ICT and the goods transport and logistics system

STELLA workshopICT, Innovation and the Transport System

Arlington, VA. 15 –17 January 2002

Michel Savy

professor University Paris-Val de Marneand Ecole Nationale des Ponts et Chaussées

director Observatory of Transport Policiesand Strategies in Europe

STELLA workshop 2

Presentation plan

1. Introduction: goods transport as a STELLA issue

2. IT, goods transport and logistics process

3. IT, organisation and market of goods transport and logistics industry

4. Conclusions (very short)

STELLA workshop 3

1. Introduction: goods transport as a STELLA issue goods transport is a substantial part of transport

system goods transport and passenger transport interfere,

notably for the use of infrastructure, particularly in metropolitan areas

goods transport is a massive consumer and provider of IT

IT plays a major role in present restructuring of this industry

structures and practices are not the same on both sides of Atlantic, whereas all large firms try to develop global intercontinental networks

STELLA workshop 4

2. IT, Goods transport and logistics process IT is a transverse technology

2.1. Goods transport network: a cross-section multi-layer "vertical" approach

2.2. Goods transport network: a "horizontal" approach

2.3. From transport to logistics

STELLA workshop 5

2.1. Goods transport network: a cross-section multi-layer "vertical" approach

Networks and IT: a generic approach

infrastructure

"infostructure"

service

IT as a new, additional layer: "infostructure"

STELLA workshop 6

2.1. Goods transport network: a cross-section multi-layer "vertical" approach (2) IT is not an intermediate layer, but a

transverse link between all layers, necessary to all interfaces

transport

infrastructure

vehicle

cargo

economicsrelationships

traffic

logistics

information system

STELLA workshop 7

2.2. Goods transport network: a "horizontal" approach Double network: physical and

informational flows

Pick up

Delivery

Haulage

Data base

physical flow

information flow

STELLA workshop 8

2.3. From transport to logistics

transport handling warehousing packaging physical distribution plus, possibly: inventory management quality control post manufacturing maintenance purchasing etc.

STELLA workshop 9

2.3. Logistics: Fields of Responsibility

0

10

20

30

40

50

60

70

80

90 warehousing

transport (external)

materials and stock

management

shipment processing

distribution

transport (between works)

order processing

transport (in works)

packaging

production planning

STELLA workshop 10

2.3. Logistics Cost Split

0

5

10

15

20

25

30

35

su

pp

ly

tra

nsp

ort

up

str

ea

m

inve

nto

ry

up

str

ea

m

fin

an

cia

l co

st

pro

du

ctio

n

dis

trib

utio

n

tra

nsp

ort

do

wn

str

ea

m

inve

nto

ry

do

wn

str

ea

m

fin

an

cia

l co

st

sa

les

ma

na

ge

me

nt

STELLA workshop 11

2.3. Flows:- information and data transmission (upstream)- goods transport (downstream)

supplyers

manufacturing

industrial warehouse

retail warehouse

distribution depots

customers

production orders

commercial orders

sales

delivery orders

supply orders

STELLA workshop 12

2.3. Logistics expense and outsourcing in Europe

Logistics expense (G $) Outsourcing (%)Germany 40,6 26France 29,0 29United Kingdom 25,5 38Italy 16,1 14Benelyx 11,6 26Scandinavia 8,9 22Spain 7,9 20Austria 3,8 21Ireland 1,0 26Portugal 0,9 18Greece 0,8 12Total Europe 128,4 26

STELLA workshop 13

2.3. Fields and Degree of Outsourcing in Logistics

0

10

20

30

40

50

60

70tr

an

sp

ort

wa

reh

ou

sin

g

pa

cka

gin

g

ha

nd

ling

pro

du

ctio

n

pu

rch

ase

-

su

pp

ly

STELLA workshop 14

3. IT, organisation and market of goods transport and logistics industry

3.1. IT in organisation of transport

groups

3.2. IT and e-logistics

3.3. IT and the limits of the firm

STELLA workshop 15

3.1. IT as an additional department or

branch

parce

l serv

ice

full

load

road

haula

ge

freigh

t for

wardi

ng

logist

ics IT

mail,

couri

er

STELLA workshop 16

3.1. IT as a transverse function

parc

el s

ervi

ce

full

load

ro

ad

haul

age

freig

ht

forw

ardi

ng

logi

stic

s

ITm

ail,

cour

ier

STELLA workshop 17

3.2. IT and e-logistics

Segmentation of market

Virtual transactions are not the problem, real

issue is physical distribution cost

lead-time

reliability

B2C (delivery at home, at precise times, problems of no consignee, mistakes, payment, etc.)

STELLA workshop 18

3.2. E-logistics network

Outsourcing or integrated distribution ? dedicated e-logistics network

additional use of existing network

competition between newcomers and existing distributors

Vertical integration

STELLA workshop 19

3.3. Subcontracting in the transport industry

0,0

5,0

10,0

15,0

20,0

25,0

30,0

35,0

40,0

45,0

50,0

0-5 6-9 10-19 20-49 50-99 100-199 200 & +

Size of the firm

Ra

te o

f s

ub

co

ntr

acti

ng

STELLA workshop 20

3.3. IT and the limits of the firm Notion of mega, extended firm

extension of networks diversification spatial coverage, up to continental and global

including regular subcontractors joint ventures alliances

Integration or "bi-polarisation" ? coherent single structure division of labour:

organisation, marketing firm, controlling IT system, non asset (4PL)

operating firms, subcontractors

STELLA workshop 21

Industry and market structures are not the same in Europe and America

4. Conclusions

0

20

40

60

80

100

120

140

160

180

200

UPS Fedex DP TPG La Poste The Post Office

Reste du monde

Europe

STELLA workshop 22

4. Conclusions

Freight transport and logistics are involved in a sharp and massive change, where IT is a central element

Those emerging issues have still to be confirmed

Euro-American comparison research programs would be desirable...