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A savings analysis of horizontal collaboration among VMI suppliers
Technologiepark 903, 9052 Zwijnaarde, Belgium |
This paper considers a logistics distribution network with multiple suppliers that each replenish a set of retailers having constant demand rates. The underlying optimization problem is the Cyclic Inventory Routing Problem (CIRP), for which a heuristic solution method is developed. Further, horizontal collaboration through a third party Logistics Service Provider (LSP) is considered and the collaborative savings potential is analyzed. A design of experiments is performed to evaluate the impact of some relevant cost and network structure factors on the collaborative savings potential. The results from the design of experiments show that for some factor combinations there is in fact no significant savings potential.
References:
[1] |
H. Andersson,
Industrial aspects and literature survey: combined inventory management and routing, Computers & Operations Research, 37 (2010), 1515-1536.
doi: 10.1016/j.cor.2009.11.009. |
[2] |
J.-F. Audy and S. D'Amours, Impact of benefit sharing among companies in the implantation of a collaborative transportation system - an application in the furniture industry, in Pervasive Collaborative Networks, s. I. : Springer US, (2008), 519-532.
doi: 10.1007/978-0-387-84837-2_54. |
[3] |
J.-F. Audy, S. D'Amours and L.-M. Rousseau,
Cost allocation in the establishment of a collaborative transportation agreement - an application in the furniture industry, Journal of the Operational Research Society, 62 (2011), 960-970.
|
[4] |
J.-F. Audy, N. Lehoux, S. D'Amours and M. Rönnqvist,
A framework for an efficient implementation of logistics collaborations, International Transactions in Operational Research, 19 (2012), 633-657.
doi: 10.1111/j.1475-3995.2010.00799.x. |
[5] |
T.-H Chen and J.-M Chen,
Optimizing supply chain collaboration based on joint replenishment and channel coordination, Transportation Research Part E: Logistics and Transportation Review, 41 (2005), 261-285.
doi: 10.1016/j.tre.2004.06.003. |
[6] |
M. Chitsaz, A. Divsalar and P. Vansteenwegen,
A two-phase algorithm for the cyclic inventory routing problem, European Journal of Operational Research, 254 (2016), 410-426.
doi: 10.1016/j.ejor.2016.03.056. |
[7] |
G. Clarke and J. W. Wright,
Scheduling of vehicles from a central depot to a number of delivery points, Operations Research, 12 (1964), 568-581.
|
[8] |
L. C. Coelho, J.-F. Cordeau and G. Laporte,
Thirty years of inventory routing, Transportation Science, 48 (2013), 1-19.
doi: 10.1287/trsc.2013.0472. |
[9] |
F. Cruijssen, M. Cools and W. Dullaert,
Horizontal cooperation in logistics: Opportunities and impediments, Transportation Research Part E: Logistics and Transportation Review, 43 (2007), 129-142.
doi: 10.1016/j.tre.2005.09.007. |
[10] |
F. Cruijssen, P. Borm, H. Fleuren and H. Hamers,
Supplier-initiated outsourcing: a methodology to exploit synergy in transportation, European Journal of Operational Research, 207 (2010), 763-774.
doi: 10.1016/j.ejor.2010.06.009. |
[11] |
Ö. Ergun, G. Kuyzu and M. Savelsbergh,
Reducing truckload transportation costs through collaboration, Transportation Science, 41 (2007), 206-221.
doi: 10.1287/trsc.1060.0169. |
[12] |
M. Frisk, M. Göthe-Lundgren, K. Jörnsten and M. Rönnqvist,
Cost allocation in collaborative forest transportation, European Journal of Operational Research, 205 (2010), 448-458.
|
[13] |
S. Lozano, P. Moreno, B. Adenso-Díaz and E. Algaba,
Cooperative game theory approach to allocating benefits of horizontal cooperation, European Journal of Operational Research, 229 (2013), 444-452.
doi: 10.1016/j.ejor.2013.02.034. |
[14] |
R. Mason, C. Lalwani and R. Boughton,
Combining vertical and horizontal collaboration for transport optimisation, Supply Chain Management: An International Journal, 12 (2007), 187-199.
doi: 10.1108/13598540710742509. |
[15] |
J. T. Mentzer, W. DeWitt, J. S. Keebler, S. Min, N. W. Nix, C. D. Smith and Z. G. Zacharia,
Defining supply chain management, Journal of Business Logistics, 22 (2001), 1-25.
doi: 10.1002/j.2158-1592.2001.tb00001.x. |
[16] |
N. H. Moin and S. Salhi,
Inventory routing problems: A logistical overview, Journal of the Operational Research Society, 58 (2007), 1185-1194.
doi: 10.1057/palgrave.jors.2602264. |
[17] |
O. Ö. Özener and Ö. Ergun,
Allocating costs in a collaborative transportation procurement network, Transportation Science, 42 (2008), 146-165.
|
[18] |
D. Power,
Supply chain management integration and implementation: A literature review, Supply Chain Management: An International Journal, 10 (2005), 252-263.
doi: 10.1108/13598540510612721. |
[19] |
B. Raa and E.-H Aghezzaf,
A practical solution approach for the cyclic inventory routing problem, European Journal of Operational Research, 192 (2009), 429-441.
doi: 10.1016/j.ejor.2007.09.032. |
[20] |
B. Raa and W. Dullaert,
Route and fleet design for cyclic inventory routing, European Journal of Operational Research, 256 (2017), 404-411.
doi: 10.1016/j.ejor.2016.06.009. |
[21] |
T. Simatupang and R. Sridharan,
The collaborative supply chain, The International Journal of Logistics Management, 13 (2002), 15-30.
doi: 10.1108/09574090210806333. |
[22] |
G. Stefansson,
Collaborative logistics management and the role of third-party service providers, International Journal of Physical Distribution & Logistics Management, 36 (2006), 76-92.
doi: 10.1108/09600030610656413. |
[23] |
C. Vanovermeire and K. Sörensen,
Integration of the cost allocation in the optimization of collaborative bundling, Transportation Research Part E: Logistics and Transportation Review, 72 (2014), 125-143.
doi: 10.1016/j.tre.2014.09.009. |
show all references
References:
[1] |
H. Andersson,
Industrial aspects and literature survey: combined inventory management and routing, Computers & Operations Research, 37 (2010), 1515-1536.
doi: 10.1016/j.cor.2009.11.009. |
[2] |
J.-F. Audy and S. D'Amours, Impact of benefit sharing among companies in the implantation of a collaborative transportation system - an application in the furniture industry, in Pervasive Collaborative Networks, s. I. : Springer US, (2008), 519-532.
doi: 10.1007/978-0-387-84837-2_54. |
[3] |
J.-F. Audy, S. D'Amours and L.-M. Rousseau,
Cost allocation in the establishment of a collaborative transportation agreement - an application in the furniture industry, Journal of the Operational Research Society, 62 (2011), 960-970.
|
[4] |
J.-F. Audy, N. Lehoux, S. D'Amours and M. Rönnqvist,
A framework for an efficient implementation of logistics collaborations, International Transactions in Operational Research, 19 (2012), 633-657.
doi: 10.1111/j.1475-3995.2010.00799.x. |
[5] |
T.-H Chen and J.-M Chen,
Optimizing supply chain collaboration based on joint replenishment and channel coordination, Transportation Research Part E: Logistics and Transportation Review, 41 (2005), 261-285.
doi: 10.1016/j.tre.2004.06.003. |
[6] |
M. Chitsaz, A. Divsalar and P. Vansteenwegen,
A two-phase algorithm for the cyclic inventory routing problem, European Journal of Operational Research, 254 (2016), 410-426.
doi: 10.1016/j.ejor.2016.03.056. |
[7] |
G. Clarke and J. W. Wright,
Scheduling of vehicles from a central depot to a number of delivery points, Operations Research, 12 (1964), 568-581.
|
[8] |
L. C. Coelho, J.-F. Cordeau and G. Laporte,
Thirty years of inventory routing, Transportation Science, 48 (2013), 1-19.
doi: 10.1287/trsc.2013.0472. |
[9] |
F. Cruijssen, M. Cools and W. Dullaert,
Horizontal cooperation in logistics: Opportunities and impediments, Transportation Research Part E: Logistics and Transportation Review, 43 (2007), 129-142.
doi: 10.1016/j.tre.2005.09.007. |
[10] |
F. Cruijssen, P. Borm, H. Fleuren and H. Hamers,
Supplier-initiated outsourcing: a methodology to exploit synergy in transportation, European Journal of Operational Research, 207 (2010), 763-774.
doi: 10.1016/j.ejor.2010.06.009. |
[11] |
Ö. Ergun, G. Kuyzu and M. Savelsbergh,
Reducing truckload transportation costs through collaboration, Transportation Science, 41 (2007), 206-221.
doi: 10.1287/trsc.1060.0169. |
[12] |
M. Frisk, M. Göthe-Lundgren, K. Jörnsten and M. Rönnqvist,
Cost allocation in collaborative forest transportation, European Journal of Operational Research, 205 (2010), 448-458.
|
[13] |
S. Lozano, P. Moreno, B. Adenso-Díaz and E. Algaba,
Cooperative game theory approach to allocating benefits of horizontal cooperation, European Journal of Operational Research, 229 (2013), 444-452.
doi: 10.1016/j.ejor.2013.02.034. |
[14] |
R. Mason, C. Lalwani and R. Boughton,
Combining vertical and horizontal collaboration for transport optimisation, Supply Chain Management: An International Journal, 12 (2007), 187-199.
doi: 10.1108/13598540710742509. |
[15] |
J. T. Mentzer, W. DeWitt, J. S. Keebler, S. Min, N. W. Nix, C. D. Smith and Z. G. Zacharia,
Defining supply chain management, Journal of Business Logistics, 22 (2001), 1-25.
doi: 10.1002/j.2158-1592.2001.tb00001.x. |
[16] |
N. H. Moin and S. Salhi,
Inventory routing problems: A logistical overview, Journal of the Operational Research Society, 58 (2007), 1185-1194.
doi: 10.1057/palgrave.jors.2602264. |
[17] |
O. Ö. Özener and Ö. Ergun,
Allocating costs in a collaborative transportation procurement network, Transportation Science, 42 (2008), 146-165.
|
[18] |
D. Power,
Supply chain management integration and implementation: A literature review, Supply Chain Management: An International Journal, 10 (2005), 252-263.
doi: 10.1108/13598540510612721. |
[19] |
B. Raa and E.-H Aghezzaf,
A practical solution approach for the cyclic inventory routing problem, European Journal of Operational Research, 192 (2009), 429-441.
doi: 10.1016/j.ejor.2007.09.032. |
[20] |
B. Raa and W. Dullaert,
Route and fleet design for cyclic inventory routing, European Journal of Operational Research, 256 (2017), 404-411.
doi: 10.1016/j.ejor.2016.06.009. |
[21] |
T. Simatupang and R. Sridharan,
The collaborative supply chain, The International Journal of Logistics Management, 13 (2002), 15-30.
doi: 10.1108/09574090210806333. |
[22] |
G. Stefansson,
Collaborative logistics management and the role of third-party service providers, International Journal of Physical Distribution & Logistics Management, 36 (2006), 76-92.
doi: 10.1108/09600030610656413. |
[23] |
C. Vanovermeire and K. Sörensen,
Integration of the cost allocation in the optimization of collaborative bundling, Transportation Research Part E: Logistics and Transportation Review, 72 (2014), 125-143.
doi: 10.1016/j.tre.2014.09.009. |





LSP & Suppliers | Retailers | ||
| 1.2/km | | 0.8/unit/day |
| 20/tour | | 10/visit |
100 units | | 100 units |
LSP & Suppliers | Retailers | ||
| 1.2/km | | 0.8/unit/day |
| 20/tour | | 10/visit |
100 units | | 100 units |
route | | | |
1 | | 6 | 152.41 |
2 | | 5 | 72.62 |
3 | | 7 | 182.47 |
route | | | |
1 | | 6 | 152.41 |
2 | | 5 | 72.62 |
3 | | 7 | 182.47 |
| route | | |
1 | | 4 | 222.95 |
2 | | 3 | 203.8 |
3 | | 6 | 146.21 |
4 | | 5 | 185.00 |
5 | | 3 | 142.36 |
6 | | 5 | 128.54 |
| route | | |
1 | | 4 | 222.95 |
2 | | 3 | 203.8 |
3 | | 6 | 146.21 |
4 | | 5 | 185.00 |
5 | | 3 | 142.36 |
6 | | 5 | 128.54 |
Coalition | Cumulative individual cost | Coalition cost | Saving | %Saving |
1 | 407.50 | - | - | - |
2 | 310.22 | - | - | - |
3 | 417.75 | - | - | - |
{1} | 407.50 | 410.20 | -2.70 | -0.66 |
{2} | 310.22 | 310.01 | 0.21 | 0.07 |
{3} | 417.75 | 428.84 | -11.09 | -2.65 |
{1, 2} | 717.72 | 659.96 | 57.76 | 8.05 |
{1, 3} | 825.25 | 780.96 | 44.29 | 5.3 |
{2, 3} | 727.97 | 697.86 | 30.11 | 4.14 |
{1, 2, 3} | 1135.47 | 1028.87 | 106.6 | 9.39 |
Coalition | Cumulative individual cost | Coalition cost | Saving | %Saving |
1 | 407.50 | - | - | - |
2 | 310.22 | - | - | - |
3 | 417.75 | - | - | - |
{1} | 407.50 | 410.20 | -2.70 | -0.66 |
{2} | 310.22 | 310.01 | 0.21 | 0.07 |
{3} | 417.75 | 428.84 | -11.09 | -2.65 |
{1, 2} | 717.72 | 659.96 | 57.76 | 8.05 |
{1, 3} | 825.25 | 780.96 | 44.29 | 5.3 |
{2, 3} | 727.97 | 697.86 | 30.11 | 4.14 |
{1, 2, 3} | 1135.47 | 1028.87 | 106.6 | 9.39 |
Supplier | nrRet | Total | Distribution | Holding |
S0 | | | | |
S1 | | | | |
S2 | | | | |
S3 | | | | |
S4 | | | | |
S5 | | | | |
S6 | | | | |
S7 | | | | |
S8 | | | | |
S9 | | | | |
L0 | | | | |
L1 | | | | |
L2 | | | | |
L3 | | | | |
L4 | | | | |
L5 | | | | |
L6 | | | | |
L7 | | | | |
L8 | | | | |
L9 | | | | |
Avg. | | | | |
Supplier | nrRet | Total | Distribution | Holding |
S0 | | | | |
S1 | | | | |
S2 | | | | |
S3 | | | | |
S4 | | | | |
S5 | | | | |
S6 | | | | |
S7 | | | | |
S8 | | | | |
S9 | | | | |
L0 | | | | |
L1 | | | | |
L2 | | | | |
L3 | | | | |
L4 | | | | |
L5 | | | | |
L6 | | | | |
L7 | | | | |
L8 | | | | |
L9 | | | | |
Avg. | | | | |
| Total | Relative | Distribution | Relative | Holding | Relative |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| Total | Relative | Distribution | Relative | Holding | Relative |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| Total | Relative | Distribution | Relative | Holding | Relative |
1 | | | | | | |
0 | | | | | | |
| Total | Relative | Distribution | Relative | Holding | Relative |
1 | | | | | | |
0 | | | | | | |
| Coalition | Total | Cumulative | Saving | |
1 | S3 | 973.2 | 973.2 | 0 | 0.00 |
2 | S3-L8 | 2409.6 | 2519.6 | 110.1 | 4.37 |
3 | S3-L8-S2 | 3004.4 | 3271.0 | 266.6 | 8.15 |
4 | S3-L8-S2-L6 | 4501.4 | 4910.2 | 408.9 | 8.33 |
5 | S3-L8-S2-L6-L3 | 5620.9 | 6168.0 | 547.1 | 8.87 |
6 | S3-L8-S2-L6-L3-L1 | 7248.3 | 8054.6 | 806.4 | 10.01 |
7 | S3-L8-S2-L6-L3-L1-S5 | 8354.2 | 9310.2 | 956.0 | 10.27 |
8 | S3-L8-S2-L6-L3-L1-S5-L4 | 9790.9 | 10973.1 | 1182.2 | 10.77 |
| Coalition | Total | Cumulative | Saving | |
1 | S3 | 973.2 | 973.2 | 0 | 0.00 |
2 | S3-L8 | 2409.6 | 2519.6 | 110.1 | 4.37 |
3 | S3-L8-S2 | 3004.4 | 3271.0 | 266.6 | 8.15 |
4 | S3-L8-S2-L6 | 4501.4 | 4910.2 | 408.9 | 8.33 |
5 | S3-L8-S2-L6-L3 | 5620.9 | 6168.0 | 547.1 | 8.87 |
6 | S3-L8-S2-L6-L3-L1 | 7248.3 | 8054.6 | 806.4 | 10.01 |
7 | S3-L8-S2-L6-L3-L1-S5 | 8354.2 | 9310.2 | 956.0 | 10.27 |
8 | S3-L8-S2-L6-L3-L1-S5-L4 | 9790.9 | 10973.1 | 1182.2 | 10.77 |
Source | Type Ⅲ Sum of Squares | df | Mean Square | F | Sig. |
Corrected Model | 121661.580a | 21 | 5793.109 | 918.996 | 0.000 |
Intercept | 570.029 | 1 | 570.029 | 90.422 | 0.000 |
| 91248.526 | 1 | 91248.526 | 14474.561 | 0.000 |
| 20639.711 | 3 | 6879.904 | 1091.345 | 0.000 |
| 8779.363 | 7 | 1254.195 | 198.950 | 0.000 |
| 306.054 | 3 | 102.018 | 16.183 | 0.000 |
| 687.925 | 7 | 98.275 | 15.589 | 0.000 |
Error | 7930.510 | 1258 | 6.304 | ||
Total | 130162.118 | 1280 | |||
Corrected Total | 129592.089 | 1279 | |||
a R Squared = 0.939 (Adjusted R Squared = 0.938). |
Source | Type Ⅲ Sum of Squares | df | Mean Square | F | Sig. |
Corrected Model | 121661.580a | 21 | 5793.109 | 918.996 | 0.000 |
Intercept | 570.029 | 1 | 570.029 | 90.422 | 0.000 |
| 91248.526 | 1 | 91248.526 | 14474.561 | 0.000 |
| 20639.711 | 3 | 6879.904 | 1091.345 | 0.000 |
| 8779.363 | 7 | 1254.195 | 198.950 | 0.000 |
| 306.054 | 3 | 102.018 | 16.183 | 0.000 |
| 687.925 | 7 | 98.275 | 15.589 | 0.000 |
Error | 7930.510 | 1258 | 6.304 | ||
Total | 130162.118 | 1280 | |||
Corrected Total | 129592.089 | 1279 | |||
a R Squared = 0.939 (Adjusted R Squared = 0.938). |
| 0 | 1 |
Estimate | | |
| 0 | 1 |
Estimate | | |
| | | | |
Estimate | | | | |
| | | | |
Estimate | | | | |
1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | |
Estimate | -4.8% | -1.8% | -0.1% | 1.0% | 1.9% | 2.5% | 3.0% | 3.5% |
1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | |
Estimate | -4.8% | -1.8% | -0.1% | 1.0% | 1.9% | 2.5% | 3.0% | 3.5% |
pctSava, b, c | ||||||||
Subset | ||||||||
| N | 1 | 2 | 3 | 4 | 5 | 6 | 7 |
1 | 160 | -4.7630 | ||||||
2 | 160 | -1.7617 | ||||||
3 | 160 | -0.1306 | ||||||
4 | 160 | 1.0208 | ||||||
5 | 160 | 1.8715 | 1.8715 | |||||
6 | 160 | 2.5444 | 2.5444 | |||||
7 | 160 | 3.0449 | 3.0449 | |||||
8 | 160 | 3.5125 | ||||||
Sig. | 1.000 | 1.000 | 1.000 | 0.051 | 0.244 | 0.632 | 0.710 | |
a Means for groups in homogeneous subsets are displayed. Based on observed means. The error term is Mean Square(error) = 6.304 b Uses Harmonic Mean Sample Size = 160.000 c Alpha = 0.05 |
pctSava, b, c | ||||||||
Subset | ||||||||
| N | 1 | 2 | 3 | 4 | 5 | 6 | 7 |
1 | 160 | -4.7630 | ||||||
2 | 160 | -1.7617 | ||||||
3 | 160 | -0.1306 | ||||||
4 | 160 | 1.0208 | ||||||
5 | 160 | 1.8715 | 1.8715 | |||||
6 | 160 | 2.5444 | 2.5444 | |||||
7 | 160 | 3.0449 | 3.0449 | |||||
8 | 160 | 3.5125 | ||||||
Sig. | 1.000 | 1.000 | 1.000 | 0.051 | 0.244 | 0.632 | 0.710 | |
a Means for groups in homogeneous subsets are displayed. Based on observed means. The error term is Mean Square(error) = 6.304 b Uses Harmonic Mean Sample Size = 160.000 c Alpha = 0.05 |
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