Efficient supply chains through flexible horizontal collaboration

Recently, a trend towards horizontal collaboration in the supply chain has been gaining ground. Collaborative supply chains promise to improve sustainability and reduce transportation costs at the same time. This paper examines the possibility of collaboration and its implementation through a description of the current situation and a case study of three large companies in Belgium who have expressed their willingness to collaborate. As collaboration assumes a long-term relationship that needs to be built, this paper investigates the advantages of moving beyond mere bundling of logistics streams and assumes that partners are willing to explore further optimization opportunities that arise from collaboration. Most notably, this paper evaluates the effects of increased flexible with respect to delivery dates, as well as allowing large orders to be split into several deliveries. The case study developed in this paper shows that a decrease in distribution costs of 25.83% can be achieved. Distributing these gains to the partners by using the recommended Shapley value, the individual gains range from 19.01% to 37.56%. By adopting a flexible attitude with respect to delivery dates and order splitting, the partners in the coalition can further increase their individual gains, as well as the total coalition gain. Interestingly, the Shapley value is found to encourage companies to relinquish a rigid attitude with respect to delivery dates and order splitting, by allocating a larger share of the gains to flexible companies.