Manufacturing Letters 23 (2020) 71–74
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HATS project for lean and smart global logistic: A shipping company case study Emanuele Frontoni a, Roberto Rosetti a,⇑, Marina Paolanti a, A.C. Alves b a b
Dipartimento di Ingegneria dell’Informazione (DII), Universita Politecnica delle Marche, Via Brecce Bianche, 60131 Ancona, Italy R&D Centre ALGORITMI, Department of Production and Systems, School of Engineering, University of Minho, 4800-058 Guimarães, Portugal
a r t i c l e
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Article history: Received 7 July 2018 Received in revised form 3 December 2019 Accepted 14 December 2019 Available online 23 December 2019 Keywords: Lean logistic Smart logistic Lead time Cost reduction Security
a b s t r a c t Global logistic activities related to e-commerce have become very time dependent in recent years. International couriers face everyday issues related to pick-up time windows, lead times delays, express/normal deliveries management, security and VAT management. There are supply chain management methodologies that, based on lean thinking principles integrated with industry 4.0 concepts, well address these issues. In this paper, a project developed in an Italian shipping company shows the potential of solutions based on these principles and concepts. Main results from this project were lead time reduction and cost reduction, with higher goods security level and a real-time data sharing policy. Ó 2019 Society of Manufacturing Engineers (SME). Published by Elsevier Ltd. All rights reserved.
1. Introduction Courier companies face greater challenges related to lead times, security and costs of their shipping. Given the growing internationalization of the on-line shopping market, shipping companies had to enhance their infrastructure to better deal with the growing shipment requests. Furthermore, the bigger volume packages have filled the means of transportation with higher value goods. This requires a higher security level and stricter privacy policy, in particular for high-end fashion products. This happen in the courier and shipping companies, but independently of their sector, nowadays, it is demanded that companies do more with less where less means, at least, less time and less costs. As Womack, Jones and Roos [2] reported in their best-seller book, Toyota used ‘‘Lean Production” to achieve higher productivity levels eliminating from the process all non-added value activities defined by Ohno as ‘‘any activity that no adds value to the product in the point of view of client and that he is not willing to pay” [3]. According to Womack and Jones [4] this defines of Lean Thinking (LT) first principle that is called ‘‘Value”. The other principles of LT are Value Stream; Flow, Pull production and Pursuit Perfection. When cyclically applied to a process, systematic continuous improvement is attained by using some tools, e.g. Standard work to establish regularity [5], Just-in-Time (JIT) production for pull pro⇑ Corresponding author.
duction [1], just to name a few. Applying these principles demands a complete transformational organization and a new thinking about the way companies partner with their suppliers and distributors, e.g. JIT production. Lean logistic was the term used by Jones et al. [6] to the application of LT principles to the entire supply chain, or ‘‘value stream” to put the emphasis in the flow and not in the traditional batches manufacturing and logistic system. Nevertheless, having a truly lean enterprise with JIT production along the value stream demands a synchronization of materials and information flows between suppliers, manufacturing and distributors hard to find. To achieve this, new emergent technologies embedded in the Industry 4.0 context [7] have an important role when integrated in a LT paradigm because they will enables 1) Much richer understanding of the customer demand; 2) Immediate sharing of the demand data throughout complex supply chains and networks; 3) Faster smart factories production with less waste; 4) Much quicker one-piece flow of customized products; 5) Potential to radically reduce inventories throughout the supply chain; 6) Real-time information in a coordinated end-to-end supply chain; 7) radically improvement form of instant just-in-time pull production reducing/eliminating overproduction [8]. Some examples of these technologies already used in lean contexts are being discussed and could be found in [9–16]. They have transformed logistic in a truly smart logistic by the use of components such as radio-frequency and other means of automatic identification, locating and sensing technologies, networking and data processing as well as billing capabilities [17].
https://doi.org/10.1016/j.mfglet.2019.12.003 2213-8463/Ó 2019 Society of Manufacturing Engineers (SME). Published by Elsevier Ltd. All rights reserved.
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Regarding this context, in this paper it is presented a project related to high-end fashion products company to its international shipment company, a 3PL provider. The aim is the satisfaction of new requirements of higher sales volume and digital channels. Improvements and changes requested concern, in particular: 1) a new schedule for standard and express shipping for customers and shops deliveries; 2) a new security plan to avoid robberies and losses of packages; 3) new administrative procedure for VAT management; 4) new real-time data sharing platform for performance monitoring. This manuscript presents how the project was developed from the current analysis, (i.e. ‘‘as-is” situation) to the proposals for the goals definition (i.e., ‘‘to-be” situation). The rest of the paper is organized as follow. Section 2 presents the research methodology. Sections 3 and 4 show the choices done to accomplish the requirements and the results obtained respectively. Finally, Section 5 presents the conclusions and the future work. 2. Research methodology This project was developed in a context of action-research methodology [18,19] where the researchers were integrated in a multidisciplinary team to identify and diagnose the problem and to propose the solutions. This team included eight participants: three from the fashion shoes company, two from international logistic providers; one security consultant and two from a R&D center. The action-research cycle involved the five-phases, which were followed in this project: 1) problem identification; 2) plan solution alternatives; 3) implementation of the selected proposals; 4) evaluation of the results implementation and finally, 5) specify learning. 3. From trust 3PL providers to HATS project development This section presents the project developed between the high fashion shoes company and his 3PL provider, the problems identified as well as the main proposals to solve them. 3.1 . Project context and diagnosis of current operations The 3PL provider had a tenth partnership good experience with the fashion shoes company which allowed the openness to this
project. It is intended that its implementation will enable a faster and more efficient service keeping shipping costs unaltered. This means that the fashion shoes company wanted a service capable to sustain a substantial increase in workload without its performance deteriorating to the point of undermining its use. The 3PL company could boast decades-long work experience with high fashion customers, flexibility for ad-hoc solutions, wide know-how and dedicated team for this purpose. With more than 1,200,000 units delivered every year and constant growing investments in infrastructures and process management tools, the 3PL provider had a solid base to implement the necessary steps able to satisfy the new customer’s requirements. The ‘‘as-is” situation was critically analyzed by the project team to diagnose the main problems in the current process and to establish the main goals and results to be reached. The flow was decomposed in four main phases that were analyzed to find solutions that streamlines the supply-chain for the parts, in particular, for the flow where 3PL was involved. Team analysis was focused in three main KPI: lead-times, costs and security. The company offered two kinds of shipment: standard and express. A detailed process activity analysis showed that in the previous work-flow, the courier did not have an express delivery and the standard shipping took about 10 days to accomplish. 3.2. Improvement proposals After the detailed analysis developed a new standard flow for the standard delivery that will takes just 4–6 days (Fig. 1) and for express delivery 3–5 days (Fig. 2) to accomplish. The benchmark required by the customer was 5–7 day and 4–6 days for standard and express shipment respectively. The reduction of delivery time was possible by redesigning the overall process from pick-up to delivery, optimizing downtimes and streamlining borders controls and VAT procedures. The improvement proposed was reached with accurate zones split and a strict pick-up time windows from factories. In fact, all the production hubs in Italy have been assigned to a time windows in which the pick-up should happened in order to guarantee the customers’ requirements. According to this, VAT operations could start in the same shipment day and finish at most the next day. Fig. 3 shows the detailed workflow for the new standard shipment policy.
Fig. 1. Lead time for new standard flow.
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Fig. 2. Lead time for express flow new standard.
Fig. 3. New standard flow details.
4. Results and discussions With the new standard flow for the standard delivery a reduction of 428,000 CHF was obtained, and the details are presented in Table 1. This result represents a reduction of the 25% in the administrative fees and of the 10% in the logistic fees planned till 2020. Moreover, lead times have been shortened, a security plan till 2020 have been developed based on anti-masking detectors, TAPA certifications, infra-red barriers on all warehouse windows inside the warehouse and other similar securities devices, VAT
procedures have been streamlined and a greener path redesign have been implemented. Comparing our method with other state of the art approaches that are usual in fashion industry [20] we can assert that our proposed approach is the only one proposing a double flow for on line and off line market with a special focus on automatic data and document delivery on high level luxury market, with quality check services and secure transportations. The luxury market has also several challenges (i.e. size and colors, make to order production strategy, etc.) that make the proposed solution novel with respect to other logistic sectors. Finally, the very low impact in costs and
Table 1 Costs projection. Year
2018 2019 2020
Administrative cost projection
Logistic cost projection
Cost Projection
Savings wrt 2016
Cost Projection
Saving wrt 2016
867k CHF 834k CHF 802k CHF
202k CHF 235k CHF 267k CHF
1.684k CHF 1.651k CHF 1.601k CHF
78k CHF 112k CHF 161k CHF
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resources of the proposed stock flow and the overall project strategy are interesting and well applicable in the high-level fashion industry field. 5. Conclusion and future works This paper describes a project developed between a high-end fashion goods company and their 3PL providers. This project was possible to the good and trustful partnerships among them. By introducing a third element, the R&D members, in this team brings the scientific expertise needed to develop successful projects. A complete and detailed analysis of the activities allowed the identification of the ones that really added value and training was focused on that. The use of smart technology easy-to-use for the teams to have instant access to all their SaaS (all-in-one interface) and software to analyze and edit encoded data reduced many waste activities (e.g. missing documents, discrepancy problems). Security was improved by implementing TAPA certifications. Future work involves the proposals implementation related with higher security that due to the ongoing state of the project were not yet implemented such as RFID technology installation among the main facilities of the company and further streamline of bureaucracy’s procedure, new sensors and systems to allow video analytics and on-line data analytics. Declaration of Competing Interest The authors declare that they have no known competing financial interests or personal relationships that could have appeared to influence the work reported in this paper. References [1] Monden Y. Toyota production system - an integrated approach to just-in-time. 1st ed. Institute Industrial Engineers; 1983. [2] Womack JP, Jones DT, Roos D. The Machine That Changed The World; 1990.
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