INTEGRATED ROUTE TRANSPORTATION PLANNING MODEL FOR

INDUSTRIAL SUPPLY CHAIN

Andika Supriatmo Putra 237407

1
Universiti Utara Malaysia, School of Technology Management and Logistics
2
Universiti Utara Malaysia, School of Technology Management and Logistics
Universiti Utara Malaysia, 06010, Sintok, Kedah, Malaysia
andika_supriatmo@stml.uum.edu.my

ABSTRACT

An integrated route transportation planning system in every country has different

characteristics and involves an understanding of Supply Chain Management This
study seeks to investigate the best integrated transportation route for industrial in
supply chain. Finding out the suitable route planning by conducting comparison study
through the existed model is another way to get better understanding on the factor
and indicator that will affect the supply chain industry. This paper argues that private
and the public sector have different agendas and planning but at the same time may
have common interests in the region that involve economic robustness, environmental
health, and social cohesiveness what is known as sustainability. And at the end what
will be key point is to find out best model of the integrated route transportation that
can support the supply chain industry. This study uses qualitative method which focus
on comparative study based on model that existed though descriptive analysis.

Keywords: Route Planning, Logistics, Supply Chain, Integrated Route

 INTRODUCTION

Background of Study

The usage of transportation all over the world generally is use for supporting
the movement of people or goods. In supply chain, the role of transportation for
logistics activities is crucial. Furthermore, one of key aspects of a successful company
is the ability to quickly and effectively react to changes in the supply chain (Marko, R,
František, R, & A, 2012). In addition, transportation system has an effect on economic
development of a country. Having poor transportation system could lead to slow
economic growth. Singapore had recognized that the lack of an efficient transport
system could have a damaging effect on the economic growth and development of the
country (Chin & K, 2005). Moreover, according to sector research (Chang, 1998),
transport accounts for as much as 30% of the total cost of logistics operations – almost
as much as Warehousing and Inventory together (Cristini, n.d).
Discussing on the supply chain, the term of distribution, procurement, customer
service, etc., are the common terminologies that usually found in many industries.
According to Marko et al., supply chain management can be understood as the flow
and management of resources across the enterprise for the purpose of maintaining the
business operations profitably. Resources include materials (raw materials, work- in
progress, finished products), people, information, money, negotiation or any other such
resources that must be managed for profitable business operations (Sehgal, 2009;
Rosenbloom, 2004) (2012).
Choosing the right freight transportation and right route to deliver the service
could be an advantage for a company. As the cost of transportation can be fluctuate due
to oil price, demand and supply, and the distance of the final destination. Meaning to
say that, the freight transportation cannot be take for granted, as it is a serious issue in
supply chain. Now consider the impact of transportation activities on the overall
economy of a country. The numbers are exciting. In the United States in 2005, freight
transport activities accounted for 10% of the GDP (Cristini, n.d). Therefore, this study
try to analyze the model of route transportation planning from the previous study as it
will help the decision maker to make effective and efficient decision route planning.

Problem Statement
Every organizations have their own business strategy that differentiate them
from their competitors. Providing the customer with on time delivery at the right place,
right item and right condition will contribute to the high customer satisfaction.
However, some companies unable to compete for providing reliable service for their
customer due to certain reasons. According to Kurban (2016) some of the reasons
include vessel delays, logistic constraints and lack of proper coordination of the freights
(Culley et al., 1991). Such solutions can include proper planning in advance to take
into account the expected delivery time while calculating the most probable transit time.
Those are the example of the most common factors that will affect the performance of
organizations. Hence, such a proper planning for integrated route transportation is
required to improve the service.
 Moreover, one of the greatest challenges in transportation is to increase
operational excellence through more effective deployment of resources (Hornstra,
2014). Besides, the role of IT and different agendas between private and public sectors
contribute to the development of integration route transportation planning. Based on
the findings, Marko (2012) stated that IT systems often support or take responsibility
for logistics planning of the vehicles of companies and the companies are searching for
new technologies that increase the quality of their services (Gehrke, Woltusiak, 2008)

LITERATURE REVIEW

Scheduling, Routing and Route Optimization

In the logistics process there is three different processes that usually being
performed for effective and efficient delivery or collection of raw material, work in
process or finished goods. The three processes include scheduling, routing and route
optimization. Routing, route scheduling, and route optimization are all critical
processes for creating reliable and cost-effective routes (Route4me, 2016).

Routing

The term of routing is referred to the route planning itself, whereby it is one of
the critical components in logistics process. Basically, routing can be defined as the
process of mapping out the unique ways that one or more vehicles will take while they
deliver or collect stock from each of their stop points (Bell, 2016). In other words,
routing is aimed to minimize the travel time to reach certain point of destination by
creating the most cost effective route. It is said that routing is a critical part in logistics
process that will affect the logistics activities like transporting or distributing goods.
According to Route4trucks (2016), routing of goods and services incurs huge costs for
vehicle operation, fuel, labor and maintenance. Hence, in order to minimize the
shipment cost of delivery goods, some principles need to be followed.

Table 1
Principles of good routing
No Principle Implication
1 Load trucks with stop points closest to each Minimizes interstop travel
other between them
2 Stops on different days should be arranged to Develop overall route, plus
minimize travel time and distance daily routes
3 Build routes beginning with the farthest stop Efficient routes
from depot
4 Stops should be sequenced or should form a No path cross each other
teardrop pattern
 5 Most efficient routes are built using the largest Will minimize total
vehicles available distance/time traveled to
serve
the stops
6 Pickup should be mixed into delivery routes To minimize the amount of
rather than assigned to the end of the routes path
crossing

Having a good route planning for the delivery of goods could lead to positive
impacts like improve customer satisfaction, reduce the operational costs and short or
fast route. There are several good principle of routing that can be followed to get those
positive impacts on the logistics process. According to Resourcer (n.d), eight principle
to be followed in order to have an effective route plan as shown in Table 1.

Scheduling

Nowadays, the complexity of transportation planning is extremely increase. As

a part of logistics process, scheduling involves activities like planning the timing for
every places being visited. Based on Route4me website (2016), the main objective of
both routing and route scheduling is to cut down on your expenses, such as mileage
and vehicle capital costs. However, it should be remembered that route scheduling
made based on the service type, see Table 2. The reason behind route scheduling is
due to the fact that there is changes in customer demands, legislation become stricter
while rising fuel and labor costs are adding further pressures as well as trend in supply
chain (Ortec, n.d). Besides, in order to set up the effective route scheduling there are
some barriers that need to be coped as shown in Table 3.
Table 2
Scheduling or routing objectives of different types of services (NPTEL, 2011)

No Service Type Objective

1 School Bus Minimize student-minutes on the bus

2 Logistics Minimize the distance travelled to pick up

and/or to deliver parcels following optimum
routes
3 Emergency (ambulance, police, Minimize response time
fire)

Characteristics of Routing and Scheduling Problems

Routing and Scheduling Problems are purposively to minimize the total cost of
providing the service. And these activities are characterized by nodes, arcs, tour and
feasibility, as shown in Figure 1 (NPTEL, 2011). The figure comprises of five circles
called nodes. Node 1 is the depot node from which the vehicle starts and ends. Nodes
2, 3, 4 and 5 represent four distribution centers (Haksever , Render, Russell, & Murdick,
1999). Arcs reflects to the line that connecting the nodes. According to Haksever et al.,
(1999), Arcs may describe the time, cost or distance required to travel from one node
to another. Arcs may be directed (arrows) or undirected (simple line segments)
(NPTEL, 2011).
Figure 1
Routing Network Example (Haksever et al., 1999)

Figure 2
Illustration for Tour.

1 2 3 4 5 1
1 5 4 3 2 1

The arrow represents the direction of travel in the case of routing problems (e.g.
one-way streets) or precedence relationships in case of scheduling problems.
Furthermore, Tour is the route for the vehicle (see illustration 2) and according to
NPTEL (2011) the feasibility implies that a tour must include all nodes, a node must
be visited only once and a tour must begin and end at a depot. Thus, basically, the route
specifies the sequence in which the nodes (or arcs) are to be visited, and a schedule
identifies when each node is to be visited.
Route Optimisation

Finally, there is route optimization as an important elements that need to be

considered. Route optimization used as a part of evaluation for routing and scheduling
in delivery or shipment of goods. Generally, route optimization is the process of
planning one or multiple routes, with the purpose of minimizing overall costs, while
achieving the highest possible performance under a set of given constraints and
considering other routes which share the same purpose (Route4me, 2016). In addition,
route planning is a part of route optimization process which comprises defining route
constraints and parameters, planning routes, dispatching routes, monitoring routing
activity, auditing routing activity, and improving planned routes.
Factors That Affect Route Planning

Policy

Policy is one of the factors that affect the routing for transportation all over the
world. There are four things that need to be considered. Newman (2009) identifies a set
of four policy tools, which he considers necessary for implementation, and which can
generally be ensured not locally but only through regional planning a strategic policy
framework that links centres with a rapid transit base, almost invariably electric rail.
First is a strategic policy framework that establishes where centres need to be created
and with what kind of density and mix. Secondly, a statutory planning base that requires
development to be implemented with the necessary density and design in each centre.
Thirdly, a public-private funding mechanism to enable both transit and transit-oriented
development (TOD) to be either built or refurbished by linking transit and the centres
it will serve. Despite, its potential benefits, regional planning should be considered a
necessary but not sufficient condition for the development and success of TOD projects
(Leite et al., 2008).

Technology

The value of collaboration of technology in the supply chain is widely

recognised by researchers and practitioners. In recent years, researchers have
emphasised the important role of freight carriers in buyer-supplier collaboration (e.g.
Fabbe-Costes et al., 2009; Gotzamani et al., 2010; Huemer, 2012; Stefansson, 2006)
with technology. In general, supply chain collaboration among peers is called horizontal
collaboration (Barratt, 2004). Since suppliers and buyers are physically connected by
means of a freight transportation stage, carriers fulfilling the transportation function are
addition to their role in vertical supply chain collaboration, carriers may engage in
“horizontal” collaboration (Mason et al., 2007). Horizontal collaboration is defined by
Cruijssen et al. (2007b) as “identifying and exploiting win-win situations among
companies that are active at the same stage of the supply chain”. Survey-based research
on the relationship between IT and supply chain collaboration often focuses on a single
IT application or uses aggregated measures for IT (Zhang et al., 2011). Evangelista et
al. (2012) consider a wider range of IT applications in their exploratory survey, which
indicates a positive relation between IT adoption and the performance of logistics
service companies.

Environment
As concern for the natural environment continues to grow, supply chains are
being put highly in pressure to develop means of ensuring sustainability in their
operations. Of all supply chain processes, transportation is most readily acknowledged
as creating negative external costs to society. Increased globalization of world
economies has created need to reconfigure supply chains as new directions of freight
flows have developed with resulting economic advantages and environmental costs
(Lakshmanan and Han, 1997; Halldorsson et al., 2009).
 In addition, competitive and regulatory demands are putting great pressure on
the transport function to achieve greater sustainability (Nederveen et al., 2003;
Rodrigues et al., 2008). Amekudzi et al. (2009, p. 340), notes “there is emerging
consensus that a sustainable transportation system must be safe, efficient in providing
accessibility and mobility, and in enhancing economic productivity, without impacting
the natural environment negatively”. As a consequence, concern over sustainability of
supply chains is increasing with additional focus on the concept of the triple bottom
line (Elkington, 1998, 2004) of economic/profit, ecological, and societal considerations
(Halldorsson et al., 2009).

Supply Chain & Logistics Modelling Technique

To design the network of logistics and supply chain the use of modelling
technique could help company to design the new with integrated route transport.
According to Murray (2018), there are three route model technique, which is
Optimization Modeling, Simulation Models, and Heuristic Model.
The first one is the optimization model, this model is used mathematical
formula. The optimization model looks at data such as the level of customer service to
be obtained, the number and location of distribution centers, the number of
manufacturing plants, the number of distribution centers assigned to a manufacturing
plant, and the inventories that must be maintained (Murray, 2018). And this model used
linear programming or also referred as LP. This is also useful for linking supply and
demand limitations of manufacturing plants, distribution centers, and market areas.
Another one is known as simulations model. According to Murray (2018),
simulation model is defined as creating a model that is based on the real world. This
model allow us to do some experiments on the model to see how the changes affect the
overall cost of the logistics network. For example, by changing the constraints on the
network. And to ensure it could be efficient, activities like collect significant amounts
of data on transportation, warehousing, labor costs, material handling, and inventory
levels, should be performed, so that when you make changes to the constraints, the
model accurately reflect the changes. This type of model is very useful when companies
have made general decisions on the network and want to see what the overall effect of
any changes will be.
Lastly, there is heuristic model. A heuristic model is used to reduce a large
problem to a more manageable size. Even, this model often referred as a rule of thumb
for designing the logistics network. For example, a heuristic model can be used to
consider the best site for a distribution center that is at least ten miles from the market
area, fifty miles from a major airport, and more than three hundred miles from the next
closest distribution center (Murray, 2018).

Reverse Logistics Network Planning

Reverse logistics has different flow of product that require a good transportation
planning to make sure an efficient and effective movement. The process of collecting
and returning the item to the centralized return center (CRC) could take a long journey
and even time consuming as well as quite expensive. In conventional supply chains,
logistics network design is commonly recognized as a strategic issue of prime
importance (Chopra & Meindl, 2001). Moreover, the location of production, storage,
and cross-dock facilities, and the selection of transportation links between them, are
major determinants of supply chain performance systems (Fleischmann, Bloemhof-
Ruwaa, Beullens, & Dekker, 2004). In short, Fleischmannl et al., (2004) stated that at
the same time, logistics network design has a fundamental impact on the profitability
of reverse logistics.

Distribution Systems
Distribution or transport systems focus on distribution of products to
consumers. Much of the production often needs to be delivered to many stores or, in
some cases, it is moved directly to customers. Basically, there exist two different ways
of how the merchandise can be shipped. Shipments may go directly from the factory or
from a distribution center to the customer, with a single order. This simplest form of
distribution is only efficient for large orders using up the vehicle. Smaller orders can be
shipped jointly in supplies starting from the factory or distribution center and calling at
several customers. A stronger bundling of small shipments is achieved by a joint
transport from the distribution center to a transshipment point and delivery in short
distance tours from there, see Fig. 1. In this case, the customer’s warehouse has the
same function as a distribution center (Stadtler, Kilger, 2008).
 Figure 4
Distribution paths (Source: Harmut, 2002)

Figure 5
Illustration of Closed, Open and Inter-depot Routes

While in the classical multi-depot periodic vehicle routing problem with interdepot
routes (MDPVRP) all routes have to start and end in the same depot (closed routes), in
the MDPVRP with inter-depot routes (MDPVRPI), vehicles can renew their capacity
in any depot in order to continue delivering or collecting materials without being forced
to return to their base depot before the end of the working day. Hence, routes can start
and finish at different depots enabling a vehicle rotation composed by inter-depot
routes. The concepts of closed, open and inter-depot routes are illustrated in Figure 6.
While closed routes have to start and end at the same depot, an open route ends at a
different depot. The difference between an open and an inter-depot route is that in the
latter a rotation has to be defined in order to get the vehicle back to its home depot.
A rotation is a set of inter-depot routes that can be performed consecutively until the
home depot is reached. In all the above works, the objective function is defined as the
minimization of either the total distance traveled or the total routing cost.
Methodology

Generally, the process of conducting the research and developing the literature
review is through the development of Systematic Literature Review (SLR). This
method seems to be suitable for this research. When a stand-alone literature review is
conducted using a systematic, rigorous standard, it is called a systematic literature
review (Okoli & Schabram, 2010). Moreover, the SLR for this research is not the same
like the experienced writers or authors as well as more formal educational programs for
doctoral authors. The difference is that the outline of the literature review in a student
thesis is similar to that in a regular published research article, it structure is not entirely
the same (Kwan, 2006).
Figure 5
Research Activities

PHASE ACTIVITIES RESULT

1. Conductliteraturereview that related to

Phase1 Route Transport Model
1. List of Journal
Conceptual Study 2. Identify the related Route Transport
Planning model for industrial supply chain

Phase 2 1. Analyzing the factor that affect

development of route transport planning 1. Comparison of route
Analyzing the models
2. Analyzing the route transport planning transport planning model
model

Phase 3 1. The compared

1. Do comparison of the journal
Comparison of the route journal based on the
based on the model
planning model model

Prior to the development of the methodology of the route transport planning model, the
research activities of this thesis is explained. Generally, the research activities comprise
of three phases which are the conceptual study, analyzing the model and Comparison
of the route planning model. The three phases are adapted from the Design Science
Research Method (DSR) of Peffers et. al (2007) which are linked with comprehensive
activities in accomplishing the objectives.
 CONCLUSION

A summary of the research conducted is presented, focusing on the achievement

of each objective outlined in the first chapter. This research summary highlights on how
analyzing and comparing the model carried out were able to provide the information
about the routing of transportation. This research also discussed the factors that affect
the routing of transportation, like policy, social networks, technology and environment.
Moreover, supply chain & logistics modelling technique was discussed. This showed
that the optimization process for the integrated should be focus based on the
functionality or needs of the party. This chapter concludes the thesis by stating several
limitations of study.

Limitations of Study
Through the process of doing the research there are several limitations that is
faced. The first is limitation of time, because of time limitation we realized that the
discussion of the research is not that comprehensive and detail. Furthermore, the
limitation to quickly adapt with new type of research is become another factor that
contributed to the quality of the research itself. As previously the researchers are never
being exposed or taught about qualitative research, yet willing to take the challenge and
opportunity of this study. Therefore, due to some of the limitations, further study need
to be done to make this research become more comprehensive and meaningfulness.