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Joint Route Planning under Varying Market Conditions

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Author Info

  • Cruijssen, F.C.A.M.
  • Braysy, O.
  • Dullaert, W.
  • Fleuren, H.A.
  • Salomon, M.

    (Tilburg University, Center for Economic Research)

Abstract

Purpose - To provide empirical evidence on the level of savings that can be attained by joint route planning and how these savings depend on specific market characteristics.Design/methodology/approach - Joint route planning is a measure that companies can take to decrease the costs of their distribution activities. Essentially, this can either be achieved through horizontal cooperation or through outsourcing distribution to a Logistics Service Provider.The synergy value is defined as the difference between distribution costs in the original situation where all entities perform their orders individually, and the costs of a system where all orders are collected and route schemes are set up simultaneously to exploit economies of scale.This paper provides estimates of synergy values, both in a constructed benchmark case and in a number of real-world cases.Findings - It turns out that synergy values of 30% are achievable.Furthermore, intuition is developed on how the synergy values depend on characteristics of the distribution problem under consideration.Practical implications - The developed intuition on the nature of synergy values can help practitioners to find suitable combinations of distribution systems, since synergy values can quickly be assessed based on the characteristics of the distribution problem, without solving large and difficult Vehicle Routing Problems.Originality/value - this paper addresses a major impediment to horizontal cooperation: estimating operational savings upfront.

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Bibliographic Info

Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2006-49.

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Date of creation: 2006
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Handle: RePEc:dgr:kubcen:200649

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Web page: http://center.uvt.nl

Related research

Keywords: Horizontal cooperation; Distribution; Outsourcing; Vehicle routing with time windows; Retail;

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References

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  1. Cruijssen, F.C.A.M. & Dullaert, W. & Joro, T., 2006. "Logistic Efficiency Through Horizontal Cooperation: The Case of Flemish Road Transportation Companies," Discussion Paper 2006-14, Tilburg University, Center for Economic Research.
  2. Fan, Terence & Vigeant-Langlois, Laurence & Geissler, Christine & Bosler, Björn & Wilmking, Jan, 2001. "Evolution of global airline strategic alliance and consolidation in the twenty-first century," Journal of Air Transport Management, Elsevier, vol. 7(6), pages 349-360.
  3. Cruijssen, F.C.A.M. & Borm, P.E.M. & Fleuren, H.A. & Hamers, H.J.M., 2005. "Insinking: A Methodology to Exploit Synergy in Transportation," Discussion Paper 2005-121, Tilburg University, Center for Economic Research.
  4. Braysy, Olli & Hasle, Geir & Dullaert, Wout, 2004. "A multi-start local search algorithm for the vehicle routing problem with time windows," European Journal of Operational Research, Elsevier, vol. 159(3), pages 586-605, December.
  5. Park, Jong-Hun, 1997. "The effects of airline alliances on markets and economic welfare," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 33(3), pages 181-195, September.
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Citations

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Cited by:
  1. VANOVERMEIRE, Christine & CUERVO, Daniel Palhazi & SÖRENSEN, Kenneth, 2013. "Estimating collaborative profits under varying partner characteristics and strategies," Working Papers 2013031, University of Antwerp, Faculty of Applied Economics.
  2. Cruijssen, F.C.A.M., 2006. "Horizontal Cooperation in Transport and Logistics," Open Access publications from Tilburg University urn:nbn:nl:ui:12-189742, Tilburg University.
  3. Schijndel, M.J.M. van & Braat, J.J.M., 2012. "Vehicle Planning in Cross Chain Control Centers," Discussion Paper 2012-058, Tilburg University, Center for Economic Research.

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