Stig Reenberg & Eva Savelsberg, Inform

www.inform-software.com 1

A Glance into the Future of Parcel Logistics Smart Network and Distribution Centre Toolkit

Priv.-Doz. Dr.-Ing. Eva Savelsberg Vice President Logistics Division

M. Sc. Engineering Stig Reenberg Hansen Business Development Director Australia


Economical & Operational Challenges I

• Rebalancing of the Australian economy from mining capital expenditure to housing construction and consumer spending

• Disposable income and decisions when, where and how to buy are driven by interest rate settings, exchange rate, house prices and consumer debt levels

• Policy uncertainty at federal / state / local level impacts confidence level and business investment decisions


Economical & Operational Challenges II

• What service strategies should be chosen: make-or-buy / make-and-sell?

• Increased quality pressure, cost efficiency and delivery demands for predictability and reliability in parcel delivery service

• Operational efficiency and effectiveness are the current limitations for parcel operators rather than the increasing parcel demand


Business and IT Transformational Drivers I

• Numerous strategic alliances being created between postal & parcel operators to attain position as trusted delivery partner

• Parcel operators are investing in new distribution centres and parcel sorting technology across multiple strategic locations

• Increased retail demand driven by digital business models and social media integration

• Reinventing the last mile of delivery via customer door, parcel shops, smart mailbox, free-lance couriers and consolidation centres


Business and IT Transformational Drivers II

• Proliferation of in-house, incompatible and interdependent parcel IT systems

• Drive towards the use of COTS applications for parcel industry in order to mitigate risks of large-scale failed IT investments


Motivation for Reinventing Parcel Logistics Centres I

The answer to reinventing Parcel Logistics is through the introduction of IT based smart network and distribution center optimisation tools:

Improved resource & peak load utilisation in yard and transport network

Easy to use but complex system that removes single point of failure in people

Reduced stress levels through non-verbal communication and noise reduction

Improved yard & gate transparency, traceability and service delivery schedule


Motivation for Reinventing Parcel Logistics Centres II


Increased safety and accident reduction through traffic light system

Improved asset management for distribution centre investments

Improved supply chain, customer satisfaction and shareholder value


Optimisation Paradigm for Logistics Centres

Postalia & Postonia:

• Different countries or states

• Different business, living and regulatory conditions

• Different strategic focus



Central Hubs

Regional Hubs

Local Sites

Web Depots

Inter-Site Communication

Asset Management


Central Hubs

• Heart of the network

• High transport volumes and complexity

• Individual processes and graphical map view

• High level of automation and optimisation


40 miles

15 miles

20 miles

15 miles

Total empty travel: 90 miles Reduction > 50%

100 miles

70 miles

Total empty travel: 205 miles

10 miles

25 miles

Logistics – Real-time Optimisation

Rule: Choose the closest follow up job

Order 1

Order 4

Order 2 Order 3

Order 1

Order 4

Order 2 Order 3

Optimised allocation with SyncroTESS algorithms


• Idealised simple planning problem: Assign n jobs to n vehicles Constraints: exactly one job per vehicle; every job assigned Objective: minimise the total cost

• Assume there are 60 jobs and vehicles. Can’t we simply enumerate? 60! = 60 x 59 x 58 x ... possible plans 60! = 8,3 x 1081 There are approximately 1078 atoms in the universe!

• Sophisticated OR algorithms can solve such a problem within seconds! For very small, idealised problems, we can even prove optimality

• Real problems are much more complex (e.g. 2,000 rather than 60 jobs) Guaranteed optimality is often out of reach and we must use heuristics in order to approximate the optimal solution

Vehi

cles

Optimisation


Central Hubs


Regional Hubs

• Hub and depot function

• Medium transport volumes, medium size and complexity

• Medium level of automation and optimisation

• Individual processes and graphical map view


Local Sites

• Low transport volumes

• Low complexity

• Little automation and no optimisation

• Standardised processes

• Schematic graphical map view

SyncroTESS Groups 32

SyncroTESS Groups …

SyncroTESS Groups 1 2 3 4 …


Web Depots

• Web Client for very small sites

• Collection of transport-relevant data

• Transmission to all sites within the network in real time



• Targeted exchange of relevant information throughout the network in real time

• Provision of content and priority information


Asset Management

• Transparency and control of passive transport units

• Proactive planning reducing peaks and bottlenecks

• Optimisation of transport unit stocks, ensuring availability and avoiding stock-outs during peaks


Asset Management

• Planning of stocks (3m) and movements (50m p.a.)

• 1,200 locations across Europe

• Volume and itemised control

• More than twice as productive as competing systems (movements per box-year)



Central Hubs

Regional Hubs

Local Sites

Web Depots


Asset Management


Summary: Why Parcel Logistics Centres need reinventing?


Improved resource & peak load utilisation in yard and transport network

Easy to use but complex system that removes single point of failure in people

Reduced stress levels through non-verbal communication and noise reduction

Improved yard & gate transparency, traceability and service delivery schedule


Summary: Why Parcel Logistics Centres need reinventing?


Increased safety and accident reduction through traffic light system

Improved asset management for distribution centre investments

Improved supply chain, customer satisfaction and shareholder value


Logistics Centres References

in 2000:

• 62 Web Depots

• 3 Central Hubs:

• Inter-Site Communication



in 2010:

• 39 Web Depots

• 3 Central Hubs:


• 3rd Party Logistics

• major upgrade

• Central Hubs:



in 2020:

• 11 Regional Hubs:

• 24 Local Sites / Groups


• 39 Web Depots

• 3 Central Hubs:


• 3rd Party Logistics

• + “Paket 2020”


Case Study – Hermes Logistik Gruppe Deutschland

• Annual transport volume: - 44.000 truck tours - 256 mio. shipments

• West HUB Hückelhoven - approx. 50 mio. parcels per year - live since 2008

• Central HUB Friedewald - approx. 70 mio. parcels per year - live since 2009

• North HUB Hanover - approx. 50 mio. parcels per year - live since 2010

• HUB Ohrdruf - handling of bulky goods - live since September 2011

• East HUB Haldensleben - approx. 56 mio. parcels per year - live since October 2011


Case Study – Swiss Post (PostLogistics)

• Annual transport volume: - 13.5 mio. km, road - 27 mio. km, track - 110 mio. parcels

• Intense fluctuations (Christmas etc.)

• Härkingen Parcel Centre - approx. 48 mio. parcels per year - live since 2000

• Frauenfeld Parcel Centre - approx. 42 mio. parcels per year - live since 2000

• Daillens Parcel Centre - approx. 24 mio. parcels per year - live since 2000

• Web-Interfaces to 39 distribution depots


Selected References: Logistics Centres


INFORM References

INFORM optimization systems are used by more than 1,000 companies worldwide


Thank you for your attention!

Priv.-Doz. Dr.-Ing. Eva Savelsberg Vice President Logistics Division

M. Sc. Engineering Stig Reenberg Hansen Business Development Director Australia

Stig Reenberg & Eva Savelsberg, Inform

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