Friday, July 12, 2013

A Collaboration Across Three Continents on Supply Chain Sustainability

Collaborations are great for science and they are also fun.

It is very rewarding when you work together on challenging problems that you are passionate about and get results.

One of my passions is sustainability and developing mathematical models using networks, optimization, and game theory to assess and analyze supply chains in a holistic manner both from cost and profit perspectives as well as from their environmental impacts.

With two great co-authors, Professor Jonas Floden of the School of Business, Economics and Law at the University of Gothenburg in Sweden and Professor Min Yu (an Isenberg PhD '12 in Management Science)  of the Pamplin School of Business at the University of Portland in Oregon, the paper, "Supply Chain Network Sustainability Under Competition Frequencies of Activities from Production to Distribution," has now been completed. The paper, was inspired, in part, by my paper, "Design of Sustainable Supply Chains for Sustainable Cities," which is now available online in the journal, Environment & Planning B.

Now for the challenge: the deadline for submission of our new paper for a special of a journal was fast approaching.  The theme of environmental applications for the journal special issue was inspired by the year 2013 having the theme Mathematics of Planet Earth.

I was back from Gothenburg, Swedem, where Professor Floden and I had numerous discussions on environmental sustainability, use of alternative transport modes, and various surveys and case studies in Sweden and Europe. Professor Yu was in China, having attended a conference on supply chains and visiting her family. Jonas and I were also interviewed by  a journalist from San Franciscoon congestion pricing  and the feature appeared on SmartPlanet.

We were literally communicating and working on our paper around the clock with a 6 hour time difference between ET (in the US) and Sweden and another 6 hour one between Sweden and China.

In the past two weeks, we have dealt with some major drama -- but the news is all good and we can breathe sighs of relief.  Sichuan province, where Min was based for a while, has encountered the worst floods in 50 years and you may recall that it was also the location for the major earthquake in 2008. 

In our paper, we not only capture competition among firms through their supply chain networks, and assume that they produce a differentiated product, but we also include frequencies of the various supply chain activities from production to storage to ultimate distribution to the demand markets. In addition, each firm weights its environmental emissions throughout it supply chain in an individual way. We focus on GHG emissions, especially carbon, but our framework is sufficiently general to also be applicable to emissions of particulate matter (PM). PMs have recently been the focus of much media attention due to their huge negative impact on air quality and human health from China to the United Kingdom and even the U.S.!

We allow for multiple options, which is especially relevant when firms have choices associated with transport models.

Our computations reveal that not only can reducing emissions be good for profits but choosing the right transport mode (intermodal, for example, or the right size truck) can reduce emissions. You may recall the milk run load paradox, discovered by one of the PhD students in Gthenburg, Niklas Arvidsson, that I have written about, which further shows that one needs to include the load (think flow in network parlance) to calculate emissions, as we do in our paper.

Our model can be applied to products in many industries from food and fast fashion to high technology products and demonstrates that a firm's smart action and wise choices in a highly competitive environment can be good for both business and the environment!