Shared data is key to low carbon logistics

By Dr. Beatriz Royo, Postdoctoral Research Fellow at ZLC and Dr. Spyridon Lekkakos, Assistant Professor at ZLC.

Freight transport, logistics and supply chains are an increasingly data-rich environment. Yet it is claimed that only a quarter of the data available is actively analysed by shippers, carriers or customers in near real time to find additional value.

This does not just perpetuate commercial inefficiencies – it actively prevents the emergence of more sustainable business models. As it is, a quarter of road freight journeys in the EU run empty, while the lack of actionable data prevents preferable modes such as rail or inland water from developing the required flexibility and responsiveness.

These are the issues driving the SELIS, or Shared European Logistics Intelligent Information Space, project, which has just completed its three year programme funded from the Horizon 2020 budget. ZLC has been actively involved in a consortium with 38 logistics stakeholders and ICT providers from 11 European countries.

The objective has been to foster collaboration between operators and across modes by creating Supply Chain Community Nodes or SCNs to enable and drive data sharing and interaction between the different logistics stakeholders in a supply chain or trade lane. That will over time enable more economically and environmentally sustainable business models. By building common open standards, protocols and applications and taking advantage of developments such as cloud computing, these SCNs are also ‘federable’ – they can be plugged together to enhance collaboration in wider and deeper logistics communities.

SELIS has built on existing international and industry standards and incorporated advanced algorithms, machine learning, predictive analytics, embedded industry ‘knowledge’ and other ‘big data’ techniques. Both qualitative and quantitative information from disparate sources can be transformed into actionable predictions allowing more accurate, informed and timely decision-making.

To prove that these developments will actually deliver tangible benefits in the real world, SELIS has run a series of ‘Living Labs’. These involve business partners developing and piloting specific applications with real customers, real goods, real money, and real issues.

Better by barge

One Living Lab centred on the potential for greater use of inland waterways to move containers from ports into the hinterland of North West Germany, the Netherlands and Belgium.

Two inland water operating companies, Trimodal and NWL, trialled SELIS solutions intended to improve planning and execution through better data flows between seaport terminals, inland hubs and the operators, especially data from different sources on barge position, vessel sailing status, and the status of individual containers. Advanced data analytic techniques have created detailed insights in ETA accuracy and lead time reliability.

They helped to automate planning tasks and optimise capacity utilisation as well as data exchange. While the quality of input data could still be improved, and the SCN would benefit from extension to other ports and hubs, the operators are sufficiently encouraged to intend gradually integrating the SELIS solutions to their existing Transport Management Systems, customer by customer. It is expected that this will increase the competitiveness and use of inland water, with accompanying reductions in CO2 emissions.

Urban loads

Urban logistics poses its own particular problems. One set of Living Lab trials applied SELIS solutions in Brussels, Athens and Milan.

In Brussels, Sumy, a logistics service provider specialising in last-mile, temperature-controlled distribution, worked with Belmedis, a pharmaceutical wholesaler, to create a new shared delivery platform for a network involving nine distribution centres and 4,000 customers with up to 3 deliveries a day. Solutions required real time, secure, collection of order data, route planning optimisation and the consolidation of loads to individual pharmacies while respecting contractual agreements for more frequent delivery. The trial included a collaborative cost model to calculate the costs and gains for each participant. The reporting dashboard also gave feedback on environmental gains.

This approach to collaborative planning reduced driven distances by 19%, driving time by 8% and CO2 emissions by an estimated 13% while vehicle load factor was up 17% and empty running down from 18% to 10%. At the same time delivery reliability was improved.

Similar approaches were adopted by Sarmed, a large warehouse and distribution company in Greece. Sarmed’s platform included capacity and demand management functionality, and lead time quotation and price negotiation tools to facilitate the sharing of transport capacity and resources among regional distribution and logistics providers. Cost reductions, load factor improvements and an estimated 10% drop in CO2 footprint were reported.

In similar vein, Zanardo, a North Italian logistics provider serving hospitals in urban areas, used SELIS solutions to address problems of poor fleet utilisation and inefficient load/unload processes, caused by a lack of real-time shared information on delivery status and available truck capacity. Data from existing warehouse management and other systems were brought together into a real-time data consolidation and flow management tool. Load factor improvement of 15%, CO2 down by 15%, and a 15% reduction in load/unload times (which has allowed a tightening of the operational ‘window’) are reported, along with a 2% annual saving on total operating costs.

Borderline

Inefficiencies in border procedures and Customs compliance still impede logistics. Unreliable, inaccurate and incomplete data makes it hard for agencies to achieve supply chain visibility. This in turn makes supervision, decision making, risk detection and management difficult for companies and agencies. Too many legitimate consignments are held up while fraudulent trades may be missed.

A SELIS Living Lab, with Conex, aimed to build on past and current EU and UN projects through creating a Pipeline Data Exchange Structure. This would enable the multiple parties (customers, vendors, carriers, freight forwarders, tax and customs authorities) each responsible for different data elements to contribute to a single and complete ‘source of truth’ for a consignment.

A publish/subscribe SCN would allow participants to send the pertinent information to the intended recipient (and only that recipient) in timely manner (eg advance filing), and as required for the different waypoints on a voyage or journey.

It wasn’t possible fully to test this approach, in part because it required the technical input from authorities who are rather pre-occupied with Brexit uncertainty. (Ironically, the SELIS approach could well be part of the solution to Brexit-type problems). But discussions with cross-border agencies suggest that the approach is worth following up.

Follow the money

Another set of Living Labs looked at the data problems around the related subjects of inventory management and supply chain financing, specifically in the grocery supply chain. The business partners were the Greek FMCG supplier Elgeka, and separately the Portuguese retailer Sonae.

At Elgeka it was found that despite extensive use of EDI there was little visibility of order delivery status, leading to retailers over-ordering and suppliers holding excessive buffer stock. This puts strain on working capital requirements, which impacts in turn on the risks perceived by third party supply chain financing companies (factors).

SELIS offered solutions to one aspect of the risk problem – that payment to the factor from the retailer is delayed because the invoiced quantity hasn’t been received (or can’t be shown to have been received) on time and in full. The solutions included a visibility and collaboration tool with automated order fulfilment tracking for use through the entire supply chain; a tool using Big Data analytics to generate ‘excellence’ scores to help factors assess risks associated with supplier delivery reliability; and a solution to facilitate the sale of supplier receivables to factors.
Benefits included reduced working capital requirements and better credit ratings for Elgeka, as well as an improved relationship with retailers through better visibility and risk management.

In Portugal, Sonae was facing challenges in integrating with SME suppliers in the way that it can with larger suppliers and retailers, due to a lack of visibility. SELIS created an independent third-party platform to facilitate data sharing between Sonae and suppliers, while inventory management algorithms were used to forecast and avoid stock outs and excesses. Sonae stock levels and sales forecasts were combined with supplier production plans, stocks, lead times and constraints in a collaborative inventory management tool. The result has been improved supplier performance ratings, better order fulfilment with lower inventory, a 2% cut in food waste, and a better ability to use promotions in response to supply and demand opportunities.

The future

SELIS has been largely successful in achieving its objectives. Experience shows though that there are still barriers to a more collaborative supply chain approach. The willingness to share data is still low, and that won’t change until there are secure infrastructures in place along with a ‘whole supply chain’ optimisation culture.

Although the Horizon 2020 funding has now expired, SELIS goes on. The technologies developed are being commercialised and where appropriate patented. Many of the firms involved in Living Labs are committed to more widespread adoption and development, although some of the concepts will require further investment and professional software support. There is a need to analyse how a blockchain could be engaged to ensure immutable “trace log” of transport events, and fast and secure establishment of “smart contracts” among the actors. And SELIS will continue to participate in the definition and fulfilment of a roadmap towards more sustainable and collaborative supply chains, exploiting digitalisation to create a low carbon, sharing economy.

For more information visit www.selisproject.eu or contact Beatriz Royo at broyo@zlc.edu.es