Sustainable logistics

In a logistic network, a number of actors will influence business costs and corresponding environmental impact. Suppliers, manufactures, consumers, logistic operators, as well as third parties operating in testing, refurbishing, recycling and energy production for the end-of-life products are the main players. These players perform majority of the activities impacting business and the environment.

In general terms, the activities performed in a logistic network are related to manufacturing, transportation, usage and end-of-life products’ destination. The following image depicts these activities:

sustainability_logistics_diagram

The decisions regarding these activities will, therefore, determine the network costs and environmental impact. These decisions are strategic (e.g. location of factories), tactical (e.g. the destination of products end-of-life) as well as operational (e.g. the choice of suppliers, third parties, etc.).

So, in order to diminish the environmental impact caused for the current logistics networks, there are specialists that have developed a procedure called multi-objective programming (MOP) with the aim to design sustainable networks.

This technique uses several programming methods, but basically consists on the following points:

  • Provide an upper bound for a system from a game theoretical perspective. Modeling environmental legislation is an example of a bi-level game: the government creates legislation to mitigate environmental impact, without damaging the economy, while companies adapt to such legislation—working to minimize the associated additional costs.
  • Determine the cost of decreasing environmental impact for the sector under study.
  • Determine the efficiency of the sector relative to the environment and costs. The efficiency will tell us how much the system can be improved with initiatives integrating and directing the players within the logistic network. This re-design of the logistic network can happen directly, by a self-reorganization of the players as well as indirectly via a leader, from a game theoretical perspective.
  • Determine ‘‘optimal’’ configurations for the sector under study.

This study is based on numerous formulations that calculates the efficiency of the network, how the efficiency changes depending on the legislation, and so on.

 

REFERENCES:

Designing and evaluating sustainable logistics networks

  1. Quariguasi Frota Neto, J.M. Bloemhof-Ruwaard, J.A.E.E. van Nunen, E. van Heck. Int. J. Production Economics 111 (2008) 195–208

Joaquín Sánchez Planelles

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