be less profitable but easier to implement. III. The idea behind Digiscan The idea is to tackle the situation in two phases. The first phase is to organize the scan and the second to develop and implement the suggested findings. Figure 2 valuing possible initiatives

3 Placing the options in a scheme as shown in figure 2, one gets an overview of all possibilities and potential rewards. Using this scheme, a choice could be made for those options which allow both good rewards and show a high level of attainability. Modal shift to sea transport, river barges and rail. After selecting the best possible options, an implementation plan has to be made and finally the senior management and other departments should be informed on the basis of a formal report after which the phase to develop and implement the suggested ideas for efficiency improvements can start. Experience with Digiscan suggests a time table for these phases as shown in the next figure: Figure 4 levels of realizable efficiency Figure 3 time table for both phases IV. Efficiency improvements Efficiency can be achieved on different levels: as a side effect due to a change in logistics policy, but also out of the operational processes as is shown by figure 4. For example fuel use efficiency may be gained by: A course of how to drive more economically ; Using trucks with a higher mileages per liter fuel and Monitoring fuel consumption and driving behavior. The actual available fleet of a company more or less sets the possibilities for usage of equipment. A well balanced fleet could be advisable to serve the various needs best like small and cheap vans for inner city distribution or for small loads. One also could consider a modal shift. Why would you always use the same equipment for a transport? Every time you send a truck from Rotterdam to Berlin, you also have to accept the possibility that it will have to return empty. In that case money and capacity are wasted. Why not consider the use of alternative transport modes for long hauls, like river barges or trains? Some examples for vehicle efficiency and modal shift are: Using better sized trucks; Using multifunctional trucks; Fleet management and Another improvement may be the use of the available equipment. Why not ensure that truckers do not drive any more kilometers as needed, or use the possibilities awarded by modal shift. In this last case a LSP will share its capacity with another LSP. For both, this will result in an improved usage of available capacities per kilometer. Some examples which could be achieved by transport efficiency are: Introducing a route planner; Using board computers Cooperating with other LSP s Planning routes for the whole organization and Reduction of time for loading and unloading trucks. Finally companies may search for logistic efficiency on a strategic level. Any change in business strategy may lead to changes in logistic policy. But why not try to look for improvements in that situation? For example by: Restructuring distribution; restructuring production; Reducing frequencies of deliveries; Adjustment of products or vehicles and Improvement of order cycle. V. Structure of Digiscan The logic of Digiscan forces the user to make the scan step by step. This prevents the chance that one moves too quickly based upon limited information, and it stimulates thinking. Digiscan takes 4 steps. The first is a one time operation which has to be done for the whole organization and can be reused for other

4 scans as well. It involves importing basic data about the company organization like: Flows of goods; Flows of transportation/destinations; Transport planning and Transport metrics. The next three steps ask for information related to the situation investigated. o Its role in the chain: Just transporting goods Just Managing flows Transport planning and Executing only. Figure 6 Quick scan and actions Figure 5 functional design of Digiscan In step 1 one is asked to import data about: Kind of transportation; Volume transport; Fine distribution; Tanker transportations (dry); Tanker transportations (wet); Bulk transportation; Container transportation; Cool goods transportation; Frozen goods transportation; Courier and express service In order to show fast results, a quick scan can be made on the basis of reduced initiatives, which shows results immediately. This will have a positive impulse on the participants and will increase their appetite for more improvements. VI. A working case In this section an actual filled in case situation is presented by showing the print screens of the scanresults. Figure 7 shows the input screen with the general information of the company, and some additional information to the user. Additionally one is asked to report on: o Transport distances: < 50 km (regional) km nationwide) km (Benelux wide) > 400 km (international). o o the amount which is transported: FTL (full truck load); LTL (> 4 pallets or equivalent); LTL (1-4 pallets or equivalent) and loose package Number of transports (per day/route): Small (< 10 routes per day) and Large (> 10 routes per day). Figure 7 General Information

5 Unfortunately at present the Digiscan is only available in Dutch and not yet in English. So all information in these printscreen are in Dutch. In all stages the Digiscan presents a help function, which offers suggestions and presents case situations which help the user to develop ideas himself. The second screen shows the type, distance and quantity of transportation used by the company. By clicking on one of the boxes, the program takes this aspect into account and suggests improvements on the basis of the items that apply to the company. in the figure in the midst of the screen. In the lower left section some suggestions for an optimal solution are offered with the possible impact if taken. By clicking on one of the bullets, this specific measure will be focused on. So every aspect can be viewed and scanned in a simple way. The second additional screen in this stage contains questions about the current solutions and specific information concerning capacity etc. as is shown in figure 10. In the same way any answer will show a change in the position of the bullets which represent all possible measures. Figure 8 Business characteristics Figure 9 shows some possible suggestions for one of the possible measures. Figure 10 how to approach this solution At the bottom of the figure a key Model allows access to an Excel file in which data can be put. This data is not always readily available within the organization. Anyway these lacks force various departments to rethink whether or not they possess all necessary data to make sound decisions. So Digiscan can also trigger a need for the creation of such a system. Figure 9 possible suggestions This screen also has three side screens attached with additional questions like does technology allows production in other locations?. By answering these questions, the option for possible solutions depicted graphically by bullets will move to a new combination of potential and attainability, as showed Figure 11 steps for achieving the improvements

6 The last additional screen (figure 11) in this stage shows the suggested steps you could take in order to get these suggestions implemented. In a similar setup as with the other screens, the various aspects are explained in the left part at the bottom. The final step is to make an efficiency plan. In this plan the various goals are set and steps are explained how they will be achieved. Not just in time aspects but also in man-hours and capacity. VII. Conclusions Up till now Digiscan has been used by 250 large transporting companies, supported by consultants. This has resulted in large efficiency gains as shown in table 1. Type of company with a large Reduction in volume for transportation Kilometers Fuel use Costs Shipper which main uses its 12% 3% 10% own fleet Shipper which main uses LSP 16% 12% LSP with own fleet 9% 3% 10% LSP with emphasis on 7% 5% subcontracting Table 1 realized savings with Digiscan per type of company Helped by our students, now also medium sized transporting companies can use the Digiscan. And then it shows that, Digiscan is a nice and simple tool to help both LSP and shippers to search for potential saving possibilities. It forces them to think in a logical way how distribution has been set up and allows facts and figures to play a part in decision making HAN University has introduced the program for teaching students the possible impacts of a change. The students readily understood Digiscan and have used it during their placements. a website will be created where the new version can be downloaded for free ; the program will be made (even) more user friendly; more and newer data will be used for the algorithms; the focus will change to small and medium sized companies as well; ACKNOWLEDGEMENTS The authors would like to thank Marcel Michon for his support and information on this subject. REFERENCES [1] Rustenburg, M., K. Verweij, F. Cruijssen and K. Ruijgrok KP 1: Verbeteringspotenties in Europese logistieke Netwerken TNO 2006 [2] S. Weijers, L. Peeters, R. Pieters, D. Piets, B. Vogel, R. Vonk en E. Vooren Digiscan Rapport 1: gebruik binnen de logistieke opleidingen aan de hogescholen in Nederland HAN University Press, Arnhem (2005) [3] S. Weijers, L. Peeters, R. Pieters, D. Piets, B. Vogel, R. Vonk en E. Vooren Digiscan Rapport 2: Docentenhandleiding HAN University Press, Arnhem (2005) At present a universal use of Digiscan in an international setting has some restrictions: It suits shippers with demand for transportation of km or more; or SLP with an annual transportation of km or more; the algorithms are not visible so difficult to understand for students; maybe they do not apply for all other countries in Europe; the language: only in Dutch and availability of the program is poor as it is not easy to get. Changes in the near future: an English language version will be made available;