Cyber physical ecommerce logistics system: An implementation case in Hong Kong

https://doi.org/10.1016/j.cie.2019.106170Get rights and content

Highlights

  • A unified CPS-enabled platform solution for (virtual) ecommerce logistics chains.

  • Industrial wearable-enabled real-time field data capturing and heterogeneous resource coordination.

  • Synchronization mechanisms for optimal and agile supply chain (re)configuration and (re)scheduling decisions.

  • Major pilot cases of SMEs in Hong Kong with both qualitative and quantitative evaluations to verify the proposed solution.

Abstract

Space limitation confines cross-border ecommerce logistics development in Hong Kong. Information technologies and practices lagged types are still used in most of small and medium sized enterprises. In order to upgrade the ecommerce logistics by making full use the cutting-edge technologies and principles, this paper proposes a multi-layer cyber physical system-enabled cloud platform to achieve logistics assets virtualization and real-time control, execution, reconfiguration as well as simultaneous-and-punctual process synchronization. In physical world, industrial wearable technology transforms traditional assets into cloud assets. In cyber world, synchronization mechanisms improve the utilization ratio of spaces and resources while reducing waiting and wastage. An implementation of the platform is conducted through two major pilot cases. It shows that this platform can realize modularization of technology application with sufficient productivity improvement and bring about step-change paradigm for ecommerce logistics.

Introduction

Cross-border ecommerce is developing rapidly. According to recent report (HKTDC Research, 2015), the number of people carrying out overseas online shopping in China is 35.6 million in 2018, while the value of overseas online shopping transactions jumps to RMB1000 billion. As a special and open region of China, Hong Kong possesses advantages in bringing foreign goods onto the mainland market and may wish to expand its B2B and B2C ecommerce markets. However, fierce regional competitions challenge Hong Kong’s role as an Asia-pacific logistics hub since the neighbouring regions develop their logistics industry fast towards higher level of automation and intelligence.

Ecommerce logistics park, as a place where goods are physically consolidated, is one of the efficient and effective approaches to alleviate the cross-border ecommerce logistics development in Hong Kong. Enterprises are able to share cost-effective infrastructure and communal services such as managed workspace, distribution centre, transportation, etc. (Qiu, Luo, Xu, Zhong, & Huang, 2014). However, it is difficult to physically build a large ecommerce logistics park considering the limited space in Hong Kong (Huang, Chen, & Pan, 2015). New operation models and mechanisms should be established. The concept of “virtual enterprises” is used to develop a system architecture to integrate and control the interoperability of the distributed, heterogeneous and concurrent systems in the participating organizations (Gou et al., 2003, Park and Favrel, 1999). Virtual ecommerce logistics park platform can thus be designed and developed with analogy to virtual enterprise, which comprises multiple equal-interest companies coming together to form an alliance to exploit shared resources to adapt to fast-changing market. After several years of research efforts, the maturing of physical internet (PI) also offers a solid theoretical support for resource virtualization and sharing of cross-border ecommerce logistics (Pan, Ballot, Huang, & Montreuil, 2017). For example, physical elements of PI could enable fast, efficient and reliable multimodal logistics fulfilments, by allowing ease of transfer of π-containers between combinations of road, rail, water and air transportation (Montreuil et al., 2010, Walha et al., 2016). It is also believed that PI-enabled intelligent planning, coordination and control will facilitate process synchronization in the complicated warehousing operations (Kong, Chen, Luo, & Huang, 2016).

New operation model requires the facilitation of advanced system technologies. However, information technologies and practices are still lagged in most of small and medium sized enterprises (SMEs) in Hong Kong due to the capital constrains and technical threshold.

  • Lagged IT architecture and solution: the existing IT infrastructure is not well integrated with the operation processes to address industrial challenges. Reconfigurable task coordination and control across key stages of ecommerce order fulfillment are still scarcely concerned. Although the enterprise information systems (e.g. warehouse management system and fleet management system), handheld devices and automation equipment (e.g. automated storage and retrieval system) have been applied, the gap between planning & scheduling level and execution level still exists.

  • Traditional data collection and interoperation method: the operations involve intensive labor and paper-based manual data collection. The front-line field information is delayed and even missing sometimes. Traditional handheld devices for frontline operators are not flexible enough to deal with complex situations. The location of large amount of machine-type assets (e.g. forklifts and shelves) cannot be traced and tracked so that delivery delay often occurs.

  • Unsynchronized resource scheduling and order fulfilment process: the unsynchronized sorting may confine the utilization of space in a warehouse where the buffer for holding products is limited. The firstly arrived items may take up the limited space waiting for the later ones in the buffer before dispatching. How to improve the utilization ratio of spaces and resources is becoming even more challenging when the demand is dynamic.

  • Unstructured automation in Hong Kong: full automation solution is usually capital-intensive, equipped with high-tech robotics and facilities. The short terms of warehouse service contracts with high rents and small space in Hong Kong also deter either warehouse owner or user to purchase modern warehousing facility. The warehouse user could not enjoy the full benefit from the advanced facility in a short term, while the warehouse owner may need to discard the facility due to the changing demand of new users (Yang, Lan, & Huang, 2019).

A solution with associated driving mechanisms is needed for the upgrade and transformation of Hong Kong’s ecommerce logistics industry. Several cutting-edge technologies can be applied to facilitate agile ecommerce operation management. Cyber physical system (CPS) is defined as transformative technologies for managing interconnected systems between its physical assets and computational capabilities (Baheti & Gill, 2011). By integrating CPS with production, logistics and services in the current industrial practices, it would transform today’s factories into an Industry 4.0 factory with significant economic potential (Lee, Bagheri, & Kao, 2015). Currently, most CPS studies and applications are focused in manufacturing realm (Monostori et al., 2016, Wang et al., 2015). Leitão, Colombo, and Karnouskos (2016) presented CPS-enabled industrial automation implementation based on four European innovation projects. The human-centered activities within cyber physical productions are designed, modelled and evaluated to improve the overall factory performance and organization (Fantini et al., 2018, Kaasinen et al., 2019, Peruzzini et al., 2018). Research effort in ecommerce logistics area using CPS technologies is still limited (Boysen, de Koster, & Weidinger, 2018).

Based on CPS technologies, this paper proposes a unified Cyber Physical eCommerce Logistics System (CPeLS) framework from real-time field data capturing, through heterogeneous resource coordination and scheduling, to optimal supply chain synchronization decisions. Several research questions and corresponding research approaches are put forward as follows:

  • How to create a CPS-enabled virtual ecommerce logistics platform to integrate and control the interoperability of the distributed, heterogeneous and concurrent resources of participating companies? Industrial wearable technologies are applied to define, connect and (re)configure heterogeneous objects deployed in ecommerce logistics scenarios. Traditional assets are thus upgraded into cloud assets. Cloud asset-enabled smart buffering, smart consolidation and smart patrolling solutions are also proposed. Participating SMEs can easily deploy and use such shared services.

  • How to establish an intelligent coordination system that is able to interact with diverse assets for task execution and collaborative decision making? The cloud assets and job pool management services are introduced to manage the multi-source data collected from the physical space and synchronize them to cyber space. The system can be deployed in both physical and cyber world to offer tactic reasoning and control for all the registered cloud assets with maximized optimization of resource coordination.

  • How to facilitate the process synchronization of ecommerce logistics chain from supply side to demand side with the real-time information provided by CPS technologies? This paper introduces a real-time visibility and traceability dashboards for ecommerce logistics chain with synchronization mechanisms, which consider both simultaneity and punctuality as performance measurements. The mechanisms can be also (re)designed and implemented to deal with both market and system discrepancies.

The remainder of this paper is organized as follows. Section 2 introduces the architecture of the proposed platform and discusses design and development considerations to make the platform into a technical reality. Industrial wearable-enabled cloud logistics assets are also discussed. Two key innovative and enabling components are examined in the following sections respectively, namely iCoordinator and smart operations (Section 3) and iSync services (Section 4). In Section 5, two real-life pilot cases from Hong Kong SMEs are used to demonstrate the necessity and usefulness of presented systems and mechanisms. Section 6 concludes the paper by providing insights gained from implementation and discussing several aspects for improvement.

Section snippets

System overview

The overall platform is built on the cloud computing architecture to enable three levels of cloud service: Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS) and Software-as-a-Service (SaaS). The overall architecture is illustrated in Fig. 1, which enables several technologies to be systematically integrated, deployed and shared in logical layers. The proposed platform architecture is consistent with the standard enterprise hierarchy defined by ISA-95 enterprise-control system

iCoordinator for smart operations

Based on the innovative technologies of CLAs, many implemented instances have been developed. Considering the real-world working environments in ecommerce logistics park, three typical CLAs-enabled operations have been created, including smart buffering, smart patrolling and smart consolidation. iCoordinator will enable the interoperability of these smart operations.

iSync for smart processes

iSync is responsible for working out optimal task allocation plans and onsite schedules for the operation and process within the ecommerce logistics parks using advanced mathematical models or solution algorithms. The key users might be centre managers, planners and schedulers. As seen in Fig. 7, the iSync service comprises of supply synchronization, operation synchronization and order synchronization, which correspond to the supply process, warehouse consolidation process and delivery process

Case study

The implementation of CPeLS platform is conducted in close collaboration with both mainland and Hong Kong business partners from manufacturing, logistics, and retailing industries. More specifically, there are two modes of pilot implementation, including configuration mode pilot for SME enterprises and customization mode pilot for representative global enterprises. Yu et al., 2017, Kong et al., 2017 have discussed customization mode using a case in furniture industry. This article will focus on

Conclusion

This paper presents a CPS-enabled platform solution for addressing pain-spot issues in (virtual) ecommerce logistics chains. Problems in the traditional ecommerce logistics parks in both Hong Kong and mainland China have been identified. An innovative multi-layer cloud system architecture has been established to sense, process and manage real-time events in the complicated ecommerce logistics scenarios. Core technological innovations, as main components of CPeLS platform, have been examined

Acknowledgments

This research is supported by the HKSAR ITC/LSCM R&D Center through the Innovation and Technology Support Program (Project Reference: ITP/079/16LP), the National Natural Science Foundation of China under grant 71801154 and Science Foundation for Youth Scholars of Shenzhen University under grant 2019070 & 189692. Acknowledgments are also given to Zhejiang Provincial, Hangzhou Municipal and Lin'an City Governments for partial financial supports. The Research Team is also grateful to the

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