Greening Supply Chains: Impact on Cost and Design

The consideration of environmental issues has emerged as a topic of critical importance for today’s globalized supply chains. The purpose of this paper is to develop a strategic-tactical decision-support methodology to assist managers in evaluating the impact of environmental issues, related to transportation emissions, on the transport geography of a region. Specifically we provide a tool that addresses: (i) supply chain network design, including port of entry and transportation mode, and (ii) decisions on leasing vs. outsourcing of transportation and distribution centers. The applicability of the proposed methodology is examined through the development of a sustainable supply chain network in the South-Eastern Europe region. The results indicate that in most cases outsourcing distribution centers to Third Party Logistics operators improves both the cost and the environmental performance of a company. In all cases outsourcing of transportation operations minimizes the amount of CO2 and PM emissions generated, while leasing minimizes costs.carbon footprint;supply chain design;supply chain sustainability

To Greener Pastures: An Action Research Study on the Environmental Sustainability of Humanitarian Supply Chains

Purpose: While humanitarian supply chains (HSCs) inherently contribute to social sustainability by alleviating the suffering of afflicted communities, their unintended adverse environmental impact has been overlooked hitherto. This paper draws upon contingency theory to synthesize green practices for HSCs, identify the contingency factors that impact on greening HSCs and explore how focal humanitarian organizations (HOs) can cope with such contingency factors. Design/methodology/approach: Deploying an action research methodology, two-and-a-half cycles of collaboration between researchers and a United Nations agency were completed. The first half-cycle developed a deductive greening framework, synthesizing extant green practices from the literature. In the second and third cycles, green practices were adopted/customized/developed reflecting organizational and contextual contingency factors. Action steps were implemented in the HSC for prophylactics, involving an operational mix of disaster relief and development programs. Findings: First, the study presents a greening framework that synthesizes extant green practices in a suitable form for HOs. Second, it identifies the contingency factors associated with greening HSCs regarding funding environment, stakeholders, field of activity and organizational management. Third, it outlines the mechanisms for coping with the contingency factors identified, inter alia, improving the visibility of headquarters over field operations, promoting collaboration and resource sharing with other HOs as well as among different implementing partners in each country, and working with suppliers for greener packaging. The study advances a set of actionable propositions for greening HSCs. Practical implications: Using an action research methodology, the study makes strong practical contributions. Humanitarian practitioners can adopt the greening framework and the lessons learnt from the implementation cycles presented in this study. Originality/value: This is one of the first empirical studies to integrate environmental sustainability and HSCs using an action research methodology

Optimal Global Supply Chain and Warehouse Planning under Uncertainty

A manufacturing company\u27s inbound supply chain consists of various processes such as procurement, consolidation, and warehousing. Each of these processes is the focus of a different chapter in this dissertation. The manufacturer depends on its suppliers to provide the raw materials and parts required to manufacture a finished product. These suppliers can be located locally or overseas with respect to the manufacturer\u27s geographic location. The ordering and transportation lead times are shorter if the supplier is located locally. Just In Time (JIT) or Just In Sequence (JIS) inventory management methods could be practiced by the manufacturer to procure the raw materials and parts from the local supplier and control the inventory levels in the warehouse. In contrast, the lead time for the orders placed with an overseas supplier is usually long because sea-freight is often used as a primary mode of transportation. Therefore, the orders for the raw materials and parts (henceforth, we collectively refer to raw material and part by part) procured from overseas suppliers are usually placed using forecasted order quantities. In Chapter 2, we study the procurement process to reduce the overall expected cost and determine the optimal order quantities as well as the mode of transportation for procurement under forecast and inventory uncertainty. We formulate a two-stage stochastic integer programming model and solve it using the progressive hedging algorithm, a scenario-based decomposition method. Generally, the orders are placed with overseas suppliers using weekly or monthly forecasted demands, and the ordered part is delivered using sea-containers since sea-freight is the primary mode of transportation. However, the end manufacturing warehouse is usually designed to hold around one to two days of parts. To replenish the inventory levels, the manufacturer considered in this research unloads the sea-container that contains the part that needs to be restocked entirely. This may cause over-utilization of the manufacturer\u27s warehouse if an entire week\u27s supply of part is consolidated into a single sea-container. This problem is further aggravated if the manufacturer procures hundreds of different parts from overseas suppliers and stores them in its warehouse. In Chapter 3, we study the time-series forecasting models that help predict the manufacturing company\u27s daily demand quantities for parts with different characteristics. The manufacturer can use these forecasted daily demand quantities to consolidate the sea-containers instead of the weekly forecasted demand. In most cases, there is some discrepancy between the predicted and actual demands for parts, due to which the manufacturer can either have excess inventory or shortages. While excess inventory leads to higher inventory holding costs and warehouse utilization, shortages can result in substantially undesirable consequences, such as the total shutdown of production lines. Therefore, to avoid shortages, the manufacturer maintains predetermined safety stock levels of parts with the suppliers to fulfill the demands arising from shortages. We formulate a chance-constraint optimization model and solve it using the sample approximation approach to determine the daily safety stock levels at the supplier warehouse under forecast error uncertainty. Once the orders are placed with the local and overseas suppliers, they are consolidated into trailers (for local suppliers) and sea-containers (for overseas suppliers). The consolidated trailers and sea-containers are then delivered to the manufacturing plant, where they are stored in the yard until they are called upon for unloading. A detention penalty is incurred on a daily basis for holding a trailer or sea-container. Consolidating orders from different suppliers helps maximize trailer and sea-container space utilization and reduce transportation costs. Therefore, every sea-container and trailer potentially holds a mixture of parts. When a manufacturer needs to replenish the stocks of a given part, the entire sea-container or trailer that contains the required part is unloaded. Thus, some parts that are not imminently needed for production are also unloaded and stored inside the manufacturing warehouse along with the required parts. In Chapter 4, we study a multi-objective optimization model to determine the sea-containers and trailers to be unloaded on a given day to replenish stock levels such that the detention penalties and the manufacturing warehouse utilization are minimized. Once a sea-container or trailer is selected to replenish the warehouse inventory levels, its contents (i.e., pallets of parts) must be unloaded by the forklift operator and then processed by workers to update the stock levels and break down the pallets if needed. Finally, the unloaded and processed part is stored in the warehouse bins or shelves. In Chapter 5, we study the problem of determining the optimal team formation such that the total expected time required to unload, process, and store all the parts contained in the sea-containers and trailers selected for unloading on a given day is minimized

On Export Intermodal Transportation Problem

This thesis investigates a logistics problem facing companies that export their products to other countries. The problem is called export intermodal transportation problem. In the export intermodal transportation problem, goods ordered by overseas customers need to be transported from production plants or warehouses of an export company to the customers destinations overseas. The transportation involves using multiple transportation modes such as trucks and rails for the inland portion and ocean liners for the overseas portion, and its objective is to have the goods moved and the cost minimized subject to various constraints. Cost can be minimized by combining orders from different customers to reduce the number of trucks, rails, or ocean containers used, and by selecting the appropriate transportation modes, routes and carriers. This study provides a formulation of the export intermodal transport problem and proposes two approaches to solve a relaxed version of the problem, where the time constraints are ignored. The first approach divides the problem into three sub-problems: order consolidation on ocean container, ocean port and carrier selection, and inland transportation mode and carrier selection. Order consolidation on ocean container is formulated as the bin packing problem and is solved by the first-fit decreasing algorithm. Ocean port and carrier selection is formulated as minimum cost maximum flow and prototyped with the cycle cancelling algorithm. And finally inland transportation mode and carrier selection is formulated as variable sized bin packing with costs and is solved by a proposed heuristics algorithm. The second approach is a backtracking approach aimed at getting the optimal solution for smaller problem instances and establishing a baseline to compare solutions obtained by the first approach. Both approaches are implemented as prototypes and evaluated with historical real world data provided by a large food export company. For all data sets, both prototypes produce solutions with transportation cost less than that obtained by the company manually. On average the prototypes reduce the cost by 3% and save $30,000 for each data set. The three stage solution approach prototype runs much faster than the backtracking approach prototype. For almost all larger data sets, it takes too long for the backtracking prototype to complete. If we let the backtracking prototype run for 30 minutes and keep the best solution, the solutions obtained by both prototypes are comparable in terms of their cost. As for time, the three stage solution approach prototype takes about 2 seconds to obtain each solution

An approach to market analysis for lighter than air transportation of freight

An approach is presented to marketing analysis for lighter than air vehicles in a commercial freight market. After a discussion of key characteristics of supply and demand factors, a three-phase approach to marketing analysis is described. The existing transportation systems are quantitatively defined and possible roles for lighter than air vehicles within this framework are postulated. The marketing analysis views the situation from the perspective of both the shipper and the carrier. A demand for freight service is assumed and the resulting supply characteristics are determined. Then, these supply characteristics are used to establish the demand for competing modes. The process is then iterated to arrive at the market solution

Logistics outsourcing and 3PL selection: A Case study in an automotive supply chain

Outsourcing logistics functions to third-party logistics (3PL) providers has been a source of competitive advantage for most companies. Companies cite greater flexibility, operational efficiency, improved customer service levels, and a better focus on their core businesses as part of the advantages of engaging the services of 3PL providers. There are few complete and structured methodologies for selecting a 3PL provider. This paper discusses how one such methodology, namely the Analytic Hierarchy Process (AHP), is used in an automotive supply chain for export parts to redesign the logistics operations and to select a global logistics service provider

Evaluation of Sea Freight Distribution - a case study from an aftermarket perspective

Background: Within research, it has been stated that transportation cost is a large part of logistics cost which is a large contributor to supply chain costs. To reduce transportation cost, choosing the appropriate transportation mode is an important decision both on a strategic and tactical level. There are several models and approaches when choosing transportation mode, including several factors and variables. Choosing the variables and factors varies for all companies. Sandvik Stationary Crushes (Sandvik SC) is a business unit within the Sandvik Group that is experiencing high logistics cost and no previous freight strategy. The business unit has identified transportation mode choice as a cost reducing opportunity. The focus of this thesis is to reduce transportation cost by a unit cost freight model that chooses the transportation mode for replenishment of aftermarket products within Sandvik SC’s global distribution network. Purpose: The purpose of this thesis is to develop a shipment profile for replenishment orders with a sea freight perspective. Research Questions: 1. How can a company determine what transport mode to use in the distribution network with the objective to minimize freight cost? 2. What factors are important to consider when changing transportation mode from air to sea freight? Method: The study has a systems approach to the problem and apply a case study on a case company. To understand the problem and situation for the case company, literature review, data gathering, interviews and observations have been carried out. With the gathered information, a simulation model based on linear programming has been developed. The output of the model is that it chooses which transportation mode, air or sea freight, that implies the lowest transportation cost between global distribution centers. Furthermore, a sensitivity analysis has been carried out to test the validity of the model. The results and the implications of the results have been analyzed and discussed from a sea freight perspective. Additionally, the ii actions taken by the case company, on recommendation from the study, together with real results are compared with the results from the simulation model. Results: The result from the model show that a significant number of items should be shipped with sea freight rather air freight for replenishment order between global warehouses. The change of transportation mode implies great cost savings for the case company. Conclusions: The study concludes that the unit freight cost model reduces cost by changing transportation mode. When choosing transport mode there are other factors than costs to consider for sea freight, such as; reliability, transit time and implementation processes. These factors need to be taken in consideration for the cost saving opportunities to be successful. Actual cost figures from the case company prove that the results from the model are applicable in practice, but with the other factors to consider as well

Shipment consolidation and distribution models in the international supply chain

With the increasing competition in global trade, buying and transporting items effectively in the international network are critical and challenging problems for many companies. The objective of this study is to design a cost-effective consolidation and distribution method to transport shipments in a global network. In the dissertation, we investigate an integrated consolidation problem in the international supply chain, where a US manufacturing company buys multiple items from China. A proactive order consolidation strategy is proposed. Different from current practices, our approach consolidates items in China considering inland transportation in US. This strategy is modeled to minimize the total costs by effectively loading items into an ocean container considering subsequent inland transportation cost and handling cost given container capacity and packing constraints. Two difficult combinatorial optimization problems, such as a mode selection problem and a three-dimensional bin packing problem, are combined into the model. Due to the problem complexity, approximation algorithms are proposed to solve the model. The basic model is extended to consider the inland multi-stop delivery and multi-period planning horizon. Several solution methodologies are developed and evaluated to solve large-scale problems. Based on the numerical results, it is observed that our proposed methods could achieve up to 30% cost savings compared with the current shipping practices. The algorithms we developed could obtain the good implementable solution in a reasonable time for real-world problems