1. Next Steps: Future of 21st
Century Logistics
Joe Pekny1
Reha Uzsoy2
Purdue University
West Lafayette, IN 47907
http://www.purdue.edu/DiscoveryPark/logistics
1e-EnterpriseCenter at Discovery Park, School of Chemical Engineering
2Laboratory for Extended Enterprises at Purdue, School of Industrial Engineering
2. OVERVIEW
• A little history…
• The TDL sector in Indiana
– Status
– Roles in economic development
– Strengths and opportunities
• Purdue-CICP initiative in TDL and supply chain
• Future directions
3. A little history…
• The Indiana economy has been based on
manufacturing for the last century, but has
been affected by shifts in the global
economy
• Industry, government and academia are
concerned about deploying new
technologies to drive continued economic
growth
4. A little history…
• The Central Indiana Corporate partnership
has commissioned studies of four main
industry sectors
– Advanced manufacturing
– Life sciences
– Information technology
– Transportation, distribution and logistics
5. What is TDL?
• Traditionally viewed as the functions of storing,
transporting goods
• Prevalent trends are towards ever greater
integration with the rest of the supply chain
• Pervasive drive towards leveraging IT
developments to better integrate, control the entire
supply chain
• Strong trend towards collaborative solutions via
partnering and outsourcing
6. What is TDL?
• Any realistic definition of TDL in today’s
environment must take a view that
encompasses the entire supply chain
• Production and distribution activities are
becoming ever more closely integrated;
does not make sense to consider them
separately
• TDL = SCM on steroids!
7. Future of TDL
• Novel partnerships within the TDL sector
– Railroads partnering with trucking to reduce cost,
improve service
• TDL providers assuming more value-adding roles
– Customization, assembly, inventory management
• Total Situational Awareness in TDL
– IT & management of complexity
– Physical and information security
8. Future of TDL
• Novel partnerships outside the TDL sector
– Outsourcing of services previously considered a
competitive advantage
• Opportunities in security and real-time tracking
– Container shipping - smart, aware containers
• Exploitation of intelligent infrastructure
– Highway sensing, GPS
• Ever tighter integration of the supply chain
– GM Order to Delivery program
– 60 days to 5!
9. Data drives the Future!
• Real-time data acquisition is constantly getting
easier and cheaper
– Wireless, smart pallets, highway sensing, GPS, cell-
phone location
• Moving the data thus acquired around is also
getting easier and cheaper
– Internet
• Increased visibility of both demand and supply
– ERP at the industry sector level?
• Who leverages their data best, wins!
11. And so…?
• We cannot get here by merely doing what
we have been doing better
• We cannot compete with the rest of the
world on cost
• We have to compete by exploiting the new
technologies to develop new capabilities
• We have to collaborate securely where it
makes sense
12. Such as…
• Moving custom-grown human tissue
– Currently no safe way of transporting it
– Need to locate production close to demand
• Now suppose we figure out a way to do this
– Can have large production facilities with
economies of scale
– Changes the entire competitive landscape!
13. Growing new industries…
• A vibrant, creative network of TDL
providers is crucial for startup companies
• By definition, they’re good at one thing
• TDL is usually not that thing
• Good TDL partners allow them to do their
thing profitably and grow
14. TDL in Indiana
• Two major studies:
• Battelle Memorial Institute for Central Indiana
Corporate Patnership in 2001
– Focused on Central Indiana
• Transport Flows in the State of Indiana: Commodity
Database Development and Traffic Assignment , Phase 2,
Bloomington, IN: Department of Geography and the
Transportation Research Center, Indiana University, July
1997 (final report) , xii + 28
• State Port Authority (“organizational advantage” –
Steve Sewell)
15. TDL in Central Indiana
• 7.4% of Central Indiana Economy
• 7.1% decline in TDL establishments in 95-01 - consolidation?
• 9.8% increase in TDL employment for the same period
15%
10%
5%
0%
Adv Manu Life Sci Info Tech TDL
% Tot IN 1% 2% 4% 13%
Establishments
% Tot Employees 4% 1% 2% 4%
16. TDL Outlook in Central Indiana
Wholesale Distribution of Durable Goods has the greatest share of the
activity and employment—Out of 6,300 Establishments and 89,4234
employees in Central Indiana TDL in total.
TDL is made up of many small businesses
60%
50%
40%
30%
20%
10%
0%
Warehousing/Stor Wholesale Distr-- Wholesale Distr-- Trucking/Courier Air/Misc. Freight &
age Durable Non-Durable Services Railroads
% Establishments 6% 55% 20% 16% 3%
% Employees 7% 46% 19% 23% 4%
17. What is being transported?
• 19 categories presented in Value (millions)
and Tonnage.
– The 19 segregated into three Sub-categories:
• Lighter goods—These have more of an even ratio of
value to weight.
• Less-Heavy Goods—These have a greater ratio of
value to weight
• Heavy Goods—These have a high ratio of tonnage
to value.
19. Less-Heavy Stuff
With a High Value to Ton Ratio
35,000
30,000
25,000
20,000
15,000
10,000
5,000
-
Fabricated Machinery, Transportation
Other Group
Metal Prods except electrical Equipment
Value (mill) 10,363 9,504 34,401 9,549
Tons 4,572 1,023 6,731 7,679
20. Heavy Goods
with a High Ton to Value Ratio
65,000
60,000
55,000
50,000
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
-
Non- Food & Chem Petrlm Stone, Primry
Farm Coal
Mtl Reltd & & Coal Clay & Mtl
Value (mill) 5,794 281 463 16,958 11,474 9,008 2,748 17,485
Tons 39,902 10,759 57,341 21,039 11,957 62,500 21,972 27,881
26. TDL in the Indiana Economy
• Provides an essential service that creates an
environment for other industries to compete
successfully
• Advanced manufacturing, life sciences
– Require novel TDL solutions to provide novel services
and products
• Technology-enabled TDL is a heavy user of IT
– Drives growth in the IT sector as well
27. Strengths in Indiana
• Location and infrastructure
– Major interstates, crossroads of America
• Extensive industrial base that is used to
operating in demanding TDL environments
– JIT logistics for the auto companies
• Two strong research universities
• Extensive network of regional campuses
and community colleges
28. Needs in Indiana
• How to upgrade/reorient the existing workforce to
the needs of a IT-driven, high value added TDL
sector?
• How to create a TDL environment that will allow
Indiana industry to thrive?
• Cannot compete on labor cost, so we need to
compete on capabilities
– Need to bring our technology to the table!
29. Purdue-CICP Initiative
• Objective is to develop a business plan for an
organization that will institutionalize industry-
university-government collaboration in the TDL
arena
• Match existing capabilities of higher education
institutions in the state to industry needs
• Identify and create capabilities that are not yet
present
– Where conomically justifiable!
30. Purdue-CICP Initiative
• One year joint study by Central Indiana Corporate
Partnership and e-Enterprise Center at Discovery
Park
• Involves several different groups at Purdue
– Laboratory for Extended Enterprises at Purdue, Indiana
Database Center, CERIAS, SUFG
• Many different disciplines
– Engineering, management, technology, computer
science
31. Discovery Park
e-Enterprise Center
• Use of Computing to Support Economic Activity
• Highly Interdisciplinary
• Strong Engagement Network
• 380+ Faculty Members
• Interested in Advanced Manufacturing, Logistics, and their
Connection
• Form Center for TDL
– Industry, Government, Universities
– Strong integration with other research activities, industries
– Combine ideas and optimize practices to get them executed
(partnerships, form companies, transfer to industry,…)
– Develop process to embed innovation in TDL (technology,
regulation, infrastructure, practices)
32. A Federation of Research
http://www.purdue.edu/DiscoveryPark
• Biometric Testing & Evaluation • Computing Research Institute
Lab • Dauch Center for Management
• Center for Collaborative of Manufacturing Enterprises
Manufacturing
• Center for Customer Driven • Digital Enterprise Center
Quality • Indiana Center for Database
• Center for e-Business Education Systems
and Research • Information Technology at
• Center for Education and Research Purdue
in Information Assurance and • Laboratory for Extended
Security Enterprises at Purdue
• Center for Information Systems in
Engineering • Purdue e-Business Research
• Center for Technology Center
Roadmapping • Purdue International Center for
• Computer Integrated Process Entertainment Technology
Operations Consortium
Links from e-Center Web Site
33. Dialog with Stakeholders
• Partnership is key (Goodwin & Sewell)
• Extensive advisory board actively involved
– Universities
– Industry
– Government
• Sponsored by CICP!
• No One Good Idea Will Win The Day
• Process for Generating, Promoting, Executing Good Ideas
• Make Good Ideas Visible and Compelling
• Realistic, Innovate, Be Optimistic, Focus on Strengths,
Minimize Weaknesses
34. Principles
• A viable institution will have to involve the entire
higher education network in the state
– Different institutions have different capabilities
– Problems are plenty big for all of us!
• A viable institution will have to be able to identify
needs and develop technology to address them
– Exploit research work in the universities
– Incentivize faculty to participate
– Ongoing dialog with stakeholders
35. Principles
• The needs of the workforce must be
addressed through a combination of degree
programs and continuing education
– Strong role for regional campuses and
community colleges
– Framework for collaboration with research
universities to bring enhanced TDL capabilities
to these institutions
36. Principles
• A successful center must provide a forum to
permit many different stakeholders to
interact in a mutually beneficial manner
– Universities
– Industry
– State and local government
37. Areas of action
• Comprehensive Indiana TDL business plan
• Economics
– What is the effect of improvements in the TDL
sector on the state economy?
• Workforce
– What types of skills are needed by whom, how
can they be supplied?
38. Areas of action
• Technology
– What technologies could significantly enhace
the ability of the TDL sector to contribute to the
state economy?
– Do these exist, or do we need to develop some
of them?
– If we develop, what mechanisms for bringing to
market?
39. Areas of action
• Infrastructure in its broadest sense
– Roads, ports, etc
– IT infrastructure - high speed Internet, wireless,
GPS, etc.
– Legal - inventory tax, real estate development
statutes, leap frog legislation, etc.
– Economic policies - e.g., 21st Century Fund,
etc.
40. Conclusions
• TDL is currently a significant portion of the
economic activity in the state
• A strong, capable TDL sector is essential to
economic growth
• Developments in IT will drastically change
this industry
• Purdue and CICP collaborating to bring
stakeholders together
41. How can you get involved?
• Make us aware of your interests,
capabilities, and concerns
– http://www.purdue.edu/DiscoveryPark/logistics
– REGISTER ON WEBSITE!!!!!!!!