Joint route planning under varying market conditions

Author(s):

Frans Cruijssen (Department of Econometrics and Operations Research, Tilburg University, TNO Mobility and Logistics, Tilburg, The Netherlands)

Olli Bräysy (Agora Innoroad Laboratory, Agora Center, University of Jyväskylä, Jyväskylä, Finland)

Wout Dullaert (Institute of Transport and Maritime Management Antwerp, University of Antwerp, Antwerp, Belgium)

Hein Fleuren (Department of Econometrics and Operations Research, Tilburg University, Tilburg, The Netherlands)

Marc Salomon (Stibbe, Amsterdam, The Netherlands)

Citation:

Frans Cruijssen, Olli Bräysy, Wout Dullaert, Hein Fleuren, Marc Salomon, (2007) "Joint route planning under varying market conditions", International Journal of Physical Distribution & Logistics Management, Vol. 37 Iss: 4, pp.287 - 304

DOI

http://dx.doi.org/10.1108/09600030710752514

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Acknowledgements:

This research was partially funded by the Jenny and Antti Wihuri Foundation.

Abstract:

Purpose

– To provide empirical evidence on the level of savings that can be attained by joint route planning and how these savings depend on specific market characteristics.

Design/methodology/approach

– Joint route planning is a measure that companies can take to decrease the costs of their distribution activities. Essentially, this can either be achieved through horizontal cooperation or through outsourcing distribution to a logistics service provider. The synergy value is defined as the difference between distribution costs in the original situation where all entities perform their orders individually, and the costs of a system where all orders are collected and route schemes are set up simultaneously to exploit economies of scale. This paper provides estimates of synergy values, both in a constructed benchmark case and in a number of real‐world cases.

Findings

– It turns out that synergy values of 30 per cent are achievable. Furthermore, intuition is developed on how the synergy values depend on characteristics of the distribution problem under consideration.

Practical implications

– The developed intuition on the nature of synergy values can help practitioners to find suitable combinations of distribution systems, since synergy values can quickly be assessed based on the characteristics of the distribution problem, without solving large and difficult vehicle routing problems.

Originality/value

– This paper addresses a major impediment to horizontal cooperation: estimating operational savings upfront.

Keywords:

Distribution management, Outsourcing, Transportation

Type:

Research paper

Publisher:

Emerald Group Publishing Limited