C.-W. Chung et al. (Eds.): HSI 2003, LNCS 2713, pp. 265-271, 2003. Springer-Verlag Berlin Heidelberg 2003

A Virtual Logistics Network and an E-hubas a Competitive Approach for Small

to Medium Size Companies

Elizabeth Chang1, Tharam Dillon2, W. Gardner2, A. Talevski2,R. Rajugan2, and T. Kapnoullas2

1 Curtin University of Technology, Australia 6845change@cbs.curtin.edu.au

2 La Trobe University, Bundoora, Australia, 3086{tharam,wgardner,alex,rajugan,terry}@cs.latrobe.edu.au

Abstract. As small to medium sized logistics companies strive to bemore competitive with the larger ones, computer processes willprogressively be carried out differently than in the traditional manner.Progressively more and more computation will occur on the Internetrather than just make use of it as a gateway. Programs will bedistributed throughout a network and the World Wide Web and worktogether in a highly developed manner. A virtual logistics networkprovides an organisational framework for collaboration in this manneris proposed. In this paper we propose a virtual logistics network thatprovides an organizational framework for collaboration between smallto middle sized companies. This employs an e-hub structure utilizingXML based mobile agents to provide seamless integration betweenisolated information systems for small to medium sized logisticproviders.

1 Introduction

Logistics can basically be separated into:

- Transportation Logistics, which is the movement of goods to the right place inthe right quantities, at the right time

- Warehousing and Storage Logistics which is the storage of goods at the rightplace in order to meet uncertain conditions and demand

These activities even within a traditional setting required strong informationsystems and computer support. Examples of such I.T. systems are: order entrysystems and routing systems for transportation, warehouse management systems forwarehousing and storage logistics [7, 8]. These systems generally need to keep trackof the movement of goods, the exact storage and location of goods, as well as beingable to accept orders, keep track of payments and issue invoices and receipts. Theyoften have to be integrated with an accounts receivable and an accounts payable

266 Elizabeth Chang et al.

system. It is sometimes further complicated by the fact that a given warehousing ortransportation logistics operator may also sub-contract the work out to other logisticsproviders. This also needs to be tracked carefully by the main logistics provider.

This I.T. support has expanded with the advent of e-commerce into the area of [8]:

(i) internet based purchasing of services by the customers(ii) internet based tracking and monitoring of these services by the customers

This has led to the development of e-commerce based systems by companies suchas FedEx and UPS which allow their customers to track and monitor the fulfillment oftheir service on the Internet, provided the goods are being handled by the onecorporation, with an integrated IT system.

2 Virtual Logistics Networks or Consortia

However, logistics providers range from:

a) Small enterprises who manage just one single aspect of the logistics chainb) Medium sized companies that may have a mixture of these facilitiesc) Mega-companies such as Fed-Ex and UPS.

Currently, the small and medium sized operators suffer the followingdisadvantages when compared to the large mega-providers, namely:

1) They do not have logistics facilities available throughout the regions intowhich they need to store and deliver goods. A reasonable supplier may onlyhave logistics facilities, either transportation or warehouses in a given countryor a given region. So if they want to export from Australia to the UnitedStates, they have to utilize another logistics provider in the other country

2) Unlike the mega companies that allow tracking of goods across boundaries,across countries and across regions, the small to medium enterprises normallyprovide tracking in the area covered by their region and their logisticsresources, as these resources may only be integrated into their owninformation systems. However, when they communicate or utilize logisticsproviders that are outside their region, they will immediately be unable toprovide tracking facilities in a seamless way, with the customer interactingwith their own logistics information system. This is seen to be a majordisadvantage for small and medium sized logistics providers. Whilst it is notpossible for a small to medium sized logistics operator to have logisticsfacilities everywhere, some effort can be made towards moving to provide avirtual network of logistics providers that communicate seamlessly through ane-hub which allows for tracking across boundaries in a transparent fashion.

When we look at trying to provide seamless integration, it is useful to note that inrecent times in B2B (Business to Business) and P2P (Partner to Partner) e-commerce,there has been an increasing tendency to set up consortia that represent several playersin a given field [12].

Consortia consist of companies or organizations in a given field, say a group of carmanufacturers that get together (partners) and produce a single site. An example of

A Virtual Logistics Network and an E-Hub as a Competitive Approach 267

this is car manufacturers GM, Ford and Daimler Chrysler that have set up theconvinst.com site. These consortia fall basically into two classes [11]:

a) Companies (or Partners) that are potential competitors, getting together toform a single site to increase traffic through the site compared to othercompetitor sites.

b) Companies (or Partners) that have their own regions of operation but couldbenefit by collaborating and through this provide a service to their customersthat extends beyond their region of operation. Logistic providers such asAmeriCold (USA), iPowerB2B (Hong Kong and China), Seapower SouthCoast Cold Storage Warehouse (Australia), could be an example of such aconsortium.

This second kind of collaboration is likely to develop in the near future leading tothe concept of a virtual logistics provider. This virtual logistics provider assembles anumber of companies (or Partners) that are physical logistic providers into strategicalliances that allow sharing of their facilities to achieve the pooling of warehousingand transportation facilities over a widely geographical distributed area of operation.Thus one could have a virtual purchase, virtual transportation provider and anintegrated virtual logistics hub.

These new class of virtual logistic providers will require a new level of IT supportthat can have one or more hubs that provide points of entry into the full set of physicalfacilities. This class of consortia has special needs for inter-organizational informationexchange and communication.

These pose problems in:

(a) developing a suitable format for exchanging information between the alliancepartners.

(b) creating appropriate levels of trustworthiness between customers of oneorganization and another.

(c) providing transparency to the customer in his/her access of one system even ifinformation from other systems needs to be made available.

This has to be done against a backdrop of:

• Varied business processes at the different alliance partners• Changing business needs by any partner• Growing customer base for any company• Growing competition from other logistic companies (in both technology and

business)• Different business logic in the different organizations• Different application logic in different organizations.

3 Architecture of Virtual Logistics Network and E-hub

The overall architecture of the systems consists of one or more eHubs that areconnected to different companies in their own geographical area of operation. Theschematic for the architecture is shown in Fig. 1 below (one eHub is shown).

268 Elizabeth Chang et al.

Fig. 1. E-hub architecture (only one is shown)

Fig. 2. Layered Architecture

It is intended that the architecture would be layered as shown in Fig. 2 so that eachcorporation would at any time be able to replace its layer eWMS or eLMS withoutaffecting the rest of the system.

The following figure shows the architecture with the interactions of the differentcommunities.

A Virtual Logistics Network and an E-Hub as a Competitive Approach 269

eBusinessLayer

eWMSeLMS

Data Store Layer

Customer

Staff

Visitor

Users Open Community Closed Community

WMS

Business Connector

• Warehouse Network

• e-WMS

• e-LMS

• Virtual Market

• Auction

•On-Line Orders

•On-Line Enquiries

•On-Line Tracking

Internet InternetInternet Extranet / Intranet

Security SecuritySecuritySecurity

eCommerce Layer

eHub

Hong Kong Server

China Sever

OZ Server

US Server

eLMS

eWMSeHUBeHUB

Locked Community

E-SolutionsE-Solutions

WMSWMS

WMSWMS

WMSWMS

WMSWMS

WMS

Fig. 3. The architecture with different communities

Note that each server (data center) is hosting up to 30 partners and is located in themajor region in the consortia.

As each of the companies have essentially got their own LMS and WMS systemsin place, company to company communication, order decomposition and placementof segments of the order become significant issues.

4 Characteristics of Virtual Logistics Network Systems

Characteristics of such a system in a virtual logistics system include [1, 13, 11, 12]:

• Reduction the network load• Overcoming network latency• Executing asynchronously and autonomously• Adapting dynamically• Providing natural heterogeneity• Robustness and fault-tolerance

270 Elizabeth Chang et al.

Fig. 4. E-hub with P2PiX (Partner to Partner Information Exchange Agent)

In figure 4, the agent-based eHub can be operated in three different ways:

1. The local customer (client) submits a request to the eHub center directly (via amobile agent), a stationary agent within eHub will search for the appropriatecompany (or companies) that can fulfill this requirement and then a mobileagent can visit these companies and perform the logistic operations.

2. Overseas client (via mobile agent) can "contact" their overseas eHub tradingpartner, if the requirement can be fulfilled "locally", the whole logisticoperations can be done independently (in a distributed manner) without thenotification of the eHub center.

3. Otherwise, if the overseas client requirement cannot be fulfilled "locally" inthe overseas site, a mobile agent will be created that will visit the eHub centerwhich will seek for the appropriate service provider(s) for "the agent" to fulfillthe logistic operation.

The approach is based on the implementation of P2PiX (Partner to PartnerInformation Exchange agent), an XML based mobile agent, within the framework of avirtual collaborative logistics system. Currently, a prototype system to test these ideasis being implemented and can be viewed on http://www.ipower-logistics.com.

A Virtual Logistics Network and an E-Hub as a Competitive Approach 271

5 Conclusions

As small to medium sized logistics companies strive to be more competitive with thelarger ones, computer processes will progressively be carried out differently than inthe traditional manner. Progressively more and more computation will occur on theInternet rather than just make use of it as a gateway. Programs will be distributedthroughout a network and the World Wide Web and work together in a highlydeveloped manner. A virtual logistics network provides an organisational frameworkfor collaboration in this manner is proposed.

Our strategy uses an e-hub structure utilizing XML based mobile agents to provideseamless integration between isolated information systems for small to medium sizedlogistic providers. The virtual logistics network has been successfully designed and aworking prototype developed. This new framework allows small to medium sizedenterprises to compete against global mega logistics providers.

References

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