Delft University of Technology
Faculty Mechanical, Maritime and Materials Engineering Transport Technology / Logistic Engineering
Th.R. Festen Tactic business optimization at Nedlloyd Lines.
Masters thesis, Report 93.3.LT.4197, Transport Technology, Logistic Engineering.
The objective of this report is to provide a concept for the tactic optimization of the core business process at Nedlloyd Lines, in order to achieve highest corporate profit. This concept focusses at the development of a comprehensive decision support system in combination with the proper arrangement of sound business incentives.
Chapter 1 sketches the environment of the container liner business, and identifies the two primal resources necessary to provide the product range of container shipments. From a top down perspective, the trade-offs between container equipment, slot capacity and full flows must be made to obtain the best overall return on company resources. An important aspect ofthese tradeoffs concerns the repositioning of empty containers.
The main barrier restraining a proper trade-off between flows and slot capacity was formed by the former organizational set-up. This set-up, together with the new organizational structure is shortly addressed in chapter 2.
The fundamental trade-offs of the core business process emerge in many decisions of all different nature. These decisions can be elaborated into strategic, tactic and operational decisions and are made at different levels in the organization, which is described in chapter 3. Furthermore, the current optimization methodology is outlined, together with the primal systems for data gathering.
The optimization models share a common conceptual structure, which is presented in chapter 4. The models differ mostly in the level of detail with which they are specified and the extent to which the parameters of the system under study are taken as fixed and given (operational) or left free to be
determined by the model itself (strategic).
In chapter 5 the basic business functions and their interdependencies are described by means of dedicated functions models. Since the functional interdependencies are often purely a matter of information flow, the optimal adjustments of the various functions can largely be accommodated by the perceived business optimization and support system.
The proposed method for action planning and performance control is presented in chapter 6. This system provides the regional and local organization with incentives to make those decisions that first of all are best for themselves and that are also best for Nedlloyd overall. With respect to the associated accountability, a significant facet is the establishment of clear regional capacity allotments.
Chapter 7 deals with capacity management, and the effectuation of flexible capacity assignment, in which the application of yield management plays a central role. With respect to achieving an optimal match between the supply and demand of slots, a revision of the charter strategy is proposed. In chapter 8 the management of the second major resource, container equipment, is briefly addressed. The perceived decision support system provides on tactic level for the optimal empty repositioning planning, optimal on/off-hiring etc. Moreover, in a strategic application the optimal fleet size
composition regarding the fluctuating demand for container equipment can be determined, as weIl as the desirable contract conditions for rental equipment.
A significant aspect of the actual realization of the decision support system concerns the data requirements, which are described in chapter 9 with an identity-relationship data modeling technique. In addition, the interface between the databases and the optimization module is given, as well as a few words on the current state of the implementation and the desired hardware and software configuration.
Since small percentage savings leverage into large dollar savings, the potential benefits are conceived considerably large. An estimation of the potential financial impact of the proposed concept for business optimization is outlined in chapter 10.
Reports on Logistic Engineering (in Dutch)
