Reducing transport costs and improving sustainability simultaneously through horizontal logistics collaboration: a case study

Abstract

In this paper the potential of a more systematic bundling of the outbound freight flows out of three neighboring distribution centers (DCs) of the same company, each specialized in a specific product category and each using a separate planning system, is investigated. Most of the outbound flows are currently still transported by truck, so one way to simultaneously achieve lower transport costs and more sustainable logistics is through supply chain collaboration in outbound logistics. This paper investigates two possible options: horizontal internal collaboration across warehousing functions and horizontal external collaboration with a non-competitor. The first option looks at internal co-loading between the three DCs by introducing cross-dock-operations on the EDC’s premises with the objective to increase the fill level of the trailers/containers under current planning restrictions. To this purpose, a discrete event simulation is performed and both internal and external transport cost savings of the resulting freight bundling potential are calculated. The second option focuses on the potential of external co-loading with a non-competing, complementary shipper to further improve outbound operations. Barriers for implementation are identified and possible solutions suggested.