Sustainability SI: Bundling of Outbound Freight Flows: Analyzing the Potential of Internal Horizontal Collaboration to Improve Sustainability

Abstract

This paper calculates the potential of reducing external transport costs through more systematic bundling of outbound freight flows. One way for companies to achieve more sustainable logistics, besides implementing a further modal shift, applying improved technologies or opting for external supply chain collaboration, is by optimizing the internal supply chain process within the company through horizontal internal collaboration across warehousing functions. The case studied in this paper focuses on a company with three neighboring distribution centers (DC’s), each specialized in a specific product category and each using a separate planning system. Most of the outbound flows are trucked, with only a small fraction transported by rail and short sea shipping. The collaboration approach looks at internal co-loading of the three product categories of the company 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 to evaluate a scenario where outbound product flows are brought together in a hypothetical cross-dock located on site next to the three DC’s. External transport cost savings of the resulting freight bundling potential are calculated.