Evaluating The Causes of Uncertainty in Logistics Operations
Evaluating The Causes of Uncertainty in Logistics Operations
www.emeraldinsight.com/0957-4093.htm
Figure 1.
Uncertainty circles model
IJLM 1998). The recent body of work on supply risk and vulnerability has added an important
21,1 new dimension of exogenous events to the Uncertainty Circle (Peck et al., 2003).
Another framework that takes uncertainty into account is the SCOR model (Supply
Chain Council, 2005). In similar vein to Mason-Jones and Towill (1998), this model
includes the supplier side as ‘‘source’’, the manufacturing process as ‘‘make’’ and the
demand side as ‘‘deliver’’. It considers the logistics network concept by introducing the
48 repetitive source-make-deliver sequences. Furthermore, the model extends the ‘‘make’’
dimension by introducing the concept of ‘‘value adding’’. However, as with the
Uncertainty Circle model (Mason-Jones and Towill, 1998), it does not explicitly consider
transport as a strategic supply chain process.
Subsequently, the Uncertainty Circle model has been extended and adapted. Van der
Vorst and Beulens (2002) develop a typology of supply chain uncertainty adding three
dimensions to each source of uncertainty: quantity, quality, and time. Geary et al. (2002)
identify the main issues associated with different types of uncertainty based on
research from the automotive sector. They link the causes and effects of uncertainty or
supply chain disruption, such as data errors or excess variances. Furthermore, Peck et
al. (2003) add a dimension of exogenous events to the uncertainty circle. This may
include government regulations, terrorism, industrial action, and disease outbreaks.
These external factors can have a considerable impact on transport flows, such as road
closures because of flooding, accidents, terrorist attacks, or other disastrous events.
Alternatively, government interventions in the form of taxation or regulations can
encourage businesses to change their core strategies.
On the basis of the aforementioned criticism regarding transport in these
uncertainty frameworks, Sanchez-Rodrigues et al. (2007) develop a logistics-focussed
uncertainty model. As shown in Figure 2, the Logistics Uncertainty Pyramid Model
Figure 2.
Logistics uncertainty
pyramid model
includes five uncertainty sources that can affect transport operations. This represents Uncertainty in
an evolution of the research of Mason-Jones and Towill (1998) and Peck (2001). The logistics
uncertainty types are defined as:
operations
. Shipper: any uncertainty originating from the sender of products in the logistics
triad, which directly impacts upon transport performance. These may relate to
raw material sourcing, the production process or the activities involved in the
despatch process. 49
. Customer: any uncertainty that is produced by the receiver of products.
Examples include forecasting and ordering products or any delivery restrictions
that the customer imposes.
. Carrier: any anomalies that can be originated from the carrier and directly affect
the delivery process, such as vehicle failure or a lack of drivers.
. Control systems: any problems caused by inadequate and fragmented ICT
systems within the logistics triad, or the lack of physical monitoring systems.
. External uncertainty: any disruption caused by exogenous factors that are not
under the control of the logistics triad, including congestion, labour shortages
and volatility of fuel prices.
This model is primarily conceptual and needs validation. Therefore, the opinions of
logistics practitioners and policy makers are sought in order to determine the models’
credibility and applicability. The aim of this paper is to refine the conceptual model
developed by Sanchez-Rodrigues et al. (2007), mapping the most relevant uncertainties
found by the focus groups into the Logistics Uncertainty Pyramid Model.
Method
A focus groups method was chosen to consult UK practitioners and policy makers
regarding uncertainty types and their impact on logistics operations. The focus group
methodology has received little attention in logistics research (New and Payne, 1995;
Frankel et al., 2005), despite a number of advantages:
. leads to innovation in business-problem solving (Bryman, 2001);
. a high degree of flexibility regarding the research plan and process (Krueger,
1998); and
. small groups being representative of a big population (Krueger, 1998).
However, Bryman (2001) highlighted the limitations of focus groups including less control
over proceedings, a time-consuming analysis process, and difficulties with facilitation.
Prior to developing the model, a methodological framework was formulated to
clarify how the uncertainty model will evolve through our research (see Figure 3). This
Figure 3.
Evolution of the logistics
triad uncertainty model
IJLM recognises that we aim to verify the logistics triad uncertainty model previously
21,1 developed by Sanchez-Rodrigues et al. (2008). In the future, it will be further developed
and validated through the application of research methods such as focus groups,
surveys, and case studies. The data obtained from such empirical research will be used
to develop, refine and validate the model, so that it can be used both in industry and for
further academic research.
In the planning stage, seven potential venues were chosen taking into account major
50 logistics flows and business locations within the UK. By taking account of the
geographical location of potential participants, we hoped to increase participation by
reducing their journey time and inconvenience. A similar approach is adopted by New
and Payne (1995), Dainty et al. (2001), and Giunipero and Eltantawy (2004). Locations
were determined as a pilot session in Birmingham, two sessions in London, two in
Nottingham, and one in Cardiff and Edinburgh. Postal invitations were sent to 156
potential participants from logistic-related companies (manufacturers, retailers, 3PLs,
and technology providers), trade associations, government bodies and logistics
consultancy companies. These were generally people known to the research team – such
an approach is common amongst the logistics research works that have applied the focus
group method including New and Payne (1995), Mangan and Christopher (2005) and
Cullen and Webster (2007). The postal invitations included information about the
research project, a personal invitation letter and a response form to confirm attendance.
Participants were allocated to a focus group depending on their workplace location.
Where two sessions were held, they were free to choose the date that suited them.
From the initial mailing, 26 positive responses were received. A follow-up process
was undertaken combined with the addition of 21 more invitees. This involved e-mail
and telephone contact with the invitees to encourage them to attend. As a result, the
final number of participants was 58, giving a response rate from 171 invites of 34 per cent.
This figure excludes those who committed to attend but were unable to do so on the
day. The aim was to have eight participants per focus group, as this represents the
optimum size according to (Krueger, 1998). In reality, the size of focus group varied
between 5 and 12 (Morgan, 1998).
In each focus group, the question posed was:
Which are the most important causes of uncertainty that inhibit effectiveness of your
transport operations?
When this question was asked, each participant wrote their suggestions on Post-It
notes, one comment per note. After that, each participant presented and discussed
individually their notes, while the other group members were encouraged to intervene
in the discussion so ideas may be developed further. In this discussion, participants
said why their selected uncertainty causes have a significant impact on their
operations. The group as a whole then categorised the individual Post-It notes into
clusters. We stated to the participants that, given the phrasing of the question posed,
we were assuming that the number of Post-It notes reflected each issue’s relative
importance. Although no one objected to this assumption, the facilitator ran a
discussion asking participants to confirm that the largest cluster represents the biggest
challenge for their operations and/or industrial sectors. The session ended with a
cause-and-effect exercise to determine the main root causes of these clusters. The
clusters form the main unit of analysis of this paper. Notes were taken by the research
team and complemented by audio recordings, to which all participants agreed prior to
the focus group commencing.
After the focus groups, scripts for each session were produced from the notes and Uncertainty in
recordings. The data were synthesised using two-way tables to compare individual issues
with top-level clusters, uncertainty types, and sectors. Also, clusters were compared with
logistics
the type of participants to see to what extent the participants’ background may influence operations
their perceptions. The classification is based on that developed by the European Logistics
Users, Providers and Enablers Group (ELUPEG)[1]. However, to avoid clusters becoming
too large, we disaggregate this categorisation into the following:
51
. Shipper: an organisation which ships products to a wide range of external
customers.
. Customer: a business that receives products from a wide range of shippers. They
may also have a distribution network internal to the company.
. Provider: companies where the main business is the provision of transport and
logistics services.
. Enabler: a company that provides technology or consultancy to facilitate the
movements of goods.
. Trade body: an organisation that represents a number of businesses from a
particular sector.
. Policy maker/influencer: government and other bodies that affect the external
environment within which transport operates.
Table I shows the breakdown of participants into these different categories.
Generally, when the focus groups methodology is applied, theory saturation is
reached after the fifth session (Morgan and Krueger, 1997). To confirm theory saturation,
the Post-It exercise was analysed. Figure 4(a) shows that the number of new issues raised
Shipper 16 27
Customer 5 9
Provider 11 19
Enabler 9 15
Trade body 12 21 Table I.
Policy maker/influencer 5 9 Breakdown of focus
Total 58 100 group participants
Figure 4.
Theory saturation of the
focus group sessions
IJLM (on individual Post-It notes) per participant does appear to tail off. However, when
21,1 looking at clusters (Figure 4(b)), there are no new clusters between the fourth and sixth
focus groups. But, the seventh focus group represent a slight exception as new sectors
were involved that had not previously contributed to the focus groups. They identified
issues unique to their industries. Overall, however, we can be confident as to the
reliability of the findings. Focus groups are conducted in series, so when a point of theory
saturation is reached the researcher can stop the data collection (Krueger, 1998), since the
52 researcher does not obtain new input from additional participants.
Shipper 50
Carrier 73
Table II. Customer 74
The original sources of Control system 22
transport uncertainty External 65
Uncertainty in
logistics
operations
53
Figure 5.
Issues causing
uncertainty in transport
operations
are primarily affected by labour and asset utilisation. Participants commented that the
lack of supply chain integration within the logistics triad can cause serious issues with
coordination and communication between partners, ultimately impacting upon delays.
Most of the participants stated that there is an evident gap between the technological
capabilities within the logistics triad. This can be expected because carriers cannot
possibly keep the same pace of technological changes as their partners, since they
often have financial pressures impeding new technology acquisitions.
Other clusters have less than ten occurrences. Legislation is considered a source of
external uncertainty for the logistics triad, but participants usually focus on the issues
that can be changed internally instead. On the other hand, the issues under complexity,
inventory management and communication were implicitly related with the other
themes that have more occurrences. Complexity increases if the level of supply chain
coordination is low, and if there are significant constraints in the delivery process.
Furthermore, a not managing inventory in a coordinated manner can have a negative
impact on the demand and information processes. However, a lack of communication
and supply chain integration can negatively influence the logistics triad coordination.
As well as considering the population as a whole, the results are also classified
according to the role of the participant within the supply chain. The results from this can
be found in Table IV. Considering the core members of the logistics triad first (shipper,
customer, provider), it can be seen that all three members place a strong emphasis on
delays as a cause of uncertainty. This reflects the direct impact that these have on
operations. Both shippers and customers identify demand and information issues as
important. These are the members of the triad that would be affected more by these
types of issues. In contrast, shippers and providers also identify delivery constraints as
another important factor. It may be that because the constraints are often imposed by the
customer, they do not perceive them to impact upon their operations.
From the remaining classifications, enablers particularly identify coordination as an
issue. This reflects the fact that many of the companies within this cluster provide
software and other services linked to the coordination of supply chains. Therefore, they
are perhaps more likely to identify issues in this area. However, it could also be that,
because they sit outside the supply chain but have a view of all operations, they can
identify issues that those more involved in the operations cannot see. Many of the trade
bodies represent the freight transport industry, and therefore identify delays as a
significant cause of uncertainty. As with enablers, they can also take a broader view of
transport operations and therefore see infrastructure issues that do not affect
54
21,1
groups
IJLM
Table III.
according to focus
Definitions of clusters
Cluster Definition
Delays Delays occur when a delivery process takes place later than scheduled. Delays are mostly caused by three
factors: road network congestion, supply disruptions, and operational problems in unloading and loading
Demand and information issues The demand from customers may be highly volatile and sudden changes may occur due to seasonality and
unexpected promotions. The main causes of this include demand volatility, poor demand forecast accuracy
and lack of information visibility
Delivery constraints Delivery constraints are restrictions in the delivery process that can limit normal transport operations.
Delivery constraints are a result of three main factors: delivery curfews at the customer facilities, restricted
delivery windows imposed by the customer, and limited storage capacity at the customer depots
Lack of coordination Uncertainty occurs when the logistics triad processes are not properly synchronised, the communication and
information flow is not effective. The main factors that cause a lack of coordination within the triad are high
customer demand for transport flexibility, disconnections between sales and logistics departments at the
company level and lack of integration between carriers and customers
Rigid infrastructure The infrastructure of the road and rail network is not flexible in the short term and so inhibits the
performance of transport. Rigid infrastructure can occur at company, supply chain and macro-level
Supply chain integration Integration within the logistics triad allows a holistic planning and execution of all the logistics triad
activities in the transfer of information and materials flow. Insufficient supply chain integration lessens the
visibility and transparency of information within the triad
Cost Cost uncertainty relates to staff and asset utilisation. Macro problems like driver shortages, volatility of fuel
prices and congestion charges can considerably affect cost. Internally, companies have operational issues that
negatively impact on cost as well
Technology The logistics triad members can have different levels of technology capability causing unavoidable
operational distortions in the information and communication flow and problems in the delivery process
Legislation Legislation determines the basic rules of the transport sector in the UK. It must be sufficiently flexible so
companies do not have constraints in terms of staff and assets. However, legislation can impose restrictions
on logistics companies that can affect as usual trends
Complexity Complexity can increase if there are many variables involved in the delivery process, leading to uncertainty.
Causes include different and diverse requirements from customers and drop deliveries to diverse portfolio of
customers
Inventory management issues An ineffective and fragmented inventory management approach can cause operational problems in transport
originating from a lack of stock available within the supply chain, and sub-optimal inventory policies
imposed by the customers
(continued)
Cluster Definition
Lack of communication Poor communication within the logistics triad at all levels leads to information uncertainty within the
logistics triad. Serious operational problems can originate through:
. Lack of communication regarding delivery failure from carrier to customer
. Insufficient driver-carrier communication
. Communication errors between shipper and customer that cause delivery refusals
Returns Any operational issues originating from the reverse supply chain, including processes like recycling, return
of defective products and logistics equipment, and remanufacturing
Global-sourcing Global sourcing imposes a challenge to the logistics triad, since the high dispersion of raw materials
increase the length of the supply chain. Causes of uncertainty include operational problems of information
visibility, insufficient stock and quality of products
Lack of managerial vision In the company boardroom, there may not be a clear vision of the logistics consequences from strategic
decisions. Logistics as a strategic activity is not embedded in other areas such as Sales, Design and
Manufacturing
Inter-modal operations A lack of fit between different transport modes, e.g. rail and road, can cause operational problems in inter-
modal operations. Also, operational issues originating by rigid inter-modal facilities can cause problems in
the delivery process
Table III.
logistics
operations
55
Uncertainty in
56
21,1
IJLM
chain role
Table IV.
based on supply
Comparison of clusters
Themes
Total
Supply number
chain Demand/ Delivery Rigid SC Inventory Global Inter- of Post-It
role Delays information constraints Coordination infrastructure integration Cost Technology Legislation Complexity management Communication Vision Returns sourcing modal notes
Shipper 19 22 14 4 2 5 5 2 3 3 4 3 1 2 3 3 95
Customer 8 10 1 1 1 1 2 2 1 1 1 0 0 0 0 0 29
Provider 8 2 7 5 1 1 1 4 1 2 1 0 0 0 0 0 33
Enabler 4 2 4 15 2 3 2 1 0 2 0 2 4 1 0 0 42
Trade body 15 3 5 0 10 3 2 1 3 0 1 2 1 1 0 0 47
Policy
maker/
influencer 3 1 1 0 1 0 1 0 1 1 0 0 0 0 1 0 10
Total
number of
Post-It
notes 57 40 32 25 17 13 13 10 9 9 7 7 6 4 4 3 256
individual supply chains but do impact on the freight transport system as a whole. Uncertainty in
Finally, policy makers show a slight bias towards delays but there is insufficient data logistics
to draw meaningful conclusions.
operations
Causes of transport uncertainty
The above analysis reflects the clusters identified as the most important during the focus
groups. What is evident is that the sources of uncertainty emerge from throughout the
transport uncertainty model. The top three individual issues from the four largest
57
clusters are mapped onto the model to illustrate the impact of transport uncertainty. This
is shown in Figure 6, which provides greater depth in understanding to Table II and
Figure 4. Overall, the results suggest that suppliers, customers, and carriers should work
together more closely to identify these sources of uncertainty within their particular
supply chain and develop a plan together to address them. However, the biggest overall
contribution to uncertainty is congestion on the road network, which is beyond the scope
of the logistics triad. We now expand on the details for these four clusters, using the
focus group discussions to provide depth to the commentary.
Delays
Delays appear to be particularly important for shippers, customers, and providers, and
therefore affect all the triad members. Delays in the delivery process are caused by
disruptions in the supply chain processes, production, storage, shipping, and
transportation and unloading. Delays are considered the principal barrier in achieving
Figure 6.
Main uncertainty causes,
clusters and sources
IJLM a high level of delivery performance, since disruptions the supply chain processes have
a knock-on effect on transport reliability.
21,1 According to the focus groups participants, delays are mostly caused by three factors:
road network congestion, supply disruptions, and operational problems in unloading and
loading. Road network congestion is an external uncertainty source (see Figure 5) and
participants commented that it can be predictable in some cases but totally random and
unexpected in others. By applying routeing algorithms, the carrier can possibly predict
58 the expected congestion within the road transport network, so they can estimate the
fastest possible route. However, events such as accidents are not predictable at all,
although it was commented that their occurrence can be mitigated by the application of
GPS systems combined with the development of alternative plans regarding routeing.
Supply disruptions in the production and shipping process can have a negative
impact on the delivery process as well. This type of disruptions mostly occurs at the
shipper. This is more evident when the supplier is located overseas, so there is less
control over quality measures and delivery of overseas operations. Therefore, supply
disruption can be mitigated by developing a tight relationship with the shipper. On the
other hand, delays can originate in the unloading and loading process at both the
shipper and customer. Problems at unloading and loading facilities within the logistics
triad can be initiated by, for example, the unavailability of staff or unsuitable facilities
for loading and unloading.
In the cause-and-effect exercise, as shown in Figure 7, the focus group participants
concluded that this uncertainty cluster is due to a general lack of awareness at the
Sales Department of the transport process. So, when a new contract is signed and
agreed the targets and responsibilities that the carrier have are decided without having
a clear framework in terms of key performance indicators (KPIs) to monitored and
control the delivery process. This is the reason why usually there is not adequate
Figure 7.
Findings from the cause-
and-effect exercise
pricing model to charge the customer and shipper for inefficiencies, e.g. delays at Uncertainty in
loading and unloading bays, in the delivery process generated by them. logistics
Demand and information issues operations
This theme was considered the second most important barrier to achieving a high level
of logistics performance. Most of the group participants affected by this theme are
from shippers and customers, with 22 and ten occurrences, respectively (Figure 5). 59
These numbers are disproportionate to the number of attendees from these triad
members in the focus groups. In many of the suppliers that took part in the focus
groups, the demand from customers is highly volatile and suddenly changes due to
seasonality factors and unexpected promotions. Also, sub-optimal inventory policies
that do not include transport can increase dramatically the delivery frequency, and
consequently the likelihood of failure within the delivery process.
Demand and information issues originate from volatility of customer demand,
insufficient demand forecast accuracy, lack of information visibility, and sub-optimal
inventory policies imposed by the customer (Figure 5). Seasonality factors like the
weather can have a considerable impact on demand volatility, but unnecessary
promotions set by the customer can also produce sudden changes in the demand trend.
This can cause unexpected short-notice extra transport deliveries or last minute
cancellations of previously agreed loads. Meanwhile, insufficient information visibility
can reduce the accuracy of demand, increasing the levels of safety stocks at the shipper
and the number of unnecessary transport movements. Insufficient demand accuracy
can have a knock-on effect on the demand volatility of transport regarding volume.
In addition, a sub-optimal inventory policy designed by the customer without
including transport operations into the equation can increase the frequency of deliveries.
Therefore, the demand for transport artificially rises, adding an extra variable to the
complexity involved in the delivery process. This can have a negative impact on
transport utilisation and increase costs. Although one participant particularly identified
just-in-time as a cause of this, a more general view was that transport is often ignored in
inventory management. However, participants commented that this uncertainty can
potentially be mitigated by the implementation of horizontal integration initiatives, such
as inventory and transport consolidation either by the shippers or the carriers.
As depicted in Figure 7, the findings from the cause-and-effect exercise regarding
the root cause(s) of variable demand and/or inaccurate forecast were that this
uncertainty cluster occurs primarily because of insufficient coordination and
communication in the process of demand management and volume forecast within the
logistics triad. However, participants agree that there is not enough coordination and
communication within the logistics triad due to the fact that customers and shippers
are not properly penalised or charged for the volume forecast inaccuracy and/or late-
notification of extra volumes. In particular, there is not an appropriate pricing model
that can encourage them to provide the carrier with accurate and timely information on
the volumes to be moved.
Delivery constraints
Delivery constraints are restrictions in the delivery process that can limit normal
transport operations. They usually occur at the customer facilities, but sometimes
happen at the shipper’s facilities. Delivery constraints are considered by participants
the third most significant barrier in transport operations, since they can restrict the
IJLM unloading processes, causing queues that potentially delay the return of vehicles to
other loading points.
21,1 Delivery constraints are a result of three main factors: delivery curfews at the
customer facilities, tight delivery windows imposed by the customer, and limited
storage capacity at the customer depots (Figure 5). As with road network congestion,
delivery curfews are an external uncertainty source. Examples of the reasons for
delivery curfews include security issues with inventory and delivery drivers
60 (particularly with early morning and late night deliveries), or due to local restrictions
imposed to improve the quality of life for local residents. Limited storage capacity at
the customer distribution centres and stores restricts the volume of the delivery and
increases the delivery frequency, and as a consequence, the number of vehicles arriving
to storage points. This can encourage tighter and tighter delivery windows.
Six participants agreed that the tight delivery windows that the customer imposes on
carriers and shippers have a negative effect on the overall transport costs. They cause
excessive queuing time for vehicles. This increases the transport costs due to the idle
time of vehicle and drivers waiting for unloading. Delivery windows can also have a
knock-on effect on transport performance since transport journeys usually occur in
series. But participants felt that the negative effect of delivery windows can be mitigated
by tighter coordination from the customer side to increase synchronisation between
carriers, and greater levels of feedback information from the carrier to the customer.
According to the results of the cause-and-effect exercise presented in Figure 7,
delivery constraints are not mitigated appropriately due to the fact that generally
customers do not undertake a proper review of locality to asses the existent delivery
constraints at loading bays located in restricted areas. The only response that
customers have to mitigate delivery constraints are very tight delivery windows that
cause excessive queues and delays at distribution centres. The focus group
participants agreed that that occur due to the fact that the supply chain relationships
between customers and carriers or shippers are not very good.
Lack of coordination
A lack of coordination within the logistics triad and at the individual-company level
can cause disruptions in the delivery process. However, if there is a high level of
coordination within the triad, it can represent the principal enabler in reducing
uncertainty. Lack of coordination as a theme represents just over 10 per cent of the total
frequency from participants and particularly from enablers.
The main factors that cause a lack of coordination within the triad are high customer
demand for transport flexibility, functional barriers between sales and logistics
departments at the company level and lack of integration between carriers and
customers (Figure 5). In many of the industrial sectors represented, customers require a
high level of transport flexibility. This adds one more variable to the already complex
transport process, so tighter coordination is needed to mitigate the complexity. Moreover,
some participants felt that transport is not integrated in strategic processes, and the level
of communication within the triad is restricted because the carrier is usually a servant
rather than truly a partner. This occurs because within the carrier the sales department
is often disconnected of the logistics function, sales negotiate new contracts without
taking account of the logistics consequences of them. An example was given where the
sales department agrees loose and unachievable contracts with the customer and raises
the customer’s expectations regarding the level of transport service, and then the
logistics function fails to fulfil its expectations. However, a tight contract from the
beginning of the partnership can enable high levels of integration and coordination Uncertainty in
within the logistics triad. logistics
As Figure 7 shown, according to the findings of the cause-and-effect exercise, as
mentioned previously, the focus group participants concluded that the main factor that operations
contributes to insufficient coordination within the logistics triad is absence of an
appropriate pricing model to encourage more coordination and communication within
the supply chain, since the supply chain relationships between carriers, customers, and 61
shippers are not at the necessary state of maturity and trust.
Managerial implications
Although the participants in the focus groups were predominantly from the UK,
the research has identified a number of issues in relation to uncertainty within
transport operations. From this, it is possible to identify some generic managerial
implications. The research has highlighted the importance of looking at the whole of
the logistics triad when dealing with uncertainty as often there are multiple sources
involving the shipper, carrier, and customer. Equally, the research has highlighted
the importance of external factors and managers need to consider how to deal with
these issues. Although the easiest approach is to accommodate them within
operational plans, there is scope for engaging with policy makers to identify ways
forward. Indeed, the policy makers who did participate in the focus groups commented
that they found it beneficial to learn more about the challenges facing the logistics
industry.
Another issue that is becoming important for managers today is the issue of the
environment. Although this was not explicitly discussed within the focus groups, there
are clear links between efficiency and environmental impact. McKinnon (2007)
identifies the key factors that convert product volumes into transport demand. A
number of these factors are clearly influenced by the uncertainty issues identified, such
as (but not limited to):
. number of links in the supply chain – connected to inventory management
policies;
. modal split – influenced by the rigidity of infrastructure and delays within each
mode;
. average load – affected by delivery constraints for multiple drop deliveries;
. average percentage empty running – affected by delays; and
. fuel efficiency – affected by delays.
By focussing on the sources of uncertainty within the logistics triad, companies can
address the root causes of issues, rather than trying to optimise their response based
upon current constraints.
In enabling the above actions, the Logistics Uncertainty Pyramid Model is a tool
that can be applied to identify issues leading to uncertainty and their sources. As
demonstrated through Figure 5, issues can be mapped against their original sources
and from this an improvement plan targeting the appropriate areas can be developed.
Therefore, it can help senior managers and policy makers to identify the main root
causes of the barriers that impede economic and environmental sustainability in
logistics.
IJLM Conclusions and future research
There are four main causes of uncertainty in transport operations – delays, variable
21,1 demand/poor information, delivery constraints, and a lack of coordination. We can
conclude that the root causes of delays and variable demand/poor information is the
absence of an appropriate pricing mechanism through which customers could be
charge and/or penalise for their delays that they originate and their volume inaccuracy
and/or late notification of volume increases. Also, delivery constraints are not properly
62 reviewed locally at unloading destinations and there is generally insufficient
coordination and communication within the logistics triad since the relationships
between carriers, customers, and shippers are far from an ideal state of maturity and
trust. According to our findings, delays are the most important cause of uncertainty for
transport operations, which might be considered an intuitive result, but this research
shows its frequency relative to other issues. The consequence of these is to reduce the
efficiency of transport operations. Also, in the overall focus groups data, road
congestion represents the biggest individual issue leading to uncertainty. Although
congestion due to road works and peak traffic flows can be incorporated into transport
planning, unplanned congestion (for example, due to an accident) leads to greater
disruption. The challenge for transport providers is to mitigate the impact of this
unplanned congestion without impacting significantly on the efficiency of their
operations.
In terms of the sources of uncertainty, most issues arise from the shipper, carrier,
customer, or external environment. Only a limited number of issues relating to control
systems were raised. This is surprising given that control systems are likely to have a
major influence in determining the level of transport demand, and perhaps reflects the
lack of integration of transport operations with the rest of the supply chain. In looking
at individual roles within the supply chain, enablers particularly identify lack of
coordination as a major issue, whereas members of the logistics triad were more
concerned with operational issues. However, integration within the triad may enable
businesses to address these more effectively.
Our model has been refined based only on participants’ perceptions. As we said in
the method section, further empirical-based research is needed to quantitatively
validate it, for each cluster identifying the frequency with which it occurs and the
impact on economic and environmental performance. This will further strengthen our
understanding of the main uncertainty causes within supply chains in the UK. Those
internal to the logistics triad can be addressed while external issues need to be
accommodated, so methods for achieving both of these need to be identified through
the research. Furthermore, given the importance industry has attached to road
congestion, new and novel approaches enabling transport planning to respond to
unpredictable congestion needs to be developed, with minimal impact on both
environmental and economic performance.
At this stage of the research, the model has been refined through the application of
the focus group method. The main aim of this stage of the research was to explore
which are the main causes of supply chain uncertainty that impact on transport
operations rather than provide a comprehensive list of all uncertainties. The model
needs to be verified through the application of the survey method, so potential
participating companies can give frequency and impact scores to each uncertainty
causes found in the focus groups. The model should also be tested through the
investigation of real-world situations, measuring the marginal impact, in terms of
unnecessary miles, and probability of the supply chain uncertainty causes derived from
the focus groups. Moreover, the transport uncertainty model needs to be incorporated Uncertainty in
within a wider business process re-engineering approach to proactively develop and
evaluate solutions to reduce transport uncertainty within supply chains.
logistics
operations
Note
1. European Logistics Users Providers & Enablers Group (ELUPEG), available at:
www.elupeg.com/
63
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Further reading
Forza, C. (2002), ‘‘Survey research in OM: a process-based perspective’’, International Journal of
Operations and Production Management, Vol. 22 No. 2, pp. 152-94.
Frohlich, M.J. (2002), ‘‘Techniques for improving response rates in OM Survey’’, Journal of
Operations Management, Vol. 20 No. 1, pp. 53-62.
Corresponding author
Vasco Sanchez-Rodrigues can be contacted at: [email protected]