A simulation tool for testing the use of flexible hubs in tank container networks
Where supply chain management and data science meet, interesting questions arise. In our Data2Move Research Stories, you’ll find out how students have managed to answer them. This time: Daan Cremers’ master thesis on using flexible hubs in tank container networks to manage uncertainty.
As a tank container operator, Den Hartogh aims to get their tank containers to the right place, at the righttime, and for the right price. However, uncertainty is always a factor that can disrupt the network. Cremers’ research focuses on making the network more flexible, which allows the network to change quickly and effectively. He achieves this by enabling effective repositioning of tank containers.
Where it started
Tank container operators face the challenge of balancing their tank container stocks to ensure they can meet demand, as global trade is imbalanced. For this purpose, forecasts are used to facilitate control processes that strive to balance tank container stock. Instead of improving forecasts, Cremers took another approach to managing uncertainty. He was set to increase the flexibility of the network, allowing it to adapt to changing circumstances to increase profitability.
Cremers delved into the current state-of-the-art literature on flexibility. To improve the networks’ flexibility he would introduce flexible hubs, which are defined as locations in the network where tank containers can be cost effective and quickly be repositioned to other parts of the network. Cremers used a simulation model to retrieve data on his hypothesis, where he simulated the network and calculated cost impacts.
His results showed that flexible hubs did indeed improve the profitability of the network. Not only did they manage uncertainty better, but they also increased the operational efficiency of the network regardless of uncertainty factors.
Conclusion and next steps
Cremers concluded that flexible hubs should be incorporated more into the strategy of Den Hartogh, as this has potential to increase profitability. “The next step”, he concludes, “is to investigate how to optimally utilize these kinds of flexible locations. At some point flexibility is not profitable anymore, as enabling flexibility comes at a cost.” He explains that further analysing this trade-off could result in both better profitability as well as a higher efficiency.