ABSTRACT NUMBER 020-0776 A PLATFORM TO SHARE … · 2011-02-18 · ABSTRACT NUMBER 020-0776 A PLATFORM TO SHARE INFORMATION AND GAIN VISIBILITY OF TRANSPORTATION PROCESSES IN COLOMBIA´S

ABSTRACT NUMBER 020-0776

A PLATFORM TO SHARE INFORMATION AND GAIN VISIBILITY OF

TRANSPORTATION PROCESSES IN COLOMBIA´S SUPPLY CHAIN

Julian Lasso* Center for Latin-American Logistics Innovation (CLI)

Avenida el Dorado # 70-16, Bogotá, Colombia Tel: +571 4254727, Fax: +571 4274723

E-mail: [email protected]

Camilo Soto Center for Latin-American Logistics Innovation (CLI)

Avenida el Dorado # 70-16, Bogotá, Colombia Tel: +571 4254727, Fax: +571 4274723

E-mail: [email protected]

POMS 22nd Annual Conference Reno, Nevada, U.S.A.

April 29 to May 2, 2011

Abstract

In Colombia, freight companies do not have complete and integrated traceability of the

vehicles during the transportation and distribution processes. This situation is mainly

generated by the existence of a large number of information providers, dearth use of

ICTs (Information and Communication Technologies), and lack of cooperation between

the parties to share data that support the decision processes.

This paper presents a collaborative platform that integrates the information of the

transportation and distribution processes of the supply chain, formalizing the

communication channel between parties and generating opportunities to reduce costs.

This platform is based on three technologies: RFID, GPS/GPRS and cellular

communication. The benefits are measured through several operational indicators such

as waiting times and load/unload times. A case study of a Colombian third party

logistics is provided to illustrate the methodology.

Keywords: Supply chain, Collaborative platform, RFID, GPS, GPRS, and ICT.

*Corresponding author.

1. INTRODUCTION

Freight is fundamental in logistics management since any supply chain requires moving

raw materials from extraction sources to production plants, semi-finished products

among factories and carrying finished goods to points of sale and final consumers

(Ghiani et al. 2004). Freight process must ensure that the exact amounts of the required

products are delivered to the right receiver at the right time, place and conditions, and at

the lowest cost (Ballou 2004). If not, there might be costly consequences such as lost

sales, customer dissatisfaction or inactivity in the production process (Lambert 1998).

Freight process is relevant because it contributes the most to the logistics costs (about

two thirds of the total logistics costs incurred by a company). Moreover, it has a

meaningful impact on the customer service level; therefore, it plays a key role in

logistics management (Tseng 2004).

Road freight is the most widespread transportation mode in Colombia (Ministerio de

transporte 2008). The Latin American Integration Association (ALADI 2008) has

concluded that the availability of information about the location and tracking of cargo

units and vehicles are some of the main shortcomings of the freight service in Colombia

and Latin America.

These tracking and localization operations are called traceability, where there are two

possibilities:

• Tracing: It consists of following the movement of a specific product unit or a

production batch along the supply chain and within each company until it arrives

to the final point of sale / service.

• Tracking: It consists of identifying the particular origin of a unit or products’

batch placed anywhere in the supply chain, according to saved records “upward”

of it.

The lack of timely information about traceability yields lack of operations’ control,

uncertainty, low customer service levels, and lack of collaboration among the actors

involved. This situation does not allow observing the operation progress in real time; in

consequence, decision-making aimed at reducing costs and time in loading,

transportation and unloading is hindered. (ALADI 2008)

The ICTs (information and communication technologies) are tools that facilitate

collecting, accessing, processing, and analyzing information. They allow users to

monitor, plan and make decisions more accurately and quickly. Also they contribute to

integrate companies with the remaining actors of their value chain (Katz 2009;

Gunasekaran and Ngai 2004; Kumar 2001; Swafford et al. 2008).

One of the main contributions of these technological solutions is the increase of supply

chain visibility levels, particularly with mobile ICTs, because they facilitate the capture

and transmission of information with a high level of detail (Gauckler et al. 2008;

Coronado et al. 2009). Transportation and distribution of consumer goods have been

part of this technological development and have obtained several benefits. For example,

ICTs implemented in this area since the mid-80s, led to the so-called intelligent

transportation systems (ITS). The technology of these systems includes advanced

electronics, telecommunications and computing, in order to make more efficient and

safer transportation operations (Qu et al. 2010; Menéndez 2008).

The most known ICTs applications in freight process are the Global Positioning System

(GPS), Geographic Information Systems (GIS), RFID-based traceability systems (Radio

Frequency Identification Devices), and mobile applications based on GSM (Global

System for Mobile communications) and GPRS (General Packet Radio Service)

(ALADI 2008; Gauckler et al. 2008).

This paper describes a collaborative technological platform developed by the Center for

Latin-American Logistics Innovation (CLI) supported by GS1 Colombia and the

National Apprenticeship Service (SENA). By means of the integration of several ICTs,

this platform improves and formalizes the communication channels among the parties,

increases collaboration among the transportation actors, and provides accurate and

relevant information in real-time about the freight process.

The rest of this paper is structured as follows: the second section describes the

methodology; the third section presents a case study of the activity of road freight in

Colombia; and finally the conclusions and future work are presented.

2. METHODOLOGY

The methodology used to develop this research project is presented below:

Figure 1. Methodology

2.1. Identify the information flow in road freight processes

The overall transportation process is evaluated by observing a model of logistic

processes such as distribution and transportation within one or several companies. This

analysis includes the following activities: to recognize the freight process actors

5. Define technical specifications of the platform and software design

4. Propose an information flow using ICTs identified before

3. Search and identifiyi ICTs that might improve the information flow in freight processes

2. Analyze the information flow and identifying its weaknesses and opportunities

1. Identify the information flow in road freight processes

(Customers, 3PL and Couriers) and to identify the relationships, communication

channels and information flow among them.

2.2. Analyze the information flow and identify its weaknesses and opportunities

A detailed analysis of every activity carried out by each actor within the information

flow is performed after gathering all the information about the freight process. This

analysis includes the identification of: 1) communication channels, 2) media used, 3) no

automated processes, and 4) weaknesses and improvement opportunities within the

process.

2.3.Identify the technologies that contribute to improve the flow of information.

Technologies used nowadays in the transport field are described in this stage; then, it is

defined how each technology supports, integrates or mitigates deficiencies identified in

previous steps of the methodology.

2.4.Propose an information flow using ICTs

According to the initial freight process and its weaknesses, an operation model

integrated with ICTs was designed in order to align the product flow (which is

transported) with the information flow by means of a standard solution.

2.5.Prepare platform specifications and software design

Software specifications and use cases were designed to program a platform that

establishes a better communication channel and flow within transportation processes.

3. CASE OF STUDY

The application of the methodology counts with the support of the Colombian third

party logistic services provider “Almagrán y Almacenar”. This company has logistics

operations in all the principal cities around Colombia and from now on it will be call

“AyA”.

For the evaluation of the transportation process, it was necessary to observe the

operation of more than thirty clients or load generators. They were selected and

classified for being representative in the massive and semi- massive freight mode inside

AyA operation. In addition, gathering information on transport operations with each of

the selected customers was carried out under model interviews with transport leaders

appointed by AyA in major cities in the country.

3.1.Identify the information flow in freight processes

When gathering information about distribution, freight processes in AyA, the following

stakeholders were identified:

• Load Generator or Customer

• 3PL (Third Party logistics), which is characterized by it does not have its own fleet

and should outsource a freight load company.

• Freight companies.

• Truck Drivers.

Figure 2 shows the interaction between these stake holders during the freight process.

Figure 2. Stakeholders in the freight process.

The operations of the freight process were characterized in the following flow of

information:

Figure 3. Freight Process

The transportation process starts when the customer (load generator) defines a

transportation service request and communicates it to 3PL. This requirement is usually

done by sending an Excel file or an email indicating origin, destination (s), dates and

hours of load and unloads process, etc.

AyA transport staff, responsible for the operation, receives the customer requirement by

mail or by voice. According to the specifications; they consolidate the requirements

estimating the type and quantity of trucks required to provide the service. Once this

activity is made, staff request trucks to the freight company who search available trucks

to supply the customer´s request. Upon confirming the availability of freight trucks

suitable to fulfill the requirement, the transport company sends the information of the

truck (plate, name of the driver, ID, etc.) to AyA. Freight Company informs to each

driver about the loading point and some other relevant information to carry the

corresponding goods.

Drivers are directed to the place indicated by the client to collect the goods, trying to

meet the agreed date for the loading or delivery. During the service activity, the driver

registers manually the starting and finishing hours of the loading, unloading and transit

processes. During the trip, drivers receive phone calls from the freight company security

staff to provide the status of the freight. Often, all this information is useful for reactive

control of the operation. However, the information does not reach the customer (load

generator).

3.2.Analyze the flow of information, identification its weaknesses and opportunities

for improvement.

With the characteristics of the previous flow of information in the freight process

between stakeholders, the following weaknesses or opportunities for improvement

were indentified:

• High levels of informality in the communication between stakeholders, high

use of mail and cell phone.

• Much of the process is characterized by the reiterative manual input of data

and absence of systems to register the information.

• Due to the high level of handwork, it was observed an intensive operational

labor in the staff that controls and manages the transportation processes in

the 3pl and freight company.

• Freight companies do not own a cargo fleet, and lose time searching for

available trucks. They do not have a system or database to really know

which vehicles are available to provide the service.

• Monitoring of the transport operation is completely manual and depends

mostly on the drivers and freight company disposition to share information

about the progress of the operation. Usually, this leads to fragmentation and

customer unsatisfaction.

• Transportation key performance indicators are fragmented, subjective and

generated by manual procedures.

• Collaborative relation among stakeholders is in initial phase and there is a

high level of distrust.

After discuss different issues or points sensitive to improvement, the main

problem was determined: “lack of timely and reliable information between

stakeholders, as well as absolute informality and incomplete information.” Then

the following objective was established: “ensure that stakeholders involved in

the freight have timely and reliable information on this operation”.

3.3.Identify the technologies that contribute to improve the flow of information.

After analyzing problem, it was identified and concluded that the most viable

alternative was the use of technologies that allow automating or improving the

capture, transmission and consolidation of relevant information in the transport

process and providing operation stakeholders access to it.

Among the identified technologies, it was selected those which could contribute to

achieving the objective and to address the weaknesses found in the transport

operation. Three technologies were chosen: RFID (Radio Frequency Identification),

Global positioning Technology, SMS (Short Message services) by cell phone. Their

potential use on this project is described below:

• RFID (Radio Frequency Identification): this technology will be used to identify

the entering or leaving of the trucks in some distribution centers in AyA. All the

trucks will be equipped with Windshield RFID Tags and readers will be

installed in the entrances.

• GPS/GPRS: This technology, traditional in transport applications, will provide

traceability during the transit process. Additionally, geofences – Virtual

perimeter defined on a geographical area in a GIS (Geographical Information

System) - can be used to identify in an automatic way the trucks arriving to their

destination.

• SMS: This method will guarantee an interaction through codified messages to

get the online status of the cargo provides directly from the drivers. This

method was chosen because more than 90% of truck drivers use GSM devices.

In conclusion, the solution proposed requires designing and developing a Web

platform that integrates technology and allows the consolidation and transport

information processing to share information and gain visibility to all the

stakeholders involved in the freight process. This way, stakeholders can access by

web to the information collected, gaining online visibility of the process and

controlling their own or their business partners performance key indicators.

Almagran - Almacenar Distribution Center

COLLABORATIVE TECHNOLOGICAL PLATFORM

Destination

RFID (in / out vehicle registration)

GPS/GPRS

Tracking and tracing

Mobile telephony (delivery confirmation and novelties report)

RFID Tag

Transportation Service request

Vehicles information

Figure 4. Technological model

3.4.Propose the flow of information for the transportation process.

Proposed transportation process, under the development of the technological and web

platform, follows next flow of information shown in Figure 5:

Figure 5. Proposed flow of information

The web based platform developed to fit the model allows stakeholders to generate

reports and send notifications automatically, establishing a reliable communication

channel.

The platform allows clients to enter an online transportation request. This transportation

request is received by the 3pl, who determines the type and number of vehicles needed

for the operation. With this information the platform generates a request to the freight

company.

The freight company selects one of their vehicles indicated as available by the platform.

Then the driver confirms his availability through coded text messages to the freight

Company while the platform automatically confirms its availability to the 3pl and to the

client.

All the stakeholders (Freight Company, 3PL and client) could observed in real time in

the platform the start and end of the main activities that constitute the freight process

(loading, transit and unloading; and the standbys before each of them). These time

records are sent to the platform either by the truck driver by means of coded SMS or by

GPS/GPRS and RFID automatic reports. In consequence a complete overview of the

operation could be achieved. This unified information can be consulted online by

anyone involved in the process and thus evaluate any of the performance indicators

obtained in the reports.

3.5.Define platform specifications and software design

The collaborative platform shown in Figure 5 was developed using the following user

profiles:

• Super-Administrator Profile: This profile has the responsibility for managing the

relationships between companies. It allows creating companies, making

relationships, editing locations and assigning reports in the database. This profile

will be exclusively developed for GS1 Colombia, neutral and non-profit foundation

company who will generate value-added services for the transport sector.

• Load Generator (customer profile): it was designed for the use of the load generator.

This module allows the creation with standardized fields of transportation requests

by web or loading Excel files. Moreover, the module allows the allocation of the

transportation request to a business partner 3pl (in this case AyA). Once the service

request is generated, the platform will send a notification to the 3pl profile. When

the service request is made, the customer can view the service progress.

• 3PL Profile: Using this profile the platform will provide information about the

services requested by the customer. It will allow to the 3pl the analysis and

assignment of the trucks required to provide the service without modifying or re-

typing the information added by the customer in the first step. Furthermore, the 3pl

user can send notifications to the assigned freight company, check the service

progress or generate reports.

• Freight company profile: this profile will allow to the freight company, responds to

every service requested. Moreover, the freight company could manage their fleet

and visualize automatically the available trucks with the appropriate conditions

required to provide the service. In this profile, technologies will support the

information about the progress of the service. The information provided by RFID

will be used to generate automatically an in/out report with the flow of vehicles

inside some distribution centers. The GPS information will be used to report the

location of vehicles at the client´s facilities using GEOFENCES. GPS also will help

to track the trucks during operations. The coded SMS text messages allow drivers to

report the delivery and any other event during the operation.

Also all the stakeholders have an administer profile to edit their own information

ADMINISTRATOR PROFILE

Administer

Create

Locations

Trucks and drivers

Users

Reports allocation to users

Transportation service request

Enter a service request

Process the request

Request by auction

Change the request status if necessary

Report generation

Time structure

On-time delivery

Transportation data sheet

Drivers performance

Finished or canceled transportation service

requests

Tracking and tracing of trucks

CUSTOMER

3PL

FREIGHT COMPANY

File upload

Check process status

USER PROFILE

Figure 6. Collaborative Platform profiles

With the development of this collaborative platform, it is possible to get some

benefits for each stakeholder, the transport sector and for the logistic

development in Colombia. Some of the benefits mentioned could be:

• Allows Freight service providers to improve the customer service level.

• All stakeholders could know the status of the freight process on real time

• Stakeholders could have detailed reports about the freight process,

knowing durations per activity (loading, transportation, unloading).This

will allow them to make decisions that aimed at reduce costs and times.

• Encourage and incentivize the actors of the transportation network to

collect and share information on behalf of the supply chain.

4. CONCLUSIONS

• Literature review presented in this paper reinforces the need of having information

and communication technologies as support tools on freight process in Colombian

and Latin- American (LATAM) supply chain. Diverse references cited in this

document, argue the opportunity that Colombian and Latam supply chain could

have to increase or improve relationships, through visibility and traceability.

• Technological systems are relevant because they integrate operations which were

previously fragmented along the supply chain, and allow the exchange and

consolidation of meaningful information. By this mean, they facilitate: 1) the overall

management of the operation, 2) the identification of problem areas, 3) the decision-

making process, and 4) the undertaking of joint actions among actors involved in the

operation aimed at make it more efficient.

• Development of this technological platform neither includes processes of route

planning nor assessment of cost structures. This is because other transport

management solutions that area already in the market address these problems. The

designed tool aims to propose an alternative to get full visibility of the freight

process.

5. FUTURE WORK

Field tests of the platform and a pilot deployment in Almagran y Almacenar´s

operation. Furthermore, qualitative and quantitative benefits, and lessons learned

will be included in a future publication.

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