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Supply Chain – Shipper Reorganisations: analysing possibilities for reducing goods movements

Problem

Transportation in Europe is increasing, and this is a cause for concern, in that this increase has completely erased the reductions in greenhouse gases achieved by industries. If we wish to reduce greenhouse gases, it is crucial that we limit the transport and movement of goods.
In this context, research on organising supply chains with less transport has both identified areas for improvement and determined the structural components for their development. These ideas are being tested in real-life cases provided by industrial shippers.

Project stages

The first project phase identified potential improvement areas for shippers wanting to reduce the number of miles travelled (excluding modal transfers).
The second phase illustrated certain areas of improvement in these real-life cases – YOPLAIT (fresh produce) and CAT (automobile industry) – using optimisation models developed by Eurodecision.

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Results

Key areas of identified improvement on several levels:

  • on a strategic level:
    • production-logistics analysis in order to marginally “despecialise” manufacturing sites (and move plants nearer to consumption areas for large flows)
    • adjustment of the distribution network architecture (location and number of transshipment points) by using shippers (allocation of fixed costs)
    • consistent supervision of regional transport flows and terminal distribution flows
  • on an operations level:
    • reduce the impact of more frequent transport
    • reduce mileage and the number of stops

by grouping shipments and using carriers specialised by channel.

  • as concerns the pricing of transport resources, an increase in the mileage price component could help in decisions more closely aligned with the reduction of greenhouse gases. Pricing (notably by contractors) is already moving more or less in this direction.
  • on the information system level: need for reliable dashboards (tracking flows by both frequency and volume) and forecasting tools (pro-active resource adaptation)

Significant reductions in greenhouse gas emissions are possible in certain areas. This said, the solutions required to achieve those reductions (e.g. despecialisation of factories) are very expensive. Current road transport costs do not encourage companies to make such investments. These costs would have to be increased significantly, which is highly unlikely today.

Leveraging results

Short-term and medium-term improvements are possible by expanding control systems:

  • strategic : organising procurement and location of inventories, upstream-downstream consistency in the transport chain
  • tactical: setting up progressive transportation plans, exchanging information with other operations contractors in a given channel
  • defining pertinent dashboards—these remain embryonic in the great majority of corporate logistics departments

In the long term, corporations and distributors must be made aware of the potential savings in overall manufacturing and supply chain costs. These savings can be achieved by optimising plant locations for various product lines and by adjusting the delivery frequency (for distributors).

Contacts

  • Project Manager: Eurodecision
  • Other partners: Paris Dauphine University, CAT Group, Yoplait