Including Carbon Emissions in the Planning of Logistic Networks: A Brazilian Case

The issue of sustainability has gained increasing importance in the agenda of government leaders and business managers alike, all over the world. Companies have come to realise that on top of being beneficial for the planet, strategies for the reduction of greenhouse gas emissions and sustainability policies represent important opportunities for businesses growth. Many such strategies are related to the business supply chain, where most decisions that impact emissions and sustainability are made. Examples of such decisions can be found in supply chain logistic network design and management: facility location, definition of transportation modes, and distribution policies, including which facilities should serve what markets. In this work, a nonlinear mathematical model to support the planning of more sustainable logistic networks was developed using a plausible hypothetical logistic network located in Brazil as a case. One aspect of the developed model that sets it apart from others in the current literature is that in addition to traditional logistic costs, carbon emission costs resulting from transportation activities along the supply chain were also taken into account in the analysis. Sensitivity analyses were conducted by using a computer simulation aimed at evaluating road and rail transportation modes, in terms of the impact that each has on the cost optimisation of the network configuration, especially in regard to the total cost of emissions and stocks held in the chain to ensure a desired level of customer service.