Simulating mill service levels for combined road and rail transport

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Bruce Newman
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1 Simulating mill service levels for combined road and rail transport Oskar Gustavsson Dag Fjeld MSc thesis, SLU/Sveaskog Supervisor, SLU/NIBIO Photo Green Cargo

2 Trends in pulpwood supply Structural development towards fewer and larger pulp mills results in longer transport distances, requiring an increased use of rail system solutions (typical b/e with road transport at -5 km). Research question - how does this development influence mill service levels?

use of rail system solutions (typical b/e with road transport at -5 km).

3 Studies of mill service levels and transport system simulation Developing pulpmill service levels in Swedish wood supply - Bäckström & Åström (), Andrén & Fjeld (4). Hedlinger et al. (5) Mill service levels within pulpwood supply range from: Low costs - High delivery precision Stable (high) freshness All of the above + mill stock management Empirical studies with reference to mill service dimensions Delivery precision Nilsson (8) Lead times Lukka (994), Puodziunas & Fjeld (), Haartveit et al. (4), Carlsson & Rönnqvist (5), Roth (), Zilo (3) Meeting goals for delivery precision and lead times/freshness is still a challenge Simulation studies of transport sytems Road Weintraub et al. (996), Marques et al. (). Fjeld (), Beaudoin et al (), Rail Saranen & Hilmola (7), Korpinen (3), Etlinger et al (4), Wolfsmayr et al. (in prep) + overview of hybrid approaches (Simulation + LP) given by Marques et al. (4) Most studies were focused primarily on costs and truck transport

mill service dimensions Delivery precision Nilsson (8) Lead times Lukka (994), Puodziunas & Fjeld (), Haartveit et al.

4 Study goal To map how different configurations of multimodal (road + rail) systems can influence mill service dimensions in pulpwood supply. Sub-goal : to develop a simulation model which manages the allocation of pulpwood and transport resources to maintain delivery precision and stock levels while following-up lead times. Sub-goal : using this model, compare the effects of typical system disturbances on service dimensions with different rail system configurations.

Sub-goal : to develop a simulation model which manages the allocation of pulpwood and transport resources to maintain

5 Method Object-oriented discrete event simulation (OODES) enabling - analysis of present and future systems under varying scenarios - tracking of individual items through whole system with multiple inventory points - follow-up of lead times per individual items With different sets of decision logic for items and resources

items through whole system with multiple inventory points - follow-up of lead

6 Material rail systems Each system supplies coastal mills based on monthly harvesting production plans to - zones for road transport (near/far) - zones for rail transport (near/far) While maintaining mill stock interval by redistribution of - Wood supply - Transport resources North (4 terminals) Rail terminal Rail terminal Truck zone Truck zone South (3 terminals) Coastal Mill

(near/far) While maintaining mill stock interval by redistribution of - Wood supply -

7 Material - data Seasonal wood supply patterns built on historic data per region - from SDC (Swedish forest industry s data central)/skogforsk Monthly supply and consumption patterns adjusted according to typical system-specific conditions Typical disturbances in supply (spring break-up) and demand (mill break-down or market-stop) mapped Monthly patterns & typical disturbances developed in discussion with company representatives (below) System Company Representative General practices Trätåg CEO Olle Pettersson North SCA Customer supply manager Henrik Sakari South Södra Raw material logistician Tomas Frick

(mill break-down or market-stop) mapped Monthly patterns & typical disturbances developed in discussion with company representatives (below) System

8 Disturbance scenarios Sc. Base case no disturbances other than typical monthly patterns Sc. Spring break-up harvesting production to road-side and terminal stocks reduced by 5 % during two weeks within typical seasonal interval Sc 3. Mill break-down or market-stop mill consumption reduced by % during two weeks at random point in time All three scenarios run with both current and increased proportions of rail transport.

9 Definitions of mill service KPIs Delivery precision for internal supply responsibility (%) Stock levels measured in terms of both volume and cover time (equivalent to days of consumption) Lead time time from harvesting to mill consumption (days)

terms of both volume and cover time (equivalent to days of

10 Basic decision logic Railway transport Adjusting wood flow Truck transport Regulating mill stock levels rail schedule responses based on: - terminal stocks - flows - mill stocks 3 rail destination responses based on - flows - mill stocks - mill consumption Start Is wood flow and mill consumption within desired interval? No To decision on weekly rail schedule and re-allocation between mills Yes 5 responses based on: - road stocks - mill stock - mill stock development Is mill stock within goal interval? No To decision on re-allocation between truck zones Yes No response

mill consumption within desired interval?

11 Results tracking KPIs (base case) Volym i lastbilslass Täcktid i dygn Planned deliveries Leveransmål enligt plan 6 7 Månad Planned stocks Lager enligt plan 6 7 Månad Variable Industrilager Terminallager Monthly delivery precision Leveransprecision i procent 3,% Täcktid i dygn %,% -3,% Månad Stock cover time Lager 8 9,% Variable I ndustrilager Väglager Terminallager Dygn Dag Lead times Ledtid Variable ledtid bil ledtid tåg Dag

Leveransprecision i procent 3,% Täcktid i dygn %,% -3,% Månad 4 3 4 5 6 7 Stock cover time Lager 8 9,% Variable I ndustrilager

12 Results distribution of KPIs (base case) Monthly Månatlig delivery leveransprecision Stock Lagrets cover täcktid time Lead Ledtid times 4 4 Frekvens i % Frekvens i % -3,% -,% -,%,%,%,% 3,% % Dygn 8 Dygn 35 4 Frekvens i % Norra Northern Sverige Sweden Frekvens i % Frekvens i % -3,% -,% -,%,%,%,% 3,% % Dygn 8 Dygn 35 4 Frekvens i % Southern Södra Sweden Sverige

% 7 4 7 4 Dygn 8 Dygn 35 4 Frekvens i % Norra Northern Sverige Sweden 3 8 5 5 5 4 Frekvens i %

13 Results road-side stocks and lead times for truck transport (base case) Southern Södra Sweden Sverige NorthernNorra Sweden Sverige 6 4 Andel av bilresurserna som styrs mot längre transportavstånd,% 6,67% 33,33% 5,% 66,67% 83,33%,% 6 4 Andel av bilresurserna som styrs mot längre transportavstånd,% 6,67% 33,33% 5,% 66,67% 83,33%,% Ledtid i dygn Lead times 8 6 Lead times Ledtid i dygn Väglager i antal lastbilslass Väglager i antal Lastbilslass Roadside stocks, no. of truck loads

bilresurserna som styrs mot längre transportavstånd,% 6,67% 33,33% 5,% 66,67% 83,33%,% Ledtid i dygn Lead times 8 6 Lead

14 Results terminal stocks and lead times for rail transport (base case) Södra Sverige Norra Sverige Lead times Ledtid i dygn Antal tåg som körs per dag Lead times Ledtid i dygn Antal tåg som körs per dag T erminallager i antal lastbilslass Terminal stocks, no. of truck loads 5 5 T erminallager i antal lastbilslass

7 8 Lead times Ledtid i dygn 9 8 7 6 5 4 3 Antal tåg som körs per dag 3 4 5 6 7 8 5 5 T

15 Result lead time variation between truck and rail Södra Sverige Norra Sverige 35 Scenario 3 35 Scenario Lead times Ledtid i dygn 5 Lead times Ledtid i dygn Sammanlagt lager i antal dygns täcktid Sum of stocks, no. of truck loads 5 5 Sammanlagt lager i antal dygns täcktid

Lead times Ledtid i dygn 5 5 5 6 9 5 8 Sammanlagt lager i antal dygns

16 Results increased adaptability to mill break-down or market-stop (sc 3) with increased rail transport,4, Relative overdelivery,8,6,4 Norra North Sverige Sweden (fyra (four terminaler) terminals) Södra South Sverige Sweden (tre (three terminaler) terminals), 5 5 Proportion of rail transport (%)

Sverige Sweden (fyra (four terminaler) terminals) Södra South Sverige

17 Conclusions More work is required to mimic a realistic transport management response ( fingertip tweaking ). OODES is a method which is useful for exploring mill service dimensions, especially lead times and stock levels. The results also suggest that an increased proportion of rail transport enables a increased adaptability to system disturbances (structural flexibility). A hybrid approach (OODES + LP) seem suitable and even necessary to solving this type of problem! Good subject for a future PhD project.

The results also suggest that an increased proportion of rail transport enables a increased adaptability to system disturbances

18 Thank-you - Skogforsk - Trätåg, SCA, Södra Skog - Bo Rydins Stiftelsen Photo University of Minnesota Photo StoraEnso

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