WO2000077696A1

WO2000077696A1 - Mechanism for modelling a logistics process

Info

Publication number: WO2000077696A1
Application number: PCT/FI2000/000521
Authority: WO
Inventors: Janne Lehto; Timo JÄSKE; Seppo YLÖNEN
Original assignee: Kesko Oyj
Priority date: 1999-06-11
Filing date: 2000-06-09
Publication date: 2000-12-21
Also published as: FI991350A0; AU5223500A; EP1200910A1; FI991350A; NO20015956D0; NO20015956L

Abstract

A method of modelling a logistics process (30), which comprises sub-processes (31), at least one cost factor (34) and at least one environmental factor (35), such as energy consumption, being associated with at least one said sub-process. A computer model is created from the logistics process, and at least one sub-model (40) of the computer model models a corresponding sub-process (31) so that the sub-model includes a corresponding cost parameter (44) for each essential cost factor (34) of the sub-process. The sub-model (40) models a corresponding sub-process (31) so that an environmental parameter (45) corresponds to at least one essential environmental factor (35) of the sub-process in the sub-model, and each cost parameter (44) of said at least one sub-model (40) and said at least one environment parameter (45) are commensurate. Reports can be generated on the basis of the computer model which show the influence of changes on the cost factors (34) and the environmental factors (35) and the logistics process (30) can be adjusted so that at least one environmental factor (35) improves.

Description

MECHANISM FOR MODELLING A LOGISTICS PROCESS

BACKGROUND OF THE INVENTION

The invention relates to a mechanism for modelling a logistics process. To be more specific, the logistics process concerned has both cost effects and environmental effects. The term 'logistics process' refers to a process for organising the logistics of a supplier. Logistics typically comprises such sectors as procurement of goods (end products and/or raw materials), value adding, packaging, storing, distribution, shop logistics and return logistics. In practice, all business operations involve both cost effects and environmental effects. The environmental effects include energy consumption and/or emissions of unwanted chemicals. For example, toxic chemicals or chemicals that enhance the greenhouse effect are unwanted chemicals.

In view of their environmental effects, logistics processes can be divided into processes involving point source pollution and processes involving diffuse pollution. An example of a point source pollution process is a building the energy consumption of which is relatively easy to measure on the basis of connecting cables or the amount of fuel supplied. The emissions of a plant can also be measured accurately by meters arranged to chimneys and/or discharge ducts. On the other hand, a large service company which produces and distributes perishables is an excellent example of a logistics process involving diffuse pollution.

As regards the environment, consideration of the environmental effects would be desirable in the selection of alternatives of a logistics process. So far particularly business enterprises that cause diffuse pollution have regarded the consideration of real environmental effects as a noble object because modelling of the whole logistics process so that at least the essential environmental effects could be accounted for has been so complicated that one has not even attempted it. As a concrete example we will examine a situation where one wants to find out what would happen if separation of waste were discontinued at one warehouse (i.e. all the waste were taken to a dump as mixed waste). In that case the number of waste containers needed at the warehouse would be smaller (because all the waste is of the same type), which decreases the space needed for them. Energy consumption might also decrease because it is easier to keep the filling ratio of the vehicles high. Furthermore, one might be able to use larger vehicles. On the other hand, energy consumption could also increase because mixed waste usually has to be transported to dumps located further away. Discontinuation of separation probably leads to increase of the total costs because disposal of mixed waste costs considerably more than disposal of separated waste. (In some cases one is even paid for separated waste.)

In addition to the extreme complexity of the task, introduction of modelling has been hindered by what can be called a verification problem: there has been no way of guaranteeing that the model will work. It is practically impossible to enclose a large distribution company of perishables in a hermetic space at the boundaries of which the influence of changes made to the process on the company's environmental effects could be monitored by meters. In other words, even if a model had been created, there would not have been any guarantees that the information provided by the model on the environmental effects of the process would be even close to reality. For this reason, at least in the case of processes involving diffuse pollution, the modelling has concentrated only on factors that can be verified: for example, modelling of cost factors can be verified by auditing methods. Modelling of environmental factors has remained at the level of rules of thumb: it is known, for example, that in certain type of distribution of perishables one ton of goods produces n kilos of waste and delivery of this amount of waste to a dump requires x kilos of fuel. The accuracy of such rules of thumb is not sufficient for modelling the effect of changes made to the process. Even though these rules of thumb can be used for estimating the approximate energy consumption of a distribution company of a certain size, they do not allow simulating the effect of small changes made to the process, such as increase in separation, on the total consumption of energy.

BRIEF DESCRIPTION OF THE INVENTION

The object of the invention is to provide a method and an apparatus implementing the method to eliminate the above-mentioned problems. To be more specific, the object of the invention is to provide a mechanism for modelling a logistics process so that the same model can be used for modelling the cost effects and environmental effects of a logistics process in a comparable manner. The object of the invention is achieved with a method and an arrangement which are characterized by what is disclosed in the independent claims. The dependent claims disclose preferred embodiments of the invention. The invention is based on creating a computer model of a logistics process, in which at least one sub-model models a corresponding sub-process so that the sub-model includes a corresponding cost parameter for each essential cost factor of the sub-process and a corresponding environmental parameter for at least one environmental factor, said cost parameters and at least one environmental parameter being commensurable.

Commensurability can be obtained e.g. if one knows the conversion factor for rendering the environmental parameter modelling an environmental factor comparable with the cost parameter. Energy consumption is a good example of an environmental factor that has such a conversion factor, i.e. the energy price. The corresponding environmental parameter is the information element that shows energy consumption in the computer model. This environmental parameter can be used in calculations (addition, comparison, etc.) in the same way as the cost parameters.

At the moment there is no fixed conversion factor for other environmental factors (e.g. noise and chemical emissions). It can be thought, however, that rights of emitting chemicals into the environment will be bought and sold on the stock exchange, at an auction and the like. When this happens, the price of chemical emissions, i.e. the conversion factor, can be determined and the computer model supplemented accordingly. An advantage of the method and arrangement of the invention is that they simultaneously show the cost effect and the environmental effect of the changes made to a logistics process. Decision-making processes include a phenomenon known as 'lock-in', which appears in the fact that a selection process tries to lock in the alternative that first reaches a situation in which the number of aspects for it exceeds the number of aspects against it by a certain threshold value. If the selection process between different alternatives is carried out using conventional technology, i.e. by calculating the cost effect first and then the environmental effect, there is a risk that the selection process locks in an economically advantageous alternative, in which case it is difficult to account for the effect of environmental factors. One aspect of the invention is a remote-measuring system of energy consumption and toxic emissions. Remote-measuring systems are used in situations where it is impossible or impractical to employ transducers physically coupled to an industrial process. An example is the speed measurement of molten metal which can be carried out by optical means. According to the present invention, the remote-measuring system is based on a detailed and accurate financial model of the logistics process. Corporations take great pains to ensure that financial models model a manufacturing or logistics process accurately. If a model is not accurate, there are proven auditing methods to find out the reason for this. Thus the invention is partially based on the idea of using the existing auditing experience to verify the accuracy of the model. If the model is able to predict process changes accurately in the financial domain, one can be reasonably certain that the model is also able to predict process changes in the environmental domain. Thus a combined and financial model of a logistics process solves two problems simultaneously. Such a model prevents the decision-making process from locking to an economically attractive course of action whose environmental effects are yet untested. Such a dual model also solves the verification problem. If the model is financially accurate, it is probably also accurate in the environmental domain.

BRIEF DESCRIPTION OF THE DRAWINGS

The invention will be described in greater detail by means of preferred embodiments, with reference to the accompanying drawings, in which Figure 1 illustrates a logistics process of a distribution company;

Figure 2 illustrates the costs and environmental loads of a logistics process;

Figure 3 illustrates factors of waste management; Figure 4 illustrates relations of a waste load; Figure 5 illustrates a waste management matrix;

Figure 6 illustrates the method of one object (wood fraction); and

Figure 7A shows an outline of a simulation report; and

Figures 7B to 7D show the results of three different simulation runs. DETAILED DESCRIPTION OF THE INVENTION

In the following, we will describe modelling of energy consumption as the only concrete example of an environmental factor which is modelled with the same model as the cost factors. The reason for this is that, in addition to energy sources, the energy bound in materials, packages and in the manufacture of products can be converted into energy as well as the energy bound or released in recycling. Furthermore, emissions are considerable in energy production. The energy price is also commensurable with the cost parameters. In the modelling of energy consumption the phases of a logistics process and the costs and energy consumption caused by it are described with the desired accuracy. The real costs, energy consumption and volumes are fed into the system. The system calculates the costs, energy consumption and the emissions caused by it for the desired part of the process. The energy savings and consumption resulting from recycling are also calculated.

In simulation the system enables comparison of the process or the results of sub-processes with alternative values which realize the same phases of the process. A new method to be examined can also be simulated with respect to a functioning process using tested values. Alternative solutions can be simulated either with respect to the costs or energy consumption, but in each case the effect is calculated and reported on the basis of both factors.

The system yields parameters of costs and energy consumption which are proportioned to the volume of goods (t, m³) that passes the logistics process. The above-mentioned parameters are obtained at least from each significant phase of the process. These commensurable parameters can be used for comparing the trends of different phases of the logistics process or different phases with each other. Figure 1 is a conventional way of illustrating the logistics process of a distribution company as a kind of organization chart. The most important sub-processes of a logistics process include purocurement of goods, manufacture/value adding, packaging, storing, distribution, shop logistics and return logistics. The most important environmental effects of the process are energy consumption, transportation emissions and waste load. Even though the model shown in Figure 1 is rather extensive, it is still clearly deficient. First, it lacks three sub-processes, i.e. manufacturing/value adding, shop logistics and return logistics. Secondly, it does not include the mutual influence of different factors. The model also lacks 'return logistics', which is used for recycling material from the later phases of the process to its earlier phases. At one point recycling causes additional loading, but at some other point it reduces the load. The material that cannot be recycled is mixed waste. Figure 2 illustrates the costs and environmental loads of the logistics process. This model is an improved version of the model of Figure 1 since the shop logistics and return logistics have been taken into account. For the sake of simplicity Figure 2 does not include manufacturing/value-adding. In this application the main sector of return logistics to be dealt with is waste management and its sub-factors, i.e. essential features with respect to the computer model, are shown in Figure 3. Each factor has a structure of its own; for example, waste management areas constitute a tree-like hierarchy of their own. The sub-factor to be discussed in greater detail below is the waste load. The waste management area refers to the area from which the waste is collected. Collection means are different containers, mixed waste pallets and presses. Waste types, i.e. fractions, include corrugated board, bio waste, metal, plastic, wood, mixed waste and energy fraction (the last-mentioned means mainly combustible waste). The recipients are companies involved in reuse or recycling, dumping sites, etc. The waste charge is e.g. Finnish marks or euros per a certain volume unit (m³ or ton). There are typically two costs types: price per unit or price per weight.

Figure 4 illustrates relations of the waste load, i.e. relations between the sub-factors in respect of the waste load. A sub-model 40 of the computer model models the waste load. The waste load 41 is associated with initial data 42, such as information on the vehicle used for transporting the load, which waste fraction was transported, which collection means was used for collecting the load, which transportation company transported the load, etc. Certain intermediate results 43 are generated from the initial data 42. For example, information on the collection means will provide information on the area from which the waste load originates. Combination of the area and the recipient yields information on the distance between these two. Correspondingly, the recipient and the waste fraction determine the waste charge 44, the distance and the vehicle the fuel consumption resulting from the transportation of the load, the fuel consumption being convertible into energy consumption 45, etc.

Figure 5 illustrates a waste management matrix 50 according to a preferred embodiment of the invention. The idea in the waste management matrix is that the above-mentioned rules of thumb are replaced with data based on real (or simulated) events. The matrix 50 may consist of two dimensions, for example: the collection means and the waste fraction. The filled cells 51 of the matrix represent real (or simulated) waste loads which combine the values of the dimensions of the matrix, i.e. in the case of the present example the waste loads which have been transported from the same collection means and consist of the same waste fraction. A large set of parameters is stored from each waste load, the most important parameters with respect to the invention being various data related to costs, such as the waste treatment charge and transportation fee, and data on performances, such as the waste amount, waste fraction and filling ratio. The stored parameters are added to the waste management matrix. The advantage of this embodiment is described in the following. In earlier models the influence of environmental factors was based on experimental rules of thumb at best. Thanks to the waste management matrix based on real (or simulated) events, the modelling can be brought much closer to the real world: the parameters stored in the matrix correspond to real waste loads, in which case the numerical values are close to the practice and the validity of the model is easy to verify.

The best way of implementing the invention is to use a computer program which runs on a general-purpose computer. According to a preferred embodiment of the invention, modelling is performed using an object model. As is well known, the object includes attributes (I am like this) and methods (I can do these things). A particularly suitable modelling tool is the MUST modeller produced by the ICL company. An advantage of object modelling and of the MUST modeller software in particular is that they comprise an improved calculation form and allow illustrative management of cause/effect relations. Figure 6 shows as an example a small section of an object model 60, i.e. method according to cell 'wood fraction#wood pallet' (combination of the waste fraction and the collection means) of the waste management matrix 50, in which the weighted average of the filling ratio is calculated for the wood pallet. The information needed in the calculation is included in the model 60 as elements 61 to 69. There are numerical values (e.g. elements 68 and 69) or accounting rules associated with the elements. At element 61 there is an example of an accounting rule which calculates the weighted average of the filling ratio using elements 62, 63 and 67. Element 63 includes an accounting rule which selects relevant events from the matrix 50. The accounting rule of element 62 calculates the filling ratio of a single waste load using elements 64 to 67. The plus symbol shown in the top right-hand corner can be used for opening additional data, e.g. for obtaining a list of the events used by the element in question.

Figure 7A shows an outline of a simulation report 700. The simulation report comprises identification data 702, result data 704, and detailed calculations in a numeric presentation 706 and in a graphical presentation 708. The most important technical elements of the identification data 702 are the action to be simulated and the affected area. Additionally, the identification data typically comprises the author, date, etc. The following examples show the results of three different simulation runs. In the examples and in figures 7B to 7D, the currency unit (°) is one Finnish mark, which is approximately equal to 0.16 euros.

Example 1 : discontinuation of waste separation The first simulation run simulates the effect of total discontinuation of waste separation. Naturally the total amount of waste remains the same but since all the waste consists of mixed waste, the waste charges increase nearly 10-fold. The other costs decrease slightly but this is not sufficient for compensating for the considerable increase of the waste charges, and thus the increase of the total costs is nearly 3.5-fold. The filling ratio improves and the number of waste collection times decreases but since the mixed waste has to be transported to dumps located further away, the total distance needed for transportation remains almost the same. In this example energy consumption decreases by about 1.5 per cents, which results e.g. from the fact that, regardless of longer distances, the number of waste collection times needed decreases. The graphical presentation is shown in Figure 7B, and the result data 704 are as follows:

Example 2: enhanced waste separation

The second simulation run simulates the effect of rationalization of recycling so that approximately half of the mixed waste is separated into corrugated board and energy fraction (combustible waste). The waste charges decrease as much as by 86%, but other (larger) costs partially cancel out the savings obtained and thus the total costs decrease by about 15%. The environmental factors show a slight increase in the distance transported and energy consumption. The graphical presentation is shown in Figure 7C, and the result data 704 are as follows:

The detailed numeric calculations 706 are as follows:

Example 3: investment in a corrugated board press

The third simulation run simulates the effect of investing in a corrugated board press, which makes recycling of corrugated board more efficient. This change is advantageous both to the total costs and the environmental effects because both the total costs and energy consumption decrease by about 8%. In this example the total sum of waste charges is negative because one is paid for disposal of corrugated board. The graphical resentation is shown in Figure 7D, and the result data 704 are as follows:

The detailed numeric calculations 706 are as follows:

The actions simulated by the first and second examples require no investments, and correspondingly, there is no return on investment or repayment period. However, the action simulated by the third example requires an investment of 100,000 currency units (°). Assuming a 5-year period with an interest rate of 6%, the current value of the investment is 137,767 currency units. With the above numerical results, the return rate of investment is 11% and the repayment period 3.5 years.

This application discloses only the central programming and modelling technology but not the actual formulae. One possible set of formulae for a large distribution company of perishables is shown in Appendix 1 , which is based on source 1 (pages 160 to 201). It will be obvious to a person skilled in the art that, as the technology develops, the inventive concept can be implemented in various ways. The invention and its embodiments are thus not limited to the examples described above, but they may vary within the scope of the claims.

Sources:

1. Tuula Pohjola: Environmental Modelling System - A Framework for Cost-Effective Environmental Decision-Making Process, Doctoral Thesis for Helsinki University of Technology, published on 11 June 1999.

Source 1 is incorporated herein by reference.

1. A method of modelling a logistics process (30), which includes sub-processes (31), at least one cost factor (34) and at least one environmental factor (35) being associated with at least one said sub-process, the method comprising: creating a computer model of the logistics process (30), in which at least one sub-model (40) models a corresponding sub-process (31) so that the sub-model includes a corresponding cost parameter (44) for each essential cost factor (34) of the sub-process; c h a ra cte rized in that said at least one sub-model (40) models the corresponding sub- process (31) so that an environmental parameter (45) corresponds to at least one essential environmental factor (35) of the sub-process in the sub-model; and each cost parameter (44) of said at least one sub-model (40) and said at least one environment parameter (45) are commensurate.

2. A method according to claim ^ characterized in that to find out the influence of a change made to the logistics process (30) or to a sub-process (31), a report is produced, which discloses the influence of the change on at least one cost factor (34) and at least one environmental factor (35).

3. A method according to claim 1 or 2, characterized in that said at least one environmental factor (35) includes at least energy consumption.

4. A method according to claim 2, characterized by generating cost parameters and energy consumption parameters, which are proportioned to the volume of goods passing the logistics process.

5. A method according to any one of the preceding claims, characterized in that said at least one environmental factor includes emission of at least one hazardous chemical.

6. A method according to any one of the preceding claims, characterized in that the logistics process is adjusted by means of the computer model so that said at least one environmental factor improves.

Claims

7. A method according to any one of the preceding claims, characterized in that the logistics process covers substantially the whole chain from procurement of goods to retail sale.

8. A method according to any one of the preceding claims, characterized in that the logistics process also covers waste management.

9. A method according to any one of the preceding claims, characterized in that the computer model is an object model (40, 60).

10. A computer, characterized by routines for performing the method according to any one of claims 1 to 9.

11. Storage medium of a computer including a computer program, characterized in that running of the computer program on the computer makes the computer perform the method according to any one of claims 1 to 9.

Fis. 1A