MIT SCM Symposium 2024

In response to global climate warming, corporations have solidified their sustainability commitments and intensified their efforts to reduce greenhouse gas (GHG) emissions. In partnership with a global CPG company, this work focuses on the feasibility of engaging wholesalers in the distribution network as third-party logistics providers (3PLs) to reduce emissions. Using shipment data provided by the company for a single area of the Kantō region in Japan, we calculated baseline emissions and costs across their current supply chain, in which wholesalers exist as customers. To assess the current network against the proposed network, in which wholesalers function as 3PLs, we built several proof-of-concept models using mixed-integer linear programming (MILP). Within the optimization models, emissions were calculated following both the Global Logistics Emission Council (GELC) Framework and the Network for Transportation Measures (NTM) methodology. We also explored the financial implications of the proposed network design by building MILPs to optimize cost. We expect these models to demonstrate that distribution through wholesalers will be the most optimal solution from an emissions perspective and provide insight into operationalizing this change. Our analysis could serve as a theoretical framework for utilizing the wholesaler network in operational scenarios, or as an input for future large-scale network optimization.