Improving Road Transport Operations through Lean Thinking: a case Study



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Incorrect processing and resource utilisation

As illustrated in Table 1 and by the Kaizen burst No. 1 in Figure 5, incorrect processing and resource utilisation wastes were found in the transportation of products to customers. These occurred because of inefficiencies in the design of routes (i.e. customer assignment to trucks and visit sequencing). Route design was a shared responsibility between the route dispatcher and the truck drivers. All the routes were defined with disregard of customer demand trends and behaviour. Company’s records showed that daily demand from Monday to Wednesday was lower than the level shown during the period from Thursday to Sunday. Additionally, routes were not designed according to daily demand and route sequences were determined by the driver every day. As a consequence, 35% of transport capacity was under-utilised and there was a 19% of distance per route travelled in excess.


Unnecessary movements and waiting

Unnecessary movements and waiting time were found in the IT operation activities of serving clients as well as the NIT activities of preparing and closing orders. This is shown in Table 1 and by the Kaizen burst No. 2 in Figure 5. These wastes occurred due to inefficient procedures that contained non-value added activities. According to Villarreal (2012), NIT activities must be carried out by warehousing operators and hence vehicle drivers should start working with the truck already loaded and properly inspected. However, in the organisation studied, this was not the case. The crew was required to be present to ensure that order product volume and mix was correct. In addition, there was an important proportion of waiting time because all the routes were inspected during the same period of time. The previous requirement originated that 70% of the total preparation activity was non-value added. In addition, closing routes included the activity of returning empty bottles. Since the majority of the trucks returned almost simultaneously, a high level of waiting time occurred. Therefore, it was found that 40% of the total time of closing routes was classified as waste due to it problem.

Waiting to serve customers was produced by restricted customer time windows that created an accumulation of suppliers arriving simultaneously to do so. Customer service time included the time taken to perform activities that did not add value or were not simplified, for example, inspecting products, verifying with the store leader whether the order was complete, and getting and loading empty bottle returns. The vehicle drivers devoted an important amount of time picking and classifying returned bottles on the street or the customer premises. Serving clients was an activity with 65% of its time categorised as waste. There was also the need to consider the time taken to obtain the payment of the order from the customer.
4.3 Definition of a strategy for the elimination of the STEWs

Different strategies have been proposed by, for example, Villarreal et al. (2009), La Londe and Masters (1994), Burns et al. (1985), Cooper (1983), among others, to improve transport operations. In this case, however, a group of experts that included the logistics managers of the organisation studied, a group of vehicle drivers, and a group of researchers gathered together to devise appropriate initiatives to reduce/eliminate the main wastes identified in the previous step. This approach to formulate improvement strategies encouraged the intuitive association within this group of experts to pick up one another’s ideas to firstly associate them, and then to develop the proposed initiatives shown in Table 2. In addition, since most successful improvement initiatives depend heavily on changing employees’ activities and attitudes (Karia and Asaari, 2006), involving the company’s employees (i.e. logistics managers and a group of vehicle drivers) was considered an strategy to facilitate the easy acceptance and implementation of the proposed initiatives.


Insert Table 2 here

Evidence suggests that in general, automation has positive effects on the productivity and ergonomics of logistics, warehousing and manufacturing operations (Echelmeyer et al., 2008; Baker and Halim, 2007; Newman et al., 2002). Based on this, the partial or full automation of repetitive operation activities such as loading and inspection was proposed by the team of experts as a possible solution to decrease waiting time, inspection, loading times in excess, and unnecessary movement. They also suggested that reassigning these operation activities to warehousing operators, alongside automation, would also contribute to improve these parameters. For the automation of the loading and inspection operation activities, the organisation considered, after consultation with automation engineers, the design and installation of arm robots that will pick product up according to customer orders from moving conveyors. The robots will be equipped with devices that will ensure that the correct quantity and product type is picked. The organisation is currently evaluating the realisation of this proposal as the capital investment required for its implementation is high. However, the feasibility study conducted by the automation engineers concluded that the inspection stages currently executed by the truck crew and warehousing personnel would be reduced by 70 minutes on average.

The initiatives of redesigning procedures with technology to serve customers and negotiating full time window flexibility have the objective of eliminating waiting time to serve and serve time in excess. This included the proposal and implementation of three initiatives. The first project considered the application of technology to receive and verify daily orders at the store, in particular, for those under franchise. The second initiative consisted of ensuring that customers returned bottles in their corresponding boxes. Finally, a team responsible for negotiating time windows considering night hours had approached store leaders. The feasibility studies conducted by the organisation to validate these proposed initiatives indicated that they had the potential of increasing the number of customers to be served per route, and decrease the number of routes required to satisfy all stores.

Finally, the project of implementing dynamic daily route design is planned to reduce fill loss and travelled distance in excess, by decreasing incorrect processing and therefore increasing truck capacity utilisation. The initial step in this improvement initiative proposed consisted of the implementation of specialised software programmes such as Roadnet Transportation Suite Routing and Scheduling Systems (UPS Logistics Group, 2004) and Map-Info (MapInfo Corporation, 2015). In particular, MapInfo software would help the organisation studied to perform a map and geocode analysis while Roadnet Transportation Suite would enable it to create optimised routes and load plans (Alagöz and Kocasoy, 2008). This is planned to reduce the number of daily routes according to the trend and behaviour of daily demand, assigning customers based on their location and demand. This will improve truck performance efficiency by increasing the utilisation of truck capacity and reducing travelled distance excess per route. The company’s management was also recommended to consider the utilisation of trucks for two daily routes, impacting favourably on the administrative availability efficiency. Finally, the company was also suggested to carry out a periodic update of routes to consider new store introduction. This initiative of route design is planned to significantly reduce resource utilisation and incorrect processing wastes. With these improvement initiatives, the organisation estimated that the average number of stores per route would increase from 15 to 25.

Overall, the organisation estimated that the outcome of this project would reduce the transportation cost of its operations by about 40%, once that all the improvement initiatives proposed are approved and implemented by the company. In addition, it is also estimated that there will be a significant decrease in truck investment requirements since it is considered that the average number of trucks necessary to satisfy daily demand will be reduced by also 40%.
4.4 Implementation status of the strategy for the elimination of the STEWs

Table 3 presents a summary of the initiatives suggested and their impact on the STEWs identified and important performance indicators. Given the recommendations provided, the management of the company decided to deploy an implementation plan consisting of three fronts.

The first two fronts were concentrated on decreasing excess customer serving time and improving warehousing activities. The first effort included the implementation of three initiatives. The first project considered the application of technology to receive and verify daily orders at the store. The second initiative consisted of ensuring that customers returned bottles in their corresponding beer cases. Finally, a team responsible for negotiating time windows considering night hours had approached store leaders. As of today, the first two initiatives have been implemented in the RDC located in the city of Monterrey, Mexico. The last initiative has been put on hold until a better assessment of the security level of the city is obtained. The direct impact observed by the company was a reduction on the average serving time from 40.6 mins to 18.7 minutes.

Insert Table 3 here

The second front considered a project to automate product loading and inspection before routing. After considering the capital investment required estimated in 100 thousand US dollars and the elimination required of 25 operators, the management decided to postpone its implementation. Instead, an alternative working scheme was implemented. This new scheme consisted of three changes; (1) loading the product was a responsibility of warehousing operators; (2) the utilisation of representatives of the drivers and warehouse operators that will check and certify that the product is loaded and inspected, are in accordance with customer orders and; (3) the re-assignment of the unloading activity to warehousing operators. This activity has already been simplified by having the right bottles in the right cases done by the customers. The company reported a significant reduction of the average route preparation time from 90 to 23 mins and of the average route closing time from 60 mins to 16 mins.

The last front was concerned with route design. The initial step in this front consisted of the implementation of the UPS Roadnet system. This will reduce the number of daily routes according to the behaviour of daily demand and assign customers based on their location and demand. This will greatly improve routing efficiency by increasing the utilisation of truck capacity and reducing excess distance travelled per route. The last step will also consider the utilisation of trucks for two routes per day. As of today, this initiative presents an important advancement in its implementation in the RDC located in the city of Monterrey, Mexico. Only the last step is still on hold until the security situation in city improves. The firm reports that the result of this application is important. Fill loss decreased by 71% from 54.9%, distance travelled in excess was eliminated and, the number of clients (given that serving time per customer was simultaneously reduced) served increased from 15 to 25.

The partially implemented strategy has already provided positive results. The average journey time per route has been reduced to about eight hours, practically eliminating the need for labour overtime. There is still the potential for utilising trucks twice per day and the investment of automating warehousing activity. The first initiative is on hold until a better social climate is present. The second initiative depends on two conditions; the availability of funds and more important; since the reduction of routes implied a relocation of operating personnel, management decided to wait for the layoff or relocation of more operating personnel.



5. Conclusions

Since the 1950s, mathematical modelling, operations research, and simulation methods have traditionally been the key techniques used by researchers to improve transport operations (Sternberg et al., 2013). With the support of these techniques, researchers have intended to address various logistics and transportation problems while minimising cost, time or distance, and optimising resource utilisation, routes, and transportation/delivery schedules. This paper documents a case study where a method to improvement based on lean thinking, specifically in the forms of concepts derived from the Toyota’s seven production and business wastes and tools such as VSM, has been applied to the road transport operations of a leading Mexican brewing organisation. The paper thus offers a valuable insight to logistics and transport organisations on how lean thinking can significantly improve their operations. Its empirical application, as presented in this paper, comprises some basic and generic steps and adapted concepts and tools that can be easily replicated to a good effect in other organisations and settings beyond the context of the case company. Thus, the paper presents important practical implications for logistics and transport managers as they can refer to this paper as a guide to improve the operations of their organisations. Organisations involved in the management and improvement of distribution and logistics operations will find this study particularly beneficial. This is considered the main practical contribution of this paper.

Besides reporting the application of lean thinking in the road transport industry, the paper also contributes to the lean and logistics literature by highlighting the main research areas where the application of lean has been concentrated in this sector. The limited research undertaken in this area as has been highlighted through this paper, is expected to stimulate scholars to further study the application of lean thinking in road transport operations and explore its compatibility with other traditional methods such as mathematical modelling, operations research, and simulation. Through this, a better understanding of this area will also be achieved, from which more effective strategies for the improvement of transport operations can be formulated. In this line, this paper has demonstrated, through the application of specialised software programmes (i.e. Roadnet Transportation Suite Routing and Scheduling Systems and Map-Info), that lean concepts and tools can complement, or be complemented, by other approaches and tools to improve road transportation. In this study, these software, which are equipped with inbuilt powerful and advanced operation research techniques, acted as a support mechanism to realise some of the improvement strategies devised for the reduction of waste identified through the TVSM study. Finally, the limited use of lean thinking to improve lean road transport operation suggests that there is no clear understanding on the benefits of lean, and how to use its principles and tools to improve this type of operations. This study has attempted to provide some evidence of the application of lean thinking to road transport operations, and can serve as a motivation to undertake further research in this area.

The partial application of the proposed scheme has already shown an important improvement of the routing operations of the Mexican company studied. The reduction of serving time per client and of the activities of preparing and closing routes, together with an increase in truck capacity utilisation and the reduction of distance in excess, increased the number of stops per route and eliminated the need for labour overtime. These results suggest lean thinking as an effective and suitable method to target the improvement of road transport operations. However, the use of a single case study research approach suggests that further research is required in different industrial settings and organisations to more widely test the effect of lean thinking in the transportation industry. Therefore, the collection of further evidence through a multiple case study approach is part of the future research agenda of the authors. In addition, to advance this area further, research is required to explore and understand the challenges and define the critical success factors (CSFs) for the deployment of lean thinking initiatives in the transport and logistics sector. Similarly, research is necessary to evaluate whether other lean principles and tools (e.g. OVE or TOVE), besides the ones employed in this paper, can contribute to enhance the positive improvements.


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Yu, V.F., Hu, K.J., & Chang, A.Y. (2015), “An interactive approach for the multi-objective transportation problem with interval parameters”, International Journal of Production Research, Vol. 53, No. 4, pp. 1051-1064.

Zander, S., Trang, S., & Kolbe, L.M., (2015), “Drivers of network governance: a multitheoretic perspective with insights from case studies in the German wood industry”, Journal of Cleaner Production, DOI:10.1016/j.jclepro.2015.03.010, in press.

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Zhang, J., Li, W., & Qiu, F. (2014), “Optimizing single-depot vehicle scheduling problem: fixed-interval model and algorithm”, Journal of Intelligent Transportation Systems: Technology, Planning, and Operations, Vol. 19, No. 3, pp. 215-224.

Zhong, H., Hall, R.W., & Dessouky, M. (2007), “Territory planning and vehicle dispatching with driver learning”, Transportation Science, Vol. 41, No. 1, pp. 74-89.

Table 1. Summary of relevant STEWs


Wastes

Operation Activity

Description

Impact on

Incorrect processing and resource utilisation

  • Transporting product to customers

  • Route sequencing defined by drivers. This resulted in sub-optimal sequencing of the customers visits

  • Routes not designed according to daily demand (i.e. it does not consider demand variability)

  • Truck capacity under-utilisation of 35%

  • Distance in excess per route of 19%

  • Long journey time of 11.5 hrs

Unnecessary movements and waiting

  • Preparing orders/routes

  • Serving clients

  • Returning empty bottles

  • Closing routes

  • Procedures for serving customers, preparing and closing routes have non-value added activities

  • Serving time in excess of 65%

  • Waiting time to close routes

Table 2. Improvement strategies proposed to reduce STEWs



Wastes

Waste Description

Initiatives Considered

Incorrect processing and resource utilisation

  • Route sequencing defined by drivers. This resulted in the sub-optimal sequencing of customers visits

  • Routes not designed according to daily demand (i.e. it does not consider demand variability)

  • Semi-dynamic route design

Unnecessary movements and waiting

  • Procedures for serving customers, preparing and closing routes have non-value activities.

  • Automating product loading and inspection

  • Assigning inspection, loading and unloading product to warehousing operators

  • Redesigning procedures to serve customers with the use of technology

  • Negotiating full time window flexibility with store leaders

Table 3. Summary of initiatives suggested and their impact on routing performance indicators



Waste Description

Initiatives Considered

Impact on

Incorrect processing and resource utilisation

  • Route sequencing defined by drivers

  • Routes not designed according to daily demand

  • Truck capacity under-utilisation of 35%

  • Distance in excess per route of 19%

  • Long journey time of 11.5 hrs

Unnecessary movements and waiting

  • Procedures for serving customers, preparing and closing routes have non-value added activities

  • Automating product loading and inspection

  • Assigning inspection, loading and unloading product to warehousing operators

  • Redesigning procedures to serve customers with the use of technology

  • Negotiating full time window flexibility with store leaders

  • Serving time in excess of 65%

  • Waiting time to prepare and close routes


Figure 1. Areas where research on lean transportation has been conducted

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