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Backhauling; the optimal road to Everest: a study on the optimisation opportunities for the Unilever European Routing Network. Public version

Verhoeven, S.P.J.W. (2008) Backhauling; the optimal road to Everest: a study on the optimisation opportunities for the Unilever European Routing Network. Public version.

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Abstract:This research contributes to the Everest team of the European Logistics Deliver department, belonging to the Unilever Supply Chain Company. The main objective of this research is to identify opportunities to optimise the European cross-border routing network. A savings application, specifically developed for Unilever’s routing network, demonstrates that more than XXX Euro savings (i.e. XXX of total costs) on a yearly basis could be realised with backhauling on a small routing network. Moreover, a reduction of XXX on kilometres driven could be established, contributing to Unilever’s carbon footprint reduction. Since these savings concern a small network, it is relevant to investigate the savings potential of the entire European routing network. Transparency of product movements and a good understanding of relevant network constraints are two fundamental points of attention when optimising a routing network. Currently, transparency is lacking and responsibilities are fragmented, which makes that Unilever cannot take advantage of its large scale. Where the Everest team aims to create full transparency and centralisisation of Unilever’s transport management across Europe, this research looks one step ahead and focuses on optimisation opportunities for a fully transparent network. In this network, location constraints concern the specific requirements of the supply and delivery locations. Freight constraints concern the characteristics of the products to be transported. For a routing problem, the importance of various constraints highly depends on the level of decision making. Since this research is focused on the optimisation of the routing network on tactical level, we consider the following constraints: the lane price, temperature control requirements, the transit time, the distance, and the frequency of a lane on a yearly basis. Consolidation and backhauling are two major tactical routing optimisation strategies. Where consolidation aims at using truck capacity at full potential through consolidating less than truckload lanes (LTL), backhauling is focused on minimising empty driven kilometres in a network of full truckload lanes (FTL). The developed savings application focuses on backhauling. The tool generates proposals for beneficial backhaul loops in specified FTL routing networks. With key performance indicators, such as costs- and kilometre savings, we validate the solutions from different perspectives. Moreover, the model also provides insight into the impact of constraints and environmental factors. For example, the import-export balance of a region highly influences the benefits of creating backhaul loops. Once feasible backhaul loops are appointed, in-depth consultation with the involved locations on operational level is required to succesfully merge backhaul loops into the day to day routing schedules. For further research, we recommend to investigate the savings opportunities of consolidation and of transport with other modalities than road. Also, hub networks and real-time scheduling are two areas of research that potentially lead to further savings on the routing network.
Item Type:Essay (Master)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:Industrial Engineering and Management MSc (60029)
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