Virtual Transport Enterprise Integration

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2000 Society for Design and Process Science

Printed in the United States of America

VIRTUAL TRANSPORT ENTERPRISE INTEGRATION

Ricardo Chalmeta

Grupo IRIS. Departamento de Informática.Universidad Jaume I. Castellón. 12071. ESPAÑA.

A virtual transport enterprise (VTE) is a temporary alliance of independent transport enterprises

that come together to share resources, skills, and costs, supported by Information and

Communication Technologies, in order to better attend market opportunities. To design an

efficient and flexible VTE that presents the semblance of a single enterprise to the customers, is

a very complex task. There are an extensive set of approaches to help in the co-ordination of the

different objectives during of the design and execution of a single enterprise. However, they do

not provide the specialized tools for the integration of VTE’s.

This paper shows a Reference Architecture that is being developing focused on the virtual

intermodal transport enterprise. This Architecture guide (1) in the design of high quality

business process, with an information flow connecting the services in the transport chain and

(2) in the development of an integrated system of management.

The architecture is composed of a methodology, a reference model, a performance measurement

system, an information and communication infrastructure and a set of computer engineering

tools.

1. Introduction

1.1. Virtual Enterprises

A Virtual Enterprise is a temporary alliance of globally distributed independent enterprises that cometogether to share resources, skills, and costs, supported by Information and Communication Technologies,

in order to better attend market opportunities and successfully fulfil a responsible corporate strategy(Bernus, 1997 and Brown, 1994). The Organisational characteristics of a virtual enterprise can be describedas (Weston, 1997).

1.2. Virtual Transport Enterprises

In the global market environment, the majority of the transport companies do not have the financialand structural capability to afford the cost to operate direct routes with the different origin and destination

points. So, in order to satisfy the customer requirements, local transport enterprises must work together

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Journal of Integrated Design and Process Science DECEMBER 2000, Vol. 4, No. 4, 46

through the establishment of co-operative agreements forming what is called Virtual Transport Enterprises (VTE).

A Virtual Transport Enterprise should be capable of taking full responsibility for a door-to-door transportation service, on behalf of its customers, and should be capable of defining the optimal solution,

taking advantage of the availability of different modes of transport and finding true added value totransportation services.

1.3. Virtual Transport Enterprise Integration

One of the future main research and development themes in the improvement of transport activitiesis the problem of the virtual transport enterprise integration. Virtual Enterprise Integration is the task of improving the performance of the whole organization by efficiently managing the interactions among the

participants. An integrated virtual enterprise should be an aware enterprise meaning that changes in theinternal or external environment should as soon as possible be reflected in the objectives and in itsactions; making sure that activities of all the components contribute to the overall objective in a co-ordinated way.

Todesign and to manage an efficient and flexible virtual transport company that present the semblanceof a single enterprise to the customers, is a very complex task. It involves different approaches regardingtechnology, management and cultural elements. High quality business process in an integrated businesschain requires properly designed operations. In addition, to ensure quality, an integrated system of management is needed, with all levels of management properly set up for the purposes of managing thevirtual transport enterprise (Chalmeta, 1997b).

To carry out this objective, it is necessary to use methodologies, reference models, informationinfrastructures and computer enterprise engineering tools that help in the co-ordination of the differentobjectives during of the design and the management of the virtual transport enterprise.

Table 1. Organisational characteristics of a virtual enterprise.

1.4. Methods and tools for Enterprise Integration

There are an extensive set of approaches for enterprise engineering as enterprise engineeringmethodologies which describe the management processes for enterprise integration as the Purdue Guidefor Master Planning and implementation of integration programs (Williams, 1995), enterprise modellinglanguages as OO (Taylor, 1995) or IDEFx (Cam-I, 1981), supporting enterprise tools for the design of individual business entities and paradigmatic enterprise models for organizational design. All these proposalscan be organized inside what is called Enterprise Reference Architectures. An Enterprise Integration

I n ternal I nherent Valu es Extern al Typica l Contro l Struc tures

?? agility and innovation value?? organic behaviour valued?? a highly dynamic

information and m aterialflow

?? cross-partner-company teamworking value

?? more open, smaller powerdistance

?? employee satisfaction higher?? employee loyalty lower

?? world class thoughcomplementarycompetencies

?? customer orientation?? less stable

?? geared to market need?? need to support change?? pro ce ss as co mm od it y?? electronic trading

necessary?? global standards vital?? system overheads high?? need for holistic and

changing integrationrequirements



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Reference Architecture is a framework that provides generic guidelines for developing an integratedenterprise and is supported by tools, methodologies, modeling languages and a range of compatible productsthus making the entire endeavor feasible, which otherwise is practically impossible in time and costs.Among the most well known ones are (Fig. 1).

? CIM-OSA (Open Systems Architecturee) Architecture presented in the ESPRIT programs of theEuropean Union (number 688, 2422 and 5288), by the AMICE Consortium (Amice, 1991).

? GIM (Grai Integrated Methodology) Architecture derived from the work carried out by several projects subsidized by the ESPRIT program of the European Union like IMPACS (number 2338) by theGRAI Laboratory of Bordeaux University (France) (Doumeingts et al., 1992).

? PERA Architecture developed by Purdue University (USA) (Williams, 1993).

Fig. 1 Main Reference Architectures (in PERA only part of the life cycle is showed).

ANALYSIS

DETAILED

(BUSINESS IDENTIFICATION)

DEFINITIONLAYER

MANAGEMENT

POLICIES

MANAGEMENT

REQUIREMENTS

MANUFACTUIRNG

NETWORK

PRODUCTION

ENTITY

PRODUCTION

REQUIREMENTS

INFORMATION

FUNCTIONAL

NETWORK

MISSION,VISIONANDVALUES

TASKS

ESPECIFICATIONLAYER

CONCEPTLAYER

MANUFACTURING

STRUCTURE

INFORMATION

STRUCTURE

HUMAN

STRUCTURE

GIM

INFORMACIO

FUNCTION

DECISION

DESIGN

RESOURCES

INFORMATION

N

ARIS

ORGANIZATION

DATA CONTROL FUNCTION

CIM-OSA

PERA

INICIALIZATION

USER REQUIREMENTSDOMAIN

DEFINITION

CONSISTENCYCHECK

PHISICALVIEW

FUNCTIONALVIEW

DECISIONALVIEW

INFORMATIONALVIEW

ANALYSISPHASE

USER SPECIFICATIONSDESIGNPHASE

IMPLEMENTATION

MANUFACTURINGSTRUCTURE

DETAILEDDESINGPHASE

ORGANIZATIONSTRUCTURE

INFORMATIONSTRUCTURE

THECNICAL ESPECIFICATIONS

PHISICALVIEW

FUNCTIONALVIEW

DECISIONALVIEW

INFORMATIONALVIEW




Fig. 2 GERAM components.

Task Force on Architectures for Enterprise Integration (International Federation Automatic Control/International Federation Information Processing) (Bernus et al., 1996). This project had a first objective(1991-1993) which consisted of the selection of an architecture that would describe and present all thenecessary activities to establish, carry out and complete an enterprise integration program for any kind of enterprise.

Due to political factors, it has been impossible for the members of this group to select only onearchitecture that could be considered by everybody as the best one(Williams and Li, 1995). However, thanks to the wide study carried out in this work in the second periodof three years of the project (1994-1996) the requirements and components, which such a referencearchitecture has to fulfil in order to be considered complete, have been defined. These requirements and

components are synthesized in GERAM (Generalized Enterprise Reference Architecture and Methodology,see Fig. 2) and are being studied by the ISO (International Standard Organization) Working group TC184/SC5/WG1. Based on this, any kind of proposal for an enterprise integration reference architecture can

be evaluated under these criteria to get ‘ISO and IFAC certification’.

2. ARDIN Project

Although the earlier architectures have many good points, all these architectures can be improved, asthey have not completely generated the necessary methodologies, modelling techniques and adequateexecution tools for the different kinds of enterprises (Pantakar, 1995). In addition, new methods enabling

employs

E E MEnterprise

E ngineer ing Methdo logies( describes pr ocess o f

enterprise engineering )

E MOEnterprise Modules

(implementable mod ules

or pr oducts, as h uman pr ofess ion s, o per ation al pr oces ses , techno lo gies ;

eg. IT infrastructu re)

E MLEn terp rise Modelling

Langu ages (con structs for modelling human roles,

p ro cesses and tech no logies )

E E TEnterpr ise Engineering

Tools

defin e sem an tics of

G E R AGeneric E nterpr ise

Reference Architecture

( identifies co ncepts of

enterprise integratio n )

E MEnterpr ise Models( representing the

part icular en ter pr i se )

G E C DG eneric Enterpr ise

Concept Definitions

expressed in

P E M

Par tial E nterprise Models( libr aries of r eusable

mo dels, reference models )

a re used to bu ild

su pport

im pleme nted in

E E M u t ilises EMTs to produ ce




the integration of virtual enterprises must be developed and their use must be popularized through examplesand application experiences.

In this context, the IRIS Group, of the University Jaume I of Castellón, Spain has been working in theARDIN research project since 1994. The objective is to develop and validate a step forward in the state

of the art of the Reference Architectures for Enterprise Integration. The work plan has been:

? Synthesizes the existing (and in our opinion) complementary approaches, in only one architecture.

? To improve the result architecture incorporating new techniques, methods, models and templates.

? To validate its usability and application, carry out real enterprise integration projects, mostly in thesmall and medium-sized enterprises of different sectors.

?To organize knowledge and experience obtained in our own architecture called ARDIN.

?To develop particular architectures and specialised tools focus in the necessities of every type of enterprise activity.

3. VITE Architecture

One of this particular architectures, called VITE, has been focused in the problem of virtual transportenterprise integration (see Fig. 3). Following the GERAM recommendations, VITE architecture iscomposed by:

? A Methodology that describes the whole life cycle of a virtual transport enterprise, including thedesign transactions among the potential transport partners as a part of the strategic management activity.

? A set of Reference Models, which allows the representation of dynamic relationships in the wholevirtual transport chain, including the management system, the operational business process and the externalconstrains.

? A Performance Measurement Systems to help in the analysis, decision-making and control of thetransport virtual organization.

? Computer engineering tools to solve specialised problems of the transport business.

? A model of an Information Management Infrastructure to support all the Virtual Transport Enterpriseactivities.

Fig. 3 VITE Components.

INPUTS OUTPUTS

Theories & Methods for

Enterprise Integration

Benchmarking & Companies

Processes Analysis

Generic Enterprise Models

GERA

Generic EnterpriseReference Architecture

International/Regional/NationalTrade relations

Management &Technology approaches

• Methodology for the development of a Virtual Transport Enterprise

• Reference Model of a Virtual Transport Enterprise

• Information Management & Communication Infrastructure

• Performance Measurement System

• Computer Engineering Tools

VITE

ARCHITECTURE



Jou rnal of Integrated Design and Process Science DECEMBER 2000, Vol. 4, No. 4, 50

Table 2. Phases of the virtual transport enterprise life cycle.

3.1. VITE MethodologyThe overall methodology is a sequence of steps that describe the life cycle and the life history of a

virtual transport company. These steps can be organized in three phases: Creation/Configuration; VirtualTransport Enterprise Design and Implementation; and execution and continuos improvement.

3.1.1. Creation/Configuration

This step corresponds to the definition, selection and delineation of the virtual transport enterprise andthe definition of the strategic objectives. Although part of the transportation network will remain relativelystable, non-strategic nodes are dynamically added/removed according to the current/future businessopportunities and the current/future state of each business process. The creation/configuration phase

uses tools for partners search, and for decision support to help the negotiation process and all the dynamicsassociated to the joining/leaving of enterprises.A model of these steps has been developed, representing the information and communication flows

indispensable for the design of a multi-party transport chain, including the negotiations procedures.

3.1.2. Virtual Transport Enterprise Design and Implementation

Within the step by step methodology for the development of an integrated virtual transport enterprise,the second step is called Virtual Transport Enterprise Design and Implementation. It corresponds to:

STEPS ACTIVI TIES SUB-ACTI VI TI ES

reation/Configuration ?? Search for partners?? Tender formation?? Negotiation / agreements?? Contract awarding and

management?? VTE strategy?? Partners strategy

?? definition of the virtual

transport enterprise?? mission, vision and values?? objectives and strategies?? general policies

esign andmplementation

?? definition of the BusinessProcesses

?? design of the Business Processes?? design of the Integrated

Management System?? virtual transport enterprise

implementation program

?? decision, resources, functionand information design

?? evaluation of the dynamic behavior

?? information andcommunicationinfrastructure

xecution and continuous

mprovement

?? new objectives of the company ornew requirements of the business

processes

?? performancemeasurement

?? change management?? actions plans




? the definition of the business processes that allow to satisfy the Virtual Transport Enterprisestrategy objectives. The objectives to be accomplished are represented by means of qualitative andquantitative attributes of the processes, and without referencing the decisions or the design andimplementation options.

? the design of the business process t o carry out the activities of the transport business chain (withan integrated material and information flow connecting the services in the value chain) and the design of an integrated management system for the purposes of managing the virtual transport enterprise. Thestudy of the dynamic behavior of every business process is necessary in order to analyse the temporalevolution and to check if its performance matches the suggested objectives. To study its performance itis necessary to use a specific tool capable of simulating its dynamic behavior.

? Virtual transport enterprise implementation programme . Once the different business processesand the integrated management system have been designed the next step is to implement the virtualtransport enterprise.

3.1.3. Execution and Continuous Improvement

The life cycle paradigm proposed for a virtual transport enterprise establishes a cyclical process of continuous improvement (Kelada, 1996). Once the strategy and the business processes have been designedand implemented, during the execution phase, their behavior has to be continuously analysed, in order todetermine if it is satisfactory. If not, the processes must be redesigned or the initial objectives changed if the business is not capable to achieve them.

In this way, it is not only assured that the business processes are coherent with the strategy (they areredesigned to match all the objectives), but the strategy itself or the partners composition is also redesignedagain depending on the performance the enterprise is able to reach. So, the changes size is variable. Itcan correspond to the punctual modification inside a process or to define a new strategy that can affectall business processes and structures.

3.2. VITE Reference Models

The complexity in the Design Process of a Transport Virtual Enterprise, whose design decisions aretaken by different groups with different background and objectives, requires the use of models thatallows one to understand, analyze and evaluate the impact of the decisions on the system performance

before its construction (Petri, 1992).So, the success of virtual transport enterprise integration as a whole very much depends on the ability

to make high quality reusable models available for management and technical personnel. These models(different depending on the life cycle phase) must exhibit the most important enterprise properties, suchas self similarity, agility, the ability to be implemented as a global virtual transport enterprise, etc. Theexistence of such models allow a ‘drag-and-drop enterprise modeling’ approach to be used by business

end-users (top level management and technical personnel). Depending on the phase inside the life cycleof the virtual enterprise integration activity these models may be used for:

? Communication of design decisions among involved parties;

? Decision support (e.g. for the analysis of current operation to identify the need for change);

? Education and training of personnel, and in general explicit representation of company knowledge;

? Model-driven control of processes (e.g. establishment of workflow based processes).

At the moment we have a reference model of the processes map of a virtual transport enterprise thatdescribes how the processes should be using the best working practises and how the roles of the human



Jou rnal of Integrated Design and Process Science DECEMBER 2000, Vol. 4, No. 4, 52

resources should be. This model has been built from a benchmarking of different transport companiesand similar processes from companies of other sectors.

Figure 4 shows a graphical representation of the internal process map of a transport enterprise andthe external processes due to their relations with other transport enterprises. The big arrows show the

nine macro-processes: order management of freight outputs (this macro-process is showed at micro- process level too), order management of freight inputs, marketing, administration, information systemsmanagement, human resources management, quality and coordination with the management system of the virtual transport enterprise.

Each macro-process is divided into micro-processes, activities, tasks, and so on until getting down tothe lowest level, that is, the event produced by a human action or a machine. Every task of the model hasinputs, outputs, controls and resources. In addition, figure 4 can be improved by colouring the activitiescarried out by personnel in the same department with the same colour. In this way, the figure representsthe horizontal view of the enterprise by means of the processes and the vertical view by means of thedepartments.

This model has served to implant the working processes and to develop the information system in a

Spanish virtual transport enterprise composed by 55 small and medium size transport enterprises.In order to develop the Reference Model of the Virtual Transport Enterprise different modeling

languages has been used. In a first approximation, IDEF0 and GRAI nets has been used to represent, ina high level, the different activities and decisions inside the different business process. Then, an object-oriented reference model using UML has been developed, in order to describe in more detail the virtualtransport enterprise business processes (Chalmeta, 1997a).

Fig. 4 Processes map of a transport enterprise.

PROCESS

ORDERS

DOCUMENTATION

T R A N S P O R T

CONTRACTION OFCOMPLEMENTARYFLEET

FREIGTH

MANIPULATION

INTERNAL FLOW OF INFORMATION

FLOW OF INFORMATION TO OTHER ENTRPRISES




3.3. VITE Performance Measurement System (PMS)

Performance measurement systems are a powerful tool for improvement if used along with enterpriseintegration. It is necessary to prescribe, suggest and assist in the design and management decision-

making phases.The performance measurement system help to translate the virtual transport enterprise mission andstrategies into a set of interrelated indicators for the different decision levels. This set of indicators can beemployed as the foundation of an integrated and iterative strategic management system. It enables avirtual transport enterprise to;

? Clarify and update strategy..

? Communicate strategy throughout the company..

? Align unit and individual goals with the virtual transport enterprise strategy..

? Link objectives to long-term targets and annual budgets.

? Conduct periodic performance reviews to learn about and improve strategy..

In virtual transport organisations, performance measurement system has to cross the functional boundaries of regional and national partners in order to represent the whole virtual transport enterprise.Figure 5 show the methodology followed in order to develop the performance measurement system for virtual transport enterprises.

3.4. VITE Information Management and Communication Infrastructure

The virtual transportation enterprise integration, identifies specific co-operative information management,communication infrastructure and functionality co-ordination requirements. For instance, the independenceand autonomy of the transportation companies that join the virtual transport enterprise require strongsupport for security of information transmission, support for private/sharable information and an appropriatetool (e.g. workflow management) to support the co-ordination of the common VITE tasks.

Fig. 5 Performance measurement.

DEFINE VIRTUAL

TRANSPORT

ENTERPRISEMISSION AND

VALUES

IDENTIFY AND DEFINE VIRTUAL

TRANSPORT ENTERPRISE STRATEGIC

OBJECTIVES

SELECT CAUSE

INDICATORSCORPORATION

ESTABLISH

CAUSE-EFFECTRELATIONSHIPS.

TRANSLATE STRATEGY TO

ENTERPRISES, DEPARTMENTS,PROCESSES AND ACTIVITIES

SELECT CAUSE

INDICATORS FOR

ENTERPRISES,DEPARTMENTS,

PROCESSES AND

ACTIVITIES

SELECT EFFECT

INDICATORSCORPORATION

SELECT EFFECT

INDICATORS FOR

ENTERPRISES,

DEPARTMENTS,PROCESSES AND

ACTIVITIES

STRATEGIC FEEDBACK(REVIEWS).

SET GOALS

(SHORT-TERM).ACTION PLANS

QUALITYINDICATORS

BUDGET

BENCHMARKING

DATABASE

SIMULATION

VALIDATE INDICATORS

STRATEGICPROBLEMS

AB C

EUROPEAN QUALITY MODEL




A model of an Information Management Infrastructure to support all the Virtual Transport Enterpriseactivities has been developed. This model consider:

? The development of a strong interoperable platform and necessary mechanisms to support the

secured and authorised sharing and exchange of VTE information among the transportation sites.? The identification of the functions (workflow) necessary to fully support both the co-ordination of

local tasks at each transportation site, and the proper functions of each site within the VTE.

? The development of a suitable communication infrastructure as the means to support the secureand reliable data transmission among VTE sites.

3.5. VITE set of computer engineering tools

Specific computer engineering tools have to be develop to help in the integration of a virtual transportenterprise. Inside the VITE architecture, we have developed a computer tool for the route planning andmanagement. This tool allow to define and to select the suitable route inside the virtual transport enterprise,considering different views as the cost, the time, the quality, the resources, the transport modes, etc.

4. Industrial Relevance

To evaluate the importance of the transport sector, it can be said that it is one of the major economicsectors in the World scenario. It employs 8 million people in Europe, corresponding to about 4% of totalEU employment and 15 million of people in North-America. In addition, it directly affects the final costsof goods and products.

The market structure in transport companies is characterized by a high degree of competition, with alow degree of production differentiation, mainly based on the costs, and low degree of concentration.However, quality became to be another competitive factor due to the changes in the geopolitical andeconomic scenario, like the creation of the single market in Europe or North-America and the eliminationof frontiers.

So, in order to achieve socio-economic and environmental sustainability, the efficient and balanceduse of existing capacities throughout the World transport system has become a key challenge. However,managers of transport enterprises and the consulting firms that assist them, have to face the limitedscope and utility of the present methods to design, to plan and to manage in an integrated and efficientway the virtual transport enterprises. In this context, VITE architecture represents a step forward in thestate of the art.

At the moment, the following architecture has been applied to CAVE logistics, a Spanish virtualtransport enterprise composed by 55 small and medium size companies. This direct benefits has beenobtained:

? Lead-time reduction: 30%

? Cost reduction: 25%

? Productivity increase: 30%? Human satisfaction: 20%

? New customers: 80%

? No Quality cost reduction: 20%

5. Conclusions

This paper has shown a Reference Architecture for virtual transport enterprise (VITE) that act as aguide during the integrated development of a Virtual Transport Enterprise. The Architecture is composed




of five subsystems: a methodology that describe the life cycle of the virtual transport enterprise, a referencemodel that represent the different views of the virtual transport enterprise (business process, managementsystem, etc.), a performance measurement system to support management decision making, an informationmanagement and communication infrastructure to co-ordinate the activities and a set of computer

engineering tools.Such Architecture allow an efficient and flexible virtual transport enterprise that presents the semblance

of a single enterprise to the customers, whereas in actual fact the enterprise is an alliance of partners for the purpose of a business mission.

The Architecture offer guidance (1) in the design of high quality business process in an integratedtransport chain with the properly definition of the suitable operations (with an integrated material andinformation flow connecting the services in the value chain) and (2) in the development of an integratedsystem of management, with all levels of management properly set up for the purposes of managing thevirtual transport enterprise.

6. Acknowledgements

The ARDIN project has being founded by Cicyt, Bancaja and different enterprises.7. References

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Virtual Transport Enterprise Integration