The Future of Same-Day Delivery: Same as the Past?

Ed Hendrix, vice president of supply chain at 4Farmers, a large mixed-feed company in the Netherlands, Europe, was reading a new scientific report from CED (an inde­pendent research and advisory company specializing in environmental impacts) that analyzed the environmental effects of the importing of raw materials. 4Farmers is a modern international company producing feed and fod­der for pigs, cows, poultry, and so on, importing grain from all over Europe. As 4Farmers considers sustainable entrepreneurship to be very important, this document made Ed wonder about the environmental and economic consequences of the import of grain as feedstock for pigs. Walmart reacted to Amazon’s efforts by announcing tests for same-day delivery in a few cities:

4Farmers has a high market share in specific feed­stock for sustainable pork, called Euro-Grain. Euro-Grain was developed in the Netherlands, but supply volume from this country is not sufficient. Some other countries within Europe are also capable of producing grain that satisfies the Euro-Grain criteria, among them Poland. Ed believes that his company could significantly improve both distribution costs and environmental impact from transportation by investigating the possibility of using various modes of transportation.

1. Modes of Transportation

The supply chain uses a combination of the following modes of transportation: truck, inland ship, sea ship, and rail. As grain is not very perishable, speed is not really an issue. Prices vary with destination and depend heav­ily on the capacity of the tranportation mode. A variety of intermodel combinations are possible, using a truck/ water/rail combination with containers.

2. Distribution Alternatives for Warsaw

Ed asked his staff to propose different distribution alter­natives for Poland: Nina Kramer on environmental issues and Leo Spoor on the costs, needs, and possibili­ties for the various transport modes.

Leo figured out the following information:

• Monthly, demand of 4Farmers for Euro-Grain is about 3,500 tons of grain.
• From the farm near Warsaw, grain can be transported by rail to the train station in Wroclaw (320 km) or the train station in Rotterdam (1160 km). By road, it is possible to reach the sea harbor Gdansk (330 km), the train station/inland harbor of Wroclaw (345 km), or even drive to 4Farmers directly (1197 km). From the sea harbor Gdansk, a sea ship can travel to the sea harbor/rail station of Rotterdam (1064 km). An inland ship can travel from the inland harbor of Wroclaw to the inland harbor of Oss (950 km). The inland harbor of Oss can also be reached by inland ship from the port of Rotterdam (84 km). Finally, as 4Farmers can only be reached by truck, it takes 26 km to drive from the inland harbor of Oss to 4Farmers, and 100 km from the sea harbor/rail station in Rotterdam.
• Distribution costs are $1 per km/ton for a truck with a capacity of 40 tons.
• A sea ship from the port of Gdansk to the port of Rotterdam costs $23.5/ton per trip with a capacity of 3,000 tons.
• An inland ship from the harbor of Wroclaw to the harbor of Oss costs $13.75/ton per trip with a capacity of 1,000 tons.
• An inland ship from Rotterdam to Oss costs $3.75/ ton per trip with a capacity of 1,000 tons.
• Rail tariffs for a capacity of 800 tons from Warsaw to Rotterdam: $25.4/ton.

Nina came up with the following information. The environmental impact of transportation can be represented by the following airborne emission cate­gories: CO2 equivalents to represent greenhouse gas (GHG) emissions, NOx equivalents to represent nitri­fication, and SO₂ equivalents to represent acidifica­tion. Table 14-12 gives the emission-equivalents per modality (per ton/km). Ed wondered which intermodal configuration would have the best sustainable perfor­mance for this supply chain.

Source: Chopra Sunil, Meindl Peter (2014), Supply Chain Management: Strategy, Planning, and Operation, Pearson; 6th edition.