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E-logistics: an introduction

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1

development
E-logistics

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 3

E-logistics: 01
an introduction
Yingli Wang and Stephen Pettit

Our objectives in presenting this book are twofold. First, we aim to

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capture the state-of-the-art developments in the field of e-logistics

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and thus help our logistics community to gain a more precise

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understanding of how a business can utilize recent information and

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communications technology (ICT) developments to manage its

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supply chain and logistics-related activities for competitive advantages.

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Second, we aim to promote and raise the awareness of the critical

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role of e-logistics in supporting business operations as well as

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driving innovations in supply chains for both practitioners and

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academics.
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n today’s highly competitive commercial environments, the importance

of fast-developing information and communication technologies (ICTs)
for ultimate success and, in some cases, even the survival of any logistics
operation and initiatives, has been well recognized. Many business concepts
would not have been successfully implemented without the aid of ICT, for
instance just-in-time (JIT), time compression, collaborative planning forecast­
ing and replenishment (CPFR), vendor-managed inventory (VMI) and cross
docking. Contemporary global manufacturing and distribution would not
be able to take place without design, sourcing, marketing, manufacturing and,
ultimately, sales all being linked through the use of information technology
(IT) applications.
Effective use of ICT can make the flow of goods transparent, allow for
the integrated management of a physically dis-integrated unit, and harmonize
decentralization and centralization within one operating system. Improvements
4 E-Logistics Development

in customer service, operation efficiency, information quality and support of

collaborative planning and execution, as well as improved responsiveness,
are well acknowledged benefits. More specifically, e-business can facilitate
effective information exchange and the removal of unnecessary players
in the supply chain, for example, by helping in minimizing one of the
well-documented problems, the ‘bullwhip effect’ (Lee, Padmanabhan and
Wang, 1997; Chatfield et al, 2004; Holweg et al, 2005). Creating better
information flows between organizations can also help to reduce uncertainties
in demand or supply, and the need to build expensive inventory buffers.
The development of new digital infrastructures, including wireless
networks, mobile devices and positioning technologies, signals the next
radical shift in digital technology as it becomes further embedded into the
day-to-day operation of businesses and the personal fabric of our daily lives.
The wide spread of the internet and digital technologies is revolutionizing
the traditional flows of goods, service, information, finance and people, and
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reshaping the competitive landscape of the logistics industry. Fuelled by

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increasing globalization and online electronic commerce trade, connectivity

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and visibility have become pivotal in allowing businesses to stay agile and
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responsive to the ever-changing needs of their customers. Increasingly, logistics

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companies are relied upon to provide large amounts of data on physical

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M
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items in order to enable shippers such as manufacturing companies and

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retailers to manage extensive and highly complex supply chains. At the same
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time, shippers, often taking a lead role in a supply chain network, will them-
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selves also have to leverage advances in ICT to ensure that information

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flows are seamlessly integrated across the different members of their supply
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chains, as it is often the flow of information that guides the flow of physical
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movements of goods. In other words, an effective management of a firm’s

digital supply chain will have a positive impact on productivity and growth;
ignorance will very likely result in the loss of competitive advantage and
have a detrimental effect on performance.

Definition of e-logistics
It is within this context that the concept of ‘e-logistics’ emerges. The
terms electronic logistics, e-logistics, internet-enabled logistics or e-business
(e-commerce) logistics have been loosely used in both academia and practice.
Some consider e-logistics as a supportive delivery process for fulfilling
online e-commerce orders (Joseph, Laura and Srinivas, 2004). Others believe
that e-logistics implies the use of information and communication technology
to support the provision and execution of a broad range of logistics activities
 E-Logistics: An Introduction 5

(Daly and Cui, 2003; Gunasekaran, Ngai and Cheng, 2007). While the former
narrowly defines the e-logistics utility in an online business to customer (B2C)
or business to business (B2B) setting, the latter offers a broader concept focus­
ing on utilizing ICT to manage information and information flows in supply
chains or supply networks – an approach adopted by this book.
Although the importance of managing the digital supply chain and infor-
mation flows is obvious, many organizations are lagging behind, unable to
take full advantage of fast-paced technological developments. Many do not
have a systematic overarching IT architecture that translates business strategy
into strategic information-processing capability. In fact, many business
organizations still struggle with the basic concepts of data use. For instance,
many face issues concerning data reliability, timeliness, completeness and
authenticity. Therefore, it is of crucial importance for both practitioners and
academia to understand:
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What are the key technological developments in the field of logistics?

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●● How do those technological advances support the effective

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management of information flow within and between organizations,

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across different modes of transport and in a global context?

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How do we assess the strategic value of e-logistics to a supply chain

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●●
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or network?
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●● What is the impact of such technologies on logistics and business

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performance?
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If the current state of information flow within and between

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●●
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organizations is not ideal, how should an organization re-engineer its

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information flows in a supply chain?

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●● What are the security, ethical, environmental and legal concerns

relating to e-logistics?
●● What does the future hold for e-logistics?

These questions motivated us to develop this book on e-logistics as, to date,

efforts in developing and understanding such an important concept have
been fragmented and rudimentary.

Historical development
We often take it for granted that we live in an interconnected and web-enabled
world, but a closer examination of the historical development of ICT reveals
a more complex and rapidly expanding e-logistics domain than is commonly
understood.
6 E-Logistics Development

Past
To better appreciate the impact of e-business technology on logistics, it is
advisable to take a look at the evolution of logistics information systems
over the last four decades. Historically, the use of e-business systems in logistics
and supply chain management originated in the 1960s. Typical examples are
materials requirement planning (MRP), inventory management systems,
and distribution resource planning (DRP) and billing systems. These systems
are usually function-based and thus are independent of each other. In the
1970s MRP evolved in order to integrate production, purchasing and
inventory management functions. In the 1980s, unable to fully/easily incor-
porate financial and labour issues into their planning, companies realized
the limitations of MRP. This resulted in an enhanced MRP methodology
and software termed manufacturing resource planning (MRP II), which
added labour and financial requirements to such systems. This integration
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expanded further in the 1990s and tried to integrate all the transaction
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processing, of all functional areas, in an entire enterprise. This became

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termed enterprise resource planning (ERP).

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Although it is widely accepted that ERP systems can bring about greater
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integration within an enterprise and have been widely adopted, it is impossible

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for one single system to provide a one-stop solution for all the logistics
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activities within a company. Therefore, many companies still need, or some-

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times prefer, to adopt best-of-breed systems for certain logistics activities.

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For example, transport management systems (TMSs) and warehouse

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management systems (WMSs) are typical stand-alone packages that are

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still widely used today. During the 1990s, decision support systems (DSSs)
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emerged as a complement to ERP, in order to provide intelligent decision

N

support capabilities (Turban, McLean and Wetherbe, 2002). More recently,

there has been increasing awareness of the importance of B2B connectivity
to achieve better communication and collaboration between an organization
and its customers and suppliers (Wilson and Vlosky, 1998; Horvath, 2001;
Fawcett, Wallin et al, 2011). Therefore, extended ERP systems (ERP II) have
emerged, trying to add modules such as customer relationship management
(CRM) to facilitate external integration. However, this has been less successful
than expected due to limitations in respect of design issues, implementation
issues, architecture, access and availability (Edwards, Peters and Sharman,
2001; Akkermans et al, 2003; Møller, 2005).
The development of inter-organizational information systems (IOSs) has
paralleled the development of the enterprise systems discussed above.
Electronic data interchange (EDI) was one of the earliest IOSs developed
to streamline business processes such as order transmission, delivery-note
 E-Logistics: An Introduction 7

communication and financial settlements. Although EDI has been in use

since the 1960s, a major step forward in its adoption only occurred in 1982
when General Motors and Ford mandated EDI for their suppliers (Award,
2004). The main problems with EDI are that it is relatively expensive and
inflexible, and so is unaffordable for small and medium-sized companies.
In many cases, therefore, it has been used by large organizations as a tool to
‘lock in’ their key business partners (Gosain, Malhotra and Sawy, 2004).
When the internet commercialized and users began flocking to participate
in the world wide web in the early 1990s, EDI transmission migrated from
the use of private networks or value-added networks (VANs) to internet-based
open communication platforms (Zhu et al, 2006). Internet EDI provides a
number of advantages over traditional EDI, for example, near real-time
transmission, and a significant reduction of set-up and transaction costs
(Lankford, 2000; Huang, Janz and Frolick, 2008). Although it seems that
internet-based EDI presents a cost-effective transmission medium, many
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organizations still need EDI translation software to provide an interface

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between internal systems and the EDI format sent/received. Similar to EDI
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systems, enterprise application integration (EAI)-based systems also use

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either point-to-point connections or middleware-based integration, therefore

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they also utilize rigid and complex interfaces and are costly to deploy
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(Badii and Sharif, 2003). These systems are categorized as one-to-one IOSs,
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sometimes known as proprietary IOSs.

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While EDI/EAI systems are still widely used in many industries, internet-
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based IOSs have gained significant growth since the late 1990s, facilitated
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by rapid ICT developments. Rather than the costly and complex point-to-point
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integration of separate systems, web-based systems are designed for participants

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to share a single system. Due to the relatively immature nature of internet-based

IOSs, many studies have attempted to provide classifications of the various
IOSs for a better understanding of their implications. A notable work is that
of McLaren, Head and Yuan (2002) who classified different IOSs according
to the degree of supply chain coordination and collaboration they support
(Figure 1.1).
Such technological advances served as an accelerator and boosted the
development of a new e-business model, the electronic marketplace (EM). It
is argued that due to the use of open technologies such as web/XML-based
applications, asset-specific investment for B2B e-business integration will
largely decrease and the adoption of EMs will be higher and more rapid
(Christiaanse, Diepen and Damsgaard, 2004). The early EMs tended to be
open systems, and based solely on aiding procurement for both buyers and
suppliers (Daniel et al, 2004).
8 E-Logistics Development

F i g u r e 1.1   Collaborative supply chain systems

Complexity of service and processes

Simple Medium Complex

Shared
Degree of interorganizational integration

collaborative
Close systems

eProcurement hub EDI/EAI

Third-party or portal
Moderate electronic
marketplace

Web-based order
entry

Loose
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N

Many-to-many One-to-many One-to-one

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Type of relationship
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Source: adapted from McLaren, Head and Yuan (2002)

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A new business model, termed ‘closed EMs’, sometimes simply known as

R

electronic networks, emerged in the early 2000s. These have not been explicitly
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incorporated into McLaren, Head and Yuan’s classification, and limited

U

research has been done in this area. A closed EM in the context of logistics
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is termed a closed ‘electronic logistics marketplace’ (ELM) (Wang, Potter

O

and Naim, 2007). The major difference between a closed EM and an open
N

EM is that the former mainly uses a web-based platform for strategic alignment,
while the latter normally uses a web-based platform for spot trading and
strategic tendering. To some extent, closed EMs have similarities with ‘shared
collaborative systems’ as defined by McLaren, Head and Yuan (2002), as
they both attempt to share one single system rather than integrate different
systems. But ‘shared collaborative systems’ are limited to either jointly
owned supply chain management (SCM) systems or SCM modules from
ERP packages that are made accessible for partner access and collaboration.
Shared collaborative systems still emphasize the one-to-one connection,
while the closed EM allows multiple participants and provides uniform
visibility to all. Finally, increasingly hybrid (with the nature of both closed
and open system) EM and ELM models are being seen in practice, as a result
of further advances in technology.
 E-Logistics: An Introduction 9

Present: interesting times and exciting opportunities

More recently, the rapid development of web-based technologies has also
triggered the emergence of a new concept called ‘cloud computing’, sometimes
named as ‘on-demand’ (O’Sullivan, 2007). Cloud computing refers to a
model of computing in which firms and individuals obtain computing power
and software applications over the internet, rather than purchasing the
hardware and software and installing it on their own computers. The most
well-known type is a public cloud, which is usually hosted by a third party
and user companies just ‘plug in and play’. Offering greater flexibility, such
systems enable not only large companies but also small and medium-sized
companies to use them, as many vendors offer a flexible pricing scheme
allowing users to pay based on transaction volume (‘pay as you go’) rather
than using traditional software-licence pricing models. A private cloud
offers similar options but has only a single tenant (either on the customer’s
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premises or off the premises) and is mostly used for companies that require
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enhanced security (Armbrust et al, 2010). There is also a hybrid cloud,

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which offers customers both options: a public cloud and a private cloud.
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Although widely considered as the next-generation technical advance

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in practice (Lynch, 2005; Dubey and Wagle, 2007; O’Sullivan, 2007;

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Viswanathan, Sadlovska and Enslow, 2007; Foster et al, 2008), our under-
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standing of these new business models and concepts is still at an early stage.
ER
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Typical e-logistics applications enabled by web-based technologies and cloud

IA
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computing are, for instance, single window systems. These are predominantly
L
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used to deal with cross-border issues by government bodies, or logistics

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community systems such as port community systems, to integrate and manage

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a range of stakeholders in a particular community.

N

In summary, as illustrated in Table 1.1, there is an observable trend in

e-logistics developments over the past five decades, from unconnected
applications to connected systems and networks, emphasizing ‘single source
of truth’ (a data storage principle to always source a particular piece of
information from one place), modular design and on-demand use. Merali,
Papadopoulos and Nadkarni (2012) summarized the following four-step
changes in ICTs since the 1960s, which have also had a major influence on
the development of e-logistics:

●● connectivity (between people, applications and devices);

●● capacity for distributed storage and processing of data;
●● reach and range of information transmission;
●● rate (speed and volume) of information transmission.
10

Ta b l e 1.1   The historical developments of e-logistics systems

Evolutionary 1960s 1970s 1980s 1990s 2000s 2010+
Stages

Typical Accounts receivable, Transport planning TMS, ERP ERP II, internet- Internet-based
E-Logistics inventory management application; MRPI WMS, DSS based ELM or community
Systems and control MRP II CRM e-logistics network systems,

N
mobile apps

O
T
Emergent Stand-alone Siloed functional Applications Integrated Service-oriented Multi-scale

FO

C
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IT Trends applications applications portfolios systems architecture and ecologies, cloud

P
web-based services computing,

Y
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R
Web 2.0, mobile

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and social media

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T
Integration Functional Functional Functional Internal end-to-end External integration, Multi-enterprise,

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U
Focus integration in a extended value collaborative value

A
C

T
company chain network
T

E
I O

R
IA
Transaction Business function Desktop and Enterprise-wide Industrial system Cross-industry
N
Business
Applications automation automation
L workgroup
automation
automation automation automation, loosely
coupled flexible
configuration

Supporting Mainframe computers Minicomputers Personal computers Enterprise-wide Internet and web Internet and web,
Computer and local area computing platform mobile platforms
Technology networks

Acronyms: MRPI = material requirements planning; MRP II = manufacturing requirements planning; ERP = enterprise resource planning; ERP II = extended ERP;
TMS = transport management system; WMS = warehouse management system; DSS = decision support system, CRM = customer relationship management;
ELM = electronic logistics marketplace
 E-Logistics: An Introduction 11

If a snapshot of current e-logistics systems is taken, typically it will be seen

that a large number of heterogeneous systems coexist and interact with each
other. These interactions may be asymmetric with varying degrees of inter-
connectivity and interdependence, contingent on prevalent conditions and
local sensibilities. These systems are referred to as complex systems (Merali
and McKelvey, 2006). Although on the one hand technical advances have
made B2B e-business connectivity more flexible and less costly (for example,
many IOSs have become more reliable and adaptable and can now be more
easily modified, extended or reconfigured), on the other hand this also
creates complexities and difficulties for organizations in determining what
form of electronic linkage and relationship configuration should be forged
with their business partner(s). The open, non-equilibrium nature of complex
systems introduces more uncertainties, unpredictability and turbulence to
the logistics sector, making effective deployment of e-logistics systems
problematic and challenging. Typical issues include fragmented development
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of different software applications and standards, interoperability issues

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between different systems, and time and cost of deployment. Coupled with
N

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IG

this are increasingly important considerations relating to ethical, security,

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environmental and legal issues. Therefore the ability to orchestrate and

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manage a portfolio of e-logistics systems is considered as a strategic dynamic

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capability for the users and providers of logistics services and is the key to
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effective information flows within and across supply chains.

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Social media
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Despite the aforementioned challenges, ICT advances also bring new opport­
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unities for potential innovation. One key trend is the rapid deployment and
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diffusion of online social media. Social media acts as a digital platform for
N

people to interact to create, share and exchange information and ideas in virtual
communities and networks. It differs from traditional media in its immediacy,
permanence, cost, style, frequency and reach. Common social media includes
blogs, microblogs, social networking sites, wikis and video- or content-sharing
sites (Vaast and Kaganer, 2013). Although still a primary communication tool
between individuals, social media has been increasingly used by businesses
as a tool for communication with external parties such as customers, suppliers,
third-party service providers and the public at large, and for internal com-
munication with employees. For example, Maersk Line, the world’s largest
container shipping company, uses different social media platforms such as
Facebook, LinkedIn, Twitter and Instagram to engage with the various
stakeholders of its company and generates significant social capital for the
business via social interactions and engagement (Katona and Sarvary, 2014).
12 E-Logistics Development

Although it is debatable how the use of social media impacts the bottom
line of the business, as economic benefits are hard to quantify, there is no
doubt that the strategic use of social media will yield multiple benefits
(O’Leary, 2011). The effective use of online social media can improve a
company’s presence as perceived by the public, being particularly important
for the logistics industry, as it often operates in a B2B environment and
rarely attracts mainstream consumer awareness. It helps to strengthen rela-
tionships among supply chain participants and accelerates information and
knowledge sharing. For example, radio frequency identification (RFID) can
be integrated with Twitter to capture the movement of goods through the
supply chain. Social media is also found to play an active role in humanitarian
logistics. For example, during the 2010 Haitian earthquake, social media
was used to support faster decision making and emergency responses, as
well as for the effective acquisition, sharing, use and maintenance of knowledge
(Yates and Paquette, 2011). In China, Weixin/WeChat is becoming the
C
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fastest-growing social app, which has seen over 396 million monthly active
PY

users worldwide (Tencent.com, 2015). This social networking platform

N

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offers free text and multimedia messages, video calls or photo sharing for its
T

users as well as enabling enterprises to communicate and engage with its

FO

consumers. What differentiates it from many other social platforms such as

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Twitter and Facebook is that WeChat provides a ‘one-stop shop’ e-commerce

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service – from a platform for chatting, to shopping, gaming and even financial
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services. In China, WeChat even allows users to book a doctor’s appointment

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or order a taxi. Users can buy items or services inside the app too (Bastin, 2014).
U

The impact of such innovations on traditional supply chain and logistics

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activities is yet to be seen, but one would be foolish to ignore its far-reaching
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influence. In fact, in a recent McKinsey report (Chui et al, 2012), new terms
such as ‘social economy’ have been invented in order to highlight the opportuni­
ties as well as the challenges brought about by such social media platforms.
When used internally, social media applications are often referred to as
enterprise social media or organizational social network systems (OSNSs).
OSNSs are designed to bring visibility to informal relationships in an organ­
ization, to support cross-functional collaboration, to identify relationships
between individuals and to provide a medium for informal interactions
unbounded by hierarchy constraints (Karoui, Dudezert and Leidner, 2015).
Still in its infancy, enterprise social media is being taken up quickly by private
and public organizations as a way to communicate with their employees and
for group as well as project-based communications. Cited benefits (Leonardi,
Huysman and Steinfield, 2013; Beck, Pahlke and Seebach, 2014; Sykes,
Venkatesh and Johnson, 2014; Karoui, Dudezert and Leidner, 2015) include:
 E-Logistics: An Introduction 13

●● improved employee productivity through the intensification of

interactions;
●● facilitating new relationships internally;
●● generating collective intelligence and knowledge exchange;
●● facilitating collaborative work;
●● fostering innovation.

Although the evidence for the benefits gained from using enterprise social
media is mostly anecdotal, they do seem to be more tangible than those
offered by external social media platforms. There are many popular pro­
prietary solutions provided by vendors such as Yammer, IBM’s Connections,
Salesforce’s Chatter, etc. These typically integrate the full variety of social
media functionality but limit their use to any one organization’s employees.
Academically the benefits of using social media platforms for internal
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and external engagement are often explained by the theory of social capital.
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Social capital is ‘the goodwill available to individuals or groups. Its source

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lies in the structure and content of the actor’s social relations’ (Adler and
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Kwon, 2002). Social capital’s effects lie in information, influence and

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solidarity benefits that accrue to members of a collective (‘bonding’ social

T
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capital) and to actors, whether individual or collective, in their relationship

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to other actors (‘bridging’ social capital) (Seok-Woo and Adler, 2014). The
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bonding social capital is likely to be generated from so-called ‘strong-tie’

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networks that are inward facing (ie intra-group). Group members can
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obtain emotional support, access to scarce or limited resource and share

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information with each other. This aligns well with the utility of the afore-
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mentioned enterprise social media. However, bridging social capital tends to

N

be created via the so-called ‘weak-tie’ networks, which are outward facing.
Therefore bridging social capital is better for linkage to external assets and
for information diffusion. This reflects the purposes of organizations that
use social media networking sites for external stakeholder engagement. The
practical implication of examining online social media through the lenses of
social network and social capital theory is that it may provide a means to
help businesses to construct an effective social media strategy and to assess
the tangible (economic) and intangible payoffs of such social activities.

Big data and internet of things

The rise of the aforementioned online social media has produced a huge
amount of unstructured ‘social’ data (such as tweets, videos and click
streams). The sheer volume of data is further boosted by the increasing
deployment of the internet of things (IoT). The concept of IoT emerged from
14 E-Logistics Development

the rapidly developing field of modern wireless telecommunications. The

basic idea of this concept is the pervasive presence around us of a variety
of things or objects – such as RFID tags, sensors, actuators and mobile
phones – which are linked through wired and wireless networks and are able
to interact with each other, often using the same internet protocol (IP) that
connects the internet (Atzori, Iera and Morabito, 2010). These networks
generate huge volumes of data – ‘sensor data’.
The increasing volume and detail of information generated by organiza-
tions, social media and the IoT has led to an explosion in the amount of data
captured, and this has subsequently challenged the information processing
capability of traditional database software tools. It is within this context
that the concept of big data emerged. It refers to datasets whose size is
beyond the ability of typical database software tools to capture, store,
manage and analyse. Big data has four key attributes as defined by IBM
(Zikopoulos et al, 2015):
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●● volume: scale of data;

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velocity: analysis of streaming data, velocity as the rate at which data

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●●
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arrives at the enterprise and the time that it takes the enterprise to
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process and understand that data;

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variety: different forms of data: structured and unstructured;

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●●
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●● veracity: uncertainty of data, refers to the quality or trustworthiness

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of the data.
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Big data changed the traditional view of how information is generated and
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travels. Proprietary information is structured data, lodged in databases,

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analysed in reports and presented in all familiar formats such as spreadsheets.

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Big data often contains both structured and unstructured data (such as social
data). Insights gained through advanced predictive analytics, particularly by
analysing unstructured data, are believed by many to be the new frontier for
innovation and productivity (McAfee and Brynjolfsson, 2012; Waller and
Fawcett, 2013). For example, Google monitors billions of search terms
(‘best cough medicine’, for example) and adds location details to track
outbreaks. Therefore, Google is better than the US Centers for Disease Control
and Prevention at identifying flu outbreaks (Crovitz, 2013).
But what does this mean for the transport and logistics sector? Waller and
Fawcett (2013) argue that the potential applications of big data in logistics
could be in the following four areas: forecasting, inventory management,
transportation management and human resources. According to Atzori, Iera
and Morabito (2010), IoT and big data have a strong application in transport
and logistics. Examples include:
 E-Logistics: An Introduction 15

●● products tracking using RFID, assisting driving by integrating

on-board vehicle systems with intelligent traffic systems to allow
better navigation and safety;
●● mobile ticketing via the use of near field communication (NFC)
tags;
●● environmental parameters (temperature, humidity and shock)
monitoring for perishable goods such as meat and fruits;
●● augmented maps: physical mobile interaction techniques being
employed to augment information on the map such as nearby hotels,
restaurants, monuments and events related to the area of interest
for the user.

Arthur (2011) offered an illustrative example emphasizing why big data

matters, using an example of RFID. He compares practices in the port of
C

Rotterdam in the pre-ICT era to the present, identifying the significant move
O

from paper-based processes supported by the use of analogue telephone

PY
N

systems to systems using RFID linked by digital communications and the

R
O

IG

entire process operating largely independently of human intervention. As we

T

H
FO

are yet to fully embrace these emerging technological developments such as

T
R

social media, it is even less clear about the link between the data that those
AT
R

technologies generate and its value to logistics. At present most attempts are
EP

ER

speculative. Some argue that big data has probably always been around in
R

IA
O

logistics – it was just in spreadsheets and e-mails (Field, 2014).

L
D

What actually matters is how to make sense out of those big data. In reality,
U
C

our logistics practitioners and researchers are often overwhelmed by big

TI

data. To gain the most out of big data (in combination with a firm’s existing
O
N

traditional data), advanced predictive analytics tools are needed. Common

tools such as data mining, case-based reasoning, exploratory data analysis,
business intelligence and machine learning could all help firms to mine the
unstructured data, although each has limitations (Tan et al, 2015). Companies
such as IBM are exploring new techniques such as cognitive computing
systems, which claim to help human experts to make better decisions by
penetrating the complexity of big data (Zikopoulos et al, 2015). Another
challenge is the lack of people with analytical and managerial talents who
are able to bring structure to large quantities of formless data and make
analysis possible (Davenport and Patil, 2012). People with these skills are
hard to find and in great demand. The exploration of big data also poses
challenges to organizational structure, culture and leadership, and requires
a new mindset of decision making.
16 E-Logistics Development

The future: building e-logistics capability

Executives expect that new digital technologies will transform their
businesses, but many admit that their companies are far from prepared in
developing capabilities and meeting challenges. Table 1.2 shows the top
challenges faced in meeting digital business priorities identified via a global
survey conducted by McKinsey (Brown and Sikes, 2012).

Ta b l e 1.2  
Most significant challenges faced in meeting digital
business priorities
Issue Percentage of
Respondents
(n = 1,469)
C
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Organizational structure not designed to take advantage of 52

PY

business opportunities
N

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O

IG
T

Lack of technology infrastructure and IT systems 51

H
FO

T
R

Lack of quality data 46

AT
R
EP

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Lack of internal leadership 45

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IA
O

L
D

Difficulty finding functional talent 43

U
C
TI

Business processes were insufficiently reworked to take 42

O

advantage of opportunities created since priorities were set

N

Lack of senior management interest or desire to change 40

current practices

Difficulty finding technical talent (eg IT or technology staff) 31

Source: McKinsey global survey on minding your digital business (Brown and Sikes, 2012)

E-logistics is not just about technology, although technology is both a driver

and an enabler. It involves relational configurations, technological connectivity
and process integration. The way in which digital supply chains are configured
should be determined by business strategy and should allow companies to
be agile and fast in order to sense and react quickly to customer demand.
 E-Logistics: An Introduction 17

Companies need to develop a well-articulated e-logistics strategy that drives

business performance via capturing new business opportunities through
innovation and creating value in core businesses to serve customers better.
At a regional level, government bodies and import nodes in a global supply
chain, such as seaports and airports, need to tackle the complex issues of
visibility and interoperability in order to streamline the information flow
and integrate information that is used by all the actors involved. Whether
building an e-logistics capability at micro level within and between organ­
izations or at macro regional or country level, the designed capability should
be fit for the information processing needs of the key stakeholders involved.
A starting point, as illustrated in Figure 1.2, is to identify the needs and
value generation from a customer perspective. Starting with the value to
customers gives a purpose to managing e-logistics. The bottom-left quadrant
of Figure 1.2 emphasizes exploiting e-logistics capability to fulfil existing
customers’ needs at a minimum cost. This is commonly known as being a
C
O

‘customer-driven’ business. However, customers sometimes may not know

PY

exactly what they want. This sounds counter-intuitive, but how many of us
N

R
O

IG

would have anticipated the sweeping effect of the internet on businesses and
T

society back in the late 1990s when it was just being commercialized? In
FO

1994 e-commerce as we now know it did not exist; 20 years later in 2014,
R

M
AT
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B2C e-commerce is estimated to have a global growth rate of almost 20 per

EP

ER

cent and is even higher in emerging markets such as China, India and Brazil.
R

B2B e-commerce worldwide also continues to strengthen and grow beyond

IA
O

L
D

the €12.4 trillion mark (Laudon and Traver, 2015). Similarly we, as consumers,
U

may not have foreseen the need to use online social media for communication,
C
TI

but once being offered such a product, we are pleasantly surprised and
O
N

‘addictively’ hooked. These kinds of technological developments bring

innovative business models and new opportunities and can revolutionize the
way that businesses are conducted and industries are structured. Under these
scenarios, given the rapid increase, and unpredictability, of technological
developments, customers may not be fully aware of their current or future
needs.
Therefore, to further unlock the potential of e-logistics, one can move up
to the upper-left quadrant of Figure 1.2, named ‘customer-driving’. In this
case, the effective explorative use of e-logistics could help to penetrate a new
market or create a new type of demand. Technologies are not playing the
‘supporting’ role, but are in the ‘driving’ seat instead. The upper-right quadrant
represents unknown territories where new and/or emerging technologies
will continue to push the boundary of business expertise and may sometimes
have disruptive effects on existing practices, posing new challenges or catalysing
18 E-Logistics Development

F i g u r e 1.2   Value generation via e-logistics

Unknown to self
Customer- New
Customers’ needs driving opportunity
Known to self

Customer- Losing
driven business

Known to self Unknown to self

Your business
C
O
PY
N

a leapfrog move towards a fast track to success. No one wants to be in the

O

IG
T

bottom-right quadrant where customers are not satisfied, and companies

H
FO

are likely to be forced out of the market.

R

After developing the aforementioned value propositions, the next step

AT
R
EP

concerns how to build appropriate capability accordingly. Figure 1.3 proposes

ER

a simplified road map as a guide. First, there is a need to get the basics right
R

IA
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(‘efficacy’ layer as shown in Figure 1.3) before rushing to adopt and roll out
L
D
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any sophisticated ICT solutions. It is not uncommon to observe that many

C

companies, large or small, often lack confidence in their data. Many see their
TI
O

data as incomplete, inaccurate, irrelevant, inaccessible, inconsistent, and as

N

having lack of timeliness, interoperability and objectivity. The problem of

having such ‘bad’ data could have adverse effects on operational efficiency
and customer service as well as potentially losing business opportunities. In
some extreme cases, this could lead to legal penalties by regulators. For
example, the Royal Bank of Scotland (UK) was fined £56 million by the
Financial Conduct Authority and the Prudential Regulation Authority for
its IT breakdown, causing significant stress for its customers in June and
July 2012 (Treanor, 2014). In an asset-intensive industry in the United States,
a natural gas transmission pipeline owned and operated by Pacific Gas and
Electric Company (PG&E) ruptured in a residential area in San Bruno,
California. The resulting fire killed 8 and injured 58 people, destroying
38 homes and damaging 108. The PG&E’s pipeline integrity management
programme, which should have ensured the safety of the system, was found
 E-Logistics: An Introduction 19

F i g u r e 1. 3   Road map of building e-logistics capability

E-logistics Data management

management

Effectiveness Knowledge

Efficiency Information

Efficacy Data
C
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N

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IG
T

by the National Transportation Safety Board to be ‘based on incomplete

H
FO

and inaccurate pipeline information’ (National Transportation Safety Board

R

(NTSB), 2011).
AT
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EP

These examples illustrate an important but often neglected fact: data

ER

integrity is fundamental to any effective decision making and business

R

IA
O

operation. Compromises on data integrity could have a detrimental effect

L
D
U

on business performance. The root causes of data integrity problems are

C

multifaceted, for instance a lack of appropriate key performance indicators

TI
O

(KPIs), disintegrated legacy IT systems, functional silos, lack of ownership

N

and accountability, as well as provision of an inadequate technological

infrastructure within and between organizations. Only by addressing the
root causes of the problem can the efficacy of information and information
flow management start to be improved. In addition to data integrity, the
efficacy layer also concerns having proper technological infrastructure such
as software, hardware and networks to allow for the creation and capture
of essential data such as customer and order-related information, production
and transport schedule, vehicle movement and location, proof of delivery,
etc. Connectivity and linkage is another key issue that has to be correct in
order to enable data flows across a variety of IT platforms and reach with a
wide range of supply chain actors involved.
While efficacy deals with ‘getting the right data’, efficiency stresses the
focus of ‘doing things right’. The dimensions of e-logistics capability should
20 E-Logistics Development

be built to: 1) ensure quality and speed of information sharing within and
between organizations; and 2) streamline and optimize current processes.
Many traditional e-logistics applications such as WMSs, TMSs and ERPs
have been developed to address the business needs in this regard by, say,
providing a high level of automation and standardization, integrating
various functions and offering static or dynamic what-if scenario analysis.
Effectiveness indicates ‘doing the right things’ so that a company continuously
delivers value to its customers and its various stakeholders. Value generation
could be obtained through improving existing operational efficiency and/or
offering innovative products and services. It is at this stage that the company
builds its dynamic e-logistics capability to integrate, build and reconfigure
internal and external competences to respond quickly to the changing
environment – a capability that is difficult to be replicated and imitated by
its competitors. Building such capability requires the integration of people,
technology and process (as shown in Figure 1.4).
C
O
PY
N

F i g u r e 1.4  
Building e-logistics capability: people, process and
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technology
H
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People
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D
U
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Process Technology
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The way forward – an overview of

the book’s structure
In the context of the many challenges outlined above, the common theme
running through e-logistics is the rapid rate of change that is occurring.
In developing this book, we believed that an improved understanding of
the issues surrounding this highly topical and contemporarily relevant
subject was necessary. Throughout the 17 chapters that follow, we present
discussion on the key areas where e-logistics is a necessary consideration for
 E-Logistics: An Introduction 21

effective logistics practices and where many systems are already substantially
embedded in operational activities.
In line with the themes outlined at the beginning of this introductory
chapter the issues are grouped into five key areas. Part 1 deals with the
infrastructural requirements for e-logistics. Part 2 considers ICT for specific
transport modes and nodes. Part 3 considers practices relating to the auto-
mation of logistics, including B2C e-commerce, challenges for warehousing,
the use of radio frequency identification (RFID), and the automation of the
services chain. Part 4 broadens the discussion to regional and global logistics
issues, including electronic marketplaces, single window systems and supply
network visibility, while Part 5 considers what the future trends in ICT
adoption are likely to be.
Part 1 (this chapter and Chapter 2) specifically considers how ICT infra-
structure is relevant for the future delivery of logistics. In Chapter 2 the
authors Adrian, Etienne and Christian Coronado Mondragon of the Royal
C
O

Holloway University of London discuss the economic importance of logistics,

PY

the complexity of supply chain networks that lead to a requirement for ICT
N

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IG

to help achieve high levels of visibility, and the responsiveness and efficiency
T

required to be competitive in global markets. The support of ICT is shown

FO

to be essential as various technologies impact on logistics activities and

R

M
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many of the technologies available today are likely to shape the future of
EP

ER

logistics. Overall, the importance of deploying a common ICT infrastructure

R

capable of supporting the future needs of logistics operations is considered.

IA
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L
D

Complex logistics solutions arising from the need for multimodal capability
U

is driving modern logistics to adopt ICT solutions and the chapter provides
C
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the underpinning concepts for those that follow.

O
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Part 2 (Chapters 3–7) considers how ICT is used in various transport

modes and nodes in the supply chain, considering air, rail, road, sea and
ports. In Chapter 3, Robert Mayer from Cranfield University discusses how
airfreight, as a key component of many modern supply chains, is comprised
of numerous organizations beyond airlines. Airfreight requires a complex
mix of freight forwarders or integrators, and is highly dependent on road
transport links to airports. Communication is therefore important to reduce
disruption in the process. The diverse nature of cargoes creates unique
challenges for airlines, freight forwarders and other organizations involved.
ICT plays a vital role in addressing the challenges and issues in the airfreight
market. However, while ICT in airfreight needs to be standardized there is a
relatively low level of ICT development in this area. The application of ICT
along airfreight supply chains is explored in this chapter together with the
major issues that have prevented its adoption in the airfreight sector. It is
22 E-Logistics Development

shown that while the data revolution in airfreight has not yet occurred,
developments are occurring and change will bring benefits for the whole
airfreight supply chain.
Unlike airfreight transport the rail industry has relied on ICT since its
very early days and was a pioneer of many systems to monitor and control
transport activity. Long-established signalling and control systems and
principles regulate access to, and movement over, the rail network. The
modal characteristics of rail lead to far greater centralized coordination and
control of rail freight activity than is the case for road haulage. One of the
key challenges for the rail sector is communication between the rail industry
and their customers. In Chapter 4, Allan Woodburn of the University of
Westminster identifies the basic principles of ICT in the rail industry, the key
needs of customers and the extent to which ICT applications are used to
improve performance and enhance customer service. The chapter covers a
number of ICT applications within rail freight management, which histori-
C
O

cally, while providing safe and efficient flows of goods, have given little
PY

transparency for customers. However, there are a growing number of ICT

N

R
O

IG

tools that now inform customers about the rail freight services offered and
T

the progress of their goods flows.

FO

From the mid-1980s, road transport companies began to utilize ICT,

R

M
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and the ability of their transport management systems to interface with

EP

ER

customer IT systems became an important aspect of their business. Initially

R

this revolved around a transport operator being able to access their

IA
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L
D

customer base to keep up to date with the progress of individual jobs.

U

Subsequent developments in ICT and the internet have allowed for the
C
TI

development of bespoke systems that have significantly enhanced the man-

O
N

agement of logistics and distribution beyond simple access systems to those

providing more effective management solutions. In Chapter 5, Derek Beevor
of Road Tech discusses these developments, as well as issues associated with
the compatibility and security of integrated systems. Consideration is given
to how much more efficient the logistics industry would be if companies
were willing and able to fully share their data. While full visibility of infor-
mation is valuable, and current technology has led to standardization, there
is not enough collaboration to derive the maximum benefit. The ability to
create closer collaboration is a challenging issue and addressing key questions
in this area is suggested as being important in the next cycle of development
in the transport industry’s IT systems.
ICT provides the sea transport sector with significant opportunities for
ICT development. Two aspects are covered in Chapters 6 and 7. In Chapter 6,
Nikolaos Vasilakis and Rawindaran Nair of Cardiff University discuss
 E-Logistics: An Introduction 23

electronic bills of lading for sea carriage contracts. The extended periods
during which goods are ‘in transit’ (and because the seller and the buyer are
often located in different countries) requires effective management of the
goods in transit and facilitation of payments between transacting parties.
Bills of lading, issued by shipping lines once shippers, consignors or sellers
have loaded their cargo aboard a vessel, are one of the most important
aspects of the carriage of cargo by sea, being both evidence of the carriage
contract and operating as a document of title. Recent developments in elec-
tronic billing were the result of the introduction of ICT and the commercial
use of EDI, which as a consequence has replaced paper bills of lading with
their electronic equivalents. The legal functions of the bill of lading and their
electronic equivalents are explained and a discussion is provided on the leg-
islative framework in the European Union and attempts at harmonization
internationally through rules from bodies such as UNCITRAL.
The final chapter in Part 2 addresses the role of ports as nodes in the
C
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supply chain. In Chapter 7, Tsz Leung Yip of the Hong Kong Polytechnic
PY

University, Yingli Wang and Jane Jing Haider of Cardiff University and
N

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Marten van der Velde of Portbase, Rotterdam define the concepts of port-
T

centric ICT systems, and how they can build value in supply chains. While
FO

the role of ICT in adding value to logistics is well acknowledged, its application
R

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in the context of port-centric logistics has been rarely studied. Ports are an
EP

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essential node in maritime shipping and multimodal transport, and their

R

role has evolved from simple transhipment points to connecting hubs

IA
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L
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supporting wider supply chains. Traditional information facilitating the

U

exchange of data often operates in application-specific environments, creating

C
TI

a range of problems. Increased competition between ports has encouraged

O
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port authorities to make use of the latest techniques in ICT to attract customers,
and new functions are being developed by the more progressive ports to
keep their existing customers and expand their businesses. Ports now find
themselves in a globally competitive market, seeking cargoes across common
hinterlands, and port-centric ICT can be used to transform data into a wide
variety of information for port stakeholders, professionals and users.
Part 3 (Chapters 8–13) addresses issues around e-commerce, the fulfilment
of e-commerce orders, the movement and tracking of goods, and issues
around warehousing and automation of the service chain. In Chapter 8,
Sharon Cullinane of Gothenburg University discusses business to consumer
(B2C) e-commerce and order fulfilment. The e-commerce market has expanded
significantly, increasing in both scope and complexity, and the chapter outlines
the various types of e-commerce and describes how the sector is evolving.
Although the business to business (B2B) side of e-commerce is important,
24 E-Logistics Development

the chapter focuses on the consumer retail market. The chapter analyses the
importance of e-tailing to the overall retail market, considers past growth
and likely future trends both in the UK and overseas.
In Chapter 9, Gwynne Richards of Apprise Consulting outlines the chal-
lenges that e-commerce activity is placing on warehousing and distribution.
Retailers, now operating in an omnichannel world where consumers expect
a seamless shopping experience, have to address issues relating to the fact
that this activity is having a major impact on warehouses and distribution
centres. In the UK, home shopping is the fastest growth area of retailing and
is having a significant effect on supply chains. Warehouse operations now
have to accommodate large numbers of daily orders, a large number of
product lines, shorter order lead times and increasing pressure to get the
process right first time. There are many challenges to face both in terms of
increased service expectations, the need for accurate inventory management
and improved forecasting, and the adoption of new technologies, which can
C
O

aid in service improvement. Continuing this theme, in Chapter 10, Tim

PY

Hotze of Amazon Supply Chain Execution and, previously, Panalpina, discusses

N

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IG

advanced warehouse management systems for streamlining e-logistics

T

processes. With the holding of goods in a warehouse adding costs to a product,

FO

warehouses must also add value to products through consolidation both

R

M
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temporally and spatially and through a reduction in the total number of

EP

ER

connections in the supply chain. He explains how e-logistics must not only
R

manage the physical flow of goods but also integrate multiple applications
IA
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L
D

as well as improve data capture and data validation, reducing or avoiding

U

entirely any negative impact on business processes.

C
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In Chapters 11 and 12, Hywel Williams of Torchwood Technologies

O
N

deals with the role of RFID in logistics and the role of GS1 in procurement
and e-logistics. In Chapter 11 he discusses how RFID has been extensively
used within logistics in all economic sectors. With RFID having the ability
to read accurately large quantities of data, quickly and without line of
sight while items are moving, the advantages for track-and-trace techniques
have become practical. The chapter explains the various technologies and
examines the uses of RFID in the fashion retail supply chain. As the IoT
develops, automated order replacement becomes a possibility and the
author outlines some of the obstacles that need to be overcome to achieve
this. The discussion is extended further in Chapter 12 where the role of
GS1 in logistics and e-procurement is considered. This chapter provides
an insight into the organization GS1 and its work in the field of logistics
and e-procurement. GS1 is a worldwide non-profit-making organization
with national member organizations, each being responsible for the local
 E-Logistics: An Introduction 25

implementation and delivery of universal standards within the area they are
responsible for. It is shown how GS1 standards provide a framework to
allow products, services and information to move efficiently and securely
for the benefit of business.
Chapter 13 considers the automation of the services chain from the
perspective of a telecommunications company. Gilbert Owusu, Sid Shakya,
Okung Ntofon and Ali McCormick of BT Research and Innovation discuss
the necessity for an appreciation and understanding of the need to optimally
manage a service chain, and why this can be at the heart of an organization’s
success. Service providers that offer a variety of services over a range of
domains can develop highly complex service chains that may be vulnerable
to the propagation of inefficiencies due to a lack of control, coordination
and optimization of both internal resources and external suppliers.
Organizations are continuously looking for approaches to eliminate such
inefficiencies and improve operational measures through effective resource
C
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utilization and this chapter focuses on automating service chains in the context
PY

of the telecommunications domain. The authors identify that what is needed

N

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IG

is the use of prospective and retrospective modelling technologies to underpin

T

the design of the service chain.

FO

The four chapters in Part 4 (Chapters 14–17) broaden the discussion to

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global supply network visibility. Chapter 14 by Yingli Wang and Andrew

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Potter of Cardiff University addresses the use of regional electronic market-

R

places that are intended to improve logistics, discussing both the benefits
IA
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L
D

and problems with such systems. While the efficiency of road freight logistics
U

operations has improved, evidence indicates that many vehicles run empty
C
TI

or with part loads. One method of addressing the issue of poor vehicle
O
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utilization is the use of ELMs – electronic hubs that use web-based systems
to link shippers and carriers together for the purpose of facilitating vertical
collaboration between shippers and carriers and horizontal collaboration
between shippers. They explain how a regional ELM can help to deliver
benefits to the users and providers of logistics services in the community,
allowing knowledge, risk, infrastructure and expenses to be shared, lower-
ing both the set-up and running costs. The difficulties of establishing such
systems are also clearly explained and highlighted.
Chapters 15 and 16 address different aspects of single window systems.
In Chapter 15, Takis Katsoulakos and Zisis Palaskas of INLECOM Systems
and Yannis Zorgios of CLMS point out that while national trade and
transport-related authorities have extensive powers and country-specific
regulatory mechanisms there has been little coordination at national,
European or international levels. This has resulted in there being a complex
26 E-Logistics Development

set of duplicated and redundant reporting requirements. In order to overcome

these problems a number of initiatives, both in the European Union and
internationally, have been developed centred on the concept of a single point
of interaction between businesses and authorities – commonly referred to as
‘single window’ systems. The chapter discusses the key drivers of single
window systems, including customs and coordinated border management,
maritime authorities and business. Chapter 16 by Jeong Hugh Han of Cardiff
University presents a case study of a single window system for South Korea.
In this chapter he highlights key requirements for such systems, including
the issue that system providers need to identify clear and specific objectives
for each service in a comprehensive framework covering logistics, finance,
regulation and compliance. Further, the coordination of stakeholders should
be addressed through the provision of appropriate support and solutions.
He suggests that the overall objective of such systems should include the
improvement of information quality and the quality of information sharing.
C
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Chapter 17 considers end-to-end global visibility management. Tim

PY

Hotze of Amazon Supply Chain Execution deals with this issue in the
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context of integrated supply and demand chains. The increasing importance

T

of supply and demand chain management, commonly constituting the entire

FO

value chain, is shown through the development stages from built-to-suit

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through built-to-order environments followed by built-to-stock approaches

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and the need to effectively manage the processes that led to the development
R

of supply chain management. He shows how configure-to-order subsequently

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evolved with manufacturers engaging in mass customization, decoupling the

U

customization of finished products as late as possible in the supply chain

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process in order to fulfil demand efficiently. The most recent evolution is

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based on the increasing importance of time-to-market and the cost-efficient

mass personalization of products. Omnichannel management and last-minute
supply and design changes are common. Companies who manage big data
‘mine’ customer buying data to provide unique product categorization for
all products they purchase. Value chain management has evolved to cover
the supply and demand side and to holistically consider the flow of goods,
information, payments and ownership.
The final part, Part 5 (Chapter 18), considers what are likely to be the
future trends in ICT adoption. Chapter 18 concludes the book by considering
how ICT is used in multimodal transport and the technological trends that
are likely to underpin future developments. Irina Harris, Yingli Wang and
Haiyang Wang of Cardiff University discuss how an integrated multimodal
transport network is a critical factor for companies to successfully execute
 E-Logistics: An Introduction 27

their supply chain processes. They show how the complex nature of multimodal
integration can limit the growth of multimodality, with the lack of effective
and efficient information connectivity among and between various modes
(water, air, road and rail) being a major constraint. The chapter offers valuable
insights and an up-to-date overview of ICT developments in freight multimodal
transport. An analysis of four key emerging ICT trends and their impact on
reducing barriers is forward-thinking and provides the basis for further
research in this important, yet underdeveloped, subject area.
In conclusion, to refer back to the beginning of this chapter, our stated
objectives are twofold. First we aim to capture the state-of-art developments
in the field of e-logistics. Underpinning this is the idea of helping the logistics
community to gain a more precise understanding of how a business can
utilize recent ICT developments to manage their supply chains and logistics-
related activities for competitive advantage. Many of the chapters in this
book deal with recent technological and theoretical issues in this area and
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present an up-to-date account of what is occurring in the logistics sector.

PY

Second we aim to promote and raise the awareness of the critical role of
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e-logistics in supporting business operations as well as driving innovations

T

in supply chains within both practitioners and academics. Through the

FO

pages of this book the reader will become aware of the rapid pace of change
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that is occurring in the field of e-logistics. We believe that the many examples
EP

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given highlight this change and will direct the reader to a greater under-
R

standing of what needs to be done to embed change and efficiency in their

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organization.
U

Given the rapidly expanding web of connections, we are inevitably

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embedded in the global economy in which materials, money, information as

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well as people are globally mobile. The digital economic landscape now offers
more entry points to a far broader range of players than it did in the past.
Not only the largest multinational companies and investors but also emerging
countries, small businesses and even individuals (micro-entrepreneurs) can
play a larger role. For participants of all types – countries, cities, businesses,
governments and individuals – participating in global flows offers great
economic opportunities. We are living in a world where physical and virtual
supply chains are rapidly converging and companies will need to meet
customer needs anytime, anywhere. Now is a critical time that organizations
truly appreciate the strategic importance of managing digital supply chains
and e-logistics, taking full advantage of digitalization and emerging
technological advances in order to avoid being left behind.
28 E-Logistics Development

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