Collaborative logistics and transportation networks : A modelling approach to hub network design

During the last thirty years, the imperatives of the customer service and cost efficiency have pushed firms to change their strategy and logistics organization, resulting in the centralization of production and distribution, and the reduction of inventory. Although for many companies these changes in strategy have been a part of a broader response to growing global opportunities and increased levels of international competition, they have led to increased competition and marketing pressure, dictating shorter lifecycles and lead-times, a larger variety of products and production in smaller quantities. Next to this centralization and inventory reduction, the need for time compression has reduced the shipment size, increased the frequency of material movement, and introduced a series of new management principles and approaches, such as JIT, Quick Response (QR), Lean Logistics, Agile Logistics, and Efficient consumer Response (ECR) to help firms accelerate their logistical operations. However, this mounting pressure to time-compress logistical systems may seen at odds with the lengthening of the supply-chain links caused by centralization. Consequently, one of the major difficulties that a company faces in the implementation of both strategies – globalization and time based competition – is that they make contradictory demands on its resources. Long transit times from distant production facilities can, after all, make the international supply chain unresponsive to short term variations in demand. And this is not the only dilemma faced in today’s logistics. Of course, there is the ever-present trade-off between logistics service quality against logistics costs. More specifically, on the one hand the firm is faced with a fragmentation of flows due to smaller, customized shipments at higher frequencies; on the other hand the need to maintain control over cost levels through benefits of scale in the logistics network is as high as ever. The main objective of this book is to develop and demonstrate a design and evaluation methodology for logistics and transportation networks in which the participants collaborate based on the: (1) integral logistics costs; (2) service requirements set by the users of the network; (3) type of collaboration; and (4) possible economies of scale throughout the logistics network.