Supply Chain Case Report

amor_carter09

DelaysenteringacontainerportAlogisticsbottleneckbyBrianLawrence.pdf

Home >Business & Finance homework help >Operations Management homework help >Supply Chain Case Report

ISBN 9780749477059 © Brian Lawrence, 2016 E-ISBN 9780749477066 www.koganpage.com

AUTHOR BIOGRAPHY

BRIAN LAWRENCE is Lecturer in the School of Management at the Assumption University in Bangkok, Thailand.

Delays entering a container port A logistics bottleneck

Brian Lawrence

CASE STUDY

LOGISTICS

Introduction

Service speed is a major criterion for operations in container terminals. This case is an examina- tion of the entry-gate operation for container trucks at a shipping container yard at a port in Australia, to fi nd out how to reduce the unacceptable queuing time. A bottleneck is caused by most trucks arriving at the terminal in the same time period, and having to endure the lengthy inspection and registration process because of inadequate staffi ng and too few truck lanes.

Three alternative scenarios are proposed for the port management company to solve this problem. The fi rst emphasizes adding gates and staff. The second focuses on changing the staff lunch-break times. The third concentrates on redesigning the work fl ow. Signifi cant criteria are: waiting time, resource utilization, costs and process cycle time. These criteria were used to compare the as-is situation and the three scenarios to select the most appropriate.

The company

Lozziestistics plc is the Australian subsidiary of an international container terminal operating company. It is an agent for shipping lines that handles container cargoes and operates container storage, for both outgoing exports for delivery to container ships and incoming imports from ships for delivery to customers. Lozziestistics’ core business is the management of port facilities for entry to the terminal and for temporary storage yards, consisting of:

Co py ri gh t © 2 01 6. K og

an P ag e. A ll r ig ht s re se rv ed . Ma y no t be r ep ro du ce d in a ny f or m wi th ou t pe rm is si on f ro m th e pu bl is he r, e xc ep t fa ir u se s pe rm it te d un de r U. S. o r ap pl ic ab le c op yr ig ht l aw .

EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 4/8/2020 5:23 PM via MORGAN STATE UNIVERSITY AN: 1335074 ; Lawrence, Brian.; Case Study: Delays Entering a Container Port : A Logistics Bottleneck Account: s5538539

Logistics2

●● Gate operation: operating the checking and registration point at the entry gate for empty and full containers on trucks, and at the exit gate for trucks collecting empty and full containers to take away to customers.

●● Yard operation: managing the temporary storage of empty and full containers, and providing powerful cranes for lifting and lowering containers from/to trucks within the terminal yard.

The problem

In 2014, the average volume of cargo handled within Australia was 30,000 containers per month. Container volume has grown in the past couple of years, and Lozziestistics must improve the speed of its port operation, to enhance the quality of customer service and manage the increasing demand volume effectively and efficiently.

The increase in the number of containers carried by trucks entering the port has caused traffic congestion inside and outside the terminal. Most of this congestion is caused by full container trucks queuing for the entry-gate process. Drivers have to waste their time, which adversely affects their work schedule. The long queues often produce heavy traffic in nearby roads.

There are two types of processing a container full of cargo, carried on a truck:

1 Entry-gate exports (EXP): this is the process of collecting containers from customers’ factories, transporting them to the port by truck, and going through the entry-gate formalities to the storage yard, for eventual uploading into a ship.

2 Entry-gate imports (IMP): this is the process of a truck going empty through the entry gate to collect a full container that has arrived at the port by ship, for eventual transportation to a customer.

All trucks wanting to enter the container terminal queue in four lanes 1, 2, 3, 4 ready to be called to stop at one of the two gates for inspection. Lanes 1 and 2 go either side of Gate A. Lanes 3 and 4 go either side of Gate B. Bottlenecks happen in these four lanes leading up to the gate barrier. For EXP, once at an actual gate, the truck and its container are inspected, pay a fee, move into the container yard, have a giant crane lift the container off, then move out of the yard through an exit gate and into the street. For IMP, the process is similar except that the truck goes through the gate empty, to have a crane lower an incoming full container onto the truck, which then, after customs and security checks, moves out of the terminal through an exit gate and into the street.

The two gates together can cope with 480 trucks per day, but higher than that causes delays during the peak period. The number of trucks entering through the gates varies daily, ranging from 390 on four off-peak days to 540 on three peak days (Tuesday to Thursday). IMP trucks average 5,250 a month, and EXP 8,220 a month. This is beyond the efficient capacity of the gate process.

Each truck inspection and registration then takes at least ten minutes before further steps. A great number of export containers (EXP) arrive in the same period, which is shortly before the container ship’s final time for loading. This peak period is Tuesday to Thursday, as the main weekly ship final loading time is Friday evening. The situation is further exacerbated by half the gate staff taking a one-hour meal break, followed by the other half, which means that for two hours the gates are only half staffed.

If this gate process does not improve, some trucks and their full containers will be too late for the ship’s departure. The ship often has to wait, or sail without a complete load of containers, thus losing income and angering truck drivers, owners and cargo owners in Australia and at

Co py ri gh t © 2 01 6. K og

Delays entering a container port 3

destination ports waiting for the containers to arrive. If the ship does wait beyond its official departure time, this affects its scheduled arrivals and departures at subsequent ports, again to the anger of many parties. This traffic congestion is a critical issue for Lozziestistics and for shipping lines, for loading and unloading ports, and for customers.

There are four steps for terminal entry:

1 Inspection (which takes on average six minutes).

2 Registration and document checking (which takes on average four minutes).

3 Planning where to drop off the container within the terminal (which takes on average two minutes).

4 The actual drop-off (which takes on average three minutes).

The bottleneck usually occurs during the first two steps or the first ten minutes of waiting time. It is difficult to move out of a lane, so a breakdown adds to the congestion until mechanics

can manoeuvre and tow the faulty truck through a security emergency entrance at either sides of the gates for repair. The main problem, however, is that the actual process at the terminal requires some time to perform each step, especially the initial inspection process. The inspection is conducted in an assigned area. These lengthy processes, to which must be added the waiting times, cause traffic problems in the lanes up to the gates, so that the whole operation has signi- ficant delays. One major reason for the lengthy process at the port is safety and security checks, especially in the first inspection process.

Within the container yard, lifting a container from a truck is done by a top loader crane, which grabs the top edges of the container, operated by a driver high up in the cab. This takes a very short time, but the process is a smooth one only if there are enough cranes and the cranes are ready. There is a separate rail checking process as container trains enter the terminal through a separate gate so sometimes the top loader crane is needed for an arriving container train. Therefore, sometimes the equipment level is not enough to support full container-gate operations, causing delay.

Efficiency criteria for gate operations

Maximizing the productivity of the handling of containers is a key performance and efficiency indicator. Gate-operation productivity is measured by throughput, the number of container trucks moving through a lane and gate per hour, and the total time a truck spends in a terminal. The performance of staff is measured by the number of trucks dealt with per hour. Gate pro- ductivity itself can be improved by capital investment in buildings and equipment, and staff resources can be improved by the number of staff hired as well by the training offered to them. However, external factors like the arriving container volumes and ship schedules are not usually alterable by the port.

Attempts to improve container entry at ports

Most ports with an entry problem are able to improve operation time and reduce waiting time. Delays at the entrance gate in a US port were solved by extending the gate-operation hours and installing an appointment system for trucks. However, the appointment system caused a problem in the next operation because of the variability of other transactions and the operators’ lack of planning skills.

Co py ri gh t © 2 01 6. K og

Logistics4

In another port, two solutions were considered to reduce congestion. One was to increase the number of gates. The other was a truck arrival appointment system. Another port concentrated on service time but rejected improvement which would incur construction costs of more gates and lanes.

Yet another port tried to reduce truck turnaround time and costs by increasing the number of lifting cranes and using a truck appointment system. An interesting idea was to look at both the land side of the terminal and the ocean side, but this also led to extended gate hours and a gate appointment system.

Lozziestistics’ suggested solutions

To find solutions Lozziestistics used a simulation technique to construct a queuing model. Computer simulation enables the analysis of data regarding data processes and can generate solutions without having to physically experiment with real trucks at the gate, which might take many days during which waiting times are exacerbated. The simulation used the following steps to model the as-is situation and possible alternatives, having collected data and opinions from gate and terminal staff, and truck drivers:

Step 1: Truck arrives at the terminal.

Step 2: Truck moves to the terminal gate for inspection. There are two gates and they can accommodate a maximum of four trucks at one time. Staff write container numbers, seal the number and condition of the container on a special form, and give it to the driver. If the container is damaged, it will be rejected and the driver has to take it a special repair area, and return for checking again once repairs have taken place.

Step 3: The truck driver submits the special form and customs documents to the gate staff and pays the gate charge. The staff check the documents. If the documents are correct, they will update the data in the computer system and give an approval sticker to the driver. If the document is incomplete or has an error, the truck has to move beyond the gate for the driver to revise the documents. Then the driver walks back to gate staff for recheck approval. The number of damaged containers is quite low at 1 per cent. Poor or missing documentation accounts for about 2 per cent of trucks. Together, those 3 per cent interrupt the smooth flow of trucks and gate checks by creating extra work for staff.

Step 4: The truck moves to contact yard staff for instructions on where they should park their trucks for the lifting crane. Yard space is crowded, and empty containers are in stacks, sometimes eight high. There is little space for trucks moving to their assigned position.

Step 5: The truck moves to the position for the container to be lifted from the truck.

Step 6: The truck moves on and exits the terminal; the end of the process.

The company’s gate service is in operation 24 hours every day. It has two 12-hour shifts, day and night. There are 32 staff involved: eight inspectors check the container condition and record it on a special form; four survey staff also survey the container, record it, write the container number and seal number on the special form (full containers are sealed shut so that tampering or pilferage are obvious at specific stages of the journey); eight gate staff enter container details into the computer system, check documents and collect the gate fee; four yard staff plan the exact lifting position beneath a crane; four yardmen stand by to signal and direct the truck driver; and finally another four yardmen control the heavy cranes that lift the containers from the truck and then move on rails to the temporary storage area.

Co py ri gh t © 2 01 6. K og

Delays entering a container port 5

Three alternatives for improvement

Simulation created the as-is situation and these three alternatives:

1 Add an extra gate (with its two lanes) and more staff.

2 Change the meal-break times of gate staff.

3 Redesign the gate entry process, by combining inspection and registration, and increasing the number of survey staff.

Alternative 1: add an extra gate and staff

This needs two staff: one an inspector, the other a gate staff.

Ta b l e 1 Waiting time result by adding a gate and staff

Scenario

Resource Simulation result

Inspector Gate staff Average waiting time (minutes)

Average number of trucks in queue

1 8 8 10 5

2 9 9 8 4

3 10 10 4 2

The fi rst scenario is the as-is present state in the simulation model, with an average waiting time of ten minutes, and an average of fi ve queuing trucks.

The second scenario adds a gate, an inspector and one gate staff. In this case, the average waiting time decreases by two minutes, and the average number of queuing trucks decreases by one.

For the third scenario, two inspectors and two gate staff are added to the team with the extra gate in operation. This reduces the average waiting time to four minutes, which is four minutes less than scenario 2. The average number of queuing trucks reduces to two, which is two less than scenario 2.

Scenarios 2 and 3 are both better than the as-is situation. It seems that the more additional staff used, the lower the waiting time at the bottleneck. But

this method could increase the average waiting time beyond the gate in the yard as more trucks move into the yard and that would not impress truck drivers in the long run.

Alternative 2: changing the staff break schedule

Currently, gate staff take a complete break to eat. Two staff in each position at a gate have the same break time. These periods produce the longest waiting time for trucks, as some gate staff disappear for two hours.

For the day staff, two inspectors and two staff at Gate A break from 11.00 to 12.00. The other team of two and two at Gate B break between 12.00 and 13.00. The night staff take their break 12 hours after the day staff. Break times of other staff are similar, but they are on permanent standby.

Logistics6

A new break schedule would spread these break times, with one inspector and one staff breaking from 11.00 to 12.00, the next pair from 11.30 to 12.30, the next pair from 12.00 to 1300 and the final pair from 1300 to 14.00 (the night team would have their break 12 hours later in the same fashion.) So, there would be four overlapping breaks, each for two people, spread over three hours instead of two hours.

The simulated resulting average waiting time would be seven minutes (compared with as-is ten), and the average number of queuing trucks would be four (compared with as-is five). However, actual truck arrival time is volatile. And a specific break time would often have to be disregarded, as the operations time is also unpredictable in practice.

Alternative 3: redesigning the process at the bottleneck

The aim is to reduce the cycle time. In a new process flow, the inspection, checking of documents and paying would be done concurrently. This would save time as truck drivers do not need to wait for the inspection before checking and paying. Truck drivers would go to the gate immediately after receiving their special forms. With this method the special form would need to be issued at the first step. This new design would need four additional staff to issue the special forms.

With the redesign, average waiting time results of the new process flow would be six minutes (ten in as-is). Average number of queuing trucks in the queue would be three (five in as-is). Average cycle time would be ten minutes (thirteen in as-is). Cycle-time reduction would also increase the truck service capacity.

Cost

There is a final factor: cost. The first alternative which adds four staff has the highest cost, US$5,100 for adding two staff, or US$7,000 for adding four staff. These costs include extra gate facilities and office supplies. There is no increased cost for the second alternative. In the third alternative, the extra cost is US$1,200 for the extra four survey staff.

Questions

1 Which of the alternatives would you choose, and why?

2 Can you think of other alternatives?

3 It seems like a simple problem. Why do you think it was not immediately tackled and solved?