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Centralisation of Distribution Systems and its Environmental Effects
Linköping University, Department of Management and Engineering. Linköping University, The Institute of Technology.
2005 (English)Licentiate thesis, monograph (Other academic)
Abstract [en]

Many believe that the current application of modern logistics solutions in general and centralisation of distribution systems in particular is damaging from an environmental perspective. The reason for this claim is that when a distribution system is centralised, products need to be shipped over greater distances. This causes an increase in transport work, which in turn is believed to cause an increase in emissions. Further, the decision to centralise distribution can be characterised as a structural decision and earlier research has helped illustrate how such decisions have greater impact on the overall performance of a distribution system than decisions taken at subsequent levels (tactical and operative). The reason for this is that structural decisions help create new opportunities to make other logistical decisions that are beneficial for the performance of a distribution system, as measured in terms of costs and service.

It is also acknowledged that there is a lack of research illustrating the actual environmental effects of centralisation. This area is the theme of this thesis and the overall purpose is to describe and analyse how centralisation of a distribution system can affect the environment. This purpose has been divided into two research questions, where the first one reads:

- How does physical centralisation of a distribution system influence the environment?

This question aims at investigating what effect centralisation has on the amount of emissions that are caused by transport in a distribution system. One of the main advantages with a centralised distribution system is that emergency deliveries are expected to decrease. This type of transport is often performed by airfreight, which is a mode of transport that is regarded to cause the largest amount of environmental stress among the four most commonly used transport modes. The argument that is made is that even though centralisation causes an increase in transport work, this must not necessarily mean that emissions increase.

As indicated above, earlier studies on structural changes in distribution systems have shown that this type of decision creates new opportunities to make other decisions that are beneficial for the performance of a distribution system, albeit in terms of costs and service. The aim of the second research question is consequently to study this issue, but from an environmental perspective. This question therefore reads:

- How do structural decisions in logistics create new opportunities to improve on the environmental performance of a distribution system?

The results of the study show that it is not sufficient to only consider transport work and emergency deliveries when the environmental effect of a centralisation is to be evaluated. It has also been concluded that centralisation creates an opportunity to make improvements within the distribution system that can prove beneficial from an environmental perspective. In summary, three characteristics besides transport work and emergency deliveries were identified as being of importance when considering the environmental effects of a centralisation. These included centralised flow, modal change, and bargaining power.

This model (see full pdf) does not aim to include all characteristics that can be relevant in an environmental evaluation of a centralisation, but rather those that have been found significant in this study. However, the model helps illustrate that there are many aspects that need to be considered in such an evaluation and that depending on the characteristics of the distribution system at hand the results can vary quite extensively.

Place, publisher, year, edition, pages
Ekonomiska institutionen , 2005. , 168 p.
Dissertations from the International Graduate School of Management and Industrial Engineering, ISSN 1402-0793 ; 91Linköping Studies in Science and Technology. Thesis, ISSN 0280-7971 ; 1175
Keyword [en]
Business and economics, Logistics management, Centralisation of distribution systems, Green logistics, Environment, Structural changes
Keyword [sv]
National Category
Economics and Business
URN: urn:nbn:se:liu:diva-2990Local ID: LiU-Tek-Lic 2005:30ISBN: 91-85299-71-5OAI: diva2:20333
2005-05-31, 13:00 (English)
Available from: 2005-07-19 Created: 2005-07-19 Last updated: 2015-06-02Bibliographically approved
In thesis
1. Towards CO2 efficient centralised distribution
Open this publication in new window or tab >>Towards CO2 efficient centralised distribution
2008 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

This dissertation treats a topic that has received increasing attention as of late, namely that of the environment and in particular increasing levels of CO2 emissions caused by transport. The aim of the dissertation is to explain how a shipper, through various measures, can reduce transport-related CO2 emissions when centralising a distribution system and how this affects the provision of cost efficient customer service. Earlier research has stated that this type of structural change is considered unfavourable from an environmental viewpoint as it increases the amount of transport work generated by the system and thereby transport-related CO2 emissions. The argument that is made in this dissertation, however, is that transport work is only one aspect to consider when evaluating how transport-related CO2 emissions are affected by this type of structural change. The reason for this being that a change in structure and management of the same can enable a shipper to make other changes within the distribution system that can prove beneficial from an environmental perspective as they decrease the amount of CO2 emissions per tonne kilometre.

Theoretically, the dissertation has its foundation in two different areas in logistics research. The first area concerns logistics and the environment, where the frame of reference examines measures discussed in previous research with reference to how a shipper can reduce CO2 emissions related to transport. The second area treated in the frame of reference concerns how costs and service are affected by the structural change of centralising a distribution system and how this relates to the measures discussed in the first part of the framework.

From a methodological viewpoint, the dissertation is based on case studies. These are presented in four appended manuscripts (a licentiate thesis and three papers), where the results of these studies are used as empirical input for the synthesising analysis that is led in the dissertation.

A key deliverable from the research presented in this dissertation is a classification of measures that increase transport-related CO2 emissions and measures that decrease transport-related CO2 emissions when a distribution system is centralised. By presenting this classification, the dissertation extends previous research on the environmental impact of various logistics strategies, where centralised distribution is an example of such a strategy. With regards to this classification, it is concluded that a shipper that seeks to centralise its distribution system in a more CO2 efficient manner will aim to identify a structural configuration that minimises the increase in transport work. This is imperative as there is a close link between transport work and CO2 emissions. Hence, a CO2 efficient centralised distribution system will include more central warehouses than that advocated by earlier research on centralised distribution. This in turn implies that a shipper may not reach the full potential in economies of scale as advocated in earlier research. However, such a configuration will simultaneously lead to less transport work, whereby a shipper will be able to offset the increase in transport work by employing measures that decrease the amount of transport-related CO2 emissions per amount of transport work. The results also indicate that in addition to reducing transport-related CO2 emissions, some of these measures come with a cost incentive. By employing such measures, a shipper can come to compensate for the potential loss in economies of scale caused by employing a structural configuration that seeks to minimise the increase in transport work rather than to maximise economies of scale. By this means, the dissertation contributes to research on centralised distribution by considering how a reduction in transport-related CO2 emissions is interrelated with the provision of cost efficient customer service.

Place, publisher, year, edition, pages
Linköping: Linköping University Electronic Press, 2008. 136 p.
Linköping Studies in Science and Technology. Dissertations, ISSN 0345-7524 ; 1220
CO2 emissions, Centralised distribution, Structural change, Shipper, Transport, Trade-off, Interrelationship
National Category
Engineering and Technology
urn:nbn:se:liu:diva-15399 (URN)978-91-7393-772-6 (ISBN)
Public defence
2008-11-27, ACAS, hus A, Campus Valla, Linköpings universitet, Linköping, 10:00 (English)
Available from: 2008-11-06 Created: 2008-11-06 Last updated: 2015-06-02Bibliographically approved

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