Environmental impact of distribution network design: the case of Korea

Abstract

PurposeThe purpose of this paper is to analyze the environmental impact of distribution network design.Design/methodology/approachTypical distribution networks are identified and modeled through interviews with logistics companies in Korea. CO2emission is calculated for the distribution network models to evaluate the environmental impact of different network designs. In addition, economic and customer service performances are evaluated to provide realistic and balanced solutions to supply chain managers.FindingsIt is suggested that hybrid networks combining Hub-and-Spoke (HS) and Point-to-Point (PP) networks with a small number of sub-terminals are the most effective in both environmental and customer service aspects, whereas HS network is the most cost-effective.Research limitations/implicationsThe analysis in this study is based on certain assumptions, and hence full application of these results to specific cases is limited. The combination of PP network with HS network is suggested, forming a hybrid network, and CO2mitigation policies need to consider support schemes that can influence a firm’s decision making in relation to network design.Originality/valueLittle attention, however, has been paid to the environmental impact of distribution network design in the exiting literature. This study is a rare attempt at evaluating the environmental impact of distribution network design and may provide valuable implications to policy-makers and practitioners in logistics and manufacturing companies.