The Impact of Standardized
Physical Internet Containers
on Shipping Volume
Russell D. Meller, Ph.D.
University of Arkansas (U.S.A.)
Center for Excellence in Logistics and Distribution
with Yen-Hung Lin and Kimberly P. Ellis
ILS 2012 (Quebec, Canada)
29 August 2012
Logistics Today … the Opportunity
We are shipping air and packaging
25% of all miles are empty!
56.8% “full” when not empty!
42.6% average utilization
$65.8B opportunity in the US alone!
Congestion is high
$100B/yr in wasted fuel and lost time!
CO2 emissions are growing
233.8 Tg CO2 emissions opportunity!
Truckers have become today’s modern
cowboys
100%+ turnover rate in the industry!
Demonstrable negative health benefits!
Russell D. Meller, Ph.D., Univ. of Arkansas, U.S.A.
Logistics Today: At a Crossroads
Courtesy of France
100,0!
400,00!
90,0!
350,00!
80,0!
300,00!
250,00!
60,0!
50,0!
200,00!
CO2!
40,0!
150,00!
CO2 EC traget 2050!
30,0!
t.km!
100,00!
20,0!
It is not enough for epsilonlevel improvements.
50,00!
10,0!
0,0!
1990!
G t.km!
M t CO2!
70,0!
We simply must do something
if we are to meet various
reduction goals for CO2
emissions.
1995!
2000!
2005!
0,00!
2010!
Sarraj, R., Ballot, E., Pan, S., “Potential of Routing Protocols for Freight in Open Logistics Networks: the Case of FMCG in France,” Proceedings of the
4th International Conference on Information Systems, Logistics and Supply Chain, 2012.
Russell D. Meller, Ph.D., Univ. of Arkansas, U.S.A.
The Global Logistics Sustainability Grand Challenge
Design a system to move, handle, store, realize, supply and
use physical
objects throughout the
world
Inefficiency
and unsustainability
claim
in a manner that is efficient and
economically, environmentally and socially sustainable.
Montreuil B. (2011) “Towards a Physical Internet: Meeting the Global Logistics Sustainability Grand Challenge,” Logistics Research, 3(2-3), 71-87, 2011.
Russell D. Meller, Ph.D., Univ. of Arkansas, U.S.A.
The Physical Internet
The Physical Internet (PI) is an open global
logistics system founded on physical, digital and
operational interconnectivity through
encapsulation, interfaces and protocols.
The PI enables an efficient and sustainable
logistics web that is both adaptable and resilient.
Russell D. Meller, Ph.D., Univ. of Arkansas, U.S.A.
Simplified Mental Image of the PI
Montreuil, B., “Physical Internet,” 2011.
• eBay-like freight
transportation “auction”
• handles standardized
“black box” modular
containers
• open and shared
transportation and
distribution network
• vast community of users
• supplier ratings to drive
logistics performance
Russell D. Meller, Ph.D., Univ. of Arkansas, U.S.A.
CELDi PI Project Focus
• What are the potential logistics
system gains of the PI?
• The CELDi Physical Internet
Project focuses on establishing
the effects of:
– optimized logistics networks
and
– standard container sizes
on the performance of the
supply chain.
• We are not addressing many
other important issues!
R.D. Meller and K.P. Ellis, "An Investigation into the Physical Internet: Establishing the Logistics System Gain Potential," in Proceedings of the 2011 International
Conference on Industrial Engineering and Systems Management, Metz – France, 575-584, 2011.
Russell D. Meller, Ph.D., Univ. of Arkansas, U.S.A.
Partners and Thought Leaders
•
•
•
•
•
•
•
•
•
Retailers: Walgreens, Walmart
CPGs: HP, P&G, SC Johnson
TSP: J.B. Hunt
Asset Management: CHEP
Packaging Experts: Menasha,
Millwood
Logistics Software: RedPrairie
Logistics 3PL: Volvo Logistics
Trucking: ATRI
Diversified Manufacturers: Air
Liquide, Boeing, Johnson
Controls, Leggett & Platt
National Science Foundation
Material Handling Industry
Volvo Logistics North America
Russell D. Meller, Ph.D., Univ. of Arkansas, U.S.A.
Decomposi on
Composi on
Standardized Modular Containers?
Montreuil, B., Meller, R.D., Ballot, E., “Towards a Physical Internet: The Impact on Logistics Facilities and Material Handling Systems Design and
Innovation,” in Progress in Material Handling Research: 2010, Material Handling Institute, Charlotte, NC, 305-327, 2010.
Russell D. Meller, Ph.D., Univ. of Arkansas, U.S.A.
Modular Container Use in the Physical Internet
What’s the impact as we …
limit the number of case sizes?
allow the number of items per case to change?
allow item dimensions to change?
Meller et al., ”A Decomposition-Based Approach for the Selection of Standardized Modular Containers," in review with EJOR; “The Impact of Standardized
Metric Physical Internet Containers on the Shipping Volume of Manufacturers, Proceedings of INCOM12, 2012; “The Impact of Standardized Physical Internet
Containers on Shipping Volume,” Proceedings of the 4th International Conference on Information Systems, Logistics and Supply Chain, 2012.
Russell D. Meller, Ph.D., Univ. of Arkansas, U.S.A.
Modular Container Selection for the PI
CPG Company
494 products
268 shelf packages
258 case sizes
If the PI reduces the
choices, how does it
affect how much
volume is shipped?
What impact is there at
the pallet level?
Russell D. Meller, Ph.D., Univ. of Arkansas, U.S.A.
Modular Container Selection for the PI
Retailer
1715 CPG products
850 shelf packages
1057 case sizes
If the PI reduces the
choices, how does it
affect how much
volume is shipped?
What impact is there at
the pallet level?
Russell D. Meller, Ph.D., Univ. of Arkansas, U.S.A.
Modular Dimensions Enforced
Russell D. Meller, Ph.D., Univ. of Arkansas, U.S.A.
Methodology, in words
• For each product, determine the best
container size.
• Best is measured by the average shipping
volume per item.
• We measure this at the “case” level and at the
“pallet” level.
• Iterate through the number of items and the
modular container sizes.
• Solve a 3D-CLP (Container Loading Problem)
for each item-container combination of
interest.
Russell D. Meller, Ph.D., Univ. of Arkansas, U.S.A.
Selecting the Best Modular Container Size
Russell D. Meller, Ph.D., Univ. of Arkansas, U.S.A.
Methodology, in words
• Our 3D-CLP formulation extends the proposed
formulations of Chen et al. (1995).
• Each iteration solves in seconds, but there are
a lot of problems to solve!
• Introduced some rules to speed up the flow
chart presented earlier.
• Output:
– optimized container for each item
– packing of item in container
– number and waste of item in container
Russell D. Meller, Ph.D., Univ. of Arkansas, U.S.A.
Effects of Modular Limitations
Data set from earlier retailer example:
Allowed either a 48” by 48” or 48” by 40” pallet
Russell D. Meller, Ph.D., Univ. of Arkansas, U.S.A.
Effects of Modular Limitations
Only allowed a 1.2m by 1.2m pallet
Russell D. Meller, Ph.D., Univ. of Arkansas, U.S.A.
Effects of Modular Limitations
As compared to 1057 originally!
Russell D. Meller, Ph.D., Univ. of Arkansas, U.S.A.
Effects of Modular Limitations
Russell D. Meller, Ph.D., Univ. of Arkansas, U.S.A.
Modular Container Selection for the PI
Retailer
1715 CPG products
850 shelf packages
1057 case sizes
At the case level, there
there is a net increase of
8%
At the pallet level, there
there is a net savings of
20%!
Russell D. Meller, Ph.D., Univ. of Arkansas, U.S.A.
Prototyping the Physical Internet: Modular Containers
EC Project on Interconnected Logistics: MODULUSHCA, 2012-2015
Securable
Traceable,
Routable
Snappable
Easy-to-dismantle
Reusable
Recyclable
How should these be designed?
sizing
functionality
materials
managed
Use optimization models,
experience of industry
partners, and technical
capabilities of labs to
design prototype modular
containers that P&G and
Poste Italiane will use in
their supply chains.
Austria, Belgium, Canada, France, Germany, Great
Britain, Italy, Poland, Spain, Switzerland, The
Netherlands
Russell D. Meller, Ph.D., Univ. of Arkansas, U.S.A.
Prior Projects and Research Questions
Other Projects with Industry Partners:
• Load Planning Impacts (France, U.S.A.)
• Modular Container Sizing (U.S.A.)
• Prototype PI Facilities (Canada, U.S.A.)
Russell D. Meller, Ph.D., Univ. of Arkansas, U.S.A.
The Physical Internet Initiative
• Informal network devoted
to the development of the
Physical Internet
• An open organization
• www.physicalinternetinitaitive.org
• @PhysicInternet
Russell D. Meller, Ph.D., Univ. of Arkansas, U.S.A.
The Impact of Standardized
Physical Internet Containers
on Shipping Volume
Russell D. Meller, Ph.D.
University of Arkansas (U.S.A.)
Center for Excellence in Logistics and Distribution
with Yen-Hung Lin and Kimberly P. Ellis
ILS 2012 (Quebec, Canada)
29 August 2012
Interconnectivity
Technology Roadmap
Physical
Digital
Global
Industry
Global
Organization
Operational
Breadth
Depth
Projects:
• Foundation
• Applied
• Demonstration
Physical: Container, Site, Network
Digital: Standards, Exchange, Hardware
Operational: Protocols, Processes, Business Models
Russell D. Meller, Ph.D., Univ. of Arkansas, U.S.A.
Facility Functional Design Prototypes Completed
Road-Based Transit Center
Road-Rail Transit Center
Road-Based Crossdock Hub
Russell D. Meller, Ph.D., Univ. of Arkansas, U.S.A.
Positioning the Physical Internet
World Wide Web (WWW)
Digital Internet
Digital Information Packets
Smart Grid
Connecting Physical Objects through WWW
Internet of Things
Smart Networked Objects
Energy
Internet
Energy Packets
Open Supply Web
Physical Internet
Smart Physical Packets
Original schematics from Benoit Montreuil, 2010, Physical Internet Manifesto, www.physicalinternetinitiative.org.
Russell D. Meller, Ph.D., Univ. of Arkansas, U.S.A.
Russell D. Meller, Ph.D., Univ. of Arkansas, U.S.A.