Assessing the environmental benefits of horizontal cooperation using a location-inventory model

Abstract

As customers are aware of the climate change, eco-friendly strategies have become a competitive advantage for companies. In particular, they are aiming to reduce their carbon footprint along their supply chain. In this context, substantial $$\hbox {CO}_{2}$$ emissions reductions can be reached by horizontal cooperation, i.e. the collaboration of companies that work at the same level of the supply chain. In this paper, we evaluate these reductions using a location-inventory model which minimizes facility opening, transportation, cycle inventory, ordering and safety stock costs. To understand the impact of different market and partners characteristics on the $$\hbox {CO}_{2}$$ emissions reductions, we compute a large set of numerical experiments, varying several key parameters (vehicles capacity, facility opening cost, inventory holding cost, order cost, demand variability and distances). Results show that horizontal cooperation reduces $$\hbox {CO}_{2}$$ emissions by 16% on average. Moreover, horizontal cooperation is more effective in decreasing the carbon footprint of companies with low facility opening costs and low order costs, carrying expensive products (high unit holding cost) on a market with a high demand variability and a vast market area.