Retail logistics costs and policy impact - What is the total cost to secure innovation for a greener retail supply chain?
12 July 2019
University of Thessaly, Conference room, Civil Engineering building block - Sekeri street, Leof. Athinon, Pedion Areos - 38334 Volos, Greece
Prof. dr. Eftihia Nathanail, prof. dr. Thierry Vanelslander, prof. dr. Wouter Dewulf
PhD defence Konstantinos Papoutsis - Faculty of Business and Economics/School of Engineering
Public-policies on freight mobility record tangible cost impacts on supply chains and in logistics processes such as goods handling, transportation, etc. Especially for the retail sector which requires a more responsive performance, the effects are even more critical. Thus, society is impacted by air pollution, noise nuisance, etc. for which they are not accountable, and decision-makers are trying to tackle via new policies. Therefore, sustainability has a cost that should be paid by polluters. On the contrary, retailers seek for innovation to offset the additional operational implications. A holistic approach on pinpointing and estimating the total costs that retailers pay in order to ship their products to customers embedding the policy adoption cost is the main scope of the doctoral dissertation.
A cost model of a retail supply chain is built focusing on urban context and the effects of policies and innovations on total costs and sustainability performance of a retailer’s B2B supply chain are estimated. This is achieved by conducting an Activity-Based-Costing method, identifying logistics activities and resources needed to execute them and incorporating public policy cost elements into this analysis. With view to internalize the external costs generated, the transport externalities are also integrated together with the indirect cost of delay in delivering time-sensitive products such as FMCG, etc.
To understand the actual costs of deliveries the cost model is applied onto the operational model of a food retailer delivering to their outlets in the city of Antwerp. On top of the as-is scenario, three different delivery scenarios are examined (urban consolidation center - UCC), Tethering, shared bus) to investigate the total cost effect of mobility policies on retailers’ supply chains. UCC secures significant cost savings but this is subject to a flawless consignment and cooperation between stakeholders. External costs constitute integral part of sustainability and thus, a sustainability analysis is performed between scenarios, encompassing service and social perspectives. In that regard, Tethering is the most sustainable scenario due to the shorter distance covered by trucks in one roundtrip.
This dissertation explores the potential of retail logistics both from a policy-making and industry point of view. It portrays the dynamics and drivers of a key sector and it reveals similarities between different economic sectors: insights could be transferable accords sectors. The potential room for innovation adoption is indicated by quantifying the cost of innovative scenarios to the retailers. It, finally, crystallizes how ‘the polluter pays’ principle is blended into the retail logistics costs.