ESRI, New Delhi
The routing of vehicles and the management of logistics operations in any company that services a fairly large geographical area can easily become quite a very complex task. The task can be simplified by the applying Geographic Information Systems, which automatically reduce the complexity by bringing out subtle geographic patterns and relationships that can form the basis of good decisions. Systems like ArcLogistics Route can take pain out of applications like Vehicle Tracking and Dispatch, Route Analysis, Warehouse Operations, Facilities and Depot Management, Routing and Scheduling. The ease of work has to be looked at though in the light that all of the data required for maximum accuracy may not be available. The system’s potential would suggest that reasonably accurate decisions can still be arrived at with less that complete data sets and in time, India too would grow into a mature GIS market where data would not longer be a constraint.
GISs endeavor to unleash the inherent potential of the geography in most data sets we deal with today. This paper discusses how GIS can help us streamline logistics related business processes like inventory management, fleet/truck management and warehousing applications. ESRI has always had strong networking and analysis tools with products like ArcNetwork and/INFO.ESRI has expanded this feature-loaded toolkit with other focussed products like ArcLogistics Route, RouteXpert and NetEngine for networking and logistics operations. Sears Roebuck and Co., one of the largest retail chains in the United States recently put to use ESRI GIS software to take care of in-warehouse routing and direct delivery systems. The system not only functioned well but also received recognition for its efficiency and success at its work.
What is Logistics?
Let us analyze the process of making a sale in company like Sears and Roebuck. The customer could come to one of the retail outlet or pick up a catalog from somewhere or order via one of the direct delivery channels like television, radio or the Internet. In the first case, assuming that the outlet has the stock, the customer will immediately receive the goods he asked for and that would be the end of the process. In the other cases, the transaction generates what is called a sale ticket. This ticket carries the transaction number, the ID number of the good(s) purchased and other details.
The ticket is then processed. A good or the goods matching the description on the ticket must be ‘tagged’ with the address that it needs to be delivered to, usually as a bar coded address. This ‘tagged’ good will generally reside in the warehouse at this time. The good will then be picked up and put in to the truck that is going to do the round of a set of address among which the tagged address is one.
Once loaded into the truck, this good will then be offloaded and handed over to the customer at the right address.
The processes that we have not detailed in this simplistic description are the supply chain and its management, the inventory and its management, the routing for the warehouse forklifts (if the warehouse is big enough to warrant it) and the routing for the trucks.
In each case as is evident, geography is the key to cutting costs. Geography determines which truck will go to or be able to service how many address. Geography determines the time taken by the distributor to get new stocks to the retail outlet. Geography determines how much stock can be transported to the truck in one trip from the warehouse to the truck.
The entire process of managing this process is called logistics management.
Breaking down the operation.
We can break the complex process down into five smaller areas:
- Vehicle Tracking and Dispatch involves being able to keep track of the location and the inventory on board every vehicle in the field and having the latest information on its position and operating status.
- Route Analysis is the operation which aims at minimizing the cost of travel involved in transporting goods from one location to another whether in terms of trips required or time or distance or a combination of these.
- Warehouse Operations become significant in cost reduction when the operation grows big and each warehouse becomes a very large operation in itself.
- Facilities and Depot Management involves minimizing waste by considering the locational aspects, the available capacity, the inventory in question and the range or effective covered area of each facility.
- Routing and Scheduling aims at minimizing all kinds of costs including mileage, overtime and maximizing all attendant benefits including customer satisfaction, adherence to schedules etc.
Vehicle Tracking and Dispatch
As global positioning systems (GPS) become cheaper, their applications is becoming cost effective and widespread. The United States Postal Services has equipped its trucks with radio transmitters and GPSs. The radio transmitters send the location of the truck at specific intervals to the central control where ESRI GIS software interprets the signal and posts it on the town map as symbol. This enables the dispatcher to track the location of this truck and the rest of the fleet in real time.
Once other systems like real time traffic monitoring systems become available, the dispatcher could also be able to leverage the real time traffic conditions to modify the route the truck could or should take to minimize delays.
In a similar manner retail chain could use a real time or near real time system to monitor its fleet and ensure that vehicles follow their routes and maintain efficiency and schedules.
In the United States, annual traffic density figures are available off the shelf for almost all areas and all streets in the United States. We, in India are moving gradually towards a similar market scenario.
A route analysis system could utilize this kind of data to generate the most efficient routes that any vehicle should take based on the current inventory load it is carrying. The system could then generate a manifest that has not only the drop-off address but also driving direction and even a map that details that route which the system finds most suitable.
ESRI’s ArcLogistics Route has such a routing and manifest generation toolkit which allows you to set a trade off between time saving which the system uses as a parameter to solve a travelling salesman problem involving all the drop-off locations.
The system can also be joined to a inventory control system in ERP software like SAP R/3 which could help create geographically aware inventory ‘packets’ for delivery taking in to account the locations of the address and the capability of the truck that will service the specific route.
A large warehouse poses the same problems as the routing application that we detailed above. Instead of drop-off locations, now we are talking about shelves as rows of shelves on which certain kinds of goods are stored. Once the inventory control system decides that a certain truck will carry a certain set of goods, a forklift ill then pick up the requisite goods and transport these goods to the truck waiting in the loading bay.
To minimize the waiting time on the part of the truck and the trip distance for the fork lift Sears uses a custom application that does just that. It solves the travelling salesman problem within the warehouse. The savings are substantial.
Facilities and Depot Management
This cab be approached from the present and the future points of view. The future view involves analyses for the location of new depots based on factors like source of incoming material and the target market to which the stocks will travel, the related communications networks and the fleet required/available to service these requirements. From the present point of view, ArcLogidstics Route and Arc/Info could form suitable tools to monitor the present inventory scenario along the supply chain. The software could demonstrate graphically what location has what stocks against what kind of demand allowing the manager to allocate new stocks to areas, which require the new stock. The system could also be programmed to take care of anticipated demand. If summer is approaching, for a soft drink company, getting larger stocks than usual to the consumption centers becomes a priority. If these stocks arrive too early then the holding costs would go up; on the other hand a delay could mean that the competition takes over the market. The system would then present comprehensive data in an easily understandable format for the manager to be able to take an informed decision.
Routing and Scheduling
Finally, the operational routing and scheduling could be handled by the software to cut costs and maximize benefits on an ongoing basis. The term benefits are employed instead of profits because maximizing benefits is a larger term and encompasses intangible benefits like customer goodwill and satisfaction.
The routing and scheduling modules will take care of day to day operations, generation of routes and manifests for the various trucks based on their inventory loads and tracking and monitoring the delivery.
We have seen how the entire logistics operation in a company can be handled with great efficiency by implementing GIS based logistics system like ArcLogistics Route and Arc/Info Network.
There are of course constraints in the Indian scenario. Data is difficult to get and if the data is inaccurate, it can significantly compromise the overall efficacy of the system. But The author would like to end on an optimistic note and feels that we are gradually moving towards a widespread use of GIS IN India and with that data availability would also move up. In the near future advanced comprehensive logistics may not be a theoretical discussion as it is now but a reality for all of us to benefit from.