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Foundations of Logistics Systems Engineering Dr. Evrim Ursavas
Logistics • Deals with the planning and control of :
– Material flows – Related information
• Mission is to get
– The right materials – To the right place – At the right time
while optimizing a performance measure and satisfying constraints
2
Logistics system
• Includes not only all the functional activities determining the flow of materials and information, but also the infrastructures, means, equipment and resources that are indispensable to the execution of these activities;
• - made up of facilities, where one or more functional activities are carried out (e.g. storage and distribution).
Suppliers Manufacturers
Distributors
Flows of material
Flows of information Customers
Example of a logistics system
• manufacturing process of the finished goods divided into a transformation phase and an assembly phase, performed in different centres;
• - suppliers of materials and components which feed the final manufacturing process;
• - two-level distribution system with a tree structure; • - CDCs directly supplied by the production plants; • - each RDC connected to a single CDC which has the
task of serving the customer; • - customers: can also be dealers or retailers.
• At each facility the flow of materials is temporarily interrupted, generally in order to change their physical-chemical composition, ownership or appearance;
• - each logistic activity involves costs which affect the value of the product, constantly adding to it as it draws nearer the facilities closest to the final customer;
• - added value: spatial (following e.g. distribution activities);
• - added value: temporal (owing to storage activities).
Representation of logistics system
• Directed (multi)graph G = (V,A): • > V: set of facilities; • > A: set of links existing among the facilities
used for the flow of materials . • - Several arcs between a pair of facilities
(alternative forms of transport services, different routes, or different products).
Representation of a logistics system system by a directed graph.
Ports in supply chains
What is a transportation network?
• Different modalities: ▫ Rails (Train) ▫ Road (Truck) ▫ Water (Ship) ▫ Air (Plane) ▫ Pipeline
• In supply chains, loads can be transported by one or more modes of transport (intermodal transport)
Customer
Carrier
Local transport company
Local transport company
Terminal operator
Terminal operator
Ports in transportation networks • Ports as a hub in a logistics network • Ports as a location for industrial settlement • Port authorities
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Port life cycle model
Introduction • basic functions •No standardisation in freight •Hardly any suppliers and customers •Local focus
time
throughput
Growth • growth to private sector • Hinterland becomes important •Distribution and storage activities
Maturity • increase in the number of terminals •International competition •Port authority •Vision on land sales •Hinterland network
Introduction: packaging of products
• Containers are large boxes used to transport goods from one destination to another.
• Container creates a “bulk” unit out of the individual pieces of freight.
• Containerization: utilizing, grouping or consolidating of multiple units into a larger container for more efficient movement.
• Advantages: less product packaging, less damaging, standardization, higher productivity.
Introduction: containers
• Dimensions of containers have been standardized.
• TEU (twenty-feet equivalent unit) is used to refer to one container of twenty feet.
• 2 TEU: a container of 40 feet. • Reefer: container with electricity for products
that need cooling. • Containerized traffic introduced in the mid-
fifties.
Container shipping • History ▫ First containers ships in the 1950s ▫ 1960s container size standardized ▫ Number of containers handled worldwide 1972: 6.3 million 2006: about 400 million Current annual growth: about 10%
• Capacity of ships has been extended from 400 TEU to about 12,000 TEU…and now 18,000TEU
• According to calculations by Ocean Shipping Consultants, the cost per TEU of transport from Europe to the Far East is about 13% less when using a ship with a capacity of 8,800 TEU instead of one with only 6,800 TEU.
Container handling
• Containers are transported by ships, trucks or trains.
• Ports and terminals are used to transship containers from one mode of transportation to another.
• Within ports, containers are transshipped with material handling equipment like vehicles and cranes.
Container fleet
The worlds biggest container ports Shanghai 31.74
Singapore 29.94
Hong Kong 24.38
Shenzhen 22.57
Busan 16.17
Ningbo-Zhoushan 14.72
Guangzhou 14.26
Qingdao 13.02
Jebel Ali, Dubai 13.01
Rotterdam 11.88
Figures of 2011 (in million TEU)
http://www.worldshipping.org/about-the-industry/global-trade/top-50-world-container-ports
Trends noticed so far • Ships and ports have strongly increased in size • Number of containers transshipped continuously grows • Competition between ports increases • Focus more and more on customers’ service • Result: docking time at ports should be as short as
possible • Can be achieved by organizing logistics processes at
terminals well
An overview of logistics processes
Unl
oadi
ng p
lan
Arrival of the ship
(Un)loading of the ship
Transportation of containers Stack Internal
Transport other modalities
import containers
export containers load
pla
n
ROTTERDAM
Flow of containers
Flow of containers
Designing a container terminal
• choice of layout of the terminal. • choice of material handling equipment used (e.g.
manned or automated). • determination of which ways of operation are
used. • development of planning and control concepts
for material handling equipment. • Logistics processes can be addressed separately
or integrated.
and the other modes…
Modes of transport - - - -
Train; road vehicle (e.g. truck); aircraft; ship (for transport on oceans, seas, lakes, canals and rivers); pipeline. Differ with respect to cost and transit time.
-
Intermodal transport - some modes of transport do not allow a door-to-door
connection between any origin and destination and should be used jointly with other modes;
- the commodities can be stored temporarily and then consolidated into different bins.
4 / 30
Rail transport - Inexpensive (especially for long-distance movements),
relatively slow, quite unreliable. Reasons: -
> convoys transporting freight have low priority compared to trains transporting passengers; direct train connections are quite rare; a convoy includes tens of cars to be worth operating.
> >
- Consequences: > railroad is a slow mover of raw materials (coal,
chemicals etc.) and of low-value finished products (steel, paper, sugar, tinned food etc.); with the aim of reducing the transfer cost, it is preferred to ship multiple loads of the wagon capacity (carload
>
transfers, or CL).
6 Managing freight transport Introduction
Road transport (1/3)
- - - -
TL -
Realized by using trucks; semi-finished and finished products; truckload (TL) or less-than-truckload (LTL); main inconvenience: limited capacity of the trucks.
TL service moves a full load directly from its origin to its destination in a single trip (see Figure 2).
LTL - if shipments add up to much less than the vehicle capacity,
it is more convenient to resort to several trucking services in conjunction with cross-docking terminals (see Figure 3); LTL trucking is slower than TL trucking. -
6 Managing freight transport Introduction
Road transport (2/3)
Redding
Phoenix
Figure 2: Example of TL transport.
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6 Managing freight transport Introduction
Road transport (3/3)
Reno Redding
Line E
Line C Line B
Stockton Palm Springs
Line D Line A
San Diego Phoenix
Figure 3: Example of LTL transport.
15 / 30
6 Managing freight transport Introduction
Air transport
- Often used along with road transport in order to provide door-to-door services; very fast in principle (the cruise speed of commercial flights is from 0.75 to 0.86 Mach); slowed down in practice by freight handling at airports; not competitive for short- and medium-haul shipments; quite popular for the transport of high-value products over long distances (about 20%, in value, of the world trade uses air as the mode of transport); capacity (in terms of both weight and volume) of the aircrafts is relatively limited, compared to that of trains and ships.
-
- - -
-
6 Managing freight transport Introduction
Water transport
- Used mainly in international trade to send bulk materials (cereals, petroleum, coal; 99% (in weight) and 50% (in value) of international trade); significantly less costly than air transport for transcontinental shipping.
-
17 / 30
6 Managing freight transport Introduction
Pipeline transport
- Used only for transporting some specific categories of goods (petroleum, its derivatives and gas); slowness of the transport (5–6 km/h); possibility of continuous provision (24 hours a day); reliability of the pipelines and pumps.
- - -
18 / 30
6 Managing freight transport Introduction
Intermodal transport - -
Moving freight with more than one mode of transport; hybrid services, with a reasonable trade-off between cost and transit time; only few combinations of the five basic modes of transport are convenient; most frequent intermodal services: aircraft-truck (birdyback ) transport, train-truck (piggyback ) transport, ship-truck (fishyback ) transport; containers are the most common load units in intermodal transport and can be moved in two ways:
> loaded on a truck and the truck is then loaded onto a train, a ship or an aircraft (trailer-on-flatcar );
> loaded directly on a train, a ship or an aircraft
-
-
-
(container-on-flatcar ). 19 / 30