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Lech Bukowski

Reliable, Secure
and Resilient
Logistics
Networks
Delivering Products in a Risky
Environment
Reliable, Secure and Resilient Logistics Networks
Lech Bukowski

Reliable, Secure and Resilient

Logistics Networks
Delivering Products in a Risky Environment

123
Lech Bukowski
WSB University
Kraków, Poland

ISBN 978-3-030-00849-9 ISBN 978-3-030-00850-5 (eBook)

https://doi.org/10.1007/978-3-030-00850-5

Library of Congress Control Number: 2018958495

© Springer Nature Switzerland AG 2019

This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part
of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations,
recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission
or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar
methodology now known or hereafter developed.
The use of general descriptive names, registered names, trademarks, service marks, etc. in this
publication does not imply, even in the absence of a specific statement, that such names are exempt from
the relevant protective laws and regulations and therefore free for general use.
The publisher, the authors and the editors are safe to assume that the advice and information in this
book are believed to be true and accurate at the date of publication. Neither the publisher nor the
authors or the editors give a warranty, express or implied, with respect to the material contained herein or
for any errors or omissions that may have been made. The publisher remains neutral with regard to
jurisdictional claims in published maps and institutional affiliations.

This Springer imprint is published by the registered company Springer Nature Switzerland AG
The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland
This book is dedicated to my wife Ewa
with thanks for over 50 years of good life
together.
Preface

Contemporary business activity, both real (including industrial and agricultural

production, services and trade) as well as virtual (i.e. capital and banking activity,
investment funds and financial markets) is developing particularly fast on a global
scale. This entails, among others, a continuous increase in the complexity of sys-
tems within which integrated business, production and service processes are
implemented, as well as the need to make key decisions based on imperfect
knowledge resulting from the uncertainty, incompleteness and ambiguity of
available data and information, and limited rationality of inference.
Such complex systems are also modern logistic networks which are characterized
by a topology of complex network structures that perform specific functions, con-
sisting of moving in space and time, as well as storing goods in an efficient and
effective manner, in a changing and uncertain environment with possible distur-
bances and threats. Logistics as the field of knowledge is defined differently in the
European zone (e.g. the definition of The European Logistics Association) and in the
American zone (e.g. the definition of The Council of Supply Chain Management
Professionals). In this work, logistics is understood as a transdisciplinary field of
scientific knowledge regarding the effective and efficient implementation of flows
(movement and storage) of tangible and intangible assets (goods, persons, transac-
tions, and related information) within systems consisting of enterprises, their clients
and other stakeholders.
The key condition for the success of the main logistic activities—delivering
products from the place of origin to the recipient—is a comprehensive approach to
the entire system consisting of infrastructure and logistics processes, with particular
emphasis on their complexity, imperfections of knowledge and broadly understood
risk. Hence, the concept of Total Logistic Management, developing by the author of
this work since 1996 as the core idea of annual conferences under the same name.
The concept was based on the following assumptions:

vii
viii Preface

(a) The complexity of logistics systems and the emergent nature of their properties.
Modern supply chains are complex engineered system of systems (usually with
a network structure) whose properties, due to multiple interdependency rela-
tions between their constituent elements and the environment, are of emergent
character, therefore it is not possible to determine them solely on the basis of
inherent properties of constituent elements.
(b) Multifaceted issues.
A comprehensive approach to logistics systems requires consideration of three
basic aspects, namely:
• The spatial extension of the logistics infrastructure and its surroundings,
where the boundary between the system and its surroundings is usually
vague or fuzzy;
• Temporary continuity and variability of logistics processes in terms of the
so-called ‘Life cycle’ and sustainability;
• A holistic approach from a technical, economic and socio-ethical perspective.
(c) Imperfection of available knowledge and decision-makers.
Knowledge, on the basis of which decisions are made, is based in many cases on
uncertain, incomplete and ambiguous data and information, therefore it is
imperfect. Furthermore, decision-makers are guided in practice by the principle
of limited (or bounded) rationality which means a large impact of the subjective
assessment of both the current situation and the utility value of the decision taken.
(d) The importance of the role of risk in making decisions.
Modern logistics networks should be designed and implemented in order to
provide them with the highest possible level of reliability, security, safety and
resilience. However, one of the basic objectives of logistics management, both
strategic and operational, should be rational risk and continuity management,
with particular emphasis on disruption-tolerant operating.
The aim of this work is to synthesise current knowledge in the field of designing,
testing and evaluation of logistic networks subjected to disturbances from a variable
and uncertain environment, and on this background to present a new concept of
dependable product delivery assurance. In order to quantitatively assess depend-
ability, the service continuity oriented approach has been applied. This approach is
based on the methodology of service engineering and is closely related to the idea
of resilient enterprise as well as to the concept of disruption-tolerant operation.
On this basis a framework for evaluation of logistic networks operational risk and
dependability has been developed and its applicability shown in several practical
examples.
The content of the book has been divided into six main parts. In the first of them—
Introduction—an analysis of the logistic concepts development was made. On this
basis, a system of concepts and definitions on which modern logistics is based has
been proposed. In Chap. 2 the concept of imperfect knowledge was presented as the
foundation for further considerations. Assessment knowledge about engineered
systems is based on imperfect data and information obtained within the imperfect
Preface ix

knowledge chain. Therefore, the process of knowledge creating and managing must
take into account uncertainty modelling methods. The measure of excellence of
acquired knowledge is knowledge maturity level which forms the foundation for
imperfect knowledge based concept of risk. The proposed operational risk model is
based on these assumptions.
Chapter 3 was devoted to the description of engineered systems based on
imperfect knowledge. A full description of the assessed system will be carried out
both in terms of system and process approach using both topology- and flow-based
methodology. The infrastructure description pays particular attention to its com-
plexity and dependencies between elements of the structure, especially in the case
of global supply networks. Instead, the process approach is based on the service
engineering principles to describe the specificity of the delivery processes (supply,
demand and distribution) as accurately as possible. A quantitative description of the
system will contain both performance and operationality related measures.
Designing complex engineered system for the risky environment is a compre-
hensive process including two main steps, namely creating reliable system’s
infrastructure and assurance process continuity. In case of logistics networks
architecting reliable engineered system of systems is based on the principle of High
Reliability Organisations, whereas the process continuity ensuring is established on
the concept of Resilient Enterprise. Detailed describing of the system designing
process can be found in Chap. 4.
Modelling and simulation of logistics networks is divided into four main stages:
modelling of logistic infrastructures using an agent based approach, modelling of
logistic processes applying a dynamic based approach, modelling of demand
variation using a probabilistic approach, and modelling of disturbances with an
event driven approach. All these processes are described in Chap. 5.
Chapter 6 is a summary of previous chapters and serves as their practical
illustration. A general framework for Evaluation of Logistic Networks Operational
Risk and Dependability—ELNORD has been proposed, and tree different examples
of its application presented. First example concerns a modified PFMEA method
(Process Failure Mode and Effects Analysis) as representative of a risk-oriented
static approach. Next example is an expert system with fuzzy reasoning based on a
process-continuity oriented approach. The last one uses a vulnerability related
dynamic approach to create an expert system with agent-based simulation.
The end of the book constitute: conclusions and concluding considerations and
terminology of the most important terms used in the book (Appendix).

Kraków, Poland Lech Bukowski

Acknowledgements

This publication has been accomplished as a part of a research project funded by

Prof. Henryk Walica Scientific Scholarship Fund. Therefore, I would like to express
my gratitude to the WSB University in Dabrowa Górnicza for supporting my
research. In addition, my thanks belong to Judyta Rak for significant help in
polishing my English.

xi
Contents

1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 A Brief History of Logistics Development . . . . . . . . . . . . . . . . . . 1
1.2 Defining the Key Terms in Logistics . . . . . . . . . . . . . . . . . . . . . . 4
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2 Assessment Knowledge About Engineered Systems . . . . . . . . . . . ... 9
2.1 Concept of Imperfect Knowledge . . . . . . . . . . . . . . . . . . . . . ... 9
2.1.1 From Knowledge Pyramid to Imperfect Knowledge
Chain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.1.2 Data and Information Imperfection . . . . . . . . . . . . . . . . . . 12
2.1.3 The Process of Knowledge Creating and Managing . . . . . . 17
2.1.4 Knowledge Maturity Assessment . . . . . . . . . . . . . . . . . . . 21
2.2 Uncertainty Modelling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.2.1 General Concept of Uncertainty . . . . . . . . . . . . . . . . . . . . 23
2.2.2 Uncertainty Modelling Methods . . . . . . . . . . . . . . . . . . . . 29
2.3 Imperfect Knowledge Based Concept of Risk . . . . . . . . . . . . . . . . 35
2.3.1 Defining Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
2.3.2 The Role of Background Knowledge in Risk Analysis . . . . 37
2.3.3 Risk Types and Its Metrics . . . . . . . . . . . . . . . . . . . . . . . . 41
2.3.4 Modelling Operational Risk Based on the Imperfect
Knowledge Concept . . . . . . . . . . . . . . . . . . . . . . . . . . ... 54
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... 57
3 Describing Engineered Systems . . . . . . . . . . . . . . . . . . . . . . ....... 59
3.1 Infrastructures—Topology-Based Methodology . . . . . . . ....... 59
3.1.1 System Approach—Systems Engineering . . . . . . ....... 59
3.1.2 Complexity and Emergence—System of Systems
and Network Organisation . . . . . . . . . . . . . . . . . ....... 67

xiii
xiv Contents

3.2 Processes—Flow-Based Methodology . . . . . . . . . . . . . . . . . . . . . 74

3.2.1 Process Approach—Service Engineering . . . . . . . . . . . . . . 74
3.2.2 Delivery Processes—Supply, Demand and Distribution . . . 79
3.3 Attributes of Engineered Systems . . . . . . . . . . . . . . . . . . . . . . . . 85
3.3.1 Performance-Related Measures . . . . . . . . . . . . . . . . . . . . . 85
3.3.2 Operationality Related Measures . . . . . . . . . . . . . . . . . . . . 88
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
4 Designing Complex Engineered Systems for the Risky
Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
4.1 Creating Reliable Infrastructures . . . . . . . . . . . . . . . . . . . . . . . . . 93
4.1.1 System of Systems Engineering . . . . . . . . . . . . . . . . . . . . 93
4.1.2 Engineered System of Systems and Its Main Attributes . . . 95
4.1.3 Architecting Reliable ESoS . . . . . . . . . . . . . . . . . . . . . . . 98
4.1.4 Building High Reliability Organisations . . . . . . . . . . . . . . 104
4.2 Assurance Process Continuity . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
4.2.1 From High Reliable Organisation Concept to Resilience
Engineering Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
4.2.2 Resilience Science—Transdisciplinary Perspective . . . . . . . 112
4.2.3 Organisational Resilience—The Concept of Resilient
Enterprise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
4.2.4 From Resilient Enterprise Concept to Process Continuity
Ensuring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
4.3 Managing Operational Risk—The Concept of Dependable
Operating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
4.3.1 From Reliability Engineering to Dependability
Engineering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
4.3.2 Disruption-Tolerant Operating—The Continuity Oriented
Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134
4.3.3 Operational Risk Based Concept of Dependability . . . . . . . 137
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140
5 Modelling and Simulation of Logistic Networks . . . . . . . . . . . . . . . . 151
5.1 Modelling and Simulation of Complex Engineered Systems . . . . . 151
5.1.1 Main Principles of Modelling and Simulation . . . . . . . . . . 151
5.1.2 The Life Cycle of a Modelling and Simulation Process . . . 159
5.2 Modelling of Logistic Infrastructures—Agent Based Approach . . . 164
5.2.1 Fundamentals of Agent-Based Modelling
and Simulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164
5.2.2 Using Agent-Based Modelling and Simulation in
Logistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168
5.3 Modelling of Logistic Processes—Dynamic Based Approach . . . . 171
5.3.1 General Rules for Managing the Flow Processes . . . . . . . . 171
5.3.2 Classification of Processes and Their Properties—APQC
Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173
Contents xv

5.3.3 Process Specification Standards . . . . . . . . . . . . . . . . . . . . 174

5.3.4 Process Dynamic Modelling and Simulation . . . . . . . . . . . 185
5.4 Modelling of Demand Variation in Logistic
Networks—Probabilistic Approach . . . . . . . . . . . . . . . . . . . . . . . 189
5.4.1 Predictable Volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189
5.4.2 Unpredictable Variability . . . . . . . . . . . . . . . . . . . . . . . . . 193
5.5 Modelling of Disturbances in Logistic Network—Event
Driven Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197
5.5.1 Identification of Sources of Risk, Threats and Hazards . . . . 197
5.5.2 Modelling of Exposures in Logistics Networks . . . . . . . . . 200
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 210
6 Assessment Operational Risk and Dependability of Logistic
Networks—Application Examples . . . . . . . . . . . . . . . . . . . . . . . . . . . 215
6.1 A Framework for Evaluation of Logistic Networks Operational
Risk and Dependability—ELNORD . . . . . . . . . . . . . . . . . . . . . . . 215
6.2 Application Examples of the ELNORD Framework . . . . . . . . . . . 221
6.2.1 A Risk Oriented Static Approach—A Modified PFMEA
Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221
6.2.2 A Process Continuity Oriented Approach—An Expert
System with Fuzzy Reasoning for Disruption Risk
Prediction in Logistics Networks . . . . . . . . . . . . . . . . . . . 234
6.2.3 A Vulnerability Related Dynamic Approach—An Expert
System with Agent-Based Simulation . . . . . . . . . . . . . . . . 240
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250
Conclusions and Concluding Considerations. . . . . . . . . . . . . . . . . . . . . . . 255
Appendix: Terminology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 259
Abbreviations

ABM Agent-Based Modelling

ABS Agent-Based Simulation
AIR Average Individual Risk
ANN Artificial Neural Networks
APQC American Productivity and Quality Center
ARIS Architecture of Integrated Information System
BCM Business Continuity Management
BPMN Business Process Model and Notation
CBR Case-Based Reasoning
CCA Cause and Consequences Analysis
CDF Cumulative Distribution Function
CHL Check List Analysis
CIP Continuous Improvement Process
CIT Communication and Information Theory
CST Classical Sets Theory
DDSC Demand Driven Supply Chain
DES Discrete Event Simulation
DFD Data Flow Diagram
DTN Disruption-Tolerant Network
DVV Data Veracity Value
ELNORD Evaluation of Logistic Networks Operational Risk and Dependability
EPC Event-driven Process Chain
ERD Entity Relationship Diagram
ERM Enterprise Risk Management
ERP Enterprise Resource Planning
ESoS Engineered System of Systems
ETA Event Tree Analysis
FAR Fatal Accident Rate
FMEA Failure Mode and Effects Analysis

xvii
xviii Abbreviations

FMECA Failure Mode, Effects and Criticality Analysis

FRAM Functional Resonance Analysis Method
FTA Fault Tree Analysis
GIS Geographic Information System
GIT Generalized Information Theory
GTU Generalized Theory of Uncertainty
HAZOP Hazard and Operability Studies
HRA Human Reliability Assessment
HRO High Reliability Organization
ICT Information and Communication Technologies
IK Imperfect Knowledge
ITS Intelligent Transportation Systems
IUV Information Utility Value
JIT Just in Time
KML Knowledge Maturity Level
KPQ Knowledge Processing Quality
LN Logistic Network
LP Logistics Process
LS Logistics System
LSLIRE Large Scale, Large Impact, Rare Event
LSS Large-Scale Systems
M&S Modelling and Simulation
MAS Multi-Agent Systems
MTBF Mean Time Between Failures
MTTFF Mean Time To First Failure
NFST Nonstandard Fuzzy Sets Theory
PDF Probability Distribution Function
PFMEA Process Failure Mode and Effects Analysis
PHA Preliminary Hazard Analysis
PLL Potential Loss of Life
PSA Process Safety Analysis
RE Resilience Engineering
ROI Return on Investment
RP Random Process
RPN Risk Priority Number
RSC Resilient Supply Chain
RTE Real-Time Enterprise
SC Supply Chain
SCM Supply Chain Management
SCOR Supply Chain Operations Reference
SCRM Supply Chain Risk Management
SCS Supply Chain Sustainability
SDM System Dynamic Modelling
SE Systems Engineering
SFST Standard Fuzzy Sets Theory
Abbreviations xix

SOA Software Oriented Architecture

SOC Self-Organized Criticality
SoS System of Systems
SoSE System of Systems Engineering
SPC Statistical Process Control
TAR Throughput Accounting Ratio
TLM Total Logistic Management
UST Unified Service Theory
VaR Value at Risk
VSM Value Stream Mapping
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