Study of outbound logistics in Singapore shipping industry

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A study of the processes followed in a typical outbound process in the shipping industry, with the emphasis being on Singapore. ERP implementation opportunity.

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Study of outbound logistics in Singapore shipping industry

  1. 1. 10, Hyderabad Road Phone +65 62704748 Off Alexandra Road nex Singapore 119579 Fax +65 68385406 Applied Research Project Report Study of Outbound Logistics Processes in the Singapore Shipping Industry Prepared By: Soham Pablo Banerjee Areez Elavia
  2. 2. Applied Research Project Report On Study of Outbound Logistics Processes in the Singapore Shipping Industry Submitted in partial fulfillment of the requirement of Global Masters in Business Administration (GMBA) Information Technology Management Specialization Submitted By: - Mentored By:- Soham Pablo Banerjee XXX Areez Elavia XXX
  3. 3. Table of Contents Table of Contents...............................................................................................................................1 Executive Summary...........................................................................................................................3 About XXX Consulting........................................................................................................................4 Brief Introduction to the problem under study......................................................................................5 The Shipping and Logistics Industry in Singapore.........................................................................5 Introduction to Supply Chain management..........................................................................................7 Statement of the problem...................................................................................................................9 Area under Study.........................................................................................................................9 Beneficiary of the research...........................................................................................................9 Methodology....................................................................................................................................10 Literature Review.............................................................................................................................11 Inbound Operations...................................................................................................................11 Port to Port (trans-shipment) Operations.....................................................................................12 Outbound Operations.................................................................................................................12 Outbound Logistics Operations.........................................................................................................14 Common IT systems implementation................................................................................................15 Content Management................................................................................................................15 Customer Relationship Management..........................................................................................15 Enterprise Resource Planning ...................................................................................................15 Supply and Demand Chain Management ...................................................................................16 E-procurement and E-markets ...................................................................................................16 Usage of IT systems in outbound logistics management....................................................................16
  4. 4. Limitations.......................................................................................................................................17 Global Logistics: Door to Door Process.............................................................................................18 Outbound Logistics Process Description...........................................................................................19 Carrier/Trucker Selection Process....................................................................................................20 Activity diagram for processes identified............................................................................................22 Warehousing Process......................................................................................................................25 Container Tracking and Booking Management System.....................................................................27 Trucker Generic Processes..............................................................................................................30 Document Flow Diagrams................................................................................................................32 Addressing the Pain Areas...............................................................................................................34 IT Enablers .....................................................................................................................................36 Conclusion and Recommendations..................................................................................................40 Appendix A: Areas covered in Personal Interview..............................................................................42 Appendix B: Document Flow Diagrams.............................................................................................43 Appendix C: End-to-End Outbound Logistics Activity Flow.................................................................46 Company List...................................................................................................................................47 Glossary..........................................................................................................................................48 Bibliography.....................................................................................................................................51 2
  5. 5. Executive Summary The following research project was conducted to gain an understanding into the Shipping and Logistics industry in Singapore, with a focus on logistics operations from the time goods arrive at the Singapore port to the time they reach their end destination. The purpose behind the research project is to empower executives of XXX to use the following documentation as a handy reference when approaching a shipping or logistics company in Singapore for business. XXX specializes in SAP based ERP implementations, and business knowledge is essential for the firm to be able to approach prospective clients for business. The research methodology followed was a combination of secondary and primary research. We first read up on existing research papers written about the shipping industry in general and about the shipping and logistics businesses in Singapore in particular. The information gathered from this exercise is documented in chapters 1 and 2. Our primary research was conducted by visiting a number of logistics and shipping line firms in Singapore, and by contacting Supply Chain Management experts in Singapore and India. We analyzed the data we gathered from these sources and chalked out a generic process that can be used as a reference point for an ERP implementation team. Our focus was always to chalk out processes with the intention of identifying IT enablers which would help us to identify which areas presented the best opportunities for XXX to tap into. Our findings include operation processes in outbound logistics, warehousing, trucker planning and space optimization algorithms. As a conclusion to our project we have presented a number of appendices, which include a detailed understanding of document flows between various processes within the outbound logistics framework. We believe that we have, at the end of our project, stayed true to our mission of understanding the shipping and logistics industry in Singapore and have been able to provide a reference manual to XXX Consulting for their future ventures. 3
  6. 6. 1 Introduction Chapter About XXX Consulting XXX Consulting provides strategic solutions to its customers in order to optimize their supply chains. XXX is a trusted advisor and partner to a huge number of global leading firms such as Flextronics, Mahindra & Mahindra, Nike, Whirlpool, Exxon Mobil, etc. Its main business competence lies in providing its customers services ranging from supply chain strategies to implementation, planning, analytics, design and data management. XXX helps its clients and customers derive value from their current supply chains. XXX’s workforce is not just made up of programmers and developers. They have with them consultants who have years of experience in the field of supply chain management, manufacturing and other related fields there by enabling them to service their customers and identify their issues in an efficient manner. SAP is one of the strategic partners of XXX. XXX has completed over 100 SAP implementations of their Supply chain solution for their customers. XXX’s relationship with SAP covers three primary areas: • Systems integration and implementation of SAP supply chain solutions • Participation in development and testing of SAP product offering • Participation the SAP xApps program XXX is currently tendering its services to clients and customers in the following industries: • Semiconductor • High Technology • Consumer Products • Automotive • Apparel & Footwear • Oil & Gas 4
  7. 7. Brief Introduction to the problem under study The Shipping and Logistics Industry in Singapore The logistics industry is an important part of the economy of Singapore and there are numerous small, medium sized and large market players in operation. The industry employs a little less than 100,000 people on the island and revenues from the various firms involved in logistics and supply chain operations contribute about 8% to the national GDP. In its plan for the next 10 years, the industry and the Singapore government aims at maintaining the status of Singapore as a premier transport-logistics hub in South East Asia, given the cutting edge processes followed in the maritime, aviation and land transport fields, and the management excellence available. Given this vision, the same authorities estimate that the contribution of the logistics and supply chain management industry will contribute about $25b to the country’s GDP in the next 10 years, making it about 15% of the country’s economy. The increase in earnings will also lead to a rise in employability in the market, with more than 150,000 possible jobs expected over the 10 year period. There are however, numerous industry best practices which are forcing the smaller and medium sized players in the field to move up the value chain. A key expansion area has been by way of implementing systems which enable all stakeholders of the logistics and supply chain business to have a real time and concurrent view of data. The implementation of such a system today counts as a major value add by the logistics firm, as all those involved with the movement of goods, starting from the agent at the source port to the liner to the agent at the destination port, along with peripheral stakeholders like truckers, have a unified view of the system. In the drive to implement e- logistics in Singapore, a key initiative has been the deployment of electronic platforms to link the various logistics sections of the supply chain and ensure quality of service. An increasingly prevalent trend in the industry, especially by the major market players are to outsource the logistical functions to third party logistics (3PL) / fourth party logistics (4PL) providers, which ensure that companies avoid capital locking in warehouses, trucks and containers. 5
  8. 8. During the course of our research we have found that there are two major areas where new players can make their contribution. The first is in the area of implementation of ERP systems. The second is in the area of security in enterprise wide system implementations. Since the ERP system in the case of the shipping/logistics industry will be accessed globally, the area of security is one which business stakeholders take very seriously. Singaporean universities in are fast building their local talent pool in this area. Singapore is actively building up its own pool of professionals who possess in-depth knowledge of the industry. To achieve this, the development of comprehensive manpower education training programs holds great potential. In Singapore, there are upwards of 3000 local and overseas based players in the logistics and transportation space. There are service providers who specialize in services for the aerospace, chemical and biomedical industries. These logistics providers are in great demand as the industries they services all have their regional hubs in Singapore. The government has sanctioned the use of the Banyan Logistic Hub on Jurong Island (Southern Singapore) exclusively for the use of logistic companies specializing in chemical goods transportation. The Singapore government has undertaken a program called the Logistics Enhancement and Applications Program (LEAP) which is a platform for government and private sector collaboration. Maritime Logistics The Singapore ports, located as they are at the crossroads of main shipping routes, offer good connectivity to the APAC region. More than 200 shipping lines connect Singapore to about 130 countries and 700 ports. At any given time, there are about 1000 ships docked in the Singapore ports. The six terminals in Singapore (Tanjong Pagar, Keppel, Brani, Pasir Panjang, Sembawang and Jurong) accommodate various types of vessels, ranging from container ships to bulk carrier. The vessels carrying crude oil call at the oil terminals maintained by the respective oil companies. Non oil carrying vessels call at the terminals maintained by PSA (Brani, Keppel, Pasir Panjang, Sembawang and Tanjong Pagar). These terminals along with the Jurong Port Terminal (which is not maintained by PSA but by Jurong Town Corporation) are equipped to handle conventional, bulk and container cargo. 6
  9. 9. The 5 ports mentioned above are regulated by the Maritime and Port Authority of Singapore (MPA), which is the legal body in charge of regulations in the shipping area. The island nation has been ranked as the world’s busiest port by way of tonnage by the American Association of Port Authorities. About 40% of all vessels calling in at Singapore carry containers, which is the focus of our study. Land Logistics Warehousing is an important side industry to the port industry. PSA, the major player, maintains over 500,000 square meters of storage space at 4 locations in Singapore in proximity to the various ports. These are located at Tanjong Pagar, Pasir Panjang, Alexandra and Keppel, with Keppel distripark being the most modern and well equipped of the four. Keppel Distripark is equipped to receive goods from PSA container terminals through a flyway. The warehouse within has place for about 3000 containers, along with space for lorry parking. It is certified to handle dangerous and hazardous cargo. The Distripark uses PortNet for real time information on stored containers. Alexandra Distripark is the largest facility among the four in Singapore. There are many smaller warehousing facilities all over the island, with facilities ranging in area from 15,000 to 20,000 square meters. Introduction to Supply Chain management A supply chain is a network of facilities and distribution options that performs the functions of procurement of materials; transformation of these materials into intermediate and finished products; and distribution of these finished products to customers. [Ganeshan & Harrison 1995, Introduction to Supply Chain Management] A supply chain is a series of processes which supply one to another. In its most simple layout, the chain is a one-way sequence of processes: In real world situations, each process can form whole supply networks, and processes can supply each other. Typically the costs of managing the supply chain can represent about 7
  10. 10. 10-15 per cent of sales in most industries. It has been seen that programs to improve supply chains might raise margins by 2% and improve customer satisfaction levels dramatically. [Mani Aggrawal and Minsok Pak 2001, Getting Smart about SCM] The entire value chain as followed in the shipping logistics industry can be depicted as follows: [Coller, Maasdorp, Mavundla 2007, Durban Maritime Industry – A Value chain Analysis] Infrastructure Human Resource Development M Technology Development A R G Procurement I N Inbound Outbound Marketing Operations Logistics Service Logistics & Sales 8
  11. 11. 2 Research Chapter Methodology Statement of the problem Area under Study Study of outbound logistics processes in the Singapore Shipping Industry with the intent of identifying business – IT alignment gaps and to empower ERP consultants to work in the logistics sector in Singapore. Through our study we intend to answer the following questions : a) What are the common business processes in the outbound operations of a typical shipping firm in Singapore? b) What are the common IT systems that act as enablers in these out bound processes? c) What are the common gaps between the outbound business process requirements and the IT systems that are typically found in shipping firms? At present, there are areas of improvement in effective implementation of ERP systems within the logistics service providers. We hope to arrive at a conclusion which will help us identify avenues of effective system implementations. Beneficiary of the research XXX Consulting specializes in consulting for firms intending to implement SAP based ERP solutions. The firm intends to enter the shipping logistics market in Singapore. The beneficiary of our research will be the ERP consultants from XXX Consulting whom we plan to empower with the following information: a) Common business processes followed in the shipping industry from the time goods land in the port to the time goods reach the destination b) Common IT systems in place that act as enablers to these processes c) Planning that goes into the outbound processes in the shipping industry 9
  12. 12. d) Business to IT alignment in the outbound operations Methodology The research was started by defining the area under study, as given above. After obtaining the background of the requirements from XXX Consulting, we conducted a literature review to gain knowledge into the field of • Supply Chain Management • Logistics – specifically Outbound Logistics • The shipping and logistics industry in Singapore We then went about identifying local firms to contact. The kind of information we needed is not available in company websites or available academic literature. The information we were looking for was, almost in every case, proprietary to the logistics firms. We thus prepared ourselves with basic interview questions (Appendix A), and conducted a series of semi structured personal interviews with executives from the shortlisted firms who agreed to meet with us. Once the primary data was collected, we analyzed the responses to identify commonly followed protocols and chalked out our understanding of the outbound logistics processes as followed in Singapore. As a result of refining our understanding, we had periodic review meeting with XXX Consulting, and made sure that the direction of our research was kept on track. The final stage of our research involved identifying the gaps in the processes identified. We then coordinated among other groups doing research for XXX, and recommended an end to end IT enabling solution to help XXX approach any logistics provider in Singapore with the intention of implementing an ERP system for them. 10
  13. 13. Literature Review For the shipping industry, a supply chain can be divided into three main parts, the Inbound Logistics, Port to Port and Outbound Logistics. Inbound Operations This part of the shipping process deals with the operations that take place from the time the contract is signed by the shipper and the logistics company to the time the goods reach the port of departure. [Supply Chain Definitions and Key Measures, v1.0.0, 2007] A brief flow of operations can be shown as follows 11
  14. 14. Port to Port (trans-shipment) Operations This section of the shipping process deals with the operations that take place from the time goods leave the source port to the time the goods reach the destination port. A brief schematic of the process can be shown as below: Outbound Operations Outbound logistics comprises the preparation of goods to be delivered from a warehouse to a receiving location. Outbound processing within the scope of warehouse management typically comprises activities like the notification of goods to be supplied from a warehouse to a customer for which the outbound delivery serves as the reference document, picking, packing, physical goods issue in warehouse, loading, goods issue, advising advanced shipping notifications to business partners and, obtaining a proof-of-delivery from the receiving business partner. [SAP Help Documentation, 2008] 12
  15. 15. An overview of the operations is as follows There is an aspect of warehousing which bears mentioning here. The practice of cross docking is an important part of warehousing activities. An instance of cross docking is when a half filled container arrives in port and there are already a few goods to be picked up from the warehouse to transport to the local agent’s holding yard. In this case the half filled container will be brought into the warehouse and kept in an area called the Cross Dock, which is normally near the gate of the warehouse. The other orders that are to be picked from the warehouse are picked up and kept with the half filled container in the cross dock. Finally all goods are put onto the truck for transportation to the local agent’s holding yard. As stated earlier the focus of this project is to study in detail the Outbound Logistics processes in the Singapore shipping industry. [Lata Chatterjee, Chiung-min Tsai, Center for Transportation Studies 1997, Transportation Logistics in Global Value and Supply Chain.] 13
  16. 16. Outbound Logistics Operations The details of the outbound logistics operations can be summarized as follows: [SAP Business Maps Process documentation] 14
  17. 17. Common IT systems implementation Customer Relationship Content Management Management Supply and Demand Enterprise Resource Change Management Planning E-Procurement and Markets Content Management In most cases this is an Internet based web site which provides and often gathers information which can be processed into actions and analyses critical to the business. Customer Relationship Management With the increased importance and possibilities of interaction with customers, CRM systems have gained considerable importance. The system helps the firm gather information about customers in an intelligent manner and makes it available at the time of the next contact. Enterprise Resource Planning These systems are aimed at integration of logistics within a single organization. The systems strongly support the efficient execution of various logistics processes, like customer order 15
  18. 18. processing, production control, product sourcing and procurement, and the planning and control of production schedules, inventory management, and transport orders. In the present research project, we plan to delve deeper into the implementation of ERP systems in the shipping industry. Supply and Demand Chain Management These systems are packages containing a series of functionalities aimed at planning, order entry, and execution over the borders of individual businesses. It requires additional functionality on top of the ERP systems. E-procurement and E-markets These are systems user very strong development at present. This is less of a business application and more of a mechanism for organizing joint procurement facilities around databases accessible through the internet. [Ramberg, Pedersen, Knoors 2004, Outbound Intermodal Logistics, from the Manufacturer’s Gate to the Final Customer: The Future Logistics Management IT Systems as Perceived by the Supply Chain Partners] Usage of IT systems in outbound logistics management Integration of the supply chain has become an important way for the industry to gain competitive advantages. Managing Outbound Logistics using IT systems is a challenge today due to the nature of varied IT systems between the various actors involved in the supply chain process. The best logistics companies have gone beyond putting barcodes on their containers and tracking shipments by computer. The below figure shows the results of a survey of over 100 logistics service providers (LSPs) – companies that primarily offer shipping and warehousing services – the best performers are investing in highly integrated systems across internal and external supply chains. 16
  19. 19. [Kawamoto 2000, A world class challenge for Japanese Banking – Bank’s profitability Revolution] • The market of system solution to outbound logistics has all the characteristics of an infant industry. The conflict of interest between the software and consulting companies selling the system technology and the industries and service companies buying the intended solutions, is evident. The sellers will normally try to identify the buyer’s financial position and their willingness to invest. The offered solution is then priced accordingly. Often limited coherence between the functionality promised and the related price exists. The implementation success is often low, often leading to court cases between the seller of technology and the buyer of the intended solutions.[Bowerson, Daugherty, Dröge, Rogers, Wardlaw, 1989, CLM, 1995]. Limitations • Most of the information that is needed to reach a more definitive understanding of the shipping is proprietary to every logistics firm. We have had to infer a lot of the information presented in this document based on the results of the personal interviews. • Quantitative research is difficult to perform in this research for the same reason. 17
  20. 20. 3 Analysis and Chapter Interpretation Global Logistics: Door to Door Process The following is a description of the processes that go towards forming the outbound logistics chain in global door to door delivery. 18
  21. 21. Outbound Logistics Process Description 1. Goods Arrive in Destination Port 2. Customs clearance takes place in the port. This activity is supervised by the port authorities. 3. In case of transshipment cargo arriving, the trucker does loading optimization into the incoming container. 4. The Logistics company books the delivery date with the consignee presence in destination 5. The local agent of the Logistics Company provides a Delivery Order to the Trucker to pick up container(s) from the port 6. Loading of container(s) onto truck at port, under supervision of port authorities 7. Trucker unloads container(s) at logistic company agent’s holding area. 8. Container is signed off between logistics company and trucker, after being checked for damage and satisfactory delivery 9. The Logistics firm updates their container manifest 10. If the container(s) are for one customer at destination then trucker is called on delivery date to dispatch the goods. If there is more than one customer for the containerized goods then the goods are unloaded and loaded into customer specific containers using loading optimization algorithms. In either case the loading activity is done by the trucker. 11. Cash deposit left by trucker at the logistic company agent office for the time the container in the hands of the trucker. 12. The goods, on reaching consignee are checked for damage. If there is no damage, then the goods are signed off and the transaction with the customer ends. In case of damage/unsatisfactory delivery, the issue is resolved with the logistic company insurance firm and consignee insurance firm. 13. The container is then returned by the trucker to the logistics firm holding area and deposit money is refunded by the logistics firm. 14. Container manifest is updated by the logistics firm. Following our research of the various Logistics companies, one of the processes which we were able to find that had commonalities amongst most Logistics Providers, was that of the Carrier/Trucker Selection. Most of the Logistics companies used a varied form of a system (some as simple as an excel sheet) to carry out this process. 19
  22. 22. Carrier/Trucker Selection Process 1. The Logistics Company/3PL maintains a list of carriers or truckers associated with them. The common details that are captured by the Logistics Providers include: • Rate per mile charged by the Carrier/ Trucker • The pair of locations between which the carrier/trucker transports goods • Distance between the pair of locations • Probability of each carrier/trucker. The probability is assigned by the Logistics company dependant on a few parameters. These parameters could vary from company to company. Some of the parameters used include: o On time delivery o Quality of service provided o No. of orders previously serviced o Level of commitment o No. of trucks of particular type 2. Once the goods have left the exporter’s country, the Bill of Lading issued by the shipping line is sent to the importer. 3. The importer gives the BOL to the Logistics Company. Logistics Company now coordinates which the shipping line for the arrival of the ship into the importers’ port. On getting the confirmation, the Logistics Company will use its Trucker Selection system to identify the best suited carrier/trucker for the job. 4. The Logistics Company enters the source and the destination location, the date of arrival, the no of containers, the date of departure. 5. The software selects the best suited carrier/trucker who gives the best price. The carrier/trucker is chosen based on the truck availability and the distance it takes from source to destination. 20
  23. 23. 6. The Logistics Company has the option of selecting the carrier which the software has chosen or it can select a predetermined carrier for the shipment. 7. Once the carrier is selected, a notification is sent to the carrier/trucker inviting him to accept the shipment for the shipment and to check his availability. 8. The carrier can accept or reject the shipment based on the availability of trucks. If the carrier rejects the tender, the software selects the next best carrier/trucker and sends an invitation to him for acceptance of shipment. If the carrier accepts the shipment, it is fed into the system and shipment is confirmed. 9. The carrier/trucker then calls the source as well as the destination and takes the appointment and feeds it into the system. The carrier/trucker fixes the appointment dependant on the time required to deliver the goods from the destination port. 10. At every stage of loading the goods into the truck, en route, the truck reaches the destination, unloading from the truck, all these statuses are updated in the system. Therefore by doing this the carrier/trucker can keep a close tab on the movement of the goods as well as the importer and head office can be well informed. From the research we were also able to identify some of the systems that around 75% of all logistics companies use. Though the actual system might not be the same, the underlying function of each of these systems is identical. The details activity diagrams of all the above mentioned processes are shown below. Appendix C contains the End-to-End activity flow for the outbound logistics. 21
  24. 24. Activity diagram for processes identified Picking Up Goods from Port... 1 Picking Up Goods from Port... 2 22
  25. 25. Delivery of Goods to Consignee... 1 Delivery of Goods to Consignee... 2 23
  26. 26. Delivery of Goods to Consignee... 3 Freight Forwarder Selection Process 24
  27. 27. Warehousing Process Once the goods are received at the port, there is a possibility that they need to be transported to a warehouse as the customer might not be willing to take delivery of all the goods currently. Thus Warehouse Operations become an integral part of the Outbound Logistics operations. Through our research we are able to provide a brief overview of the warehousing processes that are followed in Singapore. 1. Once the container arrives at the warehouse, the warehouse manager needs to check if an unloading ramp is available for the truck or no. If not, then the container is kept waiting. 2. If the ramp is available, the Warehouse manager checks if the ASN (Advanced Shipment Notice) information is received or no. If no, then the container is kept waiting. 3. If the Shipment notice is received, then the warehouse manager prints the labels for the cargo and allocates manpower to unload the goods from the container. 4. The workers then unload the cartons and build pallets. 5. The pallets are then moved to the staging location. 6. At the staging location, the height of the pallet is checked. If it is not fine, then cartons are moved into the pallet or out of the pallet to adjust the height. 7. Once the height is found to be fine, the pallet is wrapped and moved to the export location. This is dependent on the condition that space is available. 8. Once the pallet is moved to the export location the GLL is prepared. 9. Then the warehouse manager checks if the cargo has to be transported via Road or Sea. 10. The processes of transporting the goods via road and sea are different. 11. Road Transport Process: a. The GLL prepared is submitted to the Supervisor b. The supervisor submits the GLL for invoice creation c. Once the invoice is ready then the trailer is booked dependant on its availability d. Once the trailer gets booked, it arrives at the dock, loads the pallets and the loaded trailer are then sent to the destination. 12. Sea Transport Process: a. The Logistics Company books the container depending on its availability. b. Once the container is booked, it arrives at the dock on the scheduled day and time 25
  28. 28. c. The pallets are loaded onto the container in an optimized manner keeping in mind the various constraints d. The loaded container is then sent to the port. e. The GLL is then submitted to the supervisor who sends the GLL for Invoice creation. f. Once the invoice is ready, the container is shipped from the port. The Sea Transport Process mainly deals with Trans-shipment goods. 26
  29. 29. The generic processes found to be taking place in a warehouse can be summarized in the flowchart below. Start Land Sea Container arrives Submit GLL to in dock and is supervisor loaded Arrival of container in warehouse Supervisor leads Keep containers the invoice Loaded container waiting creation using sent to port GLL Advanced Shipment No Notification available ? GLL submitted to Truck is booked supervisor Yes Print Labels Supervisor leads And allocate Truck arrives at Invoice creation people to dock and is loaded using GLL container(s) Unload cartons Trailer sent to Ship container and populate into destination from port palettes End End Move Palettes to Staging locations Wrap palettes when they are of right heights Move wrapped palette to ‘Export’ location in warehouse Prepare a General Lend Lease document Transport by Land or sea ? Land Sea Land Sea Container Tracking and Booking Management System One of the systems identified addresses the need to maintain and track the details of the logistics company’s containers and allow its dealers to make bookings on behalf of the customer. One such system is shown below. The system is integrated amongst the different agents located all over the world. The Logistics Company can use this system to view different kind of inventory reports for the different kind of containers that it owns. 27
  30. 30. 1. The inventory report allows the logistics company to track the no. of Empty containers that are available as well as the other containers that are in transit, export laden, import laden or undergoing repair. This information allows the logistics companies plan for the shipments in advance and incase the logistics company doesn’t have a spare container they do lease out extra containers for a small time period. 2. The system also allows the logistics company to view the various bookings that have been made by a particular agent over a specific period of time. 28
  31. 31. 11. The Logistics Company can then view the outstanding booking requests made by the specific agents. 12. The agent would place a booking request and the Logistics Company would approve or reject it depending on the requirements and availability of containers. 13. If the Logistics Company accepts the booking, it has the option of mentioning till when is the booking valid and also mentions any additional agreement level details that are required. For example, if the shipment that needs to be transported is of scrap metal, the oil and grease from the scrap metal can damage the inner flooring of the container. To counter this the logistics company usually places a clause mentioning that the container needs to be cleaned and incase of any damage the floor ply of the container needs to be replaced. 14. The Logistics Company also mentions the no. of Free Days that the container can be kept at the port. This period differs from port to port. In Singapore the typical time period within which the container has to be shipped out is approximately between 4-5 days. In India, however, the no. of free days is approximately between 14-16 days. 29
  32. 32. Trucker Generic Processes Besides the processes followed by the Logistics companies, our research also led us to derive a generic set of processes followed by the Trucker/Carriers. These processes are mainly catered to the planning, route optimization, vehicle space allocation and estimation of no. of containers. More and more companies are seeking cost saving solutions in Logistics due to the increase in the no. of players in this area. Around 70% of the Carrier/Trucker Companies use manual methods to calculate and plan for the vehicle space utilization and estimation of no. of containers. Some use excel sheets to maintain the different routes where as around 95% of the Carrier/ Trucker companies use a GPS Tom-tom to navigate and identify the shortest/fastest route to reach their destination. These GPS devices get real-time feeds from satellites and are useful in identifying the exact position of the vehicle while it is en route. As mentioned before, one important aspect for the trucker/carrier is the vehicle space allocation. The truckers have to load goods into their trailers in a manner which allows for optimum utilization of space so that they can carry as many pallets as possible keeping in mind the given constraints of placement of pallets, nature of material transported, orientation of pallets, etc. 30
  33. 33. One of the software used by a medium sized Trucker Company is called Cube Master. Cube Master is easy to use and powerful shipment load plan and optimization software that is used for trailers and trucks as well as allows logistics companies to carry out load planning for sea container, air container, pallet and carton. It reduces shipping and transport costs through intelligent cargo loading and optimal space utilization algorithm. Cube Master supports you in planning your order picking, loading and capacity requirements. The system delivers clear instructions regarding the work preparation in seconds and gives you reliable planning. With this, the personnel resources can be planned effectively, the order picking and loading times minimized and the number of freight cost relevant packaging and transport units reduced. 31
  34. 34. As shown in the above image, Cube Master allows the trucker to plan for the sequence of loading and unloading the cargo. Other software used by the trucker companies provides similar functionality. The ability to handle the various constraints is what distinguishes the level of software. Document Flow Diagrams Along with the process flow, below is the depiction of the end-to-end data and document flow that takes place in the Logistics system. The data required by each of the individual entities is outlined and displayed in the below figure. Through our research we were able to map out the various documents and data that are interchanged between the various stake holders throughout the cycle. A high level view of the Logistics system and the data/documents flowing into and out of the system is given below: 32
  35. 35. The carrier logistics part of the system represents the outbound logistics. All the documents and data that are sent by the Shipper are depicted by Red Arrows. The data sent by the Carrier are depicted in Purple Arrows and the documents and data sent by the Consignee are depicted in blue. These 3 together form the high level view of the entire logistics chain and the documents that are exchanged amongst them. We can further divide the Carrier Logistics into smaller and finer processes and on moving one level down, we can clearly identify the 2nd level processes involved in the outbound logistics and the data inputs and outputs that exist. 33
  36. 36. The level of granularity can be increased to go deeper and deeper into these processes. The Level 3 and Level 4 view of processes is available in Appendix B. Addressing the Pain Areas During the course of the study we uncovered a few pain areas which were common for most of the Logistics Companies interviewed. The pain areas identified are as follows: • The use of RFID technology by the Trucker and Logistics companies to track their packages: This technology is currently not being used by the medium and small size companies in Singapore. One of the main reasons for this is that the technology is relatively new and there exists no standardization in the use of RFID tags for container tracking. There however do exist some large 3PL companies like Fed-Ex, DHL, etc that do use RFID technology to track the packages at every stage of delivery. However the reason as to why they are able to successfully implement this is that they have their own fleet of trucks and distribution centers in which they can implement an organization wide standard for use of RFID technology. Besides the larger players, the manufacturers and end-customers usually tag their product packages with RFID to enable easier acceptance of goods at the delivery point and to speed up the entire supply chain. 34
  37. 37. • Truck Capacity planning is another issue that is faced by most logistics companies. The main issue here is how to load the trucks and trailers to ensure the optimum utilization of available space keeping in mind the constraints of cargo unloading sequence in which case certain goods might belong to a different customer and might have to be unloaded at another location, the orientation of the pallets and nature of goods which means that certain pallets cannot be placed in a particular manner. Most of the smaller players lack in this area as they do not possess appropriate applications to assist them in this aspect. The vehicle load planning is usually done by the smaller logistics companies using manual charts or through the use of spreadsheets. The medium sized logistics companies, even though use some form of sophisticated software, and are not currently using the software to its fullest. This is due to the lack expertise in using such IT systems. The people operating these systems are not extremely tech-savvy and hence they use only a limited set of features available in these systems. • Assignment of trucks to routes is another issue that is currently affecting the efficient working of the logistics and shipping industry in Singapore. There have been instances where multiple trucks have been dispatched on the same route which leads to redundancy. The main reason for this is the under-utilization of IT systems that the non- integration of various departments in the logistics and supply chain. All these issues can be addressed to some extent with the use of efficient and integrated ERP Systems. 35
  38. 38. 4 Conclusion and Chapter Learning IT Enablers We recommend that ERP systems be implemented in the a typical logistics firm in Singapore to iron out most of the gaps that we have identified in the previous section and thereby reduce the cost implications in the entire supply chain. The proposed IT enabled ERP process with emphasis in the outbound logistics process is as follows: 36
  39. 39. Goods dispatched from Port .. 1 • When goods are to arrive in port, the Logistics firm gets the info from PortNet and sends out automated mailers/sms to all truckers in the firm’s list. • The best quote is accepted and the trucker is engaged. 37
  40. 40. Goods Dispatched form Port .. 2 • When the cargo is loaded on the port, the trucker uses optimization algorithms to load cargo onto containers in case of transshipment or cross docking. • The trucker and logistics provider updates the FF system over the internet/mobile device which gives updated information about the current consignment and container status to the trucker and freight forwarder Goods Delivery to Consignee .. 1 • Once the goods reach the freight forwarder delivery yard, a quality check is done and the systems are updated to reflect the container and goods location. 38
  41. 41. • Once goods are en route to consignee yard, the same is updated in the system by the freight forwarder. Goods Delivery to Consignee .. 2 • The trucker may split the goods into various containers if the consignments are for different locations, and use space optimization algorithms for the same. Goods Delivery to Consignee .. 3 39
  42. 42. • Once the trucker returns the cleaned container to the freight forwarder, the trucker’s deposit is returned to him and the freight forwarder and trucker acknowledge the same in the system. Conclusion and Recommendations In conclusion, our research shows that there is ample opportunity in Singapore for XXX to expand their ERP design and implementation to the Shipping Industry. A very large proportion of the Logistics companies we spoke to used rudimentary tools for information sharing with their clients and third party truckers. These companies are willing to adopt and ERP approach if they are offered a solution for the right price. We have presented a short overview of the shipping and logistics industry in Singapore on page 6 and 7. XXX can use this information as a starting point to their situation analysis. In Chapter 3 we have presented our findings and have chalked out the common processes followed by a logistics service provider in handling their outbound logistics operations. We have presented sample screenshots of commonly used information sharing and collaboration systems, and have given the example of a commonly used container optimization program. In Chapter 4, we have recommended a possible IT enablement in the outbound logistics segment of the supply chain. 40
  43. 43. Finally, we have identified the flow of documents between various stages of the supply chain in the outbound logistics segment in pages 33 and 34, as well as in Appendix B. We believe this information will help XXX immensely while building their ERP systems. This information gives the basis for forming the classes of information which will flow between processes and actors in the shipping outbound processes. We recommend that XXX use this document as a manual to understand the outbound logistics space in Singapore, and use the process flows, IT enabler flow diagrams and the document flow diagrams as a basis for building a trial ERP system, which they can demonstrate to their prospective clients. 41
  44. 44. 5 Appendix References Chapter Appendix A: Areas covered in Personal Interview In order to gather our primary data, our main method of data collection was that of unstructured and semi-structured personal interviews. In order to assist us in executing the interviews successfully we identified the following areas for gaining insightful information to assist us in our research. 1. Area and scope of Primary Business 2. Knowledge, use and business advantages of modern day technology like RFIDs, GPRS systems and GPS devices 3. Method of Route Optimization – Manual or results from Internet based sites 4. Parameters used for Truck assignment 5. Truck Capacity Planning Optimization and software used 6. Reasons for under-loaded and shorter movements of goods 7. User of ERP systems or other IT enablement in current process. 42
  45. 45. Appendix B: Document Flow Diagrams The Level 3 and Level 4 views of the outbound logistics processes are given below. Level 4 is the last level of granularity that was possible. 43
  46. 46. 44
  47. 47. 45
  48. 48. 46 End- to- End Activi ty Flow Diagr am for Outb ound Logis tics Proce sses Appendix C: End-to-End Outbound Logistics Activity Flow
  49. 49. Company List Below is the list of companies that we contacted in order to carry out our Primary Research to identify the processes followed by them. • Orient Neptune Logistics • BLPL Logistics • Seaarland Shipping • Dynacomm Shipping • Cartus Corporation Pte Ltd • B G Logistics Services • Big-foot Logistic Pte Ltd • Bulk Logistics Pte Ltd • Cel Logistics Pte Ltd • Cms Translink Parami Logistics (myanmar) Ltd • Conference Logistics & Services • Baltrans Logistics Pte Ltd(Toll Group) • Bax Global Pte Ltd • CLK Asia Pacific Pte Ltd • Colony Logistics (Singapore) Pte Ltd • Batam Logistics Pte Ltd • C & H Logistics Pte Ltd • Cappi Global Logistics Pte Ltd • Caterpillar Logistics Services Inc • Connexxion Maritime Logistics Pte Ltd • Bk Logistic • 99 Plus Consultancy & Services Pte Ltd • Abx Logistics (singapore) Pte Ltd • Acelink Logistics Pte Ltd • Admiral Freight & Logistics • Agi Logistics (S) Pte Ltd • Agility Fairs & Event Logistics Pte Ltd 47
  50. 50. Glossary • Consignee – Entity initiating the shipping process (initiator of the inbound logistics sub process) • Shipper Logistics – Function that encompasses port to port goods transfer • Carrier Logistics – Function that is Initiator of the Outbound Logistics sub process. In charge of goods delivery. • UCC (Uniform Code Council) which lay down standards for numbering and bar coding of logistic units • Electronic Data Interchange (EDI) computer-to-computer exchange of information, which has traditionally been communicated using paper documents. An EDI document is a collection of a specific set of business information to accomplish a business transaction, e.g. purchase order, invoice, etc. exchanged electronically in industry's standard format. • Invoice - An itemized list of product shipped specifying the quantity shipped, unit price, total amount due, and terms on which the invoice will be paid. This document allows a buyer to record payment information and automatically updates applicable financial systems. • PO Ready Notification - The instructions for the shipper processing the Purchase Order to generate the Purchase Order Ready Notification for the consignee. • Shipper’s Manifest (paper) - List of the carton numbers per PO or final destination (store), or invoice. This shipper manifest travels with the goods at consignee request. The shipper manifest can also be faxed to the consignee prior to the actual shipment arriving at the consignee. • Routing Guide - A motor carrier's loading instructions and/or routing guide. A transmission may include a list of the motor carrier's terminals, a list of all points served, or a matrix of all points served showing the advertised service times. • Shipping Instructions - Carrier, Mode, commodity, special handling instructions, terms, service level • Customer Guidelines - Consignee information applying to shipping and receiving instructions to be used by the shipper. • Finished Goods Available - Those items on which all manufacturing operations, have been completed. These products are available for shipment to the customer as finished product. • Proof of Delivery - The Proof of Delivery is maintained by the carrier and includes the signed Receipt of Goods. • Carrier Invoice - Detailed information for charges for services rendered by a motor carrier. It is used both as a motor carrier invoice to request payment and as details pertaining to motor freight shipments charges. 48
  51. 51. • Bill of Lading - A document issued to a carrier from the shipper for the receipt of goods for shipment, and which describes the terms of shipment. This can be used to allow shippers or other parties, responsible for contracting with a motor carrier, to provide a legal bill of lading for a shipment. • Carrier Equipment Available- A determination if the carrier has all the equipment available to perform the shipment. • Pickup Schedule - The notification from the shipper to the carrier informing the carrier the date, time, and place the load can be picked up. • Manifest - The document signed by the recipient of the goods when the trailer carrying the shipment is dropped at the consignee or distribution center. The Trailer Manifest is generated at the last trailer load. • Pickup Notice - The notification from the shipper to the carrier informing the carrier the date, time, and place the load can be picked up. • Shipment Tender - A shipment tender is generated from the shipper to the carrier, consignee or a third party to let him know there is a shipment available for pickup. This is typically done when shipping with a truckload carrier, where the shipment can be scheduled in advance, as opposed to a less than truckload shipment. the document can also be used as a pickup notification, identifying the shipment details and dates for pick up. • Carrier Payment - The transaction set can be used to make a payment, send a remittance advice, or make a payment and send a remittance advice. This transaction set can be an order to a financial institution to make a payment to a payee. It can also be a remittance advice identifying the detail needed to perform cash application to the payee's accounts receivable system. The remittance advice can go directly from payer to payee, through a financial institution, or through a third party agent. • Delivery receipt - The receipt for the goods delivered. • Shipment Status - This message contains the current status of a single shipment moving within the carrier's system. The receiver would receive a separate status message for each shipment moving with the carrier. Depending upon partnership arrangements, the information can be generated for only delivery information, pickup and delivery, each change in status, or to report status at selected intervals regardless of change. This can be used by a transportation carrier to provide shippers, consignees, and their agents with the status of shipments in terms of dates, times, locations, route, identifying numbers, and conveyance. • Response to Load tender - Generated by the shipper to the carrier to let the carrier know there is a load available to pickup. This can be used to respond to the load tender with acceptance, conditional acceptance or declination of the load tender. It can also provide the reasons for the declination and the conditions of acceptance. 49
  52. 52. • Carrier request to pickup load - The request from a carrier to a shipper requesting a time and date the carrier can pick up the load from the shipper. • Back Order: Product ordered but out of stock and promised to ship when the product becomes • available. • Back Scheduling: A technique for calculating operation start dates and due dates. The schedule is computed starting with the due date for the order and working backward to determine the required start date and/or due dates for each operation. • Backflush: A method of inventory bookkeeping where the book (computer) inventory of components is automatically reduced by the computer after completion of activity on the component’s upper-level parent item based on what should have been used as specified on the bill of material and allocation records. This approach has the disadvantage of a built-in differential between the book record and what is physically in stock. Synonym: explode-to- deduct. • Backhaul: The process of a transportation vehicle returning from the original destination point to the point of origin. The 1980 Motor Carrier Act deregulated interstate commercial trucking and thereby allowed carriers to contract for the return trip. The backhaul can be with a full, partial, or empty load. An empty backhaul is called deadheading. • Bar Code: A symbol consisting of a series of printed bars representing values. A system of optical character reading, scanning, and tracking of units by reading a series of printed bars for translation into a numeric or alphanumeric identification code. A popular example is the UPC code used on retail packaging. • Bar code scanner: A device to read bar codes and communicate data to computer systems. • Barge: The cargo-carrying vehicle used primarily by inland water carriers. 50
  53. 53. Bibliography a) Ganeshan & Harrison - Introduction to Supply Chain Management Site: http://www.apparelsearch.com/Definitions/Shipping_Freight/supply_chain_definition.htm b) Getting Smart about SCM – Mani Agrawal and Minsok Pak c) Durban Maritime Industry – A Value chain Analysis. Coller, Maasdorp, Mavundla d) SUPPLY CHAIN DEFINITIONS AND KEY MEASURES. APQC Site: http://www.apqc.org/portal/apqc/ksn/OSBC_SC_Process_Defs_KPIs.pdf? paf_gear_id=contentgearhome&paf_dm=full&pageselect=contentitem&docid=137320 e) http://esoadocu.sap.com/socoview(bD1lbiZjPTAwMSZkPW1pbg==)/render.asp? packageid=DBBB6D8AA3B382F191E0000F20F64781&id=2F96CCAE21764DA29ED171 6D8803E5AE f) http://www.bu.edu/transportation/CTS2002G.pdf - TRANSPORTATION LOGISTICS IN GLOBAL VALUE AND SUPPLY CHAINS. Lata Chatterjee, Chiung-min Tsai, Center for Transportation Studies g) http://www50.sap.com/businessmaps/86BAD391070A42B6A34F0E49D0329EB3.htm h) A world class challenge for Japanese Banking – Bank’s profitability Revolution, Kawamoto i) Bowerson, Daugherty, Dröge, Rogers, Wardlaw, 1989, CLM, 1995 j) Outbound Intermodal Logistics, from the Manufacturer’s Gate to the Final Customer: The Future Logistics Management IT Systems as Perceived by the Supply Chain Partners – Ramberg, Pedersen, Knoors k) The real business of B2b - Ramsdell 2000 l) How to rescue CRM - Ebner, Hu, Levitt, McCroy , 2005 m) Flexible warehousing policies - Skintzi, Ioannu, Prastacos, 2005 n) Option contracts in supply chains, Burnetas, Ritchken, 2002 o) Logistics in emerging Markets , Dobberstein, Neumann, Zils2005 p) Outbound logistics - an Ocean Carrier perspective - Hoegh Autoliners 2008 q) State of collaboration - shared strategy report 2008 (SAP sponsored paper) r) Logistics and Supply Chain management factsheet 2008 (EDB Singapore) s) Value added services of logistics in port areas - UNESCAP study t) http://www.articlesbase.com/copywriting-articles/basics-of-supply-chain- management-115340.html u) http://nptel.iitm.ac.in/courses/IIT-MADRAS/Management_Science_II/Pdf/3_6.pdf v) Voluntary Interindustry Commerce Solutions – www.vics.org 51

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