Joint Route Planning Under Varying Market Conditions

CentER Discussion Paper Series No. 2006-49

17 Pages Posted: 26 Jul 2006

See all articles by F. Cruijssen

F. Cruijssen

Tilburg University - Tilburg University School of Economics and Management

Olli Bräysy

University of Jyväskylä - School of Business and Economics

Wout Dullaert

University of Antwerp - Institute of Transport and Maritime Management Antwerp (ITMMA); Antwerp Maritime Academy

Hein Fleuren

Tilburg University - Center for Economic Research (CentER)

Marc Salomon

University of California, San Francisco (UCSF)

Date Written: May 2006

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.

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

JEL Classification: R41, L92

Suggested Citation

Cruijssen, F. and Bräysy, Olli and Dullaert, Wout and Fleuren, Hein and Salomon, Marc, Joint Route Planning Under Varying Market Conditions (May 2006). CentER Discussion Paper Series No. 2006-49, Available at SSRN: https://ssrn.com/abstract=919740 or http://dx.doi.org/10.2139/ssrn.919740

F. Cruijssen (Contact Author)

Tilburg University - Tilburg University School of Economics and Management ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands
+31 13 466 3063 (Phone)

Olli Bräysy

University of Jyväskylä - School of Business and Economics ( email )

University of Jyväskylä
PO Box 35
FIN 40351, FIN-40014
Finland

Wout Dullaert

University of Antwerp - Institute of Transport and Maritime Management Antwerp (ITMMA) ( email )

Keizerstraat 64
Antwerp, B-2000
Belgium

HOME PAGE: http://www.itmma.ua.ac.be

Antwerp Maritime Academy ( email )

Noordkasteel Oost 6
Antwerp, 2030
Belgium

HOME PAGE: http://www.hzs.be

Hein Fleuren

Tilburg University - Center for Economic Research (CentER) ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Marc Salomon

University of California, San Francisco (UCSF) ( email )

Third Avenue and Parnassus
San Francisco, CA CA 94143
United States

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
156
Abstract Views
1,285
Rank
341,599
PlumX Metrics