The impact of greening on supply chain design and cost: a case for a developing region

The consideration of environmental issues has emerged as a topic of critical importance for today’s globalized supply chains. The purpose of this paper is to develop a strategic-tactical decision support model to assist managers in evaluating the impact of environmental issues, related to transportation emissions, on the transport geography of a region. Specifically we provide a model that addresses: (i) supply chain network design, including port of entry and transportation mode, and (ii) decisions on using dedicated versus shared warehouses and transportation. The applicability of the proposed methodology is examined through the development of a sustainable supply chain network in the South-Eastern Europe region. The results indicate that in most cases using shared warehouses from Third Party Logistics operators improves both the cost and the environmental performance of a company. In all cases shared use of transportation operations minimizes the amount of CO2 and PM emissions generated, while dedicated use minimizes costs.

► A multi-objective supply chain design model is presented for minimizing cost, CO2 and PM emissions.
► The model is applied on a supply chain design in South-East Europe.
► Minimizing a supply chain w.r.t CO2 emissions may require a marginal increase in costs.
► Dedicated transportation and shared warehousing services appear to minimize supply chains costs.
► Shared transportation and warehousing services minimize supply chain CO2 and PM emissions.