Improving the Maritime Transshipment Operations of the Noble Group

Professor De Reyck’s modelling framework and decision support system used fast search algorithms that deliver efficient schedules and reduce reliance on additional resources.

The Noble Group is a market-leading global supply chain manager of agricultural products, metals, and minerals, operating in more than 140 locations. In 2012, Noble’s maritime operations in Indonesia were plagued by constant transportation delays, causing tens of millions of dollars per year in demurrage and detention penalties. As a result, Tim Gazzard, Global Head of Noble’s iron ore business, requested Professor Bert De Reyck to lead a research project to reduce or eliminate these delays.  

Professor De Reyck has a track record in the area of scheduling which dates back from 1994, with applications in project management, R&D management, production planning, and logistics. The focus is on generating optimal schedules using optimization techniques such as integer programming, combinatorial optimisation and heuristics. 

The system developed by Professor De Reyck and his team as based on his research on mathematical programming approaches for tackling a core issue in managing operations i.e. having to decide whether to use either company-owned or use bought-in resources in order to meet shipping deadlines and avoid late penalties. The trade-off between the utilization of spot (immediately accessible) capacity versus the occurrence of penalties from reduced service quality is a fundamental one in the operations management literature. In a maritime transshipment setting, this trade-off is further complicated by an underlying scheduling and allocation component: the timing of the transshipment operations influences the optimal capacity allocation in a non-trivial way. 

The system developed by Professor De Reyck was first tested in two Indonesian ports (Taboneo and Muara Kaman) in 2012 and 2013, where it showed savings exceeding $1.5 million per month. This initial test was then followed by a full implementation across Noble’s Indonesian operations from September 2013 onwards. 

Based on his research on optimization for planning and scheduling, Professor De Reyck and his team developed a modelling framework and decision support system to facilitate the planning and management of Noble’s transshipment operations, using fast search algorithms that deliver efficient schedules, minimizing the cost of delays and additional resources. After full implementation across Noble’s Indonesian operations were able to reduce logistics costs by approximately $1.0 per tonne, with savings amounting to between $18-24 million per year using their most conservative estimates. 

Links

• Professor Bert De Reyck
• UCL School of Management
• UCL Faculty of Engineering Sciences
• Faculty of Engineering REF 2021

Image 

• Image credit: Shutterstock / Studio concept