Toward sustainable logistics networks

Eric Ballot Centre of scientific management (MINES ParisTech - CGS), Shenle Pan (MINES ParisTech - CGS) and Frédéric Fontane Robotics Centre (MINES ParisTech - CAOR)

1  How to make supply chains more sustainable?

It is well known that freight is one of major support of the economic activities. On the other hand, awareness of the climate change problem is rising. Global warming naturally concerns the transport sector, as it is a significant source of greenhouse gas (GHG) emissions. In this context, this research work aims at new collaborative strategies between supply chains, namely pooling supply chains and Physical Internet to improve sustainability of absolutely necessary supply networks. The research objectives are to firstly define and apply the pooling strategies to supply chains of the consumer goods distribution in France and set up models to assess their effects. And secondly to develop a new logistics organization: the Physical Internet. Two aspects are considered: environment footprint by the reduction of the CO2 emissions from supply networks and economy. The obtained results show that the pooling supply chains works very well to improve the current chains’ performances and is a first step to sustainability of supply chains.

2  Encouraging results obtained from -14% up to -52% of CO2 emissions reductions 

The pooling supply chains here implies sharing or, indeed, working together to design logistical chains. It means sharing a logistical network, regardless of how it is used (by one service provider or more) or its size (the tour of a truck or distribution network). Therefore, pooling is a form of horizontal collaboration. At first time, the optimization only aims at reducing CO2 emissions. In total, the optimization yields a relative reduction of CO2 emissions of 14% exclusively with road transport and of 52% with joint road and rail transport. In economic terms, from a global point of view, with a single transport mode the emissions reduction and the cost reduction are compatible.

Without pooled logistics networks  Pooled logistics networks

Overall, the results obtained show that in all cases, pooling leads to a significant reduction in CO2 emissions and a change in costs. It shows the significance of pooling resources in relation to a reduction in CO2 emissions, whilst offering cost savings except the joint transport by road and rail. However, it should be emphasized that, till now this work did not take into account all the costs of the supply chain. In particular, the costs of storage from suppliers and retailers are not considered, as is the cost of safety stock, even though it is undeniable that the solutions depending on different scenarios of pooling affect stocks differently. 

3  Next step: the Physical Internet 

The next step is to consider supply networks as a set of open networks to interconnect through smart containers. This innovative approach is called the Physical Internet and Mines ParisTech is one of the leading institutions in this worldwide research initiative with Université Laval (Québec – Canada), EPFL (Switzerland) and Arkansas University, VirginiaTech and GeorgiaTech in the USA. The Physical Internet is an open global logistics system leveraging interconnected supply networks through standard modular containers and standard collaborative protocols for increased efficiency and sustainability (definition by B. Montreuil, E. Ballot and R. D. Meller).

                                         Illustration of an interconnect supply network
4  Awards

- Best research paper in Industrial Engineering at International Conference on Industrial Engineering and Systems Management Montréal 2009 for the paper entitled: The reduction of greenhouse gas emissions from freight transport by merging supply chains. 
- Shenle Pan received Chinese Government Award for Outstanding Self-financed Chinese Students Abroad by China Scholarship Council in 2010. - OpenFret project nominated for mid Predit 4 programm award at Bordeaux, May 2011. 

5  Acknowledgement 

This research program was partially funded by Ministère de l'Ecologie, de l'Energie, du Développement durable et de la Mer en charge des Technologies vertes et des Négociations sur le climat trough the Predit 4 program and by the Région Ile de France trough the R2DS program. This program also received support from the Club Déméter.

In the middle, M. Quan Kong Ambassador of China, on the right, Mrs Xiaoyu Zhu Minister Advisor for Educational Affairs of the Ambassador of China, on the left M. Shenle Pan PhD at Centre of scientific management (MINES ParisTech - CGS).


Eric Ballot presents the Physical Internet Initiative

The future of Logistics