Physical internet manifesto 1.9 2011 04-21 english bm

Physical Internet ManifestoTransforming the way physical objects

are handled, moved, stored, realized, supplied and used,aiming towards global efficiency and sustainability

Benoit Montreuil

Canada Research Chair in Enterprise Engineering

CIRRELT, Interuniversity Research Centeron Enterprise Networks, Logistics & Transportation

Université Laval, Québec, Canada

Version 1.9: 2011-04-21

πwww.PhysicalInternetInitiative.org

Physical Internet ManifestoBenoit Montreuil

Version 1.9, 2011-04-29, p. 2/88www.PhysicalInternetInitiative.org

AcknowledgementsThe Physical Internet Manifesto has greatly benefited from

the contribution of esteemed colleagues

AmericaCIRRELT 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



Macroscopic Positioning

CLAIMThe way physical objects are

moved, handled, stored, realized, supplied and used throughout the world

is neither efficient nor sustainableeconomically, environmentally and socially

GOALEnabling the global efficiency and sustainability

of physical object movement, handling, storage, realization, supply and usage

VISIONEvolving towards a worldwide Physical Internet



Supporting the claim

CLAIMThe way Physical objects are

moved, handled, stored, realized, supplied and used throughout the world

is neither efficient nor sustainableeconomically, environmentally and socially



Inefficiency and unsustainability symptoms Leading Us Toward Hitting the Wall Real Hard

1. We are shipping air and packaging2. Empty travel is the norm rather than the exception3. Truckers have become the modern cowboys4. Products mostly sit idle, stored where unneeded,

yet so often unavailable fast where needed5. Production and storage facilities are poorly used6. So many products are never sold, never used7. Products do not reach those who need them the most8. Products unnecessarily move, crisscrossing the world9. Fast & reliable intermodal transport is still a dream or a joke10. Getting products in and out of cities is a nightmare11. Networks are neither secure nor robust12. Smart automation & technology are hard to justify13. Innovation is strangled



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

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]

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

being filled by packaging

We are shipping air and packagingInefficiency and unsustainability symptom 1



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

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).

Vehicles and containers often return empty,or travel extra routes to find return shipments

Vehicles leaving loaded get emptier and emptieras their route unfolds from delivery point to delivery point

Empty travel is the norm rather than the exceptionInefficiency and unsustainability symptom 2



Truckers have become the modern cowboysInefficiency and unsustainability symptom 3

So many are nearly always on the road,so often away from home for long durations

Their family life, their social lifeand their personal health are precarious

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

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 examinedthe 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 thatthe driver shortage will grow to 111,000 by 2014 [2]



Products mostly sit idle, stored where unneeded, yet so often unavailable fast where needed

Inefficiency and unsustainability symptom 4

Manufacturers, distributors, retailers and usersare 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

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

Stocks are increasingly maintained at a higher levelin 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.



Production and storage facilities are poorly usedInefficiency and unsustainability symptom 5

Most businesses invest in storage and/or production facilitieswhich 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

[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

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]

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]



So many products are never sold, never usedInefficiency and unsustainability symptom 6

A significant portion of consumer products that are madenever reach the right market on time, ending up unsold and unused

while there would have been required elsewhere

Rusting new cars in disused airfields



Products do not reach those who need them the mostInefficiency and 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



Products unnecessarily move, crisscrossing the world


Products commonly travel thousands of miles-kilometerswhich could have been avoided

(1) by routing them smartlyand/or

(2) making or assembling themmuch nearer to their point of use

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



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

Fast & reliable intermodal transport is still a dream or a joke




Getting products in, through and out of citiesis a nightmare


Most cities are not designed and equippedfor 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

http://www.transports-marchandises-en-ville.org/



Networks are neither secure nor robustInefficiency and unsustainability symptom 11

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

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

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

http://www.weforum.org/pdf/CSI/Terrorism.pdf



Smart automation & technology are hard to justifyInefficiency and 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 justifysmart 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, 2001http://www.arcweb.com/ARCReports2001/Material%20Handling%20Control%20System%20Software%20Extends%20Supply%20Chain%20Visibility.pdfSunderesh 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 WatersDecker 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



Innovation is strangledInefficiency and 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



Inefficiency and unsustainability symptoms Leading Us Toward Hitting the Wall Real Hard

1. We are shipping air and packaging2. Empty travel is the norm rather than the exception3. Truckers have become the modern cowboys4. Products mostly sit idle, stored where unneeded,

yet so often unavailable fast where needed5. Production and storage facilities are poorly used6. So many products are never sold, never used7. Products do not reach those who need them the most8. Products unnecessarily move, crisscrossing the world9. Fast & reliable intermodal transport is still a dream or a joke10. Getting products in and out of cities is a nightmare11. Networks are neither secure nor robust12. Smart automation & technology are hard to justify13. Innovation is strangled



Mapping unsustainability symptoms to environmental, environmental and societal

facets



Readdressing the Goal

GOALEnabling the global efficiency and sustainability

of the transport, handling, storage, realization, supply and usage of physical objects across the world



Expliciting the Overall Goal

References: Dablanc L., “Urban Goods Movement and Air Quality Policy and Regulation Issues in European Cities”, Journal of Environmental Law Advance Access, 2008McIntyre K., “Delivering sustainability through supply chain management”, Chap.15 in Global Logistics New Directions in Supply Chain Management, 2007Esty D. C. and Winston A.S. “Green to Gold “; 2006

Societal goalIncrease the quality of life of both

the logistic, production and transportation workersand the overall population by making much more accessible

across the world the objects and functionality they value

Economic goalUnlock highly significant gainsin global logistic, production,

transportationand business productivity

Environmental goalReduce by an order of magnitude

global energy consumption, pollutionand greenhouse gas emission associated with

logistic, production and transportation



Restating the Overall Goal

Enabling the global efficiency and sustainabilityof bringing to users from around the worldthe physical objects they need and value,

through a triple synergistic gainin terms of economy, environment and society

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

“We are not environmentalist.We are not Scientists But if we don’t do anything,we will be out of business.” Unilever supply chain managerthe world’s largest purchasers of fish.

“In a prosperous society,you really have tow assets:

people – their capacity and skills –and the ecosystem around them.

Both need to be carefully tended.” Mats Lederhausen,

executive’s veteran at McDonald’s.



The Inspiration for the VisionJune 2006: The Spark

• A great front page one-liner• Interesting yet mainstream supply chain articles

• Nothing like what I perceiveda 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 offerthat are not achievable today?

• Another question surfaced rapidly: Why would we need a Physical Internet?



The Digital InternetBuilding Upon and Expanding Beyondthe Information Highway Metaphor

When the digital world was looking for a wayto 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/



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 ofan open distributed networked infrastructure

that is currently revolutionizingso 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/p1http://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/

The Digital InternetBuilding Upon and Expanding Beyond

the Information Highway Metaphor

http://www.futura-sciences.com/fr/doc/t/telecoms/d/internet-2-le-web-de-demain_582/c3/221/p1/



The Essence of the Digital Internet

The Digital Internet is aboutthe interconnection between

networksin a way transparent for the user,so allowing the transmission of

formatted data packetsin a standard way

permitting them to transit throughheterogeneous 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/



Toward a Physical InternetDigital Internet as a Metaphor for the Physical World

Even though there are fundamental differencesbetween the physical world and the digital world,

the Physical Internet initiative aims to exploit the Internet metaphor

so as to propose a vision fora sustainable and progressively deployable

breakthrough solutionto global problems

associated with the waywe move, handle, store, realize, supply and use

physical objects all around the world



The Physical Internet

An open global logistics systemleveraging interconnected supply networks

through a standard set ofcollaborative 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



Exposing Key Featuresof the Physical Internet Vision




Key Featuresof the Physical Internet Vision

1. Encapsulate merchandises in world-standardsmart green modular containers

2. Aim toward universal interconnectivity3. Evolve from material to container handling & storage systems4. Exploit smart networked containers embedding smart objects5. Evolve from point-to-point hub-and-spoke transport

to distributed multi-segment intermodal transport6. Embrace a unified multi-tier conceptual framework7. Activate and exploit an open global supply web8. Design products fitting containers with minimal space waste9. Minimize Physical moves and storages by digitally transmitting

knowledge and materializing products as locally as possible10. Deploy capability certifications and open performance monitoring11. Prioritize webbed reliability and resilience of networks12. Stimulate business model innovation13. Enable open infrastructural innovation



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 dealtwith explicitly by Internet

The packet header containsall information required foridentifying the packet androuting it correctly to destination

A packet is constructed fora specific transmission and it isdismantled once it has reachedits destination

Image: http://www.softlist.net/program/sniff_-_o_-_matic-image.html



The Digital Internet is based on a protocolstructuring data packets independently from equipment

In this way, data packets can be processedby 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.

Digital Internet:From information to packets

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 Internet1. 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 andis 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



-Containers: Modularized and standardized worldwide

in terms of dimensions, functions and fixtures

-containers

X

Y

Z Illustrativemodular

dimensions0,12 m0,24 m0,36 m0,48 m0,6 m1,2 m2,4 m3,6 m4,8 m6 m12 m

B. Montreuil, B. Gilbert



-ContainersEasy to handle, store, transport, seal, snap, interlock, load,

unload, construct, dismantle, panel, compose and decompose



Physical Internet2. Aim toward universal interconnectivity

High-performance logistic centers, systems and moversexploiting world standard protocols,

making it fast, cheap, easy and reliableto 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, 2007Goetschalckx M. “Distribution System Design”. Chap. 13 in Logistics Engineering Handbook, 2008



Digital Internet:Hubs and Routers

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

Routing allows to insure Internet performancethrough a very efficient orientation of the packetstowards 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



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

Physical Internet2. Universal Interconnectivity

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, 2007Chopra & Meindl, Facility Decisions and Distribution Network - 2009_E4.5



Physical Internet3. Evolve from material to -container

handling & storage systems

-container handling and storage systems,with innovative technologies and processesexploiting the characteristics of -containersto enable their fast, cheap, easy and reliable

input, storage, composing, decomposing,monitoring, protection and output

through smart, sustainable and seamlessautomation and human handling





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



-container handling and storage systems:• Enable fast and reliable input and output performance

• Have seamless interfacing with vehicles and systemsmoving 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 Internet4. Exploit smart networked containers

embedding smart objects

Exploiting as best as possiblethe 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 clientsand overall performance of the Physical Internet



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 Thingsto enable the ubiquitous connectivityof its -containers and -systems

References: Johnson M. E., “Ubiquitous Communication: Tracking Technologies within the Supply Chain”, Chap.20 in Logistics Engineering Handbook, 2008Scott 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/

Image: http://www.globetracker.biz/GlobeTracker/News.asp



Physical Internet5. Evolve from point-to-point hub-and-spoke transport

to distributed multi-segment intermodal transport

Distributed multi-segment travelof -containers through the Physical Internet,

with distinct carriers and/or modestaking charge of inter-node segments,

with transit nodes enabling synchronized transfer of -containers and/or carriers between segments,

and with web software platformenabling an open market

of transport requesters and transport providers



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.

Digital InternetDistributed multi-segment transmission



Currently, if a trailer fully loaded with containers is requested to be transportedfrom 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 returningtoward 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 Internet5. Evolve from point-to-point hub-and-spoke transport to

distributed multi-segment intermodal transport



A typical cowboy haul from Québec to Los Angeles

One-way Distance travelled : 5030 kmDrivers: 1, Trucks: 1, Trailer: 1

One-way driving time: 48 hoursReturn driving time: 48 hoursOne-way trip time: 120 hoursReturn trip time: 120+ hours

Driving time for driver: 96 hours

Trip time for driver: 240+ hours



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 Internet5. Evolve from point-to-point hub-and-spoke transport to




Multi-segment travel from Quebec to Los Angeles

Québec

MontréalAlexandria Bay, US border

SyracuseBuffalo

ClevelandColumbus

Indianapolis

St-Louis

SpringfieldTulsa

Oklahoma CityAmarillo

Albuquerque

FlagstaffNeedles

Barstow

Los Angeles

20

20-401

81

90

90

71

70

70

44

44

44

40

40

40

40

40

15-10

Truck-Driver 1

Truck-Driver 2

Truck-Driver 3

Truck-Driver 4

Truck-Driver 5

Truck-Driver 6

Truck-Driver 7

Truck-Driver 8

Truck-Driver 9

Truck-Driver 10

Truck-Driver 11

Truck-Driver 12

Truck-Driver 13

Truck-Driver 14

Truck-Driver 15

Truck-Driver 16

Truck-Driver 17

Distance travelled one-way: 5030 km 5030 kmDrivers: 1 17Trucks: 1 17Trailer: 1 1One-way driving time (h): 48 51+Return driving time (h): 48+ 51+Total time at transit points (h): 0 9Total trailer trip time from Quebec to LA (h): 120 60+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

Current Proposed



-Transit sitesallowing distributed

multi-segment transportthrough the Physical

Internet




Road-Water -Hubdesigned for enabling


of -containers throughthe Physical Internet




Reference: B. Montreuil, E. Ballot, C. Montreuil et D. Hakimi (2010), OpenFret Project Report, InnoFret Program, France

Road-Rail Hub designed for enablingmulti-segment intermodal transport of -containers

through the Physical Internet



Physical Internet

6. Embrace a unified multi-tier conceptual framework

Intra-Center Inter-Processor Network



Intra-Facility Inter-Center Network

Physical Internet




Intra-Site Inter-Facility Network

Physical Internet




-transits & -hubs

Intra-City Inter-Site Network

Physical Internet


Toward -enabledsustainablecity logistics



Québec, Canada

North eastern states,U.S.A.

Intra-State Inter-City Network

Physical Internet


-transits & -hubs



Physical Internet




Physical Internet7. Activate and exploit an Open Global Supply Web

An open web of product realization centers,distribution centers, warehouses,

hubs and transit centersenabling producers, distributors and retailers

to dynamically deploy their -container-embedded productsin multiple geographically dispersed centers,

producing, moving and storing themfor fast, efficient and reliable response delivery

to distributed stochastic demandfor their products, services and/or solutions

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<.

Enabling Physical Equivalents ofIntranets, Virtual Private Networks,

Cloud Computing and Cloud Storage



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 utilizationand facility profitability

• Significant reduction in asset requirements and significant improvement in logistic costs and delivery service performance

Physical Internet7. Activate and exploit an Open Global Supply Web

References: “Virtual warehousing”, Jeroen van den Berg Consulting , 2001 Chopra & Meindl, “Facility Decisions and Distribution Network “, 2009_E4.5



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

Open supply webwith a high density of open DCsavailable to many other clients

Factories: 4Firm dedicated DCs: 0Group dedicated DCs: 0Open DCs used: 60+Mean lead time: 0Max lead time: 0

Factories: 4Firm dedicated DCs: 0Group dedicated DCs: 3Mean lead time: 1,48Max lead time: 3

Factories: 4Firm dedicated DCs: 0Group dedicated DCs: 16Mean lead time: 1,08Max lead time: 3

Factories: 4Firm dedicated DCs: 16Mean lead time: 1,75Max lead time: 3

Factory: 1Firm dedicated DCs: 4Mean lead time: 1,73Max lead time: 3




Shared supply webwith independentlyimplemented DCs

Shared supply webwith jointlyimplemented DCs

Independentprivatesupply networks

* Lead times induced by transport from DC to client region

1

2

3

4

3

24

1

1

2

3

4

3

24

1



From Private Supply Networksto Open Supply Webs

Reference: Montreuil and Sohrabi, From Private Supply Networks to Open Supply Webs, IERC 2010

The private supply networks of 5 companiesserving clients across Canada and the U.S.A.

under a one-day delivery service policy,with 42 DC and 5 factories

Insuring one-day delivery by each company in its served markets

47 facilities 30 facilities

A shared supply networks among 5 companiesserving clients across Canada and the U.S.A.

under a one-day delivery service policy,with 25 DC and 5 factories



Physical Internet8. Design products fitting containers

with minimal space waste

Products designed and engineeredto minimize the load they generate on the Physical Internet,with dimensions adapted to standard container dimensions,

with maximal volumetric and functional densitywhile containerized

Reference: Seliger G., “Sustainability in Manufacturing - Recovery of Resources in Product and Material Cycles” (Ed. by Günther Seliger, Sringer Verlag, 2007



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 Internet8. Design products fitting containers

with minimal space waste



In general,it is much easier and much less expensive

to move and store digital objectscomposed 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 WatersDuncan 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 Internet9. Minimize Physical moves and storages

by digitally transmitting knowledgeand materializing products as locally as possible



Physical Internet9. Minimize physical moves and storages


Exploiting extensivelythe 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

clientsa wide variety of products

from digitally transmitted specifications,local physical objects and, if needed,

critical physical objects brought in from faraway sources



Third-party production is to take an ever growing shareof the overall production market,

internal production ever more limitedto highly sensitive core objects

Product realization knowledge should be protected,and authenticity of the materialized products

should be legally acknowledged

Physical Internet9. Minimize Physical moves and storages





Firm dedicated factories: 4Firm dedicated DCs: 0Group shared DCs: 0Open DCs used: 60+

D2C max: 0 mean: 0,00F2D max: 12 mean: 4,75

Firm dedicated factories: 4Firm dedicated DCs: 0Group shared DCs: 3D2C max: 3 mean: 1,48F2D max: 10 mean: 4,39

Firm dedicated factories: 4Firm dedicated DCs: 0Group shared DCs: 16D2C max: 3 mean: 1,08F2D max: 9 mean: 4,36

Factories: 4Firm dedicated DCs: 16D2C max: 3 mean: 1,75F2D max: 9 mean: 3,92

Factory: 1Firm dedicated DCs: 4D2C max: 3 mean: 1,73F2D max: 8 mean: 4,11




Shared supply webwith independentlyimplemented DCs

Shared supply webwith jointlyimplemented DCs

Independentprivatesupply networks

Inter-region transport induced lead timesF2D: Factory to DC lead time

D2C: DC to client region lead time

1

2

3

4

3

24

1

1

2

3

4

3

24

1

Contrasting Supply Networks, an Open Supply Web and a Global Open Supply Web in terms of factory-to-DC lead times with no shared or open production centers




and shared factories among the four firms

Firm dedicated factories: 0Group shared factories: 4Firm dedicated DCs: 0Group shared DCs: 0Open DCs used: 60+Mean DC-to-region lead time: 0Max DC-to-region lead time: 0Mean factory-to-DC lead time: 2Max factory-to-DC lead time: 4

Contrasting Supply Networks, an Open Supply Web and a Global Open Supply Web in terms of factory-to-DC lead times with shared or open production centers

Open supply webwith a high density of

open distribution and production centersavailable to many other clients

Firm dedicated factories: 0Group shared factories: 0Open factories used: 64+Firm dedicated DCs: 0Group dedicated DCs: 0Open DCs used: 64+Mean DC-to-region lead time: 0Max DC-to-region lead time: 0Mean factory-to-DC lead time: 0Max factory-to-DC lead time: 0* Inter-region transport induced lead times

Firm dedicated factories: 0Group shared factories: 4Firm dedicated DCs: 0Group shared DCs: 16Mean DC-to-region lead time: 1,08Max DC-to-region lead time: 3Mean factory-to-DC lead time: 1,11Max factory-to-DC lead time: 3

Shared supply webwith shared factories

and independently implemented shared DCs

Firm dedicated factories: 0Group shared factories: 4Firm dedicated DCs: 0Group shared DCs: 3Mean DC-to-region lead time: 1,48Max DC-to-region lead time: 3Mean factory-to-DC lead time: 0,83Max factory-to-DC lead time: 3

Shared supply webwith shared factories

and jointly implemented shared DCs



Physical Internet10. Deploy capability certifications and

open performance monitoring

Multi-level Physical Internet capability certificationof containers, handling systems, vehicles,

information systemsports, distribution centers,roads, cities and regions,protocols and processes,

and so on



Physical Internet10. Deploy capability certifications and

open performance monitoring

Live open monitoring of really achieved performanceof all -certified actors and entities,

focusing on key performance indices of critical facetssuch 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 Internet11. Prioritize webbed reliability

and resilience of networks

The overall Physical Internet network of networksshould warrant its own reliability

and that of its containers and shipments.

The webbing of the networks and the multiplication of nodesshould 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 Internet11. 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 Internet12. Stimulate business model innovation

Multiple actors with innovative business modelscommercializing 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 ofAmazon, 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 transportationsolution and technology providers

so as to best thrive from the emerging Physical Internet?



Remunerating the Players In the Digital Internet, the transmission of information

is remunerated mostly through bundled flat feesdue 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




The Digital Internet has created a plethoraof new businesses and business models,from service providers to platform buildersand e-retailers

The advent of the Physical Internet will surely have the same impact, stimulating business model innovation:• In the various logistic and transport industries, the technology and solutions providers, third-part operators, Physical Internet and Supply Web software services, and so on

• In the production, distribution and retailing industries, with business models exploiting the open supply web capabilities enabled by the Physical Internet




Systemic coherence and means interoperabilitymust enable the transparent usage of

heavy handling, storage and transport meanscurrently existing or to come in the future,

that are currently so hard to use,currently reducing

their potential positive environmental impact

The Physical Internet homogeneity in terms ofcontainer modules encapsulating objects

should allow a much better utilization of means,thus increasing the capacity of infrastructures

by the exploitation ofstandardizations, rationalizations and automations

through currently unreachable innovations

Physical Internet13. Enable Open Infrastructural Innovation



Key Featuresof the Physical Internet Vision

1. Encapsulate merchandises in world-standard modular containers2. Aim toward universal interconnectivity3. Evolve from material to container handling & storage systems4. Exploit smart networked containers embedding smart objects5. Evolve from point-to-point hub-and-spoke transport

to distributed multi-segment intermodal transport6. Embrace a unified multi-tier conceptual framework7. Activate and exploit an open global supply web8. Design products fitting containers with minimal space waste9. Minimize physical moves and storages by digitally transmitting

knowledge and materializing products as locally as possible10. Deploy capability certifications and open performance monitoring11. Prioritize webbed reliability and resilience of networks12. Stimulate business model innovation13. Enable open infrastructural innovation



Physical Internet addressing unsustainability symptoms



Positioning the Physical Internet

World Wide Web (WWW)Digital Internet

Digital information Packets

Open Supply WebPhysical InternetSmart Physical Packets

Connecting Physical objects through WWW

Internet of ThingsSmart Networked Objects

Smart GridEnergy Internet

Energy Packets



Realizing the Vision




The Physical Internet:Global systemic sustainable vision

stimulating and aligning action around the world

Individual initiatives by businesses, industries and governments are necessary but are not sufficient

There is a need fora macroscopic, holistic, systemic vision offering

a unifying, challenging and stimulating framework

There is a need foran interlaced set of global and local initiatives

towards this vision,building on the shoulders of current assets and projects,

to help evolvefrom the current globally inefficient and unsustainable state

to a desired globally efficient and sustainable state



Physical Internet ImplementationProgressive Deployment, Cohabitation and Certification

The widespread development and deployment

of the Physical Internet

will not be achieved overnight in a Big-Bang logic

but rather in an ongoing logic

of cohabitation and of progressive deployment,

propelled by the actors

integrating gradually the Physical Internet ways

and finding ever more value in its usage and exploitation



Physical Internet ImplementationProgressive Deployment, Cohabitation and Certification

A smooth transitionstarting with rethinking and retrofitting phases,then moving toward more transformative phases

The Physical Internet can constitute itself progressively through the multi-level certification of:

• Protocols

• Containers

• Handling and storage technologies, distribution centers,

production centers, train stations, ports, multimodal hubs

• Information systems (e.g. reservation, smart labels, portals)

• Urban zones and regions, inter-country borders



Conclusion(1/2)

This manifesto has outlined a bold paradigm breaking visionfor the future of

how we handle, store, transport, realize, supply and usephysical objects across the world

It proposes to exploit the Internet,which has revolutionized the digital world,

as an underlying metaphor for steering innovationin the physical sphere

The outlined Physical Internet does not aimto copy the Digital Internet,but to inspire the creation of

a bold systemic wide encompassing visioncapable of providing real efficient and sustainable solutions

to the problems created by our past and current waysand by our vision toward which we should aim



With this manifesto and its underlying research,a small step has been made

A lot more are needed to really shape this visionand, much more important,

to give it flesh through real initiatives and projectsso as to really influence in a positive way

our collective future

This requires a lot of collaborationbetween academia, industry and governments

across localities, countries and continents

Your help is welcome

Conclusion(2/2)



Questions and comments are welcome

Questions et commentaires sont les bienvenus

Fragen und Kommentare sind willkommen

Las preguntas y los comentarios son bienvenidos

[email protected]

Physical internet manifesto 1.9 2011 04-21 english bm

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