Modelling collaboration among micro-truck owners through capacity sharing
Thesis review questions and answers
Submitted by
Arindam DebRoy Roll No: 13IN91R04
Response to Indian Reviewer
Q1. Freight transportation is the business of 3PL and 4PLs. They are handling the freight for most companies. How do you compare their business model with the four items you have considered?
Answer: Generally, there are four main interrelated layers of logistics services. Each level of the pyramid involves increasing the level of service and supply chain integration (Rodrigue, 2020).
Third and fourth party logistics are the layers which provide specialized outsourced logistics solutions and add value to the supply chain (Hsiao et al., 2010) whereas the first and the second parties are the ones outsourcing the work. The advantage of outsourcing the work allows the companies to concentrate on its core business activities. The business model of the third and the fourth party logistics has been explained as follows:
Third party logistics: In a 3PL business model, the parent company maintains the business management in its own hand and outsources the logistics and transportation responsibilities to the 3PLs. The 3PL
1 PL
Cargo owners (manufacturers, retailers)
2 PL
Carriers (Transportation)
3 PL Logistics service
4 PL
Lead logistics providers and consultant
companies not only provide logistics solutions but also add value to the supply chain by taking the responsibilities of warehousing, packaging, leveling etc (Ciemcioch, 2018).
Fourth party logistics: 4PLs involve providing solutions to manage the entire supply chain operations. The companies which outsource their work to 4pls expect them to control and manage their entire supply chain and not only the logistics operation of warehousing, transportation, packaging etc (Gruchmann et al., 2020).
However, in our work, we have mainly concentrated on the transport service providers i.e., the truck carriers which fall in the second layer of the logistics services. Their business model is strictly limited to transporting the item from the shippers to their customers. They are hired by the third party logistics companies to carry out the transportation work for the clients (shippers). The third party logistics are in turn managed by the fourth party logistics that are hired by the client to manage the entire supply chain.
Q2. State governments and central governments play an active role in the goods movements. How does the change in GST rules affect the goods movement?
Answer: Passage of goods and service tax (GST) bill on 29th of March 2017 in the Indian parliament was a refreshing relief for businesses in the country who were burdened with numerous taxes levied on them by both the state and the central government. This bill has not only enhanced the performance and competitiveness of the manufacturing and the retail sector in the country but has also improved the efficiency of the logistic sector (Cleartax, 2020).
The logistic performance of the country was ailing and saw a dip from 2010 to 2015 (Saripalle & Chebolu- Subramaniam, 2017). A major reason for the poor performance efficiency of the logistic sector was the in- transit delays in the movement of goods. Implementation of GST has resulted in the seamless and faster trucking across the country which is responsible for the majority of goods movement in the country (Truckbaba, 2019). The average distance covered by a truck in India was 250 to 400 km per day which was much lower as compared to 700 to 800 km travelled by a truck on a daily basis in US and Europe. One of the major reasons for this was the time spent by the truck drivers in check posts at state borders where they were required to pay numerous state taxes. On an average, the inter-state check points had a waiting time of 5-7 hours (Naik et al., 2016). Passage of the GST bill has integrated all the indirect taxes which the business had to pay especially for entering a state border. By simplifying the tax system, GST has done away with this time which was wasted in the journey. GST has also increased the demand for large 25 Ton heavy commercial vehicles. This demand is expected to grow at a rate of 10% as compared to a foreseen growth
of 3-4% previously (Truckbaba, 2019). This growth in demand for HCVs will increase the amount of goods that can be moved at a time and thereby improving the efficiency of operation of trucking sector, reduce the amount of carbon emission and also reduce the overloading of trucks.
Another important outcome of the GST bill has been the significant reduction in the number of paper works which had to be carried out before the bill was passed. Now with reduced paper works, the logistic carriers can move the goods quicker resulting in a reduced delivery time (Supply chain game changer, 2020).
Q3. In platform business how do you ensure the security of data?
Answer: The industry experts feel that ‘platforms’ have not only become the market place of the 21st century but also the store house of information of people from across the globe. Airbnb has 1.5 pentabyte of data (Marr, 2020) so does Amazon which has 10^9 gigabytes of data (Price, 2015). Such huge storage of information makes it unobjectionable to say that data has become the most critical aspect of today’s business (PWC, 2017). Platforms are complex global systems where the information is transferred through cyberspace. This makes the importance of secure handling and storage of data a priority. Data security is paramount for running a successful digital business (Media, 2020). According to a report by CNBC, at least 15 million customers fall victim to identity fraud in 2016 costing more than $16 billion (Grant, 2017).
These figures have forced businesses to take some serious steps in ensuring the security of the information provided by their customers. Some of the techniques used by businesses to protect their data from cyber- attack have been listed as follows:
a) Authentication: This technique is based on verifying the identity of the user based on the credentials stored in the security domain of the system (Herrera-Cubides et al., 2019). Most common mode of governance is password technology. However, there are other techniques such as the SIM card inserted in someone’s cell phone.
b) Encryption: Storing data in an encrypted form is highly recommended (Heath, 2018). It renders the data into undecipherable form without proper key to unlock the same. In order to crack encryption one would have to carry out highly complex mathematical calculations which would take enormous amount of computational resource and time.
c) Firewall: Now-a-days most of the data is stored in the cloud. Cloud computing has become one of the powerful medium of sharing information over the internet. Most of the platforms use cloud to store the huge information they collect from their customers (Kantaria, 2019) making it a vulnerable to cyber- attacks. In order to protect these data firewalls are employed by the companies (Swapna et al., 2016).
In addition to these techniques, the platforms are also looking at blockchain technology as an able security measure for their platforms (Taylor et al., 2020) as its key feature is encryption and decentralized data storage which provides increased security for cloud platform infrastructure (Fox, 2019).
Q4. Goods theft, contamination, etc. are common in electronic, food and oil logistic chains. Can IOT help in these cases?
Answer: International supply chains are extended and complex. The sheer volume of shipments moving across the world gives opportunities for thefts and counterfeits (Zomer, 2017). Theft of goods is an obvious problem, but quality loss, contamination or waste due to containers being breached, has also become a serious issue which the global supply chain is facing. Emerging internet of things (IoT) technology is being used to counter these graves issues.
Like other industry, the logistics industry is also busy adopting IoT technology such as sensors and devices to track shipments, trucks and equipment (Ramos, 2017). These sensors and devices allow for greater control of inventory, environmental conditions, control of shipments and theft. This helps in monitoring the state of the product and reducing its damage. IoT allows for better visibility, which is one of the biggest problems in logistics and which was originally done manually and was error prone (Pundir et al., 2019).
In addition to product damage, theft of product is another big issue which the logistics industry is facing.
Studies report that around 89% of people in the logistics industry believe that inadequate visibility is the major reason for the items getting stolen (Ramos, 2017). Similar to monitoring product damage, IoT enabled tracking system provides real time information of the asset’s location to the authorized people and helps to prevent theft of goods and properties (Caballero-Gil et al., 2013). Another important feature of IoT which is used by warehouses to keep a monitor on their products is geofencing (Pesic et al., 2019). Geofensing creates a virtual boundary around the location. In case an IoT enabled product is removed from this area, an alert is send to the concerned person (Trab et al., 2018). Apart from helping, the warehouses keep a watch on their goods; geosensing can also help in protecting freight while it is being transported. IoT enabled truck or product will send an alert to the mobile devices when the truck enters a predefined geographical area (20Cube, 2018). The companies which have opted for IoT have an edge over the companies who are still contemplating on doing it. It is high time to adopt this technology for all the business houses.
Q5. During last five months, the goods movement has almost vanished. How do you make the future of freight transport system more resilient?
Answer: Covid-10 pandemic is first of its kind global crisis, which the world has seen in over a hundred years. Global supply chain is going through a massive shock, which has disrupted not only the demands side but also the supply side. The supply chain is facing a huge challenge in keeping the goods and services flowing during this time of global lockdown. The present pandemic has effected all the modes of moving cargos. Airline cargo handling has taken the most hit as countries have not allowed international air travel for the last four to five months (Business Wire, 2020). Similarly, road freight transport has also seen a huge slump in the movement of freight. The road freight sector is yet to bounce back to its original pre Covid-19 status.
A holistic view of our freight movement can ensure a resilient future. In light with this thought some of the steps and policy changes which the supply chain practitioners are suggesting are namely; (a) shift to digitization, (b) shifting to localized supply chain, (c) increase visibility across the supply chain. The changes made during this pandemic might not be temporary and may stick around even after this pandemic is long gone (Saunders. 2020).
(a) Paradigm shift from manual to digitization: Digitization and connectivity will be a key to ensuring seamless movement of goods moving forward. Before the global supply chain and logistics was jolted by this pandemic, most of documentation work was handled by humans. However, the shippers and carriers are no longer interested in manual documentation as they are trying to maintain social distancing. IoT enabled systems can help foster a digital ecosystem of connected systems which would provide relevant data to make the most informed decision at any given point of time (Robert, 2017).
(b) Shifting to localized supply chain: Most of the manufacturing companies of the developed countries of USA and Europe have their suppliers based in the developing countries of Asia (Seric et al., 2020). With Asia as the epicenter of Covid-19 and China being its genesis, the companies of the west are looking to shift their supply chains near home (Taylor, 2020). This localization of supply chain will provide better visibility through chain allowing the members of the supply chain to control disruption when it occurs making the supply chain more resilient.
(c) Increase visibility across the supply chain: An integrated logistic control to get real-time visibility into operations will be required to make the logistics more resilient. This will require integrating logistics market
information, inventory levels, demand forecasts and capacity constraints across the chain to support better and faster decision-making.
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Response to Foreign Reviewer Q1. What are the research questions?
Answer: Following are the research question for each objective presented in this thesis:
Objective 1: Analyze the impact of collaboration on performance of truck owners under strict overloading laws.
Research questions:
RQ1. In spite of all the fines imposed by the governments on the truck owners and incurring all the increased additional costs for overloading, why do this problem continues to exist?
RQ2. Can an alternative solution be found to the problem of capacity shortage other than overloading a truck?
Objective 2: To enhance the performance of micro-truck owners through collaboration under incomplete advance demand information.
Research questions:
RQ1. Can collaboration help the carriers to handle incomplete demand information from the shippers?
RQ2. Out of the two collaborative practices s, namely, (i) strict control practice and (ii) limited control practice, which one is better suited in handling incomplete demand information?
Objective 3: Application of horizontal collaboration between micro truck owners for performance improvement under partial demand information.
Research questions:
RQ1. How does a broker impact the operation of a carrier?
RQ2. Can collaboration among truck owners help them in handling the problem of capacity shortage instead of approaching the broker?
RQ3. How does variation in the percentage of collaboration affect the profit of a small trucking company?
Objective 4: Development of mathematical models to aid in the collaboration of truck owners through digital platform-based trucking system.
RQ1. Is it a profitable decision for the truck owners to switch from a broker-dependent business model to a platform-based business model?
RQ2. Can online freight exchange platforms (OFEP) provide opportunities for the carriers to reduce empty movement of trucks?
Q2. What are the primary contributions of this work to the academic literature?
Answer: The primary contributions of each objective presented in this work to the academic literature has been discussed as follows:
Contribution of the thesis
Objective 1: Analyze the impact of collaboration on performance of truck owners under strict overloading laws.
Academic contribution:
i. The chapter analyses the effect of the maximum allowable overloading on two most important business outputs for a carrier namely; profit and the total number of orders completed;
ii. Development of the product compatibility matrix for the items which the trucks transport while sharing their capacity is a major contribution of this chapter to the literature as it helps the carriers in collaborating;
iii. On checking the effect of the variation in the capacity exchange price paid by a carrier on profit, it is observed that with increase in 𝛾 , the profit does not always increase. This trend is seen mainly because profit and 𝛾 do not have a one-to-one relationship, there are other factors influence them.
Objective 2: To enhance the performance of micro-truck owners through collaboration under incomplete advance demand information
Academic contribution:
(i) To the best of our knowledge, there is no study which uses horizontal collaboration to address the issues of incomplete advance demand information coupled with the problem of capacity shortage.
(ii) Collaboration through strict control as well as limited control practice is proposed as an economical solution for the carriers.
(iii) Equal profit method is used to allocate the profit earned from shared capacity among carriers.
Objective 3: Application of horizontal collaboration between micro truck owners for performance improvement under partial demand information.
Academic contribution:
(i) The researchers have mostly concentrated on ALI and its impact on the operation of a carrier. However, rarely do the carriers get information about the load in advance. The carriers have to plan their operation with only partial information about the load. We have tried to fill this gap in the literature by considering these scenarios in our study.
(ii) One of the contributions of this research is evaluating the impact of brokers in the process of information sharing and the operations of trucking supply chain. We have tried to show the importance of broker in sharing the information between shipper and carrier.
(iii) As mentioned by many researchers (Coulter et al., 1989, Murphy et al., 1991, Murphy et al., 1997), selecting the eligible carriers is the responsibility of a broker. Usually the carriers are chosen depending upon the amount of truck capacity, which they can use (Murphy et al., 1991). To represent this situation, we introduced the capacity requirement factor (the minimum capacity required) for a carrier and use it as a criterion to get an order.
(iv) As the carriers do not have proper information about the load, there is a high probability that they might fall short of the required amount of capacity to complete the order. We show in our study the significance of carrier collaboration in helping these carriers manage variation in demand.
(v) Checking the impact of variation in the percentage of capacity shared on the profit of a truck carrier will allow him to plan his operation in a better manner.
Objective 4: Development of mathematical models to aid in the collaboration of truck owners through digital platform-based trucking system.
Academic contribution:
(i) The impact of the digital freight platforms on the operation of the truck owners has been studied and a comparative analysis with the traditional broker dependent trucking system has been carried out.
(ii) It is found that, risk-taking attitude of a carrier increases his probability of getting more orders and improve their business. In an industry with cut-throat competition, it is very important to take the initiative to increase the chances of earning more profit.
(iii) Collaboration through freight exchange using OFPs is a new concept (Miler and Nie, 2019). In this study, we have shown the effectiveness of OFPs in aiding in the collaboration among carriers and improving the performance measures of a carrier such as profit earned and the number of empty truck movements.
Q3. How were papers collected for literature review? How did you ensure that all the related areas are captured? What keywords did you use your search attempts? What databases were used and why? Overall how systematic was your literature review?
Answer: Initially, business articles, web-based reports, blogs and news articles were searched looking for areas related to the trucking industry, which can be studied. Once perspective problem areas were found, literature corresponding to the topics were searched in order to understand the extend of research conducted by other researchers till date on those topics. Papers were collected based on the relation to the areas, which were finalized after the initial search.
After initially going through the web-based articles and other source of information on the internet, it was finalized that the area of this research will be pertaining to the operations of a truck owner and the problems he faced for improving its efficiency. Once it was done, we conducted a thorough literature search based on the areas which were related to a carrier’s operational model such as, order information, capacity allocation, truck back hauling, carrier collaboration, online freight platforms, freight load boards etc.
We strictly stuck to the areas related to the operation of truck owners and ensured that all the areas were covered. This was followed by zeroing in on research gaps, which were found from the existing literature.
We used, Scopus, science direct, google scholar and web of science for our literature survey.
We conducted a systematic literature review of the areas covered in this thesis.
Q4. How do you define research methodology in your PhD research? Why is there no chapter for this?
Answer: The methodology followed to carry out the research work in this thesis involved carefully going through the literature, business articles, blogs and reports to find out about the problems faced by the
trucking industry. This was followed by finalizing the problems to be tackled in this thesis and converting them into research objectives. We then collected data from the transporters of the kharagpur region and finalized the variables to be considered for developing the mathematical models. We followed it up by developing algorithms for solving the mathematical problems formulated in the objectives. Once the solution was found, we carried out sensitivity analysis to provide better managerial insights.
All the objectives presented in this thesis are linked and sequentially worked on during the course of this research. However, each objective has its own separate variables, parameters and scenario which was considered while formulating the mathematical models. Due to this reason, have separate algorithms, which have been used to solve the mathematical models. Hence, a single chapter describing the methodology of all the objective is not possible. Moreover, providing the algorithms after presenting the mathematical model makes it easier to understand and relate with the problem.
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