Integrate Optimise Sustain

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1 Prepared by James Horton August 2012

2 Overview The intent of this paper is to describe how rail automation can be integrated with logistics scheduling. It provides general information on applying systems thinking concepts to leverage rail automation to identify new opportunities within the logistics scheduling and execution processes. Mining companies and their related Heavy Haul Rail Operations are increasingly introducing more sophisticated systems to support their current growth cycles and drive for efficiency. Complex automation projects such as driverless trains are providing opportunities that go beyond simple process efficiencies. They present opportunities for driving business change that will dramatically increase the effectiveness of operations. However, this requires that automation is successfully leveraged. Rail Automation that is successfully integrated with the associated activities within Logistics Scheduling enables opportunities to both optimise current business processes and move to entirely new ones. Complex automation projects such as driverless trains are providing opportunities that go beyond simple process efficiencies. They present opportunities for driving business change that will dramatically increase the effectiveness of operations. Although there are standard approaches that can be applied separately to Rail Operations and Logistics Scheduling, the Heavy Haul Rail Operations of owner operated mining companies located in remote regions such as the Australian Pilbara provide a unique set of circumstances that are not catered for in existing pit to port supply chain management systems. Also, each company is coming from a different starting place and needs to consider which automation choices will drive efficient rail operations and increase throughput. I ll provide my view on how automation can be analysed to identify and leverage the logistics scheduling opportunities that it provides Automation Considerations So first off, let s briefly consider why we are automating? Is it solely to make a process more efficient? Are we automating to optimise? Are we aiming for fully autonomous operations? Automation is replacing a manual task (e.g. data entry), process (e.g. generating a report) or function (e.g. driving a train) with a technological solution. Automated decision support seeks to present back a choice from a set of possible outcomes, and if it is the best choice then we are attempting optimisation as part of the automation effort. Automation is more than substitution. In the case of organisations that still use a paper train graph for scheduling and recording train movements and associated activities, the replacement electronic train graph provides significantly more benefit than mere substitution. The automation provides new visibility of information to the scheduling and execution processes previously available only on paper.

3 Automation should deliver efficiency but may not deliver effectiveness. Efficiency of a process is about performing functions in the best possible manner with the least waste of time and effort. Effectiveness of a process is about achieving the right outcome. To be effective, the automation needs to produce the intended or expected outcome. Automation does not improve an ineffective process; it achieves the wrong outcome more efficiently! So optimisation endeavours should rework a process to be effective first, and then automate the optimised process. Automation can help move towards optimisation if efficiency gains are directed towards refining existing processes in light of the new information. Automation has another benefit, in that it can be incorporated into a larger system to leverage additional business change. For example, the removal of one of the constraints to train running provides additional flexibility to the associated logistics scheduling processes. We ll look into how systems thinking can help identify these benefits for logistics scheduling, so that logistics scheduling can become more effective, not just more efficient. Systems Thinking Systems thinking is the process of understanding how things influence one another within a whole and that, for a complex system, the whole is greater than the sum of its parts. For an organisation, systems are complex as they consist of people, structures, and processes that work together. Systems thinking proposes the use of a holistic view when considering the resolution of a problem. Systems thinking is a set of habits that seek to understand the components of a system by looking at how they interact with each other, and interact with other systems. Systems thinking assists in maintaining a holistic view of Rail Operations. Consideration of mine and port operations, understanding their needs and impact to rail, uncovers opportunities to maximise the benefit of automation initiatives such as driverless trains. The independent optimisation of the parts of a complex system is unlikely to yield an optimised whole. There is also a focus on circular feedback, rather than linear cause and effect. It aims to prevent thinking that an outcome is dependent upon only the internal processes of a component, rather than its interactions with other components. It protects against the silo effect and the mistaken belief that fixing a problem in one area will alleviate a problem in another. For example, regular yard departures may seem like effective behaviour. However, it can cause up track congestion if another part of the network is having trouble responding to this. It is useful to approach delay accounting with a systems view to ensure cause and effect feeds back into the system. Systems thinking helps to recognises patterns of behaviour that can be considered for automation. For example, the introduction of an electronic train graph will allow train path scheduling decision making to be visible outside of train control. Other teams can understand patterns of behaviour and gain an understanding of the business rules that are being applied. These can be refined to support more effective operation between functional areas, and become candidates for automation efforts. Information and information flow (inputs and outputs) are key considerations with systems thinking. The benefit to getting this right is that automation of a component can be effectively leveraged by surrounding systems. If we consider automation as a means to improve only the internals of a component, we miss opportunities for effectiveness. For example, driverless trains are not simply about removing the variability between drivers. The automation will support different driving strategies depending upon the needs of logistics scheduling. An example of this is discussed further in the paper. As such, there needs to be an information flow between the components to supports this behaviour Boundaries such as control systems and information systems are a useful distinction to consider. Typically there are tighter constraints on control systems, such as train control and driverless trains, and making changes to the technology in this area is more costly. Information systems, such as planning and scheduling systems, typically have more flexibility and the business rules are kept in these systems. The driving strategy to employ, for example where the trains should dwell, is all determined in the logistics scheduling system. The decisions made in this system become paramount to gaining most benefit. Automation should not be attempted in isolation, so understanding boundaries allows consideration to be given to upstream and downstream systems. Automatic Route Setting is a common automation task, with the boundaries being train path schedules from a train scheduling system on one side and route settings within a train control system on the other. If we decide to run trains differently, this can be managed within the train scheduling system. It also moves information between information and control systems, so the information flow should be minimised to support flexible behaviour. Logistics Scheduling Considerations Let s consider logistics within the confines of mining companies with owner operated rail operations, specifically in remote areas. The entire supply chain from mine through port is operated by a single company allowing a train cycle to be scheduled. Rail Operations are 24 by 7, with downtime expected only for major shuts, if at all. Track possessions for maintenance are weighed against throughput targets.

4 The limited crew depots are geographically dispersed, and the crew availability places significant constraints on the train schedule. Issues with existing COTS software to support this operating model are: The scheduling solutions are tailored to produce time-tabled schedules, which is fine if a slot or train path on the rail network is being purchased. Crewing solutions prefer fixed changeover locations, with limited constraints to crew availability. There is typically limited or no support for a train cycle model of port to mine return, and crewing this cycle effectively. They have limited ability to manage day of execution impacts within the network, providing expected timetables with support for simple scheduling rules. So work is required to customise COTS software to support rail logistics scheduling. Further work is required to leverage additional benefits afforded by automation. For example, driver automation will reduce complexity of crew scheduling, although basic functionality is still required. The software functional allocation which piece of software should perform what task is still evolving. This lends more weight to iterative project developments. If processes are going to evolve with each automation project then the software will need to be adapted each time to support innovation within the operations. In summary, set realistic expectations for the functional fit of COTS software to your business. Don t expect to find a magic bullet in the existing software. All software systems need to be integrated into your particular business. Support software evolution. There is no one size fits all, as logistics scheduling is not a commodity that has been outsourced for remote owner operated rail operations. Integrating Driverless Trains Logistics scheduling software will need to be adapted to leverage automation benefits. Let s consider the direct benefit that mainline driverless trains will have on some of the other activities within logistics scheduling and execution: Train Scheduling variability is reduced so the estimated time of arrival at mine and port can be relied upon as it is more likely to be an accurate reflection of the possible Train Path Scheduling train meets are not constrained to valid crew changeover locations Train Running different driving strategies can be employed with instant adaptation Crew Scheduling largely removed for standard ore-train running scenarios, although complexities around maintaining driver qualifications need to be managed Track Maintenance Scheduling more accurate forecasting of ETAs can be applied to maintenance work, allowing work gangs to get possession of the track at the scheduled time Rolling Stock Maintenance Scheduling more likely to get the rolling stock delivered on time, if rolling stock maintenance is factored into the train schedule in the first place Yard can depart when train build is complete, not when a driver is available However, additional benefit can be obtained if we consider business change opportunities. This in turn will require further software change. Additional opportunities include: Train Control implement automatic route setting to ensure driverless trains are not held up due to train control workload, further reducing delays Track Maintenance Scheduling trains can be dwelled at blocks to wait for maintenance to complete without concern for crew scheduling, speed restrictions can be set to manage track wear as the driving engine will cope with frequently changing speed restrictions, braking and accelerating can be avoided on tracks that need maintenance Train Scheduling shorter trains are possible because there is no longer a crew constraint, increasing opportunities for managing on the day deviation to schedule, trains can be run at different speeds depending upon congestion and availability of the rail network, trains can be dwelled at various locations to assist with network congestion without concern for crew scheduling, time tabled departures are not a constraint to make it easier to crew trains; it is now only a consideration for regularity of trains around the rail network. Train Running implement moving block with shorter trains and they can run closer together, implement automatic bankers Yard can choose to hold back a train if there is network congestion without concern of crew implications Mine and Port shorter trains can support more flexibility to addressing supply chain deviation Each business change requires the associated software system to be adapted to support a change in philosophy, as do the metrics used by the business to measure performance, and compliance to plan. Queuing strategies become more of an opportunity, as does running the network at different speeds. Logistics Scheduling can be more effective as you have an information system that can respond to changes. The Train Path Scheduling system needs to support these varied train running opportunities available with driverless trains.

5 Appropriate Metrics Automation in Heavy Haul will introduce agility to operations not previously available. Automation is the first step to support new ways of operating, and should not be considered as a means to make old ways more efficient. To support this agility the metrics used to measure performance need to be reviewed in light of the new opportunities that can be leveraged. Performance to plan is cited as a common goal. However if driverless trains respond in an agile way then it can support other parts of the operation as they attempt to focus on adherence to schedule. If driverless trains can cope with deviations to schedule by varying their operating state, it will allow the appropriate metrics to be tracked against the offending activity. With the introduction of driverless trains, KPIs need to be reconsidered for their applicability to various operational scenarios. For example, cycle time drives an operating philosophy of moving trains through as quickly as possible, with little consideration to different queuing strategies. Driver performance to schedule becomes irrelevant when there is no longer a person to incentivise. With no drivers to account for deviation to cycle times, then cycle times are completely dependent upon the smooth execution of other scheduled activities. No longer do rail operations need to consider off-tracking work gangs to let trains through. Train running can be adjusted to minimise dwelling times through slow running of trains, with the associated benefits to fuel consumption and track wear. If more track maintenance is supported then better train running can be supported. The focus can move to adherence to track maintenance schedule, with train cycle times a secondary benefit of getting all the track maintenance activities completed on time. Driverless trains make train running efficient. Focus can shift to Service Level Agreements with the non-automated elements of rail operations, to drive efficiency in their area. The ability to more finely control the operating speed of the trains allows for the possibility of running at below maximum speed. This allows for individual trains to absorb any disturbance in the regular operation of the rail network. For example, a delay to a yard departure needn t upset the entire network if there is capacity for trains to increase or decrease speed to accommodate minor slippage and close gaps in regular paths. Delay accounting can move to a proactive stance to support different train running tactics. If different queuing strategies and slow running are to be encouraged, then it is necessary for the delay accounting system to understand these strategies. Rather than capture the delay when it happens and try to assign a cause, it would be more effective to support delay scheduling. This involves capturing upfront the scheduling decision of where to dwell, rather than trying to infer if there was a scheduled root cause to a detected delay. To support rail operations being agile to supply chain variance, the logistics scheduling system now requires more accurate information from mine and port operations. For example, metrics that provide visibility on rail network, mine and port congestion become more important. Then the most appropriate train running strategy can be deployed. The dependency of this new information will drive further automation projects, as these boundaries are where the most benefit for driverless trains can be obtained. The Benefits and Outcomes The benefits of giving full consideration as to how automation can be integrated with logistics scheduling and execution are: Recognition that automation can support different operating strategies and behaviours outside of the function or process being automated. A component of the supply chain needs to be receptive to changes of inputs from surrounding systems, and generate outputs that support a full understanding of the state of the automated system. It ensures automation supports core business. Removal of a constraint, such as crew availability, is not focussed entirely on removing variability and getting consistent cycle times. Logistics scheduling can now consider different train running strategies that support a supply chain view, using it as a lever to alleviate network congestion, respond to network disturbances and support other value-adding work such as track maintenance. Capital expenditure can be directed to support continuous improvement, with increased throughput an outcome of business change, not purely technology driven. A roadmap of projects can be anticipated based on understanding the information made visible from an automation activity. Time needs to be set aside to manage the new state effectively, define new business behaviours and undertake subsequent automation activities. Understanding that there is a process to move from automation to optimisation. Automation in itself is not the sole path to achieve tangible growth. Each improvement allows for review in the way the organisation is structured and the behaviours it follows. Logistics Scheduling can leverage additional benefit from automation with step change improvements that align with the automation, rather than looking for the next big automation project.

6 Conclusion What I have tried to demonstrate today is that automation considered in isolation within a process, although delivering efficiencies, may not contribute to effectiveness within an organisation. By understanding the flow of information between the elements of the operations as a whole, opportunities can be identified to change behaviours, adopt more appropriate metrics, and manage constraints more effectively. The purpose of automation is to introduce efficiencies into a process. Driverless trains achieve this through the removal of constraints (crew availability) and the introduction of consistent driving behaviour. There are also benefits to asset maintenance as improved train handling reduces wear to track and rolling stock. However, the true benefit to logistics scheduling is via the opportunities driverless trains create for employing different operating strategies within Rail Operations. Train running can be utilised as a lever to assist with variability in other parts of the supply chain. It can be used to support business maturing in other areas by focussing on appropriate metrics, and supporting a gradual move to performance to plan by coping with network disturbances and helping delay accounting understand cyclical cause and effect. In order to achieve these benefits, the automation must be effectively integrated into logistics scheduling. This requires subsequent automation projects to enhance the information systems that can now support new behaviours. Visibility of new information may be required to drive new behaviours, such as network congestion. Organisational boundaries may need to change to accommodate these new behaviours. It should be expected this will be an ongoing process, but that each project will deliver a step change to the business if a holistic approach is employed. Brisbane Sydney Canberra Melbourne Adelaide Perth Level Adelaide St Brisbane QLD 4000 (07) Level 2 68 Pitt St Sydney NSW 2000 (02) Level 2 6/3 Sydney Ave Barton ACT 2600 (02) Level Freshwater Pl Southbank VIC 3006 (03) Ground Floor 165 Grenfell St Adelaide SA 5000 (08) Level St Georges Tce Perth WA 6000 (08) WP0005_15/01/2013

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