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Physical Internet Manifesto
 Globally transforming the way physical objects
           are handled, moved, stored,
           realized, supplied and used




                                                           π
             Benoit Montreuil
Canada Research Chair in Enterprise Engineering

    CIRRELT, Interuniversity Research Center
on Enterprise Networks, Logistics & Transportation


        Université Laval, Québec, Canada

                                                     Version 1.8: 2011-03-28




  www.PhysicalInternetInitiative.org
Acknowledgements
  The Physical Internet Manifesto has greatly benefited from
           the contribution of esteemed colleagues

America
 CIRRELT Research Center:
  • Teodor Crainic - UQAM
  • Michel Gendreau - Université de Montréal
  • Olivier Labarthe, Mustapha Lounès & Jacques Renaud - Université Laval
 CICMHE, College-Industry Council for Material Handling Education:
  • Russ Meller – University of Arkansas
  • Kevin Gue & Jeff Smith – Auburn University
  • Kimberley Ellis – Virginia Tech
  • Leon McGinnis – Georgia Tech
  • Mike Ogle – MHIA
Europe
  •   Rémy Glardon – EPFL
  •   Éric Ballot, Frédéric Fontane – Mines ParisTech
  •   Rene De Koster – Erasmus University
  •   Detlef Spee – Fraunhofer Institute for Material Flow and Logistic

                            Physical Internet Manifesto
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                          www.PhysicalInternetInitiative.org
Macroscopic Positioning

                      CLAIM
           The way physical objects are
moved, handled, stored, realized, supplied and used
      throughout the world is not sustainable
     economically, environmentally and socially
                           GOAL
          Enabling the global sustainability
    of physical object movement, handling, storage,
              realization, supply and usage
                       VISION
   Evolving towards a worldwide Physical Internet
                    Physical Internet Manifesto
                           Benoit Montreuil
                   Version 1.8, 2011-03-28, p. 3/88
                  www.PhysicalInternetInitiative.org
Supporting the claim




                      CLAIM
           The way Physical objects are
moved, handled, stored, realized, supplied and used
      throughout the world is not sustainable
     economically, environmentally and socially




                   Physical Internet Manifesto
                          Benoit Montreuil
                  Version 1.8, 2011-03-28, p. 4/88
                 www.PhysicalInternetInitiative.org
Thirteen unsustainability symptoms
Leading Us Toward Hitting the Wall Real Hard
1.  We are shipping air and packaging
2.  Empty travel is the norm rather than the exception
3.  Truckers have become the modern cowboys
4.  Products mostly sit idle, stored where unneeded,
    yet so often unavailable fast where needed
5. Production and storage facilities are poorly used
6. So many products are never sold, never used
7. Products do not reach those who need them the most
8. Products unnecessarily move, crisscrossing the world
9. Fast & reliable intermodal transport is still a dream or a joke
10. Getting products in and out of cities is a nightmare
11. Networks are neither secure nor robust
12. Smart automation & technology are hard to justify
13. Innovation is strangled

                     Physical Internet Manifesto
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                   www.PhysicalInternetInitiative.org
We are shipping air and packaging
                                 Unsustainability symptom 1

Trucks and containers are often half empty at departure,
        with a large chunk of the non-emptiness
                being filled by packaging

                Overall, most goods travel by road. In the UK, 65% of all freight is moved by road, or about 160 billion tonne
                                                kilometres out of 240 billion tonne kilometres.
                In the USA, for example, there are 40,000 public carriers and 600,000 private fleets. With so many operators
                                   competition is likely to be more intense and pricing more flexible. [1]

                    Transportation costs are the single largest contributor to total logistics costs, with trucking being the most
                                                             significant subcomponent.
                       Trucking costs account for roughly 50% of total logistics expenditures and 80% of the transportation
                                                                   component.
                                                  Trucking revenues in 2005 increased by $74 billion over 2004,
                                              but carrier expenses rose faster than rates, eroding some of the gain.
                Fuel ranks as a top priority at trucking firms as substantially higher fuel prices have cut margins. The
                U.S. trucking industry consumes more than 650 million gallons of diesel per week, making it the second largest
                                                            expense after labor.
                                                      The trucking industry spent $87.7 billion for diesel in 2005,
                                                         a big jump over the $65.9 billion spent in 2004. [2]

      References:   1]: “Transport in Logistics”, Chap. 12 in An Introduction to Supply Chain Management, Ed. By Donald Waters [Palgrave Macmillan] (2003)
                    [2]: Wilson R. A., “Economic Impact of Logistics”, Chap. 2 in Logistics Engineering Handbook , 2008

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                                              www.PhysicalInternetInitiative.org
Empty travel is the norm rather than the exception
                                          Unsustainability symptom 2

                     Vehicles and containers often return empty,
                    or travel extra routes to find return shipments
              Vehicles leaving loaded get emptier and emptier
         as their route unfolds from delivery point to delivery point




                             Statistical evidence that around 30 per cent of truck-kilometres are run empty,
                  illustrating huge inefficiency in road haulage and enormous potential for increasing back loading.
In Britain, the proportion of truck-kilometres travelled empty felt from 33 per cent in 1980 to 27 per cent in 2004, yielding significant
                                                economic and environmental benefits. [1]
Other things being equal, if the empty running percentage had remained at its 1980 level, road haulage costs in 2004 would have been
       £1.2 billion higher and an extra 1 million tonnes of carbon dioxide would have been emitted by trucks (McKinnon, 2005).

                     Reference: [1]: McKinnon A., “Road transport optimization” Chap. 17 in Global Logistics New Directions in Supply Chain Management (2007), Ed. by Donald Water

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                                                        www.PhysicalInternetInitiative.org
Truckers have become the modern cowboys
                                 Unsustainability symptom 3




                         So many are nearly always on the road,
                       so often away from home for long durations
                                Their family life, their social life
                            and their personal health are precarious




                           The shift workers with the lowest mean hours of daily sleep are truck drivers, at 3.5 hours/24 hours
                                       Fatigue and sleep deprivation are important safety issues for long-haul truck drivers
                                                 A National Transportation Safety Board study examined
                      the effects of duty shifts and sleep patterns on drivers of heavy trucks involved in single-vehicle accidents
                        and found that 62 of 107 accidents (58%) reported by drivers were deemed to be "fatigue-related“ [1]

                                                      The American Trucking Association (ATA) has estimated that
                                                         the driver shortage will grow to 111,000 by 2014 [2]

 References:   [1]: “Consequences of Insomnia, Sleepiness, and Fatigue: Health and Social Consequences of Shift Work “, http://cme.medscape.com/viewarticle/513572_2
               [2] : Wilson R.A. “Economic Impact of Logistics”, in Chap. 2 in Logistics Engineering Handbook, 2008
                                                     Physical Internet Manifesto
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                                               www.PhysicalInternetInitiative.org
Products mostly sit idle, stored where unneeded,
   yet so often unavailable fast where needed
                            Unsustainability symptom 4
           Manufacturers, distributors, retailers and users
           are all storing products, often in vast quantities
   through their networks of warehouses and distribution centers,
         yet service levels and response times to local users
                    are constraining and unreliable




                               Stocks are increasingly maintained at a higher level
   in response to longer and sometimes unpredictable delivery times, as well as changes in distribution patterns.

                   In 2005, the average investment in all business inventories was $1.74 trillion,
                                which surpassed 2004’s record high by $101 billion.

                      Reference: Wilson R.A. “Economic Impact of Logistics”, in Chap. 2 in Logistics Engineering Handbook, 2008

                                               Physical Internet Manifesto
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Production and storage facilities are poorly used
                                       Unsustainability symptom 5

 Most businesses invest in storage and/or production facilities
  which are lowly used most of the times, or yet badly used,
 dealing with products which would better be dealt elsewhere,
               forcing a lot of unnecessary travel




    When the production function is considered to be a part of the supply chain, there is obviously much that can be done
                            to improve environmental and social performance at this stage [1]

     The transport and storage of goods are at the centre of any logistics activity, and these are areas where a company
                            should concentrate its efforts to reduce its environmental impacts [2]

    [1]: McIntyre K., “Delivering sustainability through supply chain management”, Chap.15 in Global Logistics New Directions in Supply Chain Management, (2007)
    [2]: Cooper J., Browne M. and Peters M., “European Logistics: Markets, management and strategy”, Blackwell, London (1991)
    Chopra & Meindl, “Facility Decisions and Distribution Network “, 2009_E4.5
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So many products are never sold, never used
                 Unsustainability symptom 6

    A significant portion of consumer products that are made
never reach the right market on time, ending up unsold and unused
         while there would have been required elsewhere




                      Rusting new cars in disused airfields

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Products do not reach those who need them the most
                                             Unsustainability symptom 7

 This is specially true in less developed
  countries and disaster-crisis zones




 Countries most affected by high prices are those: which import large quantities of food,
 whose populations spend a large part of their income on food, where inflation is already
  high, where there is already food insecurity and which have large urban populations.

           References:   “World Food Programme (WFP)”, http://www.wfp.org/node/7904
                         “Problems in developing logistics centres for ports in the Escap region”; Chap5, http://www.unescap.org/ttdw/Publications/TFS_pubs/pub_2194/pub_2194_ch5.pdf

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Products unnecessarily move,
   crisscrossing the world
   Unsustainability symptom 8



                                                  Products commonly travel
                                                thousands of miles-kilometers
                                               which could have been avoided
                                                 (1) by routing them smartly
                                                           and/or
                                               (2) making or assembling them
                                               much nearer to their point of use




      Reference: “Virtual Warehousing”, Jeroen van den Berg Consulting, 2001

             Physical Internet Manifesto
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        www.PhysicalInternetInitiative.org
Fast & reliable intermodal transport
                      is still a dream or a joke
                                          Unsustainability symptom 9
      Even though there are some great intermodal examples,
in general synchronization is so poor, interfaces so badly designed,
 that intermodal routes are mostly time & cost inefficient and risky




      Reference: Crainic, T.G. and Kim, K.H., “Intermodal Transportation, Chap8 in Handbooks in Operations Research and Management Science”, C. Barnhart and G. Laporte (Eds.), 2007

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Getting products in, through and out of cities
                 is a nightmare
                                     Unsustainability symptom 10
           Most cities are not designed and equipped
    for easing freight transportation, handling and storage,
making the feeding of businesses and users in cities a nightmare




     References:   « Transport des marchandises en ville », www.transports-marchandises-en-ville.org
                   “Problems in developing logistics centres for ports in the Escap region”, Chap5, http://www.unescap.org/ttdw/Publications/TFS_pubs/pub_2194/pub_2194_ch5.pdf
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Networks are neither secure nor robust
                                             Unsustainability symptom 11

There is extreme concentration of operations in a limited number
       of centralized production and distribution facilities,
       with travel along a narrow set of high-traffic routes

                                 This makes
                    the logistic networks
                        and supply chains
                 of so many businesses,
           unsecure in face of robbery
                       and terrorism acts,
               and not robust in face of
                          natural disasters
                       and demand crises
 References: Chopra & Meindl, “Facility Decisions and Distribution Network” - 2009_E4.5
             “Terrorism - Supply Chain Effects”, http://www.weforum.org/pdf/CSI/Terrorism.pdf
             “The New Supply Chain Challenge - Risk Management in a Global Economy”, FM Global, 2006 , http://www.fmglobal.com/assets/pdf/P0667.pdf
             Peck H., “Supply chain vulnerability, risk and resilience”, Chap.15 in Global Logistics New Directions in Supply Chain Management, (2007)
             “Managing Supply Chain Risk”, Video produced by CFO Research Services, http://www.fmglobal.com/VideoPlayer.aspx?url=/assets/videos/CFO_SupplyChain.wm
             “Security, Risk Perception and Cost-Benefit Analysis”, Joint Transport Research Centre OCDE Summary & Conclusions – Discussion Paper #2009-6, March 2008
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Smart automation & technology are hard to justify
                                      Unsustainability symptom 12


          Vehicles, handling systems
           and operational facilities
       have to deal with so many types
     of materials, shapes and unit loads,
       with each player independently
and locally deciding on his piece of the puzzle

                                 This makes it very hard to justify
                         smart connective technologies (e.g. RFID & GPS),
                           systemic handling and transport automation,
                          as well as smart collaborative piloting software



       References:   Montreuil B., Facilities Location and Layout Design Chapter 9. in Logistics Engineering Handbook (2008)
                     Hakimi D., Leclerc P-A., Montreuil B., Ruiz A., « Integrating RFID and Connective Technologies in Retail Stores », RFID in Operations and Supply Chain Management -
                     Research and Applications, Erich Schmidt Verlag, 148-171, 2007.Spada Sal,“Material Handling Control System Software Extends Supply Chain Visibility “nov.15, 2001
                     http://www.arcweb.com/ARCReports2001/Material%20Handling%20Control%20System%20Software%20Extends%20Supply%20Chain%20Visibility.pdf
                     Sunderesh S. H., Material Handling System – Chapter-11 in Logistics Engineering Handbook (2008)
                     McKinnon A., Road transport optimization – Chap. 17 in Global Logistics New Directions in Supply Chain Management - eBook (2007) Fifth Edition, Edited by Donald Waters
                     Decker C. et al.“Cost-Benefit Model for Smart Items in the Supply Chain” (2008)
                     Myerson J.M. “RFID in the Supply Chain - A Guide to Selection and Implementation” - IT Consultant Philadelphia, Pennsylvania USA - Auerbach Publications 2007
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                                                      www.PhysicalInternetInitiative.org
Innovation is strangled
                                            Unsustainability symptom 13

                     Innovation is bottlenecked,
         notably by lack of generic standards and protocols,
     transparency, modularity and systemic open infrastructure
                     This makes breakthrough innovation so tough,
                    justifying a focus on marginal epsilon innovation




References: “RFID Tags: Advantages and Limitations”, http://www.tutorial-reports.com/wireless/rfid/walmart/tag-advantages.php
            “RFID hype is blurring limitations, study claims “, http://www.usingrfid.com/news/read.asp?lc=d59745mx97zf
            “RFID_Internet of Things in 2020 - Roadmap for the future”, Infso D.4Networked Enterprise & RFID Infso G.2Micro & Nanosystems, 2008
                                                                 Physical Internet Manifesto
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                                                            www.PhysicalInternetInitiative.org
Thirteen unsustainability symptoms
Leading Us Toward Hitting the Wall Real Hard
1.  We are shipping air and packaging
2.  Empty travel is the norm rather than the exception
3.  Truckers have become the modern cowboys
4.  Products mostly sit idle, stored where unneeded,
    yet so often unavailable fast where needed
5. Production and storage facilities are poorly used
6. So many products are never sold, never used
7. Products do not reach those who need them the most
8. Products unnecessarily move, crisscrossing the world
9. Fast & reliable intermodal transport is still a dream or a joke
10. Getting products in and out of cities is a nightmare
11. Networks are neither secure nor robust
12. Smart automation & technology are hard to justify
13. Innovation is strangled

                     Physical Internet Manifesto
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                   www.PhysicalInternetInitiative.org
Mapping unsustainability symptoms
to environmental, environmental and societal facets




                                                                                          Environmental
                                                                             Economical
                        Unsustainability symptoms




                                                                                                          Societal
         1 We are shipping air and packaging
         2 Empty travel is the norm rather than the exception
         3 Truckers have become the modern cowboys
           Products mostly sit idle, stored where unneeded, yet so often
         4
           unavailable fast where needed
         5 Production and storage facilities are poorly used
         6 So many products are never sold, never used
         7 Products do not reach those who need them the most
         8 Products unnecessarily move, crisscrossing the world
         9 Fast & reliable intermodal transport is still a dream or a joke
        10 Getting products in and out of cities is a nightmare
        11 Networks are neither secure nor robust
        12 Smart automation & technology are hard to justify
        13 Innovation is strangled

                               Physical Internet Manifesto
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                            www.PhysicalInternetInitiative.org
Readdressing the Goal

                         GOAL
          Enabling the global sustainability
of the transport, handling, storage, realization, supply
    and usage of physical objects across the world




                    Physical Internet Manifesto
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                  www.PhysicalInternetInitiative.org
Expliciting the Overall Goal

                                          Economic goal
                       Unlock highly significant gains
                        in global logistic, production,
                               transportation
                          and business productivity

                                  Environmental goal
         Reduce by an order of magnitude
       global energy consumption, pollution
   and greenhouse gas emission associated with
      logistic, production and transportation

                                                       Societal goal
             Increase the quality of life of both
    the logistic, production and transportation workers
and the overall population by making much more accessible
 across the world the objects and functionality they value
  References:   Dablanc L., “Urban Goods Movement and Air Quality Policy and Regulation Issues in European Cities”, Journal of Environmental Law Advance Access, 2008
                McIntyre K., “Delivering sustainability through supply chain management”, Chap.15 in Global Logistics New Directions in Supply Chain Management, 2007
                Esty D. C. and Winston A.S. “Green to Gold “; 2006
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                                                               www.PhysicalInternetInitiative.org
Restating the Overall Goal

                            Enabling the global sustainability
                       of bringing to users from around the world
                        the physical objects they need and value,
                             through a triple synergistic gain
                     in terms of economy, environment and society




“We are not environmentalist.                                                                                                                                      “In a prosperous society,
We are not Scientists                                                                                                                                            you really have tow assets:
 But if we don’t do anything,                                                                                                                             people – their capacity and skills –
we will be out of business.”                                                                                                                               and the ecosystem around them.
Unilever supply chain manager                                                                                                                             Both need to be carefully tended.”
the world’s largest purchasers of fish.                                                                                                                                    Mats Lederhausen,
                                                                                                                                                           executive’s veteran at McDonald’s.

                  Reference:   Sustainable Supply Chain Logistics Guide (SCL)- Business Tool (2009) http://www.metrovancouver.org/about/publications/Publications/sustainablesclguidefinal-june23.pdf

                                                                     Physical Internet Manifesto
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                                                                www.PhysicalInternetInitiative.org
The Inspiration for the Vision
       June 2006: The Spark


           • A great front page one-liner
               • Interesting yet mainstream supply chain articles
               • Nothing like what I perceived
                 a Physical Internet should be
           • I rapidly got passionate about the question
             What should or could be a full blown
             Physical Internet?
               • What would be its key features?
               • What capabilities would it offer
                 that are not achievable today?
           • Another question surfaced rapidly:
              Why would we need a Physical
             Internet?


         Physical Internet Manifesto
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       www.PhysicalInternetInitiative.org
The Digital Internet
      Building Upon and Expanding Beyond
       the Information Highway Metaphor
             When the digital world was looking for a way
            to conceptualize how it should transform itself,
              it relied on a physically inspired metaphor:
                    Building the information highway




References “BCNET's Optical Regional Advanced Network Upgrade Completed”, http://www.bc.net/news_events_publications/newsletters/Dec_2007/ROADM_Completion.htm
           “What the Telecom Industry May Look Like in 10 Years”, http://kennethmarzin.wordpress.com/2008/01/24/what-the-telecom-industry-may-look-like-in-10-years/

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                                                     www.PhysicalInternetInitiative.org
The Digital Internet
                                   Building Upon and Expanding Beyond
                                    the Information Highway Metaphor
                  Well, they have achieved their goal and went farther,
                              reshaping completely the way
                digital computing and communication are now performed
                                              They have invented the Internet,
                                           leading the way to the World-Wide Web
                                  They have enabled the building of
                             an open distributed networked infrastructure
                                   that is currently revolutionizing
                          so many facets of our societal and economic reality




References: « Internet 2, le Web de demain », /http://www.futura-sciences.com/fr/doc/t/telecoms/d/Internet-2-le-web-de-demain_582/c3/221/p1
            http://www.20minutes.fr/article/353755/Economie-Surendettement-Christine-Lagarde-ne-veut-pas-interdire-le-credit-revolving.php
            « rE-veille: réflexions sur l’aventure Internet », http://reveille.wordpress.com/

                                                                           Physical Internet Manifesto
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                                                                     www.PhysicalInternetInitiative.org
The Essence of the Digital Internet


                                                                                The Digital Internet is about
                                                                                the interconnection between
                                                                                           networks
                                                                             in a way transparent for the user,
                                                                              so allowing the transmission of
                                                                                   formatted data packets
                                                                                      in a standard way
                                                                             permitting them to transit through
                                                                                 heterogeneous equipment
                                                                               respecting the TCP/IP protocol


References:   Kurose J., Ross K. and Wesley A. “Computer Networking: A Top Down Approach Featuring the Internet”, 3rd edition., July 2004.
              Parziale L., Britt D.T., Davis C., Forrester J., Liu W., Matthews C. and Rosselot N. “TCP-IP Tutorial and Technical Overview”, 2006.
              http://www.redbooks.ibm.com/redbooks/pdfs/gg243376.pdf
              “Interconnection of access networks, MANs and WANs “, http://images.google.ca/imgres?imgurl=http://www.exfo.com/
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                                                                www.PhysicalInternetInitiative.org
Toward a Physical Internet
Digital Internet as a Metaphor for the Physical World


     Even though there are fundamental differences
    between the physical world and the digital world,
             the Physical Internet initiative
          aims to exploit the Internet metaphor
              so as to propose a vision for
       a sustainable and progressively deployable
                  breakthrough solution
                    to global problems
                 associated with the way
     we move, handle, store, realize, supply and use
          physical objects all around the world



                    Physical Internet Manifesto
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                  www.PhysicalInternetInitiative.org
The Physical Internet


             An open global logistics system
      leveraging interconnected supply networks
                through a standard set of
collaborative protocols, modular containers and smart
                       interfaces
       for increased efficiency and sustainability




                                                            Working definition for the Physical Internet,
                                     jointly developed by Benoit Montreuil, Eric Ballot and Russ Meller,
                                                                               version as of 2011-03-23

                  Physical Internet Manifesto
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                www.PhysicalInternetInitiative.org
Exposing 13 Key Features
    of the Physical Internet Vision

                    VISION
Evolving towards a worldwide Physical Internet




                Physical Internet Manifesto
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              www.PhysicalInternetInitiative.org
Thirteen Key Features
        of the Physical Internet Vision
1.  Encapsulate merchandises in world-standard modular containers
2.  Aim toward universal interconnectivity
3.  Evolve from material to container handling & storage systems
4.  Exploit smart networked containers embedding smart objects
5.  Evolve from point-to-point hub-and-spoke transport
    to distributed multi-segment intermodal transport
6. Embrace a unified multi-tier conceptual framework
7. Activate and exploit an open global supply web
8. Design products fitting containers with minimal space waste
9. Minimize physical moves and storages by digitally transmitting
    knowledge and materializing products as locally as possible
10. Deploy capability certifications and open performance monitoring
11. Prioritize webbed reliability and resilience of networks
12. Stimulate business model innovation
13. Enable open infrastructural innovation
                        Physical Internet Manifesto
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Digital Internet:
           From information to packets
 The Digital Internet does not transmit information,
  it transmits packets embedding information
 Information packets are designed for ease of use in Internet
 The information within a packet
  is encapsulated and is not dealt
  with explicitly by Internet
 The packet header contains
  all information required for
  identifying the packet and
  routing it correctly to destination
 A packet is constructed for
  a specific transmission and it is
  dismantled once it has reached
  its destination
                                                 Image: http://www.softlist.net/program/sniff_-_o_-_matic-image.html



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                      www.PhysicalInternetInitiative.org
Digital Internet:
                 From information to packets
 The Digital Internet is based on a protocol
  structuring data packets independently from equipment

 In this way, data packets can be processed
  by different systems and through various networks
  • Modems, copper wires,
    fiber optic wires, routers, etc.
  • Local area networks,
    wide area networks, etc.
  • Intranet, Extranet, Internet,
    Virtual Private Network, etc.




  References:   Kurose J., Ross K. and Wesley A. “Computer Networking: A Top Down Approach Featuring the Internet”, 3rd edition., July 2004.
                Parziale L., Britt D.T., Davis C., Forrester J., Liu W., Matthews C. and Rosselot N. “TCP-IP Tutorial and Technical Overview”, 2006. http://www.redbooks.ibm.com/redbooks/pdfs/gg243376.pdf

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                                                        www.PhysicalInternetInitiative.org
Physical Internet
        1. Encapsulate merchandises in
world-standard smart green modular containers
    -containers are key elements enabling the interoperability
 necessary for the adequate functioning of the Physical Internet
  Merchandise is unitized as content of a -container and
   is not dealt with explicitly by the Physical Internet
  From the cargo container sizes down to tiny sizes
  Conceived to be easily flowed through various
   transport, handling and storage modes and means
  Conceived to be easy to handle, store, transport, seal, snap, interlock,
   load, unload, construct, dismantle, panel, compose and decompose
  Smart tag enabled, with sensors if necessary, to allow their proper
   identification, routing and maintaining
  Environment friendly materials with minimal off-service footprint
  Minimizing packaging materials requirements by enabling of the
   fixture-based protection and stabilization of their embedded products;
  Various usage-adapted structural grades
  Conditioning capabilities (e.g. temperature) as necessary
  Sealable for security purposes

                        Physical Internet Manifesto
                               Benoit Montreuil
                      Version 1.8, 2011-03-28, p. 34/88
                      www.PhysicalInternetInitiative.org
-Containers:
      Modularized and standardized worldwide
   in terms of dimensions, functions and fixtures

-containers
          Y



                       X

  Z     Illustrative
          modular
        dimensions
           0,12 m
           0,24 m
           0,36 m
           0,48 m
            0,6 m
            1,2 m
            2,4 m
            3,6 m
            4,8 m
             6m
            12 m


 B. Montreuil, B. Gilbert
                              Physical Internet Manifesto
                                     Benoit Montreuil
                            Version 1.8, 2011-03-28, p. 35/88
                            www.PhysicalInternetInitiative.org
-Containers
 Easy to handle, store, transport, seal, snap, interlock, load,
unload, construct, dismantle, panel, compose and decompose
   Composi on




                                                          Decomposi on
                       Physical Internet Manifesto
                              Benoit Montreuil
                     Version 1.8, 2011-03-28, p. 36/88
                     www.PhysicalInternetInitiative.org
Physical Internet
2. Aim toward universal interconnectivity



 High-performance logistic centers, systems and movers
           exploiting world standard protocols,
          making it fast, cheap, easy and reliable
 to interconnect -containers through modes and routes,
with an overarching aim toward universal interconnectivity




References:   Crainic, T.G. and Kim, K.H., Intermodal Transportation, Chapt. 8, Transportation, Handbooks in Operations Research and Management Science, C. Barnhart and G. Laporte (Eds.), North-Holland,, 467–537, 2007
              Goetschalckx M. “Distribution System Design”. Chap. 13 in Logistics Engineering Handbook, 2008

                                                                            Physical Internet Manifesto
                                                                               Benoit Montreuil
                                                                      Version 1.8, 2011-03-28, p. 37/88
                                                                      www.PhysicalInternetInitiative.org
Digital Internet:
                                                Hubs and Routers
 Routing allows to insure Internet performance
  through a very efficient orientation of the packets
  towards the nodes of the network
 Routing exploits the ease of storing & transmitting
  information
 A router's job is extremely simple:
  • It moves packets to the next machine in the right direction
    as quickly as possible.
 Because all routers do is move packets, they are able
  to process millions of packets a minute
  • Each router maintains a routing table, a set of rules that
    tell the router which next machine to forward packets to,
    based on the final destination of a packet
  References: Zuckerman E. & McLaughlin A., “Introduction to Internet Architecture and Institutions” : August, 2003
              Perlman R, “Interconnections - Bridges, Routers, Switches, and Internetworking Protocols”; (2nd Edition) 1999

                                                                Physical Internet Manifesto
                                                                   Benoit Montreuil
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                                                          www.PhysicalInternetInitiative.org
Physical Internet
                    2. Universal Interconnectivity
 The Physical Internet nodes are concurrently routing and
  accumulation sites within the networks, as well as gateways
  interfacing with the entities out of the Physical Internet
 As currently conceived, the activities of sorting, storage and
  handling physical objects are brakes to interconnection
  • Be it in train sorting yards or in crossdocking platforms
 However there exist exceptions:
  • Such as some of the recently implemented container ports
 There is a need to generalize unloading, orientation, storage
  and loading operations, widely applying them to -containers
  in a smart automated and/or human-assisted way
 The objective is to make load breaking almost negligible
  temporally and economically
  •   Intermodal less-than- truckload transport nearly at the same price,
      speed & reliability as single-mode full truckload
      References: Crainic, T.G. and Kim, K.H., Intermodal Transportation, Chap. 8, Transportation, Handbooks in Operations Research and Management Science, C. Barnhart and G. Laporte (Eds.), North-Holland, 467–537, 2007
                  Chopra & Meindl, Facility Decisions and Distribution Network - 2009_E4.5
                                                                    Physical Internet Manifesto
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                                                              www.PhysicalInternetInitiative.org
Physical Internet
3. Evolve from material to -container
     handling & storage systems


   -container handling and storage systems,
   with innovative technologies and processes
  exploiting the characteristics of -containers
  to enable their fast, cheap, easy and reliable
    input, storage, composing, decomposing,
        monitoring, protection and output
    through smart, sustainable and seamless
         automation and human handling




                 Physical Internet Manifesto
                        Benoit Montreuil
               Version 1.8, 2011-03-28, p. 40/88
               www.PhysicalInternetInitiative.org
Physical Internet
3. Evolve from material to -container
     handling & storage systems




 Reference: Montreuil, B., R.D. Meller, E. Ballot (2010) Towards a physical internet: the impact on logistics facilities and material handling systems design and innovation,
 International Material Handling Research Colloquium (IMHRC 2010), Milwaukee, États-Unis, 2010/06/21-24
                                                        Physical Internet Manifesto
                                                            Benoit Montreuil
                                                   Version 1.8, 2011-03-28, p. 41/88
                                                   www.PhysicalInternetInitiative.org
Physical Internet
     3. Evolve from material to -container
          handling & storage systems
 -container handling and storage systems:
  • Enable fast and reliable input and output performance
  • Have seamless interfacing with vehicles and systems
    moving products in and out, as well as client software systems for
    tracking and interfacing with the containers
  • Monitor and protect the integrity of -containers
  • Secure the containers to the desired level
  • Provide an open live documentation of their specified performance
    and capabilities and of their demonstrated performance and
    capabilities, updated through ongoing operations
 This applies in currently-labeled distribution centers,
  crossdocking centers, train stations, multimodal hubs,
  seaports, airports, and so on

                          Physical Internet Manifesto
                                 Benoit Montreuil
                        Version 1.8, 2011-03-28, p. 42/88
                        www.PhysicalInternetInitiative.org
Physical Internet
   4. Exploit smart networked containers
         embedding smart objects



              Exploiting as best as possible
          the capabilities of smart -containers
connected to the Digital Internet and the World Wide Web,
          and of their embedded smart objects,
  for improving performance as perceived by the clients
     and overall performance of the Physical Internet




                     Physical Internet Manifesto
                            Benoit Montreuil
                   Version 1.8, 2011-03-28, p. 43/88
                   www.PhysicalInternetInitiative.org
Physical Internet and the Internet of Things


                                                                             The Internet of Things is about enabling
                                                                              ubiquitous connection with physical
                                                                              objects equipped with smart connective
                                                                              technology, making the objects ever
                                                                              smarter and enabling distributed self-
                                                                              control of objects through networks
                                                                                     • It exploits technologies such as
                                                                                       Internet, Web, RFID and GPS
                                                                             The Physical Internet is to exploit as
                                                                              best as possible the Internet of Things
                                                                              to enable the ubiquitous connectivity
                                                                              of its -containers and -systems
Image: http://www.globetracker.biz/GlobeTracker/News.asp


    References:   Johnson M. E., “Ubiquitous Communication: Tracking Technologies within the Supply Chain”, Chap.20 in Logistics Engineering Handbook, 2008
                  Scott D. M., “Electronic Connectivity and Soft ware” Chap.20 in Logistics Engineering Handbook, 2008
                  “Building a Smarter Container”, RFID Journal, http://www.rfidjournal.com/article/articleview/655/1/1/
                                                                             Physical Internet Manifesto
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                                                                       www.PhysicalInternetInitiative.org
Physical Internet
5. Evolve from point-to-point hub-and-spoke transport
  to distributed multi-segment intermodal transport



              Distributed multi-segment travel
      of -containers through the Physical Internet,
            with distinct carriers and/or modes
          taking charge of inter-node segments,
         with transit nodes enabling synchronized
transfer of -containers and/or carriers between segments,
              and with web software platform
                  enabling an open market
     of transport requesters and transport providers




                    Physical Internet Manifesto
                           Benoit Montreuil
                  Version 1.8, 2011-03-28, p. 45/88
                  www.PhysicalInternetInitiative.org
Digital Internet
 Distributed multi-segment transmission
                            In the Digital Internet, the packets that constitute an
                             overall transmission, such as an e-mail, do not travel
                             directly from source node A to destination node B
                            The packets travel through a series of routers and
                             cables (copper or optical), dynamically moved from
                             origin to destination in as best a way as possible
                             provided the routing algorithms and the congestion
                             through the networks
                                    • An email from Québec to Lausanne may go through
                                      tens of routers across the world, from New York to
                                      Beijing
                            Packets forming a message are not restricted to
                             travel together
                                    • Each may end up traveling its distinct route
                                    • The overall message is reconstituted upon packet
                                      arrival at final destination
References: Zuckerman E. & McLaughlin A., “Introduction to Internet Architecture and Institutions” : August, 2003
            Kurose J., Ross K. and Wesley A. “Computer Networking: A Top Down Approach Featuring the Internet”, 3rd edition., July 2004.

                                                            Physical Internet Manifesto
                                                               Benoit Montreuil
                                                      Version 1.8, 2011-03-28, p. 46/88
                                                      www.PhysicalInternetInitiative.org
Physical Internet
5. Evolve from point-to-point hub-and-spoke transport to
     distributed multi-segment intermodal transport


                                           Currently, if a trailer fully loaded with
                                            containers is requested to be transported
                                            from Québec to Los Angeles,
                                            there is high probability that:
                                                   • A driver and a truck will be assigned to the
                                                     multi-day trip,
                                                   • The driver sleeping in his truck and driving to
                                                     destination,
                                                   • Then moving to some as nearby as possible
                                                     location to pick up a trailer returning
                                                     toward as near as possible of Québec,
                                                     to avoid empty travel

    References: Powell W. B. “Real-Time Dispatching for Truckload Motor Carriers“, Chapter 15 in Logistics Engineering Handbook, 2008
                McKinnon A., “Road transport optimization “,Chap. 17 in Global Logistics New Directions in Supply Chain Management - eBook (2007) Fifth Ed. Edited by Donald Waters

                                                                Physical Internet Manifesto
                                                                   Benoit Montreuil
                                                          Version 1.8, 2011-03-28, p. 47/88
                                                          www.PhysicalInternetInitiative.org
A typical cowboy haul from Québec to Los Angeles




                                    One-way Distance travelled : 5030 km
                                    Drivers: 1, Trucks: 1, Trailer: 1


                                    One-way driving time: 48 hours
                                    Return driving time: 48 hours

                                    One-way trip time: 120 hours
                                    Return trip time: 120+ hours
                                    Driving time for driver: 96 hours
                                    Trip time for driver: 240+ hours




                  Physical Internet Manifesto
                         Benoit Montreuil
                Version 1.8, 2011-03-28, p. 48/88
                www.PhysicalInternetInitiative.org
Physical Internet
5. Evolve from point-to-point hub-and-spoke transport to
     distributed multi-segment intermodal transport

  In the Physical Internet, such a point-to-point experience
   would be exceptional. Most probably:
    • A first driver and truck would be assigned to transport it to a transit
      point 3 to 6 hours away
    • The trailer would be deposited to a slot in the transit point
    • The first would then pick up another trailer required toward Québec
    • Another driver and truck would rapidly afterward pick up the trailer
      and move it another segment forward, or yet the containers could
      be transferred to other trailers, trucks, trains, ships or planes as
      pertinent given the opportunities
    • Repeating the process all the way to Los Angeles
    • The shipper or its representative would have a priori arranged
      transportation on each segment and sojourn at each transit point,
      in his best interest in terms of price, timing and risk; or yet the
      routing decisions would be dynamic and/or distributed

               Reference: “Warehousing And Cross-Docking”, http://www.3pd.com/Services/JobSiteWarehousing.aspx
                                      Physical Internet Manifesto
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                                 www.PhysicalInternetInitiative.org
Multi-segment travel from Quebec to Los Angeles


                                                                                                                                 Québec
                                                                                                                            20
                                                                                                                        Montréal
                                                                                                                         Alexandria
                                                                                                                    20-401            Bay, US border
                                                                                                            81
                                                                                                      90
                                                                                                         Syracuse
                                                                                                90 Buffalo
                                                                                          71 Cleveland
                                                                                   70
                                                                                      Columbus
                                                                            70
                                                                               Indianapolis
                                                                     44 St-Louis
                                                           44    Springfield                                                 Current Proposed
                                                    44   Tulsa
                                                                           Distance travelled one-way:                        5030 km 5030 km
                                            40  Oklahoma City
                                                                           Drivers:                                             1      17
                                       40 Amarillo
                                                                           Trucks:                                              1      17
                               40   Albuquerque
                                                                           Trailer:                                             1      1
                      40     Flagstaff                                     One-way driving time (h):                           48      51+
                40 Needles                                                 Return driving time (h):                           48+      51+
             Barstow                                                       Total time at transit points (h):                    0      9
     15-10
                                                                           Total trailer trip time from Quebec to LA (h):     120      60+
  Los Angeles
                                                                           Total trailer trip time from LA to Quebec (h):    120+      60+
                                                                           Total trailer round trip time (h):                240+      120+
                                                                           Average driving time per driver (h):               96+      6
                                                                           Average trip time per driver (h):                 240+      6,5

                                                 Physical Internet Manifesto
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                                           www.PhysicalInternetInitiative.org
V12    C8                              B1
                                                                                                                                                              C1          B2
                                                                                                                    V8                   C5                               B3
                                                                                                                                                                   C6     B4
                                                                                                                V13      C9                                               B5
                                                                                                                                                         C7               B6
                                                                                                                                                         C3               B7
                                                                                                                                                                          B8
                                                                                                                                                 C4                       B9
       -Transit sites
                                                                                                                                         V6
                                                                                                                                                         C2              B10

 allowing distributed
multi-segment transport                                                                                                                                              : π-containers

 through the Physical
                                                                                                                                                                     : π-carrier
                                                                                                                                                                     : π-vehicle
        Internet
                                                                                                                                                                     : π-bay
                                                                                                                  Status of ! -car r ier s cur rently in ! -tr ansit"
                                                                                                                           I ncoming deposit               Outgoing pickup estimation
                                                                                               ! -car r ier   ! -bay
                                                                                                                         ! -vehicle    T ime          ! -vehicle  T ime (min, mode, max)
                                                                                                   C1          B2             V1              04:35     V14        (06:04, 06:05, 06:15)
                                                                                                   C2          B10            V3              05:15     V15        (06:05, 06:09, 06:12)
                                                                                                   C3          B7             V4              05:20     V13        (06:04, 06:07, 06:10)
                                                                                                   C4          B9             V6              05:35     V11        (06:02, 06:02, 06:02)
                                                                                                   C5          B3             V8              05:45     V12        (06:01, 06:01, 06:01)
                                                                                                   C6          B4             V9              05:48     V16        (06:10, 06:12, 06:18)
                                                                                                   C7          B6          V11                05:55     V19        (06:15, 06:20, 06:30)
                                                                                                   C8          B1          V12                05:58     V18        (06:10, 06:15, 06:20)
                                                                                                   C9          B10         V13                06:00     V25        (06:20, 06:30, 06:45)

   Reference: Montreuil, B., R.D. Meller, E. Ballot (2010) Towards a physical internet: the impact on logistics facilities and material handling systems design and innovation,
   International Material Handling Research Colloquium (IMHRC 2010), Milwaukee, États-Unis, 2010/06/21-24
                                                          Physical Internet Manifesto
                                                              Benoit Montreuil
                                                     Version 1.8, 2011-03-28, p. 51/88
                                                     www.PhysicalInternetInitiative.org
Water




    Road-Water -Hub
  designed for enabling
distributed multi-segment
   intermodal transport
 of -containers through
   the Physical Internet




                                                                                                                                            Road
     Reference: Montreuil, B., R.D. Meller, E. Ballot (2010) Towards a physical internet: the impact on logistics facilities and material handling systems design and innovation,
     International Material Handling Research Colloquium (IMHRC 2010), Milwaukee, États-Unis, 2010/06/21-24
                                                            Physical Internet Manifesto
                                                                Benoit Montreuil
                                                       Version 1.8, 2011-03-28, p. 52/88
                                                       www.PhysicalInternetInitiative.org
Road-Rail Hub designed for enabling
multi-segment intermodal transport of -containers
          through the Physical Internet




     Reference: B. Montreuil, E. Ballot, C. Montreuil et D. Hakimi (2010), OpenFret Project Report, InnoFret Program, France
                                                     Physical Internet Manifesto
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                                                www.PhysicalInternetInitiative.org
Physical Internet
6. Embrace a unified multi-tier conceptual framework

        Intra-Center Inter-Processor Network




                   Physical Internet Manifesto
                          Benoit Montreuil
                 Version 1.8, 2011-03-28, p. 54/88
                 www.PhysicalInternetInitiative.org
Physical Internet
6. Embrace a unified multi-tier conceptual framework

         Intra-Facility Inter-Center Network




                   Physical Internet Manifesto
                          Benoit Montreuil
                 Version 1.8, 2011-03-28, p. 55/88
                 www.PhysicalInternetInitiative.org
Physical Internet
6. Embrace a unified multi-tier conceptual framework




          Intra-Site Inter-Facility Network
                   Physical Internet Manifesto
                          Benoit Montreuil
                 Version 1.8, 2011-03-28, p. 56/88
                 www.PhysicalInternetInitiative.org
Physical Internet
6. Embrace a unified multi-tier conceptual framework

Intra-City
Inter-Site
 Network
                                                         -transits & -hubs




                                                      Toward -enabled
                                                         sustainable
                                                        city logistics

                   Physical Internet Manifesto
                          Benoit Montreuil
                 Version 1.8, 2011-03-28, p. 57/88
                 www.PhysicalInternetInitiative.org
Physical Internet
6. Embrace a unified multi-tier conceptual framework

Intra-State
 Inter-City
  Network


                                                              -transits & -hubs
  Québec, Canada




North eastern states,
       U.S.A.


                           Physical Internet Manifesto
                                  Benoit Montreuil
                         Version 1.8, 2011-03-28, p. 58/88
                         www.PhysicalInternetInitiative.org
Physical Internet
6. Embrace a unified multi-tier conceptual framework




                   Physical Internet Manifesto
                          Benoit Montreuil
                 Version 1.8, 2011-03-28, p. 59/88
                 www.PhysicalInternetInitiative.org
Physical Internet
7. Activate and exploit an Open Global Supply Web

        An open web of product realization centers,
              distribution centers, warehouses,
                    hubs and transit centers
       enabling producers, distributors and retailers
to dynamically deploy their -container-embedded products
       in multiple geographically dispersed centers,
             producing, moving and storing them
      for fast, efficient and reliable response delivery
               to distributed stochastic demand
        for their products, services and/or solutions
                   Enabling Physical Equivalents of
                  Intranets, Virtual Private Networks,
                 Cloud Computing and Cloud Storage
  References: Montreuil B., Labarthe, O., Hakimi, D., Larcher, A., & Audet, M. Supply Web Mapper. Proceedings of Industrial Engineering and Systems Management, Conference, IESM, , Conference Montréal, Canada, May 13-15, 2009
              Hakimi D., B. Montreuil, O. Labarthe, “Supply Web: Concept and Technology”, 7th Annual International Symposium on Supply Chain Management, Conference Toronto, Canada, October 28-30, 2009Montreuil, B.,
              Hakimi, D. , B. Montreuil, O. Labarthe, ”Supply Web Agent-Based Simulation Platform” Proceedings of the 3rd International Conference on Information Systems, Logistics and Supply Chain Creating value through green
              supply chains, ILS 2010 – Casablanca (Morocco), April 14-16<.

                                                                            Physical Internet Manifesto
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                                                                      www.PhysicalInternetInitiative.org
Physical Internet
7. Activate and exploit an Open Global Supply Web
    As products and materials are moved and stored in
     modular secured containers, it allows:
       • Warehouses and DCs to accept handling and storing
         containers from a wide variety of clients, embedding
         an indeterminate and non-pertinent number of
         distinct products, as long as they respect their
         throughput, security, conditioning and dimensioning
         capability specifications
       • Significant improvement in capacity utilization
         and facility profitability
       • Significant reduction in asset requirements and
         significant improvement in logistic costs and
         delivery service performance
    References: “Virtual warehousing”, Jeroen van den Berg Consulting , 2001
                Chopra & Meindl, “Facility Decisions and Distribution Network “, 2009_E4.5
                                                                  Physical Internet Manifesto
                                                                     Benoit Montreuil
                                                            Version 1.8, 2011-03-28, p. 61/88
                                                            www.PhysicalInternetInitiative.org
1
Factories:           4                                                                       3
Firm dedicated DCs: 16
Mean lead time:   1,75
Max lead time:       3
                                                                     2
                                                                                                         4

Independent             Factory:             1     Factory:             1    Factory:             1   Factory:             1
private                 Firm dedicated DCs: 4      Firm dedicated DCs: 4     Firm dedicated DCs: 4    Firm dedicated DCs: 4
                        Mean lead time:   1,73     Mean lead time:   1,78    Mean lead time:   1,75   Mean lead time:   1,73
supply networks         Max lead time:       3     Max lead time:       3    Max lead time:       3   Max lead time:       3

Shared supply web                                                                                        Shared supply web
with independently                                                                                       with jointly
                                              1                                          1
implemented DCs                                       3                                          3       implemented DCs
      Factories:              4                                                                          Factories:              4
      Firm dedicated DCs:     0                                                                          Firm dedicated DCs:     0
                                                     2                                           2
      Group dedicated DCs:   16                                                                          Group dedicated DCs:    3
                                          4                                          4
      Mean lead time:      1,08                                                                          Mean lead time:      1,48
      Max lead time:          3                                                                          Max lead time:          3


                                                                 1                 Factories:             4
                                                                         3         Firm dedicated DCs:    0
              Open supply web                                                      Group dedicated DCs:   0
       with a high density of open DCs                                             Open DCs used:       60+
       available to many other clients                                   2         Mean lead time:        0
                                                             4                     Max lead time:         0

* Lead times induced by transport from DC to client region
      Contrasting Independent Supply Networks, an Open Supply Web and a Global Open Supply Web
                  in terms of number of distribution centers and of DC-to-client lead time
                                                    Physical Internet Manifesto
                                                           Benoit Montreuil
                                                  Version 1.8, 2011-03-28, p. 62/88
                                                  www.PhysicalInternetInitiative.org
From Private Supply Networks
                               to Open Supply Webs
             Insuring one-day delivery by each company in its served markets




                  47 facilities                                                                            30 facilities
The private supply networks of 5 companies                                        A shared supply networks among 5 companies
serving clients across Canada and the U.S.A.                                      serving clients across Canada and the U.S.A.
   under a one-day delivery service policy,                                          under a one-day delivery service policy,
         with 42 DC and 5 factories                                                        with 25 DC and 5 factories

                        Reference: Montreuil and Sohrabi, From Private Supply Networks to Open Supply Webs, IERC 2010
                                               Physical Internet Manifesto
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                                          www.PhysicalInternetInitiative.org
Physical Internet
            8. Design products fitting containers
                 with minimal space waste




             Products designed and engineered
to minimize the load they generate on the Physical Internet,
with dimensions adapted to standard container dimensions,
      with maximal volumetric and functional density
                    while containerized




      Reference: Seliger G., “Sustainability in Manufacturing - Recovery of Resources in Product and Material Cycles” (Ed. by Günther Seliger, Sringer Verlag, 2007
                                                     Physical Internet Manifesto
                                                          Benoit Montreuil
                                                 Version 1.8, 2011-03-28, p. 64/88
                                                 www.PhysicalInternetInitiative.org
Physical Internet
          8. Design products fitting containers
               with minimal space waste
 Product dimensions adapted to the standard container dimensions
  • So that the packaged product fits in a small footprint container
 In order to avoid moving and storing air, products should be
  designed and engineered so as to have maximal volumetric
  density while being in Physical Internet containers, extendable to
  their usage dimensions when necessary
 Products should be designed so that only key components and
  modules have to travel extensively through the Physical Internet:
  • Easy to be completed near point of use using locally available
    objects
 Products having to move through the Physical Internet should be
  as functionally dense as possible when in the containers
  • Functional density of an object can be expressed as the ratio of
    its useful functionality over the product of its weight and volume

                          Physical Internet Manifesto
                                 Benoit Montreuil
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                        www.PhysicalInternetInitiative.org
Physical Internet
         9. Minimize physical moves and storages
            by digitally transmitting knowledge
      and materializing products as locally as possible




                    In general,
    it is much easier and much less expensive
          to move and store digital objects
            composed of information bits
rather than physical objects composed of matter




References: Waters D., “Trends in the supply chain”, Chap. 1 in Global Logistics New Directions in Supply Chain Management , 2007) Fifth Ed., Ed. by Donald Waters
Duncan R., “Internet traders can increase profitability by reshaping their supply chains” Chap. 19 in Global Logistics New Directions in Supply Chain Management , 2007 5th Ed. by D. Waters
                                                       Physical Internet Manifesto
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                                                  www.PhysicalInternetInitiative.org
Physical Internet
           9. Minimize physical moves and storages
              by digitally transmitting knowledge
        and materializing products as locally as possible


                      Exploiting extensively
      the knowledge-based dematerialization of products
   and their materialization in physical objects at point of use

                       As it will gain maturity,
       the Physical Internet is expected to be connected to
ever more open distributed flexible production centers capable of
       locally realizing (make, assemble, finish) for clients
                      a wide variety of products
              from digitally transmitted specifications,
                local physical objects and, if needed,
    critical physical objects brought in from faraway sources


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                      Version 1.8, 2011-03-28, p. 67/88
                      www.PhysicalInternetInitiative.org
Physical Internet
     9. Minimize physical moves and storages
        by digitally transmitting knowledge
  and materializing products as locally as possible



Third-party production is to take an ever growing share
           of the overall production market,
         internal production ever more limited
            to highly sensitive core objects
  Product realization knowledge should be protected,
    and authenticity of the materialized products
          should be legally acknowledged




                  Physical Internet Manifesto
                         Benoit Montreuil
                Version 1.8, 2011-03-28, p. 68/88
                www.PhysicalInternetInitiative.org
1
                                                                                          3
Factories:           4
Firm dedicated DCs: 16
D2C max: 3 mean: 1,75
F2D max: 9 mean: 3,92                                              2
                                                                                                      4


Independent              Factory:            1   Factory:            1     Factory:            1   Factory:            1
private                  Firm dedicated DCs: 4   Firm dedicated DCs: 4     Firm dedicated DCs: 4   Firm dedicated DCs: 4
                         D2C max: 3 mean: 1,73   D2C max: 3 mean: 1,78     D2C max: 3 mean: 1,75   D2C max: 3 mean: 1,73
supply networks          F2D max: 8 mean: 4,11   F2D max: 7 mean: 3,00     F2D max: 7 mean: 3,69   F2D max: 9 mean: 4,88

Shared supply web                                                                                     Shared supply web
with independently                                                                                    with jointly
                                           1                                          1
implemented DCs                                    3                                          3       implemented DCs
   Firm dedicated factories: 4                                                                         Firm dedicated factories: 4
   Firm dedicated DCs:       0                                                                         Firm dedicated DCs:       0
                                                   2                                          2
   Group shared DCs:        16                                                                         Group shared DCs:         3
   D2C max: 3       mean: 1,08         4                                          4                    D2C max: 3       mean: 1,48
   F2D max: 9       mean: 4,36                                                                         F2D max: 10      mean: 4,39


             Open supply web                                   1
                                                                                   Firm dedicated factories: 4
      with a high density of open DCs                                              Firm dedicated DCs:        0
                                                                       3
                                                                                   Group shared DCs:          0
      available to many other clients                                              Open DCs used:           60+
                                                                       2
     Inter-region transport induced lead times             4
                                                                                   D2C max: 0       mean: 0,00
           F2D: Factory to DC lead time                                            F2D max: 12      mean: 4,75
        D2C: DC to client region lead time
            Contrasting Supply Networks, an Open Supply Web and a Global Open Supply Web
             in terms of factory-to-DC lead times Internet Manifesto
                                        Physical with no shared or open production centers
                                                        Benoit Montreuil
                                               Version 1.8, 2011-03-28, p. 69/88
                                               www.PhysicalInternetInitiative.org
Shared supply web                                               Shared supply web
               with shared factories                                           with shared factories
     and independently implemented shared DCs                          and jointly implemented shared DCs
 Firm dedicated factories:        0                                                    Firm dedicated factories:        0
 Group shared factories:          4                                                    Group shared factories:          4
 Firm dedicated DCs:              0                                                    Firm dedicated DCs:              0
 Group shared DCs:               16                                                    Group shared DCs:                3
 Mean DC-to-region lead time: 1,08                                                     Mean DC-to-region lead time: 1,48
 Max DC-to-region lead time:      3                                                    Max DC-to-region lead time:      3
 Mean factory-to-DC lead time: 1,11                                                    Mean factory-to-DC lead time: 0,83
 Max factory-to-DC lead time:     3                                                    Max factory-to-DC lead time:     3

                                                                          Firm dedicated factories:       0
                                                                          Group shared factories:         4
                                                                          Firm dedicated DCs:             0
            Open supply web                                               Group shared DCs:               0
     with a high density of open DCs                                      Open DCs used:                60+
     available to many other clients                                      Mean DC-to-region lead time:    0
                                                                          Max DC-to-region lead time:     0
and shared factories among the four firms                                 Mean factory-to-DC lead time:   2
                                                                          Max factory-to-DC lead time:    4

                                                                          Firm dedicated factories:       0
                                                                          Group shared factories:         0
             Open supply web                                              Open factories used:          64+
           with a high density of                                         Firm dedicated DCs:             0
                                                                          Group dedicated DCs:            0
 open distribution and production centers                                 Open DCs used:                64+
      available to many other clients                                     Mean DC-to-region lead time:    0
                                                                          Max DC-to-region lead time:     0
                                                                          Mean factory-to-DC lead time:   0
* Inter-region transport induced lead times                               Max factory-to-DC lead time:    0
             Contrasting Supply Networks, an Open Supply Web and a Global Open Supply Web
                in terms of factory-to-DCPhysical Internet Manifesto production centers
                                         lead times with shared or open
                                                       Benoit Montreuil
                                              Version 1.8, 2011-03-28, p. 70/88
                                              www.PhysicalInternetInitiative.org
Physical Internet
  10. Deploy capability certifications and
       open performance monitoring



Multi-level Physical Internet capability certification
     of containers, handling systems, vehicles,
                information systems
             ports, distribution centers,
              roads, cities and regions,
              protocols and processes,
                      and so on




                  Physical Internet Manifesto
                         Benoit Montreuil
                Version 1.8, 2011-03-28, p. 71/88
                www.PhysicalInternetInitiative.org
Physical Internet
       10. Deploy capability certifications and
            open performance monitoring

    Live open monitoring of really achieved performance
            of all -certified actors and entities,
   focusing on key performance indices of critical facets
 such as speed, service level, reliability, safety and security

Such live performance tracking is openly available worldwide
            to enable fact-based decision making
           and stimulate continuous improvement

    Open information is to be provided while respecting
          confidentiality of specific transactions



                       Physical Internet Manifesto
                              Benoit Montreuil
                     Version 1.8, 2011-03-28, p. 72/88
                     www.PhysicalInternetInitiative.org
Physical Internet
                    11. Prioritize webbed reliability
                      and resilience of networks

     The overall Physical Internet network of networks
             should warrant its own reliability
         and that of its containers and shipments.

The webbing of the networks and the multiplication of nodes
    should allow the Physical Internet to insure its own
      robustness and resilience to unforeseen events.

     For example, if a node or a part of a network fails,
    the traffic of containers should be easily reroutable,
                 as automatically as possible



     Reference: Peck H., “Supply chain vulnerability, risk and resilience”, Chap. 14 in Global Logistics New Directions in Supply Chain Management, 2007
                                                    Physical Internet Manifesto
                                                         Benoit Montreuil
                                                Version 1.8, 2011-03-28, p. 73/88
                                                www.PhysicalInternetInitiative.org
Physical Internet
                         11. Prioritize webbed reliability
                           and resilience of networks
 The Digital Internet is to transport information flows in a
  reliable manner by its intrinsic nature, its protocols and its
  structure.
 It not only transmits information from any one point to any
  other point within the network, it also insures its coherence
  and avoids its corruption by external elements, notably
  through its data encapsulation in packets.
 The Physical Internet’s actors, movers, routes, nodes and
  flowing containers should interact in synergy to guarantee:
  • The integrity of physical objects encapsulated in -containers
  • The physical and informational integrity of -containers, -movers,
    -routes and -nodes
  • The informational integrity of -actors (humans, software agents)
  • The robustness of client-focused performance in delivering and
    storing -containers.
       Ref.: Shi X. and Chan S., “Information systems and information technologies for supply chain management”, Chap. 11 in Global Logistics New Directions in Supply Chain Management, 2007

                                                            Physical Internet Manifesto
                                                                Benoit Montreuil
                                                       Version 1.8, 2011-03-28, p. 74/88
                                                       www.PhysicalInternetInitiative.org
Physical Internet
     12. Stimulate business model innovation
       Multiple actors with innovative business models
                 commercializing novel offers
      enabled by and adapted to the Physical Internet,
with innovative revenue models for the various stakeholders

             What are to be the -enabled equivalents of
                     Amazon, eBay and Google?
     How are to evolve the manufacturers, distributers, retailers,
                 transporters and logistics providers
             so as to best exploit the Physical Internet?
     How are to evolve the material handling and transportation
                  solution and technology providers
      so as to best thrive from the emerging Physical Internet?


                         Physical Internet Manifesto
                                Benoit Montreuil
                       Version 1.8, 2011-03-28, p. 75/88
                       www.PhysicalInternetInitiative.org
Physical Internet
       12. Stimulate business model innovation
                                 Remunerating the Players
 In the Digital Internet, the transmission of information
  is remunerated mostly through bundled flat fees
  due to the quasi nil marginal costs
 In the Physical Internet, the transmission of a container
  generates non negligible costs for each of the operators
  having taken charge of some part of the transmission
 It is thus necessary to define business models for
  commercializing offers as well as operator revenue models
  • There currently exist examples paving the way to realize
    this, notably in the airline industry

       Reference:   Crainic, T.G. and Kim, K.H., “Intermodal Transportation”, Chap. 8 in Transportation, Handbooks in Operations Research and Management Science, Barnhart C. and Laporte G.
                    (Eds.), North-Holland, Amsterdam, 467–537, 2007
                                                          Physical Internet Manifesto
                                                              Benoit Montreuil
                                                     Version 1.8, 2011-03-28, p. 76/88
                                                     www.PhysicalInternetInitiative.org
Physical internet manifesto 1.8.2 2011 03-28-english bm
Physical internet manifesto 1.8.2 2011 03-28-english bm
Physical internet manifesto 1.8.2 2011 03-28-english bm
Physical internet manifesto 1.8.2 2011 03-28-english bm
Physical internet manifesto 1.8.2 2011 03-28-english bm
Physical internet manifesto 1.8.2 2011 03-28-english bm
Physical internet manifesto 1.8.2 2011 03-28-english bm
Physical internet manifesto 1.8.2 2011 03-28-english bm
Physical internet manifesto 1.8.2 2011 03-28-english bm
Physical internet manifesto 1.8.2 2011 03-28-english bm
Physical internet manifesto 1.8.2 2011 03-28-english bm
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  • 1. Physical Internet Manifesto Globally transforming the way physical objects are handled, moved, stored, realized, supplied and used π Benoit Montreuil Canada Research Chair in Enterprise Engineering CIRRELT, Interuniversity Research Center on Enterprise Networks, Logistics & Transportation Université Laval, Québec, Canada Version 1.8: 2011-03-28 www.PhysicalInternetInitiative.org
  • 2. Acknowledgements The Physical Internet Manifesto has greatly benefited from the contribution of esteemed colleagues America CIRRELT Research Center: • Teodor Crainic - UQAM • Michel Gendreau - Université de Montréal • Olivier Labarthe, Mustapha Lounès & Jacques Renaud - Université Laval CICMHE, College-Industry Council for Material Handling Education: • Russ Meller – University of Arkansas • Kevin Gue & Jeff Smith – Auburn University • Kimberley Ellis – Virginia Tech • Leon McGinnis – Georgia Tech • Mike Ogle – MHIA Europe • Rémy Glardon – EPFL • Éric Ballot, Frédéric Fontane – Mines ParisTech • Rene De Koster – Erasmus University • Detlef Spee – Fraunhofer Institute for Material Flow and Logistic Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 2/88 www.PhysicalInternetInitiative.org
  • 3. Macroscopic Positioning CLAIM The way physical objects are moved, handled, stored, realized, supplied and used throughout the world is not sustainable economically, environmentally and socially GOAL Enabling the global sustainability of physical object movement, handling, storage, realization, supply and usage VISION Evolving towards a worldwide Physical Internet Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 3/88 www.PhysicalInternetInitiative.org
  • 4. Supporting the claim CLAIM The way Physical objects are moved, handled, stored, realized, supplied and used throughout the world is not sustainable economically, environmentally and socially Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 4/88 www.PhysicalInternetInitiative.org
  • 5. Thirteen unsustainability symptoms Leading Us Toward Hitting the Wall Real Hard 1. We are shipping air and packaging 2. Empty travel is the norm rather than the exception 3. Truckers have become the modern cowboys 4. Products mostly sit idle, stored where unneeded, yet so often unavailable fast where needed 5. Production and storage facilities are poorly used 6. So many products are never sold, never used 7. Products do not reach those who need them the most 8. Products unnecessarily move, crisscrossing the world 9. Fast & reliable intermodal transport is still a dream or a joke 10. Getting products in and out of cities is a nightmare 11. Networks are neither secure nor robust 12. Smart automation & technology are hard to justify 13. Innovation is strangled Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 5/88 www.PhysicalInternetInitiative.org
  • 6. We are shipping air and packaging Unsustainability symptom 1 Trucks and containers are often half empty at departure, with a large chunk of the non-emptiness being filled by packaging Overall, most goods travel by road. In the UK, 65% of all freight is moved by road, or about 160 billion tonne kilometres out of 240 billion tonne kilometres. In the USA, for example, there are 40,000 public carriers and 600,000 private fleets. With so many operators competition is likely to be more intense and pricing more flexible. [1] Transportation costs are the single largest contributor to total logistics costs, with trucking being the most significant subcomponent. Trucking costs account for roughly 50% of total logistics expenditures and 80% of the transportation component. Trucking revenues in 2005 increased by $74 billion over 2004, but carrier expenses rose faster than rates, eroding some of the gain. Fuel ranks as a top priority at trucking firms as substantially higher fuel prices have cut margins. The U.S. trucking industry consumes more than 650 million gallons of diesel per week, making it the second largest expense after labor. The trucking industry spent $87.7 billion for diesel in 2005, a big jump over the $65.9 billion spent in 2004. [2] References: 1]: “Transport in Logistics”, Chap. 12 in An Introduction to Supply Chain Management, Ed. By Donald Waters [Palgrave Macmillan] (2003) [2]: Wilson R. A., “Economic Impact of Logistics”, Chap. 2 in Logistics Engineering Handbook , 2008 Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 6/88 www.PhysicalInternetInitiative.org
  • 7. Empty travel is the norm rather than the exception Unsustainability symptom 2 Vehicles and containers often return empty, or travel extra routes to find return shipments Vehicles leaving loaded get emptier and emptier as their route unfolds from delivery point to delivery point Statistical evidence that around 30 per cent of truck-kilometres are run empty, illustrating huge inefficiency in road haulage and enormous potential for increasing back loading. In Britain, the proportion of truck-kilometres travelled empty felt from 33 per cent in 1980 to 27 per cent in 2004, yielding significant economic and environmental benefits. [1] Other things being equal, if the empty running percentage had remained at its 1980 level, road haulage costs in 2004 would have been £1.2 billion higher and an extra 1 million tonnes of carbon dioxide would have been emitted by trucks (McKinnon, 2005). Reference: [1]: McKinnon A., “Road transport optimization” Chap. 17 in Global Logistics New Directions in Supply Chain Management (2007), Ed. by Donald Water Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 7/88 www.PhysicalInternetInitiative.org
  • 8. Truckers have become the modern cowboys Unsustainability symptom 3 So many are nearly always on the road, so often away from home for long durations Their family life, their social life and their personal health are precarious The shift workers with the lowest mean hours of daily sleep are truck drivers, at 3.5 hours/24 hours Fatigue and sleep deprivation are important safety issues for long-haul truck drivers A National Transportation Safety Board study examined the effects of duty shifts and sleep patterns on drivers of heavy trucks involved in single-vehicle accidents and found that 62 of 107 accidents (58%) reported by drivers were deemed to be "fatigue-related“ [1] The American Trucking Association (ATA) has estimated that the driver shortage will grow to 111,000 by 2014 [2] References: [1]: “Consequences of Insomnia, Sleepiness, and Fatigue: Health and Social Consequences of Shift Work “, http://cme.medscape.com/viewarticle/513572_2 [2] : Wilson R.A. “Economic Impact of Logistics”, in Chap. 2 in Logistics Engineering Handbook, 2008 Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 8/88 www.PhysicalInternetInitiative.org
  • 9. Products mostly sit idle, stored where unneeded, yet so often unavailable fast where needed Unsustainability symptom 4 Manufacturers, distributors, retailers and users are all storing products, often in vast quantities through their networks of warehouses and distribution centers, yet service levels and response times to local users are constraining and unreliable Stocks are increasingly maintained at a higher level in response to longer and sometimes unpredictable delivery times, as well as changes in distribution patterns. In 2005, the average investment in all business inventories was $1.74 trillion, which surpassed 2004’s record high by $101 billion. Reference: Wilson R.A. “Economic Impact of Logistics”, in Chap. 2 in Logistics Engineering Handbook, 2008 Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 9/88 www.PhysicalInternetInitiative.org
  • 10. Production and storage facilities are poorly used Unsustainability symptom 5 Most businesses invest in storage and/or production facilities which are lowly used most of the times, or yet badly used, dealing with products which would better be dealt elsewhere, forcing a lot of unnecessary travel When the production function is considered to be a part of the supply chain, there is obviously much that can be done to improve environmental and social performance at this stage [1] The transport and storage of goods are at the centre of any logistics activity, and these are areas where a company should concentrate its efforts to reduce its environmental impacts [2] [1]: McIntyre K., “Delivering sustainability through supply chain management”, Chap.15 in Global Logistics New Directions in Supply Chain Management, (2007) [2]: Cooper J., Browne M. and Peters M., “European Logistics: Markets, management and strategy”, Blackwell, London (1991) Chopra & Meindl, “Facility Decisions and Distribution Network “, 2009_E4.5 Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 10/88 www.PhysicalInternetInitiative.org
  • 11. So many products are never sold, never used Unsustainability symptom 6 A significant portion of consumer products that are made never reach the right market on time, ending up unsold and unused while there would have been required elsewhere Rusting new cars in disused airfields Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 11/88 www.PhysicalInternetInitiative.org
  • 12. Products do not reach those who need them the most Unsustainability symptom 7 This is specially true in less developed countries and disaster-crisis zones Countries most affected by high prices are those: which import large quantities of food, whose populations spend a large part of their income on food, where inflation is already high, where there is already food insecurity and which have large urban populations. References: “World Food Programme (WFP)”, http://www.wfp.org/node/7904 “Problems in developing logistics centres for ports in the Escap region”; Chap5, http://www.unescap.org/ttdw/Publications/TFS_pubs/pub_2194/pub_2194_ch5.pdf Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 12/88 www.PhysicalInternetInitiative.org
  • 13. Products unnecessarily move, crisscrossing the world Unsustainability symptom 8 Products commonly travel thousands of miles-kilometers which could have been avoided (1) by routing them smartly and/or (2) making or assembling them much nearer to their point of use Reference: “Virtual Warehousing”, Jeroen van den Berg Consulting, 2001 Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 13/88 www.PhysicalInternetInitiative.org
  • 14. Fast & reliable intermodal transport is still a dream or a joke Unsustainability symptom 9 Even though there are some great intermodal examples, in general synchronization is so poor, interfaces so badly designed, that intermodal routes are mostly time & cost inefficient and risky Reference: Crainic, T.G. and Kim, K.H., “Intermodal Transportation, Chap8 in Handbooks in Operations Research and Management Science”, C. Barnhart and G. Laporte (Eds.), 2007 Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 14/88 www.PhysicalInternetInitiative.org
  • 15. Getting products in, through and out of cities is a nightmare Unsustainability symptom 10 Most cities are not designed and equipped for easing freight transportation, handling and storage, making the feeding of businesses and users in cities a nightmare References: « Transport des marchandises en ville », www.transports-marchandises-en-ville.org “Problems in developing logistics centres for ports in the Escap region”, Chap5, http://www.unescap.org/ttdw/Publications/TFS_pubs/pub_2194/pub_2194_ch5.pdf Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 15/88 www.PhysicalInternetInitiative.org
  • 16. Networks are neither secure nor robust Unsustainability symptom 11 There is extreme concentration of operations in a limited number of centralized production and distribution facilities, with travel along a narrow set of high-traffic routes This makes the logistic networks and supply chains of so many businesses, unsecure in face of robbery and terrorism acts, and not robust in face of natural disasters and demand crises References: Chopra & Meindl, “Facility Decisions and Distribution Network” - 2009_E4.5 “Terrorism - Supply Chain Effects”, http://www.weforum.org/pdf/CSI/Terrorism.pdf “The New Supply Chain Challenge - Risk Management in a Global Economy”, FM Global, 2006 , http://www.fmglobal.com/assets/pdf/P0667.pdf Peck H., “Supply chain vulnerability, risk and resilience”, Chap.15 in Global Logistics New Directions in Supply Chain Management, (2007) “Managing Supply Chain Risk”, Video produced by CFO Research Services, http://www.fmglobal.com/VideoPlayer.aspx?url=/assets/videos/CFO_SupplyChain.wm “Security, Risk Perception and Cost-Benefit Analysis”, Joint Transport Research Centre OCDE Summary & Conclusions – Discussion Paper #2009-6, March 2008 Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 16/88 www.PhysicalInternetInitiative.org
  • 17. Smart automation & technology are hard to justify Unsustainability symptom 12 Vehicles, handling systems and operational facilities have to deal with so many types of materials, shapes and unit loads, with each player independently and locally deciding on his piece of the puzzle This makes it very hard to justify smart connective technologies (e.g. RFID & GPS), systemic handling and transport automation, as well as smart collaborative piloting software References: Montreuil B., Facilities Location and Layout Design Chapter 9. in Logistics Engineering Handbook (2008) Hakimi D., Leclerc P-A., Montreuil B., Ruiz A., « Integrating RFID and Connective Technologies in Retail Stores », RFID in Operations and Supply Chain Management - Research and Applications, Erich Schmidt Verlag, 148-171, 2007.Spada Sal,“Material Handling Control System Software Extends Supply Chain Visibility “nov.15, 2001 http://www.arcweb.com/ARCReports2001/Material%20Handling%20Control%20System%20Software%20Extends%20Supply%20Chain%20Visibility.pdf Sunderesh S. H., Material Handling System – Chapter-11 in Logistics Engineering Handbook (2008) McKinnon A., Road transport optimization – Chap. 17 in Global Logistics New Directions in Supply Chain Management - eBook (2007) Fifth Edition, Edited by Donald Waters Decker C. et al.“Cost-Benefit Model for Smart Items in the Supply Chain” (2008) Myerson J.M. “RFID in the Supply Chain - A Guide to Selection and Implementation” - IT Consultant Philadelphia, Pennsylvania USA - Auerbach Publications 2007 Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 17/88 www.PhysicalInternetInitiative.org
  • 18. Innovation is strangled Unsustainability symptom 13 Innovation is bottlenecked, notably by lack of generic standards and protocols, transparency, modularity and systemic open infrastructure This makes breakthrough innovation so tough, justifying a focus on marginal epsilon innovation References: “RFID Tags: Advantages and Limitations”, http://www.tutorial-reports.com/wireless/rfid/walmart/tag-advantages.php “RFID hype is blurring limitations, study claims “, http://www.usingrfid.com/news/read.asp?lc=d59745mx97zf “RFID_Internet of Things in 2020 - Roadmap for the future”, Infso D.4Networked Enterprise & RFID Infso G.2Micro & Nanosystems, 2008 Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 18/88 www.PhysicalInternetInitiative.org
  • 19. Thirteen unsustainability symptoms Leading Us Toward Hitting the Wall Real Hard 1. We are shipping air and packaging 2. Empty travel is the norm rather than the exception 3. Truckers have become the modern cowboys 4. Products mostly sit idle, stored where unneeded, yet so often unavailable fast where needed 5. Production and storage facilities are poorly used 6. So many products are never sold, never used 7. Products do not reach those who need them the most 8. Products unnecessarily move, crisscrossing the world 9. Fast & reliable intermodal transport is still a dream or a joke 10. Getting products in and out of cities is a nightmare 11. Networks are neither secure nor robust 12. Smart automation & technology are hard to justify 13. Innovation is strangled Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 19/88 www.PhysicalInternetInitiative.org
  • 20. Mapping unsustainability symptoms to environmental, environmental and societal facets Environmental Economical Unsustainability symptoms Societal 1 We are shipping air and packaging 2 Empty travel is the norm rather than the exception 3 Truckers have become the modern cowboys Products mostly sit idle, stored where unneeded, yet so often 4 unavailable fast where needed 5 Production and storage facilities are poorly used 6 So many products are never sold, never used 7 Products do not reach those who need them the most 8 Products unnecessarily move, crisscrossing the world 9 Fast & reliable intermodal transport is still a dream or a joke 10 Getting products in and out of cities is a nightmare 11 Networks are neither secure nor robust 12 Smart automation & technology are hard to justify 13 Innovation is strangled Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 20/88 www.PhysicalInternetInitiative.org
  • 21. Readdressing the Goal GOAL Enabling the global sustainability of the transport, handling, storage, realization, supply and usage of physical objects across the world Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 21/88 www.PhysicalInternetInitiative.org
  • 22. Expliciting the Overall Goal Economic goal Unlock highly significant gains in global logistic, production, transportation and business productivity Environmental goal Reduce by an order of magnitude global energy consumption, pollution and greenhouse gas emission associated with logistic, production and transportation Societal goal Increase the quality of life of both the logistic, production and transportation workers and the overall population by making much more accessible across the world the objects and functionality they value References: Dablanc L., “Urban Goods Movement and Air Quality Policy and Regulation Issues in European Cities”, Journal of Environmental Law Advance Access, 2008 McIntyre K., “Delivering sustainability through supply chain management”, Chap.15 in Global Logistics New Directions in Supply Chain Management, 2007 Esty D. C. and Winston A.S. “Green to Gold “; 2006 Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 22/88 www.PhysicalInternetInitiative.org
  • 23. Restating the Overall Goal Enabling the global sustainability of bringing to users from around the world the physical objects they need and value, through a triple synergistic gain in terms of economy, environment and society “We are not environmentalist. “In a prosperous society, We are not Scientists you really have tow assets: But if we don’t do anything, people – their capacity and skills – we will be out of business.” and the ecosystem around them. Unilever supply chain manager Both need to be carefully tended.” the world’s largest purchasers of fish. Mats Lederhausen, executive’s veteran at McDonald’s. Reference: Sustainable Supply Chain Logistics Guide (SCL)- Business Tool (2009) http://www.metrovancouver.org/about/publications/Publications/sustainablesclguidefinal-june23.pdf Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 23/88 www.PhysicalInternetInitiative.org
  • 24. The Inspiration for the Vision June 2006: The Spark • A great front page one-liner • Interesting yet mainstream supply chain articles • Nothing like what I perceived a Physical Internet should be • I rapidly got passionate about the question What should or could be a full blown Physical Internet? • What would be its key features? • What capabilities would it offer that are not achievable today? • Another question surfaced rapidly: Why would we need a Physical Internet? Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 24/88 www.PhysicalInternetInitiative.org
  • 25. The Digital Internet Building Upon and Expanding Beyond the Information Highway Metaphor When the digital world was looking for a way to conceptualize how it should transform itself, it relied on a physically inspired metaphor: Building the information highway References “BCNET's Optical Regional Advanced Network Upgrade Completed”, http://www.bc.net/news_events_publications/newsletters/Dec_2007/ROADM_Completion.htm “What the Telecom Industry May Look Like in 10 Years”, http://kennethmarzin.wordpress.com/2008/01/24/what-the-telecom-industry-may-look-like-in-10-years/ Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 25/88 www.PhysicalInternetInitiative.org
  • 26. The Digital Internet Building Upon and Expanding Beyond the Information Highway Metaphor Well, they have achieved their goal and went farther, reshaping completely the way digital computing and communication are now performed They have invented the Internet, leading the way to the World-Wide Web They have enabled the building of an open distributed networked infrastructure that is currently revolutionizing so many facets of our societal and economic reality References: « Internet 2, le Web de demain », /http://www.futura-sciences.com/fr/doc/t/telecoms/d/Internet-2-le-web-de-demain_582/c3/221/p1 http://www.20minutes.fr/article/353755/Economie-Surendettement-Christine-Lagarde-ne-veut-pas-interdire-le-credit-revolving.php « rE-veille: réflexions sur l’aventure Internet », http://reveille.wordpress.com/ Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 26/88 www.PhysicalInternetInitiative.org
  • 27. The Essence of the Digital Internet The Digital Internet is about the interconnection between networks in a way transparent for the user, so allowing the transmission of formatted data packets in a standard way permitting them to transit through heterogeneous equipment respecting the TCP/IP protocol References: Kurose J., Ross K. and Wesley A. “Computer Networking: A Top Down Approach Featuring the Internet”, 3rd edition., July 2004. Parziale L., Britt D.T., Davis C., Forrester J., Liu W., Matthews C. and Rosselot N. “TCP-IP Tutorial and Technical Overview”, 2006. http://www.redbooks.ibm.com/redbooks/pdfs/gg243376.pdf “Interconnection of access networks, MANs and WANs “, http://images.google.ca/imgres?imgurl=http://www.exfo.com/ Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 27/88 www.PhysicalInternetInitiative.org
  • 28. Toward a Physical Internet Digital Internet as a Metaphor for the Physical World Even though there are fundamental differences between the physical world and the digital world, the Physical Internet initiative aims to exploit the Internet metaphor so as to propose a vision for a sustainable and progressively deployable breakthrough solution to global problems associated with the way we move, handle, store, realize, supply and use physical objects all around the world Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 28/88 www.PhysicalInternetInitiative.org
  • 29. The Physical Internet An open global logistics system leveraging interconnected supply networks through a standard set of collaborative protocols, modular containers and smart interfaces for increased efficiency and sustainability Working definition for the Physical Internet, jointly developed by Benoit Montreuil, Eric Ballot and Russ Meller, version as of 2011-03-23 Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 29/88 www.PhysicalInternetInitiative.org
  • 30. Exposing 13 Key Features of the Physical Internet Vision VISION Evolving towards a worldwide Physical Internet Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 30/88 www.PhysicalInternetInitiative.org
  • 31. Thirteen Key Features of the Physical Internet Vision 1. Encapsulate merchandises in world-standard modular containers 2. Aim toward universal interconnectivity 3. Evolve from material to container handling & storage systems 4. Exploit smart networked containers embedding smart objects 5. Evolve from point-to-point hub-and-spoke transport to distributed multi-segment intermodal transport 6. Embrace a unified multi-tier conceptual framework 7. Activate and exploit an open global supply web 8. Design products fitting containers with minimal space waste 9. Minimize physical moves and storages by digitally transmitting knowledge and materializing products as locally as possible 10. Deploy capability certifications and open performance monitoring 11. Prioritize webbed reliability and resilience of networks 12. Stimulate business model innovation 13. Enable open infrastructural innovation Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 31/88 www.PhysicalInternetInitiative.org
  • 32. Digital Internet: From information to packets  The Digital Internet does not transmit information, it transmits packets embedding information  Information packets are designed for ease of use in Internet  The information within a packet is encapsulated and is not dealt with explicitly by Internet  The packet header contains all information required for identifying the packet and routing it correctly to destination  A packet is constructed for a specific transmission and it is dismantled once it has reached its destination Image: http://www.softlist.net/program/sniff_-_o_-_matic-image.html Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 32/88 www.PhysicalInternetInitiative.org
  • 33. Digital Internet: From information to packets  The Digital Internet is based on a protocol structuring data packets independently from equipment  In this way, data packets can be processed by different systems and through various networks • Modems, copper wires, fiber optic wires, routers, etc. • Local area networks, wide area networks, etc. • Intranet, Extranet, Internet, Virtual Private Network, etc. References: Kurose J., Ross K. and Wesley A. “Computer Networking: A Top Down Approach Featuring the Internet”, 3rd edition., July 2004. Parziale L., Britt D.T., Davis C., Forrester J., Liu W., Matthews C. and Rosselot N. “TCP-IP Tutorial and Technical Overview”, 2006. http://www.redbooks.ibm.com/redbooks/pdfs/gg243376.pdf Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 33/88 www.PhysicalInternetInitiative.org
  • 34. Physical Internet 1. Encapsulate merchandises in world-standard smart green modular containers -containers are key elements enabling the interoperability necessary for the adequate functioning of the Physical Internet  Merchandise is unitized as content of a -container and is not dealt with explicitly by the Physical Internet  From the cargo container sizes down to tiny sizes  Conceived to be easily flowed through various transport, handling and storage modes and means  Conceived to be easy to handle, store, transport, seal, snap, interlock, load, unload, construct, dismantle, panel, compose and decompose  Smart tag enabled, with sensors if necessary, to allow their proper identification, routing and maintaining  Environment friendly materials with minimal off-service footprint  Minimizing packaging materials requirements by enabling of the fixture-based protection and stabilization of their embedded products;  Various usage-adapted structural grades  Conditioning capabilities (e.g. temperature) as necessary  Sealable for security purposes Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 34/88 www.PhysicalInternetInitiative.org
  • 35. -Containers: Modularized and standardized worldwide in terms of dimensions, functions and fixtures -containers Y X Z Illustrative modular dimensions 0,12 m 0,24 m 0,36 m 0,48 m 0,6 m 1,2 m 2,4 m 3,6 m 4,8 m 6m 12 m B. Montreuil, B. Gilbert Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 35/88 www.PhysicalInternetInitiative.org
  • 36. -Containers Easy to handle, store, transport, seal, snap, interlock, load, unload, construct, dismantle, panel, compose and decompose Composi on Decomposi on Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 36/88 www.PhysicalInternetInitiative.org
  • 37. Physical Internet 2. Aim toward universal interconnectivity High-performance logistic centers, systems and movers exploiting world standard protocols, making it fast, cheap, easy and reliable to interconnect -containers through modes and routes, with an overarching aim toward universal interconnectivity References: Crainic, T.G. and Kim, K.H., Intermodal Transportation, Chapt. 8, Transportation, Handbooks in Operations Research and Management Science, C. Barnhart and G. Laporte (Eds.), North-Holland,, 467–537, 2007 Goetschalckx M. “Distribution System Design”. Chap. 13 in Logistics Engineering Handbook, 2008 Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 37/88 www.PhysicalInternetInitiative.org
  • 38. Digital Internet: Hubs and Routers  Routing allows to insure Internet performance through a very efficient orientation of the packets towards the nodes of the network  Routing exploits the ease of storing & transmitting information  A router's job is extremely simple: • It moves packets to the next machine in the right direction as quickly as possible.  Because all routers do is move packets, they are able to process millions of packets a minute • Each router maintains a routing table, a set of rules that tell the router which next machine to forward packets to, based on the final destination of a packet References: Zuckerman E. & McLaughlin A., “Introduction to Internet Architecture and Institutions” : August, 2003 Perlman R, “Interconnections - Bridges, Routers, Switches, and Internetworking Protocols”; (2nd Edition) 1999 Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 38/88 www.PhysicalInternetInitiative.org
  • 39. Physical Internet 2. Universal Interconnectivity  The Physical Internet nodes are concurrently routing and accumulation sites within the networks, as well as gateways interfacing with the entities out of the Physical Internet  As currently conceived, the activities of sorting, storage and handling physical objects are brakes to interconnection • Be it in train sorting yards or in crossdocking platforms  However there exist exceptions: • Such as some of the recently implemented container ports  There is a need to generalize unloading, orientation, storage and loading operations, widely applying them to -containers in a smart automated and/or human-assisted way  The objective is to make load breaking almost negligible temporally and economically • Intermodal less-than- truckload transport nearly at the same price, speed & reliability as single-mode full truckload References: Crainic, T.G. and Kim, K.H., Intermodal Transportation, Chap. 8, Transportation, Handbooks in Operations Research and Management Science, C. Barnhart and G. Laporte (Eds.), North-Holland, 467–537, 2007 Chopra & Meindl, Facility Decisions and Distribution Network - 2009_E4.5 Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 39/88 www.PhysicalInternetInitiative.org
  • 40. Physical Internet 3. Evolve from material to -container handling & storage systems -container handling and storage systems, with innovative technologies and processes exploiting the characteristics of -containers to enable their fast, cheap, easy and reliable input, storage, composing, decomposing, monitoring, protection and output through smart, sustainable and seamless automation and human handling Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 40/88 www.PhysicalInternetInitiative.org
  • 41. Physical Internet 3. Evolve from material to -container handling & storage systems Reference: Montreuil, B., R.D. Meller, E. Ballot (2010) Towards a physical internet: the impact on logistics facilities and material handling systems design and innovation, International Material Handling Research Colloquium (IMHRC 2010), Milwaukee, États-Unis, 2010/06/21-24 Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 41/88 www.PhysicalInternetInitiative.org
  • 42. Physical Internet 3. Evolve from material to -container handling & storage systems  -container handling and storage systems: • Enable fast and reliable input and output performance • Have seamless interfacing with vehicles and systems moving products in and out, as well as client software systems for tracking and interfacing with the containers • Monitor and protect the integrity of -containers • Secure the containers to the desired level • Provide an open live documentation of their specified performance and capabilities and of their demonstrated performance and capabilities, updated through ongoing operations  This applies in currently-labeled distribution centers, crossdocking centers, train stations, multimodal hubs, seaports, airports, and so on Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 42/88 www.PhysicalInternetInitiative.org
  • 43. Physical Internet 4. Exploit smart networked containers embedding smart objects Exploiting as best as possible the capabilities of smart -containers connected to the Digital Internet and the World Wide Web, and of their embedded smart objects, for improving performance as perceived by the clients and overall performance of the Physical Internet Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 43/88 www.PhysicalInternetInitiative.org
  • 44. Physical Internet and the Internet of Things  The Internet of Things is about enabling ubiquitous connection with physical objects equipped with smart connective technology, making the objects ever smarter and enabling distributed self- control of objects through networks • It exploits technologies such as Internet, Web, RFID and GPS  The Physical Internet is to exploit as best as possible the Internet of Things to enable the ubiquitous connectivity of its -containers and -systems Image: http://www.globetracker.biz/GlobeTracker/News.asp References: Johnson M. E., “Ubiquitous Communication: Tracking Technologies within the Supply Chain”, Chap.20 in Logistics Engineering Handbook, 2008 Scott D. M., “Electronic Connectivity and Soft ware” Chap.20 in Logistics Engineering Handbook, 2008 “Building a Smarter Container”, RFID Journal, http://www.rfidjournal.com/article/articleview/655/1/1/ Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 44/88 www.PhysicalInternetInitiative.org
  • 45. Physical Internet 5. Evolve from point-to-point hub-and-spoke transport to distributed multi-segment intermodal transport Distributed multi-segment travel of -containers through the Physical Internet, with distinct carriers and/or modes taking charge of inter-node segments, with transit nodes enabling synchronized transfer of -containers and/or carriers between segments, and with web software platform enabling an open market of transport requesters and transport providers Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 45/88 www.PhysicalInternetInitiative.org
  • 46. Digital Internet Distributed multi-segment transmission  In the Digital Internet, the packets that constitute an overall transmission, such as an e-mail, do not travel directly from source node A to destination node B  The packets travel through a series of routers and cables (copper or optical), dynamically moved from origin to destination in as best a way as possible provided the routing algorithms and the congestion through the networks • An email from Québec to Lausanne may go through tens of routers across the world, from New York to Beijing  Packets forming a message are not restricted to travel together • Each may end up traveling its distinct route • The overall message is reconstituted upon packet arrival at final destination References: Zuckerman E. & McLaughlin A., “Introduction to Internet Architecture and Institutions” : August, 2003 Kurose J., Ross K. and Wesley A. “Computer Networking: A Top Down Approach Featuring the Internet”, 3rd edition., July 2004. Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 46/88 www.PhysicalInternetInitiative.org
  • 47. Physical Internet 5. Evolve from point-to-point hub-and-spoke transport to distributed multi-segment intermodal transport  Currently, if a trailer fully loaded with containers is requested to be transported from Québec to Los Angeles, there is high probability that: • A driver and a truck will be assigned to the multi-day trip, • The driver sleeping in his truck and driving to destination, • Then moving to some as nearby as possible location to pick up a trailer returning toward as near as possible of Québec, to avoid empty travel References: Powell W. B. “Real-Time Dispatching for Truckload Motor Carriers“, Chapter 15 in Logistics Engineering Handbook, 2008 McKinnon A., “Road transport optimization “,Chap. 17 in Global Logistics New Directions in Supply Chain Management - eBook (2007) Fifth Ed. Edited by Donald Waters Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 47/88 www.PhysicalInternetInitiative.org
  • 48. A typical cowboy haul from Québec to Los Angeles One-way Distance travelled : 5030 km Drivers: 1, Trucks: 1, Trailer: 1 One-way driving time: 48 hours Return driving time: 48 hours One-way trip time: 120 hours Return trip time: 120+ hours Driving time for driver: 96 hours Trip time for driver: 240+ hours Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 48/88 www.PhysicalInternetInitiative.org
  • 49. Physical Internet 5. Evolve from point-to-point hub-and-spoke transport to distributed multi-segment intermodal transport  In the Physical Internet, such a point-to-point experience would be exceptional. Most probably: • A first driver and truck would be assigned to transport it to a transit point 3 to 6 hours away • The trailer would be deposited to a slot in the transit point • The first would then pick up another trailer required toward Québec • Another driver and truck would rapidly afterward pick up the trailer and move it another segment forward, or yet the containers could be transferred to other trailers, trucks, trains, ships or planes as pertinent given the opportunities • Repeating the process all the way to Los Angeles • The shipper or its representative would have a priori arranged transportation on each segment and sojourn at each transit point, in his best interest in terms of price, timing and risk; or yet the routing decisions would be dynamic and/or distributed Reference: “Warehousing And Cross-Docking”, http://www.3pd.com/Services/JobSiteWarehousing.aspx Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 49/88 www.PhysicalInternetInitiative.org
  • 50. Multi-segment travel from Quebec to Los Angeles Québec 20 Montréal Alexandria 20-401 Bay, US border 81 90 Syracuse 90 Buffalo 71 Cleveland 70 Columbus 70 Indianapolis 44 St-Louis 44 Springfield Current Proposed 44 Tulsa Distance travelled one-way: 5030 km 5030 km 40 Oklahoma City Drivers: 1 17 40 Amarillo Trucks: 1 17 40 Albuquerque Trailer: 1 1 40 Flagstaff One-way driving time (h): 48 51+ 40 Needles Return driving time (h): 48+ 51+ Barstow Total time at transit points (h): 0 9 15-10 Total trailer trip time from Quebec to LA (h): 120 60+ Los Angeles Total trailer trip time from LA to Quebec (h): 120+ 60+ Total trailer round trip time (h): 240+ 120+ Average driving time per driver (h): 96+ 6 Average trip time per driver (h): 240+ 6,5 Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 50/88 www.PhysicalInternetInitiative.org
  • 51. V12 C8 B1 C1 B2 V8 C5 B3 C6 B4 V13 C9 B5 C7 B6 C3 B7 B8 C4 B9 -Transit sites V6 C2 B10 allowing distributed multi-segment transport : π-containers through the Physical : π-carrier : π-vehicle Internet : π-bay Status of ! -car r ier s cur rently in ! -tr ansit" I ncoming deposit Outgoing pickup estimation ! -car r ier ! -bay ! -vehicle T ime ! -vehicle T ime (min, mode, max) C1 B2 V1 04:35 V14 (06:04, 06:05, 06:15) C2 B10 V3 05:15 V15 (06:05, 06:09, 06:12) C3 B7 V4 05:20 V13 (06:04, 06:07, 06:10) C4 B9 V6 05:35 V11 (06:02, 06:02, 06:02) C5 B3 V8 05:45 V12 (06:01, 06:01, 06:01) C6 B4 V9 05:48 V16 (06:10, 06:12, 06:18) C7 B6 V11 05:55 V19 (06:15, 06:20, 06:30) C8 B1 V12 05:58 V18 (06:10, 06:15, 06:20) C9 B10 V13 06:00 V25 (06:20, 06:30, 06:45) Reference: Montreuil, B., R.D. Meller, E. Ballot (2010) Towards a physical internet: the impact on logistics facilities and material handling systems design and innovation, International Material Handling Research Colloquium (IMHRC 2010), Milwaukee, États-Unis, 2010/06/21-24 Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 51/88 www.PhysicalInternetInitiative.org
  • 52. Water Road-Water -Hub designed for enabling distributed multi-segment intermodal transport of -containers through the Physical Internet Road Reference: Montreuil, B., R.D. Meller, E. Ballot (2010) Towards a physical internet: the impact on logistics facilities and material handling systems design and innovation, International Material Handling Research Colloquium (IMHRC 2010), Milwaukee, États-Unis, 2010/06/21-24 Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 52/88 www.PhysicalInternetInitiative.org
  • 53. Road-Rail Hub designed for enabling multi-segment intermodal transport of -containers through the Physical Internet Reference: B. Montreuil, E. Ballot, C. Montreuil et D. Hakimi (2010), OpenFret Project Report, InnoFret Program, France Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 53/88 www.PhysicalInternetInitiative.org
  • 54. Physical Internet 6. Embrace a unified multi-tier conceptual framework Intra-Center Inter-Processor Network Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 54/88 www.PhysicalInternetInitiative.org
  • 55. Physical Internet 6. Embrace a unified multi-tier conceptual framework Intra-Facility Inter-Center Network Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 55/88 www.PhysicalInternetInitiative.org
  • 56. Physical Internet 6. Embrace a unified multi-tier conceptual framework Intra-Site Inter-Facility Network Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 56/88 www.PhysicalInternetInitiative.org
  • 57. Physical Internet 6. Embrace a unified multi-tier conceptual framework Intra-City Inter-Site Network -transits & -hubs Toward -enabled sustainable city logistics Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 57/88 www.PhysicalInternetInitiative.org
  • 58. Physical Internet 6. Embrace a unified multi-tier conceptual framework Intra-State Inter-City Network -transits & -hubs Québec, Canada North eastern states, U.S.A. Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 58/88 www.PhysicalInternetInitiative.org
  • 59. Physical Internet 6. Embrace a unified multi-tier conceptual framework Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 59/88 www.PhysicalInternetInitiative.org
  • 60. Physical Internet 7. Activate and exploit an Open Global Supply Web An open web of product realization centers, distribution centers, warehouses, hubs and transit centers enabling producers, distributors and retailers to dynamically deploy their -container-embedded products in multiple geographically dispersed centers, producing, moving and storing them for fast, efficient and reliable response delivery to distributed stochastic demand for their products, services and/or solutions Enabling Physical Equivalents of Intranets, Virtual Private Networks, Cloud Computing and Cloud Storage References: Montreuil B., Labarthe, O., Hakimi, D., Larcher, A., & Audet, M. Supply Web Mapper. Proceedings of Industrial Engineering and Systems Management, Conference, IESM, , Conference Montréal, Canada, May 13-15, 2009 Hakimi D., B. Montreuil, O. Labarthe, “Supply Web: Concept and Technology”, 7th Annual International Symposium on Supply Chain Management, Conference Toronto, Canada, October 28-30, 2009Montreuil, B., Hakimi, D. , B. Montreuil, O. Labarthe, ”Supply Web Agent-Based Simulation Platform” Proceedings of the 3rd International Conference on Information Systems, Logistics and Supply Chain Creating value through green supply chains, ILS 2010 – Casablanca (Morocco), April 14-16<. Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 60/88 www.PhysicalInternetInitiative.org
  • 61. Physical Internet 7. Activate and exploit an Open Global Supply Web  As products and materials are moved and stored in modular secured containers, it allows: • Warehouses and DCs to accept handling and storing containers from a wide variety of clients, embedding an indeterminate and non-pertinent number of distinct products, as long as they respect their throughput, security, conditioning and dimensioning capability specifications • Significant improvement in capacity utilization and facility profitability • Significant reduction in asset requirements and significant improvement in logistic costs and delivery service performance References: “Virtual warehousing”, Jeroen van den Berg Consulting , 2001 Chopra & Meindl, “Facility Decisions and Distribution Network “, 2009_E4.5 Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 61/88 www.PhysicalInternetInitiative.org
  • 62. 1 Factories: 4 3 Firm dedicated DCs: 16 Mean lead time: 1,75 Max lead time: 3 2 4 Independent Factory: 1 Factory: 1 Factory: 1 Factory: 1 private Firm dedicated DCs: 4 Firm dedicated DCs: 4 Firm dedicated DCs: 4 Firm dedicated DCs: 4 Mean lead time: 1,73 Mean lead time: 1,78 Mean lead time: 1,75 Mean lead time: 1,73 supply networks Max lead time: 3 Max lead time: 3 Max lead time: 3 Max lead time: 3 Shared supply web Shared supply web with independently with jointly 1 1 implemented DCs 3 3 implemented DCs Factories: 4 Factories: 4 Firm dedicated DCs: 0 Firm dedicated DCs: 0 2 2 Group dedicated DCs: 16 Group dedicated DCs: 3 4 4 Mean lead time: 1,08 Mean lead time: 1,48 Max lead time: 3 Max lead time: 3 1 Factories: 4 3 Firm dedicated DCs: 0 Open supply web Group dedicated DCs: 0 with a high density of open DCs Open DCs used: 60+ available to many other clients 2 Mean lead time: 0 4 Max lead time: 0 * Lead times induced by transport from DC to client region Contrasting Independent Supply Networks, an Open Supply Web and a Global Open Supply Web in terms of number of distribution centers and of DC-to-client lead time Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 62/88 www.PhysicalInternetInitiative.org
  • 63. From Private Supply Networks to Open Supply Webs Insuring one-day delivery by each company in its served markets 47 facilities 30 facilities The private supply networks of 5 companies A shared supply networks among 5 companies serving clients across Canada and the U.S.A. serving clients across Canada and the U.S.A. under a one-day delivery service policy, under a one-day delivery service policy, with 42 DC and 5 factories with 25 DC and 5 factories Reference: Montreuil and Sohrabi, From Private Supply Networks to Open Supply Webs, IERC 2010 Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 63/88 www.PhysicalInternetInitiative.org
  • 64. Physical Internet 8. Design products fitting containers with minimal space waste Products designed and engineered to minimize the load they generate on the Physical Internet, with dimensions adapted to standard container dimensions, with maximal volumetric and functional density while containerized Reference: Seliger G., “Sustainability in Manufacturing - Recovery of Resources in Product and Material Cycles” (Ed. by Günther Seliger, Sringer Verlag, 2007 Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 64/88 www.PhysicalInternetInitiative.org
  • 65. Physical Internet 8. Design products fitting containers with minimal space waste  Product dimensions adapted to the standard container dimensions • So that the packaged product fits in a small footprint container  In order to avoid moving and storing air, products should be designed and engineered so as to have maximal volumetric density while being in Physical Internet containers, extendable to their usage dimensions when necessary  Products should be designed so that only key components and modules have to travel extensively through the Physical Internet: • Easy to be completed near point of use using locally available objects  Products having to move through the Physical Internet should be as functionally dense as possible when in the containers • Functional density of an object can be expressed as the ratio of its useful functionality over the product of its weight and volume Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 65/88 www.PhysicalInternetInitiative.org
  • 66. Physical Internet 9. Minimize physical moves and storages by digitally transmitting knowledge and materializing products as locally as possible In general, it is much easier and much less expensive to move and store digital objects composed of information bits rather than physical objects composed of matter References: Waters D., “Trends in the supply chain”, Chap. 1 in Global Logistics New Directions in Supply Chain Management , 2007) Fifth Ed., Ed. by Donald Waters Duncan R., “Internet traders can increase profitability by reshaping their supply chains” Chap. 19 in Global Logistics New Directions in Supply Chain Management , 2007 5th Ed. by D. Waters Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 66/88 www.PhysicalInternetInitiative.org
  • 67. Physical Internet 9. Minimize physical moves and storages by digitally transmitting knowledge and materializing products as locally as possible Exploiting extensively the knowledge-based dematerialization of products and their materialization in physical objects at point of use As it will gain maturity, the Physical Internet is expected to be connected to ever more open distributed flexible production centers capable of locally realizing (make, assemble, finish) for clients a wide variety of products from digitally transmitted specifications, local physical objects and, if needed, critical physical objects brought in from faraway sources Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 67/88 www.PhysicalInternetInitiative.org
  • 68. Physical Internet 9. Minimize physical moves and storages by digitally transmitting knowledge and materializing products as locally as possible Third-party production is to take an ever growing share of the overall production market, internal production ever more limited to highly sensitive core objects Product realization knowledge should be protected, and authenticity of the materialized products should be legally acknowledged Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 68/88 www.PhysicalInternetInitiative.org
  • 69. 1 3 Factories: 4 Firm dedicated DCs: 16 D2C max: 3 mean: 1,75 F2D max: 9 mean: 3,92 2 4 Independent Factory: 1 Factory: 1 Factory: 1 Factory: 1 private Firm dedicated DCs: 4 Firm dedicated DCs: 4 Firm dedicated DCs: 4 Firm dedicated DCs: 4 D2C max: 3 mean: 1,73 D2C max: 3 mean: 1,78 D2C max: 3 mean: 1,75 D2C max: 3 mean: 1,73 supply networks F2D max: 8 mean: 4,11 F2D max: 7 mean: 3,00 F2D max: 7 mean: 3,69 F2D max: 9 mean: 4,88 Shared supply web Shared supply web with independently with jointly 1 1 implemented DCs 3 3 implemented DCs Firm dedicated factories: 4 Firm dedicated factories: 4 Firm dedicated DCs: 0 Firm dedicated DCs: 0 2 2 Group shared DCs: 16 Group shared DCs: 3 D2C max: 3 mean: 1,08 4 4 D2C max: 3 mean: 1,48 F2D max: 9 mean: 4,36 F2D max: 10 mean: 4,39 Open supply web 1 Firm dedicated factories: 4 with a high density of open DCs Firm dedicated DCs: 0 3 Group shared DCs: 0 available to many other clients Open DCs used: 60+ 2 Inter-region transport induced lead times 4 D2C max: 0 mean: 0,00 F2D: Factory to DC lead time F2D max: 12 mean: 4,75 D2C: DC to client region lead time Contrasting Supply Networks, an Open Supply Web and a Global Open Supply Web in terms of factory-to-DC lead times Internet Manifesto Physical with no shared or open production centers Benoit Montreuil Version 1.8, 2011-03-28, p. 69/88 www.PhysicalInternetInitiative.org
  • 70. Shared supply web Shared supply web with shared factories with shared factories and independently implemented shared DCs and jointly implemented shared DCs Firm dedicated factories: 0 Firm dedicated factories: 0 Group shared factories: 4 Group shared factories: 4 Firm dedicated DCs: 0 Firm dedicated DCs: 0 Group shared DCs: 16 Group shared DCs: 3 Mean DC-to-region lead time: 1,08 Mean DC-to-region lead time: 1,48 Max DC-to-region lead time: 3 Max DC-to-region lead time: 3 Mean factory-to-DC lead time: 1,11 Mean factory-to-DC lead time: 0,83 Max factory-to-DC lead time: 3 Max factory-to-DC lead time: 3 Firm dedicated factories: 0 Group shared factories: 4 Firm dedicated DCs: 0 Open supply web Group shared DCs: 0 with a high density of open DCs Open DCs used: 60+ available to many other clients Mean DC-to-region lead time: 0 Max DC-to-region lead time: 0 and shared factories among the four firms Mean factory-to-DC lead time: 2 Max factory-to-DC lead time: 4 Firm dedicated factories: 0 Group shared factories: 0 Open supply web Open factories used: 64+ with a high density of Firm dedicated DCs: 0 Group dedicated DCs: 0 open distribution and production centers Open DCs used: 64+ available to many other clients Mean DC-to-region lead time: 0 Max DC-to-region lead time: 0 Mean factory-to-DC lead time: 0 * Inter-region transport induced lead times Max factory-to-DC lead time: 0 Contrasting Supply Networks, an Open Supply Web and a Global Open Supply Web in terms of factory-to-DCPhysical Internet Manifesto production centers lead times with shared or open Benoit Montreuil Version 1.8, 2011-03-28, p. 70/88 www.PhysicalInternetInitiative.org
  • 71. Physical Internet 10. Deploy capability certifications and open performance monitoring Multi-level Physical Internet capability certification of containers, handling systems, vehicles, information systems ports, distribution centers, roads, cities and regions, protocols and processes, and so on Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 71/88 www.PhysicalInternetInitiative.org
  • 72. Physical Internet 10. Deploy capability certifications and open performance monitoring Live open monitoring of really achieved performance of all -certified actors and entities, focusing on key performance indices of critical facets such as speed, service level, reliability, safety and security Such live performance tracking is openly available worldwide to enable fact-based decision making and stimulate continuous improvement Open information is to be provided while respecting confidentiality of specific transactions Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 72/88 www.PhysicalInternetInitiative.org
  • 73. Physical Internet 11. Prioritize webbed reliability and resilience of networks The overall Physical Internet network of networks should warrant its own reliability and that of its containers and shipments. The webbing of the networks and the multiplication of nodes should allow the Physical Internet to insure its own robustness and resilience to unforeseen events. For example, if a node or a part of a network fails, the traffic of containers should be easily reroutable, as automatically as possible Reference: Peck H., “Supply chain vulnerability, risk and resilience”, Chap. 14 in Global Logistics New Directions in Supply Chain Management, 2007 Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 73/88 www.PhysicalInternetInitiative.org
  • 74. Physical Internet 11. Prioritize webbed reliability and resilience of networks  The Digital Internet is to transport information flows in a reliable manner by its intrinsic nature, its protocols and its structure.  It not only transmits information from any one point to any other point within the network, it also insures its coherence and avoids its corruption by external elements, notably through its data encapsulation in packets.  The Physical Internet’s actors, movers, routes, nodes and flowing containers should interact in synergy to guarantee: • The integrity of physical objects encapsulated in -containers • The physical and informational integrity of -containers, -movers, -routes and -nodes • The informational integrity of -actors (humans, software agents) • The robustness of client-focused performance in delivering and storing -containers. Ref.: Shi X. and Chan S., “Information systems and information technologies for supply chain management”, Chap. 11 in Global Logistics New Directions in Supply Chain Management, 2007 Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 74/88 www.PhysicalInternetInitiative.org
  • 75. Physical Internet 12. Stimulate business model innovation Multiple actors with innovative business models commercializing novel offers enabled by and adapted to the Physical Internet, with innovative revenue models for the various stakeholders What are to be the -enabled equivalents of Amazon, eBay and Google? How are to evolve the manufacturers, distributers, retailers, transporters and logistics providers so as to best exploit the Physical Internet? How are to evolve the material handling and transportation solution and technology providers so as to best thrive from the emerging Physical Internet? Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 75/88 www.PhysicalInternetInitiative.org
  • 76. Physical Internet 12. Stimulate business model innovation Remunerating the Players  In the Digital Internet, the transmission of information is remunerated mostly through bundled flat fees due to the quasi nil marginal costs  In the Physical Internet, the transmission of a container generates non negligible costs for each of the operators having taken charge of some part of the transmission  It is thus necessary to define business models for commercializing offers as well as operator revenue models • There currently exist examples paving the way to realize this, notably in the airline industry Reference: Crainic, T.G. and Kim, K.H., “Intermodal Transportation”, Chap. 8 in Transportation, Handbooks in Operations Research and Management Science, Barnhart C. and Laporte G. (Eds.), North-Holland, Amsterdam, 467–537, 2007 Physical Internet Manifesto Benoit Montreuil Version 1.8, 2011-03-28, p. 76/88 www.PhysicalInternetInitiative.org