Operations Research Management Science Today - International Operations Research

<BODY bgcolor="#ffffff" link="cc0000" vlink="cc0000" text="#000000"> <img src="../cleardot.gif" width=1 height=1 vspace=4 border=0><br>   <table border=0 cellspacing=0 cellpadding=0 width=480><tr valign=top> <td width=10><img src="../cleardot.gif" width=1 height=1 hspace=4 border=0></td> <td width=470> <FONT face="verdana, arial, helvetica" SIZE=2><B><I><A HREF="../../ORMS.shtml" TARGET="_top">OR/MS Today</A> - April 2003</I></B></font><BR> <hr size="1"> <img src="cleardot.gif" width=1 height=1 vspace=4 border=0><br> <IMG SRC="art/Int-OR.jpg" WIDTH="468" HEIGHT="183"> <font face="times new roman, times"> <img src="../cleardot.gif" width=1 height=1 vspace=4 border=0><br> <FONT face="verdana, arial, helvetica" SIZE=2><B>International OR</B></FONT><br> <IMG SRC="../barbluehook.gif" WIDTH="468" HEIGHT="4"><br> <img src="../cleardot.gif" width=1 height=1 vspace=8 border=0><br> <FONT SIZE="+2"><B>Logistics,<BR> Asia-Pacific Style</B></FONT><BR> <img src="../cleardot.gif" width=1 height=1 vspace=2 border=0><br> <FONT SIZE="+1"><I>Singapore-based institute encourages "out-of-the-box" thinking when stock answers just won't work</I></FONT><BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> <FONT face="verdana, arial, helvetica" SIZE=2><B>By John J. Jarvis</B></FONT><br> <hr size="1"> <img src="../cleardot.gif" width=1 height=1 vspace=12 border=0><br>    Asia Pacific (AP) is a region of contrasts and contradictions, a region where logistics are not always logical, a region where those who practice logistics have to quickly reorient their thinking. In many places in China, for example, forget automation as a solution; just throw people at the problem. Most movements in AP are cross-border; every airline flight in Singapore is international. In AP, almost all transit times are expanded dramatically; Sydney to Singapore is eight hours flying time. In parts of Tokyo, park the truck and use a pushcart; the streets are too narrow and too crowded for vehicles. The list goes on and on.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> OK, you've already found five examples where this is not true. Quite right; it depends on what you're doing and where you're doing it. The point here is that in AP you have to let go of the stock answers and begin to think "out of the box." That is what we are trying to do in The Logistics Institute-Asia Pacific (TLI-AP) (<A HREF="http://www.tliap.nus.edu.sg" TARGET="_new">www.tliap.nus.edu.sg</A>).<BR> <img src="../cleardot.gif" width=1 height=1 vspace=12 border=0><br> <FONT face="verdana, arial, helvetica" SIZE=3><B>The Logistics Institute-Asia Pacific</B></FONT><BR> <IMG SRC="../barbluehook.gif" WIDTH="468" HEIGHT="4"><br> <img src="../cleardot.gif" width=1 height=1 vspace=2 border=0><br> TLI-AP was created in 1998 in Singapore as a collaboration of the National University of Singapore (NUS) and the Georgia Institute of Technology (Georgia Tech). It is patterned after The Logistics Institute (TLI) at Georgia Tech, and its mission is to be the premier institute in Asia Pacific, nurturing logistics excellence in research and education.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> Base funding for TLI-AP comes from the two universities and five Singapore government agencies: Economic Development Board (EDB), Agency for Science Technology and Research (A*STAR), Civil Aviation Authority of Singapore (CAAS), International Enterprise Singapore (IE Singapore) and Maritime and Port Authority of Singapore (MPA). The TLI-AP base budget is augmented by support from industry, research grants and public offerings.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> TLI-AP grew out of the Singapore government's "World-Class Universities" (WCU) Program, an initiative to attract 10 top universities in the world to Singapore. The goal is to transform Singapore into the knowledge-hub of Asia Pacific. As a result, we enjoy the strong and active support of many government agencies, support that has benefited us greatly in our development.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> TLI-AP reports to a Board of Directors comprised of representatives from governmental agencies, industry and the two universities. The Board supports two committees: Audit and Industry.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> The Industry Committee consists entirely of industry representatives. A "hands-on" group, the Industry Committee has been instrumental in shaping our relationship with industry by helping guide our degree, professional education and industry membership programs.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> TLI-AP draws on the faculty of Georgia Tech and NUS. Approximately 25 faculty from Georgia Tech (ISyE, supported by Math and Management) spend from one week to one year at TLI-AP. About 20 NUS faculty (Engineering, Management, Computer Science and Science) participate in the activities of the Institute.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> In addition to the 45 to 50 faculty from Georgia Tech and NUS, there are approximately 35 full-time personnel at TLI-AP, including an executive director (me), two deputy executive directors (Academics and Industry), two program directors, eight faculty fellows, 12 research students and engineers, as well as an administrative support staff of 10. My contribution is staying out of everyone's way so they can do their jobs.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> Insofar as possible, the Institute encourages the faculty to work in pairs, one NUS and one Georgia Tech faculty member together, advising students, leading research efforts and working with companies. We do not require joint teaching of courses; that is up to the faculty. This cooperation is intended to meld the two groups into a single strong and effective team. It takes a great deal of effort to get faculty to work together, whether in the same or different departments or universities, but the rewards are worth the effort.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> The Institute has four major activities (programs): degreed education, research, executive and professional education, and industry outreach.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> <B><I>Dual Master's Program.</I></B> The Dual Master's Program (DMP) is intended to train tomorrow's AP logistics leaders. Each year, the program takes in approximately 25 students from all over the world. These students spend two semesters at NUS and one semester at Georgia Tech. They write a research thesis on an industrial problem and receive two master's degrees  one from NUS and the other from Georgia Tech.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> As part of the program, the students take industry tours in Singapore and Atlanta, and they attend industry-led seminars. Their thesis is about a real problem of interest to their sponsoring company. We do everything possible to see that they are introduced to the real world of logistics practice.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> A unique feature of the DMP is that one of the requirements to get into the program is that applicants must be accepted for future employment by a logistics-related company, provider or user. This is the first time in my memory that students are offered a job before starting their program of study. These are not seasoned veterans; they are by-and-large fresh bachelor of science graduates who have no prior association with the particular company. TLI-AP will, from time to time, accept self-financed students, but this is rare.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> These students, with their advisors, have tackled some interesting business/engineering problems for their supporting companies. Since the students will be going to work for the companies after they complete their thesis, we encourage the advisors and companies to give them difficult issues to deal with so that they can transition into development and implementation of solutions after their graduation.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> The Double Degree Program (DDP) is offered jointly between the School of Engineering at NUS and Tsinghua University, perhaps the leading university in China. The three-year degree program concentrates on China land transportation and logistics. I like to think of it as providing the logistics "infrastructure" for China, but it is more than that.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> Tsinghua students may apply for the program. At the end of their first year they are selected by NUS to come to Singapore for two years. They write a thesis under the direction of a Tsinghua and NUS professor. When they complete the program they receive two degrees: the Master's of Science (Engineering, Computer Science or Mathematics) from Tsinghua and the Master's of Science (Transportation and Systems Management) from NUS.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> DDP students are supported by companies during their stay in Singapore. The structure of the company scholarship program for DDP is similar to that for DMP, except that companies pay the full cost and can place the students anywhere in the world after graduation. Many are considering placing them in their operations in China to take maximum advantage of their education.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> <B><I>Research.</I></B> The TLI-AP research program focuses on important issues to Singapore. We currently have joint research teams in air logistics, sea logistics, chemical logistics and logistics security. Given statistics about Singapore, it is fairly easy to understand why these topics are important. From the TLI-AP Web site, in 1999: <UL> <LI> Singapore was the world's 10th busiest airport in metric tons handled.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=2 border=0><br> <LI> Singapore was the third-largest petroleum-refining center in the world. </UL> Finally, given the events of 9/11, the importance of logistics security is evident.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> Each of these research teams has two leaders  one from Georgia Tech and the other from NUS  as well as faculty and research students from both universities. The teams coordinate with industry partners to help shape their research agendas and provide real problems and data, ensuring relevance of the results. The research teams spend the first year writing white papers on each area. The white papers describe the current development and suggest a roadmap for research in each area. These are available on our Web site.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> To date, the teams have produced numerous technical reports on a variety of subjects. A number of these reports relate to interesting AP problems.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> <B><I>Executive/Professional Education.</I></B> Our executive/professional education programs utilize many of those offered at TLI of Georgia Tech, but we go further. In addition to short courses, logistics conferences, and academic and industry seminars, we offer a Distinguished Lecture Series featuring visiting dignitaries from academia and industry. Our programs draw between 60 and 300 participants. To say that business in Singapore is hungry for logistics knowledge would have to be an understatement.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> Our goal is to offer one professional education event per week. We are already coming close to doing this. We are always looking for new talent and ideas in this area. In addition to the Georgia Tech faculty, we have featured Hau Lee of Stanford and, soon, Martin Christopher of Cranfield. We want to bring in the very best people we can to speak to the working professionals here in Singapore and the region.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> <B><I>Industry Outreach.</I></B> In our industry outreach program we offer a membership program for industries of all sizes and needs to cooperate with us in a variety of ways. We work hard to involve industry in all aspects of our activities. Staying close to industry is one of the keys to our success.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> TLI-AP currently has 36 significant relationships with various industries in the AP region. These include logistics providers, as well as logistics users and governmental agencies.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=12 border=0><br> <FONT face="verdana, arial, helvetica" SIZE=3><B>Interesting Logistics Problems</B></FONT><BR> <IMG SRC="../barbluehook.gif" WIDTH="468" HEIGHT="4"><br> <img src="../cleardot.gif" width=1 height=1 vspace=2 border=0><br> I mentioned earlier that we must be prepared to change our thinking to adequately address logistics problems in AP. Let me give some examples.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> <B><I>High-tech does not always dominate low-tech.</I></B> A team of TLI-AP researchers visited a warehouse in China where they were given a tour of the facilities. During the tour they were surprised at the complete lack of automation. There were few racks, no AGVs, forklifts or any other people savers. During the discussion session they couldn't help but comment of the lack of automation. Their host, an executive with a multi-national corporation, replied that his operations research staff had looked into automation, but that it could not be justified. Salaries in that region were so low that no amount of automation could ever be justified.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> <I><B>What is lower than "low-tech"?</B></I> I visited Guangzhou, China, on TLI-AP business early in 2003. As we were traveling through the city I kept noticing trucks stopped along side streets where workers were offloading boxes of goods onto bicycles and motorcycles. A rider would tie down as many boxes as he could carry on the back of his bicycle (the riders clearly carried more than I thought safe, although I never witnessed any accidents). These riders would then deliver the boxes of goods to retail shops. The whole thing reminded me of a time when I was 14 and had a paper route.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> This "distribution" system is surely repeated from Vietnam to Indonesia. It is an interesting question as to why this is the case because it is unlikely to be seen in Singapore, Australia or New Zealand. I can only put two hypotheses forward. It may be a case of: 1) fitting the price to the customer, or 2) working with what you have. More developed countries tend to be better off with respect to both issues, although Japan is a special case due to the narrow, crowded streets.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> <B><I>Land transportation is not an option.</I></B> Indonesia consists of approximately 13,000 islands, many of which are quite small. About one thousand of the islands have permanent settlements. A logistics system designed to serve Indonesia, in large part, must be made up of air and sea legs.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> This problem is by no means unique, just unusual. In some ways it is similar to the problem of visiting oil rigs off the coast of the United States. In the oil-rig problem, the points tend to be geographically closer and amenable to the use of helicopters.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> Indonesia does have some large cities, such as Jakarta, where somewhat normal logistics takes place. Nevertheless, freight like food, medicine and mail have to be distributed among the various locales.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> <B><I>Step up to the boat dock, the bank will be here any minute.</I></B> Along the klongs (canals) in Bangkok, the Thailand government instituted a banking service to reach the people living along the river. These boats contain tellers, guards and other personnel to provide the banking services for their customers. With all of its klongs, Bangkok is dubbed the "Venice of the East."<BR> <img src="../cleardot.gif" width=1 height=1 vspace=12 border=0><br> <FONT face="verdana, arial, helvetica" SIZE=3><B>Hub-and-Spoke System</B></FONT><BR> <IMG SRC="../barbluehook.gif" WIDTH="468" HEIGHT="4"><br> <img src="../cleardot.gif" width=1 height=1 vspace=2 border=0><br> Singapore and UPS Air have much in common. Both operate essentially as a "hub-and-spoke" system. Singapore is ideally positioned between Asia and Europe. Ships take freight produced all over Asia to Singapore where it is consolidated into loads placed on outgoing ships to India, the Middle East and Europe. Shippers and carriers benefit from the connectivity generated in such a system.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> It is not unusual to create hub-and-spoke systems in logistics; what is unusual is that it would naturally occur. One possible reason why it might occur in Singapore is that the island republic is located on many of the natural shipping lanes between key points in Asia and Europe. Since the freight will need to be deconsolidated and consolidated somewhere, it would be logical to find a point along the lanes where many of them come together. Singapore is just such a place; moreover, it has deep-water ports and ideal, tropical weather.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> This may be one reason why Malaysia decided to build a new large port immediately across the border from Singapore, even when it already had several other ports not at full capacity. Currently, Malaysia and Singapore are in competition for deconsolidation and consolidation shipping business in the region. Malaysia managed to lure the first and third largest shipping companies with special concessions. Beyond this, it has gotten harder to lure any more away. In fact, the third largest shipping company subsequently moved some of its business back to Singapore. This might be explained in two ways.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> PSA Corporation, Singapore's privatized port operator, in response to losing two large shipping companies, cut its rates and provided more flexibility. Second, by virtue of its size, Singapore offers great connectivity to smaller, regional shipping lines. A hub-and-spoke logistics system provides connectivity to the smaller shipping players. They can call on ports and gather loads that they take to the hub. There it is deconsolidated and consolidated into loads going out on its way to world markets.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> <B><I>Just about everything is international.</I></B> Every day we read that Asia is becoming the manufacturing complex for the world. This results in intra-Asian supply chains and supply chains linking Asia with Europe and North America. These supply chains involve several countries, each with its own paperwork and procedures. Even if international zones are involved, there still is usually paperwork associated with the chain, and dealing with this paperwork adds complexity.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> Many Asian countries manufacture goods for the rest of the world. In such cases customs on both sides of the chain become involved. If the United States is the other end of the supply chain, then U.S. Customs becomes involved and logistics security is added to the chain. Asian countries are finding that substantial complexity is added to the process as security policies and procedures are added by U.S. Customs. It is the management of these processes that provides new challenges for Asian logistics professionals.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=12 border=0><br> <FONT face="verdana, arial, helvetica" SIZE=3><B>China, the 5,000-Pound Gorilla</B></FONT><BR> <IMG SRC="../barbluehook.gif" WIDTH="468" HEIGHT="4"><br> <img src="../cleardot.gif" width=1 height=1 vspace=2 border=0><br> All eyes are on China. Will China become the supplier to the world? What should companies do to position themselves for a piece of the action? How will governments react to the expected change in China-world relationships? These and many more strategy and tactics questions are put forward daily in the hallowed halls of education, business boardrooms and legislative chambers. TLI-AP is no exception.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> TLI-AP initiated a market research effort to understand what is happening in logistics in China and elsewhere in AP (one should never forget India). Our Web site includes surveys, interviews, theses and other research reports focused on doing (logistics) business in China. While China is poised to become the world's manufacturing leader, we should not expect other AP historical producers  Japan, Korea and Taiwan  to simply "roll over and play dead."<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> The United States has studied Europe for centuries. In the last decade, our attention turned to Central and South America. We must develop a greater understanding of the Asia-Pacific region and its effect on our lives. AP's time is coming no matter what you and I do, so we might as well get ready by becoming better informed. In the area of logistics, TLI-AP is trying to help.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=12 border=0><br> <FONT face="verdana, arial, helvetica" SIZE=3><B>Acknowledgment</B></FONT><BR> <IMG SRC="../barbluehook.gif" WIDTH="468" HEIGHT="4"><br> <img src="../cleardot.gif" width=1 height=1 vspace=2 border=0><br> The author thanks several people, including Jerry Banks, Harvey Donaldson, Alan Erera and Nukala Viswanadham for their helpful comments.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=4 border=0><br> <IMG SRC="../barbluehook.gif" WIDTH="468" HEIGHT="4"><br> <img src="../cleardot.gif" width=1 height=1 vspace=2 border=0><br> <FONT face="verdana, arial, helvetica" SIZE=2><I><B>John J. Jarvis</B> is executive director of The Logistics Institute-Asia Pacific and professor of Industrial and Systems Engineering at the Georgia Institute of Technology. A past president of the Operations Research Society of America, Jarvis formerly served as chair of the Industrial and Systems Engineering Department at Georgia Tech.</i><BR>  <img src="../cleardot.gif" width=1 height=1 vspace=5 border=0><br>  <img src="../barblue.gif" width=468 height=1 border=0 alt=" "><br> <img src="../cleardot.gif" width=1 height=1 vspace=8 border=0><br> <font face="verdana, arial, helvetica" size="1"> <CENTER><script type="text/javascript"></script> <script type="text/javascript" src="http://pagead2.googlesyndication.com/pagead/show_ads.js"> </script></CENTER><br> <img src="../cleardot.gif" width=1 height=1 vspace=8 border=0><br> <LI> <A HREF="tocfr.html" Target="_top"><I>Table of Contents</A><br> <img src="../cleardot.gif" width=1 height=1 vspace=4 border=0><br> <LI> <A HREF="../../ORMS.shtml" TARGET="_top"><I>OR/MS Today</I> Home Page</A><br>  <img src="../cleardot.gif" width=1 height=1 vspace=8 border=0><br> <img src="../barblue.gif" width=468 height=1 border=0 alt=" "><br> <b><i>OR/MS Today</i></b> copyright � 2003 by <A HREF="http://www.informs.org/" target="_new">the Institute for Operations Research and the Management Sciences</a>. 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