Eco-efficiency in logistics: a case study on distribution network design

Abstract

Sustainability demands that managers deliberate effects on stakeholders and the environment alongside traditional profitability measures. This paper presents a case study suggested by the managers of a distribution firm that seeks to balance environmental impact with cost in an industrial distribution network configuration decision incorporating product returns, which is currently taking place. While this can be modelled using mathematical programming, nonlinear terms in the objective functions as well as the likeliness that a large number of combinations of binary decision variables result suggest that this will not be able to be relied upon for a solution. For this reason, we propose a heuristic that aims at finding the Pareto-efficient frontier, which managers can use to deliberate the best solution balancing cost and environmental impact, according to the relative trade-offs of various possible configurations. We illustrate this heuristic on the Italian region of Liguria, and further explore trade-offs juxtaposing the regions of Lombardi and Sicily. Lastly, various extensions for enhanced product recovery opportunities for returns are suggested.

Keywords:

• sustainable supply chains
• environmental impact
• eco-efficiency
• multiobjective

Acknowledgements

The authors wish to thank David Francas (Mannheim), Grit Walther (Wuppertal) and two anonymous referees for their very helpful comments. The work presented is part of the INTERLINK project on Supply Chain Sustainability and supported by the Italian Ministry of Research and Higher Education. Participating universities are University of Brescia (Italy), Linköping Institute of Technology and Lulea University of Technology (both Sweden), University of Mannheim and University of Magdeburg (both Germany). This work was also supported by Shippensburg University's Centre for Faculty Excellence in Scholarship and Teaching.