Advanced

Improving the Flow of Returnable Transport Items at Dynapac - Through the introduction of traceability and a fleet sizing formula

Ohlsson, Pernilla LU and Rylander, Malin LU (2012) MTT820 20121
Engineering Logistics
Abstract
Background: Companies can lower their environmental impact and reduce their costs by considering reverse logistics in their operations. In the area of physical distribution, reverse logistics is concerned with the reusage of load carriers used for the transportation of goods. Dynapac Compaction Equipment AB, is a company which uses returnable load carriers (racks), for the transport of large and heavy components purchased from their suppliers in order to obtain better stackability as well as minimizing the damage of goods during transportation. Occasionally Dynapac experiences problems with delayed shipments of components from their suppliers, which are due to the fact that suppliers do not have access to a sufficient amount of racks. This... (More)
Background: Companies can lower their environmental impact and reduce their costs by considering reverse logistics in their operations. In the area of physical distribution, reverse logistics is concerned with the reusage of load carriers used for the transportation of goods. Dynapac Compaction Equipment AB, is a company which uses returnable load carriers (racks), for the transport of large and heavy components purchased from their suppliers in order to obtain better stackability as well as minimizing the damage of goods during transportation. Occasionally Dynapac experiences problems with delayed shipments of components from their suppliers, which are due to the fact that suppliers do not have access to a sufficient amount of racks. This can in turn result in production stoppages at Dynapac, which is very costly and can delay deliveries to the end customer.

Problem Discussion and Research Questions: Currently, Dynapac has no means of identifying where the racks are located in the closed return-loop between them and their suppliers. This means that they are unable to certify that the right number of racks are available at the suppliers’ sites exactly when they are needed. In order to provide Dynapac with better control of their flow of racks and thereby minimize the risk for production stoppages the following research questions were developed:
* What does the current material and information flow of racks at Dynapac look like?
* How can the flow of racks at Dynapac be improved in terms of traceability and control?
* Which parameters determine the correct number of each type of rack that is required in the system?
* How many racks of each type should optimally be in the system?

Purpose: The purposes of this study are two-folded. The first purpose is to improve the control and traceability of the flow of racks between Dynapac and its suppliers, in order to certify that racks are available where they are needed, when they are needed. The second purpose is to find a way to determine the number of racks of each type required in the system, that is, to determine the optimal fleet size for each type of rack.

Method: As the studied system is complex and intertwined, where the flow of racks is dependent on external as well as internal factors, a holistic view was necessary in order to find a suitable solution for Dynapac. Therefore a systems approach was taken. As a first step, a rich theoretical framework was compiled in order to gain a thorough understanding of the mechanisms of return systems as well as how to determine fleet size. Thereafter, exploratory semi-structured interviews were held with employees to gain their views on the problem and a selection of three racks of different complexity to study in more detail was also made. Quantitative data was also collected, where Dynapac’s ERP system served as a main source. A mapping of the flow and a benchmarking study of three other companies were then performed. Next, the data gained from this, together with the theoretical framework, was used as a basis for analysis of the flow, which led to the development of improvement suggestions. The mapping of the flow was also used, together with the operational data that had been gathered for the three selected racks, to determine which parameters that impact the performance of the flow of racks for a given fleet size. These identified parameters, together with the theoretical inventory control framework, was then used to develop a formula for the calculation of the minimum fleet size of racks. Next step was to test this formula on the three selected racks to evaluate its applicability and a recommendation regarding fleet size could then be made to Dynapac.

Conclusions: Today, Dynapac has one person who is responsible for the operational work with racks. There is a lack of clear rack handling routines to support this work. One of the main problems is that Dynapac does not control the flow of racks themselves, but instead they are shipping empty racks according to supplier orders. The flow will be improved if a tracking system(balance-based booking system) is implemented in Dynapac’s ERP system, together with barcodes on racks and scanners at different points in the flow. This will enable Dynapac to know exactly where their racks currently are in the flow. Dynapac can also eliminate the dependency on supplier orders and take control of the flow by introducing shipment reorder points for each supplier that is decided by Dynapac. Furthermore, internal and external communications need to be improved by the introduction of a flow owner, who takes on the responsibility for the overall performance of the flow and certifies that new routines are followed. Lastly, the external storage area should be reorganized to obtain a better layout. Demand rate, shipping quantity, safety and transportation times are some of the parameters affecting the fleet size of racks that is needed in order for the system to work optimally and without stock-outs. These parameters were taken into account when developing a formula for minimum fleet size. Dynapac’s demand rate of racks and the transportation time between Dynapac and their suppliers are the parameters which have the largest impact on fleet size.
Keywords: (Less)
Abstract (Swedish)
Bakgrund: Det är möjligt för företag att minska sin miljöpåverkan och reducera sina kostnader genom att ta hänsyn till returlogistik i alla delar av sin verksamhet. När det handlar om den fysiska distributionen i försörjningskedjan, så handlar returlogistik främst om att återanvända lastbärare som används för transport av gods. Dynapac Compaction Equipment AB är ett företag som använder sig av returlastbärare för transport av stora och tunga komponenter köpta av sina leverantörer för att på så sätt kunna uppnå bättre stapelbarhet samt undvika att godset blir skadat under transport. Dynapac upplever emellanåt problem med försenade leveranser från sina leverantörer som beror på att leverantörer inte har tillräckligt många lastbärare hos sig.... (More)
Bakgrund: Det är möjligt för företag att minska sin miljöpåverkan och reducera sina kostnader genom att ta hänsyn till returlogistik i alla delar av sin verksamhet. När det handlar om den fysiska distributionen i försörjningskedjan, så handlar returlogistik främst om att återanvända lastbärare som används för transport av gods. Dynapac Compaction Equipment AB är ett företag som använder sig av returlastbärare för transport av stora och tunga komponenter köpta av sina leverantörer för att på så sätt kunna uppnå bättre stapelbarhet samt undvika att godset blir skadat under transport. Dynapac upplever emellanåt problem med försenade leveranser från sina leverantörer som beror på att leverantörer inte har tillräckligt många lastbärare hos sig. Detta kan då resultera i att Dynapac får produktionsstopp, vilket är väldigt kostsamt och det kan också orsaka förseningar i leverans till slutkund.

Problem Diskussion och Forskingsfrågor: I nuläget har Dynapac ingen metod för att identifiera var i returflödet mellan Dynapac och deras leverantörer lastbärarna befinner sig, vilket betyder att de är oförmögna att säkerställa att rätt antal lastbärare finns att tillgå hos leverantörena när de behövs. För att Dynapac ska kunna uppnå bättre kontroll över sitt returflöde
av lastbärare och därmed minska risken för produktionstopp så har följande forskningsfrågor tagits fram:
* Hur ser material- och informationsflödet av lastbärare ut på Dynapac i nuläget?
* Hur kan returflödet av lastbärare på Dynapac förbättras för att kunna uppnå bättre spårbarhet och kontroll?
* Vilka parametrar bestämmer antalet lastbärare av varje typ som behövs i systemet?
* Hur många lastbärare av varje typ behöver finnas i systemet för att detta ska fungera optimalt?

Syfte: Denna uppsats har två syften. Det första syftet är att förbättra kontrollen och spårbarheten av returflödet av lastbärare mellan Dynapac och dess leverantörer, för att säkerställa att lastbärare finns tillgängliga där de behövs, när de behövs. Det andra syftet är att hitta ett sätt att bestämma antalet lastbärare av varje typ som behövs för att minimera risken att brist uppstår.

Metod: Eftersom att flödet av lastbärare är komplext, innefattar flera olika aktörer och därmed påverkas av såväl externa som interna faktorer, är det nödvändigt att ta ett helhetsperspektiv för att finna en lösning till Dynapac. Därför använde sig författarna av en systemansats. Det första steget var att sammanställa ett rikt teoretisk ramverk för att få en grundlig förståelse för ett returflödes mekanismer och hur lastbärarkvantiter kan beräknas. Därefter så hölls semistrukturerade intervjuer med de anställda på Dynapac för att få deras syn på lastbärarproblematiken och sedan valdes tre lastbärare med olika egenskaper och av olika komplexitet ut för att studeras mer i detalj. Även kvantitativ data samlades in, där Dynapacs affärssystem var den huvudsakliga källan. En kartläggning av flödet och en benchmarking av tre företag utfördes sedan. Denna data samt det teoretiska ramverket, användes sedan för att genomföra en analys av flödet, vilket i sin tur ledde till utveckling av förbättringsförslag. Kartläggningen av flödet användes sedan, tillsammans med den insamlade datan för de tre utvalda
lastbärarna, för att bestämma vilka parametrar som påverkar returflödet av lastbärare. Dessa parametrar, tillsammans med teorin som behandlar lagerstyrning, användes sedan för att kunna utveckla en formel för beräkning av det minimala antal lastbärare som behövs i systemet. Formeln testades sedan på de tre utvalda lastbärarna för att utvärdera formelns användbarhet och en
rekommendation kunde slutligen ges till Dynapac.

Slutsatser: Dynapac har en person som är ansvarig och kunnig i det operativa arbetet med lastbärare och det finns inte tillräckligt tydliga rutiner för hur lastbärarna ska bli hanterade. Ett av de stora problemen är att Dynapac inte själv kontrollerar flödet av lastbärare utan de skeppar lastbärare när leverantörerna beställer. Flödet tros kunna förbättras om ett saldobaserat bokningssystem implementeras i Dynapacs affärssystem, samt genom att märka lastbärarna med streckkoder och implementera streckkodsläsare i olika delar av flödet. Detta kommer att göra det möjligt för Dynapac att veta exakt var i flödet deras lastbärare befinner sig. Dynapac kan också eliminera deras leverantörsberoende genom att introducera beställningspunkter för varje leverantör som bestäms av Dynapac själva. Ytterligare en slutsats gjord av studien är att både den interna och den externa kommunikationen behöver förbättras och att en flödesägare, som ansvarar för flödets totala prestanda samt ser till att nya rutiner följs, måste tillsättas. Även lagringsplatserna utomhus måste omorganiseras för att uppnå mer ordning och reda. Frekvens på efterfrågan, skeppningskvantitet, säkerhetstid och transporttid är några av de parametrar som påverkar antalet lastbärare som behövs i returflödet mellan Dynapac och dess leverantörer. Dessa parametrar inkluderades vid utvecklingen av formeln för optimala kvantiter av lastbärare. Dynapacs efterfrågefrekvens och transporttiden mellan Dynapac och dess
leverantörer är de parametrar som visade sig ha största påverkan på hur många lastbärare som krävs totalt i systemet. (Less)
Please use this url to cite or link to this publication:
author
Ohlsson, Pernilla LU and Rylander, Malin LU
supervisor
organization
course
MTT820 20121
year
type
M1 - University Diploma
subject
keywords
Returnable transport items, closed return-loop, returnable packaging material, fleet sizing, racks
other publication id
5739
language
English
id
3469730
date added to LUP
2013-02-18 09:44:12
date last changed
2015-06-29 12:27:19
@misc{3469730,
  abstract     = {Background: Companies can lower their environmental impact and reduce their costs by considering reverse logistics in their operations. In the area of physical distribution, reverse logistics is concerned with the reusage of load carriers used for the transportation of goods. Dynapac Compaction Equipment AB, is a company which uses returnable load carriers (racks), for the transport of large and heavy components purchased from their suppliers in order to obtain better stackability as well as minimizing the damage of goods during transportation. Occasionally Dynapac experiences problems with delayed shipments of components from their suppliers, which are due to the fact that suppliers do not have access to a sufficient amount of racks. This can in turn result in production stoppages at Dynapac, which is very costly and can delay deliveries to the end customer.

Problem Discussion and Research Questions: Currently, Dynapac has no means of identifying where the racks are located in the closed return-loop between them and their suppliers. This means that they are unable to certify that the right number of racks are available at the suppliers’ sites exactly when they are needed. In order to provide Dynapac with better control of their flow of racks and thereby minimize the risk for production stoppages the following research questions were developed:
* What does the current material and information flow of racks at Dynapac look like?
* How can the flow of racks at Dynapac be improved in terms of traceability and control?
* Which parameters determine the correct number of each type of rack that is required in the system?
* How many racks of each type should optimally be in the system?

Purpose: The purposes of this study are two-folded. The first purpose is to improve the control and traceability of the flow of racks between Dynapac and its suppliers, in order to certify that racks are available where they are needed, when they are needed. The second purpose is to find a way to determine the number of racks of each type required in the system, that is, to determine the optimal fleet size for each type of rack.

Method: As the studied system is complex and intertwined, where the flow of racks is dependent on external as well as internal factors, a holistic view was necessary in order to find a suitable solution for Dynapac. Therefore a systems approach was taken. As a first step, a rich theoretical framework was compiled in order to gain a thorough understanding of the mechanisms of return systems as well as how to determine fleet size. Thereafter, exploratory semi-structured interviews were held with employees to gain their views on the problem and a selection of three racks of different complexity to study in more detail was also made. Quantitative data was also collected, where Dynapac’s ERP system served as a main source. A mapping of the flow and a benchmarking study of three other companies were then performed. Next, the data gained from this, together with the theoretical framework, was used as a basis for analysis of the flow, which led to the development of improvement suggestions. The mapping of the flow was also used, together with the operational data that had been gathered for the three selected racks, to determine which parameters that impact the performance of the flow of racks for a given fleet size. These identified parameters, together with the theoretical inventory control framework, was then used to develop a formula for the calculation of the minimum fleet size of racks. Next step was to test this formula on the three selected racks to evaluate its applicability and a recommendation regarding fleet size could then be made to Dynapac.

Conclusions: Today, Dynapac has one person who is responsible for the operational work with racks. There is a lack of clear rack handling routines to support this work. One of the main problems is that Dynapac does not control the flow of racks themselves, but instead they are shipping empty racks according to supplier orders. The flow will be improved if a tracking system(balance-based booking system) is implemented in Dynapac’s ERP system, together with barcodes on racks and scanners at different points in the flow. This will enable Dynapac to know exactly where their racks currently are in the flow. Dynapac can also eliminate the dependency on supplier orders and take control of the flow by introducing shipment reorder points for each supplier that is decided by Dynapac. Furthermore, internal and external communications need to be improved by the introduction of a flow owner, who takes on the responsibility for the overall performance of the flow and certifies that new routines are followed. Lastly, the external storage area should be reorganized to obtain a better layout. Demand rate, shipping quantity, safety and transportation times are some of the parameters affecting the fleet size of racks that is needed in order for the system to work optimally and without stock-outs. These parameters were taken into account when developing a formula for minimum fleet size. Dynapac’s demand rate of racks and the transportation time between Dynapac and their suppliers are the parameters which have the largest impact on fleet size.
Keywords:},
  author       = {Ohlsson, Pernilla and Rylander, Malin},
  keyword      = {Returnable transport items,closed return-loop,returnable packaging material,fleet sizing,racks},
  language     = {eng},
  note         = {Student Paper},
  title        = {Improving the Flow of Returnable Transport Items at Dynapac - Through the introduction of traceability and a fleet sizing formula},
  year         = {2012},
}