Benefit analysis of IT Visibility Platforms in Containerized Supply … Projecten/Beveiliging... · Benefit analysis of IT Visibility Platforms in Containerized Supply Chains Master’s

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Benefit Analysis of ITVP in CSC

Final Draft

Benefit analysis of IT Visibility Platforms

in Containerized Supply Chains

Master’s thesis Supply Chain Management Date: February, 2008 Author: Yixiu Zhou (298966) Supervisor: dr. Rob Zuidwijk Co-reader: drs. Marcel van Oosterhout

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Preface

This Master’s thesis results from a seven-month internship at RSM Erasmus University Decision and Information Science department. The research presented in this thesis is part of a research project called PROTECT. In this project, many organizations cooperate doing research in the field of supply chain security.

This research is the working package 1.4 of PROTECT project. During the internship, I was involved in a lot of interviews and participation in workshop sessions to identify the capabilities and benefits of information visibility platform.

I declare that the text and work presented in this Master thesis is original and no sources other than those mentioned in the text and its references have been used in creating the paper.

The copyright of the master thesis rests with the author. The author is responsible for its contents. RSM Erasmus University is only responsible for the educational coaching and beyond that cannot be held responsible for the content.

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Acknowledgements

I would not have been able to accomplish my research without the involvement of so many people around me. I need to express a word of gratitude for all those who supported the development of this thesis.

First, I want to thank my coach Rob Zuidwijk for his continuous input on reviewing my thesis draft and giving me important academic advice of refinement. Without his vision and involvement, this thesis would not have reached this quality.

Second, I want to thank the many people from the project that were involved in the workshops and interviews. I’m grateful to Marcel van Oosterhout for his great input on preliminary versions, his planning and execution of the workshops and progress meetings, and continuously providing me with literature for my research needs. I also want to address many thanks to Iwan van der Wolf, Harry Langevoort, Jurjen Duintjer and Bart Vermeer for their contributions to the interviews of benefit research.

Furthermore, I want to thank my colleagues of the other working packages for sharing resources and supporting each other. I’m especially grateful to Hans van Wijngaarden for providing me with the extra information from his research and integrating my research questionnaire into his online survey.

Finally yet importantly, I want to thank my husband, Frank, for his support throughout my thesis writing and handing out my research questionnaires to whoever he thought might be relevant from his social relation. I want to thank my parents, Zhongyi and Jianjing, for their support throughout my entire study. I want to thank my unborn baby, Audrey, for giving me the courage and enjoyment inside my body during this seven month.

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Executive summary

The management of containerized supply chain (CSC) operations is complex and involves the management of information and document flows, as well as the coordination of all the public and private participants. In the last few years, disruption risk has received increasing attention in CSC. Both supply chain companies and regulatory authorities are taking security measurers to cope with the threat of terrorist attacks, smuggling and theft. In addition, because of the demands fluctuation and information distortion, companies are facing big problems of increased inventory, lead time variation and stock outs in their logistics process.

IT visibility platform (ITVP) comes into being in order to deal with the difficulties that companies and organizations face. ITVP consists of various types of inter-organizational information systems in CSC. Its objective is to improve information transparency, to accelerate speed of operation and to improve CSC service.

The objective of this research is to define an ITVP in CSC, to develop and validate a benefit analysis of the ITVP in terms of supply chain (SC) performance and SC security.

In the first phase of my research, literature research is the major methodology. CSC is defined in terms of involved parties, SC processes, and the information exchanges among parties. The information requirements for realizing better visibility in CSC are put forward.

Studies have found that, as a result of better visibility in SC, SC performance could be more efficient by reducing inventory levels, enhancing integrity, shortening the processing time, and adding value to end customers. In order to realize better visibility of CSC, information requirements are elaborated by the scholars. Seven requirements were summarized in this research:

1. Standardization of administrative and security processes, both internationally and domestically.

2. Commitment to shipments with reliable and predictable processing times 3. Synchronization of container operational information 4. Protection of all commercial information given to authorities 5. Integrity of conveyance, loading, documentation, and sealing 6. Balance of information load for planning and execution data 7. Creation of security and anti-tampering practices Particular information capabilities are needed to fulfill these information requirements and realize the benefits within CSC. In the second phase of my research, exploratory research was carried out. Firstly, the ITVP compositions and designed capabilities are defined. A semi structured discussion session with an expert on ITVP is done to find out whether the current ITVP capabilities could meet the information requirements of CSC, and to evaluate the extent of realized visibility. Three ITVP capabilities are confirmed as major research objects for benefit analysis. These are capability of real-time location, capability of container integrity information, and capability of monitoring & alerts.

1. Real-time location: Real time information about the position of a container or goods

2. Container Integrity Information: Monitoring the integrity of a container during transport

3. Monitoring & Alerts: Monitoring the status of a container shipment and providing alerts in case of deviations

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In the third phase of my research, the benefit analysis is elaborated among these three major ITVP capabilities. A spreadsheet of benefit indicators is deployed for benefit analysis. Nine benefit indicators implemented in the benefit analysis are elaborated. For SC performance perspective, the benefit analysis indicators are cost reduction, throughput time reduction, productivity improvement, delivery reliability improvement, and flexibility of satisfying customers’ demands. For SC security perspective, the benefit analysis indicators include legality improvement, enhanced prevention of disruption, quicker responsiveness and risk management improvement.

Six stakeholders in CSC are interviewed to evaluate the beneficial effects they experienced, or expected to be experienced, from three ITVP capabilities. An online survey is carried out at the same time to validate the interview results. 27 companies reply this survey and the response rate is 36%. Around 64% of the interview results are validated; and one third of the results show magnitude difference in benefit indicators. Some new benefits are added to each capability from the survey, too.

The interview results show that the real-time location capability is extremely valuable for reducing throughput time of containers and improving the delivery reliability. As to the SC security perspective, it is significantly beneficial to shipment legality, prevention of disruptions, and responsiveness for CSC operations.

The container integrity information capability is found most valuable in providing security benefits to all the stakeholders. The monitoring & alerts capability is a comprehensive capability covering all the benefits of the other two capabilities.

Because stakeholders of CSC have different business goals, their benefits obtained from ITVP capabilities differ in patterns and magnitudes. The group of significant beneficiaries from ITVP implementation are Shippers/Consignees, Shipping line/LSP, and Customs. These parties have direct concern over container shipments, and ITVP could provide them with more operational certainty and security during the shipment. Other parties such as terminal operators, freight forwarders and port authority belong to the group of moderate beneficiaries, because their operations are also greatly influenced by factors other than visibility of assets.

The improvement of CSC performance and security needs great efforts from all stakeholders, and the development of ITVP requires cooperation from all stakeholders. As a recommendation, ITVP service providers could cooperate more tightly with stakeholders from moderate beneficiaries and find customized solutions for them to better utilize CSC visibility, in order to motivate their participation into the optimization process.

In conclusion, ITVP technologies are going through a period of rapid development. The potential of ITVP is tremendous for further improving CSC performance and security.

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Table of Contents Chapter 1 Introduction

1.1 Motivation and Problem Statement ……………………………… 8

1.2 Research Objective ………………………………………………… 10

1.3 Research Questions and Conceptual Model ………………… 10

1.4 Methodology …………………………………………………………… 11

1.5 Reading Guide ………………………………………………………… 12

1.6 Discussion ……………………………………………………………… 14

Chapter 2 SC and Containerized SC 2.1 Definition of SC and the role of IT ………………………………… 15

2.2 Introduction of Containerized SC ………………………………… 16

2.3 Information use of Containerized SC …………………………… 17

2.4 Conclusion ……………………………………………………………… 19

Chapter 3 Information Requirements of Containerized SC 3.1 Information realizing better visibility in SC ……………………… 20

3.2 Information Requirements in CSC ……………………………… 23

3.3 Conclusion ……………………………………………………………… 26

Chapter 4 SC Performance and SC Security 4.1 SC Performance ……………………………………………………… 27

4.2 SC Security …………………………………………………………… 29

4.3 Conclusion ……………………………………………………………… 31

Chapter 5 Definition of IT Visibility Platform 5.1 Definition of IOS for CSC …………………………………………… 32

5.1.1 Definition of IOS

5.1.2 Definition of PIOS

5.2 What is IT Visibility Platform (ITVP) ……………………………… 34

5.3 Current Information Capabilities of ITVP ……………………… 36

5.4 Conclusion ……………………………………………………………… 38

Chapter 6 Matching Capabilities with Information Requirements

6.1 More SC Visibility- Advantages of IOS ………………………… 39

6.2 ITVP capabilities realizing Visibility ……………………………… 40

6.3 Conclusion ……………………………………………………………… 43

Chapter 7 Benefits analysis of ITVP 7.1 Building Benefits Analysis Model ………………………………… 44

7.1.1 Schema of benefits analysis model 7.1.2 Benefit indicators of analysis model ……………………………………… 46

7.2 Methodology …………………………………………………………… 47

7.3 Benefits analysis ……………………………………………………… 48

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7.3.1 Benefit analysis on each capability ………………………………………… 49

7.3.2 Benefit analysis on each stakeholder ……………………………………… 55

7.4 Validation ………………………………………………………………… 58

7.5 Conclusion ……………………………………………………………… 60

Chapter 8 Conclusions and Recommendations 8.1 Conclusions of Research …………………………………………… 62

8.2 Limitations of this research ………………………………………… 65

8.3 Recommendations for further research of ITVP in CSC ……… 65

8.4 Recommendations for further development of ITVP in CSC … 65

References 67

Appendix Appendix A Stakeholders in CSC ………………………………………………… 70

Appendix B Export major process ………………………………………………… 71

Appendix C Import major process ………………………………………………… 73

Appendix D Information flow of each stakeholder …………………………… 75

Appendix E Matching capability with info Requirements …………………… 77

Appendix F Interview Results of Benefit Analysis …………………………… 79

Appendix G Questionnaire for Semi-structured Interview and Online survey …………………………………………………………………… 89

List of figures and tables ………………………………… 90

List of abbreviations ……………………………………… 91

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Chapter 1 Introduction

1.1 Motivation and Problem statement: In recent decades, with fast development of globalization, the containerized supply chain (CSC) is playing an extraordinary important role in world economy. However, a typical maritime trade transaction involves more than 20 different parties and over 120 data elements, while there’s no single entity or organization responsible for coordinating the movement of goods through the whole chain (UNISYS, 2006). The biggest challenge for managing CSC involves the management of information and document flows, as well as coordinates all public and private participants.

Meanwhile, irrelevant information is overloading decision makers and it is important to select information that is accurate, relevant, and timely. Some small sized chain parties have limited resources to invest in information and automation systems. A lot of technical problems exist as well. Information is not completely standardized for all the sharing parties.

These organizational and technical bottlenecks are hampering the CSC performance. Following Figure 1 shows the most important 10 management problems facing the CSC executive currently.

2.1

2.2

2.4

2.7

2.8

3

3.1

3.3

3.5

3.7

3.7

3.9

4

0 1 2 3 4 5

13th Complying with RFID mandates

12th Reducing insurance costs

11th Reducing shrink

10th Increasing manufacturing uptime

9th Assigning liability

8th Locating lost containers

7th Reducing labor and fees

6th Managing POFR

5th Preventing lost contianers

4th Reducing stock outs

3rd Reducing lead time variance

2nd Reducing inventory

1st Assuring contianer security

1 Not important

3 Moderately important

5 Most important

Figure 1: Importance of the top 10 management issues in the CSC (Source: A.T. Kearney interview)

From the view of managers, the most urgent problems are assuring container security and reducing inventory, lead time variance, and stock outs.

Assuring container security

Supply chain (SC) security is a complex challenge involving the movement of goods, documents, and money around the world. According to the U.S. Customs and Border Protection (CBP) Commissioner Robert Bonner, “A terrorist attack using a container to conceal a so-called dirty bomb…could probably stop global trade in its tracks unless we have a maritime security system that can detect and deter such an attack.”(Bonner, 2003) Besides the terrorist attacks on September 11, 2001, a recent series of security breaches and disruptions are threatening national security for many countries, such as the October 2002 U.S. west coast longshoremen’s lockout, utility failures in the U.S. and Europe in 2003, the Madrid bombing, and the tsunami in 2004. All these breaches and disruptions illustrate the inherent vulnerability that exists in global SC. Our economies are especially vulnerable

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to attacks either from a natural disaster, an infrastructure failure, or a business collapse.

Disruption risk has received increasing attention in the last few years. Since with longer paths and shorter clock speeds, there are more opportunities for disruption and a smaller margin for error if a disruption takes place.

Reducing inventory, lead time variation and stock out

When information is inaccurate and untimely, it may increase inventory, lead time and stock outs in the logistics process. For example, if a container is going to be loaded on the inland transport trucks, a lot of information must be prepared accurately and timely, such as release order from customs, transport order, complete bill of lading, etc.

Deviations from planning may happen for internal or external reasons. For example, a container couldn’t be loaded on the train as planned when it did not arrive at the terminal or because the train was delayed. If organizations couldn’t receive the information in time, it would be difficult for them to respond to the deviations to minimize the loss or delay. The uncertainty in every link could lead to the increase in inventory, lead time variation and even stock out for business parties in SC.

Lee and Whang (2000) indicated that partners in CSC should make use of the advantages provided by information technology (IT) to overcome the bottlenecks within organizations and optimize SC performance.

One article from American Metal Market (Anonymous, 2006) mentioned the important role of information in realizing visibility in today’s networked economy. Paoni, who taught in the managerial economics and decision sciences department at Northwestern University, told the distribution executives that the value and role of information is shifting from a support role in the industrial economy to a much more strategic role in a new "networked economy". Increasingly, IT systems are providing businesses with a platform to facilitate organizational changes and to link employees, customers and suppliers to managers. "A supply chain network is really a function of how good your information is," Paoni said. "Do you have a glass pipeline? Can you see into the supply chain?"

As a result, IT visibility platform (ITVP) comes into being in forms of various information systems aiming at improving information transparency, accelerating speed of operation and enhancing SC service. By using ITVP, CSC could achieve a relatively time-definite and controlled chain of custody for container shipments.

Some studies have been done on the general benefits of asset visibility and security initiatives. For example, Rice and Spayd (2005) worked out the benefit diagram obtained from asset visibility; UNISYS (2006) defined major benefits from visibility and benefit distribution to several stakeholders. Other studies (Gutiérrez, et al., 2007) conducted massive surveys exploring the benefits of security initiatives in specified performance and security indicators.

However, within CSC, studies on benefit analysis of ITVP haven’t been done yet. The benefit distributions to stakeholders are not clear either. The reason could be that the network composition of CSC is too complicated, and it could also be the tremendous differences existing in regulations among ports internationally and domestically. All these factors add to the difficulties for carrying out such analysis.

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1.2 Research Objective The research presented in this thesis is conducted within the PROTECT project. The aim of PROTECT is to determine critical success factors of security in global SC and to determine to what degree organizations in SC can manipulate these factors to create and sustain secure global SC. For more details about the PROTECT project, please refer to http:// protect.transumo.nl.

The working package of my research is to define an ITVP in CSC, develop and validate a benefit analysis of the ITVP in terms of SC performance and SC security.

Research Objective is:

Analyze what exactly the positive impacts of ITVP capabilities are to CSC performance and security, and benefits distribution to each stakeholder.

1.3 Research Questions and Conceptual Model The major Research Question of this research is:

What are the benefits in terms of SC performance and security experienced, or expected to be experienced, by the CSC actors through the usage of IT visibility platform?

Conceptual model:

The conceptual model of this research is formulated as below:

Firstly, the ITVP is established with certain information capabilities. With these information capabilities, information will be more transparent and quickly shared among parties. The information requirements of CSC are met by ITVP capabilities and thereby visibility of CSC is improved. The enhanced visibility in CSC will positively influence the SC performance and SC security.

In order to answer the research question, a lot of sub research questions need to be answered as follow:

Step 1: ITVP composition 1) Which CSC processes can be involved in the ITVP? 2) Who are stakeholders involved in the formation of this information system? 3) What’s the definition of ITVP, what’s the objective of ITVP? 4) What are the capabilities of ITVP?

Benefits Visibility

CSC

IT visibility

platform

SC Performance

SC Security

Enable

Step 1 Step 2

Step 3

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Step 2: Visibility of CSC 5) What are the information requirements for realizing better visibility in CSC? 6) Which ITVP capabilities meet these information requirements?

Step 3: Benefit Analysis 7) What are the definition and indicators of SC performance in CSC? 8) What are the definition and indicators of SC security in CSC? 9) What are the benefits obtained by implementing ITVP capabilities in terms of SC

performance and security? 10) Who are the beneficiaries in the chains?

1.4 Methodology The benefit analysis will be built to figure out the positive impacts of ITVP capabilities to CSC in terms of performance and security, and to each stakeholder, what the major benefits are. To reach this goal, different methods are used. The study is divided into three phases:

1st Phase: Literature Review

Desk research is the major methodology for the studies of this phase.

Firstly, clear definition of CSC is given, including involved parties, supply chain processes, and the information exchanges.

Next, definition of what visibility means to CSC is presented, and how information and information architectures are required to enable the realization of visibility are described.

As background knowledge for benefit analysis, the indicators of SC performance and SC security are defined as well.

2nd Phase: Workshop discussion

This phase is mainly exploratory research.

Firstly, current available ITVP examples and designed capabilities are reviewed. ITVP definition and capabilities are generalized from current inter-organizational information systems (IOS) in CSC.

A semi-structured workshop discussion with an expert on ITVP was done in this phase to find out whether the current ITVP capabilities could meet the information requirements.

3rd Phase: Interviews and Validation

In the 3rd phase of this research, the focus is mainly on the benefit analysis.

A spreadsheet of benefit indicators was worked out based on literature review and interview with an expert on ITVP services.

The second round interviews were done with stakeholders in CSC. They were asked to fill in the benefit spreadsheet and add explanations they experienced, or expected to be experienced, from operations.

An online survey was carried out at the same time to validate the interview results.

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1.5 Reading Guide

In this subsection an outline of this report is given. The contents of each chapter are described and a graphical representation of the outline is given in Figure 2.

Chapter 2:

Chapter 2 is about the composition of CSC and information flows going between chain partners. It introduces the information uses of CSC.

Chapter 3:

With fast changing and diverse market demands, Chapter 3 is about how information realizes more visibility throughout CSC, and generates specific requirements on the information systems applied.

Chapter 4:

Chapter 4 defines indicators in SC performance and security in CSC which will be used to analyze the benefit of ITVP usage.

Chapter 5:

In Chapter 5, current ITVP definition is introduced in detail, including objective and capabilities.

Chapter 6:

ITVP capabilities are matched with all requirements of CSC in order to figure out the major capabilities which could realize most benefits to CSC.

Chapter 7:

A benefit analysis is carried out in Chapter 7 to assess ITVP in terms of SC performance and security. Key benefits to each stakeholder are indicated and comparisons are made among stakeholders for variant interest points.

Chapter 8:

In this final chapter, the conclusions of the research are presented. The limitation and possibilities for further research are suggested. Several recommendations are made for further development of ITVP based on findings from benefit analysis.

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The structure of the thesis is as follow:

Figure 2: Research Approach

Constructive Research

Exploratory Research

Ch6 Matching capability with visibility requirement

Ch5 IOS, ITVP composition and capabilities

Ch7 Benefit Analysis

Ch1 Introduction

Literature Research/

Ch8 Conclusions and Recommendations

Desk Research

Expert Workshop Desk Research

Expert Workshop

Interviews and Desk Research

Ch2 CSC composition Info flow

Ch3 Visibility theory CSC info requirement;

Ch4 CSC performance & Security indicator

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1.6 Discussion

The benefit analysis of this research will clarify the specific benefits of several major capabilities of ITVP and provide stakeholders a prospect of ITVP future development. This research is very important for the development of IOS within CSC.

This benefit analysis could motivate stakeholders to build better trust, and achieve tighter cooperation and orchestration in order to realize the potential benefits.

In conclusion, the ITVP benefit analysis model will become a useful tool to manage the CSC as a more efficient, more secure, more transparent and harmonious business community.

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Chapter 2: SC and Containerized SC In this chapter, the concept of CSC is described in detail. In CSC, many organizations are involved in container transportation from shippers to consignees. Different information are exchanged and coordinated within stakeholders. The chapter is outlined as follows: In Section 2.1, the basic theory of SC is introduced. Section 2.2 covers definition of CSC, including main stakeholders and major execution processes. Finally, in Section 2.3, major information flows within CSC are presented and summarized.

2.1 Definition of SC and the role of IT

In this section, the definition of SC is given, and the role of IT in SC is introduced. Readers could get a general overview of SC which helps good understandings of CSC.

SC consists of all parties involved, directly or indirectly, in fulfilling a customer request (Chopra and Meindl, 2001). The parties of SC, or supply network or supply web (Mentzer et al. 2001), are customers, manufacturers, suppliers, transporters, retailers, warehouses and distribution centers. Each organization adds value to the product for end-customers. They are connected by physical, information and financial flows, as indicated in Figure 3. The most successful SC are effective in coordination processes, have a focus on customer value delivery, eliminate unnecessary costs, and create SC performance measures (Brewer and Speh, 2000).

Figure 3: Parties and flows involved in a supply chain (Simchi-Levi et al, 2003)

IT is an enabler factor for organizations to achieve efficient performance. The traditional way of information exchange is by voice/phone, sending of paper documents, fax, and face-to-face meetings. New technologies could result in increased speed, accuracy, immediate process-ability and reliability of information (Baalen et al., 2000). The implementation of IT in SC improves the information collection, analysis, sharing/collaboration and access process (Simchi-Levi et al., 2003). High quality information could lower the SC uncertainties presented in problem statement, and lead to predictive and responsive SC.

Suppliers Distributor Retailers Manufact. Consumers

Financial Flow

Information flow

Physical flow

Reverse logistics flow

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2.2 Introduction of Containerized SC

This section presents the definition CSC, active stakeholders, and major processes. It’s critical to have a complete view of how CSC network operates. It helps to understand the physical structures of information exchanges in CSC.

Value is added by various actors to CSC through processes and activities within physical, information, and financial flows. Figure 4 depicts the organizations in CSC.

Figure 4: The containerized transport supply chain (Baalen et al. 2000)

Table 1 gives complete list of stakeholders in CSC activities. Within the groups, different actors can be distinguished.

Group Actors Color in Figure 4 Customer group Shipper / exporter

Consignee / importer Yellow

Organizing group Forwarder (merchant haulage) Shipping line agent (carrier haulage)

White (merchant haulage) Blue (carrier haulage)

Physical group Sea terminal Shipping line / sea carrier Pre- or On-carrier (carrier inland transport)

- Barge operator - Rail operator - Road carrier

Inland terminal Central distribution point / container freight station Empty container depot

Orange (transport related) Green (storage)

Authorizing group Customs

Port authorities Seaport police / River police Customs & Inspection authorities

Rouge

Table 1: Organizations in the containerized transport supply chain (Oosterhout et al. 2000)

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– The customer group consists of the shipper, the client at the point of origin, and the consignee, the customer at the point of destination.

– The organizing group includes the freight forwarders (merchant haulage) and shipping agents (carrier haulage).

– The physical group is the organizations responsible for the actual transportation of the container from the shipper to the consignee.

– The authorization group consists of organizations responsible for public infrastructure and regulatory authorities that monitor whether the SC companies obey to the rules and regulations.

– The financial group supports financial transactions between the organizations in CSC. (Out of the scope of this research)

A detail explanation of the roles playing by the five groups of stakeholders and their responsibilities could be found in Appendix A.

Within the port of Rotterdam, two major processes can be distinguished. First process type is exporting goods to an offshore country. Rotterdam is the country of origin in the left square of Figure 4. Goods are gathered via an inland transport process and are transferred to the port of Rotterdam. Containers are loaded onto a container ship and are shipped to the offshore port.

Second process type is importing goods from the country of origin. Here Rotterdam plays the role of destination in the right square of Figure 4. Goods to be imported are shipped to the port of Rotterdam and transferred via an inland transport process to the final destination.

In Appendix B and Appendix C, the description of export and import processes in CSC could be found. At each step, several stakeholders are participating simultaneously, and information are frequently exchanged. In the next section, specific information uses in CSC are explained.

2.3 Information uses of Containerized SC

In this section, specific information flows of each stakeholder are presented and information blocks in CSC are summarized in table. The information blocks are the basic units contained in ITVP, which will help the understanding of how ITVP supports the operations in CSC.

In Figure 5, Van de Zande (2002) illustrated the brief information flow in the import and export processes. Combined with processes described in Appendix B and C, some information uses need to be added to Zande’s diagram. Appendix D gives a detailed information flow explanation.

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Figure 5: Information Flow in CSC (Van de Zande, 2002)

Mark Meijer, another colleague from work package 5.2, summarized the information needs of CSC by means of interviews with experts in Port of Rotterdam. (Meijer, 2007) The information uses in CSC are generalized in eleven blocks:

1. Container (general) – this information block contains data elements about the container like the container number and the container status.

2. Seal – this information block contains data elements about the seal that is used for the container. Examples of possible data elements are the location of sealing, the seal status and the seal number.

3. Nuclear detection – in this information block information about the nuclear scan of the container is stored. Every container that is transferred by rail or road is scanned by the nuclear detection ports.

4. Scanning or inspection (container contents) – information about the scanning or inspection of the container contents or the container in general is contained within this information block. Data elements within this block are, for example, the container scan type and the container scan results. These scans and inspections include both X-ray scanning and physical inspection by Customs, VWA or PD.

Port Authority Shipping line Port Authority

Pre-carriage operator

Shipping line Agent/ Forwarder

On-carriage operator

Customs

Terminal

Customs

Importer’s Bank

Exporter’s Bank

Consignee Shipper

Container messages

Stowage instructions Dangerous Goods

Discharge report

Dangerous Goods

Container Status Arrival Notice Booking Manifest Bill of Lading

Goods receipts Load List Goods receipts Discharge List Release Order

Transport order Transport order

Inspection Certificate Export License Certificate of Origin Bill of lading

Status Arrival Notice Customs Clearing documents Transshipment info

Loading/unloading plan Inland Transport documents Inspection info Invoices

Shipping Instructions Status Bill of Lading

Status Arrival Notice

Contract/Order Delivery Forecast Dispatch Advice

Request for Quote/Quote Invoice Remittance Advice

Certificate of Origin Insurance Certificate Bill of lading/Waybill Transport Documents

Letter of Credit Payment

Letter of Credit Documents

Payment

Letter of Credit Insurance Payment

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5. Operators – this information block contains information about the operators that handled a specific container. This block contains information about the operator (contact information) and whether the operator is certified or not. For specific types of operators, information that is more detailed may be stored to meet specific information needs.

6. Cargo – in this information block, data elements relating to the cargo inside of the container are stored. This information includes, for example, the B/L number, the cargo value, a cargo description and cargo weight.

7. Ship details – this information block contains data elements about the ship that was used to transport certain containers.

8. Process information on timing – the timing (time of arrival and time of departure) of the container in the different processes, as described in section 2.1, is contained within this information block.

9. Personnel – in this information block, information about the personnel that handled the containers is stored. This information includes personal details and the organization for which the person is working.

10. Port information – this information block contains information about the port(s) that were passed by the container. This information includes some general port information (name, country, etc.) and the port security level.

11. Incidents – in this final information block, data elements about incidents concerning the container transport are stored. This information includes an incident description and an incident location.

These information are exchanged and utilized through certain capabilities of ITVP. The composition of ITVP and its capabilities will be given in the following chapter.

2.4 Conclusion

First, the definition of SC and role of IT in SC are introduced as background knowledge for CSC concept.

Second, CSC is defined and involved stakeholders are introduced in order to create a concrete definition of the actors. The actors are divided into four groups namely the customer group, the organizing group, the physical group, and the authorizing group.

Third, processes in the export and import of CSC were described. ITVP is mainly implemented to support these processes operation to improve CSC performance.

Finally, from literature review and former colleague’s study, eleven categories for information uses in CSC are defined. They are basic units exchanged within ITVP.

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Chapter 3: Information Requirements of CSC The information components in CSC operation have been presented in the Chapter 2. This chapter defines the visibility in CSC, and puts forward the information requirements of highly efficient and secured CSC.

In Section 3.1, how information enhances the visibility in SC is described. It covers several criteria of information and generic architecture of information implementation for better visibility. After that, the specific information requirements for CSC performance and security are put forward in Section 3.2 from literature research.

3.1 Information realizing better visibility in SC

In this section, the concept of visibility in SC is firstly presented. Several criteria and certain implementation steps are required to be met. This section paves the way for verifying positive influence of ITVP usage in terms of CSC performance and security.

First of all, what is visibility? In the dictionary, the definition is given as follow:

Visibility -- the degree of clearness with which an object can be discerned; the ability to give a clear view of an object.

From this definition of visibility, we can have an easy explanation of “SC visibility” -- the degree of clearness of SC. However, how does information play a role in realizing the “clearness” of SC?

The concept of data quality is tightly connected to realizing visibility of SC. Only if information reaches high quality, it is possible to enhance the visibility of SC. Strong et al. (1997) defined the data quality (DQ) in four categories of Intrinsic DQ, Accessibility DQ, Contextual DQ, and Representational DQ, which have several dimensions respectively in Table 2.

Table 2: DQ category and DQ dimensions

In the practical information exchange processes, how to ensure these categories of DQ is analyzed below.

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Intrinsic information quality:

Information production should be objective and accurate; no subjective judgments should be involved during processing. The same information should come from a single resource to avoid mismatch happening. Thereby, the reputation of information is ensured.

Accessibility of information quality:

Information should be supported by sufficient computing resources and reliable networks to ensure the privacy and confidentiality in order to make information available to qualified personnel.

Contextual information quality:

Information should be relevant to consumers’ tasks and add value to integrating and aggregating consistent information. Information should be available in terms of timeliness and completeness.

Interpretability of information:

High quality information should be easy to understand with concise and consistent representation.

Therefore, high quality information could be guaranteed when the criteria dimensions are met. In the SC operations, these criteria are the basic requirements of information units. Inaccurate and subjective information will lead to the mistakes in the operation and processing. In addition, when information is hacked by unauthorized personnel, it may cause the leak of business secrets and put the companies at the risks of losing business advantage. When information is overloaded, it will probably lead to overwhelming processing and data filtering time which diminishes the company efficiency.

Meanwhile, high quality information are applied within certain scope of SC. Greg Johnsen (2006), executive vice president and co-founder of GT Nexus, wrote one article defined three dimensions of ideal information usage for SC visibility and control. They are physical flow of shipments; the financial flow, and the documents & data flow.

1st Dimension: The Physical Flow

This is the first aspect of information utilization to realize SC visibility. The SC partners need a single, reliable, continuous view of the entire physical SC instead of dedicated information systems of multiple parties.

2nd Dimension: The Financial Flow

The visibility in financial flow means the parallel ability to see and track costs as they accumulate through the SC — by SKU, by shipment, in real time. Visibility into the financial flow allows companies to catch costing aberrations early and to take action immediately, before those aberrations explode into full-scale financial disasters.

3rd Dimension: The Document & Data Flow

Lapses such as missing documents or inaccurate records impede the flow of goods, for instance suspending the customs clearing processes. They will put the physical flow at risk and also impede financial operations. Personnel along the value chain will have difficulties

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in re-using the trade and logistics documents as well.

In conclusion, visibility of SC could be better realized through information utilization within the three flows mentioned by Johnsen.

For physical flow, all stakeholders in CSC could monitor container/cargo condition in a timely manner with consistency. As a result, high quality information provision could help to build reliable continuous information of containers/cargos.

For financial flow, bills and invoices are generated electronically and transferred through information systems; payments could be notified and traced in a timely manner. As a result, the physical operations for transferring containers could be speeded up as well.

For the document & data flow, with high quality document information electronically transferred among different parties, documents information will be more accurate, timely, and consistent represented. Errors could be eliminated from manual work, or lapses could be corrected as soon as possible. The speed of physical operations could be accelerated from smooth document flow as well.

When high quality information are utilized through these three flows of SC, it could enhance the “clearness” of SC, which equals to the meaning of visibility. Stakeholders should make use of high quality information to overcome the bottlenecks in operation and technical levels. (Lee and Whang, 2000)

Apart from high quality information and SC dimensions utilizing information, certain basic steps and infrastructures are required to facilitate IT implementations. In the master thesis of Joshi (2001), several basic steps to achieve real time visibility in SC were concluded: 1. Have real time data acquisition mechanisms. 2. Convert acquired data into relevant information: using standardized, secure representation. 3. Have instantaneous access to this information.

In the generic SC, information visibility is visualized as shown in Figure 6.

Figure 6: Layered approach to information visibility (Joshi,2001)

This approach is a generic schema in realizing visibility in SC. The basic unit data includes all the information elements from physical, financial and documentation flows, such as current inventory, upcoming orders, shipping schedules, etc. The information blocks have been defined in Section 2.3. They should be available in high quality in terms of accuracy, timeliness, accessibility and other criteria. Automated tracking systems could acquire

Instantaneous, secure communication over the internet Converting data into relevant information description and representation, storage at relevant location

Real-time data acquisition through automated tracking systems

SC Unit Data

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information in real-time and store them pertinent in the local database. The authorized users could access these information through internet and use this information for making further decisions.

A good example of information usage for better visibility in SC could be found in the paper of Lee and Özer (2005). RFID is a technology using radio wave to track and manage inventory in the SC. All the cargo information in terms of location, content, and condition will be interpreted to understandable information and be available in certain information platform. All the relevant parities could access the platform and read the information with authorized rights. Lee and Özer pointed out that the visibility provided by this technology could largely eliminate the discrepancy between inventory record and physical inventory, and allow inventory replenishment to be more precise.

Lee and Whang (2000) indicated the architecture examples of sharing cost-effective IT across entities including client-server architecture, TCP/IP, relational DBMS (data base management systems), ERP (enterprise resource planning), EDI (electronic data interchange), object-oriented programming environments, wireless communications and the Internet. These technologies enable companies to replace costly logistics flows and inventories by information. But in this paper, the technical infrastructure is not the major research objective.

In conclusion, from the current studies of scholars, managerial executives, and academic graduates, an overview of how information implementation contributes to the visibility in CSC is given in this section. However, it requires all partners in CSC to reach an agreement on implementing such a collaborative framework with instantaneous, secure communication.

3.2 Information Requirements in CSC From the analysis in Section 3.1, the impact of information on SC visibility is illustrated. In addition, Chapter 1 has stated that nowadays CSC are required to be securer and more efficient. This section puts forward specific requirements of information provision in the whole value chain.

In the report of GAO (United States General Accounting Office), two directors made statements of corresponding requirements of information systems to address how to improve the data quality and information coordination (Dacey and Hite, 2003).

- Standardization of administrative processes Examples of information flows for administrative purposes are commercial transactions, insurance, customs clearance, safety and security regulations, etc. Digitization of these information flows is a result of previous investments in information technologies in CSC. In order to further reap the benefits of this approach, standardization needs to progress in order to create flexible SC and not get hindered by exceptional costs and time delays due to administrative complications.

- Synchronization of container operational information Some container information, such as pickup time, final destination, and hinterland transport mode may change at several time points. In addition, it is not known far in advance when the container will be released from the terminal. However, terminal operators need to work out the planning of the container stacking and transport onwards with other parties.

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Information changes need to be updated dynamically in the planning system. Table 3 illustrates the synchronized information among involved parties in CSC.

Involved parties Synchronized information Shipper Timely notification of (changes in) the final

destination, preferred transport mode and route

Shipping line Speed up the release of the container from the terminal

Terminal operator Quays distribution and stacking planning Customs Speed up the administrative process

Table 3: Synchronized information among involved parties in container supply chain

- Balance of information load for planning and execution data Due to inherent uncertainties in transport, e.g. due to congestion, delay may occur in the arrival of transport modes at the terminal. This requires the capacity planning of terminal be flexible to response to the change. In addition of the synchronization of the container information among organizations, a balance needs to be found between overloading organizations with execution data and confronting planners with sudden facts. Organizations involved could adapt an alerting system for effective communication of disruptions in planning. Another approach is to regard uncertainty as a given, and to consider re-planning as normal business phase.

Lee and Wolfe (2003) also set several essential requirements to realize a more secure CSC.

- Assure the integrity of conveyance loading, documentation, and sealing.

- Reduce significantly the risk of tampering in transit -- ultimately with comprehensive monitoring for tampering and intrusion.

- Provide accurate, complete, and protected information about shipments to those who need it in a timely manner.

- Protect all commercial information given to authorities: this includes protection from Freedom-of-Information and tort disclosure.

- Commit to processing and inspecting qualifying shipments in ways that permits highly reliable and predictable processing times for those companies that adhere to the best security practices and standards.

- Harmonize and standardize security processes internationally and domestically.

- Create security and anti-tampering practices that are by-products of excellent supply chain management practices and are not non value-added activities.

These two studies of information requirements need to be further looked into, and classified the beneficial effects in SC perspective (Pref) and SC security perspective (Sec) in Table 4.

Information requirements (Dasey and Hite, 2003) Pref. Sec. Standardization of administrative processes √

Synchronization of container operational information √ √

Balance of information load for planning and execution data √ √

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Information requirements (Lee and Wolfe, 2003) Pref. Sec. Integrity of conveyance, loading, documentation, and sealing √

Reduce significantly the risk of tampering in transit √

Provide accurate, complete, and protected information √ √

Protect all commercial information given to authorities √

Commit to shipments for highly reliable and predictable processing times √ √

Harmonize and standardize security processes √ √

Create security and anti-tampering practices √

Table 4: Information requirements analysis in CSC

From the classification of impacts on SC performance and security, some requirements could be combined with similarities in beneficial influence and some remain for its unique impacts. The information requirements are generalized and the positive influence on SC performance and security are explained as follow:

1. Standardization of administrative and security processes internationally and domestically.

The information formats should be consistent with representation throughout the chain activities. In addition, operations at different points of the chain should obey to standardized codes of conduct in security initiatives. The benefits of standardization of the administrative and security processes are to prevent exceptional costs and time delays in information transfer. 2. Commitment to shipments with reliable and predictable processing times

For the shipments which provide reliable delivery and comply strictly with the security codes in operations will obtain advantage in the green lane policy. When they are loaded in secured points and with qualified procedures, they could exempt from the inspection of customs and also cooperate more efficiently with the port authority for inland transportation. Physical groups will also earn reputation from the high quality of customer service.

3. Synchronization of container operational information

Synchronization of process information assures better preparation of container operations in advance, and smoothing transit processes. For example, terminal operator requires the container vessels’ schedule at least 24 hours before it arrives at the port in order to prepare quays, cranes, stacking plans, etc, and logistic service providers need to get prepared for the inland transportation.

4. Protection of all commercial information given to authorities

Information is accessible to only authorized people, which is one of the key dimensions of high quality information. It adds relevance of information to the users. If unauthorized people use information for illegal purposes, it is possible to threaten the security of cargos and impair the interest of cargo owners.

5. Integrity of conveyance, loading, documentation, and sealing

For the physical flow of CSC, information is required to provide cargos integrity information to protect the interest of cargos owners. Documentation is required to be accurate, timely, and consistent represented in order to eliminate manual errors or correct lapses as soon as

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possible. Therefore, the interests of consignees are protected, and throughput time for operations is shortened.

6. Balance of information load for planning and execution data

Alerting systems for disruptions occurrence is required to be built. In addition, chain members should be more flexible and resilient in preparing for the deviations during shipments. Any links in the chain may experience disruptions and result in delays of containers shipments. Notifying the disruptions in time will help the operators in the chain to better re-plan and make adjustment to reduce the time delay or minimize the economic loss.

7. Creation of security and anti-tampering practices

Anti-tampering activities are required to protect containers from intrusion; actors in the chain should take defending actions immediately when they get alerted. When the disruptions happen in an irreversible way, for example the nature disaster, consignees and logistic service providers should be notified in time and work out the new production or shipment plans in short time.

3.3 Conclusion

In conclusion, this chapter defines the visibility in SC, and puts forward the information requirements for highly efficient and secured CSC.

Firstly, information is a necessary tool in realizing the visibility in SC when it is in high quality. Four categories of DQ, which are intrinsic DQ, accessibility DQ, contextual DQ and interpretability DQ, are the fundamental guarantees for high quality information. Information utilization penetrates the application in physical, financial, and documentation flows of SC. Meanwhile collaborative information framework of data acquisition is required to be built for facilitating the information usage.

Studies have found, as a result of better visibility in SC, SC performance could be more efficient by reducing inventory level, enhancing the integrity, shortening the processing time, and adding value to end customers.

Second, seven information requirements of CSC are generated based on literature review.

1. Standardization of administrative and security processes, both internationally and domestically.

2. Commitment to shipments with reliable and predictable processing times 3. Synchronization of container operational information 4. Protection of all commercial information given to authorities 5. Integrity of conveyance, loading, documentation, and sealing 6. Balance of information load for planning and execution data 7. Creation of security and anti-tampering practices

Particular information capabilities are needed to fulfill these information requirements and realize the benefits within CSC.

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Chapter 4: SC Performance and SC Security

In this research, the indicators for benefit analysis of ITVP usage are mainly generated from the indicators of SC performance and SC security. In this chapter, the major objective is to define indicators of SC performance and SC security in CSC.

In Section 4.1, indicators of CSC performance are presented based on combining studies on SC performance indicators with the practical conditions of CSC. In Section 4.2, indicators of CSC security are figured out based on studies on global CSC security indicators.

4.1 SC Performance

In this section, the major SC drivers are discussed as background knowledge of further benefit indicators research. The indicators of CSC performance are built based on the desk research results.

The performance that SC deliver is largely measured by the value final customer receives; and the most fundamental facet of value is product availability (Simchi-Levi et al., 2003). High quality SC performance requires four major SC factors: facilities, inventory, transportation, and information (Chopra and Meindl, 2001). Each driver requires coordinating to each other in order to align with the SC strategy. The drivers are discussed below:

Facilities include the number of warehouse, assembly and manufacturing locations. The flexibility and capacity of these locations influence a SC.

Inventory covers all raw materials, work in progress and finished goods in the chain. The inventory level determines the responsiveness and efficiency on the SC performance.

Transportation is responsible for moving goods from point to point through the chain, via road, pipeline, air, rail, or water. The more responsive the SC, the faster the transport mode needs to be.

Information exchanges important data of transportation process, inventory shipment and replenishment, facilities locations and capability, and customers’ demands. SC management makes use of information to measure performance and make it more efficient or responsive.

From the specific situation of CSC, the facilities include the containers, container vessels, terminal operational equipments, inspection facilities, etc. Inventory covers all raw materials, work in progress and finished goods either at certain location or during the shipments. The main transportation is via water, road and rail. In this research, the role of information is highlighted as an enabling factor of CSC.

As to discussion within CSC, one causal relationship diagram between these four drivers was developed based on researches from Lee and Whang (2000). The causal relationship graph is shown as below:

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1. Information Quality – Facility Utilization

The information exchange in time and accurately will positively influence the utilization of facility for better planning in advance.

2. Information Quality – Transport Reliability & Efficiency

With timely and accurate information for transport, container could be tracked and traced, to ensure transshipment smoothly carrying out.

3. Information Quality – Inventory Level

The information transparency will greatly eliminate the distortion on market demand and provide optimal safety stock and lead time (Lee and Özer, 2005).

4. Facility Utilization + Transport Reliability & Efficiency – Inventory Level

Better facility utilization and optimal transportation will provide more auditable management for SC and reduce the inventory level.

From the relationship analysis, it confirmed the vital role of information in affecting other factors in SC performances.

Apart from the basic drivers, further indicator frameworks are developed for SC performance. According to Beamon (1999), three different types of indicators are necessary to measure SC performance, namely resources (measuring cost and efficiency), output (measuring customer service) and flexibility (measuring changes and exceptional handling). The specific indicators of each type are listed in Table 5:

Resources Output Flexibility Total cost Delivery lead time Number of changes in the process

Distribution cost Cycle time Number of exceptional cases

Information carrying cost Throughput time Hours spent on exceptional handling

Transportation cost Errors made

Storage cost Customer complaints

Material cost Customer response time

Labor cost Waiting time

Capital productivity Average lateness of shipments

Labor productivity Average earliness of shipments

Capacity Utilization Percent on time deliveries

Return on inventory Customer satisfaction

Table 5: Indicators for measuring SC performance (Beamon, 1999)

Table 5 lists the indicators for general SC performance. One of my colleagues, Hans van Wijngaarden studies the Business Intelligence in CSC. He interviewed some stakeholders

Information Quality

FacilityUtilization

TransportReliability & Efficiency

InventoryLevel

+

+

+

+

+

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of CSC and worked out a spreadsheet containing mission, goals, strategies and KPIs (key performance indicators) of each major stakeholder. After summarizing, the specific goals of CSC performance are cost reduction, time compression, flexibility, resource utilization, customer service and security. Each goal is measured by several SC performance indicators. For example, specific indicators for time compression are waiting time, loading-unloading time, transshipment time and travel time.

In the benefit analysis, specific performance indicators are confirmed as benefit indicators for evaluation during interviews. After combing the indicators from Beamon and Hans, the SC performance indicators for CSC are concluded in Table 6:

Operational Cost: Distribution cost; Inventory carrying cost; Transportation cost; Storage cost; Labor cost

Costs

Investment Costs: Material cost; Inventory cost

Process Time: Delivery time; Loading/unloading time

Waiting Time: Transshipment time; Dwell time Throughput time

Delivery Lead Time

Productivity Asset Utilization: Facility Utilization; Labor Utilization

Delivery Reliability On time Delivery: Percent on time deliveries; Average lateness of shipments; Average earliness of shipments; Errors made

Flexibility to satisfying customer demand

Quick respond to customers: Customer satisfaction; Customer complaints

Table 6: Performance indicators for measuring SC performance of CSC

Another problem needs to be concerned is that whether all the stakeholders in CSC could share these performance indicators?

From the research of Hans, it could be found that stakeholders have some goals in same and some different. For example, they all pursue the goals of binding to customer and ensuring reliability in operation. On the other hand, the authority group put more emphasis on ensuring security and legality of containers, while customer group and physical group focus on low cost, service level.

After reviewing all the goals and indicators from Hans’s work, it’s validated that Table 6 covers all general aspects of SC performance in CSC. Some expression adjustments are needed for specific stakeholders when these indicators are used for interviews.

Last but not least, the flexibility indicators from Beamon’s study are not included in the CSC performance indicator. They are considered more security oriented and are put into the indicators of SC security.

4.2 SC security In this section, definitions of disruptions in CSC are introduced first as background knowledge of security issues in CSC. After that, the specific security indicators of CSC are summarized for further benefit analysis.

Theoretically, SC security is one aspect of SC performance measurement. However, security has been raised to top issue in the CSC, prior to the other indicators, and it’s the major research objective of PROTECT project. Therefore, SC security is separated as one important performance measure in CSC.

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Business managers have recently become more sensitized to the vulnerability of their SC to an ever-increasing range of security breaches and disruptions that affect global SC. Beside the terrorist attacks on September 11, 2001, a recent series of security breaches and disruptions are threatening national security for many countries, such as the October 2002 U.S. west coast longshoremen’s lockout, utility failures in the U.S. and Europe in 2003, the Madrid bombing, and the tsunami in 2004. All these breaches and disruptions illustrate the inherent vulnerability that exists in global SC.

Kleindorfer and Saad (2005) classified disruption risk in SC management to three aspects: 1. Operational Contingencies -- equipment malfunctions and systemic failures 2. Natural Hazards -- Earthquakes, Hurricanes, and Storms 3. Terrorism, Political Instability

Occurrence of any disruptions will impair the SC performance and SC security. The natural hazards belong to systematic risks which are difficult to prevent if they happen without any forecast. On the contrary, the risks from operational contingencies, terrorism and other political instability, are more unsystematic risk, which could be minimized if proper security initiatives are implemented.

Willis and Ortiz (2004) defined four measurable capabilities for the global CSC to securely delivering goods.

Shipment reliability. Shipment reliability is defined as the rate of the transportation of container meeting mission requirements to provide the required shipments to the critical transfer points within SC. SC must behave as expected, retrieving and delivering goods as directed, with a minimum amount of loss due to theft and accident. SC shrinkage, resulting from misrouting and theft of goods, erodes both this trust and the efficiency of the shipping network. Misrouting causes losses through delays in shipment delivery. Theft results in both direct economic losses and indirect losses resulting from delays in product delivery.

Shipment legality. Shipment legality is defined as the extent all the cargos through CSC are legitimately represented to authorities and legal to transport. The shipping system should be transparent enough to minimize improper use of the system. Traditionally, shipment legality involved inspections at the port of entry to detect illegal immigrants or items being smuggled in an attempt to avoid regulations or tariffs.

Fault tolerance. Fault tolerance is the property that a system could allow the component faults and continue providing its specified service (Lee and Anderson, 1990). In fault-tolerant systems, the surrounding ports and distribution system can compensate with utilization of extra resources (time and/space) to continue the service providing, when a section of the system is compromised. The container shipping system should be able to respond to disruptions and failures of isolated components without bringing the entire system to a grinding halt.

Resilience. The resilience of a CSC is measured by the time that it is able to return to normal operating conditions quickly after a failure. The important characteristic of resilience is to provide flexibility, it does require the organization to make choices about reallocating capacity (material, machine, human resources), basically making tradeoffs on which products would take priority in the event that one product or facility were disrupted. The more resilient the SC is, the quicker the backlogs will be cleared, avoiding the resulting delays. Resilience is a function of the system design and the response from the oversight layer.

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Table 7 is made for demonstrating security indicators of CSC. Shipment Reliability Prevention of disruption: Operational Contingency; Natural Hazard

warning; Anti-Theft; Anti-Tampering; No Misrouting Secure point of loading: Security codes compliance Shipment Legality Required security procedure: No-Smuggling; No-Tax and Tariff fraud

Fault Tolerance Extra Resources: Buffering resource for operation; Time span for Fault; Dispatch control ability

Resilience Agility for re-plan: Relocation of capacity; Time spent on recovery

Table 7: Indicators for measuring SC security of CSC

Since the disruption classification is the same to all the stakeholders in CSC, the applicability of the security indicators could generally cover the major security indicators of all the stakeholders. Small expression adjustments are needed when the indicators are applied to specific stakeholder.

4.3 Conclusion In conclusion, the objective of this chapter is to figure out key indicators of SC performance and security of CSC, which will be further used in the benefit analysis of ITVP.

First, information is found to playing vital role in influencing other SC performance drivers such as facilities, inventories and transportation. The SC performance indicators of CSC are costs, throughput time, productivity and customer service. Costs include operational costs and investment costs. Throughput time is composed of process time, waiting time and delivery lead time. Productivity is mainly about the asset utilization. Last but not least, customer service includes the delivery reliability and flexibility to satisfying customers’ demand in CSC.

Second, the security indicators of CSC are reliability, legality, fault tolerance and resilience. Shipment reliability measures the safety of containers and transportation tools, and prevention from external disruptions. Shipment legality covers the legitimately representation of shipments in terms of secure point of loading and comply with required security procedure. Fault tolerance refers to the preparation of extra resources for dealing with any faults happened. Resilience measures the time that CSC responds to disruption and works out re-plans.

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Chapter 5: Definition of IT Visibility Platform In Chapter 2 and 3, the composition of CSC and the information requirements throughout the value chain activities have been explained. In this chapter, the definition of inter-organizational system (IOS) in CSC is described first. In addition, ITVP is defined, including the specific information capabilities responsible for delivering the information flows.

In Section 5.1, the definition of IOS implemented in CSC is briefly described, several examples are given. In Section 5.2, ITVP definition is given including its concept and implementing scope. In Section 5.3, the information capabilities of ITVP are introduced in detail.

5.1 Definition of an IOS for CSC

In this section, the IOS system is defined and the practical implementations within CSC are explained.

5.1.1 Definition of IOS

Inter-organizational systems (IOS) are information systems that span organizational boundaries (Johnston and Gregor, 2001). The range of different IOS includes electronic data interchanges, extranets, shared databases and electronic-support supply-chain management systems (Chaffey, 2004). Parties involved in the IOS network could improve coordination of activities and achieve more efficient communication, storage and processing capabilities (Bakos and Treacy, 1986).

EDI is a good example of the large IOS family, including fax, electronic mail, telex, and computer bulletin boards. Especially EDI can be used as an enabling technology for redesigning information exchange, where it concerns high volume standardized message exchange.

5.1.2 Definition of PIOS

A port inter-organizational information system (PIOS) is an IOS that facilitates the complex inter-organizational communication in a port. Three different target groups are generally engaged in a PIOS, the government, logistic sector and/or transport sector (see Figure 7). The government focuses on getting information about formalities, the logistics sector focuses on getting information on cargo level and the transport sector focuses on getting information on container level.

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Therefore, all these stakeholders in the PIOS have varying information needs based on their own interest focus. But these parties couldn’t work separately to build a PIOS without participation of other involved groups.

In CSC, numbers of information systems are used for the exchange of digital information between the organizations. Different categories are distinguished in Table 9:

PIOS categories Function Example Neutral or open community systems

Exchange security and non-security relevant information

Port Infolink

Authority systems Used by regulatory authorities

Customs systems and the seaport police systems

Container integrity systems Exchange the integrity of the container throughout the logistic process

Savi Networks; CommerceGuard

Business (community) systems Exchange info among individual SC companies

Forwarder Systems Shipping line Systems

Table 8: Different categories of PIOS in CSC (Meijer,2007)

Currently these four types of PIOS are widely applied to ensure the efficient and secure operation and add value to CSC.

5.2 What is IT Visibility Platform (ITVP)

In this section, a clear definition of ITVP is given. The major characteristics of ITVP are summarized. The scope of ITVP definition is described.

IT visibility platforms (ITVP) have already existed in several PIOS. In order to get a general definition of ITVP, examples of current ITVP implemented in CSC operation are listed in Table 9:

Government

Transport

Logistic

Information about formalities

Information about cargo

Information about containers

Figure 7: Information needs in PIOS

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Inter-organizational System

PIOS type*

Functions

Optimization of the processes in the transport chains that run through the port of Rotterdam by means of on-line information and communication services to boost the efficiency levels of customers

Port Infolink (Rotterdam) NCS

Lead to cost reductions, quality improvement and user-friendliness.

CommerceGuard --Siemens CIS Equip each container with a full electronic security system and reports tracking data to a secure Internet database

SaviTrak™ Information Service

CIS A globally-deployed, managed network of real-time data collection devices. Monitor shipments automatically as they move through each point from shipper to port of departure, trans-shipment port, final destination port and consignee.

VOS information hub (Netherland)

BS A central orchestration hub: a centralized information system in which the user-interface is customized for the various organizations in the chain.

Portnet (Singapore) NCS The system effectively synthesizes information from a variety of sources in the transportation chain to maximize efficiency of cargo movements

A platform provides interconnection among the industry stakeholders and related community systems to facilitate information flow and enhance efficiency.

Digital trade and transportation Network (DTTN in HongKong)

NCS

Attract existing suppliers and spawn the development of new businesses including logistics software development, value added services, etc.

An internet based “one-stop-shop” for freight and port information premised on a network of sources for real-time freight and port related data.

Freight Information Real-time System for Transport (FIRST in NewYork & New Jersey)

NCS

Smooth the transfer of containers from terminal to truck.

Dakosy (Hamburg) NCS A high-speed communication portal for the exchange of specific information and documents between organizations in the port/supply chain.

* NCS = Neutral or open community systems, CIS = Container integrity systems, BS = Business (community) systems

Table 9: Examples of current ITVP implemented in the CSC Based on Internet websites: PortInfolink, SaviNetworks, CommerceGuard, PortNet, VOS, DTTN, FIRST, Dakosy

From the table, the ITVP implemented in the CSC has several major characteristics:

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1. Facilitation of information flow

First of all, ITVP is an IT facility that enables the information exchange. The total throughput time of the CSC will be reduced due to less paper work, less waiting time in process operation, etc.

2. Information hub function

Information is no longer transferred in bilateral relations or through third parties. The information hub function enables the information shared among authorities, which will save huge amount of setup costs and interpretation time between multiple bilateral parties.

3. Efficiency and Security oriented

All the systems aim at enhancing the efficiency of CSC by means of providing timely information. Meanwhile, security is another major consideration. For example, containers are equipped with RFID tag to get tracked and traced in order to ensure the integrity during transportation.

4. Chain-wide participation activities

All the participants in CSC share the information and take responsibilities to achieve an integrated SC. It is quite similar with the total quality management system in the manufacturing industry to involve all the stakeholders. Lee and Whang (2005) suggested the similarity of quality movement and security initiatives. Concluded from above mentioned characteristics, IT visibility platform (ITVP) in CSC is generally defined as:

“An inter-organizational information system to facilitate information exchange between authorized stakeholders within one shared user platform in order to provide information transparency.”

Implementation of ITVP aims at reducing costs, improving quality, optimizing operational processes, and enhancing SC performance and security. It will facilitate the interconnection of business process of CSC and provide a platform to promote development of new business opportunities.

In addition, the scope of ITVP could have several definitions since it’s implemented in all types of PIOS. First type is neutral community systems and authority systems, which are used within the ports and accessed by all relevant parties. Second type is container integrity systems, which are used throughout the CSC operation from shippers to consignees. Third one is the business systems which are used within individual SC actors. The CSC stakeholders are involved in different types of ITVP and closely interrelated to one another.

The ITVP provides a number of access channels to enable participants to connect to the ITVP. The channels composed of Web browser, E-mail application, System gateway, Short Message Service (SMS), etc.

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5.3 Current Information Capabilities of ITVP In this section, the current information capabilities of ITVP are found. In Section 2.3, the information use of CSC was presented. This section will go one step further to conclude the capabilities of ITVP carrying those information blocks. In addition, hierarchies are found among the capabilities.

Based on information blocks summarized in Section 2.3, the capabilities of an ideal ITVP in CSC could be retrieved. Similar functions and capabilities are grouped into one category for CSC operational processes.

1. Messaging documentation flow In the CSC, a lot of the documents need to be produced for customs clearing, contract making, orders noticing, transshipment and status reporting. With paperless documentation generation and transferring, it could save processing time to a large extent.

Nowadays, the messaging documentation flow service is the most basic communication function of information systems to speed up the process time and reduce costs.

2. Database repository and manifest function Some information systems are playing the role of ‘information hubs’ to facilitate all relevant parties communicate their real-time operation status, such as vessel sailing schedule, loading/unloading plan, cargo arrival information, terminal operation planning, etc. For example, in export and import processes, physical group will inform chain partners the container status, and ensure the planning successfully carried out.

3. Data Security The security of data is an essential element of ITVP capabilities. Important transportation data must be kept privacy and confidentiality in order to ensure the security of SC operation. These systems authorize permission to only qualified personnel.

4. Real-time location of container This capability provides real time position of a container or goods in SC through the technology such as GPS, RFID and TREC. Customer groups and organizing group need to keep tracking the asset locations to update schedules. For example, one of the TREC’s core systems is Shipment monitoring services (SMS). It uses the TREC technology and provides end-to-end physical SC visibility, improving security, efficiency and asset management.

5. Container Integrity information Container Integrity Information includes monitoring the integrity of a container during transport. Customers could get notified as soon as the container are tampered or intruded by unauthorized people. Apart from the physical tampering information, the electronic seal and sensor could also provide the information of container door open history, temperature, humidity and other containers’ details.

6. Monitoring & Alerts Both port community system and container integrity system provide this capability. They could monitor the status of a container shipment and providing alerts in case there are deviations, for instance unforeseen differences between planned and actual position, suspicious contents found during scanning. Customs and authorities need to inspect the

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container contents and ensure safety and legality of containers. The nuclear detection, X-ray, and Gamma ray scanning make sure the safety of cargo.

7. Planning Planning is the capability that individual systems could automatically work out operation plans based on available external information. Examples are the assignment of containers to vessels, route planning, terminal operation planning, and arrangement for transshipment.

8. Financial functions During all the processes, bills, invoices and payments could be generalized and sent automatically by the information platform. The transactional relationships between stakeholders are very complicate. Automatic generation and transferring of the bills and payments will save a lot of processing time.

There exist four hierarchies among these eight categories of capabilities, which will help readers gaining deeper insights into ITVP capabilities. It is illustrated in Figure 8:

Figure 8: Capabilities Hierarchies of ITVP

The first layer is database. It fulfills the basic information needs for operation processes by capabilities of messaging and manifest functions. These two capabilities mainly replace the inefficient manual work with automated exchanges and operations.

The second layer adds the security function which allows authorized people to access information.

In the third layer, ITVP could serve for transaction purpose such as planning and financial functions to further speed up the business processes and realize customization service for stakeholders.

At the top of the pyramid are the capabilities with most values added to stakeholders in CSC. They could speed up the container operations and optimizing business processes. These capabilities include real-time location, container integrity information, and monitoring & alerts. The fourth layer of capabilities aims at dealing with the new CSC problems, such as cargo securities and high uncertainty in demand of markets. New technologies such as RFID and GPS tracking systems are used for these capabilities.

2

3

1

4

Database: Messaging documentation flow Database repository and manifest function

Authority: Data Security

Transaction Service: Planning, Financial functions

Value Added Service: Real-time location Container Integrity, Monitoring & Alerts

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5.4 Conclusion In conclusion, this chapter introduces the definition of IOS and ITVP. Current capabilities of ITVP are presented and classified into hierarchies.

First, four major IOS categories are implemented in CSC. The first category is the neutral or open community systems (NCS). These systems are used by the SC companies and the regulatory authorities to exchange information. The second category is the authority systems (AS) where much information resides for security relevance. The third category is the container integrity systems (CIS) which provide information about integrity of the containers during transport. The final category concerns the business (community) systems (BS) which exchange information within individual SC companies.

Second, ITVP is defined as the IOS systems that facilitate information exchange between parties participating in CSC to provide more information transparency. ITVP is a coordinated information network presenting in different systems and providing various capabilities. ITVP aims at reducing costs, improving quality, optimizing SC processes, and enhancing SC performance and security.

Third, eight categories of ITVP capabilities are defined, they are messaging documentation flow, database repository and manifest function, data security, real-time location, container integrity, monitoring and alerts, planning and financial functions. Four hierarchies are found to differentiate the value of these capabilities implemented in CSC. Basic ITVP capabilities, such as messaging and manifest functions, realize the massive automation for information processing in CSC. After the fundamental needs of CSC are satisfied, advanced capabilities emerge to meet current CSC requirements for dealing with cargo security and uncertain demands patterns. These capabilities include real-time location, container integrity information, and monitoring & alerts.

In the next chapter, from a workshop with expert in ITVP, the impact of the capabilities to CSC performance and security are evaluated, and information requirements are matched.

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Chapter 6: Matching Capabilities with Information Requirements Chapter 3 has defined the requirements of information system to realize visibility in CSC. Chapter 5 described current ITVP capabilities. This chapter tests whether the current ITVP capabilities meet information requirements. The beneficial influence by the usage of ITVP is tenable only if the requirements are met.

In Section 6.1, several papers are reviewed to indicate how IOS improve the information quality and reinforce the SC performance as the background knowledge for Section 6.2. In Section 6.2, expert workshop is carried out for figuring out how ITVP capabilities achieve the information requirements and contribute to the visibility of CSC. The capabilities meeting most requirements will be the major research objects of benefit analysis.

6.1 More SC Visibility - Advantages of IOS In this section, it describes how IOS plays vital role in enabling all trading partners realizing a collaborative framework for instantaneous, secure, and transparent communication.

First, the data quality is enhanced in terms of timeliness and accuracy. According to Malone (1987), the prime benefit of IOS is the time compression and improved data accuracy (since data needs to be entered only once). IOS can permit inexpensive, rapid electronic transmission of sales and service messages throughout the SC. Hence, capture more precise, timely usage data. Johnston and Vitale (1988) also pointed out that IOS provide inter-organizational efficiency in information communication.

Another indication of the improved accuracy information is that IOS technology provided flexibility as it enabled communication (Golden and Powell,1999). Firms which use one common shared IOS with different partners can avoid the disadvantages in the multiple bilateral information systems, such as increased complexity in verbosity of data standards, individual “tweaking” of data interpretation and representation, and use of different standards. The appearance of IOS could largely manage the complexity by means of translating messages between formats.

A good example for the time compression and accuracy benefits could be found in the research from Lee et al. (1997). They discuss findings at Procter and Gamble and put forward the notion of bullwhip effect describing that the demand order variability in SC are amplified as they move up SC. However, by the usage of IOS providing updated forecasts from downstream, distortions in product rationing, price fluctuations and “batching’’ of orders can be greatly tempered. This information distortion can be reduced through the opening of electronic information channels, by providing a speedy, easy to co-ordinate and flexible infrastructure (Davis, 1993). IOS will achieve a lot of operational and strategic benefits in the business, both internally and externally.

Another important benefit is the close integration of the inter-organizational business processes, capturing data more quickly, leading to faster analysis and shorter response time. Thereby, IOS could enable modern management philosophies such as Just-in-time systems, concurrent engineering concepts, and various inventory replenishment schemes

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to take root (Humphreys et al, 2001). Customer service will also be improved by identifying and reporting problems more quickly, allowing more accurate diagnosis and faster response.

6.2 ITVP capabilities realizing Visibility From Section 6.1, a lot of studies indicate that IOS could facilitate higher information quality and realize better SC visibility. This section described in detail how ITVP, as one IOS, provides various capabilities to maximize visibility in CSC.

Chapter 3 has generalized the information requirements for visibility needs of CSC. Chapter 5 listed capabilities of ITVP, and they were classified in hierarchies from the aspects of value added to stakeholders. These two research results will be combined to test whether ITVP capabilities could meet the information requirements of today’s CSC operations.

This matching study builds on the workshop with Mr. Iwan van der Wolf, Manager Strategy & Business Development of Port Infolink, in order to obtain an in-depth understanding of the relationships uncovered, namely:

match ITVP capabilities with information requirements.

the extent to which ITVP capability provide visibility in CSC.

the key capabilities that influence the information visibility.

Port Infolink analyzed the information needs and information exchanges for all business segments (containers, dry bulk, liquid bulk and general cargo), purposes and players in the port of Rotterdam. Mr. van de Wolf is the Manager of Strategy & Business Development of Port Infolink, who has abundant knowledge of ITVP architecture and deep understanding into the CSC activities from each point. A semi-structured questionnaire guided workshop with Mr. van de Wolf, focusing on: (Appendix E)

types of capabilities contained in Port Infolink,

function description of capabilities,

impact of ITVP capabilities on visibility of CSC

rating the importance of ITVP capabilities to visibility of CSC

The workshop was conducted at the campus with two of my project supervisors providing expert opinions and lasted for 2 hours.

Mr. van de wolf was asked to figure out what the available capabilities were in Port Infolink, and which still needed to be designed in the future. In addition, he ranked the importance of these capabilities in terms of both performance and security criteria.

From the workshop, it is indicated that Port Infolink provides ITVP capabilities of messaging documentation flow, database repository & manifest function, and data security function. Capabilities of planning and financial function are utilized mostly in individual systems of stakeholders, but Port Infolink is playing an information hub’s role to transfer and manifest the relevant information to the notified parties in time. In addition, all the capabilities mentioned above contribute mainly to the SC performance.

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The capabilities of real time location of container, container integrity information, and monitoring & alerts, are not included in Port Infolink systems. Mr. van de wolf suggested that particular companies are investing in these specialized capabilities, such as SaviNetwork, CommerceGuard and IBM TREC. Cooperation between CIS and NCS is still at the infant stage. That is because the development of CIS is undergoing huge technological reform, and the costs stay too high for mass acceptance. Only numbers of top companies are pioneering in implementing these technologies through their CSC.

However, Mr. van de wolf affirmed the important value of these capabilities, and indicated that they would work together with CIS in the future.

After the workshop, the impacts of each ITVP capabilities on SC performance and security are summarized, and match with the major information requirements defined in Chapter 3. They are listed below:

① Standardization of administrative and security processes internationally and domestically. ② Commitment to shipments for reliable and predictable processing times ③ Synchronization of container operational information ④ Protection of commercial information given to authorities ⑤ Integrity of conveyance, loading, documentation, and sealing ⑥ Balance of information load for planning and execution data ⑦ Creation of security and anti-tampering practices

Table 10 indicates the matching results of ITVP capabilities with the requirements numbers.

Capabilities Requirements Complied with 1. Messaging documentation flow ① 2. Data repository and manifest ③ 3. Data Security ④ 4. Real-time location of container ②③⑥ 5. Container Integrity information ①⑤⑥⑦ 6. Monitoring & Alerts ①②③⑤⑥⑦ 7. Planning ①③ 8. Financial functions ①③

Table 10: Summary of matching ITVP capabilities with requirements

The matching results by each capability for Port Infolink are explained below.

1. Messaging documentation flow

Documents are standardized in formats and keep consistency in the transfer processes by ITVP; it can avoid exceptional costs and time delays even in complicated information transfer and administration process. Therefore, the capability could partially meet the requirement of standardization of administrative processes.

2. Database repository and manifest function

This capability helps synchronize the container operational information. Meanwhile as long as certain disruptions happen during shipments, parties involved could be instantly notified and get prepared. It’s quite essential for speeding up the operation in each link of the CSC.

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3. Data Security

All commercial information is protected and given to authorities. High relevancy of the information is guaranteed. It also protects the interest of information providers who invest in the information infrastructure, thereby motivates further innovation of the CSC.

Mr. van de wolf confirmed that four types of current PIOS could already provide high level of data security currently.

4. Real-time location of container

With real-time location information of the container, it not only synchronizes the operation information, but also notifies routes deviation in a timely manner for parties to adjust original plan. It could reduce the risk of tampering in transit from transparent monitoring of containers and provide convincible evidence for shipment procedure and time management.

5. Container Integrity information

With this capability, the integrity of containers will be better assured. Any deviations or disruptions will be notified immediately and help involved parties to respond in time. It also can reduce significantly the risk of tampering in transit from transparent monitoring. Last but not least, the processes of security could be standardized both domestically and internationally, resulting in the coherence to the integrity requirements of CSC.

6. Monitoring & Alerts

Actually, the monitoring & alerts function covers the real-time and container integrity information capabilities. Any deviation happens will be monitored and alerts to the relevant party. Certainly, there are also other situations to be alerted apart from location and integrity of containers. Therefore, the relationship is shown in the picture.

The requirements of synchronization and balance information of planning and executing are firstly met. In addition, it could improve the integrity of container in conveyance, loading and sealing. For instance, the terminal operation could be monitored to ensure the discharge safety. Therefore, the risk of tampering in transit can be reduced significantly. Meanwhile, a highly reliable and predictable processing time for companies could be assured to adhere to the best security practices and standards. Last but not least, the standardization will be transmitted in domestic and international codes of conduct for cohering to the security initiatives. As a result, the defending ability of CSC from certain disruptions will be enhanced.

7. Planning

With automated planning function, a lot of working time could be reduced and automatic notification is given to parties in a standardized format. For any urgent re-plan, the systems could make quick adjustment such as reroute, change capacity or stowage plan, etc. In addition, the re-plan can be transferred immediate to all relevant parties and executed as soon as possible.

Monitoring & Alerts

Real-time location

Container Integrity

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8. Financial functions

The financial function could help improve the standardization of administrative processes and synchronize the cash flows to ensure the smooth running of the other SC flows.

From the above analysis, it is found that capabilities 1,2,7,8 meet the information requirements for SC performance by increasing efficiency, utility and time compression. Capability 3 covers the information requirements of information privacy and confidentiality. Capability 4,5,6 could meet with the requirements both in terms of SC performance and SC security by increasing the visibility of CSC. This result coincides with the hierarchy analysis in Section 5.3.

From the requirements of PROTECT project, this research should focus on ITVP capabilities most significantly contributing to SC visibility. Since ITVP capabilities such as electronic communication and synchronization of operation have reached a relatively mature technical stage, a lot of cost benefits analyses have been done. Therefore, the focus of further benefit analysis will focus on newly emerging capabilities, which are capability of real-time location, capability of container integrity information and capability of monitoring & alerts. 1. Real-time Location: Real time information about the position of a container or goods 2. Container Integrity Information: Monitoring the integrity of a container during transport 3. Monitoring & Alerts: Monitoring the status of a container shipment and providing alerts

in case of deviations

6.3 Conclusion In conclusion, this chapter firstly introduced how IOS facilitates visibility in SC; then current ITVP capabilities were matched to information requirements of CSC to find out to which extent ITVP could realize visibility in the CSC.

First, IOS is an advance technical architecture for providing more accurate, timely information to the network participants; therefore improves the flexibility of service and avoids the distortion of demands. Another important benefit is that IOS could tightly integrate inter-organizational business processes, capture data more quickly, and lead to faster analysis and shorter response time.

Second, ITVP, as one of the IOS, serves CSC in order to enhance SC performance and security. One workshop with expert from Port Infolink was carried out to evaluate the impact of ITVP capabilities. It is found that capabilities, such as messaging documentation, data repository, planning, and financial functions, could improve CSC efficiency, utilization and time compression. Capability of data security contributes the information requirements of information privacy and confidentiality. Capability of real time location, container integrity, and monitoring & alerts could fulfill the requirements both in terms of SC performance and SC security.

Finally, it is confirmed that beneficial impacts were tenable since all information requirements are met by current capabilities. However, not all the capabilities are going to be evaluated in the final benefit analysis. The research will further to evaluate the major capabilities significantly contributing to SC visibility, namely real-time location, container integrity information and monitoring & alerts.

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Chapter 7: Benefits analysis of ITVP In Chapter 6, the major capabilities of ITVP for benefit analysis are confirmed. Each capability is assumed to have some benefits in certain indicators of SC performance and security. Each stakeholder is assumed to gain certain benefits from these capabilities.

In Section 7.1, some studies are firstly reviewed over general aspects of benefits to stakeholders on visibility in SC. Then the benefits analysis model is built and benefit indicators are confirmed based on indicators defined in Chapter 4. In Section 7.2, the methodology of benefit analysis is introduced. In Section 7.3, the results from stakeholders’ interviews are presented and summarized. Section 7.4 is the validation of benefits research in Section 7.3.

7.1 Building benefits analysis model

In this section, current studies for benefits of ITVP capabilities are firstly reviewed. It aims at providing scientific argument for the benefit indicators used in benefit research model. Then, the benefits indicators of ITVP capabilities are confirmed by combining literature results with the indicators defined in Chapter 4.

7.1.1 Schema of benefits analysis model

With access to container location and status information, the whole SC could achieve a time-definite and controlled chain of custody for transshipment. Figure 9 is used by Rice to illustrate the benefits realized by asset visibility. (Rice and Spayd, 2005)

Figure 9: Benefits of Asset visibility (Rice and Spayd, 2005).

Asset visibility could reduce the uncertainty of shipment arrival. From first upper relation flow in Figure 9, with real-time location and status information available, anti-tampering initiatives or corrections could be prepared in time when any exceptional incidents happen. Therefore, theft and interruption in the shipment could be largely prevented, and higher level of security is ensured. (Rice and Spayd, 2005)

From the lower branch of the relation diagram, material flows become more certain with visible SC. Therefore, companies could reduce inventory levels and lower operating

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expenses. Another benefit could be the cycle time reduction; because less storage space is needed and therefore less numbers of locations are required to discharge the cargos.

The usage of ITVP will ensure the benefits covering the whole SC. The white paper of UNISYS, a worldwide information technology consulting company, generalizes the benefits achieved by visibility of operations.

Figure 10: Benefit categories of asset visibility and benefit receivers (Source: UNISYS, 2006)

The benefit model of UNISYS has two extra benefits in addition to Rice’s model, which are asset utilization and brand protection. With more asset visibility, containers operation could be better planned and optimally utilized. Brand protection is out of the benefit scope in this research, since it is a comprehensive benefit resulted from other basic benefits.

In addition, the UNISYS model illustrates the distribution of benefits to the major stakeholders in CSC. The benefit analysis will cover the distribution in detail.

The schema of my benefit analysis model is illustrated in Figure 11:

Step 1: First, the overall benefit indicators are confirmed. The indicators will be used for evaluating ITVP benefits in terms of SC performance and security. In Section 4.1 and 4.2, key performance and security indicators of CSC have been defined. The models of Rice and UNISYS are used as literature references for confirmation of benefit indicators. One discussion session is conducted with experts from IBM, developer of TREC container integrity system, to provide professional opinions on the benefits indicators of ITVP capabilities.

ITVP capabilities

Benefits analysis SC performance

& Security

Allocation at SC stakeholders

Step 1 Step 2

Figure 11: Schema of benefit analysis model

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Step 2:

After benefit indicators in terms of SC performance and security are confirmed for ITVP capabilities, the allocation of benefits at each CSC stakeholder will be further studied in Step 2 for deeper understanding of the benefits.

7.1.2 Benefit indicators of analysis model

After the discussion session, professional opinions from IBM commercial cases are incorporated. The definition of major benefit indicators in terms of performance and security are summarized for further benefit analysis.

SC performance perspective

1.1 Cost reduction By reconciling tracking data to purchase orders and variations across the industry, it will ultimately lead to more efficient SC, fewer errors and lower inventory carrying costs—the most significant SC expense (Rice and Spayd, 2005). Apart from inventory costs, a lot of operational costs will be reduced such as labor costs, distribution costs, transportation cost, storage cost, etc.

1.2 Throughput time reduction

The throughput time could be reduced largely due to the better asset utilization, less stock points and reliable operation planning. Throughput time can be divided into three categories: processing time, waiting time and lead time.

1.3 Productivity improvement Improved asset utilization and equipment availability has been explained in the UNISYS model. With better monitoring of containers movements, the operational devices could be optimally assigned to containers’ movement to ensure higher utilization rate (UNISYS, 2006).

1.4 Delivery reliability improvement Because accurate shipment data is a fundamental element in the transportation management process, the intelligence gathered sets the foundation for effective logistics management, network optimization and carrier performance evaluation. With better information visibility, physical groups could provide their service with increased percentage of on time deliveries. (Gutiérrez et al., 2007)

1.5 More flexibility to satisfying customers’ demand Service providers could quickly respond to the demands change of customers and offer high quality service with more flexibility (Peleg-Gillai, 2006). In one word, these advantages in service quality will greatly improve the company image and credibility for a long term development and prosperity.

In conclusion, the major benefits to SC performance due to the introduction of an ITVP consist of cost reduction, throughput time reduction, productivity improvement, and improvement in terms of delivery reliability and flexibility to satisfying customers’ demand.

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SC Security perspective

In Section 4.2, the indicator of a secured CSC was discussed. The major indicators are legality, reliability, fault tolerance and resilience. With the implementation of ITVP, the transiting of containers is expected to be more secure in terms of these indicators.

2.1 Legality improvement By usage of ITVP, the legality of overall CSC will be reinforced because of the more commitment to the security processes and procedures (Reidy and Redbro, 2007). Data could be gathered easily to conduct “virtual inspections” prior to arrival of containers. Thereby, it will realize better customs regulations compliance.

2.2 Enhanced prevention of disruption Since there’s also reliability indicator in SC performance indicator, to avoid confusion, the reliability in security is rephrased to “prevention of disruption”.

In the benefit model of Rice, it is explained that the likelihood of tampering and intrusion are expected to be reduced. Tax and tariff fraud can be prevented through physical monitoring in-transit, proof-of-delivery verification, and the exchange and analysis of existing standard commercial information sources.

2.3 Quicker responsiveness It is benefit term concerning the indicators of fault tolerance and resilience. With acute insights into disruption causes and sufficient preparation for back up resources, CSC will be more resilient to return to normal operating conditions quickly after a failure rather than bringing the entire system to a grinding halt (Peleg-Gillai, 2006).

2.4 Risk management improvement By utilizing the capabilities of ITVP, it could help maintain an auditable chain of custody for risk management and regulatory purposes. Freight forwarders, manufacturers and governments could establish risk management systems in order to enhance operation, technology development and process standards. (Reidy and Redbro, 2007)

The benefits of SC security realized by ITVP could be concluded as legality improvement, enhanced prevention of disruption, quicker responsiveness, and risk management improvement.

7.2 Methodology:

This benefit analysis builds on interview work to obtain an in-depth understanding of two major research goals:

the extent to which ITVP capabilities provide benefits to the SC performance and security.

the distribution of benefits to stakeholders.

In Step 1, nine indicators that organizations could expect to be improved have been identified. In Step 2, the research continues by interviews and online surveys.

Based on the list of potential benefits indicators, a questionnaire is prepared for the interview. Interviewees are asked to state whether their company could realize such a benefit after implementing defined ITVP capabilities and if so, what magnitude of

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improvement they experienced, or expected to be experienced. For a copy of the questionnaire, please see the Appendix G.

To extend UNISYS benefit model, it is necessary to evaluate all stakeholders involved in CSC. My interview highlights the main partners participating in ITVP. Due to limited resources and research time, a goal of recruiting a total of 5-10 companies and organizations is set to take part in the study. Such a number is small but sufficient to study benefits of each stakeholder obtained from ITVP implementation.

The semi-structured interviews are conducted with six interviewees, one from each of the six stakeholders. They filled in the questionnaire of benefit analysis during the interview and provided extra information about their own strategic roles in CSC. Each Interview lasted 1-1.5 hours.

In addition, an online survey is carried out to some companies simultaneously, which is expected to validate the interview results in the later research stage. The majority of the respondents are chosen from participants in Port of Rotterdam, and some are selected from Port of Shanghai, China for rich data. The survey was sent out to over 75 email addresses, 27 respondents finished the whole questionnaire. Therefore, the validation of the benefit analysis could be done in the later stage.

The samples are summarized in the following table

Stakeholders Shipper/consignee Shipping line/LSP* Terminal Forwarder Customs Port Authority Total

Number of Interviewees 1 1 1 1 1 1 6 Number of

Survey Respondents 3 10 5 9 0 0 27

* LSP = Logistic Service Provider Table 11: Samples summary of interviews and surveys

The next step in the study is analysis of the data collected from participating companies and organizations. Research results from interviews are summarized in three tables. Each table represents the benefits of each capability. The table shows magnitude of benefits to each beneficiary. After that, for each stakeholder, a summary of benefits from all the capabilities are generated for making final overall conclusion of the benefit analysis in terms of SC performance and SC security.

It is important to note that due to the relatively small number of stakeholders that participated in the study, the results should not be considered as representative of a ‘typical stakeholder’ or as an industry average. The information received from the participating stakeholders, as well as the results of the data analysis, is summarized in the following sections.

7.3 Benefits analysis

This section is implementing Step 2 in the schema of benefit analysis model. The results from interviews are reported and summarized, including analysis and comparisons of benefit indicators for each capability. The analysis includes quantitative analysis and deep qualitative explanations. For each stakeholder, a summary of benefits from all the capabilities are generated for making final overall conclusion of the benefit analysis in terms of SC performance and SC security.

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7.3.1 Benefit analysis on each capability

In this subsection, the benefit analysis is divided by capabilities. Analysis figures out the basic positive impacts of each capability. The groups of significant beneficiaries are found, and detailed explanations are given.

First, the interview results are summarized in three tables of the benefits to stakeholders. The block with diagonal line means that the stakeholder obtains great benefit from this capability on certain indicators. The block in grey means the stakeholder obtains moderate benefit from this capability. The block in vertical lines means that the stakeholder obtains slight benefit from this capability on certain indicators. Empty blocks means the interviewees won’t perceive any benefits on certain indicator from this capability.

The analysis for each stakeholder in each benefit indicator could be found in Appendix F.

Real-time location

In Chapter 6, capability of real-time location is found to be able to synchronize the administrative processes, balance the information load of planning and execution data, reduce the risk of tampering, and commit to shipments for reliable and predictable processing time. Based on these functions, real-time location capability could provide stakeholders a lot of benefits in terms of SC performance and SC security as indicated in the Table 12.

Capability: Real time location information

Shipper/

Consignee Shipping line/

LSP Terminal Operator

Forwarder Customs Port

Authority

1.1 Costs

1.2 Throughput time

1.3 Productivity

1.4 Reliability

1.5 Flexibility

2.1 Legality

2.2 Prevention of disruption

2.3 Responsiveness

2.4 Risk management

Table 12: Interview Summary - benefit analysis of real time location capability

Generally speaking, all the stakeholders could benefit from this capability, but with some deviations. The group of significant beneficiaries from this capability is shipper/consignee, shipping line/LSP and customs, who obtain considerable benefits from both aspects of SC performance and security. The beneficial effects are explained by each indicator below.

1.1 Costs reduction: By having a more robust process for transferring product, companies are able to solidify the process and gain more consistency, which results in significant reduction in inventory costs. One case is given below for illustration of cost reduction benefit from real time location capability.

Moderately Improved Slightly Improved Greatly Improved

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Case Heineken Results Benefits Reliable beer arrival time

Reduce uncertainty in distribution and calculate optimal stock level

Reduce operational costs


Throughput time is a common benefit indicator for all stakeholders. If customs sees no route change, no intrusion or disruption during shipment, waiting time for containers to be inspected and the clearing time could be shortened. The benefit of lead time reduction for actors is that they could better plan further processing steps, for instance loading, unloading, transshipping, shelving, etc. Two cases are given below for illustrations. Case Volkswagen Results Benefits Reliable parts arrival time from suppliers

Eliminate stock out of parts, cars are assembled efficiently

Reduce throughput time and lead time

Case ECT and LSP Results Benefits Reliable containers arrival time

LSP arranges transshipment on time; reduces dwell time of containers in terminals. ECT gets released from shortage of buffering yard and from extra handling time

Reduce waiting time

1.3 Productivity improvement

With real time location information of containers, Customs could make full use of the routing record information for more efficient and accurate selection of container for inspection. Other physical parties could also better plan the operational equipment utilization before containers arrive.

1.4 Reliability improvement

Reliability of delivery is another important beneficial effect from real-time location capability. Each party could commit to either transportation plan or containers release plan with higher reliability and predictability.

1.5 Flexibility in satisfying customer demand

When customers change the shipment orders, physical groups could quickly work out the new shipment schedule since they know exactly where the cargo is.

2.1 Legality improvement

Companies could achieve better compliance with security initiatives such as C-TPAT.

2.2 Enhanced prevention of disruption This is another important beneficial effect in terms of SC security for stakeholders. Companies with high value products such as electricity products and pharmaceutical companies will mostly benefit from this aspect. Better security practices allow companies to be more successful in protecting their products.

In addition, LSP could largely reduce the likelihood of tampering and intrusion during shipment, thereby protect the interest of customers and provide value added service.

2.3 Quicker responsiveness Whenever misrouting happens, with accurate notification, stakeholders could quickly make

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re-planning for re-routing or dispatch other ships or trucks to make compensation and minimize the loss and delay in service. One case is given below for illustration. Case Blokker Results Benefits Real time location of Christmas products imported from China

Eliminate risk of empty shelves, prepare back up products for shelving in case any delays happening

Quick Responsive; Agility in re-planning

2.4 Risk management With more accurate records of containers information throughout the whole CSC, customs could consummate the selection process of containers based on more auditable data mining technology, and optimally enhance the security level significantly while remain high efficiency and low costs. Other parties could also make use of the information for assessing scenarios and dealing with claims.

Compare to the largest beneficiaries, the group of moderate beneficiaries are terminal operator, forwarder and port authority. Although they benefit from the real-time capability in a lot of indicators, the magnitude is less than that of the largest beneficiaries. It will be explained in detail in the next subsection.

After the stakeholders’ scorings are summed up for each benefit, the ranking of benefit indicators of this capability could be got in Figure 12.

Ranking of Benefit Indicators-Real-time location

0 2 4 6 8 10 12 14 16

More flexibility to satisfying customers demand

Cost reduction

Productivity improvement

Risk management improvement

Reliability improvement

Legality improvement

Enhanced prevention of disruption

Quicker responsiveness

Throughput time reduction

Sum of Scoring

Figure 12: Ranking of benefit indicators of Real-time location

The scoring maximum is 18, since considerable benefits equal to 3 marks and there are 6 stakeholders in total. For real-time location capability, throughput time reduction obtains 15 marks and becomes the most significant benefit for CSC stakeholders. The following three benefits are from the security perspective.

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Container Integrity information

In Chapter 6, capability of container integrity information is found to be able to balance the information load of planning and execution data, ensure the integrity of conveyance and sealing, reduce the risk of tampering, harmonize and standardize security processes, and create security practices. Based on these functions, container integrity capability could provide stakeholders a lot of benefits in terms of SC performance and SC security as indicated in Table 13.

Capability: Container Integrity information

Shipper/




Authority

1.1 Costs

1.2 Throughput time

1.3 Productivity

1.4 Reliability

1.5 Flexibility

2.1 Legality


2.3 Responsiveness

2.4 Risk management

Table 13: Interview Summary - benefit analysis of container integrity capability

Similar with real-time location capability, all the stakeholders could benefit from this capability; the largest beneficiaries from this capability are shipper/consignee, shipping line/LSP and customs.

1.1 Costs reduction:

Once any damage to the integrity of cargos inside the containers is detected, shippers and consignees could immediately re-plan the shipment or production plan to minimize losses. One case is given below for illustration of cost reduction benefit from container integrity information capability. Case Chiquita Results Benefits Temperature is detected too high for bananas

Reroute ripened fresh bananas to companies producing mix juice for lower price, avoid throwing all bananas

Reduce investment costs

In addition, companies can easily know where containers go wrong, who should be blamed and send the claim to. It’s particularly important to the pharmaceutical producers, since they are bounded to the restriction of temperature and humidity.

1.2 Throughput time reduction This is similar with the benefit reasoning behind real-time location capability. The clearing time and inspection time will be much shorter than usual since customs sees no intrusion or other disruption.

1.5 Flexibility in satisfying customer demand If the cargos are detected with any deviation from required temperature, humidity or from

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any kinds of disruption, LSP can alert the customers immediately to ask for remediation plan.

2.1 Legality improvement

This is a common benefit for all the stakeholders. Companies could achieve better compliance with security initiatives; reduce the magnitude of fraud and the counterfeiting. It will also improve the handling of condition with sensitive items due to the monitoring of containers temperature, humidity status, etc. The history records of container integrity information could provide customs with more convincing proof of legality of contents in containers during the shipments.

2.2 Enhanced prevention of disruption

The beneficial reasoning is similar with real-time location capability. Those high value products will mostly benefit from this aspect. Better security practices allow the companies to be more successful in protecting their products.

2.3 Quick responsiveness Companies could quickly make re-planning either to shipment or to adjust operation processes. One case is given below for illustration. Case TV importers Results Benefits Detect a big shock of containers during the transportation; Expect 50% of the cargos are damaged

Immediately arrange another shipment instead of finding the damage two months later when goods arrive at final destination

Quick Responsive; Agility in re-planning

Physical and organizing groups could quickly reroute or dispatch other ships and trucks to make compensation.

2.4 Risk management This beneficial effect reasoning is similar with that of real-time location.


Ranking of benefit indicators-Container IntegrityInformation

0 2 4 6 8 10 12 14 16



More flexibility satisfying customers demand

Cost reduction






Sum of Scoring

Figure 13: Ranking of benefit indicators of Container Integrity Information

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The scoring maximum is 18; legality improvement obtains 14 marks and becomes the most significant benefit for CSC stakeholders. The first three benefits are all from security perspective. The fourth benefit is throughput time reduction.

Monitoring & Alerts

In Chapter 6, the capability of monitoring and alerts is defined as monitoring the status of a container shipment and providing alerts in case any deviation happens. It covers the functions provided by the capability of real-time and container integrity. It is found to meet all the information requirements the other two capabilities could met. Therefore, the benefits for stakeholders are similar with the other two capabilities analyzed above, it won’t be repeated here.

Capability: Monitoring & Alerts

Shipper/




Authority

1.1 Costs

1.2 Throughput time

1.3 Productivity

1.4 Reliability

1.5 Flexibility

2.1 Legality


2.3 Responsiveness

2.4 Risk management

Table 14: Interview Summary - benefit analysis of monitoring and alerts capability

The group of largest beneficiaries from this capability is shipper/consignee, shipping line/LSP and customs. Terminal operators, forwarders and port authority are the moderate beneficiaries from the capability.


Ranking of benefit indicators-Monitoring & Alerts

0 2 4 6 8 10 12 14 16

More flexibility to satisfying customers demand


Cost reduction







Sum of Scoring

Figure 14: Ranking of benefit indicators of Monitoring & Alerts

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The scoring maximum is 18; quicker responsiveness obtains 14 marks and becomes the most significant benefit for CSC stakeholders. The first three benefits are all from security perspective. The fourth benefit is delivery reliability improvement from the SC performance perspective.

In order to get an overview of the benefits ranking figure, all the scorings of benefits are aggregated for these three ITVP capabilities, as indicated in Figure 15.

Figure 15: Aggregated ranking of benefit indicators of three ITVP capabilities

Figure 15 indicates the most significant benefits of ITVP implementation to CSC operations are quick responsiveness, enhanced prevention of disruption, throughput time reduction, and legality improvement. Flexibility to satisfying customers’ demand and productivity improvement are the least benefits of ITVP implementation to CSC operations.

7.3.2 Benefit analysis on each stakeholder

In this subsection, the benefit analysis is divided by stakeholder. For each stakeholder, a summary of benefits from all the capabilities are generated. Therefore a final conclusion of the benefit analysis of ITVP on the stakeholders could be made in terms of SC performance and SC security.

Shippers and Consignees

The major benefits of customer group obtained from ITVP capabilities are as below:

Real Time Location Container Integrity Monitoring & Alerts Costs reduction Costs reduction Throughput time reduction

Throughput time Reduction Throughput time reduction Legality improvement Legality improvement Legality improvement Prevention of disruption

Prevention of disruption Prevention of disruption Responsiveness Responsiveness

The interests of shippers/consignees are tightly connected to the cargos, including the value of cargo itself and the delivery service of cargo. Therefore, they are the significant

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beneficiaries from obtaining more visibility throughout the CSC. They could ensure the security of cargos, reduce the inventory level, and speed up the delivery time to end consumers and grab the fast changing pace of the markets.

Shipping line company/LSP

The major benefits of shipping line company/LSP obtained from ITVP capabilities are as below:

Real Time Location Container Integrity Monitoring & Alerts Throughput time reduction Throughput time reduction Throughput time reduction

Flexibility improvement Flexibility improvement Flexibility improvement Prevention of disruption Prevention of disruption Prevention of disruption

Responsiveness Responsiveness Responsiveness

Shipping line company/LSP are the physical group who are delivering reliable logistic service to the customer group, and be responsible for containers during the long trip. The motivation for them in implementing ITVP is offering qualified service to customers and adding competitive advantage.

As the carriers of containers, shipping line company/LSP obtain more operational benefits than shippers/consignees; and they expect higher service level to their customers. The monitoring capability of real time location and container integrity will add huge value to the quality of transport service, by shortening the transportation time and improving the security of cargos.

Terminal Operator

The major benefits of terminal operator expected to obtain from ITVP capabilities are as below:

Real Time Location Container Integrity Monitoring & Alerts Prevention of disruption Prevention of disruption Legality improvement

Since the containers have less mobility within terminal site, terminal operators are situated at a relatively easy position in CSC. The current information system of ECT could meet the most information needs for efficient and secured operation in the terminal. Therefore, the biggest benefit they expect to experience is the security improvement within the working area in the port. Other benefits related to them are just moderate.

However, ECT also confirms that whenever the technology is matured for commercial application in CSC, they are willing to participate in ITVP implementation.

Freight Forwarder

The major benefits of customer group obtained from ITVP capabilities are as below:

Real Time Location Container Integrity Monitoring & Alerts Prevention of disruption Prevention of disruption

Responsiveness Responsiveness

International freight forwarders play an integral part in the transportation processes, acting on behalf of exporters in arranging transportation services. Since forwarders don’t have ownership of the cargos, neither be responsible for the transportation directly, they are playing the roles of brokers in CSC.

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Therefore, freight forwarders are not directly connected to indicators for manufacturing or operation. Their mission mainly focuses on the service level to customers. The biggest benefits they get from the ITVP capabilities are to ensure the security of cargos, represent customers to solve the dispute, and enhance their service level as agents.

Customs

The major benefits of customs expecting to obtain from ITVP capabilities are as below:

Real Time Location Container Integrity Monitoring & Alerts Throughput time reduction Throughput time reduction Throughput time reduction Productivity improvement Legality improvement Productivity improvement Reliability improvement Risk management Reliability improvement

Risk management Risk management

Because customs’ main responsibilities are to ensure the security and legality of containers, they are another big beneficiary from ITVP capabilities. Since the ITVP capabilities could provide more accurate and complete security information of containers, customs could save a lot of time in selection of containers and enhance the asset utilization to those most suspected containers.

Port Authority

The major benefits of port authority expected to obtain from ITVP capabilities are as below:

Real Time Location Container Integrity Monitoring & Alerts Responsiveness Responsiveness Responsiveness

As to Port Authority, apart from containers, their responsibility covers the whole port area including river, docks, vessels, all facilities, etc. Therefore, they are facilitating the ITVP capabilities for installation. Although they are not first movers in the ITVP technology, benefits are still expected to be experienced by Port Authority when the ITVP is massively implemented.

In conclusion, Table 15 summarizes the benefits obtained for each stakeholder and the magnitude.

Stakeholders Major Benefits

Perspective Experienced or

Expected Benefits Extent of Benefits

Obtained

Shippers/Consignees Products SC efficiency

Cargos security Experienced Considerable

Shipping line/LSP Operation Excellence Experienced Considerable

Terminal Operator Operation Excellence Expected Moderate

Freight Forwarder Service level Enhancement Expected Moderate

Customs Operation Excellence

Legality Guarantee Expected Considerable

Port Authority Legality Guarantee Expected Moderate

Table 15: Summary of benefit analysis of ITVP capabilities

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Although shippers/consignees are considered as large beneficiaries of ITVP capabilities, the magnitude of benefits depends on the products properties. Several groups of producers are the most active investors in ITVP technology.

Products with high value such as liquid crystal displays Innovative products with short life cycle such as IPOD music players Fresh products such as fruits and vegetables Products with high regulatory requirements for transportation such as pharmaceutical products

These types of producers could obtain more considerable benefits from ITVP capabilities than other companies because of their vulnerability to different kinds of disruptions.

From the side of shipping line company/LSP, the major motivation of investing in ITVP capabilities are from the demands of customers, who are increasingly demanding greater reliability of container shipments at lower total cost. But in return, this investment of technology will add value to the service of shipping line company/LSP, allowing companies asking for higher rates from customers.

Last but not least, apart from the basic benefit indicators used in this analysis, other benefits on managerial and strategic level were found from ITVP implementation in the long term.

Business managerial activities involve allocation of the firm’s resources and supporting business strategic decisions. After the implementation of ITVP, more reliable data sets are taken into considerations; thereby decisions can be made more optimal. Performance of CSC could be improved from the long term development.

In the long run, after all stakeholders cooperate in ITVP implementation and generate huge synergy effects, the opportunities for further growth and alliance among companies will increase. Innovation could be booming after the joint development in the IT infrastructure. As a result, the sustainable competitiveness of companies will be established (Reidy and Redbro, 2007).

7.4 Validation As part of the research methodology used in this thesis, a survey was conducted online to validate research findings from the interview results. The majority of the respondents were chosen from participants in Port of Rotterdam. The survey was sent out to over 75 email addresses, 27 respondents finished the whole questionnaires, and the distribution is shown in the following table:

Stakeholders Shipper/consignee Shipping line/LSP Terminal Forwarder Numbers 3 10 5 9

However, there is no respondent from customs and port authority. This survey uses the same questionnaire for the semi-structured interviews. People were asked to tickle out the benefits they experienced, or expect to be experienced, from each capability and gave the magnitude for the benefits. The aim of this survey is to validate the benefit analysis from the research results of interviews with different stakeholders.

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The magnitudes of each benefit indicator are calculated as average scoring from the same stakeholder group.

Capability: Real time location information

Shipper/

Consignee(3)Shipping line/

LSP (10) Terminal

Operator(5) Forwarder(9)

1.1 Costs

1.2 Throughput time

1.3 Productivity

1.4 Reliability

1.5 Flexibility

2.1 Legality


2.3 Responsiveness

2.4 Risk management

Table 16: Survey Summary - benefit analysis of real time location capability

Capability: Container Integrity information

Shipper/


LSP (10) Terminal


1.1 Costs

1.2 Throughput time

1.3 Productivity

1.4 Reliability

1.5 Flexibility

2.1 Legality


2.3 Responsiveness

2.4 Risk management

Table 17: Survey Summary - benefit analysis of container integrity capability

Capability: Monitoring & Alerts

Shipper/


LSP (10) Terminal


1.1 Costs

1.2 Throughput time

1.3 Productivity

1.4 Reliability

1.5 Flexibility

2.1 Legality


2.3 Responsiveness

2.4 Risk management

Table 18: Survey Summary - benefit analysis of monitoring and alerts capability

Greatly Improved Moderately Improved Slightly Improved

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Compared with interview results, some benefits are confirmed, some are different in the magnitude, some benefits are newly added, and some benefits are removed. A comparison table is made below:

Capabilities Number of. Benefits – Interview

Number of benefits unchanged

Number of benefits changed in magnitude

Newly added benefits from survey

Removed benefits from survey

Real-time location 28 18 9 7 1 Container Integrity 22 14 6 6 2 Monitoring & Alerts 23 15 8 13 0

Table 19: Results comparison between interview and survey

The table of percentage of results comparison is separately made below:

Capabilities Number of. Benefits-Interview

Percentage of benefits unchanged

Percentage of benefits changed in magnitude

Percentage Newly added benefits

Percentage Removed benefits

Real-time location 28 64% 32% 25% 3.5% Container Integrity 22 63% 27% 27% 9% Monitoring & Alerts 23 65% 34% 56% 0

Table 20: Results comparison in percentage between interview and survey

From Table 20, the results from two research methods could be better analyzed. For each capability, around two-thirds of the benefits indicators were confirmed and with same magnitudes. For capabilities of real-time location and monitoring & alerts, one-thirds benefits changed magnitudes of benefits. For capability container integrity, 27% changed in magnitude. For all the capabilities, there were newly added benefits from survey. Capability of monitoring & alerts gain the most newly added benefits from survey.

The interview results come from individuals of each stakeholder. The survey results come from average scoring of more responding stakeholders. Respondents from different companies may have different understandings in the magnitude measurement for the indicators such as considerably, moderately and slightly. Therefore, some benefit magnitudes appeared to be higher or lower than the interview results. In addition, for each individual company, benefit indicators have different representations in specific activities. Therefore, some new benefits were found valid from survey.

In one word, survey only provides limited quantitative data for validation rather than deep qualitative analysis. Without sufficient interviews and real case studies, doing a complete validation is difficult. The ITVP technology still situates in the pilot testing stage, most of the stakeholders are expecting the benefits instead of truly experienced. For further research, a specific case study of ITVP implementation could be conducted to demonstrate the benefits experience to all involved parties, and to measure the magnitude.

7.5 Conclusion In this chapter, benefit indicators for analysis are built based on desk research and interviews with expert from IBM. Semi-structured interviews were organized between all major stakeholders to evaluate the benefits they experienced, or expect to be experienced, from the implementation of ITVP capabilities. An online survey was carried out simultaneously for validating the results of interviews.

First, current studies indicate that the major benefits from asset visibility include prevention of theft and interruption, lowering of operating costs, optimization of asset utilization and shortening of cycle time. A discussion session was carried out with expert from IBM Secure Trade Lane to figure out all possible benefit indicators in terms of SC performance and SC

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security. The indicators defined in Chapter 4 are used as fundamental indicator units for discussion.

Second, nine benefit indicators implemented in the benefit analysis are generated after discussion session. For SC performance perspective, the benefit analysis indicators are cost reduction, throughput time reduction, productivity improvement, delivery reliability improvement, and flexibility to satisfying customers’ demands. For SC security perspective, the benefit analysis indicators are legality improvement, enhanced prevention of disruption, quicker responsiveness and risk management improvement.

Third, one questionnaire was made for the interviewees to figure out the benefit indicators they experienced, or expect to be experienced, after implementing certain ITVP capability. Interviewees provided explanations on how the capabilities might cause such benefits to them.

The Real-time location capability is found to have major benefits on performance and security perspectives to stakeholders, particularly in the aspects of throughput time reduction, reliability improvement, enhanced legality, prevention of disruptions and more responsiveness.

The container integrity capability is found most valuable in providing security benefits to all stakeholders. Some stakeholders will also benefit from the performance perspective from this capability.

The monitoring & alerts capability is a comprehensive capability covering benefits of the other two.

After the benefits’ scoring for these three ITVP capabilities are summed up, the most significant benefits to CSC operations are benefits of quick responsiveness, enhanced prevention of disruption, throughput time reduction, and legality improvement. Benefits of flexibility to satisfying customers’ demand and productivity improvement are the least benefits to CSC operations.

As to the stakeholders, because the business goals are different, their benefits obtained from the ITVP capabilities differ as well. The group of significant beneficiaries from ITVP implementation are Shippers/Consignees, Shipping line/LSP, and Customs. Since these parties have direct concern over the continuous shipment of containers; therefore ITVP could better meet their requirements on efficient SC performance and higher cargo security during the shipment.

Because the operations and services of terminal operators, freight forwarders and port authority are greatly influenced by a lot of other factors apart from visibility of assets, these parties expect moderate beneficiaries from ITVP implementation. Although these parties are not first movers in the implementation of ITVP, they are willing to cooperate and contribute to the mass commercialization of ITVP technology, and share the benefits together with other chain parties.

Last but not least, one online survey was carried out for validating the interview results. 27 companies replied survey and the response rate is 36%. Around 64% of the interview results were validated, one third of the results showed magnitude difference in benefit indicators. Some new benefits are added to each capability as well from survey.

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Chapter 8: Conclusions and Recommendations Given the increased interest in container security, transparency and flexibility of the CSC, information exchanges about the visibility of the container are becoming more and more important. An ITVP that supports the information exchange among CSC stakeholders to provide capabilities of real time location, container integrity information, and monitoring & alerts are warranted. In Section 8.1, the main outcomes of the research are presented. Section 8.2 is about limitations of this research. Directions for further research are identified in Section 8.3. Finally, recommendations for the development of an ITVP for CSC are formulated in Section 8.4.

8.1 Conclusions of Research The objective of this thesis is formulated as follows: “Analyze the positive impacts of ITVP capabilities to the CSC performance and security, as well as the benefits distribution to each stakeholder.” To come to these benefit analysis, one major research question is formulated as follow: “What are the benefits in terms of supply chain performance and security experienced, or expected to be experienced, by the CSC actors through the usage of IT visibility platform?” To answer this research question, ten sub questions were defined that should be answered. The research questions are discussed one by one in the remainder of this section.

Step 1: ITVP composition

1. Which CSC processes can be involved in the ITVP?

This question is answered in Section 2.2. The processed involved in the ITVP covers the origin exporters’ factories to the final importers’ destination.

The major processes of CSC in export are: Booking → Pre-carriage transport planning → Pre carriage transportation → Acceptance → Storage and loading → Sea transport

The major processes of CSC in import are: Sea Transport → Unload & Storage at sea Terminal → Release → Planning inland Transport → Inland Transportation → Delivery

2. Who are stakeholders involved in the formation of this information system?

Section 2.2 answered this question. The major parties participating in the ITVP contain four groups. - Customer group are shipper and consignee who are the sender and receiver of the

containers. - Organizing Group include freight forwarder and shipping line agent which are responsible

for arrange the shipment of goods. - Physical Group include sea terminal, shipping line company/LSP, inland transporters and

depot operators, which are responsible for carrying the containers throughout the chain. - Authorizing Group are customs and port authority, which are authorizing the entry and exit

of containers.

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3. What’s the definition of ITVP, what’s the objective of ITVP?

In Section 5.2, a clear definition of ITVP is given based on the definition of current inter-organizational systems of CSC:

“An inter-organizational information system to facilitate information exchange between authorized stakeholders within one shared user platform in order to provide information transparency.”

Implementation of ITVP aims at reducing costs, improving quality, optimizing SC processes, and enhancing SC performance and security. It will facilitate the interconnection of business process of CSC and provide a platform to promote development of new business opportunities.

4. What are the capabilities of ITVP?

Eight categories of ITVP capabilities are defined in section 5.3 based on capabilities of current IOS used in CSC. These capabilities are validated in the workshop with expert from Port Infolink. They are capabilities of messaging documentation flow, database repository and manifest function, data security, real-time location, container integrity information, monitoring & alerts, planning and financial functions.

Step 2: Visibility of CSC

5. What are the information requirements for realizing better visibility in CSC?

ITVP needs to meet certain information requirements to maximize the utilization of information. All the requirements are put forward in Section 3.2. In order to handle the biggest challenges in CSC, seven requirements in both SC performance and security should be met.

1) Standardization of administrative and security processes internationally and domestically. 2) Commitment to shipments for reliable and predictable processing times 3) Synchronization of container operational information 4) Protection of all commercial information given to authorities 5) Integrity of conveyance, loading, documentation, and sealing 6) Balance of information load for planning and execution data 7) Creation of security and anti-tampering practices

6. Whether ITVP capabilities meet these information requirements?

One workshop with expert from Port Infolink was carried out to evaluate the impact of ITVP capabilities based on the information requirements defined in Section 3.2. In Section 6.2, it is found that capabilities, such as messaging documentation, data repository, planning, and financial functions, mainly fulfill the information requirements of SC performance. Capability of data security ensures the information privacy and confidentiality. Capability of real time location, container integrity, and monitoring & alerts could fulfill most of the requirements both in terms of SC performance and SC security.

For the benefit analysis, not all the capabilities are evaluated. The major capabilities contributing most significantly to the SC visibility are real-time location, container integrity information and monitoring & alerts, they become the research objects in benefit analysis.

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Step 3: Benefit Analysis

7. What are the definition and indicators of SC performance in CSC?

In Section 4.1, the indicators of SC performance are defined based on current researches. The measurements of these SC performance drivers of CSC are costs, time, productivity and customer service. Costs include operational costs and investment costs. Throughput time consists of process time, waiting time and delivery lead time. Productivity is mainly about the asset utilization. Last but not least, customer service includes the delivery reliability and flexibility to satisfying customers’ demand in CSC.

8. What are the definition and indicators of SC security in CSC?

In section 4.2, the security indicators of CSC are shipment reliability, shipment legality, fault tolerance and resilience. Shipment reliability measures the safety of containers and transportation tools, and prevention from external disruptions. Shipment legality is measuring the legitimately representation of shipments in terms of secure point of loading and complying with required security procedures. Fault tolerance refers to the preparation of extra resources for dealing with any faults happened. Resilience measures the time that CSC responds to disruption and work out re-plans.

9. What are the benefits incurred by implementing ITVP capabilities in terms of SC performance and security?

Literature review on the benefit of asset visibility is firstly done in Section 7.1; and then a discussion session is carried out with expert from IBM Secure Trade Lane to figure out all possible benefit indicators in terms of SC performance and SC security.

For SC performance perspective, the benefit analysis indicators are cost reduction, throughput time reduction, productivity improvement, reliability improvement, and flexibility improvement. For SC security perspective, the benefit analysis indicators are legality improvement, enhanced prevention of disruption, quicker responsiveness and risk management improvement.

In Section 7.3, semi-structured interviews are carried out among stakeholders to evaluate all benefit indicators for each ITVP capability. The Real-time location capability is found to have benefits on both perspectives, particularly in the aspects of throughput time reduction, reliability improvement, enhanced legality, prevention of disruptions and more responsiveness. The container integrity capability is found most valuable for providing security benefits to stakeholders. The monitoring & alerts capability is a comprehensive capability covering the benefits of the other two.

After the benefits’ scoring for these three ITVP capabilities are summed up, the most significant benefits to CSC operations are benefits of quick responsiveness, enhanced prevention of disruption, throughput time reduction, and legality improvement. Benefits of flexibility to satisfying customers’ demand and productivity improvement are the least benefits to CSC operations.

10. Who are the beneficiaries to the benefits?

Because the business goals are different among stakeholders, their benefits obtained from the ITVP capabilities differ as well. The group of significant beneficiaries from ITVP

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implementation are Shippers/Consignees, Shipping line/LSP, and customs. Since these parties have direct concern over the continuous shipment of containers, they could obtain more benefits through the usage of ITVP to improve their performance and cargo security. Other parties belong to the group of moderate beneficiaries, because visibility of assets has limited contribution to their operations or services. Although moderate beneficiaries are not first movers in the implementation of ITVP, they are willing to cooperate and contribute to the mass commercialization of ITVP technology, and share the benefits together with the other chain parties.

8.2 Limitations of this research

First, since the CSC consist number of parties involved; it adds difficulties in specific benefit analysis for each party in detail. The research results could only cover the general beneficial aspects of each party.

In addition, the benefit analysis results are obtained from individual interviewee of each stakeholder. The generalizability of the interviewees’ opinions should be scientifically validated.

Third, the ITVP capabilities are not commercialized equally to each stakeholder. Since two-thirds of the interviewees are expecting the beneficial impacts for their operation, it is difficult to provide abundant research data for evaluating the real beneficial effects. This will decrease the validity of research results.

Last but not least, this research only studies the beneficial impacts of ITVP capabilities, the investing costs of ITVP and operational costs are not covered. There are always two sides of everything, only looking at the positive side is not complete.

8.3 Recommendations for further research of ITVP in CSC

First, the questionnaire of this research could be further applied for a massive survey with more scientific sampling design. Therefore the generalizability of the survey results could be improved.

In addition, in order to get more quantitative data for benefit analysis, case studies could be conducted in future studies to evaluate specific impacts for each stakeholder. Meanwhile, commercial cases from ITVP providers should be potential valuable resources.

Further researches could involve the costs analysis of ITVP implementation to complete the cost-benefit analysis, which could provide stakeholders with more comprehensive understandings of the influences of ITVP, and hopefully motivate the collaboration from all parties in CSC.

8.4 Recommendations for developments of ITVP in CSC

From the benefit analysis results, although all the parties could benefit from the three types of capabilities of ITVP, deviations exist in the magnitudes of benefits obtained.

The technologies of ITVP are developing fast. A lot of service providers are competing in developing new technologies for providing better visibility to customers. However, the problem of compatibility of technologies, e.g. the frequency of reading tags, is a huge

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impediment for the popularization of ITVP. In future, the development of ITVP technology should be more standardized in information acquiring mechanism for CSC.

From the benefit analysis results of each capability, it’s found that these three ITVP capabilities have more significant contributions to SC security indicators than to SC performance indicators. It might because they are generated mainly to solve the security problems in CSC, but they could be further utilized for high quality SC performance as well. ITVP companies need to think about the solutions for benefits maximization from both perspectives. One of the possible methods is that ITVP service providers have more horizontal cooperation and coordination among various information systems. The three ITVP capabilities discussed in benefit analysis are mainly from CIS. The other capabilities discussed in Section 5.3 are mainly run in NCS, AS, and BS. Companies from CIS could give more supports to the other IOS by means of integrating information flows of CIS to the other systems’ capabilities.

This type of horizontal cooperation will bring benefits to CIS companies as well. Since systems such as NCS have already realized information sharing among all the stakeholders in CSC and built standardized interfaces for all parties, CIS companies might save huge amount of setting up costs for new users from CSC. The moderate beneficiaries could be more motivated to install CIS if it is tightly integrated into the NCS that they use for everyday operations.

Return to the discussion of three major ITVP capabilities. It’s found that the improvement of SC performance and security is guaranteed by efforts from all participants in CSC. All stakeholders should be highly motivated to participate in the optimization procedures. From the results of this research, shippers/consignees and shipping line companies are the major parties investing in the ITVP capabilities currently. Other parties are either facilitating the installation of ITVP capabilities or watching the trends of development of ITVP technologies.

The service providers of ITVP should pull in more stakeholders, among moderate beneficiaries, to implement ITVP by motivating their initiatives. Several methods could be used. Firstly, ITVP companies could help these stakeholders to develop customized ITVP satisfying their specific operations needs, and to optimize the interfaces of information acquirement, in order to provide convenience for them to fully utilize CSC visibility. In addition, based on cooperation experience between these two parties, costs-benefits analysis of ITVP in terms of specific performance indicators could be more easily elaborated from practice. Therefore the vision of further development of ITVP implementation could be clearer and the missions for each stakeholder are more distinct.

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28. Mentzer, J.T., et al., 2001, Defining Supply Chain Management, Jounal of Business Logistics, Vol.22, No.2, pp.1.25

29. Munson, F. C. and D. C. Pelz, 1979, "The Innovating Process: A Conceptual Framework," Working Paper, University of Michigan.

30. Peleg-Gillai, B., et al.,2006, Innovation in Supply Chain Security: Better Security Drives Business Value, The manufacturing Innovation Series, Stanford University, July

31. Reidy S. and Redbro M. 2007, Envisioning an efficient and secure global supply chain, IBM Global Business Services, February

32. Rice, J.B., Spayd, P.W. 2005, Investing in Supply Chain Security: Collateral Benefits, IBM Center for the Business of Government, 2nd Edition.

33. Sheffi, Y., McFarlane, D. 2003, The impact of automatic Identifications on Supply chain Operations, the International Journal of Logistics Management, Vol.14; No.1 pp. 1-17

34. Simchi-Levi, D., Kaminsky, P., Simchi-Levi, E. 2003, Designing &managing the Supply Chain, Concepts, Strategies & Case Studies, McGraw-Hill, New York.

35. Strong, D.M., Lee, Y.W, Wang, R.Y., 1997. Data quality in context. Communications of the ACM, v.40 n.5, p.103-110,

36. UNISYS, 2006, Secure Commerce Road Map: The Industry’s View for Securing Commerce, White paper

37. Van der Zande, J., 2002, Virtuele Informatie Systemen- PROMISE Case. Presentation Master Classes, Erasmus University, Rotterdam.

38. Vlist P Van, et al., 1994 EDI in de Transportsector (EDI in the Transport Sector), Samsom, Alphen aan den Rijn, The Netherlands.

39. Willis, Henry H., and David S. Ortiz. 2004 “Evaluating the Security of the Global CSC.” Santa Monica, CA.: RAND Corporation.

Website Resource Economic Development and Labour Bureau, Hong Kong. (2002, November). Study for the Development of a DTTN System to Support the Development of Hong Kong as an International Logistics Hub. Available from: http://www.logisticshk.gov.hk/board/dtt.pdf

Port Infolink 2007 Available from: http://www.portinfolink.com/english/content/informatie/Port_Community_Systeem.asp

SaviNetworks 2007 Available from: http://www.savinetworks.com/solutions/savitrak_benefits.html

CommerceGuard 2007 http://www.gesecurity.com/portal/site/GESecurity/menuitem.32d6221157ddac1d942d57e7140041ca/?v

http://www.sciencedirect.com/science/journal/09255273�

http://www.sciencedirect.com/science?_ob=PublicationURL&_tockey=%23TOC%236004%232005%23999039996%23594904%23FLA%23&_cdi=6004&_pubType=J&view=c&_auth=y&_acct=C000050221&_version=1&_urlVersion=0&_userid=10&md5=33fab7454e38e8e460c5b62f2dfdcab8�

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gnextoid=9282207ffae76010VgnVCM100000592d7003RCRD&isP=true

PortNet 2007 http://www.portnet.com/

VOS 2007 http://www.voslogistics.com/?id=30&Language=English

FIRST 2007 http://www.firstnynj.com/

Dakosy http://www.dakosy.de/en/

Interviews Nr Category Organization name Interviewee Date 1 Port Community System Port Infolink Mr. Iwan van der Wolf 2007-09-27 2 Customs Shanghai Customs, PRC Mr. Zhongyi Zhou 2007-11-07 3 Port Authority Havenbedrijf Rotterdam Mr. Jurjen Duintjer 2007-11-11 4 Terminal Operator ECT Mr. Bart Vermeer 2007-11-19 5 Shippers/Consignees IBM Mr. Harry Langevoort 2007-11-29 6 Shipping line company Maersk line shipping, PRC Mr. Yi Lin 2007-12-05 7 Freight Forwarder Savino Del Bene, PRC Ms. Qing Zhang 2007-12-13

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Appendix A: Stakeholders in CSC 1. Customer Group: Shipper The consignor is the individual of company that initiates a shipment of goods. This party in general does not own or operate a ship, but it owns the goods to be moved. Consignee The consignee is the receiver of the shipment, normally is individual or company. 2. Organizing Group: Forwarder This party performs tasks such as receiving, trans-shipping and delivering in order to facilitate the shipment of goods on behalf of the shipper or consignee. Shipping line Agent The shipping line agent is the individual or company that acquires the transportation orders for the shipping company which takes care of the actual shipment process of goods. 3. Physical group: Sea Terminal A party that is responsible for the loading and unloading of goods from a particular transport type or from a warehouse to another type of transport or warehouse. There are two types of terminals, known as inland terminal and sea terminal but the information flow is the same. Shipping line /sea carrier The Ocean Carrier is the company that transports the cargo. This party does not necessarily owns the ships on which the cargo is transported (NVOCCs). Ocean carriers use shipping agents to acquire transportation orders. Pre- or On-carrier Operator (Carrier inland transport) This party takes care of the carriage of containers by any mode of transport from the place of receipt to the port of loading on the ocean vessel. (Barge operator, Rail operator, Road carrier) Depot Operator This party owns and controls the depot in which the goods are disposed, awaiting further shipment, delivery or storage. 4. Authorizing Group: Customs & Inspection Authorities This party is responsible to check the inbound and outbound flow of goods and has to ensure safety and if (inter)national laws are being met. Customs, which is a government authority, also takes care of VAT and other levies with respect to the import and export processes. Port Authority This party manages the various facilities of a port. Examples of these facilities are cargo and shipping terminals, bridges and tunnels. The Port Authority of a port can also have its own police force and other services. The documents that this party receives are documents about dangerous goods. 5. Financial Group: Bank of exporting party This bank manages the bank account of the exporting party. The exporting party is the party that sends product from internal to foreign countries. Bank of importing party This is the bank that manages the account of the importing party. The importing party is the party that orders goods and services from abroad. It is used to make order payments and money is transferred from the account of the importing party to the account of the exporting party. Insurance Company An insurance company is a company that pays a specific amount of money to the party that is insured by them, in case of a fire, damage or other accidents.

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Appendix B: Export major process (Source: Port Infolink, 2005) Processes in orange: physical process; Processes in black: information process;

Processes in grey: Financial process; Processes in dotted frame: specific container related movement

Process 1.Booking 2.Pre-carriage

transport planning 3.Pre-carriage transportation 4.Acceptation

5.Storage and Loading

6.Sea Transport

Shipping line Company Arrange Stowage

plan Sea Transport

Sea terminal /Depot

Receiving Clearing & Accepting Task

Pick up planning & inform Customs

Clearing/acceptation Loading empty container

Loading/ Storage

Planning loading process Storage & loading

Phys

ical

Gro

up

Inland transport operator Accept Transport &

planning terminal visit Pick –up empty, loading

& pre-transport Deliver to sea terminal

Transport to container scanning

Shipping line agent

Booking Processing & Customs

Clearing/Accepting Task Planning departure

ship Prepare the

departure ship Supporting departure ship & Arrange B/L

Org

aniz

ing

Gro

up

Forwarder Export planning

Planning pre-carriage & export

Loading goods Transshipment instruction Inform status after

loading selection Inform Status

Customs Administration pre-transport & export Export certification Analyze and

selection of loading Inspection & Control

Aut

horiz

ing

grou

p

Port authorities /seaport police

Authorize departure

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Export major processes: The physical transport process for exporting containers is described. In the left column are the major processes from beginning of transport, and in the right column are the description of stakeholders involved and their actions within the major processes.

Forwarder firstly works out the export plan, prepare for the customs clearing documents, and make the booking with shipping line agent.

1. Booking

Shipping line agent planning the ships and schedules, and confirm the booking with forwarder including all transportation details. Meanwhile, the agent will inform terminal to arrange the export and loading process. Forwarder contacts inland transporters and instruct the shipments to the terminal. Meanwhile forwarder prepares the transport documents for customs. Inland transporter informs terminal operators the visit plan and loading container instruction.

2.Pre-carriage transport planning

Terminal checks the clearing documents and accept the inland transporters’ visit. Inland transporter deliver the cargos to the depot and finally take loaded container to the sea terminal Depot checks the documents, begins loading into empty containers.

3.Pre-carriage transportation

Customs inspect the cargos and give export certification Customs inspect the container Shipping line agent inform forwarder ETD and ship info, meanwhile prepare the ship with loading list and inform the terminal with loading plan Shipping line company work out the stowage plan and inform the terminal

4.Acceptance

Terminal inform gate in to shipping line company/agent/inland transporter; check the transport documentation; arrange the loading of container including quay and crane, personnel, stack etc. Agent prepare the loading plan and inform forwarder the loading selection result Forwarder inform the inland transporter about the customs loading selection Custom inspect the container and release it to terminal

5.Storage and Loading

Terminal scans the container and load onto the ship Agent informs port authority and customs information about the dangerous cargo, waste, sails crew, and passengers’ list. Meanwhile works out the bill of lading and send to the customs. Inform forwarder the ship departure time. Port authority and Customs authorize the leaving of ship

6.Sea Transport

Shipping line company starts its ride and inform agent the departure time

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Appendix C: Import major process (Source: Port Infolink, 2005) Processes in orange: physical process; Processes in black: information process;

Processes in grey: Financial process; Processes in dotted frame: specific container related movement

Process 1.Sea Transport

2.Unload &Storage at Sea

Terminal 3.Release

4.Planning inland 5.Inland Transportation 6.Delivery

Shipping line Company

Sea Transport & Informing agent

Sea terminal /Depot Unloading planning Unload and storage Distribute Release

information Pick up Planning

Distribution Loading inland

transport Unloading/storage /loading/Inspecting Accept legal container

Phys

ical

Gro

up

Inland transport Transport to/from

container scanning Transport acceptation & Planning terminal visit

Pick-up & inland transport

(Following transport) Deliver and return empty

transportShipping line

agent Planning arriving ship Support ship arrival and loading

Commercial Release

Org

aniz

ing

Gro

up

Forwarder Inform receive & Arrival Notice Inform Receive Sea freight cost

payment

Planning inland transport

Inspection and Control Goods Receipt

Customs Analyze and selection of loading Custom Release Clearing inland

transport

Aut

horiz

ing

grou

p

Port authorities / Authorize Arrival

Inspection and Control

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Import major processes: The physical transport process for importing containers is described. In the left column are the major processes, and in the right column are the description of stakeholders involved and their actions within the major processes.

Shipping line company ships the container on the way and informs agent about the ship & container loading information Agent informs customs the loading of ship and ETA. It informs forwarder the ETA of ship. Informs terminal about the stowage plan and unloading list and apply for customs selection, and mentions all dangerous/waste/declaration of special goods, personnel and passenger list to the port authority Customs analyze and select loading based on documentation and legislationForwarder informs consignee the ETA and ask them to receive goods Terminal prepare the quays and cranes, personnel and stack plan for unloading

1. Sea Transport

Port authority authorizes the arrival of the ship and makes the invoice Agent provide port authority with received goods report; informs customs of warehouse loading and summary of statement for inspection; informs forwarder the ATA; inform terminal the ship arrival info and visit time and personnel info Inland transporter prepare to transport the container after inspection and gate out Customs inspect the container and release the ship to be loaded, Port authority authorize the ship arrival

2. Unload & Storage at Sea Terminal

Terminal unload the container and store it, makes invoice for agent to pay for the unloading costs, and clearing customs, then release it to the inland transport Agent receive the invoice and ask forwarder to pay from bank, after the payment, it starts the customs clearing processes, then informs the terminal of release Customs release the container

3. Release

Terminal delivers the container Forwarder applies for the inland transport. After confirmation from transporter, it instructs the transshipment and makes declaration to customs about the transshipment, import, and loading. After the container is cleared from customs, it prepares the inland transport documents Inland transporter checks its transport schedule, capacity and budget, and accepts the inland transport service. Then it plans the terminal visit Terminal permits the visit of inland transporter and inform it about the status of container in the port and customs clearing status

4. Planning inland Transport

Customs passes the released container and permit the transshipment Inland transporter arrives in terminal. After official procedure and service cost is paid in terminal, it will carry on the inland transport.

5. Inland Transportation

Terminal check the payment of service, loading to the inland transporters truck and informs gate out to shipping line company/agent/inland transporter Inland transporter deliver the container to receiver, pick up empty container and planning the return to depot

6. Delivery

Depot plans pick up the empty container and inform the inland transporter, after it receives container, it will contact shipping line company

In the processes description, the customer group is not included into detail explanation, because shippers and consignees will get info about the container transportation from time to time, but contribute little to the operational processes.

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Appendix D: Information flow of each stakeholder Customer Group Consignees: Consignees need information include the shipment data (contract, delivery forecast, and dispatch advice), the price of the shipment, and receives information about the declaration of the goods, by the shipping agent. Consignees send information include payment information, for a financial institution and an extended declaration for the customs. There is also a remittance advice, a (request for) quote and an invoice transferred between the shipper and the consignee. The consignee sends payments to the bank of the importer. Shippers Shippers provide exporter’s bank with certificate of origin, insurance certificate, bill of lading and transport documents, provide the consignee with contract order, delivery forecast, dispatch advice, Shippers request for quote, invoice and remittance advice from consignee; and request the shipping line agent/forwarders with shipping instructions, status and bill of lading. Organizing Group Forwarder The (freight) forwarder sends a status arrival notice to the consignee and the trade officials. Further, he sends shipping instructions, a bill of lading to shippers. He sends a transport order to the pre- and on-carriage operators. Information about container status, arrival notice, booking manifest and a bill of lading is transferred several times between this party and the ocean/air transport operator. Finally, it sends a load and discharge list with release order to the port authority and the stevedore. Shipping line Agent Shipping line agent sends a general explanation to the customs, an approval of release to the (sea) terminal and an acceptation order to the inland terminal. Furthermore, it sends a transportation request to the inland carrier; a copy of the approval of release, status and an arrival notice to the consignee. It receives a report for either gate-in or gate-out from the terminal and, if successful, a payment confirmation from the financial institute. This party is also connected with the trade officials, to which a status report and an arrival notice is sent. Inland transporter The inland carrier receives a transportation order to or from terminal, and needs to send an advanced visit plan for the sea or inland terminal. This party exchanges booking manifests, bills of lading, container status and an arrival notice with the shipping/liner/forwarding agent. It exchanges discharge reports, documents for dangerous goods with the port authority and container messages and towage instructions with the terminal operators. Physical Group Shipping Line Company The Shipping line company receives a transportation order, and needs to send an advanced shipping note for the sea or inland terminal. The shipping line company usually cooperates with a shipping agent and therefore sending manifests to the shipping agent about the goods

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and the shipment information.

Terminal Operator The Terminal operator needs information about the goods on the vessel and the transportation data. It exchanges goods receipts with the inland/ocean transporter. Furthermore, it also sends stowage instructions, container messages to and receives discharge reports from the inland transporter. It also exchanges load/unloading lists, discharge lists and release orders with the shipping/liner/forwarding agent. Authorizing Group Customs The information the customs need for their processes are the declarations of the shipper, the customs clearing documents, a general explanation of the shipping agent, an unloading report from the terminal and an extended declaration from the consignee. Customs will provide the inspection results to other relative parties. Port Authority The documents that this party receives are documents about dangerous goods. And provide gate in and out result to other parties. Financial Group Bank of exporting party It receives a payment and a letter of credit advice. It also receives and sends a certificate of origin, an insurance certificate, a bill of lading/ waybill and transport documents from and to the shipper (consignor). Bank of importing party The account of the importer receives a letter of credit assurance and payment information from the consignee. From the exporter’s account to the importer’s account there is a transfer of a letter of credit advice, a letter of credit documents.

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Appendix E: Matching capability with info Requirements Which capabilities are required to realize the information visibility in containerized SC and improve the SC performance and SC security? (Please evaluate each service by ranking priority 1-5) ** 1 = Very important; 2 = Important; 3 = Neutral; 4 = Less important; 5 = Not important Current

available To be designed

Importance

1. Communication processes- Messaging documentation flow Value Security

Electronic Delivery Order √ 1

Container Store & Release orders √ 1

Customs Clearing documents √ 1

Transshipment √ 1

Current available

To be designed

Importance

2. Database analysis function Value Security

Operational status notification (Info hub for physical group, organizing group and authority group)

√ 1

Vessel sailing schedules √ 1

Arrival schedule √ 1

Cargo arrival by type √ 1

Others:

Electronic manifests and associated amendments

Delivery instructions to transport operators

Requests to out-turn in sheds/warehouses

Current available

To be designed

Importance

3.Data Security Value Security

Data verification and rectification √ 1

Authorized access management √ 1

Current available

To be designed

Importance

4.Real-time location of container Value Security

Mobile communications (GPS) √ 3

Electronic cargo seals (RFID) √ 2

Current available

To be designed

Importance

5. Container Integrity information Value Security

Physical tampering, temperature, shock and humidity

√ 2

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Inspection/maintenance service history √ 2

Detection and Scanning (e.g. Nuclear, X/Gamma ray)

√ 2

Current available

To be designed

Importance

6.Alerts and Monitoring Value Security

Instant notification of container security breaches √ 3 1

Incorrect route √ 3 1

Workflow deviation √ 3 1

Entering wrong zone √ 3 1

Identification system of personnel √ 2

Current available

To be designed

Importance

7.Planning Value Security

Assignment of containers to vessels √ 3

Management of vessel space √ 3

Re-selling and subletting of slots √ 3

Route/ Schedule Planning √ 2

Terminal Visit Planning √ 1

Terminal operation planning (loading/unloading, stacking)

√ 1 1

Operation arrangement for transshipment: Asset movement, protection, allocation

√ 2 3

Current available

To be designed

Importance

8. Financial functions Value Security

Collation of information necessary for the generation of bills

√ 1

Customizable billing standards √ 1

Electronic generation of bills √ 1

Others:

Acceptance of rent/storage charges

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Appendix F: Interview Results of Benefit Analysis Interview results from Customer Group The major Customer Groups in CSC are those manufacturers from various industries importing or exporting products in the globalized trade. I had a second interview with IBM consultant from TREC shipping information to obtain the benefits on the side of customers. IBM has provided TREC technology to a lot of big companies in the consumer product industry, including Heineken, Apple, Chiquita, and some big pharmaceutical companies. The benefit analysis IBM consultant gave me was mainly about the condition of consumer product industry. In the coming years, consumers from consumer product market will differentiate in value with more fragments, and the information is exposed to all customers. The business operations require more real-time information visibility, analytics, and automated systems to grab the fast changing pace of the markets and deal with the growing pressure form new governmental requirements. Another key pressure is to meet security requirements from regulatory bodies and also from the end customer. The threat of terrorism is driving governments and companies towards greater security measures. Tariffs and import restrictions are more stringent than ever. The growth of piracy and the fear of product tampering have driven consumers to demand a greater degree of end-to-end security. Under these two major motivations of consumer products market, those companies are pioneering in investing in the ITVP technology. Then I will briefly explain the benefits occurring to the customer group, the analysis is based on the interview records and results of the IBM researches on consumer products industry with ITVP capabilities. Some benefits are specific from single capability, some general from some of them, I will illustrate it clearly in the title. 1.1 Cost Reduction By having a more robust process for transferring product, and by following their container consolidation program, companies were able to solidify the process and gain more consistency, which resulted in significant reduction in inventory. In addition, with container integrity information, companies can easily know where do containers go wrong, in whose responsible area, who should be blamed on and to send the claim to. It’s particularly important to the pharmaceutical producers, since they must obey the restriction of temperature and humidity. Two examples are given below for specific products.

R - Operational costs reduction:

In the Heineken’s example, a beer company, with the real time location, they can plan exactly when the beer will arrive the distributers’ warehouse, combining the stock level they know in the distributors, they could calculate the optimal stock level and reduce the fluctuation in uncertainty of distribution. In this sense, Heineken can reduce a lot of operational costs.

C - Investment costs reduction

Chiquita, a leading international producer of quality fresh fruit, imports fresh bananas from mid-America to Europe. If they meet with a temperature issue when arriving the European ports, but the ripening procedure is already activated. If they have no alerts from the temperature issue, the whole cargos value will be damaged. On the other hand, with container integrity information available, as soon as these products arrive in Europe, they could immediately reroute them to companies such as Danone, to process the fresh

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bananas into mix juice for lower price. Otherwise, Chiquita could only throw them away and face huge losses of goods. 1.3 Throughput time

R+C+M - Process time reduction

If customs sees there’s no route change, no intrusion or other disruption, the clearing time will be much shorter than usual. Companies reported multiple improvements in their processing. 75 percent of companies increased process compliance, 50 percent were able to reduce process deviations, and 25 percent saw an increase in process predictability. Furthermore, 50 percent of companies reduced the number of steps in their supply chain process, while 38 percent of companies were able to reduce cycle time (measured as the time from order receipt until it is shipped).

R+C+M - Waiting time reduction

Most companies saw improvements in waiting time, with some of these improvements reaching very significant levels. 88 percent of companies saw a reduction in cargo inspection, while 63 percent experienced a reduction in inspection delays and 38 percent of companies improved the predictability of these inspections. In addition to fewer inspections, the ones that took place seemed to be less extensive reported by 63 percent of companies.

R+C+M - Lead time reduction (More planning oriented)

The benefit of lead time reduction for customers is that they could better plan their further processing steps for instance loading, unloading, transshipping, shelving, etc. For Volkswagen, the car producers, hundreds of thousands of suppliers are providing the car parts to it. If one of the suppliers didn’t arrive in time, Volkswagen needs to put the car into a repairing area waiting for normal parts arrive, which wastes a lot of time and space. If the whole chain could be more visible, better lead time could be planned to in case of this situation happening. For retailers such as Blokker, if the Christmas products imported from China can not arrive in time, they will have empty shelf and huge loss of sales. But with the real time shipment information, knowing the cargos will arrive late, they could preplan to put other products on the empty shelf first. 1.4 Reliability improvement

R+M - On time delivery

38 percent of companies improved their reported on-time deliveries. In addition, 13 percent of companies reported an increase in item fill-rate and a reduction in each of the following areas: – the number of back-orders; – the frequency of cancelled orders; and – defective products delivered. 1.5 Flexibility in meeting customer demand

R+C+M - Quick respond to Customers’ demand

The operation will be more flexible due to the ability to react to shifts in demand patterns and react to events when they occur. 2.1 Legality improvement

R+C+M - Secure point of loading; Required security procedure

Companies could achieve better compliance with security initiatives such as C-TPAT. It will also improve the handling of condition with sensitive items due to the monitoring of

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containers temperature, humidity status, etc. Furthermore, 38 percent of companies were successful in reducing the magnitude of fraud, while 25 percent were successful in reducing the magnitude of counterfeiting. 2.2 Enhanced prevention of disruption

R+C+M - Theft and Interruption Prevention

Those high value products, such as electricity products and pharmaceutical, will mostly benefit from this aspect. Better security practices allowed the companies to be more successful in protecting their products; 75 percent of companies reported a reduction in theft/loss/pilferage; 50 percent of companies saw a reduction in tampering; and 25 percent of companies were able to reduce the magnitude of damage to their goods. 2.4 Quick Responsive and flexibility

C+M - Agility of re-planning

Similar examples are shown in the Chiquita and Blokker cases, companies could quickly make re-planning either to shipment or to adjust products processing plan. For example, TV importers detect a big shock of containers during the transportation, they could expect 50% of the cargos are damaged, they can immediately arrange another shipment instead of finding the damage two months later when goods arrive the destination.

2.4 Risk management

R+C+M - Auditable risk exposure

Owners of the high value products such as electronic, fresh products and chemicals will mostly benefit from this aspect. If there’s an issue happening, companies will know how to handle it with experienced assessments before. In addition, customers could better monitor shipment information to analyze the service quality of LSPs, to see whether they did what they committed to and to know who to send the claims to when goods are defected.

Interview results from Physical Group Logistic Service Providers (LSP)

LSP include the ocean carriers and the inland carriers who are responsible for the door to door or part of the transportation of the containers. An interesting phenomenon is that the major motivation of LSP investing in ITVP capabilities are from the demands of customers, who are increasingly demanding greater reliability of container shipments at lower total cost. But in return, this investment of technology will add value to the service of LSP, allowing companies asking for higher rates from customers. Another major factor is also the urge of changes in public policy requiring plans for increased security throughout the industry.

The benefit of LSP analysis was also from the interview of IBM consultant from TREC shipping information. IBM has also cooperated with biggest shipping companies such as Maersk. Then I will briefly explain the benefits occurring to the physical group, the analysis is based on the interview records. 1.2 Throughput time

R+C+M - Process time, Waiting time reduction

Better insight into the shipment schedule and the no tampering history of containers will fasten the time of custom clearance, reduce the inspection time.

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1.4 Reliability improvement R+C+M - On time delivery

LSP responsible for the entire chain will have an end-to-end integration and more tightly synchronized supply chain. LSP could better commit to the delivery time since better control and insight into the chain. 1.5 Flexibility in meeting customer demand

R+C+M - Quick respond to Customers’ demand

This is quite important beneficial aspect of LSP. When customers change the shipment orders, they could work out the new shipment quickly since they know exactly where the cargo is. If the cargos are affected by temperature, humidity or other kinds of disruption, LSP can alert the customers immediately to ask for certain kinds of remediation. Last but not least, the monitoring function could help LSP evaluate the performance of their service throughout the chain, and better comply with the commitment to customers of high level service and providing solid proof. 2.1 Legality improvement


Shipping processes is required to become more tamper-proof and hence, a “chain of trust” is likely to be required to satisfy government mandates. This will easily help to provide certification of stuffing containers with evidence that each container, once sealed, has not had dangerous items inserted into it. 2.2 Enhanced prevention of disruption

R+C+M - Theft and Interruption Prevention With more visible shipping processes and secured monitoring, LSP could largely reduce the likelihood of tampering and intrusion during shipment, thereby protect the interest of customers and provide value added service. 2.3 Quick Responsive and flexibility

R+C+M - Agility of re-planning Whenever there’s certain kind of disruption happening, with accurate in time information of containers, LSP could quickly make optimal re-planning for re-routing or dispatch other ships or trucks to make compensation and minimize the losses and delays in service. Terminal Operators The interview with terminal operator is with ECT, the major terminal operator in Port of Rotterdam, charging and discharging containers. Their customer is normally the shipping line (carrier haulage), but sometimes also the forwarder (merchant haulage). ECT has a lot of competitions from the other terminal operators in other ports. If ECT is not competitive in the operation of containers, shipping line could easily change the location to discharge their containers. Decreases in the containers discharged from Port of Rotterdam will immediately occur. ECT must perform excellent in the discharging speed, reliability and security in the operation of containers. Under these motivations, terminal operator is willing to participate in the ITVP technology in future, but not as urgent at those customer group or physical group. ECT has already equipped with RFID readers’ park compliant to international ISO standard. However, up till now, they don’t have really commercial case yet. Only some pilots are currently running or planned, such as a pilot test from the South of China. Therefore, the benefits are more expected to be experienced to terminal operators.

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1.2 Throughput time R - Process time reduction

One of the major disruptions of ECT operation is too long dwell time of containers and saturation of stuffing area. Although ECT could charge to the LSP when containers surpass the limit of dwell time in the yard, it means that containers have to be handled much more times than origin and a much bigger buffer area is needed. Therefore, when LSP arrange better transshipment plan by ITVP capabilities, the terminal operators could gain huge benefits in reducing dwell time of containers. However, this is more applicable to the terminal operators owning the shipping line as well, such as Maersk. Then the dwell time reduction benefit will be more apparent and direct.

1.3 Productivity R – Asset utilization

The most frequently communicated parties to terminal operators are shipping line companies and customs. The shipping line company will provide pre-notification of the arrival of ship and the stowage planning. The customs have direct access to the ECT systems to select containers, and ECT will discharge those containers to a separate stack automatically. When the real time location information is available, terminal operator could make better plan the loading/unloading equipments for more efficient operation upon the containers. However, when the container reaches the terminal, the location information is still periodically rather than continuous moving; ECT already has such information system to locate the container in the stacking yard. This benefit will be balanced to the investment cost however. Another rationality is the same as the dwell time reduction in 1.2, asset could be optimally utilized for better planning from the LSP side, but it’s relatively indirect benefits. 1.5 Flexibility in meeting customer demand

R - Quick respond to Customers’ demand

Whenever LSP has any urgent containers to handle deviating from the original plan, terminal operator could quickly search the location of containers in the yard and loading them on the ship or to the truck in time. 2.1 Legality improvement

C+M - Secure point of loading; Required security procedure

ECT needs to make sure no intruders come into their area to steal goods from containers or put dangerous things into them, which is also compliance to the ISPS code. With the container integrity information and monitoring capabilities, ECT could ensure the legality of their operation of containers. 2.2 Enhanced prevention of disruption


Security is very important for ECT, since they are responsible for integrity of container within terminal toward both the customer and the customs. With the ITVP capabilities, ECT could reduce greatly the likelihood of tampering in the terminal. 2.3 Quick Responsive and flexibility

R+C+M - Agility of re-planning

Whenever, any tampering of containers is alerted, terminal operators could quickly take actions within the field and minimize the loss of cargos.

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Comparing with the LSP and customers group, terminal operators are situated at a relatively easy position in the CSC, since the containers have less mobility within terminal. The current information system could meet up with the most relevant information need for the efficient and secured operation of ECT. Therefore, they have relatively less motivation in investing the ITVP technology. They admit the high value of ITVP in the SC security perspective, but it’s still expensive technology for them. However, whenever the technology has been matured for commercial application for terminal operation, and reached a massive degree of acceptance in the CSC, they are willing to participate into the inter-organization system anytime.

Interview results from Organizing Group Forwarder International freight forwarders play an integral part in the transportation process. Freight forwarders act on behalf of exporters in arranging transportation services. They are familiar with the import rules and regulations of foreign countries, methods of shipping, government export regulations, and documents connected with foreign trade. Some of the typical information reviewed by a freight forwarder is the commercial invoice, shipper's export declaration, and other documents required by the carrier or country of export, import, or transshipment. Forwarder can cut costs for exporters because they can arrange for the transport of huge numbers of consignments; they can consolidate loads going to a single destination to keep freight charges down for individual traders. Customers will ask freight forwarders for the information of cargos during transportation relevant to the schedule, location, clearing process, and integrity. Whenever there’s any damage to the goods, forwarders are the first to be claimed from. I interviewed one operator from an Italian International Freight Forwarder to know about the benefits they expect to get from the ITVP capabilities. 1.1 Cost Reduction

R+C+M - Operational costs reduction:

With real time location, freight forwarders could arrange more efficiently the customs clearing processes and the transshipment connection, save some operational costs. When there’s any damage happens to the cargos, with monitoring of integrity of cargos, forwarders could more easily investigate who should be responsible for the damage and who to send claims to. It will save a lot of investigation and negotiation costs.

1.2 Throughput time R+C+M - Process time reduction

With early notification of container location and integrity, the time for customs clearing and transshipment arrangement will be shortened. And it could help forwarders save a lot of cargo checking time if no tampering history recorded. Conflicts on the damage of cargos could be more easily to find parties responsible for the claims.

1.4 Reliability improvement R+M - On time delivery

The real time information could help forwarders estimate more accurate cargo schedules and comply with the commitment to customers. 2.1 Legality improvement


With the ITVP capabilities, forwarders could largely improve the legality of cargos and

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provide proof the authority departments to speed up the movement of containers. In addition, it can reduce the risk of forwarders to take all the responsibilities on the costs of damaged or missing cargos when it happens. 2.2 Enhanced prevention of disruption


This is quite important to the forwarder. They can ensure the safety of cargos by route and integrity monitoring, and provide more reliable service to customers. 2.3 Quick Responsive and flexibility


Whenever, there’s any intrusion happening, the forwarders could be notified in time and respond immediately to either re-plan the route, or estimate the loss, or inform the customers for certain changes in transportation to keep good quality service. Forwarders will gain more initiatives in dealing with disruptions than passively waiting before. 2.4 Risk management


The ITVP capabilities could not only help forwarders to improve their own business by more reliable service to customers, with more auditable records of transportation, they could also help forwarders to evaluate the service level of shipping companies and other LSPs.

Interview results from Authority Group Customs The Netherlands Customs Administration supervises the import, export and transport of goods, monitors whether the taxes payable upon import are paid and whether exported goods meet the relevant requirements. Customs also supervises compliance with legislation concerning safety, health, economy and environment. Currently, the container selection for scan or physical inspection based on the spot check, and manual processing of cargo information to filter out the suspecting containers before container arrives the port. With scan, Customs will notify the consignees or LSPs in advance, and the scanning status could be found in the website of ECT (Terminal Operator of Port of Rotterdam). Physical inspection will take a few days even several weeks, since more parties are involved in the inspection. The goals of customs are reducing the administrative cost, realizing paperless customs, be more efficient in planning, scanning, certification, and horizontal surveillance. However, since percentage of containers checked is very low, containers imported and exported come from every corner of the world, it’s difficult to the ensure all of the containers comply to the legislation. With this problem, Customs could expect to experience following benefits from each capability from ITVP.

Then I will briefly explain the benefits occurring to the Customs, the analysis is based on the interview with one officer from Shanghai Customs of People’s Republic of China. Some benefits are specific from single capability, some general from some of them, I will illustrate it clearly in the title. 1.2 Throughput time

R+C+M - Process time, Waiting time reduction

Since ITVP could record any deviation from route and human intervention during the transportation, Customs could make full use of the history information for more efficient and

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accurate selection of container for inspection. With real time location information of containers, Customs could better plan the scanning schedules and facilities for containers from different sources, therefore, minimize the waiting time for containers to be inspected. 1.3 Productivity

R+M – Asset Utilization

With real time location information of containers and getting alerts for any deviation, Customs could better plan the scanning schedules and facilities for containers from different sources, therefore, optimized the utilization of assets. 1.4 Reliability improvement

R+M - On time delivery

It is the similar rationality of the above two benefits. With real time location information and getting alerts for any deviation from containers’ shipments, Customs could better plan the scanning schedules and facilities for containers from different sources, therefore, minimize the unnecessary waiting time and commit to the time of containers release after confirmation of the conformability. 2.1 Legality improvement

C - Secure point of loading; Required security procedure

The history records of container integrity information could provide Customs with more convincible proof of legality of contents in containers during the shipments. 2.4 Risk management


With more accurate records of containers information throughout the whole CSC, Customs could consummate the selection process of containers based on more auditable data mining technology, and optimally enhance the security level significantly while remain high efficiency and low costs. Port Authority Port Authority’s activity mainly contain two parts, one is commercial activities and activities related to the public task. The commercial activities include managing the various facilities of a port. Examples of these facilities are cargo and shipping terminals, bridges and tunnels. The public task is to make sure our port is secure, clean, and efficient. For Port Authority of Rotterdam, a very important task is to implement International Ship and Port Facility Security (ISPS) code to ensure that physical ships and terminals meet the minimal requirements of security. There are more than 150 companies operating in the port of Rotterdam and must obey to ISPS code for security assurance. Up till now, there’s no single common information system providing communication for port authority to other port authorities in the world. Even the suspecting ship was found in the exporting port, the importing port couldn’t get caution for that, which potentially increases the work load for importing port. In addition, the electronic pre-notification of containers for export is far from the level of secured. Since there’re cargos from every place in Europe to the port, the situation is more complicated than import. Port authority needs the sealing information at the point of stuffing to know the integrity of container and ensure the security of port. With over 10,000 containers reception everyday, it largely increases the difficulty to trace and verify the sealing history of containers without electronic pre-notification.

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I interviewed one security advisor in Port Authority of Rotterdam, he provided me with an overview of the operation in port and the expected benefits they will experience from each capability from ITVP. 1.1 Cost Reduction

R+C+M - Operational costs reduction:

With real time location of containers, ships arrival and left from port could be better notified, reduce the operational costs in planning sea route, docks and other port facilities. With container integrity information, port authority could better ensure the security of port and reduce the operational costs in checking the containers’ sealing history.

1.2 Throughput time R+C - Process time reduction

With more accurate information of containers’ real location and integrity history, port authority could authorize the release of containers leaving port more quickly with higher insurance of security.

1.3 Productivity Improvement R+M – Asset Utilization

With the information of containers’ location and notification of any deviation during transportation, port authority could optimize the facilities utilization in port to speed up the in and out of ships and containers.

1.4 Reliability improvement R+C+M - On time delivery

With pre-notification of containers and ships information during the transportation, port authority could speed up the authorization of arrival and left of ships and containers, facilities are smoothly prepared and they can better stick to the port service commitment to customers. 2.1 Legality improvement


Security of the port is the one of the top priorities of port authority; the ITVP capabilities will definitely provide more proof to port authority for the safety of ships and containers and help port authority stick to security codes within ports. 2.2 Enhanced prevention of disruption


As port authority’s responsibility, the containers and ships should also be safe within the region of port. The monitoring of containers location and integrity will protect the containers from intrusion to some extent. 2.3 Quick Responsive and flexibility


Whenever any deviation happens to the original transportation plan of ships, port authority could be resiliently make adjustment in facilitation and authorization processes. Whenever there’s intrusion happening to certain containers within the port, port authority get alarmed in time and can take immediate actions to stop the illegal activities.

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2.4 Risk management R+C+M - Auditable risk exposure

With more complete information of containers’ route and integrity history, port authority can work out more accurate risk analysis for containers and ships, which will greatly assist port authority to make the decision of release and accept a container or a ship. However, for Port Authority of Rotterdam, currently they just facilitate the installation of ITVP device within the port from the request of customers, and they are less active in investing the technology themselves than the customer groups. Some of port authority’s customers are not interested in the ITVP capabilities because they know that their containers will arrive in certain days, which is quite predictable and the integrity of cargo is not threatened, and the cost of implementing ITVP is still too high for them. But this kind of technology is particularly important to those companies with complicated supply chain, whose goods in motion is also one part of their stocks, as well as for those very expensive goods such as laptop, light inside, liquid cargo, consumer electronics, and cigarette. Thereby, in the current stage, port authority only facilitates the storing of these equipments; subscription of the service will be later. However, the security advisor of Port of Rotterdam confirmed with me that although they are not first movers in the ITVP technology, these benefits are expected to be experienced by Port Authority when the ITVP is massively implemented and when they could share the information with other stakeholders, therefore, they are willing to cooperate and facilitate those initiatives.

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Appendix G: Questionnaire for Semi-structured Interview and Online surveyPlease select your company type or government department： (1) shipper (2) consignee (3) forwarder (4) shipping line (5) inland transporter (6) Custom (7) terminal operator (8) port authority Questions: Will the visibility capability have the following benefits on the stakeholder in containerized supply chain? If yes, please fill in “√” in column “Y/N”

If you believe these benefits occurs to the you, please rank the significant level of benefits in the column “HOW” Rank “1-3”: 1 = Improvement within small extent; 2 = Improvement in medium size; 3 = Greatly Improved

Visibility capability 1: Real time Location Information: Real time information about the position of a container or goods in the supply chain through the technology such as GPS and RFID (Two more pages with other two capabilities)

Y/N How

1.1 Cost Reduction

Operational costs

Investment costs


Process time

Waiting times

Lead time

1.3 Productivity improvement

Asset Utilization

1.4 Delivery Reliability Improvement

On time delivery

1.5 Flexibility in meeting customer demand

Quick respond to customers

2.1 Legality Improvement

Secure point of loading

Required security procedure

2.2 Enhanced prevention of disruption

Theft and Interruption Prevention

2.3 Quick Responsive and flexible

Agility of re-planning

2.4 Risk management improvement

Auditable risk exposure

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List of figures and tables

Figures Figure 1: Importance of the top 10 management issues in the CSC (Source: A.T. Kearney interview) 8

Figure 2: Research Approach 13

Figure 3: Parties and flows involved in a supply chain (Simchi-Levi et al, 2003) 15

Figure 4: The containerized transport supply chain (Baalen et al. 2000) 16

Figure 5: Information Flow in CSC (Van de Zande, 2002) 18

Figure 6: Layered approach to information visibility (Joshi,2001) 22

Figure 7: Information needs in PIOS 33

Figure 8: Capabilities Hierarchies of ITVP 37

Figure 9: Benefits of Asset visibility (Rice and Spayd, 2005). 44

Figure 10: Benefit categories of asset visibility and benefit receivers (Source: UNISYS, 2006) 45

Figure 11: Schema of benefit analysis model 45

Figure 12: Ranking of benefit indicators of Real-time location 51

Figure 13: Ranking of benefit indicators of Container Integrity Information 53

Figure 14: Ranking of benefit indicators of Monitoring & Alerts 54

Figure 15: Aggregated ranking of benefit indicators of three ITVP capabilities 55

Tables Table 1: Organizations in the containerized transport supply chain (Oosterhout et al. 2000) 16Table 2: DQ category and DQ dimensions

Table 3: Synchronized information among involved parties in container supply chain 20

Table 4: Information requirements analysis in CSC 24Table 5: Indicators for measuring SC performance (Beamon, 1999) 24Table 6: Performance indicators for measuring SC performance of CSC 28Table 7: Indicators for measuring SC security of CSC 29Table 8: Different categories of PIOS in CSC (Meijer,2007) 31Table 9: Examples of current ITVP implemented in the CSC 33Table 10: Summary of matching ITVP capabilities with requirements 34Table 11: Samples summary from interviews and surveys 41Table 12: Interview Summary - benefit analysis of real time location capability 48Table 13: Interview Summary - benefit analysis of container integrity capability 49Table 14: Interview Summary - benefit analysis of monitoring and alerts capability 52Table 15: Summary of benefit analysis of ITVP capabilities 54Table 16: Survey Summary - benefit analysis of real time location capability 57Table 17: Survey Summary - benefit analysis of container integrity capability 59Table 18: Survey Summary - benefit analysis of monitoring and alerts capability 59Table 19: Results comparison between interview and survey 59Table 20: Results comparison in percentage between interview and survey 60

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List of abbreviations

BS Business (community) Systems

CIS Container Integrity Systems

CSC Containerized Supply Chains

DQ Data Quality

IOS Inter-organizational information Systems

IT Information Technology

ITVP Information Technology Visibility Platform

NCS Neutral or open Community Systems

PIOS Port Inter-organizational information Systems

RFID Radio Frequency Identification

SC Supply Chains =, =, =