Analysing the economic and environmental sustainability of distribution systems

Until recently, the main focus of attention in supply chain management has been the economic performance. However, the topic of environmental sustainability in processes and operations has attracted a great deal of attention in the last few years. As a consequence, more and more companies are trying to assess the impact of their operations on the environment. In most of the cases, this impact is accounted for in terms of CO2 emissions which is the predominant greenhouse gas in the atmosphere and, therefore, largely responsible for global warming. Since almost 20% of total greenhouse gas emissions stem from transportation activities, this work will focus on this specific aspect of a supply chain and show how it is possible to consider CO2 emissions from freight transport activities in the decision making process. In particular, the focus will be on decisions concerning the distribution of products, meaning all processes that are necessary to move and store products on their way from the production stage to the customer. Two distinct aspects of distribution planning are considered in this work, namely strategic network-design decisions on the one hand and tactical/operational transport and inventory planning decisions on the other hand. Whereas network-design decisions are concerned with determining the optimal number and position of facilities, transport and inventory decisions consider the timing, the quantity and the route of replenishment deliveries to customers. For all of those decisions, freight transport plays a crucial role and must, hence, be investigated in more detail. This work, first, extends two basic facility location models, namely the p-median problem and the Warehouse Location Problem, to also include environmental aspects. These extended models are applied to a case study from the petrochemical industry. The results clearly show a trade off between total costs of distribution and environmental performance.