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SMART logistics chain

Conference Paper · March 2012

DOI: 10.1007/978-3-642-28487-8_45

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 SMART Logistics Chain

Arkadiusz Kawa

Poznań University of Economics,

al. Niepodleglości 10, 61-875 Poznan, Poland
arkadiusz.kawa@ue.poznan.pl

Abstract. Modern logistics companies today rely on advanced ICT solutions for
information processing and sharing. Access to data and information about the
demand for logistics services and supply opportunities are becoming a key
competitive factor. Unfortunately, only the largest companies can afford
advanced systems. Small and medium logistics companies have limited or no
IT-competence. Tools are therefore needed to facilitate cooperation between
smaller logistics companies, which in turn will reduce transaction costs. The
paper proposes an idea of the SMART model, which is based on agent
technology and cloud computing. It will allow easier collection and flow of
information as well as better and cheaper access to logistics management
systems.

Keywords: logistics industry, logistics services, logistics service provider,

cloud computing.

1 Logistics Industry

Reliable and fast transportation, as well as efficient logistics services play a more and
more important role in the activities of many companies. Logistics is not only a
source of competitive advantage, but can also decide whether the firm will exist in the
market at all. Therefore, a company that is focused on its core business and does not
have adequate resources and experience in the logistics field is beginning to use the
services of an external logistics company.
Logistics service providers are companies belonging to the so-called transport,
forwarding and logistics industry. This sector covers the activities of companies of
different size, multiplicity of services and global range. It includes very large but also
small firms, offering a range of services - from simple transport services, through
service forwarding, warehousing, palletizing, packing, packaging, to full service of
supply chains. Their range of activities may comprise a region (e.g. province),
country, continent or the whole world [2].
The term “transport, forwarding and logistics industry” itself points to a
combination of more or less distinct activities in the past. Operators in the industry,
developing new skills, fall within the competence of their more or less close
competitors (carriers, freight forwarders, logistics providers). On the other hand, by
working with clients, they extend their offers with additional services, sometimes
taking their competitors’ sales and marketing functions.

J.-S. Pan, S.-M. Chen, N.T. Nguyen (Eds.): ACIIDS 2012, Part I, LNAI 7196, pp. 432–438, 2012.
© Springer-Verlag Berlin Heidelberg 2012
 SMART Logistics Chain 433

Depending on the model of business, enterprises operating on the logistics market

focus on transport management (the majority of revenue comes from transport
services and freight forwarding), warehouse management (inventory management
services and other related services), while offering a wide range of logistics services
on the basis of a contract at the same time [1, 2, 3, 5, 7].
The basis of logistics is mainly a well-developed operating system which consists
of working people and infrastructure. In this system, not only parcels, documents and
heavy freight are sent, but also information about them. To ensure a fast and correct
flow of information between individual entities of the operating system, a logistics
service provider has to use appropriate information technologies. Information and
telecommunication technologies are now so closely connected with the operating
system that one cannot exist without the other. Companies that are not aware of the
essence of modern technology have no opportunities for further development. It is
even believed now that logistics companies cannot build a competitive advantage
without functioning IT systems.
Logistics companies apply information technology mainly in order to increase
efficiency and automate their work. Thanks to them, numeric data presentation and
fast verification and control of costs, revenues, sales and other such data clear to
everyone is possible. Also, information transmission to individual business units,
employees or contractors, and access to archived data is uncomplicated. Another
important objective of the application of information technology by logistics service
providers is to fulfill the expectations of potential and existing customers. These are
the customers who care more and more about the time and safety of delivery and full
information about the logistics process than about the price of the services [1, 5].

2 Computing Problems of the Logistics Industry

Unfortunately, customers using the services of various logistics service providers always
have to adapt to their tools. Not only that, in the cases of one-off cooperation, they have
to search for the carrier browsing their websites, trade catalogues, etc. every single time.
The logistics services industry lacks solutions that would integrate the services of
different operators in one place. For example, if a customer orders goods from Taiwan
to the Czech Republic, s/he has to arrange several means of transport (e.g. shipping,
rail, road) and use the services of several transportation companies. A similar problem
occurs in regional transport, for example, in a province or country. Although in some
countries there are logistics centers (e.g. in Germany, Italy, Spain), small and medium
enterprises use them to a small degree. Individual logistics centers compete with each
other, ensuring comparable conditions of infrastructure. The only thing that
distinguishes them is value-added services. Information about the availability of
services of other businesses located near the center is an example. It includes shared
information on schedules for arrivals and departures of regular and charter services,
cargo tracking and tracing across organizational borders, real-time business process
monitoring and exceptional situations.
Unfortunately, SME logistics companies have limited or no IT-competence and
investments. They think that they should focus on business competence rather than
IT [6].
434 A. Kawa

The great problem of the logistics industry is a lack of formal semantics which
prevents automated data integration. There are not any universal solutions which let
smaller companies work together in the changing conditions and access resources,
software and information provided to computers and other devices on demand.

3 SMART Model
In relation to the above questions, one should look for ways to help tackle the
problem. A proposal for such a solution is the SMART model - Specialized, Market-
driven, Applicable, Reactive and Technologically-oriented Logistics Chain.
The idea of this model starts from the assumption that a single company’s intelligence
does not necessarily imply the system’s intelligence. In fact, through cooperation
companies should rationalize their logistics processes, obtain cost savings and reduce
empty shipments. At the moment, companies are not activating collaboration as they are
traditionally managed like “family enterprises”. This limits their ability to get potential
opportunities offered by collaboration with other actors operating in the market.
That is why there is a need to create an electronic platform which will enable
SMEs to cooperate, especially to gain access to data about logistics services and
supply capacities. One of the solutions to these problems is cloud computing with
web semantic services based on the Internet network (see fig. 1). It avoids capital
expenditure on hardware, software, and services by paying a third-party provider only
for what SMEs need to use.
Since obtaining and processing appropriate data within cloud computing is a
complex and laborious process for individual actors, this research proposal suggests
making use of a very promising agent technology. Software agent is a piece of
software that acts for a user or another program. Agents are autonomous, thus the user
can activate and disconnect them from the network, provided the agent mission is
well-defined. They are capable of modifying the way in which they achieve their
objectives and are, therefore, called smart agents. They are able to gather information
and transform it into useful knowledge. Such agents know the data processing
methods and improve them in the course of the learning process, i.e. in the course of
the system operation. Smart agents are robust (they accomplish the group’s objective
even if some members of the group are unsuccessful), self-organized (activities are
neither centrally controlled nor locally supervised), and adaptive (they respond to the
dynamically changing environment). The agent community may evolve; weaker
agents are eliminated and replaced by those better adapted to the market conditions.
The model proposed is based on a semantic web concept including such elements
as XML, RDF, and ontologies which allow efficient automatic data collection about
logistics service providers and their resources. Special logistic ontology has been
created for the needs of the project (definitions of the core elements of logistics
ontologies). The standard description of the content in cloud computing has been
introduced in order to let software agents process data and information appropriate for
their purpose and meaning. The main feature of this model is its interoperability
which will enable different information systems to cooperate, safely exchange data
with a predefined structure, and mutually use this data further in order to create
information. What is important is that the access to such cloud computing does not
require application of any specialized IT systems.
 SMART Logistics Chain 435

Fig. 1. Idea behind the SMART Model

Companies are provided with an electronic platform with unlimited availability and
safety of its use. Relevant information is collected from various entities (e.g.
providers of logistics services), filtered and aggregated on the server. Then they are
made available in a suitable form to customers.
Thanks to the use of cloud computing, better and cheaper access to the systems of
global logistics networks (such as DHL, UPS, FedEx) and other suppliers in this market
(e.g. insurance companies, petrol stations, suppliers of car parts) will be possible.
The members of the platform will be able to optimize their cost of transport, for
instance by using common transport, e.g. rail, instead of private road transport.

4 Exemplification of the SMART Model - Communication

between Agents
In the SMART model, communication between the agents of individual companies
within the network is very important. Agents exchange messages based on ACL
(Agent Communications Language) using FIPA protocol, especially from FIPA
Communicative Act Library Specification, which provides cooperation between
agents systems [4]. These protocols define the syntax, semantics, and pragmatics of
created messages. This solution helps to send messages between independently
designed and developed agent systems [8]. Some examples of protocols of interaction
between agents are presented below.
Before starting the purchase of a product, an interaction protocol (CFP - Call for
Proposal) is used, in which one agent (in this case, the "Buyer" representing the buyer)
436 A. Kawa

submits a bid to another agent ("eMarket" for example, representing the electronic stock
exchange). The buyer asks the electronic exchange environment to send proposals for
sale of up to 500 tonnes of plastic for the price of less than 75 units per tonne. The
presented proposal has its ID "bid09", which facilitates communication between agents
by referring to it in other messages. The protocol is also a reference to the ontology
which contains the specification of terms and their meanings in the field of plastics
suppliers.

(cfp
:sender (agent-identifier :name Buyer)
:receiver (set (agent-identifier :name eMarket))
:content
"((action (agent-identifier :name eMarket)
(sell plastic max 500))
(any ?x (and (= (price plastic) ?x) (< ?x 75))))"
:ontology plastic-suppliers
:reply-with bid09
:language fipa-sl)

The recipient may accept the proposed offer or reject it, e.g. because of too low
prices. If it is the first case, further communication is aimed at implementation of the
proposed action; if it is the second case, the agent continues the search and sends a
CFP message to other agents of the eMarket type. In the next step, the Buyer Agent,
who bought the product on a commodity market, would like to have a third logistics
party (3PL) to carry out the dispatch. For this purpose, it forwards the data on the
numbers of the containers and shipping routes from London to Paris to the agent
representing the server cloud computing (CC).

(request
:sender (agent-identifier :name Buyer)
:receiver (set (agent-identifier :name CC))
:content
"((action (agent-identifier :name 3PL)
(deliver containers000093-001956 from LON to PAR)))"
:protocol fipa-request
:language fipa-sl
:reply-with order00678)

In the next step, in cloud computing, a suitable 3PL that can fulfill a given task is
determined. The 3PL agent may agree on the task that the CC agent asks for or refuse.
(agree
:sender (agent-identifier :name 3PL)
:receiver (set (agent-identifier :name CC))
:content
"((action (agent-identifier :name 3PL)
(deliver containers000093-001956 (loc 49°31.607 'N 22°12.096'E)))
(priority order00678 high))"
:in-reply-to order00678
:protocol fipa-request
:language fipa-sl)
 SMART Logistics Chain 437

Another message that can be transferred between agents, is a request to submit

additional information. The CC agent asks to send information about the services
offered by 3PL.

query-ref
:sender (agent-identifier :name CC)
:receiver (set (agent-identifier :name 3PL))
:content
"((all ?x (available-service j ?x)))"
:in-reply-to order00678
:protocol fipa-query
:language fipa-sl)

In response to the above request, the 3PL agent informs that it offers transport,
storage and packing services.

(inform
:sender (agent-identifier :name 3PL)
:receiver (set (agent-identifier :name CC))
:content
"((= (all ?x (available-service 3PL ?x))
(set (forwarding service)
(warehousing service)
(co-packing service))))"
:ontology logistic-services
:in-reply-to order00678
:protocol fipa- query-ref
:language fipa-sl)

Such messages sent between the agents are numerous. However, due to their
similar structure, this paper has been limited to present the most important ones.

5 Conclusion and Future Work

The proposed solution gives, especially small and medium enterprises, a better
possibility to automatically capture information and exchange it within a particular
enterprises’ network. Also, it helps to build up business relations and, finally, to better
match demand and supply capacity data.
The proposed model will be tested in a simulation environment. It allows to
evaluate the operating performance prior to the implementation of the system. The
simulations carried out will enable companies to perform powerful what-if analyses
leading them to better planning decisions and allow to compare the various
operational alternatives. Moreover, it will help to understand the overall supply chain
processes and characteristics by graphics/animation.

Acknowledgements. The paper was written with financial support from the
Foundation for Polish Science [Fundacja na rzecz Nauki Polskiej].
 438 A. Kawa

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