(EcoProduction) Paulina Golinska-Dawson, Adam Kolinski (Eds.) - Efficiency in Sustainable Supply Chain-Springer International Publishing (2017)

EcoProduction.
Environmental Issues in Logistics and Manufacturing
Paulina Golinska-Dawson
Adam Kolinski Editors
Efficiency in
Sustainable
Supply
Chain
EcoProduction
Environmental Issues in Logistics and Manufacturing
Series editor
Paulina Golinska-Dawson, Poznan, Poland
About the Series
The EcoProduction Series is a forum for presenting emerging environmental issues

in Logistics and Manufacturing. Its main objective is a multidisciplinary approach
to link the scientific activities in various manufacturing and logistics fields with the
sustainability research. It encompasses topical monographs and selected conference
proceedings, authored or edited by leading experts as well as by promising young
scientists. The Series aims to provide the impulse for new ideas by reporting on the
state-of-the-art and motivating for the future development of sustainable manufac-
turing systems, environmentally conscious operations management and reverse or
closed loop logistics.
It aims to bring together academic, industry and government personnel from
various countries to present and discuss the challenges for implementation of
sustainable policy in the field of production and logistics.
More information about this series at http://www.springer.com/series/10152

Paulina Golinska-Dawson
Adam Kolinski
Editors
Efficiency in Sustainable
Supply Chain
123
Editors
Paulina Golinska-Dawson Adam Kolinski
Faculty of Management Engineering Poznan School of Logistics
Poznan University of Technology Poznan
Poznan, Wielkopolskie Poland
Poland
ISSN 2193-4614 ISSN 2193-4622 (electronic)

EcoProduction
ISBN 978-3-319-46450-3 ISBN 978-3-319-46451-0 (eBook)
DOI 10.1007/978-3-319-46451-0
Library of Congress Control Number: 2016952014
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Preface
This book presents selection of contributions on strategic and operational aspects

which are important in order to improve the efficiency in sustainable supply chain.
Efficiency allows comparing the outputs of actions taken in the supply chain in
relation to the resources which were used to perform certain processes.
Comprehensive analysis of efficiency requires both an operational data relating to
technological process, supported by assist processes and service, and the data
generated by an information system in order to ensure their reliability and timeli-
ness. For this reason, the efficiency analysis should ultimately affect the logistics
process, taking into account both the material flow and information flow, as well as
the aspects of supply chain management and existing feedback.
This book covers both qualitative and qualitative approaches to the efficiency
improvement in sustainable supply chain. It might be valuable to both academics
and practitioners wishing to deepen their knowledge for efficiency assessment in
sustainable supply chain.
The authors’ contributions are divided into two parts, as follows:
• efficiency in sustainable supply chain—strategic aspects and
• efficiency in sustainable supply chain—operational aspects.
Part I of this book focuses on the improvement of processes in supply chain at
the strategic level. The authors of the Chapter “Sustainable Supply Chain in
Forming Environmental Macro Responsibility” discuss how the macro sustainable
policy can be implemented to improve a company’s supply chain operation and
minimization of the use of non-renewable resources. Chapter “The Transformation
of Supply Chains in Closed-Loop Supply Chains” analyses the selected aspects
of the decision-making process which leads to closing the material flow in the
supply chain. Chapter “Innovative Approaches to Improve Sustainability of
Physical Distribution in Dutch Agrifood Supply Chains” provides discussion on
how the relationship between different supply chain partners in the agrifood
industry can lead to achieving improved distribution operations and meeting the
sustainability goals. The next chapter follows social, business and technology
trends by improving cooperation among entities operating in the supply networks in
v
vi Preface
FMCG industry. The discussion on how to make the supply chains more efficient is
continued in the subsequent chapter. The authors present application of GRAI
modelling approach and discuss its benefits for the improvement of efficiency of
supply chain operations. The subsequent chapter highlights ecological aspects
of the implementation of logistics processes in fast growing domain of e-commerce.
The first part of this book is concluded with the chapter on to the issues of sus-
tainable development of the transport sector and the definition of eco-efficiency in
transport.
Part II of this book presents operational aspects of supply chain in relation to the
efficiency improvement. The value chain perspective is taken, as the authors of
subsequent chapters provide contribution on design, manufacturing, transport and
distribution.
First issues related to eco-design are discussed. Eco-design provides an inte-
grated approach to reduce negative environmental impact and increase energy
efficiency in the whole life cycle of the products from the design, through pro-
duction and use phase till recovery. Its outputs influence the efficiency of operations
in the whole supply chain. The authors of the two related chapters provide dis-
cussion on the eco-design methods and present relevant case studies on different
products. The subsequent chapter addresses issues related to the impact of
eco-efficiency in production on availability of machines and equipment. Then, a
case study on the analysis of economic and environmental effects of cooperation
between enterprises and in the provision of transport is presented. The concluding
chapter provides insight into efficient demand management in retailing through
category management.
The good scientific quality of the chapters was assured by a rigorous blind
review process.
Although not all of the received chapters appear in this book, the efforts spent
and the work done for this book are very much appreciated.
We would like to thank all reviewers whose names are not listed in the volume
due to the confidentiality of the process. Their voluntary service and comments
helped the authors to improve the quality of the manuscripts.
Poznan, Poland Paulina Golinska-Dawson

Adam Kolinski
Contents
Part I Efficiency in Sustainable Supply Chain—Strategic Aspects

Sustainable Supply Chain in Forming Environmental
Macro Responsibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Yevhen Krykavskyy and Nataliia Mashchak
The Transformation of Supply Chains in Closed-Loop
Supply Chains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Roman Domański and Michał Adamczak
Innovative Approaches to Improve Sustainability of Physical
Distribution in Dutch Agrifood Supply Chains . . . . . . . . . . . . . . . . . . . . . 31
Reinder Pieters, Paul van Beek, Hans-Heinrich Glöckner,
Onno Omta and Stef Weijers
Sustainability—Indispensable Part of the Logistics Development . . . . . . 53
Martyna Zdziarska
Using DMAIC for Making Sustainable Supply Chain
Efficient in a GRAI Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Paul Eric Dossou and Gilles Dedeban
Ecological Aspects of the Implementation of Logistics
Processes in E-commerce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Karolina Kolinska, Izabela Jeleń and Marta Cudziło
Green Logistics as the Basis for Improving Environmental
Efficiency of Transport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Marina A. Zhuravskaya
vii
viii Contents
Part II Efficiency in Sustainable Supply Chain—Operational

Aspects
Virtual Reality Based Ecodesign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
Justyna Trojanowska, Anna Karwasz, Jose M. Machado
and Maria Leonilde R. Varela
Using CAD 3D System in Ecodesign—Case Study . . . . . . . . . . . . . . . . . . 137
Anna Karwasz and Justyna Trojanowska
The Impact of Eco-efficiency in Production on Availability
of Machines and Equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161
Adam Kolinski
The Analysis of Economic and Environmental Effects
of Cooperation Between Enterprises and in the Provision
of Transport—A Case Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179
Marta Cudzilo and Jakub Sobotka
Efficient Demand Management in Retailing Through
Category Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195
Davor Dujak, Zdenko Segetlija and Josip Mesarić
Part I
Efficiency in Sustainable Supply
Chain—Strategic Aspects
Sustainable Supply Chain in Forming
Environmental Macro Responsibility
Yevhen Krykavskyy and Nataliia Mashchak
Abstract Humanity is concerned about changes that occur in the climate and the
level of pollution. Countries and producers of goods and services have to introduce
the concept of sustainable development thereby decreasing the volume of harmful
emissions into atmosphere, searching resource saving technologies affecting the
level and pace of business. Only wealthy countries can be a good example for the
adoption and strict implementation of commitments by all countries of the world in
the field of sustainable supply chain management, the implementation of which has
a significant impact on the quality of the environment.
Keywords Sustainable development Supply chain Environment
1 Introduction
Influenced by the world global crisis humanity is experiencing a period of rapid and
devastating changes. Humanity is concerned about changes that occur in the climate
and the level of pollution. Countries and producers of goods and services have to
introduce the concept of sustainable development thereby decreasing the volume of
harmful emissions into atmosphere, searching resource saving technologies
affecting the level and pace of business. These transformation caused the transition
from marketing 1.0, where the focus was on products, marketing 2.0—with focus
on customers to a new level—marketing 3.0 (or marketing values), where a key role
is given to orientation on person and change of consumer behavior—the demand
for sustainable goods and services. This evolution of consumer behavior caused
changes in traditional supply chains, requiring them a sustainable approach (Kotler
2014).
Y. Krykavskyy (&) N. Mashchak

National University “Lviv Polytechnic”, Lviv, Ukraine
e-mail: [email protected]
N. Mashchak
© Springer International Publishing AG 2017 3

P. Golinska-Dawson and A. Kolinski (eds.), Efficiency in Sustainable
Supply Chain, EcoProduction, DOI 10.1007/978-3-319-46451-0_1
4 Y. Krykavskyy and N. Mashchak
Confirmative example of this is scandal around the global automotive industry

leader Volkswagen, which installed automotive software, which turned off to
control air emissions and wastewater system during normal driving and turned on
when the test occurred composition of the exhaust answering to ecostandarts on
paper. It caused profits reducing (net income reached €12.6 billion in 2014) and
appointed a fine in $18 billion. It’s only beginning of the financial damage. In the
early days the group lost on the stock exchange around €30 billion, and its shares
fell by 37 %, this is not the final damage, since only in Switzerland suspended
further production about 180,000 cars (Gavrysh 2015).
Moreover, on the eve before the Paris summit on climate change, the main aim
of which is a struggle with climate change, it is necessary to assess progress in
decisions implementation of the Kyoto Protocol, under which only the wealthy
countries have adopted corresponding obligations, above all, to limit greenhouse
gas emissions. Because these countries, with significant potential for this can be a
good example for the adoption and strict implementation of commitments by all
countries of the world in the field of sustainable supply chain management, the
implementation of which has a significant impact on the quality of the environment.
2 Controversial Aspects of Macro Environmental Analysis
As the evaluation indicators use system of indexes. Scientists from Yale and
Columbia University (USA) periodically publish evaluating indexes. Index EPI
(Environmental Performance Index)—an index that takes into account 20 factors,
grouped in six categories: state of the environment, water resources, diversity and
the environment; production of natural resources, climate change). Table 1 shows
the first thirty countries rated by EPI index, given also their membership in the G7
and G20, GDP and population density in 2014 year respectively (EPI 2014).
However, superficial analysis of ranking countries by the EPI index shows their
scant presence in the upper part: only two countries in the top ten from group G7
(Germany and UK) and 8 of the first 30 from group G20. Graphical interpretation of
depending GDP per capita and the EPI index of countries in 2014 are presented in
Fig. 1.
Ongoing in recent years statistical studies on identification of dependencies
between evaluation indexes and level of development have not found enough strong
dependence, but allowed to make a differentiation matrix representation of which is
shown in Fig. 2.
According to the analysis of correlation field (Fig. 1) and matrix (Fig. 2), we can
do following conclusions:
– there are no countries with high and medium level of development (GDP) with
low or middle EPI index, what is a good fact;
– countries with high EPI index belong to the group of countries that have high
level of development;
Sustainable Supply Chain in Forming Environmental Macro Responsibility 5
Table 1 Rate of countries according to the EPI index in 2014

No Country EPI G7 G20 GDP at purchasing Density of
score member member power parity per population,
capita, international on sq.km
dollars
1. Switzerland 87.67 − − 57,140 188
2. Australia 82.40 − + 43,902 3.2
3. Czech 81.47 − − 30,445 134
Republic
4. Germany 80.47 + + 45,616 229
5. Spain 79.79 − − 33,763 91
6. Austria 78.32 − − 46,165 100
7. Sweden 78.09 − − 45,144 21
8. Norway 78.04 − − 64,893 13
9. Netherlands 77.75 − − 47,131 411
10. United 77.35 + + 39,137 255
Kingdom
11. Denmark 76.92 − − 44,863 128
12. Iceland 76.5 − − 43,393 3.1
13. Slovenia 76.43 − − 29,917 106
14. New 76.41 − − 35,217 16
Zealand
15. Portugal 75.8 − − 28,327 115
16. Finland 75.72 − − 39,754 16
17. Ireland 74.67 − − 47,804 65
18. Estonia 74.66 − − 26,355 29
19. Slovakia 74.45 − − 27,585 111
20. Italy 74.36 + + 34,758 200
21. Greece 73.28 − − 26,099 86
22. Canada 73.14 + + 44,089 3.4
23. Unites 72.91 − − 63,497 99
Arab
Emirates
24. Japan 72.35 + + 36,426 337
25. France 71.05 + + 38,851 114
26. Hungary 70.28 − − 24,498 108
27. Chile 69.98 − − 22,333 24
28. Poland 69.53 − − 24,882 122
29. United 67.52 + + 54,629 33
States of
America
30. South 63.79 − + 34,356 487
Korea
Source prepared by authors on the basis of (EPI 2014)
20k
100k
80k
GDP
60k
40k
20k
0k
20 30 40 50 60 70 80
EPI index
Fig. 1 Graphical interpretation of depending GDP per capita and the EPI index. Source prepared
by authors based on (EPI 2014)
Higher, more
than 40000
GDP at purchasing power parity per capita,
less
international dollars
Medium , 15000-
40000
more
more more
Low, till
15000
less
Low Medium Higher

EPI Score
Fig. 2 Matrix differentiation between the EPI index and the level of GDP. Source prepared by
authors on the basis of (EPI 2014)
– most of countries with low and middle EPI index have a low level of devel-
opment that is not accidental.
We believe that it would be more correct to assess the progress of the impact on
the environment through the use of available indicator of the potential to reduce the
impact, because it reflects not only the extent of the effort, but their intensity.
Applying on this S-curve (curve of experience), we can argue about progress
availability of different effects on the environment in countries with high and low
levels of calculated based on GDP per capita. Graphic interpretations will look like
(Fig. 3).
Figure 3 shows us that availability as a measure of effort to achieve progress in
ecologization is different for countries with different income: for countries with
average level it is considerably higher than in countries with high development, and
for the last one each successive next unit of availability associated with progressive
GDP growth. DGDP—unit of GDP per capita growth, which is accompanied by
increased potencial (P). Natural factors such as area, population, resources can be
considered as essential factors of influence, but not sufficient. Increasingly affecting
soft factors such as consciousness, behavior and attitude. Therefore, such a result is
obtained correlation, allowing hypothesis, not necessarily the country with high
GDP have a high level of EPI index. In our opinion, this non-linear relationship
between potential environmental progress and level of development is that
ΔPh
Potential environmental progress
of the country, P
ΔPm
ΔPl
0
ΔGDPl ΔGDPm ΔGDPh
low level = medium level = high level
GDP
Fig. 3 Graphical interpretation dependency between GDP per capita and the country’s potential
environmental progress. Source own study
controversy that does not characterize correlations obtained by the researchers as

strong and reliable enough.
The authors attempted to indirectly included in the research correlation depen-
dencies human factor—population density, along with GDP per capita by making
calculations about the availability of multiple correlation, based on the first 30
countries in the ranking index (Table 1). Here we have following results:
(a) linear approximation (y—EPI index; x1—GDP at purchasing power parity per
capita; x2—population density in sq. m.):
y ¼ 70:90 þ 0:00013 x1 0:0056 x2 ð1Þ
The coefficient of determination R2 = 0.1222.

(b) non-linear approximation
y ¼ 17:613 þ 5:554 lnðx1 Þ 0:1897 lnðx2 Þ ð2Þ
The coefficient of determination R2 = 0.1224.

These data allow to suggest that the emphasis on activities in relation to the
environment is becoming more apparent. It is likely that the extent of needs requires
suppliers to look more broadly than the main environmental issues and to be
responsible for the implementation of programs to reduce the consumption of
energy sources and water. The choice of suppliers and carriers using a sustainable
practice become a key requirement. Moreover, 22 % of Poles are willing to pay 5–
10 % more for products made in accordance with principles of a sustainable
development.
3 Theoretical Basis of Sustainable

Supply Chain Management
Approved by countries commitments to the environment have long-term impact and

must be monitored, matched with expected accomplishments and appropriately
managed. Obviously, along with norms of direct impact, such as standards, regu-
lations, etc., should be effective instruments of influence mediated primarily by
extended exposure beyond individual enterprises, achieving the effect of open
space. In terms of network structures of domination in the economy this means
spreading effect on all members of the supply chain.
Sustainable supply chain management (SSCM) is becoming a necessity not only
for reasons of economic or legal norms, but also because of the influence of
socio-economic trends and increasing of social awareness about the environment in
Table 2 Megatrends impact on supply chain management

Megatrends Threats and challenges Opportunities
Globalization Increasing of logistics costs, the Expansion of outsourcing,
complexity of the supply chain collaboration with new
management and monitoring. New stakeholders in supply chain, low
requirements for transportation costs for standardized products
area
Individualization Complication in realization of Custom order for the customer is
logistics processes (transportation, more valuable and sold at a higher
warehousing, packaging) that price that causes profit increasing
causes increasing of total logistics
costs
Informatization Lack of modern information Simplifies management processes
programs causes the complexity of in a whole supply chain
the supply chain management and
monitoring
Humanization Lack of transparent information Transparency in activities builds
about company activities causes’ loyal relationships with
public interest (what the company stakeholders at all stages of supply
doing wrong?) chain management.
Ecologization Increasing demands of legal Implementation of recycling
authorities to protect the processes, improvement of
environment. Eco-frienly logistics packaging processes, optimization
processes, trade-off conflict of of transportation that will earn
globalization and ecologization costs
goals
Sourse own study based on (Krykavskyy 2005)
which the enterprise operates (Table 2). Checking organizations and customers are
causing more pressure on companies that do not control the activities of their
suppliers. The need for a broader view on supply chain management is the result of
many modern trends. Sustainable supply chain management can not only identify
them but also to manage potential risks and turn them into opportunities and
business benefits for all participants in the supply chain (Krykavskyy 2005).
Sustainable supply chain management (SSCM) is the management of economic,
social and environmental impact of the supplying process in the whole product life
cycle to create, health and long-term development of the economic, social and
environmental value for all interested parties in the process. According to SSCM
three groups of criteria are taken into the account (Gruszecka-Tiesluk 2013):
1. Economic criteria—fair conditions of contracts, timely adjustment of debts,
transparency in establishing of business contacts between participants of the
supply chain, prevention of corruption.
2. Social criteria—fair practice in the field of employment (compliance with labor

laws and human rights, fair compensation to employees, adherence to the
principles of equality, concern for health and safety) and practice focused on
cooperation with local communities.
3. Environmental criteria—the aspects of the environment that relate to the entire
product life cycle (design, transportation, use of raw materials for production,
recycling).
To achieve a sustainable cooperation in the supply chain requires cooperation of
all levels: suppliers, manufacturers, distributors and customers. Each of these links
in any case can implement the principles of sustainable development.
Implementation of logistics processes in a sustainable supply chains should be
based on next principles (Skowronska 2008):
– selection—search the available ways to meet the needs of those who has less
onerous impact on the environment;
– minimization—minimization of use of resources and materials, energy, space,
etc.;
– maximization—increasing the efficiency of space, matter, energy,
transportation;
– sorting—minimization and elimination of side effects of logistics processes.
However, a great responsibility is attributed to producers and suppliers that have
the greatest impact on the environment and may influence the behavior of other
groups. However, each participant will receive benefits from the effective cooper-
ation between the links of the supply chain. (Table 3) (Swietlinska 2014).
At the same time there are new trends in the sustainable supply chain man-
agement (Gruszecka-Tiesluk 2013):
– “Green Supply Chain”–is a supply management processes in the context of
reducing the negative impact on the environment, including waste, and also
efficient management of natural resources such as energy and water. Carbon
Footprint and Plastic Footprint may be effective tools for this (carbon footprint
and plastic footprint—calculator of CO2 emissions and plastic).
– Investment in the local markets—more and more enterprises begin to cooperate
with local markets, which not only save transportation costs, but also has a
positive impact on the local communities. It is also a way to shorten the supply
chain, thereby reducing the risks associated with its management. Local
Resource Network can be an effective tool in this to find a local partner or
consultant in the area of implementation of ethical standards into the sector of
certain local region.
– Eduction and cooperation with suppliers. Development of common values (i.e.
the total cost.). Instead of giving preference to cooperation with another
Table 3 Logistics decisions and benefits of introducing the concept of sustainable development
in the supply chain
The elements of Logistics decision The potential benefits
the supply chain
Procurement – The choice of environmental friendly Social and environmental
materials effects:
– Optimal choice of suppliers and their – Optimal use of exhaustible
appropriate localization and limited resources
– Selection of suppliers that adhere to Economic effects:
the concept of sustainable – Cost saving during the
development purchase of resources
Production – Closed cycle of water, energy Social and environmental
circulation effects:
– Reducing the weight of packaging – Reduction of waste products
– Production of energy – Reduction of water and
saving/low-cost/water saving energy consumption,
products Economic:
– Reduction of distribution
costs
– Reduction of costs
associated with the use of
energy, water etc.
Transportation – New technologies that limit harmful Social and environmental
emissions effects:
– Intermodal transportations – Reduction of environmental
– The elimination of empty runs pollution emissions of CO2
– Full load of vehicles Economic effects:
– Optimization of logistic
processes
– Reduction of transportation
costs
Consumption – Optimization of purchases Social and environmental
– Selection of organic products effects:
– Waste products segregation – Limiting of dissipation
– Choice of recyclable packaging – Reducing waste
– Advantages of the reverse
flow
Economic effects:
– Optimization of consumer
spending
Utilization of – Well organized reverse logistics Social and environmental
waste system effects:
– Packaging that contains information – Reduction of environmental
about impact on environment contamination
– During whole supply chain Economic effects:
– Reduction of costs, related to
the reverse flows
Source prepared by authors on the basis of (Swietlinska M 2014; Vorobey 2014)
supplier, you can maintain the existing gradual development and implementa-
tion of their own ethical standards.
– Involvement of business partners for joint social activities.
– Managing of diversity in the supply chain—equality of rights and treatment to
men and women participants in the supply chain, involvement of disabled
people and others.
Thus, the company has a whole arsenal of possibilities to make its chain sus-
tainable and to comply with current trends and social consciousness by choosing
the most relevant to the field and specific character of goods and services.
4 Applied Aspects of Sustainable Supply Chain
According to the concepts of Marketing 3.0 (by Kotler), this means prioritization
purposes of responsible development (to the environment and society) at the mis-
sion, vision, objectives and principles of operation level that allows appropriately
implement appropriate policies based on the concepts of sustainable development.
Auxiliary there may be good practice identified in the context of benchmarking
regarding to the environmental standardization decisions in relation with supply
chain (suppliers, carriers and other intermediaries and clients). Obviously, such
instruments do not are too rigid and are soft, they require absolute priority of human
values, including the appropriate level of economic consciousness pro environ-
mental position and the daily routine pro environmental behavior.
Today the sustainable supply chain management strategy is an integral part of
business management. Enterprise can not forget that its duties also include suppliers
with whom it works. Enterprise is responsible not only for its business but also for
the whole supply chain, within which goods or services are manufactured and
supplied to consumers. The automotive industry is one of the most difficult and
complex supply chains. Like other car manufacturers, Ford is working with thou-
sands of suppliers who supply materials, components and services needed to create
end products. The width and depth of supply chain and relationships in it can lead
to difficulties in business administration and cause problems related to a sustainable
development. Ford is always able to cope with these problems because of the
numerous, effective decisions (Lancuch dostaw Ford 2014):
– Ford was the first automotive manufacturer, that recognized the importance of
protecting human rights in the whole supply chain for many years, which is an
important element of sustainable development;
– Strategy on Human Rights of the Ford company includes adherence to the Code
of human rights, fundamental working conditions and corporate responsibility
(Letter 24), as well as evaluation of actions and behavior of all suppliers in
respect of the said Code. It also includes training of suppliers and assisting them
in meeting the requirements of sustainable development;
– providing of adequate tools to support suppliers in managing the issues of
sustainable development and risks of its own operations in the supply chain.
Training and presentations were prepared and conducted in the following areas:
human rights, working conditions and greenhouse gases emissions.
In a rapidly changing industry where transportation, technology and production
continues to increase, thus increasing its effects on the environment, Ford is devoted
to working with suppliers to help them to resolve any problems and doubts.
To the number of benefits that are received from a sustainable supply chain we
can also include (Jastrebska 2015):
– to choose suppliers by using environmental criteria (for example, 70 % of the
main suppliers of Danone company are registered in the a SEDEX—a platform
that contains information about 28 thousand suppliers, such as compliance with
labor standards, ethics, environmental protection and so on. Danone carries out
the purchase of milk, raw materials and packaging from local producers and thus
affects the local economy, because such purchases constitute 95 %.);
– to implement codes for suppliers (e.g., a Code of Conduct of SABMiller
Suppliers describes the obligations of suppliers in the field of sustainable
behavior concerning the environmental protection and promoting the principles
of the Code in their own supply chains);
– to conduct audits of suppliers (again, the Danone company under the FaRMs
program evaluates cooperation with agriculture companies every six months in
the field of the environmental protection);
– the awareness of all interested participants of the supply chain (e.g., eco cal-
culator of DB Schenker logistics operator is offered to customers to monitor
energy consumption and fuel as well as environmental contamination during
transportation of their cargo).
For example, Unilever under the “Life in a sustainable way” programme, makes
measurements and calculations of 1500 products in 14 countries. Each product is
analyzed in terms of environmental impact at all stages of the life cycle. American
supermarkets chain Wallmart implemented an “Index of goods”, according to
which it informs all interested parties, including consumers, about the entire process
of manufacturing its products (Michael E. Smith 2010).
Table 4 contains good practices of global enterprises on different links of sus-
tainable supply chain.
As you can see from the Table 4, successful implementation of good practices
could be based on benchmarking and selecting best of them according to the
specific product and industry of Ukrainian domestic enterprises. Such implemen-
tation is evidenced by successful performance of these companies in the world
Table 4 Good practices of global enterprises in sustainable supply chain

No Link of Description of good practice Enterprise
sustainable
supply chain
1. Purchase of – Selection of suppliers that Ford, Danone, Carrefour,
raw materials adhere to the concept of END
sustainable development
– Collaboration with local Danone, Nestle
suppliers for time and costs
economy
2. Production – Products design and production, END, Tetra Pak, Wal-Mart
in a way that is the most
recyclable or re-usable
– Eduction in the use of raw Coca-Cola, Nestle, Unilever,
materials, energy, water etc. per Henkel, Carlsberg, P and G
unit
– Planning no-wastes production END
3. Packaging – Reusable packaging design Carlsberg, Coca-Cola
– Oackaging design that is able for Danone, Nestle, P and G,
recycling Unilever
4. Transportation – Minimizing CO2 emissions DBShenker, Fedex, Danone,
Nestle, P and G, Coca-Cola
– Use of intermodal transportation DBShenker, P and G, DHL,
WHIRPOOL
– Lack of empty runs and the DBShenker, P and G, DHL,
maximum load of the vehicle
5. Reverse – Waste segregation Tesco, KPMG, Farm Frites
logistics Poland
– Effective reverse flows system Danone, Nestle, P and G,
Unilever, Carlsberg,
Coca-Cola, Henkel, Tesco
– Recycling Danone, Nestle, P and G,
Unilever, Carlsberg
Source prepared by authors on the basis of (Saprykina 2012)
market for many years. In order to improve the management of a sustainable supply
chain, companies can use the following tools (Table 5) (Gruszecka-Tiesluk 2013).
In May 2013 Global Reporting Initiative—an international organization that
created the rules of reporting in the sustainable development and announced the
so-called fourth generation of reporting the rules (G4). Key changes were in
non-financial reporting with greater emphasis on providing information related to
the supply chain, both in terms of environmental protection and human and workers
rights. For business it means to emphasize the importance of accountability for
their suppliers. In addition, the principles of G4 will be an inspiration to create
Table 5 Tools for sustainable supply chain management

Group of tools Essence of tools
Tools that help to control SEDEX (Supplier Ethical Data Exchange)—the platform
the supply chain management of data exchange concerning the suppliers, information
at various stages of the process, about which is divided into four categories: labor
including selection of suppliers standards, health and safety, environment, ethics. It
allows the company to verify current or potential
suppliers and to monitor progress. The base has 28,500
suppliers from 150 countries, from farm to multinationals
SHDB (Social Hotspots Database)—an American
database for a wide range of stakeholders—from directors
to scientists and offers clear information about social risks
and opportunities of business cooperation in 227
countries and in 57 industries
Ecodesk—Internet tool that allows all organizations to
publish and transmit information about the practice of the
implementation of sustainable technologies. After
registration in Ecodesk a participant can calculate the
volume of CO2 and at the level of his company, and of all
other participants in the supply chain
EcoVadis—an interactive platform where you can find
suppliers, which are divided into four main categories
(retail, IT, pharmaceutical and automotive industries). It
helps organizations to manage the business risks better in
the supply chain. The latest project EcoVadis is a
partnership with Carbon Disclosure (CDP) project, is to
provide enterprises information on how to reduce the
impact of CO2 on the environment
IT solutions for the CSRware’s Sustainability Supply Chain—program that
supply chain management allows you to evaluate and to compare individual
suppliers. The program also lets you create your own
ranking of suppliers and allows transparent management
of relations with stakeholders
COMPASS (Competitive Packaging Assessment)—an
online application that allows packaging designers to
estimate its impact on the environment, taking into
account the life cycle of a product and takes into account
the origin of materials, use of energy in the production of
packaging, use of recycled materials and waste
System IFS Applications—a Polish system that offers to
track changes in the environment (including the volumes
of CO2, waste that are associated with the product life
cycle), with help of IFS Footprint Management
Social Fingerprint Supply Chain Management—a
self-assessment tool “social footprint” in the supply chain.
Self-assessment is carried out in 9 different categories,
which later develops through the course of e-learning and
continuous monitoring progress. The methodology of this
instrument relates directly to ISO 8000
Source prepared by authors on the basis on (Gruszecka-Tiesluk 2013)
(or expand) a dialogue between the supply chain participants on the subject of
improving standards relating to governance, ethics and the environment. These
innovations will also encourage enterprises to implement the principles of sus-
tainable supply chain management into their business operations (G4 Sustainability
Reporting Standards 2014).
5 Conclusions
In the process of giving globalization the “human face” and resolving increasing
threats for the civilization an enterprise should be included. They should strive to
develop their own supply chains according to the idea of a sustainable development,
but not only because of the possible risks of social and environmental impacts that
occur in the supply chain, but also because of the benefits that SSCM can bring to
the company. According to the research of statistics data of EPI index and the GDP
indicator was revealed the absence of countries with high and medium level of
development (GDP) with low or middle EPI index, what is a positive fact and
countries with high EPI index belong to the group of countries that have high level
of development. These outlines confirm the correctness and effectiveness of the
inclusion of environmental factors in the different areas of business.
Existing trends of nowadays put new challenges to supply chain management.
Through the supply chain management, to improve the productivity of social,
environmental and economic activities of the company, the business is working for
itself and its stakeholders, and SSCM is an important factor in the growth of
indicators of all it’s participants.
These good practices of global companies in the field of SSCM confirm the
effectiveness of the implementation of the following activities in logistics activities
of the companies and can be used on the basis of benchmarking at Ukrainian
enterprises, considering the specificity of the industry, products and services. To
improve the management of sustainable supply chain company can use some tools:
tools to help control such supply chains and IT-solutions to manage them.
And, although the actions of the company, in accordance with the principles of
sustainable development, may have a higher initial cost, but it is important to take
into account the entire life cycle of products and services. The more energy efficient
and eco-friendly equipment and processes the company has, the smaller is its
impact on the long-term operating costs. Enterprises and society must develop with
common values. So, first of all the supply chain managers must respond to new
challenges: to find suppliers who adhere to the principles of sustainable develop-
ment and to minimize the use of non-renewable resources with parallel limitation of
the company’s costs.
References
Ford—Nasz lancuch dostaw (2014) http://www.ford.pl/O_firmie/Srodowisko/Sustainability/

Dostawy
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rankings
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New time. New time 36:36–38
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Tematyczna. Forum Odpowiedzialnego Biznesu. Nr.3, pp 1–9
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nego przedsiebiorstwa. Dobre praktyki biznesu w Polsce”. “Logistyka Odzysku”. Nr 2/(15),
pp 49–51
Kotler Ph (2014) Marketing 3.0. Expo. p 197
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Polytechnic”
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Publishing house “Painted paper”, Kyiv 18p
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Skowronska A (2008) Technologie logistyczne jako przyklad technologii srodowiskowych na
drodze do zrownowazonego rozwoju. Logistyka—nauka 1:85–90
Standart G4 of Global Reporting Initiative (2014) http://csr-ukraine.org/news
Swietlinska M (2014) “Zrуwnowazony lancuch dostaw zywnosci—studium przypadku”. “PRACE
NAUKOWE”, z. VIII, pp. 373–382
Vorobey V (2014) SSCM. UN Office in Ukraine, Kyiv 48p
“Zrownowazony lancuch dostaw: fikcja czy rzeczywistosc?” http://odpowiedzialnybiznes.pl/
artykuly/zrownowazony-lancuch-dostaw-fikcja-czy-rzeczywistosc/
The Transformation of Supply Chains
in Closed-Loop Supply Chains
Roman Domański and Michał Adamczak
Abstract Within the framework of the concept of sustainable development, eco-

nomic growth should be considered not only in economic, but also environmental
and social terms. The economies of countries face new challenges intended to
satisfy growing human needs while maintaining (or improving) the quality of the
environment. Not all countries are on the same level as regards the implementation
of this strategy. We found that the implementation of the concept of sustainable
development would be possible but for the activities undertaken by individual
enterprises being a part of the supply chain. Special importance is given to the
implementation of closed-loop supply chains. The aim of the chapter is to present
the need to implement closed-loop supply chains in the Polish economy. The
chapter presents the selected aspects of the decision-making process aimed at
closing the material flow in the supply chain. The description contains a full
analysis of the current ratio analysis at macroeconomic level (pertaining to the
economies of selected European countries) and the review of the methods and
techniques for the optimization of supply chains which realize forward and back-
ward material flows.
Keywords Re-use of materials Closed-loop supply chain Sustainable devel-

opment Lot sizing problem
1 Introduction
Contemporary economic growth should be considered not only in economic, but

also environmental and social terms. This triad is jointly referred to as sustainable
development. The idea behind sustainable development (SD) is to satisfy growing
R. Domański (&) M. Adamczak

Poznan School of Logistics, Estkowskiego 6, 61-755 Poznań, Poland
M. Adamczak

20 R. Domański and M. Adamczak
human needs while maintaining the quality of the environment (Zaman and
Goschin 2010).
While monitoring the values of economic indicators which refer to the three
pillars of sustainable development, it should be noted that the implementation of the
idea is at various stages in various countries. Considerable disproportions are vis-
ible even after narrowing the search area to the European Union. Therefore,
questions arise what should be done to make sustainable development an economic
reality, and not merely a concept of thought implemented in selected economies.
A particularly important role in implementing the idea of sustainable develop-
ment is played by the methods, tools and techniques which serve the rationalisation
of material flow in supply chains and, in consequence, in entire economies. One of
the methods that aim at reducing the consumption of raw materials is a closed-loop
supply chain. It enables maintaining economic growth without exploiting new
natural resources, which also considerably reduces the social costs of such growth.
The aim of the chapter is to present the need to implement closed-loop supply
chains in the Polish economy. The proposed methodology is based on selected
stages of the decision-making process directed towards the transformation of tra-
ditional supply chains into closed-loop supply chains are presented. These stages
include: the analysis of current status developed based on the authors’ own set of
macroeconomic indicators a the level of economies of individual countries, as well
as the selected models of implementation focusing on the analysis of the
closed-loop supply chain model implementation method.
2 Material Flows
In order to achieve a harmonious economy growth, all possible environmental

factors and environmental conditions that impact the broadly-understood human
surroundings must be taken into account (Korzeń 2001). It is therefore essential to
take interest in the subsequent phase of a product’s life (after it has been used until
full utilisation of its components)—in order to close the cycle fully. Today a full
cycle starts with the acquisition of raw materials and ends with sending clean and
harmless product remains back to the environment. This is the essence of the flow
of physical goods in an economy (Szołtysek 2009).
The chief developmental trend in contemporary production systems and waste
management subsystems which function as part of them, is presently aiming
towards the selection of raw materials, semi-finished products and finished product
manufacturing technologies (intended for exploitation) so that these products could
be later used to the highest extent as raw material for future technologies. Thus,
plans provide for the recirculation of products following their consumption i.e. the
replacement of a part of the stream of raw materials feeding the manufacturing
process with waste materials. It results in replacing open-type processes, where
products are sent back to the environment in the form of waste, with closed-type
processes providing for the recirculation of material resources (Fig. 1). This
The Transformation of Supply Chains in Closed-Loop Supply Chains 21
Materials Products NO Waste

Product’s manufacturing Product’s natural wear Is it possible
process and tear to reuse?
YES
Worn products
Waste
Fig. 1 Model showing the flow of material resources in economy, in a closed cycle (with
recirculation), own study
P product
Z material resource (amount of
O2 waste (amount
(amount of used obtained kz consumption
kw generation (efficiency NO of generated
resource) material) (efficiency of the Is it possible
of the product’s waste)
product’s wearing to reuse?
generation process)
process)
YES
R worn product
O1 waste (amount of
generated waste)
Fig. 2 Scheme of a model of the flow of material resources with recirculation own study
assumption provides a basis for developing analytical models of closed-loop

material flows (Korzeń 2001).
The logistic model of material resource flow in a closed cycle presents a process
which a single material resource is subject to, namely its processing into a product
and, then, its wearing. In the closed model, a used product becomes a waste only
partially, whereas its remaining part is directed back to the processing stage
(Fig. 2).
Directing the stream of used products back to the processing stage brings down
the level of used resources and reduces the amount of waste generated as a result of
the flow process directed to the environment. The processes that maximise the flow
effectiveness coefficient minimise the coefficient of relative amount of waste gen-
erated in the process. It means that the technology maximising the amount of
product generated with the use of a single amount of material resource minimises
the amount of waste generated in the process (Korzeń 2001).
The supply chains were originally created to support the flows from the pro-
duction of raw materials up to final customers. But at present the return flows within
these chains become more and more important as well (Sadowski 2010). The
modern logistics has to be able to solve problems of remains of production batches,
goods returns, warranty and post-warranty service, production wastes, packaging

and packaging wastes. All these issues are covered by so-called reverse logistics
(Brdulak 2012).
The logistic chain of forward type (traditional forward chain) covers the pro-
cesses related to the production and the distribution of goods, i.e. their flow from
the place of origin of raw materials to the place of their final consumption (i.e. final
customer). The logistic chain of backward type (return chain) covers the processes
of the return and the collection of used products (Seitz and Wells 2006), as well as
the processes connected with their recycling, i.e. their flow from the place of final
consumer to the producer (from the point of view of a given chain). The returned
product can be disassembled up to modules, parts or materials (Wikner and Tang
2008) during the backward processes. The aim of this process (e.g. during recy-
cling) is to restore the original market value of the product (Gupta and Pochampally
2004).
The aim of undertaken operations could be the reuse of materials, return of the
value of products taken from the market, the proper recycling or the optimization of
after-sale services and reducing scarce material.
3 Macroeconomic Analysis
The re-use of materials as part of supply chains with closed material loop is a
challenge not only for production and distribution companies, but also for regional,
national and international authorities. Macroeconomic analysis refers to such
aspects of company operations as the use of materials, the productivity of resources,
the amount of generated waste, or the per cent share of recycled materials. It was
carried out with the use of macroeconomic indicators. Due to Poland’s location in
Europe and its membership in the European Union, the authors decided to compare
the situation of Polish companies to European enterprises. In order to unify the
analyses and make them more transparent, data from selected European countries
has been presented. Mean values for 28 EU member states and detailed data con-
cerning the Visegrád Group (Poland, Czech Republic, Slovakia, and Hungary), the
Weimar Triangle (Poland, Germany and France) and United Kingdom have been
shown. Selection of the research perspective was influenced by different degree of
development of European economies. Countries such as Germany, France or United
Kingdom are considered to be states characterised by high economic culture. States
comprising the Visegrád Group are the states which accessed the EU in 2004 and
have been dynamically developing since then. They lead changes in Central and
Eastern Europe. On the basis of available data, the 2012 situation has been
presented.
The first measure analysed is Domestic Material Consumption (DMC) per
capita. It is defined as the total amount of material directly used in an economy per
inhabitant. DMC equals Direct Material Input (DMI) minus exports. DMI measures
the direct input of materials for the use in the economy (Eurostat 2015). Results of
the DMC per capita analysis for selected countries have been presented in Graph 1.
The consumption of materials in Polish economy is the highest in analysed
countries. It could show that manufacturing sector in Poland is really well devel-
oped, or manufacturing in Poland is unproductive. The consumption of materials
itself proves considerable demand for them and high scale of manufacturing
activity. However, it does not show how effective the processing stages occurring
within an economy are. This issue is synthetically presented by the resource pro-
ductivity index. Resource productivity is gross domestic product (GDP) divided by
DMC (Eurostat). Analysis results have been presented in Graph 2.
While comparing the analysis results presented in Graph 1 with resource pro-
ductivity, it should be explicitly remarked that high consumption of materials in
Polish economy is translated into a high added product value. Resource produc-
tivity of Polish economy is lowest among all analysed countries. Whereas it comes
as no surprise in the context of comparison with the countries of the Weimar
Triangle or United Kingdom, it is surprising in the case of comparison with the
states forming the Visegrád Group. Mean resource productivity of these economies
is 100 % higher than Poland’s. It shows how low the added value of technological
processes executed in Polish economy is.
While analysing the results presented in Graphs 1 and 2, the question about the
amount of waste generated by the economies of individual countries is of particular
interest. The amount of waste itself does not fully reflect the issues tackled in the
present chapter. It is therefore essential to present the amount of generated waste
against a different macroeconomic indicator. A decision was taken that value of an
indicator being the quotient of the total amount of waste and gross domestic product
would be calculated. The value shows how many tonnes of waste are generated in a
domestic economy to achieve GDP of one million EUR. Measures used in the
quotient formula of the suggested indicator have been presented below.
Graph 1 Domestic material consumption per capita (Eurostat 2015)

Graph 2 Resource productivity (Eurostat 2015)
Graph 3 Generation of waste by gross domestic product at market prices (Eurostat 2015)
Total amount of waste generated by households and businesses by economic

activity. GDP is an indicator for a nation’s economic situation. It reflects the total
value of all goods and services produced less the value of goods and services used
for intermediate consumption in their production. Expressing GDP in PPS (pur-
chasing power standards) eliminates differences in price levels between countries,
and calculations on a per head basis allows for the comparison of economies
significantly different in absolute size (Eurostat). Results of the authors’ analysis
have been presented in Graph 3.
The results shown in Graph 3 bear out the hypothesis on low added value of
Polish economy, Production in Poland is also characterised by generation of a large
amount of waste per each million EUR GDP. The indicator showing the generation
of waste by gross domestic product at market prices for Polish economy is more
Graph 4 Recycling rate (Eurostat 2015)
than twice higher that European average and over three times higher than German
and Slovak economies. High value of the indicator proves that generation of a
considerable amount of waste is required to obtain a million EUR GDP.
Apart from analyses showing the use of materials and the generation of waste, the
amount of waste subject to recycling and re-use has been presented. The scope of
available data has allowed the authors to focus only on two groups of waste: electronic
waste and packaging waste. Electrical and electronic waste (e-waste) is a risk to
environment because of its hazardous components. However, it also provides a high
potential for recycling precious metals and other highly valuable materials. The
indicator presents the effective recycling rate of e-waste which is the collection rate
multiplied by the efficiency of treatment of waste electrical and electronic equipment
(WEEE). Recycling rate for packaging waste means the total quantity of recycled
packaging waste, divided by the total quantity of generated packaging waste (Eurostat
2015). Collective results of analyses have been presented in Graph 4.
Conclusions regarding the results presented in Graph 4 should be divided into
two groups. Recycling waste for e-waste is, in the case of Poland, on average
European level. In the case of packaging, the indicator for Polish economy is lowest
among all analysed economies. It should be noted that the economies of the Czech
Republic and Slovakia deal with the aspect particularly smoothly.
4 Selected Implementation Variants
Implementation of solutions increasing the share of recycled or remanufactured

materials requires drawing up some new organisational solutions.
Cardoso et al. (2013) proposed the model of a supply chain, realizing
two-direction flows. The aim of this model is to create a structural solution (choice
of the structure of a supply chain) to maximize NPV indicator (net present value) in
the situation of the uncertainty of the demand. The elaborated model describes four
levels. The final goods, in the described model, can be destined to the market
through the distribution network, from the warehouse or directly from the pro-
duction plant. The backward flow of used goods takes place from a client (market)
to various points of the supply chain. The used goods (or their parts) go also outside
the described structure and are identified with wastes (are not used within the
analysed chain structure).
Jonrinaldi and Zhang (2013) presented the proposal of the model of the integration
of products and stocks with regards to backward logistics in a finite time period. Total
costs of functioning of the supply chain (of each part among mentioned below) are the
aim function of this model. The model assumes the existence of a supply chain of
6-level structure. The described model was used by authors to inspect the influence of
the coordination of the production process with stocks in conditions of the supply
chain performing both forward (from producer to client) and backward (from client to
producer) goods’ flow on total costs of functioning of such supply chain.
The re-use of materials from goods used by consumers provides materials whose
supply has not been precisely determined, which makes determination of optimum
sizing of the lot of material flow on all stages of the supply chain more difficult.
This issue has been discussed in the paper written by Zhendong et al. (2009). The
authors have developed a supply chain model providing for a closed loop. A conceptual
approach to a closed loop has been presented in Fig. 3.
Due to possible variants of performing the production process presented in
Fig. 3, Zhendong et al. have presented four possible variants:
– capacitated dynamic lot sizing problem with only disposal,
– capacitated dynamic lot sizing problem with only remanufacturing,
– capacitated dynamic lot sizing problem with remanufacturing and disposal,
– dynamic lot sizing problem with capacitated production and uncapacitated
remanufacturing, for optimising the flow of materials.
Production
Recyling Returned Recyling
Disposal New items Customers
center items center
Reman ufacturing
PRODUCT
LIFE CYCLE
Fig. 3 The closed-loop supply chain with production, disposal and remanufacturing, own study
based on (Zhendong et al. 2009)
4.1 Capacitated Dynamic Lot Sizing

Problem with Only Disposal
In this variant, the general optimisation model assumes the following form
(Zhendong et al. 2009):
X
T
min ðft ðxt Þ þ ht Itr Þ
t¼1
where:
T the length of the planning horizon
t the index of the planning horizon, t = 1, … , T
ft ðxt Þ the cost (or profit) of disposing x returned products in period t
ht Itr the inventory cost of holding I of returned products held in inventory at the
end of period t
4.2 Capacitated Dynamic Lot Sizing

Problem with Only Remanufacturing
X
T
min ðft ðyt Þ þ ht Itr Þ
t¼1
where:
ft ðyt Þ the cost (or profit) of returned products remanufactured in period t
end of period t
4.3 Capacitated Dynamic Lot Sizing Problem

with Remanufacturing and Disposal
X
T
min ðft ðxt Þ þ gt ðyt Þ þ ht Itr Þ
t¼1
where:
f t ð xt Þ the cost (or profit) of disposing x returned products in period t
gt ðyt Þ the cost of remanufacturing y returned products in period t
end of period t
4.4 Dynamic Lot Sizing Problem with Capacitated

Production and Uncapacitated Remanufacturing
X
T
min ðgt ðyt Þ þ et ðzt Þ þ ht Itr þ ;t Its Þ
t¼1
where:
gt ð y t Þ
the cost of remanufacturing y returned products in period t
et ðzt Þ
the cost of producing z new products in period t
end of period t
;t Its the inventory cost of holding I of serviceable products held in inventory at
the end of period t
The variants described above may be broadened with conditions of limited
capacities for each of the production activities (primary production, utilisation and
re-use). For a situation in which the limitation of capacities changes in time, the
issue of determining the size of material flow in a supply chain becomes a serious
problem. Its practical solution is possible in a situation where various types of
production processes coexist, but their capacities are definite (unchangeable) or
indefinite (are not a limitation) (Zhendong et al. 2009).
5 Conclusion
Increasing the share of material from recycled used finished products is a

long-lasting process involving both technological and organisational changes. In
the chapter, the authors have focused on the organisational issues, particularly on
the process of making decisions concerning the transformation of supply chains in
favour of closed-loop supply chains. The most essential stages of this decisive
process are the identification of the present situation and the implementation of
changes. The stage related to the selection of the best solution has therefore been
omitted. It has been stated that these solutions already exist and they form a set of
best practices rooting from the issues relating to the closed-loop supply chain.
Making a diagnose on the situation on the macroeconomic level is the first stage
of making decisions aiming at increasing the per cent share of recycled materials in
materials used by production companies. The chapter presents a detailed macroe-
conomic analysis of Polish economy as opposed to other European economies in
the context of the re-use of materials. The analysis shows that over 25 years after
the transformation of its system, Polish economy has still much to catch up in the
ecological context, not only as compared to the countries of the so-called “old
Europe”, but also in comparison to the states of the Visegrád Group, which have
similar histories. It makes one aware of how urgent the implementation of solutions
increasing the re-use of materials should be.
As part of the stage of implementing solutions whose purpose is to increase the
use of recycled materials, the authors suggest the use of a model for optimising the
structure of these chains and the sizing of the lot of material flow in a closed-loop
supply chain. The purpose of these activities is to eliminate negative impact of
unstable stream of materials (in the form of processed used goods) on the costs
of operational activity of the supply chain. The aim of its use is the minimisation of
total costs of operational activities on an unstable supply market.
Acknowledgments This chapter has been the result of the study conducted within the grant by
the Ministry of Science and Higher Education entitled “Modelling of economic order quantity in
the supply chain” (project No. KSL 1/15) pursued at the Poznan School of Logistics in Poznań.
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Innovative Approaches to Improve
Sustainability of Physical Distribution
in Dutch Agrifood Supply Chains
Reinder Pieters, Paul van Beek, Hans-Heinrich Glöckner, Onno Omta

and Stef Weijers
Abstract Sustainability has become an important issue in all aspects of corporate

policy. This also applies to organizations operating in agrifood supply chains. Most
literature on sustainability in the agrifood industry focuses on food security or
prevention of food losses. However, little attention has been paid to how organi-
zations working in agrifood supply chains use new approaches and innovations for
making physical distribution more sustainable. Therefore we set up a study on how
companies in the agrifood supply chains use innovations to improve the sustain-
ability of the physical distribution. For this purpose, we have interviewed key
managers of 14 Dutch companies—6 logistics service providers, 3 wholesalers and
5 food processors—all involved in agrifood value chains on how they approach,
and innovatively improve, sustainability within physical distribution. We found that
all the groups of companies have sustainability in their mission and use various
innovations for improving the sustainability of their physical distribution. We also
found that various links in the chain preferred different types of innovations e.g.
food processors preferred innovations linked to reduction strategy and wholesalers
focused on innovations related to efficiency strategy. The applied innovations were
not linked to the supply chain as a whole, but concentrated on a specific aspect of
the supply chain and were often initiated by a partner from outside the agrifood
supply chain.
Keywords Sustainable physical distribution Agrifood supply chains

Innovations
R. Pieters (&) H.-H. Glöckner S. Weijers

HAN University of Applied Sciences, Ruitenberglaan 31,
6826 CC Arnhem, The Netherlands
P. van Beek O. Omta
WUR Wageningen University, Hollandseweg 1,
6706 KN Wageningen, The Netherlands

32 R. Pieters et al.
1 Introduction
Since the publication of the Brundlandt report (1987), companies have put sus-
tainability at the top of their agendas (Szekely and Knirsch 2005) and incorporated
sustainability into their strategy (McDonough and Braungart 2002; Porter and
Kramer 2004). Organizations in the agrifood sector have also incorporated sus-
tainability into their strategy (Van der Vorst et al. 2013). This aspect is not a recent
issue, as the agrifood sector has a long history of sustainable awareness on the use
of land, water, pesticides, fertilizers and energy (Maloni and Brown 2006; Smith
2008; Leaver 2011; Leach et al. 2012). In 2008, the Dutch agrifood sector generated
50.5 billion Euros added value, which was 9.6 % of the total added value of the
Dutch economy, employing approximately 685,000 people. Distribution of agri-
food products in the Netherlands accounted for 12 billion Euros and 178,000 jobs
(Van der Vorst 2011). The logistics sector is also important to the Dutch economy,
contributing € 40 billion (8.5 %) to the Dutch GDP and an estimated 750,000 jobs
(10 %) in 2010. In 2008, freight transportation was responsible for 6 % of all CO2
production within the Netherlands (Van der Meulen and Kindt 2010; Pieters et al.
2012). Agrifood transport makes up 28 % of all physical transport (RLI 2013b),
generating 1.7 % of all CO2 production within the Netherlands.
Most literature on transportation of agro-business products concentrates on food
security (Henson and Caswell 1999; Maloni and Brown 2006; Godfray et al. 2010).
An amount of studies has addressed the role of sustainability when transporting
agrifood products (Wognum et al. 2011; Van der Vorst et al. 2013; Schott and
Andersson 2015; Papargyropoulou et al. 2014). But it remains unclear how the
main players in the agrifood supply chain (logistics service providers, food pro-
cessors and wholesalers) translate strategic policies into tangible innovations to
make physical distribution within the agrifood sector more sustainable. With 1.7 %
of all CO2 production, Dutch logistic service providers and shippers of agrifood
products should consider their responsibility to control, or even better, lower the
amounts of CO2 produced.
This research focuses on sustainability in the physical distribution of agrifood
products and the role the various partners in the supply chain—logistics service
providers, shippers and private carriers—play in this process. Do they approach
sustainability as an integrated and repeatable phenomenon or is it seen as a singular
action concerning individual situations or do these actions require cooperation
within or outside the supply chain? And what are the new, innovative ideas con-
cerning making physical distribution more sustainable? The purpose of this study is
to help increase our understanding on how the relationship between shipper, private
carrier and logistics service provider in the agrifood industry relates to improving
sustainability. If properly understood, it will help us in making physical distribution
in the agrifood industry more sustainable.
Environmental issues enjoy wide attention, governments, companies and insti-
tutions have incorporated sustainability in their business strategies (McDonough
and Braungart 2002). The EU wants freight transport to be cleaner (European
Innovative Approaches to Improve Sustainability … 33
Commission 2004, 2011). It is expected that sustainability will become one of the
prime drivers within the supply chain (Rao and Holt 2005; Carter and Rogers 2008;
Ploos van Amstel 2008; Van den Broek 2010). In 2008, transportation was
responsible for 21 % of all CO2 production within the Netherlands. The main part
(79 %) of this figure was taken up by road transport (private and freight). The
remainder was divided into inland shipping (5 %), air transportation (2 %) and sea
transport (14 %). Within road transport, freight transport had a share of 36 % (Van
der Meulen and Kindt 2010). These figures show that the Dutch freight transport
sector did produce a considerable amount (6 %) of CO2 in 2008.
This increased environmental awareness for making physical distribution more
sustainable will require a change in management policy as well as new techno-
logical innovation (Colicchia et al. 2013). Can lessons be learned from experiences
with innovations in making physical distribution in the Dutch agrifood supply
chains more sustainable? And what is the role played by co-operation on a hori-
zontal or vertical level within these supply chains?
First we will introduce a concept for innovation in physical distribution and
secondly we will setup a framework to determine the sustainability of physical
distribution of agrifood products. Thirdly we will discuss the various strategies
which can be employed to make physical distribution of agrifood products more
sustainable. After these theoretical discussions we explain and defend our chosen
methodology and show the results of our research.
2 Innovation and Physical Distribution
Innovation involves the creation and marketing of new ideas (Kline and Rosenberg
1986; Van de Ven 1986; Baregheh et al. 2009). Organizations introduce new ideas
in order to achieve a cost advantage, a quality improvement, a competitive differ-
entiation, or a combination of these results. These innovations should achieve a
competitive advantage over other players in the market. Most definitions of inno-
vation fall back on Schumpeter’s idea that innovation is either: a new product or
service, new method of production, new way to organize business or opening up
new markets—purchasing markets as well as sales markets (Hospers 2005, p. 23).
Innovations do not have to be 100 % new. They can be a combination of old ideas,
or a copy, or an imitation of existing ideas. An idea is called an innovation as long
as the people who are involved perceive this idea as new (Van de Ven 1986,
pp. 591–592). For our research we consider anything to be an innovation, provided
the interviewee mentioned this as being new to either his organization or his supply
chain.
Jacobs (2009) discerns innovations in being (a) technical—based on new tech-
nology—or (b) non-technical—requiring human skills or intervention. New tech-
nology often requires help from partners—often suppliers—who have access to this
technology. For non-technical innovations, a change is required when implement-
ing these new ideas or new approaches in either their own organization, in the
supply chain or between different supply chains. We will follow this division and
for our research concentrate on innovations, which have an impact on the CO2
emissions during physical distribution, increase food quality, improve food security
or result in reduction in losses of agrifood products during the whole distribution
process.
3 Sustainability and the Physical Distribution

of Agrifood Products
What makes freight transportation services sustainable is not altogether clear (Rittel
and Webber 1973; Levin et al. 2012). This could partly be due to a lack of a
generally accepted definition of sustainable transportation (Pezzey 1997). As for the
concept of sustainability, the definition of sustainable development provided by the
Brundtland Commission (World Commission on Environment and Development
1987) is often used (Mihyeon Jeon and Amekudzi 2005):
Sustainable development is development which meets the needs of the present without
compromising the ability of future generations to meet their own needs (World Commission
on Environment and Development 1987).
As, for instance, most trucks still employ a combustion engine, it can be stated
that every liter of gasoline used for transportation today will not be available for
future generations. The Brundtland-based definitions therefore fail to be realistic
and usable for our research. A definition of Environmentally Sustainable
Transportation (EST) as developed by the Organization for Economic Co-operation
and Development (OECD) is more precise and will therefore serve as the basis for
our research:
Transportation that does not endanger public health or ecosystems and meets the needs for
access consistent with (a) use of renewable resources at below their rates of regeneration,
and (b) use of non-renewable resources at below the rates of development of renewable
substitutes (OECD 1999).
This definition takes three aspects of EST into account: public health, ecosys-
tems and natural resources.
When discussing sustainable transportation, the attention focuses on reducing
exhaust gases. For the Netherlands, the main exhaust gases are carbon dioxide
(CO2), sulphur dioxide (SO2), nitrogen oxides (NOx) and particulate matter
(PM) (Francke et al. 2009). There are more polluting exhaust gases concerning
transportation like carbon monoxide (CO) and hydrocarbons (HC) (Van der Meulen
and Kindt 2010). The available literature on sustainable freight concentrates on CO2
reduction. The other gases are hardly mentioned. Our research follows this lead and
also concentrates on innovations, which result in a reduction of CO2.
Holden and Gilpin (2013) discern three main sustainable transport strategies in
literature: efficiency, alteration and reduction. The efficiency strategy concentrates
on developing more efficient transport logistics, which could result in improved

load factor and better utilization of available transport equipment. Alteration
strategy recognizes the need to change present transport patterns and behavior
fundamentally. The reduction strategy concentrates on avoiding unnecessary—not
value-added—transport. These strategies may correlate with each other. An alter-
ation in transport mode could also result in a more efficient use of transport space or
in a decrease in transport movements.
The shipper as a customer of the logistics service provider plays an important
role when we want to discuss innovations to obtain an improved sustainability in
physical distribution. The transport market is best described as being dominated by
heavy competition and low profit margins, so the customer is certainly “King”
(Christopher 2005). But how important are sustainability and innovations for
shippers when selecting a logistics service provider? A survey among shippers
conducted by Van der Meulen and Kindt (2010) found that Dutch shippers used
certain criteria when selecting a logistics service provider. The criteria included:
reliability, price, service, sustainability and innovation. When asked to rank these
criteria, price and reliability are placed at the top, with sustainability near the
bottom, in fourth place and innovation in last position. These findings are further
supported by literature concerning logistical considerations; choices made in regard
to transportation, are usually determined by two things (Christopher 2005; Visser
2010):
1. effectiveness i.e. speed and reliability
2. efficiency (low cost).
But it also shows that both sustainability and innovation do not seem to play an
important part in the choice of a shipper for a logistics service provider. The
combination of innovation and sustainability is not researched, but based on the
ranking in the survey of Van der Meulen and Kindt (2010); it will certainly not be a
decisive factor in the selection procedure of a shipper for logistic services (Pieters
et al. 2012).
4 Strategies in Making Physical Distribution

More Sustainable
As mentioned before, three strategies can help to make physical distribution more
sustainable: (1) efficiency strategy; (2) alteration strategy and (3) reduction strategy
(Holden and Gilpin 2013). We first need to discuss innovations linked to each of
these strategies.
(1) Efficiency strategy
The efficiency strategy aims at making better use of the available modes of
transportation. This can be accomplished by (a) improving the amount
transported in one ride—load factor—or (b) reducing the amount of fuel

needed to make a specific ride. Both approaches will be discussed below.
(a) Improving the load factor.
In this way, more goods are transported in one haul. This can be achieved
by combining rides—or freight bundling—which demand less than full
truckload capacity. Not all combinations are possible. Products like
bananas could affect the quality of other fresh food products and should,
preferably, not be shipped in one transport unit. Frozen agrifood products
do not mix very well with fresh agrifood products, which will freeze and
deteriorate. But also, combining agrifood products with non-agrifood
products could cause problems. Some agrifood products do transmit an
odor, which might cling onto non-agrifood products and make these
products unsalable. These problems can be solved by splitting a truck into
various compartments, each with its own storage regime. Freight bundling
is a typical way for all logistics service providers to lower cost on the
actual transport itself. If shippers or receivers are in close proximity,
bundling freight could be interesting. But this is not always possible, as
shippers, as well as receivers, sometimes demand specific pickup or
delivery times, making freight bundling impossible. The answer here lies
in convincing the parties concerned to amend their requested pickup or
delivery times to co-ordinate with each other. Another obstacle for freight
bundling is that some shippers demand that their products are to be
shipped without any product from other shippers. For transporting
unprocessed agrifood products, this could be a valid reason. For processed
agrifood products, the fear of—mutual—contamination could be less and
therefore freight bundling might be a possible option for processed agri-
food products. Another obstacle might be that some trucks carry the logo
of the shipper and are considered an extension of branding the shipper’s
name. They even might insist that the logistics service provider first
checks with them to ensure that the image of their own brand name is not
harmed in any way. Sharing cargo space with competitors might also
generate negative emotions, preventing freight bundling of these
shipments.
(b) Reducing fuel consumption for a given distance.
As CO2 production is directly linked to the amount of fuel used for the
transportation, the less fuel used, the lower the amount of CO2 produced
during a transport. This can be achieved by ensuring that drivers are taught
to be more energy conscientious and drive accordingly: the new driving
style or ecodriving (Stillwater and Kurani 2013; Thijssen et al. 2014).
Besides a reduced fuel consumption, the logistics service provider will
also achieve savings on brakes and tires which do not need to be replaced
as often as with a less careful driving style. Ecodriving can be monitored
by placing a device in the truck, which stores all actions of the driver. The
gathered information per truck and per driver can be analyzed to search for
improvements. Some systems transmit this information directly in real

time, using a wireless network. In this way, the logistic service provider—
and sometimes also the shipper—can see online the exact location of the
truck and react directly to any change monitoring the actual delivery or
pickup. A second way to improve the mileage is to replace the existing
fleet with trucks of better mileage. The average Dutch truck will have an
economic lifespan between four and seven years. So, after this period, the
whole fleet will have been replaced with newer, cleaner models. By
adding fuel saving techniques and by ensuring a proper maintenance of
the existing fleet, mileage can be improved by the logistics service
provider.
(2) Alteration strategy
With the alteration strategy, the company aims at changing the way in which
operations always were done. For transport, this means that the traditional
mode used for transportation could be replaced by other modes, which pro-
duce less CO2. For instance, compared with truck transportation, air trans-
portation will be approximately 900 times more polluting. Most agrifood
transportation within mainland Europe will be done by truck, rail or inland
shipping. For these modes, the CO2 per ton/km ranges between 85 and 122 for
trucks up to 20 tons loading capacity (1 TEU) to 21–42 for inland shipping
with barges with a loading capacity of 5500 tons (a container ship with 200
TEU). Rail and inland shipping generate less CO2 per ton shipped over one
kilometer as compared with shipment by truck (Den Boer et al. 2008). From
this point of view, every environmentally-conscious shipper or logistic service
provider should opt for—partly—rail or boat transportation and not for trucks
alone—intermodal transportation. Every shipment starts at the sending party
and ends with the receiving party as its destination. Most of these sending and
receiving parties are not directly located near a loading platform for rail
transportation or near an inland harbor. This means that trucks will be used to
transport to and from the freight station and harbor. Every change of mode will
take time, result in additional costs and increase risks for the cargo. All three
aspects may entice the organization to continue using the familiar pattern of
transportation instead of opening up new distribution channels. In contrast to
all these concerns with intermodal transportation, trucks have the advantages
of being flexible and able to reach almost all destinations. For this reason,
most agrifood products are shipped by truck and this will not change in the
near future. But for very long hauls—500 km or more—this could be a
possible, interesting alternative for road transportation.
Another form of alteration strategy often employed for achieving a more
sustainable physical distribution is the use of alternative fuels. These fuels
could be either (a) cleaner—producing less CO2—or (b) renewable energy
sources. Both will be explained below:
(a) Using cleaner fuels.

An easy way to change to fuel that is less polluting is to use mineral oils,
which will generate less CO2, or change to alternative fuels like electricity
or fuel made from agrifood products: biofuel (Holden and Gilpin 2013).
Biofuel will be discussed in the next point under renewable fuels. Less
polluting fuels are e.g. liquid gas, natural gas or cleaner gasoline. Another
alternative for mineral fuels is electricity. Engines which run on electricity
emit no CO2 during transportation, but they have a limited range of
70 km. This means that long hauls by electric trucks cannot yet be con-
sidered as a reasonable option for gasoline-fuelled trucks. Producing
electricity is another issue, as electricity often is generated by power plants
running on mineral fuels, still resulting in CO2 production. Electricity
generated by nuclear power plants hardly produces CO2 (Fthenakis and
Kim 2007) but results in radioactive waste, which needs to be stored for
several thousand years (Pickard 2010), burdening future generations.
During the last sixty years, atomic energy has been generated and twice—
1986 Chernobyl and 2011 Fukushima—we have seen problems with
nuclear plants. Much is expected from the development of fuel-cell
technology by which electricity is directly generated by a battery using
chemical processes. Unlike combustion engines, no heat loss occurs
during the conversion process (Capros et al. 2014).
(b) Using renewable fuels.
Mineral fuels like gasoline and petrol are by definition not sustainable, as
they are non-renewable (OECD 1999) and deprive future generations the
use of these energy sources (World Commission on Environment and
Development 1987; Holden and Gilpin 2013). Renewable energy will
solve these problems. For physical distribution, this implies at this
moment the use of electricity or biofuels. Electricity generated by solar
power, wind power or water power is more in line with the general
concept of sustainability and generates far less CO2 as compared with
fossil fuels (Raadal et al. 2011). The Dutch government wants to raise the
amount of renewable energy from 4 % in 2013 to 16 % in 2026 (SER
2013), so non-renewable fuels will still be responsible for the remaining
84 % of Dutch energy consumption. Another alternative fuel source for
mineral fuels is biofuels. But in a world (figures 2011–13) with an esti-
mated 842 million people suffering from hunger (FAO 2013), growing
food for fuel and not for human or animal consumption poses ethical
questions and could lead to more pressure and competition for good
quality agricultural land (Godfray et al. 2010).
(3) Reduction strategy
The reduction strategy aims at reducing the use of material and equipment.
This may be the result from actions taken using the efficiency strategy as
explained before. Improving the load factor will also decrease the need for
rides to be done by using better planning systems and freight bundling
procedures. Agrifood industries could also reduce the kilometers between

them and their farmers. A nice example of how this can be achieved is given
by FP4 (Framework Programme 4). They used to have farmers all over the
Netherlands but during the last 15 years they enticed local farmers near the
factory to produce for them, resulting in fewer kilometers driven to transport
food to the production unit from the fields.
Reducing the distance between farmer and food processing factory also has a
positive impact on quality and reduces food losses during transportation or storage.
Innovations that do reduce food losses will also result in CO2 reduction; not only in
less CO2 during cultivation or production, but also due to less transport movements
for shipping products to and from the production plant, which eventually will not
lead to agrifood products suited for consumption. Quality reduction of agrifood
products during physical distribution can be prevented in two ways: (1) proper
conditioning of the agrifood product during transportation and storage, and
(2) speeding up the good flow in the supply chain by opting for smaller production
and transportation lots (Van Beek 2010). For instance, while harvesting an agrifood
product, waiting for a full truckload can take so long that the quality of the food
product could deteriorate. So trucks used to ship harvested, fresh food products will
often transport less than a full truckload. Other agrifood products require condi-
tioned transport, as they need to be kept cool or frozen. Keeping these products in a
frozen or cool state means that cooling systems will have to be employed. These
cooling systems require energy, which means the transport will use up more fuel.
Mileage will improve if new cooling systems are developed, which use less energy.
A very simple solution to keep food products fresh is to consume only food that is
produced nearby. This would reduce the food miles needed to transport the food to
its destination (Scheer et al. 2011).
5 Methodology
For the current research we will proceed as follows. First, we review the forces for
change literature on innovations. We then present our view on the concept for “sus-
tainable” physical distribution, laying out the various aspects for the Dutch agrifood
sector. Next we introduce structures for sustainable physical distribution, which are
being utilized by logistics service providers, private carriers and shippers in the Dutch
agrifood sector. This section is based on interviews we held in the period December
2013 till June 2014 at 14 companies: six logistics service providers (LSP), three retail
organizations or wholesalers (WS), and five food processors (FP) of agrifood prod-
ucts. We used a convenience sample, selecting companies, which actively supported
sustainability and we ensured that various aspects (size, ownership, place in the value
chain) were represented in our sample as is shown in Table 1. All interviewed com-
panies are connected to the University of Applied Sciences of Arnhem and Nijmegen
through work-placement schemes, etc.
40
Table 1 Characteristics of the interviewed companies

Aspect Company
Wholesalers Logistics service providers Food processors
WS1 WS2 WS3 LSP1 LSP2 LSP3 LSP4 LSP5 LSP6 FP1 FP2 FP3 FP4 FP5
Member lean and green × × × × × × × × ×
Own trucks × × × × × × ×
Food transported as Can/Glass × × × × × × × × × × ×
Fresh × × × × ×
Frozen × × × × ×
Size in FTE <201 × ×
201 < 501 ×
501 < 1001 × × × ×
>1001 × × × × × × ×
Ownership PLC × × × × × ×
Family owned × × × × × × ×
Cooperative ×
Dutch × × × × × × × × × × ×
Rest EU ×
USA × ×
R. Pieters et al.
All logistics service providers, two food processors (FP3 and FP4) and one
wholesaler (WS1) are members of Lean and Green, an award scheme for compa-
nies, who want to improve sustainability of their physical distribution. This scheme
has been set up by the Dutch government to speed up the process and to structure
discussions (Pieters et al. 2012). One logistics service provider (LSP6) also buys
fruit and processes pulp, which is then frozen and sold to other food processors. In
principle, LSP6 could also have been seen as an agrifood processor, but it sees
physical distribution as its main activity. Therefore, it has been placed under
logistics service providers. LSP2 is an expediter and has no trucks of its own. It
organizes the whole transport for customers and rents anything it might need from
other logistics service providers. Except LSP6, that only transports agrifood
products, all other logistics service providers interviewed transport non-agrifood
products as well. One (FP5) also trades in fresh flowers for the consumer market.
WS3 operates a chain of biological food corners within supermarkets. It only
delivers agrifood products; fresh and processed. WS1 and WS2 sell also
non-agrifood products. WS1 mainly sells to large institutional customers like
hospitals and canteens. WS2 is a regional chain of supermarkets. LSP6 buys fruit
from a wholesaler, processes it into fruit pulp and sells the frozen fruit pulp to
another food-processing industry for further processing.
The interviews were held at the company’s location and the interviewee was
always (co-) responsible for developing the company’s strategy on sustainable
physical distribution. Every interview was recorded, transcribed and send to the
interviewee for correction and omissions. In the interview, we asked how the
company approaches and improves sustainability from its own point of view within
physical distribution of agrifood products. Which strategies it has developed for
sustainability. What kind of actions did it undertake in the field of sustainability
and, what kind of innovative ways it has introduced to make physical distribution of
agrifood products more sustainable.
To limit our scope, the current research will concentrate on the sustainability
aspects of the actual transport itself. In order to concentrate on the actual physical
distribution itself, innovations undertaken to improve sustainability, but not related
to the actual transport—such as more environmentally friendly ways of cleaning
cars etc.—are additionally not included in our research.
6 Results
For our conceptual framework, we assume that every logistics service provider,
private carrier or shipper operates within its own specific environment (finance,
market, customers and location) and has its own special mix of forces for change
(drivers, enablers and barriers). Combining these elements, the logistics service
provider, private carrier or shipper could each on its own develop a plan for
achieving a higher level of sustainability. This strategy can be written down
explicitly, or implicitly embedded into the company’s mission. Based on this
strategy, the logistics service provider, private carrier or shipper implements the
plan or maintains the status quo. Using this conceptual framework, we want to
understand if innovations have been developed due to a change in the company’s
strategy for sustainability. These innovations could be either organizational, like
new types of physical distribution networks, or technical, like new software or
fuels, or a combination of both. This change in strategy may (or may not) be
influenced by the forces for change as explained above. We expect these innova-
tions will result in new demands on physical distribution systems and, even further,
that they will drive innovations in sustainable physical distribution.
Based on this conceptual framework, for our research we asked our interviewees:
1. How they approach strategically sustainability within physical distribution of
agrifood products?
2. What were the drivers, enablers and barriers for the sustainability innovations?
3. What kind of actions do they undertake on the field of sustainability and if so,
what kind of innovative ways they have introduced to make physical distribu-
tion of agrifood products more sustainable?
4. Who initiated these innovations?
Ad (1) All interviewees mentioned sustainability as part of the mission of the
company. Only one (FP5) took a higher level and also mentioned corporate social
responsibility (Maloni and Brown 2006) as the focus of its mission. It placed sus-
tainability in this framework, but was more concerned with employees’ health pro-
grams, local schools and local food programs. The main driver for being sustainable is
cost reduction. All mention that they perceive sustainability in physical distribution,
with a higher rate of efficiency and therefore reduced costs. One (FP3) states that new
innovations may be taken on, providing costs are equal to the former situation. This
concept that sustainability should be linked to lower costs is also found in the Lean and
Green award scheme. Members of this Dutch scheme set themselves the goal of
reducing in five years’ time CO2 by at least 20 % and to lower the cost for physical
distribution (Pieters et al. 2012). All logistics service providers mention that a higher
price for sustainable physical distribution will not be acceptable for the customer. Two
food processors and one wholesaler (FP3, FP4 and WS1) agree with this view. The
remaining five interviewees (WS2, WS3, FP1, FP2 and FP5) mention that they find
either a combination of higher price with improved quality, trust or reliability more
important. For FP5 there is no alternative but to use air cargo to ship the products from
East Africa to Europe. Shipping by boat would deteriorate the product before it
reaches destination. It has one competitor that produces the same product in South
America, and fails to deliver a standard quantity/quality ratio. But if it were possible,
FP5 would use a container barge for the East Africa-Europe route. All other inter-
viewees place the cost for physical distribution at between 3 and 8 % of total cost, but
FP5 has calculated a staggering 34 %. Another driver was personal commitment from
the owners of the company (LSP1 and FP3).
Ad (2) The enablers for making physical distribution more sustainable have for
all companies a technological (Jacobs 2009) approach, e.g. new vehicles or IT
solutions. Two companies choose an organizational approach by setting up an

innovation think tank (LSP1) or appointing a sustainability manager for the whole
supply chain (FP3). Other enabler that was mentioned is the availability of
infrastructure like rail (LSP1, LSP2 and LSP4) or water (LSP1, LSP2, LSP3, LSP4,
LSP6 and FP3). All members of the Lean and Green award scheme (all LSPs, WS1,
FP3 and FP4) consider the program to be an inspiration and a help with achieving
sustainability within their physical distribution. This is confirmed by FP1, whose
logistics service provider is a member of Lean and Green. FP4 and LSP3 joined in
2013 Green Freight Europe (GFE), founded in 2012 to unite shippers and carriers in
order to promote sustainable logistics. GFE has the ambition to establish credible
performance criteria and review test data to ensure that such practices, vehicles,
equipment and technologies will help fleets improve their efficiency and reduce
emissions. Their aim is to create a pan-European standard similar to the program of
SmartWay Partnership in the USA.
As for barriers to making physical distribution more sustainable, all logistics
service providers pointed to shippers’ emphasis on cost issues and lack of
co-operation to find new innovative ways to enhance sustainability. One food
processor (FP1), voiced his concern that the division between partners of the
benefits and costs of the innovation would not be fairly done. Three food processors
(FP1, FP2 and FP5) and one wholesaler (WS2) mentioned restrictions set by nature
on ripeness of the agrifood products. One wholesaler (WS3), two logistics service
providers (LSP1 and LSP3) and one food processor (FP5) considered governmental
—local, national and European—regulations or the lack of support a major obstacle
for introducing innovations. The wholesaler pointed to the time frames set by local
governments for allowing deliveries within specifically designated areas—often
city centers. This problem is also mentioned by WS1 but his problem is caused by
the unwillingness of some customers to align their delivery schedules with
neighboring customers. In this way WS1 has to go first to Amsterdam, then to
Alkmaar, back to Amsterdam to finish north of Amsterdam again. In total, this one
haul could have a potential saving of 12 % in kilometers if customers could be
persuaded to adjust delivery times to fellow customers. LSP1 wanted to create a
new harbor near its main location but the local government waited over 15 years
before it gave permission for the project. LSP3 wanted to use Longer Heavier
Vehicles (LHV), also called super lorries, for rides through Germany. The LSV is
allowed on Dutch roads, but not in Germany. So every time it wanted to use a LHV
for a short cut through Germany to reach a Dutch destination, it had to apply for
special dispensation from the German authorities. FP5 sees the rules for not being
able to employ certain pesticides against fungi as a barrier for getting products into
Europe in a slow way instead of using air cargo. One logistics service provider
(LSP2) saw the focus of the planner on directly serving the wish from a customer as
a barrier. The planner should look for alternatives, which might be more sustainable
but still interesting for the shipper.
Ad (3) We asked the interviewees to describe the recent new actions they had
undertaken or would soon undertake for making physical distribution more sus-
tainable. It was up to the interviewee to decide what these innovations were in
accordance with Van de Ven (1986). We labeled the given answers and split them
into two categories (1) the basic form of an action being either: (a) non-technical—
requiring human skills or intervention—or (b) technical—based on new technology
(Jacobs 2009) and (2) the intended strategy of the innovation—(a) efficiency
strategy; (b) alteration strategy and (c) reduction strategy (Holden and Gilpin 2013).
Combining these two categories, we obtained an overview of the innovations our
survey group use or will be using to make physical distribution more sustainable, as
is shown in the Tables 2 and 3 below:
For the non-technical innovations, no reduction strategy actions were undertaken
by the respondents. This does not mean that no reduction of CO2 was generated by
these innovations, but that reduction strategy was not the prime one for
non-technical innovations, as mentioned by the interviewee. We were surprised to
see that only three interviewees mentioned the new driving style, which features as
a much-used action by members of Lean and Green for achieving sustainability
(Pieters et al. 2012). Another surprise was that not all respondents mentioned
planning as something they intend to alter. We had expected that this aspect, in
combination with co-operation, would be a straightforward choice. Co-operation,
vertical and horizontal, is very popular. WS2 and LSP5 want to work together with
competitors. The logistics service providers LSP1, LSP2 and LSP3, as well as the
food processors FP1 and, FP2, see more integration with another link in the supply
chain. FP3 wants to tackle both forms of co-operation. FP3 has shared for some
months river boat capacity with other shippers of food products, even if they are all
competitors for the same agrifood market. Without sharing capacity, this mode of
transportation would have been out of reach for FP3 and its competitors alike. Now
they all have lower CO2 emissions and have drastically reduced their transportation
costs. This project was co-initiated by FP3.
If we look at new product and market, we have found two interesting examples.
LSP2 is an expeditor and arranges transport and other logistic services for customers.
The company does not have a fleet of transport equipment itself, but when needed
rents transport capacity from other logistics service providers. In order to help cus-
tomers to decide, LSP2 developed a software tool to calculate the prices, times and
CO2 production of various alternative routes between the starting position and the
desired finish. For this calculation, the software program uses information on the
customer’s attitude towards price, time and sustainability. This software program
calculates various alternative routes and the planner preselects the five best routes for
the customer to choose from. As alternative options are given for one route, this
system has been called synchromodal transportation. LSP1 introduced a new service
by which the customer paid for CO2 neutralization. With this money, trees were
planted to compensate for the CO2 emissions during transportation. The extra costs
amounted to 5 %, but only 1 % of all trade was handled under this scheme.
Some technical actions that we were expecting—like fleet maintenance or
electrical vehicles—were not mentioned at all. Splitting trucks was done by all
wholesalers. In the case of WS2 by its logistics service provider on request of WS2.
This seems logical, as the wholesalers have to ship a wide variety of products from
their central warehouses to the shops or institutional customers. Of the three
Table 2 Non-technical innovations for making physical distribution more sustainable
Strategy Action Company
Efficiency strategy Planning × × × × × ×
New driving style × × ×
Alteration strategy Modal transport × × × × ×
Innovative Approaches to Improve Sustainability …
Horizontal co-operation × × × ×
Vertical co-operation × × × × × ×
New markets × × ×
New products or services × × × ×
New methods × × ×
45
46
Table 3 Technical innovations for making physical distribution more sustainable

Strategy Action Company
Efficiency Planning software × × ×
strategy Fuel efficient trucks × ×
Split trucks into multiple × × ×
compartments
Alteration Larger heavier vehicles (LHV) × × × ×
strategy Alternative fuels × ×
Bio fuels ×
Monitoring the truck data ×
Reduction New packaging and wrapping × × × ×
strategy material as used in transportation
Conditioning × × ×
R. Pieters et al.
interviewees who were using the new driving style, only one mentioned that it will
monitor the information gathered with this new driving style. FP5 mentioned that
its supplier suggested a change of wrapping material. Due to this new material, the
processed and packed vegetables did not turn black at the cutting edge. Bent
vegetables, which previously had to be rejected, can now be chopped, packed and
sold as prime products for the European market. The wrapping material also helps
to extend the shelf life of the other uncut vegetables, which gives the company an
extra advantage on the market. Packaging seems to be a food processor aspect. FP4
started a new way of packing, which resulted in less air being packed with the
products. This meant that (a) more products could be stored and shipped and
(b) less energy was needed to cool the products. FP1 used a new material for
canning, which needed less energy to manufacture and which was easier to recycle.
In total, 58 innovations were mentioned. The majority (30 = 52 %) of these
innovations were mentioned by the logistics service providers; the wholesalers
mentioned 13 (22 %) and the food processors mentioned 15 (26 %). Of the inno-
vations, 17 (29 %) were intended to improve efficiency, 34 (59 %) are aiming at
changing the existing patterns and 7 (12 %) were connected to reduction. Most (35–
60 %) innovations were of a non-technical nature, with the remainder (23–40 %)
focusing on technical solutions. For the 23 technical solutions, the division in the
three strategies is almost even. Efficiency and Alteration strategy having eight
innovations and reduction strategy scoring 7. But the food processors seem to
concentrate on innovations connected with reduction strategies and have not
mentioned any innovation aimed at efficiency. A change in packaging and wrapping
up products for distribution was particularly mentioned by food producers. The
wholesalers and logistics service providers concentrate on innovations connected
with efficiency and changing existing patterns as can be seen in Fig. 1.
Fig. 1 Innovations and

strategies for technical
solutions
WS - Wholesaler
LSP - Logistics Service Provider
FP - Food processing company
Looking at the non-technical solutions, we see a very different picture: 9 (26 %)

innovations can be placed under efficiency strategy and 26 (74 %) innovations fall
under alternation strategy; and not one for reduction. In short, changing existing
patterns seems to be the important objective of innovations in our target
group. Especially, the logistics service providers and the food processors focus on
alteration strategies. As for the wholesalers, the bulk of innovations is on efficiency
improvement (60 %), but 40 % on alteration is impressive as can be seen in Fig. 2.
Ad (4) Finally we were interested in how an innovation entered the company.
We found that with technical innovations, the supplier played an important role. He
is the one who generates interest in the company for this innovation. LSP1 has
developed a special relationship with a major truck manufacturer, which uses LSP1
for testing new products. In return, LSP1 knows these new developments in
advance of other competitors. For the non-technical innovations, a more internal
approach is taken. For instance, LSP1 has created a special team of experienced
people and FP3 has nominated a manager for sustainable physical distribution. Both
companies have concentrated on non-technical innovations and actively stimulate
innovations, especially with third parties in the supply chain. None of the inter-
viewees mentioned a government as an initiator for innovations. This is strange, as
governments have set up charges related to the amount of pollution generated by a
truck. For instance, the more a truck pollutes, the higher the toll for trucks driving
on the German motorways will be, e.g. € 0.155 per kilometer for a Euro 6 norm
truck of four axles or more, whilst a similar Euro 3 norm truck will have to pay
€ 0.204 per kilometer. This is still better compared with the lowest class of trucks
paying € 0.288 per kilometer (figures Toll-Collect 2014). The price difference could
be an incentive to replace the existing fleet with cleaner trucks.
Fig. 2 Innovations and

strategies for non-technical
solutions
WS - Wholesaler
LSP - Logistics Service Provider
FP - Food processing company
7 Conclusions
Prior work has shown that for making physical distribution more sustainable,
various strategies can be distinguished (e.g. Holden and Gilpin 2013). Research of
agrifood products (Henson and Caswell 1999; Maloni and Brown 2006; Godfray
et al. 2010; Van Beek 2010; Wognum et al. 2011; Van der Vorst 2011; Van der
Vorst et al. 2013; Schott and Andersson 2015; Papargyropoulou et al. 2014) has
focused primarily on aspects like cost reduction, food safety and prevention of food
losses as much as on being green in distribution. However, these studies did not
focus on the role of innovations for making physical distribution more sustainable
and the position in the supply chain from where an innovation originates.
In this study, we researched how 14 organizations—logistics service providers,
food processor and wholesalers—translate strategic policies into tangible innova-
tions to make physical distribution within the agrifood sector more sustainable.
During the—open and unstructured—interviews, we asked the interviewee how
her/his company approached sustainability in physical distribution and what she/he
considered to be new.
From our question—what innovative actions have Dutch logistics service pro-
viders, shippers and private carriers in the agrifood industry undertaken to make
physical distribution more sustainable?—we found that the researched companies
used technical innovations as well as non-technical innovations for improving the
sustainability of their physical distribution. Certain types of innovations were
common amongst a specific group, like innovative packaging among food pro-
cessor and trucks with multiple compartments for wholesalers.
As for the initiator of these innovative actions, we found that applied technical
innovations were mainly put forward by someone from outside the company,
especially suppliers of transport material, packaging material, cooling equipment
and software programs, e.g. for planning, truck monitoring and temperature regu-
lation. These technical innovations require a thorough insight in the functioning of
the new product or service and how this innovation can be adapted, used or applied
for usage in the company. Non-technical innovations often involve co-operation
with other links in the supply chain or in parallel supply chains. Here the initiator
could come from inside its own company.
From the experience of innovations in making physical distribution in the Dutch
agrifood industry more sustainable, we learned that the strategy for achieving
sustainability as employed by the organization seems to be vital. Innovations at
food processors relied more on reduction strategy and wholesalers were more
focused on innovations related to efficiency strategy. Logistics service providers
relied more on changing the traditional patterns. Our results indicate that our
interviewees had a focus on a specific aspect—a transport or a product—involving
their own organization and, perhaps, the previous or next link in the value chain, or
identical organizations in different value chains. This could be called a “bottom up”
approach. Surprisingly, not one of the interviewees mentioned an innovation
intended for the supply chain as a whole. By looking at the supply chain from a
holistic approach—or “top down”—sub-optimization could be avoided. By

approaching sustainability “bottom up”, an improvement in one link in the value
chain might result in a deterioration somewhere else. For instance, applying Life
Cycle Assessment (Guinée et al. 2002; Finnveden et al. 2009). Dagran (2011) has
shown that a different way of packaging concentrated fruit juices will not only
result in a reduction in transported containers or in energy spend on cooling, but
also in less energy used on making and recycling the actual package itself.
We found the initiator of innovations to be either coming from inside its own
company or coming from a link closely connected to the organization. However,
some limitations are worth nothing, as we used a convenience sample for estab-
lishing our target group and we only investigated a small number of companies we
can draw no general valid conclusions. Understanding the role of the supply chain
as a whole whilst initiating innovations in sustainability in physical distribution will
require further investigation.
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Sustainability—Indispensable Part
of the Logistics Development
Martyna Zdziarska
Abstract Each company operating in a free market economy wants to reduce the
cost of its activities. But often managers attempt to reduce costs pushing them into
other actors operating in the supply chain or even to its surrounding environment.
Consequently, such actions are very short-sighted, because all the costs generated
by the logistics network are finally being felt in the external environment and price
of the final product. Indeed focus should be on fighting disturbance in the supply
chain, that include the sustainability issues. Main objective of the chapter is a
presentation of different sustainability dimensions with its future development, as
well as introduction of Physical Internet influence on logistic challenges in terms of
sustainable growth. Following social, business and technology trends by improving
cooperation and better access to information among cells operating in the supply
networks and their surrounding lead to significant positive results especially in fast
growing FMCG industry, as the author presents later in the chapter.
Keywords Sustainability Physical internet Distribution efficiency
1 Sustainability Dimensions
Sustainability from the logistics perspective means greening and improving process
efficiency respecting the existence of the human economy and cooperating with its
environment. Thus the specific perception and adherence to the required standards
of environmental protection and public safety, while maintaining the desired
standards of quality and economics in business leads to the tangible benefits.
Sustainable growth in logistics may be understood also as a method of design and
implementation of supply chain management, respecting economic reasons and to
minimize the environmental burden in the distribution network.
M. Zdziarska (&)
Institute of Logistics and Warehousing, Poznan, Poland

54 M. Zdziarska
Seeking a compromise within the modern supply chain we need to introduce

solutions that enable sustainable, based on harmony with nature development of the
industry, involving both the economical as well as ecological use of resources.
Sustainability is nowadays the fastest growing trend in logistics worldwide.
Currently a very important aspect of operations is to reduce their negative impact on
the ecological environment. Therefore, more and more companies especially in the
FMC sector are getting committed to green distribution.
Implementation of environmentally friendly solutions in logistics is now nec-
essary and in the close future may even become mandatory. The decisive factor of
changes implementation will be an increasingly environmentally aware customer.
Experts predict that as a result of ongoing social changes associated with aging and
depopulation of society a key role in the development in future will play a big urban
centres. Only strong urban centres focused on savings and multiple processing of
natural resources and use of natural energy will be able to ensure a safe society
existence. They will determine the place of competitive struggle, redefining the role
and importance of logistics in the process of goods flow.
The most important element of green logistics, in which changes will be
immediately visible, is transport and the associated reduction in emissions of CO2.
Global emissions footprint reduction within the supply chains becomes a major
future challenge. Restrictions are relatively easy to convert into savings, and EU
environmental legislation will additionally prefer the implementation of new
solutions to reduce curb environmental degradation.
There are many different sustainability definitions, however most of them
emphasize three important areas that should be taken into consideration: (1) eco-
nomic development, (2) environmental preservation, (3) social development
(Mihyeon and Amekudzi 2005). Talking about logistics networks, economic
development is considered as profits and internal benefits of the company taking
employees into account. Second, environmental preservation directly concerns local
surrounding as well as global climate change. Finally, social development accounts
for the effects of logistics activities on human society, including the detrimental
impact that pollution can have on the public (Sathaye et al. 2006).
According to Grant et al. (2013) there are few main trends that affect sustain-
ability in logistics. First of all, increasing globalization that forces entrepreneurs to
cooperate in logistics processes in order to provide customer with a product or
service at the right time, in the right quantity, in the right condition at proper cost. It
started the process of integration of growing number of supply actors to work
together. (Korczak 2012) Secondly, in 1926 H Ford used the statement “if there is
something you cannot do more effectively, cheaper and better than competitors,
there is no point in doing it, and you should hire someone who can do the task
better than you”. These words became a contribution to thinking of key businesses
competences and opened companies to outsourcing. The English term ‘out-
sourcing’, which stands for the words ‘outside, resource, using’ quickly became
popular and contributed to the development of the concept of transferring part of the
businesses competence to the third parties. Aspect that differentiates outsourcing
from regular business cooperation is that outsourcing is not a single operation. It
Sustainability—Indispensable Part of the Logistics Development 55
aims at rather long collaboration. In addition, outsourcing requires a full sharing of

information and sustainable mutual growth of engaged parties that positively
influences their economic situation (Amiti and Shang-Jin 2004). What is more, to
be successful in the modern logistics, enterprises need to implement high tech-
nologies. Companies to operate effectively in the supply chain, must use infor-
mation systems, automatic identification of goods and electronic data interchange
that are becoming a widely used standard. More and more firms today are turning to
advanced order-processing methods such as electronic data interchange (EDI) and
electronic funds transfer (EFT) to speed the process and improve accuracy and
efficiency, and advanced scanning technology such as radio frequency identifica-
tions (RFID) to track and trace products.
Fast moving consumer goods industry that is experiencing a rapid growth
globally and regionally is the best possible example of commencing sustainable
operations. More and more companies focus on sustainable development that
allows them to be profitable in accordance with social and environmental standards.
With the economic downturn putting budgets under pressure, the need to cut costs
was the most commonly reported reason for companies to introduce sustainability
to their operations. Most brands link themselves with the social causes, thereby
linking consumers with the brands and gaining goodwill in the market. Companies
started to monitor their environmental impact in terms of reducing wasted resources
and unnecessary spend.
2 Logistic Challenges in FMCG Industry
FMCG is a very dynamic industry. Manufacturers and distributors have to be agile

in order to satisfy needs of the clients. Prices are quite low so are the profits. That’s
the reason why companies have to find the ways to minimize their logistics costs
and find best possible solutions. It is said that logistics costs in the FMCG supply
chains are 30 % of sales. That’s the highest rate in comparison to all the other
industry sectors.
Challenges of the FMCG industry handling primarily result from the massive
scale of operation. This requires considerable resources and logistics management
on a large scale. Distribution networks are becoming more and more complex, and
therefore there is a need to pay more attention to the effective transportation systems
and their optimization in the long run. Chain stores with hundreds of retail outlets
have become an important customer for the producers, and with the scale of
operations can influence the shape of the finished products. This leads to a situation
where more and more producers are forced to adapt products to the needs of specific
chain stores through a dedicated package and the necessity of keeping the retailers
imposed terms and conditions of supply.
In FMCG industry products are quickly disappearing from the store shelves,
therefore the logistics task is continuous inventory tracking and regular replenish-
ment. Increasing delivery frequency reduces primary transport loading. The need to
56 M. Zdziarska
involve a huge amount of resources entrusts logistics service to outside companies.

Support for the FMCG industry is realized by many logistics providers in the
facilities dedicated to specific chain stores or selected manufacturers. Due to a large
volume of flow dedicated warehouses are often located in logistics parks that have a
very good access to the infrastructure. It needs to be mentioned that FMCG dis-
tribution networks remain fragmented. It causes problems in cooperation and at the
same time is the reason why the cost is high and efficiency is hard to gain. Lack of
transport collaboration on more frequent customer deliveries causes reduced vehicle
fill. Delivery load utilization is often at the level of 50 %.
Nowadays FMCG sector is really demanding in terms of logistic operations,
however price is no longer the most important issue. When it comes to building the
strategic partnership with a logistic service provider there are some new factors that
play a significant role. First of all lead time and punctuality, access to the real time
information about the process realization and smooth communication between
engaged parties. What is more clients pay attention to distribution centres local-
ization and transport conditions that would shorten delivery time. However, the
factor that gains much importance recently is an ecological aspect. More and more
clients even claim that eco factors are equal to economical.
The great diversity of products and the variability of volumes are the most
characteristic features of the FMCG sector, which leads into the need of providing
variety of services. The expectations placed in front of a logistics operator can be
defined as achieving unlimited flexibility while maintaining the highest quality and
the lowest possible cost concerning ecological aspects. Of course, such a perfect set
of criteria is a challenge that requires a detailed analysis of the process and often to
adjust to conflicting goals. Distribution systems of goods may differ from each other
but regardless of the specifics of a supported product in case of fast-moving goods,
logistics operator always has to reckon with the criterion of time and the require-
ment of process automation.
The FMCG industry is constantly changing resulting from a fierce fight for the
customer. Although in the first instance this means competition at the sales level,
changes sooner or later also move to the entire production and logistics. The
economic crisis primarily hit retail customer consumption. Purchasers today
demand more favourable rate between quality and price, which has forced many
manufacturers to look for room for savings. While in the case of savings on raw
materials and production processes, changes reflect in the quality of the final pro-
duct, the logistics savings does not necessarily mean a lower standard of customer
service. And that is the greatest argument why the Inter-connected network should
be taken into consideration. Moving from current dedicated networks to open agile
consolidated system is an opportunity to accelerate systemic velocity and increase
vehicle load. What’s more such network enables growth of inter-modal flows in
connection with improved communication between interested parties. Thanks to the
Inter-connected network shared transport system allows high frequency deliveries.
Multi-channel distribution becomes more efficient. Another important aspect is that
common systems and equipment reduce order lead time.
3 Directions of Sustainable Logistics Development
Nowadays, competition goes much further. Not only companies but whole supply
chains compete between each other. The most successful firms are always the part
of an efficient network. Willingness to adapt to the dynamics of the development of
the modern economy requires enterprises to increase their competitiveness
(Christopher 1998).
Demanding customer expects to receive a high quality product at the lowest
price possible in the shortest possible time. Moreover, universal access to infor-
mation allows him to compare any number of listings and to choose the most
convenient for him. “Logistics is an integrated process of shaping and control of
physical movement of products and their determinants in order to obtain infor-
mation similar to the optimal relationship between the level of services provided
and the level and structure of the costs” (Urbańska 2008). Effective supply chain
management allows you to fully respond to the expectations of our customers while
building a competitive advantage (Skowronek and Sariusz-Wolski 2008). Volatility
of market trends and consumer preferences requires company’s flexibility and
adaptability, which is unfortunately often associated with a costs increase. The main
logistics objective is to optimize the processes by minimizing expenses while
maintaining a high service quality. Organization treated as a complex, coherent
system, in which an observation of cause and effect dependence helps to identify
problems, enables faster introduction of improvements.
However, even holistic approach to the logistics management is insufficient if it
focuses only on the level of a single enterprise. Effective supply chain allows
managers to fully respond to the expectations of the customers while building a
competitive advantage. Partnership in the supply chain is a key factor of success
when it comes to the long term mutual growth and business development of pro-
ducers, suppliers and logistics service providers.
Concept of the Physical Internet is a next step towards logistics network
extension based on full sharing of global supply chains, resources and infrastruc-
ture, while use of standardized, modular packaging. Its main purpose is to develop a
universal framework for cooperation in an open logistics environment, assuming an
utter and unwavering flow of information and collaboration that goes far beyond the
standard schemes.
The current level of distribution efficiency, flow the of goods in supply chains,
and the situation in the global logistics especially in the FMCG sector is not
optimal. Despite many attempts to manufacture process optimization, logistics
operators, distributors and finally customers continue to incur very high costs
associated with handling of the goods. It manifests itself not only in terms of
economic but also environmental and social aspects. The solution to this imbalance,
is a task on a global scale. The aim of the great challenges is to enable global
sustainable development of mobility (transportation, handling) physical goods, their
storage, execution (manufacturing, assembling, processing) and distribution to the
final customer. From an economic point of view, the aim is to multiply profits in the
58 M. Zdziarska
area of global logistics, production and transportation, thanks to increased efficiency

of processes taking place in them. From an environmental perspective, the main
task is to reduce global energy consumption, the direct and indirect CO2 air pol-
lution and greenhouse gas emissions. In addition, this solution affects the social
aspect such as a significant increase in the quality of life of people employed in the
area of logistics, as well as the entire population through better access to infras-
tructure and information related to the movement of goods.
The above-described situation has led to the concept of the Physical Internet,
which was presented by Professor Benoit Montreuil from the University of Laval in
Canada and the Physical Internet Conference in Quebec City in 2012. This inno-
vative approach to solving the problem of imbalance in global supply chains, met
with great interest both research and business environment. In addition, in line with
the strategy of the European Commission and assumptions of Horizon 2020, one of
the main objectives is to study the possibilities of optimization and efficiency in
distribution. Physical Internet is an open global logistics system (integrating
logistics networks), which is based on physical, digital and operational connections
of individual cells active thanks to the encapsulation of goods, standard interfaces
and protocols, with the intent to transfer, store, produce, deliver, and use of physical
objects all over the world in a manner which is economically, environmentally and
socially effective and sustainable manner.
The concept of Physical Internet aims to create a logistics system in which there
is unwavering flow of information and cooperation goes far beyond the standard
schemas. Physical Internet is based on the full sharing of the supply network,
resources and infrastructure, while leveraging standard, modular packaging. It is
planned to replace the existing models. Its foundation is the cooperation of all
entities involved in the distribution of goods and the full flow of information
between them. Physical Internet aims at transforming handling, storage, distribution
and implementation of the supply of goods, aimed at increasing the efficiency of
global logistics and sustainable development (Zdziarska 2015).
4 Principles of Physical Internet
This innovative concept is based on three main pillars. The combined infrastructure
means that companies start to take action aimed at optimizing the operation of such
resources like storage space, vehicles capacities and production systems through
sharing. The current situation shows that most companies are not in a position to
fully exploit its potential, thereby freezing their capital. The market of logistics
services will strive to create a common infrastructure. Logistics centres, hubs and
transit points located all over the world will be widely available to all operators,
thus creating one global network. The ability to use a large amount of docs will
increase the efficiency of transport. The first tests of such activities were conducted
by P&G and Tupperware. Thanks to the collaboration and joint programming of
supplies they were able to reduce logistics costs by 15 %, reduce CO2 emissions by
2 million tonnes per year and increase the vehicle utilization from 55 to 85 %. But
these are not the only such initiative in the market. Companies such as Walmart,
HP, Volvo and Boeing are also heavily involved in the implementation of this
concept among its business partners.
The second area is the introduction of modular cargo units. Trying to be
achieved through the use of analogy of the Digital Internet data distribution in
physical processes in the real world. Digital Internet does not provide the infor-
mation but only transmits packets with embedded data. These packages are
designed in such a way as to be easily recognizable by internet networks.
Information in the package is closed and is not directly decoded by the network.
The packet header contains all the information necessary for the identification and
designation of transit routes to the destination. Digital Internet is based on protocols
that structure the data packets regardless of the mode of transmission. In this way,
they can be processed in different systems and networks such as modems, fibre
optic cables, routers, local area networks, Intranet, Extranet and virtual private
networks. Similarly to the Physical Internet (open logistics network) will not handle
the goods directly (whether they are raw materials, components or finished prod-
ucts), but only manipulated specially designed modular containers that allow an
encapsulation of these goods. Target solution involves a complete change of pallet
system into modular loading units. This involves, of course, the adaptation of
vehicles, handling equipment and warehouse space that will allow handling this
type of packaging. However, simulations conducted for research projects clearly
demonstrate that the investments made in the long term will help to significantly
reduce logistics costs and losses related to the movement of goods. Containers
thanks to the folding panels can create boxes of various sizes tailored to the indi-
vidual needs of the sender. M-Boxes are easy for handling, storage, transport,
loading and composition. They have a standard phrases recognizable throughout the
system and are equipped with sensors and transmitters to maintaining full control
during the transportation process. As a result, shipping safety is maintained
throughout the journey, and all actors involved in the distribution have full over-
view of the status of the order. Moreover, the package is reusable and easy to
recycle.
The last pillar is the exchange of data. This is the most crucial element of the
whole concept. Physical flow of information in the Physical Internet will operate
through an integration of infrastructure. In the PI you would be able to report and
organize the individual orders from your own ERP system in a standardized format,
which will be processed into ‘the cloud’ and decrypted by the other participants in
the process. An important aspect in this data exchange is the access level. The
architecture concept, developed so far, has designated four areas. Information on
the container (its designation, dimensions, special conditions of carriage) will be
available to all, then the data associated with the transport process (detailed route
and delivery address), reserved only for the carrier. Another area is an information
covering the delivery data such as sender and recipient, description of goods, value
of the contract and the terms and time of delivery. For this type of data only
logistics operators and customs will get an access. Most sensitive information will
60 M. Zdziarska
be used only by the sender and recipient, and will be associated with contracts,
number of orders, invoicing or discrepancies in the delivery.
Logistics operators, carriers and owners of the storage infrastructure will also
share their detailed information. They will provide information on the availability
of their resources, capacity and the status of implementation of orders. By com-
bining all these data, the system will optimize the process and suggest the best
possible solution for minimizing the cost of each of the participants in the process.
Physical Internet is called the concept of win-win-win, because it allows the bal-
anced growth of all actors in the supply chain (Zdziarska 2015).
Although the concept of the Physical Internet is still being developed there are a
few examples of the business initiatives that are based on the idea. Companies
Nivea and Energizer due to the fact of having distribution centres in Gądki/Poznan,
agreed to cooperate in the distribution of their products in order to maximize
ecological and cost-effectiveness. Both companies gave up their own flexibility to
get better results. Common delivery to retail chains run in partnership with a
logistics operator allowed both companies to effectively dispose the logistics
infrastructure. All project partners obey the rule of confidentiality. Each partner
could at any moment to leave the project, but the companies continue to cooperate,
because resource sharing allows them to cut costs and fuel consumption by a few
percent and raise quality of the service.
Another example in FMCG sector is Procter and Gamble. The long-term vision
of sustainable development which gives direction to the company’s operations
covers three areas: products, production and logistics, and social engagement. In
each of those areas, the vision is supported by specific goals that will be achieved
by 2020. Objectives of the area of production and logistics is projected to reduce by
2020 an additional 20 % energy and water consumption, CO2 emissions and the
amount of waste generated per unit of production. In the field of transport P&G also
intends to reduce the transport of heavy goods vehicles by 20 % per unit of pro-
duction in relation to the size of 2010.
An important element of sustainability is an intermodal transport. In a new
approach towards transportation and logistics, P&G is expanding its use of rail. The
company decided on a significant increase in the share of rail transport of P&G
products in Europe from 10 % of tonne-kilometres in 2008 to 30 % in 2016.
Implementation of the plan goes smoothly—as in 2012, the share of rail transport
reached 28 % of tonne-kilometres. This means that the traffic on the roads of
Europe, including Polish, decrease in number of 70,000 trucks, which is translated
into a reduction of CO2 emissions by 33,000 tons.
Henkel company is also very involved in sustainable actions. They optimize
logistics operations in order to reduce transport emissions. Firm positions its
warehouses and distribution centres to minimize the distance between the sites and
its customers. Wherever possible, they combine shipments between individual sites
and warehouses.
In 2014, Laundry & Home Care replaced four distribution centres with a
high-bay storage facility in Düsseldorf in order to reduce transport mileage and
energy needs. The new central warehouse is situated directly next to production,
thus eliminating supply shipments and cutting the ton kilometres travelled to cus-
tomers by 20 %. Laundry & Home Care also worked with suppliers to upgrade
transportation vehicles to more efficient emissions standards. Beauty Care is
working with retailers and suppliers to reduce carbon dioxide emissions. In France,
for example, Beauty Care launched a pilot project with customers to deliver
products on cardboard pallets instead of wood pallets.
Adhesive Technologies is consolidating customer deliveries in Western Europe
to reduce the number of truckloads shipped as well as carbon dioxide emissions. In
2015, Electronics business begins replacing Styrofoam coolers used to transport
heat-sensitive products with reusable, thermal containers. The new containers
reduce the carbon footprint by 75 % and waste per container by 95 %.
5 Conclusions
To achieve compromise within the modern supply chain companies, researchers are
looking for the solutions that enable sustainable, based on harmony with nature
development of the industry, involving both the economical as well as ecological
use of resources. Sustainability is an indispensable part of the logistics develop-
ment. Fast moving consumer goods sector is just a great example on how business
actions influence environment and society. Physical Internet concept that was first
introduced to FMCG distribution shows that sustainable growth can be achieved by
sharing resources, information exchange and new reusable and recyclable pack-
aging under the condition of willingness to collaborate among involved parties.
Physical Internet shows the new approach towards logistics operations and its
positive impact on sustainable development need to be further examined. Although
the idea is still developed there are a few business cases on the FMCG market that
presents tangible benefits of the new sustainable approach.
References
Amiti M, Shang-Jin W (2004) Fear of service outsourcing. Is it justified? In: IMF working paper,
pp. 6–7
Christopher M (1998) Logistics and supply chain management, strategies for reducing costs and
improving service, II edn. Financial Times—Pitman Publishing, London
Grant DB, Trautrims A, Yew Wong Ch (2013) Sustainable logistics and supply chain management:
principles and practices for sustainable operations and management. London, p. 11
Korczak J (2012) Globalizacja łańcuchów logistycznych. Czasopismo Logistyka 6(2012):713–718
Mihyeon JCh, Amekudzi A (2005) Addressing sustainability in transportation systems: definitions,
indicators and metrics’. J Infrastruct Syst 11(1):31–50
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and options for mitigation. Berkley, p. 3
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Polskie Wyd, p 15
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Częstochowa, p 110
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(eds) Innovation in logistics contemporary and future development trends, Radom, pp. 170–
178
Using DMAIC for Making Sustainable
Supply Chain Efficient in a GRAI
Environment
Paul Eric Dossou and Gilles Dedeban
Abstract The gloomy economic climate in Europe in comparison to the other

continents has a hard impact on SMEs in France and Europe. The best way for
resisting to globalisation negative impacts is to be more efficient at each step of their
supply chain. This is the key of their competitiveness. According to COP21 con-
clusions, it is nowadays a necessity for enterprises to integrate in their strategy
social, societal, environmental aspects in addition to cost, quality and lead time for
improving themselves: they have to be sustainable. The question is how to make
sustainable enterprise more efficient. Despite the other functions in the enterprise,
the supply chain and its related functions are the main area of improvements. GRAI
methodology is one of the three main methodologies (with PERA and CIMOSA)
used for improving enterprise performance. GRAIMOD is a tool being developed
for supporting GRAI methodology. The concepts defined during this elaboration
could be used for making supply chains sustainable. The result of the improvement
process is an efficient supply chain. DMAIC is a problem solving method used for
continuous improvement and really adapted to the wanted objective: improvement
of the supply chain. This chapter shows how to use this method in a GRAI envi-
ronment for making sustainable supply chains more efficient. Concepts are pre-
sented and illustrated will a real example on a SMEs.
Keywords Carbon reducing Cost

Lead time
Quality management

Dashboard Risk analysis Lean manufacturing Social Societal and environ-

mental indicators Design of experiments (DOE) Capability SPC GRR
P.E. Dossou (&)

ICAM Paris Senart, Carré Sénart, 34 Points de vue, 77127 Lieusaint, France
G. Dedeban
ICAM Vendée, 28 Boulevard d’Angleterre, 85000 La Roche sur Yon, France

64 P.E. Dossou and G. Dedeban
1 Introduction
The gloomy economic climate in Europe has a disaster impact on SMEs in

France and in Europe. The conditions for being adapter to globalisation are hard.
Indeed, it is difficult for them to be competitive because of high cost price due to
labour cost, charge, norms, etc. In addition, conclusions of COP21, which takes
place in France, show that it is urgent to know exactly how to reduce impacts on
the climate, the energy and on the environment. For instance a project is dis-
cussed for implementing everywhere in Africa solar energy, for reducing the use
of other resources. Norms and current regulations will be reinforced for enter-
prises. Cities like Paris, have already adopted the drastic reduction of gasoil
energy for transport, alternative solutions are being elaborated in the frame of
urban mobility.
SMEs have to reorganise themselves for being sustainable according to the
world tendency and mainly to their local territory. In addition to their actual dif-
ficulties for being competitive, they have to take into account new constraints,
norms etc. then, the efficiency is needed for them. The best way is to improve their
supply chain. Indeed, technical decisions are needed but also economic and
organisational aspects; the triptych (cost, quality and lead time) is now completed
with carbon footprint, social, societal and environmental indicators. Changes
required for being efficient involve the use of a structured methodology and
approach.
GRAI methodology is one of the three main methodologies (with PERA and
CIMOSA) for improving enterprise. GRAIMOD is a tool being in development and
supporting this method. The concepts developed are adapted for improving supply
chains. DMAIC, a problem solving method is combined with the use of GRAIMOD
modules for making sustainable supply chains efficient.
In this chapter GRAI Methodology and GRAIMOD are presented, then DMAIC
is combined with the use of GRAIMOD modules. An analysis is made for
explaining the impact of the approach elaborated. Finally an example is given for
illustrating the concepts presented.
2 GRAI Environment
This part explains the concepts developed according to this environment: GRAI
methodology and GRAIMOD. GRAI Methodology is one of the three main
methodologies (with PERA and CIMOSA) used for modelling enterprises.
GRAIMOD is software being developed for supporting this methodology in the
improvement of enterprise performance.
Using DMAIC for Making Sustainable Supply Chain Efficient … 65
2.1 GRAI Methodology
GRAI Methodology is used for analysing and designing enterprises. GRAI

approach is composed of four phases:
• an initialization phase to start the study,
• a modelling phase where the existing system is described,
• an analysis phase to detect the inconsistencies of the studied system,
• and a design phase during which the inconsistencies detected are corrected, and
a new system proposed.
The GRAI methodological tree is composed of five domains as clearly shown in
Fig. 1. Scientific concepts are defined for each domain in order to model, analyse,
and improve enterprises. For instance, GRAIPROGI and GIMPLANT are defined
for the computer solution choice and Implementation/technique/organisational
domain.
These concepts are used to choose and implement a computer tool (Supply
Chain management or ERP tool) which meets the real market needs (globalisation,
relocation, capacity to be proactive, cost optimisation, lead time, quality,
flexibility).
For example, the GRAIPROGI approach is completely integrated in GRAI
methodology approach. The ‘AS IS’ models describe the existing system (Fig. 2).
The components of the system are already known, described and formalised. It is
Fig. 1 The GRAI methodology tree, own study

therefore possible to easily understand the system and pinpoint the strengths and
weaknesses.
The ‘TO BE’ correspond to models for the future originating from the design
phase of the GIM (GRAI Integrated Methodology) approach.
In the GRAIPROGI approach the ‘SHOULD BE’ illustrate the ‘vision’ of the
future system and are considered as a key goal in the trajectory of the development
of the company. The elaboration of ‘SHOULD BE’ consists in defining a very
long-term business plan including strategic objectives, from which development
actions would be established.
Because the environment of the enterprise is in constant evolution, it is necessary
to regularly update the ‘SHOULD BE’ in order to ensure the coherence of the
development process. The definition of ‘SHOULD BE’ must allow to determine the
key factors for the success of the enterprise. It is precisely these elements, which
will enable the enterprise to achieve its global objectives.
The ‘AS IS’ and ‘TO BE’ models have the same structures (physical, decisional,
informational, functional and process models). The ‘TO BE’ models are therefore the
result of a combination of the enterprise ambitions, the constraints of the existing system
and the realistic aspirations taking into consideration the economic environment.
Then an action plan is defined. The next stage is the execution of the action plan
over short, medium and long terms. At the same time the ‘TO BE’ model is
transformed into specifications needed firstly to obtain the road book, to reorganise
the enterprise, to improve its performance and secondly to select the most suitable
tool.
Fig. 2 Use of enterprise modelling for choosing an SCM tool, own study
From the specifications we deduce:

• the global architecture containing the needed computer features (client/server
architecture, data base SQL server). This architecture can lead to the develop-
ment of SCM software. Most frequently, however, enterprises normally choose
already existing software.
• an action plan determines the evolution of the project with the choice and imple-
mentation of software. The specifications should also consider social, technical and
human factors, for supporting GRAI methodological tree different concepts and
software tools were developed. GRAIMOD is the new one being developed by
ICAM Engineer School for covering the 5 domains and proposing concrete solu-
tions for improving enterprise supply chains. The following parts present the
architecture of this tool and how it could be used for improving sustainable supply
chains.
2.2 Architecture of GRAIMOD
GRAIMOD (Fig. 3) is a computer-aided tool containing two parts:

• the interface analysis part used for modelling and analysing enterprises. It con-
tains three sub-modules: GRAIXPERT, GRAIMANAGER and GRAIKERN,
Fig. 3 Architecture of GRAIMOD

• the improvement part defined for giving tools needed for improving enterprises
and elaborating future models, action plans required. It composed of five
modules: GRAISUC, GRAIQUAL, GRAI_SSE, GRAIWORKER and
GRAITRANS.
GRAIKERN is a graphic editor used for representing the different models

associated to GRAI methodology. It is an interface between the different modules.
GRAIMANAGER is a management module used for organising the different
interactions between the modules of GRAIMOD. It controls and manages the
system’s interactions with the users. It presents the users with appropriate questions
and choices together with the necessary information about the characteristic of the
enterprise studied. It also manages the rules classified according to a typology of
production systems. Its main tasks are the modification, suppression or selection of
the applicable rules in a given context. It is also used for the loading and the saving
of rule files. Finally, it controls the design process, different actions of the
sub-modules and their interactions.
GRAIXPERT is a hybrid expert system (Russell and Norvig 1995; Xia and Rao
1999) for managing the analysis of the existing system and proposing a new system.
We define knowledge as the process which transforms the whole set of known
information Ci (stable state) into another Ci + 1. Knowledge Ci + 1 can be
therefore defined as a sum of disjointed information or as a progressive improve-
ment of the whole—C1 implying a restructuring of already acquired information.
How does a child obtain meaning of words used around him? He integrates the new
element with his already acquired knowledge and he structures his learning by
employing actively what he has just experienced.
Both cases correspond to a refinement of knowledge by the addition of distinct
(new) knowledge or the improvement of existing knowledge (Chen et al. 2008). We
use this concept to define three modes of knowledge representation:
• The reference models show the standard for a given sector of activity. They
allow to define an ideal for each sector of activity, which can be used as a
reference in the elaboration of the future model (TO BE).
• The cases studied are capitalized in order to enrich the knowledge capitalization
module of GRAIXPERT with the objective being to improve the use of CBR
(Case Based Reasoning).
• The rules are used throughout the different phases of the operation of GRAI
methodology. They serve not only to elaborate modules concerning the existing
situation of the enterprise (AS IS) but also to detect malfunctions of the
enterprise and establish its strengths and weaknesses and finally during the
design phase of the future system (TO BE).
GRAIXPERT is composed of two sub-modules in interaction with GRAIKERN:
the Knowledge Capitalization (KCM) and the Knowledge Based System
(XPERTKBM) (Burke et al. 2000; Brown and Chandrasekaran 1985; Chen et al.
2008).
The Knowledge based system contains a rule base used for analysing the dif-
ferent models in order to detect inconsistencies and propose corrections.
A dictionary is used to translate the user’s expressions into standard expressions
provided by the GRAI methodology.
The knowledge capitalization process needs some aptitudes to manage different
know-how and points of view. It must integrate this knowledge in an accessible,
usable and maintainable form. It offers an expertise model based on the knowledge
of the experts but also on the previously realised studies. The capitalization module
is composed of an acquisition module for integrating other expert knowledge, a
case base for capitalizing cases and reusing them during a new modelling, and a
reference models base containing models according to different types of enterprise
domain. For elaborating the reference models, a production typology is done. This
typology is improved by the addition of new criteria.
GRAIWORKER is the work base elaborated for managing, modifying and
capitalising knowledge about the case studied. GRAITRANS is a Transfer
Interface used for putting the new case in GRAIXPERT in order to improve its
Cases Base. The reference model elaborated for each enterprise domain will be
improved by the acquisition of this new model in GRAIXPERT (Dossou and
Mitchell 2009a, b; Dossou and Pawlewski 2010).
GRAISUC is a module used for managing the choice of an ERP or SCM tool for
an enterprise. It is composed of two sub-modules SpeMM and SpeCM. The
Specification Management Module (SpeMM) is used for choosing the appropriate
ERP or SCM Tool of an enterprise. The specifications obtained are capitalised in
the Specification Capitalisation Module (SpeCM).
This tool requires acquisition of specialist knowledge. Concepts developed for
GRAIXPERT are reused for this new module (Dossou and Mitchell 2009b, 2012a).
These concepts are used during the different phases leading for choosing and
implementing of a SCM tool. For instance, the reference models and the rules are
used during the analysis and the design of the future enterprise models.
GRAIQUAL is a module used for managing quality approach implementation
or quality improvement in an enterprise. It contains two sub-modules IMM and
QUALKBM. The Improvements Management Module (IMM) is used for managing
the different quality action plans of the enterprise. It contains different quality tools.
In the IMM we can notice for example tools such as SPC (Statistical Process
Control). SPC is a powerful quality control tool whose objective is to reduce the
variability of the process in order to constantly satisfy the technical specifications of
the products and improve the manufacturing procedures. It is founded on the
continuous detection of procedure evolutions, favourable or unfavourable, allowing
to foresee stability over time. SPC consists in controlling samples after the machine,
by recording the data on a control card. As soon as the values exceed the control
limits (at a point before the product is considered unacceptable), or when a suspect
deviation is detected, the machine is stopped and a search for the cause must be
undertaken.
We can also find Poka Yoke (a mistake proofing system). It is a relatively simple
means to prevent human error. Mistake proofing systems exist in everyday life as,
for example, the gas pump nozzle for leaded petrol cannot be inserted into the petrol
tank orifice of cars using unleaded petrol. There is nothing new in this concept.
What is new is the generalisation of its use. They can be simple: a template in which
only parts with the correct dimensions fit, photoelectric cells detecting the presence
of a shape on a conveyor etc.
The Quality Knowledge Base Module (QUALKBM) is being elaborated for
containing the rules related to quality certifications in order to use them for
improving or elaborating quality in an enterprise. This method is used for organ-
ising the global implementation of a quality approach, for managing the associated
quality system and improving the enterprise performance. In this section we also
look at the concepts, which form the basis of the GRAIQUAL. Some of them were
developed for GRAIXPERT and reused for this new module (Aamodt 1994;
Arezoo et al. 2000; Brown and Chandrasekaran 1985). Reference models, rules and
old case are reused.
For instance, the concept of reference model allows with GRAIXPERT to define
according to the domain the optimum realizable in terms of the quality approach
and the implementation of certification. For example, this could be the management
of the process and all the necessary stages to obtain ISO 9000 version 2000 with the
entire implementation phase and follow up.
The discovery phase and the mastery of the vocabulary and principles (ISO
9000), the quality assurance demands (ISO 9001) and the main axes for the
improvement of enterprise performance (ISO 9004) are established. The established
rules are exploited in the initial audit (modelling of the existing system) as well as
in the phases concerning application of norms and the internal audit (analysis and
design). Adding a case study enables to enrich the data base comprising the dif-
ferent studies undertaken in order to render the use of CBR (Case Based Reasoning)
more efficient.
In order to manage all the GRAI Quality approach and the design of the ‘TO BE’
models the problem resolution method developed for the expert system
GRAIXPERT is used. It is based on several reasoning mechanisms: CBR (Case
Based Reasoning), Decomposition, Transformation and direct correspondence
(Dossou and Mitchell 2012b). Once defined the architecture allows to bring to the
company all the expertise in the field of quality, continuous improvement tools and
certification procedure.
The most important factors of the developed model are used for doing a com-
parative study in order to show to the company decision makers, the interest of
implementing quality approach (procedure, continuous improvement, or certifica-
tion). Investing in quality management is always profitable in the medium term,
even if decision makers often demand instant results. The economic and financial
arguments to convince them are made more credible by using this module.
GRAI_SSE is the new module being developed specially for integrating social,
societal and environmental dimensions in the improvement of enterprises. It is
composed of a sub-module GRAICARB destined to manage carbon footprint and
GRAI_SO being elaborated for improving the other aspects of environmental,
social and societal dimensions.
It appears that a focus has to be made on the use of this criterion. A new module
GRAI_SSE is being added to GRAIMOD in order to pinpoint the environmental,
societal and social dimensions in enterprises. This module would integrate for
example changes associated to carbon management, ISO 26000, ISO 14000
implementations, social and societal evolutions impacts on enterprises but also
territorial collectivities (states, associations, districts, etc.) (Dossou and Mitchell
2012a). The objective is not to dissociate this criterion but to obtain a best com-
bination by really studying this aspect of the enterprise in order to propose
appropriate solutions. The difficult enterprise context due to the crisis and the
research of alternative solutions to the basic QCD optimization, are the cause of this
new focus on how social, societal and environmental dimensions are important and
how it is benefit for enterprises to find a new optimized solution by focusing on
these aspects.
The architecture of this system contains three different bases for managing the
study of a new case. A model base is used for managing elaborated reference
models. A rule base is used for analysing the models of the system in question. And
a case base is defined for capitalizing different studies for future use. This tool
proposes the combination of CBR (Case Based Reasoning) and Multi-agent sys-
tems for solving enterprise-modelling problem and improving enterprise
performance.
A new typology of enterprises is being elaborated by realizing a detailed study
on Vendee enterprises. The results would be presented later but this new typology
allows to define enterprises making a different management form by integrating
alternative considerations. The capitalist model based on market economy, is not
totally efficient. Then it appears that elaboration of a typology taken into account
this aspect and pinpointing the enterprises with alternative solutions is welcome.
A questionnaire has been elaborated and sent to enterprises.
GRAICARB is composed of different modules. CARBMM is a module for
managing carbon reduction policy of enterprises. It used allows to define and
manage according to social, societal and environmental dimensions and to elaborate
and manage improvements based on these aspects. CARBKBM is destined to
contain rules related to ISO 14000 certification and carbon management rules in
order to be able to implement or improve enterprises according to this norm. The
structure of this sub-module is the same to GRAIQUAL structure (Fig. 4).
Carbon footprint management is an approach. It represents the elaboration of
evaluation project and gas emission reduction. Six key steps could be defined:
growing awareness of carbon management, Definition of the study area, Data
acquisition, Results exploiting, Elaboration of reduction action plan, Executing
reduction action plan.
The approach chosen is based on the method proposed by ADEME (French
environment agency). It is composed of the previous steps, specific calculation
rules, calculation software tool (database) and the associated documentation.
For developing GRAIMOD and these modules an intelligent CAD systems
theory was used and a problem solving method combining different reasoning
Fig. 4 Architecture of GRAICARB, own study
(CBR, decomposition, direct correspondence, transforming reasoning) was elabo-

rated. The CBR is combined with the multi-agent theory for realising the modules.
JADE (Java Agent Development Framework) technology that implemented
multi-system agents with the standard FIPA-ACL language (Foundation for
Intelligent Physical Agents—Agents Communication Language) is chosen for this
development. The question now is how to use this new tool for improving effec-
tively the enterprise performance but also according to the changes of the world
how to take into account the impact of environmental demands on the enterprise
supply chain.
3 DMAIC
DMAIC (Fig. 5) is a problem solving method used in the frame of total quality
management for improving quality of an enterprise. The steps of the method are
adapter for improving progressively quality of the supply chain and reducing cost.
The approach used is the following:
• Define: well define the process used, critical characteristics, limits and taskforce
• Measure: find a good tool for measuring the system, data acquisition, check
quality of the system
• Analyse: examination of the system, data analysing, find factors with a real
impact on the system,
• Innovate: experimenting, modifying, improving, optimising, showing statisti-
cally that improvement are efficient
Fig. 5 DMAIC approach, own study
• Control: pay attention to every deviation, formalisation, and define how to

control
• Standardise: make the solutions durables, deploy good practices, close the
project.
The idea is to use this method on the supply chain in order to control ad to
manage changes. The advantage of this method is the use the necessity to define,
measure and improve. During the evolution of the system we could measure every
time the state of the system and propose improvement. Then the obtained results
due to the applied improvements could also be measured. The system is under
control. The following chapter shows how to combine this method with the con-
cepts of GRAIMOD.
4 Efficiency of Sustainable Supply Chain by Combining

the Use of GRAIMOD and DMAIC
As it is told above, for improving a supply chain, it is recommended to optimise

each part of the supply chain but also the combination of the different parts. The
modules being developed in GRAIMOD are destined to help the designer/analyst
during the optimisation phase. Criteria are needed for knowing exactly how to
optimise but also how to measure optimisation. In addition to the main criteria cost,
quality and lead time, it is proposed to use carbon footprint, social, societal,
environmental indicators (Fig. 6).
The approach developed is based on decomposition reasoning and the use of
criteria for each part. The improvement of the system by using quality criterion has
a real impact on lead time and cost. Cost and lead times are also optimized in the
same way by choosing a SCM tool for the enterprise in order to manage the whole
supply chain from the suppliers to customers (Dossou and Mitchell 2013; Dossou
et al. 2013).
Indeed, for each sub-part of the supply chain, we can define a type of quality and
measure the level of quality. This quality improvement also implies the respect of
environmental demands. For each part of the supply chain everything is done for
making the supply chain sustainable. According to energy reduction and carbon
management, supply chains need to:
• Assess dependence on fossil fuels,
• Anticipate fluctuations in energy prices,
• Limit the impact of the activity on the environment.
Even if researchers do not agree on the degree of damage to the planet caused by
human beings, it is now clear and validated by COP21 (more than 195 countries)
that each people, each enterprise (supply chain), each town, each country has to
reduce its carbon level. GRAIQUAL, one of GRAIMOD modules, allows to
improve each part of the supply chain by using well-known quality tools and
GRAISSE is used for managing the social, societal and environmental criteria
(energy management and carbon reduction). For quality criterion, this improvement
could globally be represented by the Fig. 7.
Fig. 6 Efficient and sustainable supply chain performance indicators, own study
Fig. 7 Quality system management, own study
The quality system has to be improved by adapting a quality policy and plans.
Then it means that each part of the production system will be improved for
respecting quality. The quality system of an enterprise will be improved every day.
So we can measure all the time the level of quality. The steps of DMAIC would be
used in combination with the quality concepts of GRAIMOD presented above.
u(t) is the representation of the input (it means the quality required by the
customer), v(t) the representation of the output, g(t) the function associated to the
served system (the quality system) and k(t) the function of the feedback (customer
and internal audits). Laplace transforming could be used for formalizing this sys-
tem. If e(t) is the difference between the quality required and the quality compre-
hended by customers and people in the enterprise, then the objective is to reduce
this difference to zero. We can calculate the transfer function as follows:
VðpÞ ¼ GðpÞ EðpÞ

EðpÞ ¼ UðpÞ VðPÞ FðpÞ
then VðpÞ ¼ GðpÞ ½UðpÞ VðpÞ FðpÞ
VðpÞ ½1 þ GðpÞ FðpÞ ¼ GðpÞ UðpÞ
VðpÞ GðpÞ
so ¼
UðpÞ 1 þ GðpÞ FðpÞ
Then the temporal relation between v(t) and u(t) could be deduced. This loop
will be applied to each part of the supply chain. A zoom on the procurement part
and the relation with suppliers allows to define a vector qp associated to the product,
and then to able to quantify the local optimum for this supply chain part and
simultaneously take into account the impact on the environment. The best quality of
raw material could be chosen according to lead time. An economic study allows the
choice of the best raw material not only in terms of cost performance of the supply
chain but also in respect of the environment. Using a set of software adapted to the
enterprise helping it to react more quickly and to meet customer’s demands does the
optimization of the global supply chain. The goal is to be able to guarantee to the
customers the delivery date and quality of the product and furthermore to reduce
costs.
It means the management and optimization of each part of the supply chain from
suppliers of suppliers to customers of customers, but also the integration of all the
chain. It is essentially the synchronization of the industrial, logistic and commercial
processes, the reduction of information-handling and decision-taking cycles, and
the reduction in enterprise process complexity. We can deduce that the choice of
these tools is crucial for the enterprise. The addition of the environmental dimen-
sion also complicates the situation. The use of GRAISUC allows to facilitate the
improvements of the supply chain and to choose and implement the appropriate
SCM tool for the enterprise.
We consider the set of supply chain E as a vector space (Fig. 5). We can define
L1 an endomorphism of E and u a vector of E associated to a given supply chain (an
object O). We also define uk the vector of E associated to the sub-object Ok, uk
being a basic vector of L1. Each supply chain is improved by optimizing the main
performance criteria such as quality, cost, lead-time. For quality criterion, each
vector uk corresponding to a given supply chain sub-part will be composed of
vectors qf, qp, qpr, qs associated respectively to the main aspects of quality. The
vector qf represents Quality of suppliers, qp Quality of products, qpr Quality of
process, and qs global Quality of the system. These vectors are defined for each
sub-part and indicate the global state of the sub-part according to the performance
criterion Quality. We obtain the following Eqs. (1) and (2):
X
4
L1 ðuk Þ ¼ ðal ql Þ ð1Þ
l¼1
!!
X
n X
4
L1 ðuÞ ¼ kk al ql ð2Þ
k¼1 l
The following step is the design and local optimization. The global optimization
objectives are detailed in local attainable objectives for a sub-part. An optimization
of criteria is obtained for each supply chain. The coefficients al associated to vectors
defining uk are optimized by using the reference models defined in GRAIQUAL.
The basic values kk associated to each sub-part are implicitly optimized and by
deduction of the sub-part. We transform by successive iterations the sub-part Ok
into designed sub-part Ock.
Indeed, we define a vector space F associated to the designed object Oc. It has
the same dimension as E. Let us also define L2 a linear application from E to F
which transforms each basic vector uk associated to the object Ok into a vector vk
associated to a designed sub-object Ock as follows (3) and (4):
vk ¼ L2 ðuk Þ ¼ dk uk ð3Þ
X
n
L1 ðvÞ ¼ rk vk ð4Þ
k¼1
The validation of the optimization of all the sub-objects implies a re-composition

stage. It is clear that the sum of local optima is not necessarily the global optimum.
In addition to the sum, this phase also guarantees coherence between all the defined
optima, according to the existing reference models. The design solution of the
object O is obtained by combining different partial solutions obtained for the
sub-objects Ok and by keeping the coherence of the set.
We obtain the following Eq. (5):
[
n
Oc ¼ Ock ð5Þ
k¼1
As its name suggests, GRAIQUAL tool is used for managing different aspects of
quality. It allows to analyse the quality approach (if it already exists) of an enter-
prise, and to propose an improvement process, action plan in conformity with
reference models along with existing quality tools in GRAIQUAL. The defined
process of quality acts on each part of the supply chain.
We can consider that for radically improving the performance of the supply
chain, we need to carry out the same transformations based on the other perfor-
mance criteria. In reality, the definition of a global optimum in terms of quality is
not separable from an improvement to cost and lead time. Indeed, the elimination of
defects in the manufacturing of a product for example, leads to reduced production
and transport costs in order to satisfy customers and avoid penalties or claims due to
the bad quality of products. It also improves the manufacturing process and thus
reduces lead time. The implementation of a global quality approach greatly influ-
ences the performance of the supply chain.
The different aspects of quality are studied. Then each part of the supply chain is
improved and logically the global supply chain. But simultaneously, the different
reference models contained in GRAIQUAL in order to implement certifications
could also be used for respecting the environment. The consequence is that the
implementation of the certification ISO 14001 is generally obtained. The different
phases of the implementation are managed with GRAIQUAL. This theory is
coherent with the organisation of new production systems in order to respect sus-
tainable development expectations.
For the vector qf associated to the quality of suppliers specifications are defined
for verifying the nature of the supplier production. For instance, the assurance of
using only adults for production, of respecting the environment (norms and certi-
fications), of using ecological means of transport. A weighting could be defined for
each specification in order to evaluate the environmental position of the supplier.
For the vector qp associated to the product, the choice of the nature of the raw
materials is studied in order to respect the environment. An economic study allows
the choice of the best raw material in respect of cost performance of the supply
chain but also in respect of the environment.
For the vector qpr associated to the quality process, we have to manage the
rational use of raw materials in order to optimize the quantity of materials and
minimize defects. Ecological choices have to be made for the production system.
The use of energy is not necessary polluting. For a wood enterprise for example,
shavings could be reused for heating of the enterprise or they could be resolve in
order to be transformed into pellets for the new generation of heating stoves.
For the vector qs associated to the quality of the system, the life cycle of the
product including recycling could be prepared. The ecological and economic
organization of transport would also be studied. Thus the management of the
product movements during the process would be optimised.
The application of these different types of quality improvements allows to
simultaneously improve environmental and supply chain performance.
The improvement of the supply chain corresponds to the optimization of the
triptych quality, cost and lead-time. Carbon management could be added as a new
criterion because of the impact of environmental demands and sustainability on
future supply chains. By using GRAIQUAL, quality related to each part of the
supply chain could be improved.
For instance, a zoom on the procurement part and the relation with suppliers
allows to define a vector qp associated to the product, and then to able to quantify
the local optimum for this supply chain part and simultaneously take into account
the impact on the environment. The best quality of raw material could be chosen
according to lead-time. An economic study allows to choose the best raw materials
not only in terms of cost performance of the supply chain but also in respect of the
environment. Using a set of software adapted to the enterprise helping it to react
more quickly and to meet customer’s demands does the optimization of the global
supply chain.
The goal is to be able to guarantee to the customers the delivery date and quality
of the product and furthermore to reduce costs. It means the management and
optimization of each part of the supply chain from suppliers of suppliers to cus-
tomers of customers, but also the integration of all the chain. It is essentially the
synchronization of the industrial, logistic and commercial processes, the reduction
of information-handling and decision-taking cycles, and the reduction in enterprise
process complexity. We can deduce that the choice of these tools is crucial for the
enterprise. The addition of the environmental dimension also complicates the sit-
uation. We can notice that the improvement of quality also implies the respect of
environmental demands. For each part of the supply chain everything is done for
making the enterprise sustainable. So the three main performance criteria are highly
related to carbon management. The objective is to use different techniques and

methods for reducing carbon in each part of the supply chain.
The improvement of each part of the supply chain needs to use different methods
and algorithms and then offers the opportunity to improve lead-time. Indeed the use
of GRAIQUAL for each part is destined to optimize quality but the impact on
lead-time is also clear. For instance, if we pay attention to procurement and relation
with suppliers, some significant influences could be noticed. According to
GRAIQUAL all the procurement service would be reorganized in order to have a
coherent structure in the short, medium and long terms. This kind of structure
implies efficient processing of information concerning procurement and anticipation
of procurement lead time. The processing over a long term of procurement allows to
define a collaboration relation with suppliers and involves them in the respect of the
customer expectations such as lead time, cost, quality and sustainability. The
organization of raw material reception by establishing the respect of delivery date
by suppliers and an evaluation grid taking into account this parameter, and also by
preparing quality control is also very beneficial for the enterprise in terms of lead
time. Indeed, the supplier if there exist a good relation of collaboration between the
enterprise and its suppliers could do quality control. It means a gain of time in terms
of control. But in some cases a control at reception of goods could be justified to be
certain of the receiving raw materials with the accepted level of quality, and we
know the impact of having best components on production. It is clear that in this
way we will decrease one of the causes of delays due to product quality.
We consider vector space E associated to the supply chain and Ei a vector
sub-space associated to each part of the supply chain. For each Ei, we have three
steps of multi-criteria combination:
• The first one allows to optimise lead time by taking into account all the
parameters reducing delivery date. It means the optimization of lead-time
according to planning and organization, product, and process of the chosen part.
• The second step is integration of the four criteria (quality, lead time, cost and
carbon management) for each part of the supply chain for finding a real opti-
mum corresponding to the particularity of the enterprise. The defined reference
models associated to each domain could be adapted to the enterprise in order to
obtain the result envisaged.
• The last level is about the global supply chain for integrating the different parts
and their local optima. The consequence of this step is the creation of a real
coherence between the study of each part.
Using the following equations could combine these three steps. Li is the
lead-time (lj is the lead time obtained by taking into account one parameter in each
domain) and Oi is the Optimum (integrating quality Qi, cost Ci, lead time Li, and
carbon management Si) associated to one part of the supply chain. O is the global
optimum of the supply chain.
X
n
Li ¼ aj l j
j¼1
Oj ¼ b Li þ k Ci þ c Qi þ l Si
Xm
O¼ gi Oi
i¼1
Then GRAIQUAL as shown, contains tools for really transforming the supply
chain in order to improve each performance criterion and integrate them.
Let us now focus on the carbon management criterion and its constraints. The
objective for the enterprises is to use the opportunities to optimize waste man-
agement by reducing cost. The regulations relating to waste are constraints for
enterprises, so it is obvious that they have to reorganize each part of their supply
chain according to this new approach. Waste management has to be organized step
by step: identification of potential partners, identification of partners having the
same waste typology, knowledge of recycling domain, definition of partner’s
policy, economic and environmental validation of the optimized flows (carbon
impact, tonne per km, empty return rate, load factor…).
The second point is transport. In France the use of road transport has not ceased
to expand over the last twenty years. But we know how ecologically expensive it is
to use road transport for procurement or for dispatch. So it is interesting to use
alternative transport: railway, air, maritime, or waterways. Nowadays, road trans-
port represents 85 % of merchandise traffic compared to 58 % in 1984. It means
that we have an increase in non-ecological transport use. The problem is that there
is no suitable alternative solution for short distance transport. The potential idea,
which could be interesting, is to use the tramway network or local railway for
distributing products directly to enterprises.
For long distances we do have alternatives. The increase in the price of oil and
gas and the ecological constraints encourage the research of other viable solutions.
We have for example the use of high-speed trains for transporting products pre-
viously transported by truck or plane. The combination of rail and road appears a
clear way forward if we use electric motors for road vehicles. Electric trucks could
be integrated in the environmental development of a town replacing current
diesel-driven trucks. There are other alternative motors being developed but their
efficiency still needs to be confirmed.
The following examples allows to illustrate this last section and facilitates
showing how to make the best choices using GRAIMOD to make enterprises and
their supply chains sustainable.
The first step Define is used for expressing the indicators that would take into
account for measuring the existing level of the system (supply chain). A dashboard
is elaborated containing these indicators. This phase allows to take into account the
modelling of the existing system. A handbook is elaborated with functional analysis
tool according to the enterprise requirement. GRAIXPERT and the sub-module
GRAIKERN are used for realising this step. An important analysis is made on
potential risk by using FMEA (Failure Modes and Effects Analysis).
The following step is Measure. The existing supply chain is measured by using
indicators defined previously. The grid for FMEA is made and validated with action
plan for critical points. For instance data corresponding to each quality criterion
defined for a sub-part of the supply chain are acquired and measured by using
GRAIQUAL. GRR (Gage, Reproducibility and Repeatability) coefficient is cal-
culated for the quality criterion, for validation the capability of the measure
instrument. The evolution of a sub-part could be followed by implementing a
dashboard and observed during all the deployment of the approach.
The third step Analyse is destined to check capability of the supply chain and
define the optimisation desired. It would be possible at this step to use Ishikawa
diagram for finding all parameters impacting the optimised response. The use of
Design of Experiments (DOE) and FMEA will be used for choosing factors
influencing the system (part of supply chain) and critical parameters.
The fourth step Innovate is the main step for reducing variability, for optimising
the system, for making the system efficient. The DOE would be used for extracting
the parameters with a high influence on the response. The coefficients of the model
representing the response would be found: the exact response would be given.
The fifth step Control is for checking if the chosen influent parameters are able to
furnish the optimised solution. The DOE is used for verifying if the mathematical
model founded above is good or not. The factors would be in the appropriate level
and the real response will be observed. A dashboard will be elaborated for mea-
suring the indicators elaborated previously.
The last step Standardise is destined for capitalising the approach and extended
the obtained approach to the rest of supply chain.
5 Illustration of DMAIC
This example is presented for illustrating the different concepts presented above.
The enterprise is specialised in military and aeronautics pieces control, repairs and
maintenance. The enterprise work force is about 49 employees. This enterprise,
located in the area of Sénart just near Paris in France, has a turnover of 4 million €.
The activities of this company are non-destructive control, repairs and
assembly/disassembly. The enterprise has more than 250 customers with three of
them very important in terms of high technologies and aeronautics.
The activities of the company were handmade. The growth of this enterprise is
important because of the number of customers. The process was not adapted to this
new challenge. In 2008, a new president has purchased the enterprise. He decides to
reorganise the company for becoming industrial.
The enterprise has difficulties to solve, due to the different changes and the
increase of customer demand. The economic environment and the actual context of
the enterprise impose the elaboration of a new organization and the optimization of
the whole supply chain. The main problems were about respect of customer
lead-time, quality of products and processes, and carbon management.
GRAI Methodology combined with DMAIC is being used in this enterprise for
solving all problems. The objectives consisting in being industrial are defined for
three years with steps to achieve every six months.
The following parts present the first step realised.
5.1 The Modelling Phase: Define
The first step of modelling phase was for acquiring the project context. Interviews
were done, for knowing exactly how the enterprise was organised. This step cor-
responds to Define of DMAIC. Functional requirements were realised. The result
obtained was a handbook, containing according to FAST method requirements,
objectives, but also Beta-corn and octopus method. Interviews were realised by
using GRAIMOD. The acquired Knowledge was used for elaborating models of the
enterprise.
The second step of the modelling phase served for elaborating existing models
according to GRAI methodology. The enterprise processes were observed for
modelling the production cycle. Actigram formalism was used for representing the
enterprise physical system and functional view (links between services).
GRAIGRID and GRAINETS correspond to the decisional system: how the enter-
prise decision were structured (Fig. 8). UML (unified modelling language) were
used for elaborating the informational system. Extended actigram served for rep-
resenting processes. VSM (Value Stream Mapping) was also used for representing
the production system.
5.2 The Analysis Phase: Measure and Analyse
The first step of the analysis phase was the study of the elaborated models for
finding inconsistencies. The module GRAIXPERT containing rules, was used for
Fig. 8 Existing system GRAIGRID, own study

realising is the analysis phase. As expected, GRAIQUAL was used for the
detection of inconsistencies due to a lack of quality (products, process, SQA
(Supplier Quality Assurance) and respect of norms). The analysis of the actual
VSM points out inconsistencies related to lead-time. The impact on cost was
clear due to the activity sector cost reduction was not priority, however by
improving quality and lead-time, cost reduction would be effective. The envi-
ronmental, social and societal aspects of the enterprise were analysed by using
GRAISSE.
Table 1 presents a part of points to improve and the corresponding requirements.
The second step of this phase consists in the definition of performance indicators
for measuring the existing system organisation. The objective was to be able to
know exactly how to improve the enterprise but also how to achieve the defined
objectives.
Fig. 9 presents an example of indicator and how this indicator will measure the
existing system and the future system in order to show the impact of the
reorganisation.
Table 1 Requirements and points to improve

Points to improve Requirements
No production range Technical data elaborations
Traceability Transform curative maintenance into preventive
maintenance
Lack of master production schedule, and Production planning and master production
scheduling schedule
Stock management Data warehouse reorganisation, ABC analysis
implementation
Data treatment ERP implementation
Non added values (MUDA) Action plan for reducing lead time
Fig. 9 Example of indicator

5.3 Design Phase: Innovate, Control and Standardise
This phase is being realised. For instance, the green touch is being applied on the
enterprise supply chain according to GRAISSE module. The quality approach of
the enterprise is underdone; the improvement of lead-time by using VSM principles
is effective. The proposed design tries to respect environmental demands and
reduces carbon levels in order to obtain a sustainable chain.
A special attention is paid to traceability, and ERP implementation. GRAISUC
is being used for choosing and implementing an ERP tool in this enterprise in order
to manage the whole system in the short, medium and long term. For instance, the
improvements were also about the organization of the enterprise and the software.
One of the inconsistencies was the small area available in the manufacturing
system. In this phase a new implementation is being studied. The points Innovate,
Control and standardise corresponding to the last part of DMAIC will be tested
during this phase.
6 Conclusions and Further Research
All the European enterprises have to resist economically and financially to the
present crisis. However, they have to be ready for the future economic growth in
Europe. The evolution of their structure will allow to achieve this objective. GRAI
Methodology could be used for helping them. The concepts elaborated for
GRAIMOD have been illustrated in this chapter and their combination with
DMAIC method has been presented. The steps Innovate, Control and standardise
are not finished but the example given shows how the concept will be used. The
main performance criteria (cost, quality, lead time) are completed with social,
societal and environmental aspects. The efficiency of the enterprise supply chain is
very important for the global strategy of an enterprise. The introduction of envi-
ronmental dimensions everywhere in this enterprise is an advantage. The design
phase will be finished in two months and the defined indicators will show the
realised improvements.
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Ecological Aspects of the Implementation
of Logistics Processes in E-commerce
Karolina Kolinska, Izabela Jeleń and Marta Cudziło
Abstract E-commerce is a constantly evolving market. In order to cope with the

customer’s expectations it is required that companies need an appropriate man-
agement of logistics processes. Therefore, it becomes necessary to monitor the
processes using the respective metrics and indicators. The aim of this study is to
propose indicators of logistics processes in e-commerce, also in an ecological
aspect and an indication of trends in e-commerce. Maintenance of proper levels of
customer satisfaction requires changes in the organization of the procurement
process for e-commerce. It is proved, that helpful are IT systems that allow parcel
tracking.
Keywords E-commerce Ecological Logistics processes
1 Introduction
The Internet is presently the most popular tool for searching information on various
areas of life. It is also used for sending messages via e-mail accounts, chatting,
making money transfers etc. Such enormous popularity of this form of communi-
cation and common access to the Internet has been quickly noticed and used by
entrepreneurs as another channel for making sales and purchase transactions.
According to the classification suggested by GUS (Central Statistical Office) (Jelen
and Sawicki 2015), this type of commercial exchange is referred to as e-commerce,
and it includes transactions made via networks based on an IP protocol. Goods and
services are ordered online, whereas delivery and payment may take place on- or
K. Kolinska (&) I. Jeleń M. Cudziło

Institute of Logistics and Warehousing, Estkowskiego 6, 61-755 Poznań, Poland
I. Jeleń
M. Cudziło

88 K. Kolinska et al.
offline. It should be noted that e-commerce does not include orders made by phone,
fax or email.
The e-commerce market in Poland is growing very dynamically (Value of Polish
e-commerce market is estimated at PLN 33 bn). Growth of the market is determined
by several factors: delivery speed, service quality, online payments, mobile pay-
ments. An increasing number of Poles buy online; according to estimates, the
market in next years will grow 15 %. (PMR Report 2014). It is a consequence of
broader access to the Internet, and greater trust towards virtual transactions. Until
recently, e-commerce was identified with buying goods in e-shops, only by private
persons, while companies running this type of activity were usually micro- and
small enterprises. The scope of goods available for online purchase also keeps
growing. According to the E-commerce report (Chocholowski 2015), both services
(such as buying tourist trips, booking hotel rooms) and a wide scope of goods, from
the ones available in traditional bookshops, clothing, shoe and jewellery shops, and
specialist shops, such as medications, home electronics, household appliances, may
be bought online.
Another step in the development of e-commerce is transferring Internet users’
purchasing habits from private life to the level of enterprises they run or they are
employed at (Cardona et al. 2013; Jin and Cho 2015). Typical example are
microenterprises assembling installations in houses, designing interiors etc. The
tendency was soon observed by companies distributing various materials and
devices used for these installation works (Falk and Hagsten 2015). In consequence,
next to a traditional distribution channel via wholesale companies and specialist
shops, in which a customer purchases goods in person or orders them on the basis
of producer catalogues, distributors open their own e-shops (Savrul et al. 2014).
At the initial stage of launching a new sales channel by distributors, only the
goods whose dimensions allowed ordering a delivery by a courier company were
sold. At the next stage, to satisfy customers’ requirements, decisions related to
broadening the scope of goods sold in e-shops were made, which, consequently,
resulted in significant increase in costs related to handling warehouse processes and
transport. Observing the increasing sales in the area of e-commerce, distributors
started to consider reorganising processes of distributing goods bought via the
Internet.
2 Advantages and Limitations in E-commerce
As in every type of business operations, there are both advantages of this form of
sales, as well as certain limitations. What is more, some elements related to
e-commerce pertaining to the sale of services will generate profits only, while in a
situation where an entrepreneur sells goods, they will cause specific limitations. At
the same time, in the case of selling a wide variety of goods, these features may be
Ecological Aspects of the Implementation of Logistics Processes … 89
advantageous to one of the groups, whereas in another case, it will contribute to a

significant increase in costs related to handling this type of flow of goods. However,
for all companies operating in e-commerce, irrespective whether they sell services
of goods, there is a common group of advantages. According to the report
(Chocholowski 2015), it includes, in particular:
• savings resulting from: reduced office space, reduced number of employees,
shorter distribution channels, entire or partial resignation from warehouses,
• interactivity, which makes it easier to verify a spectrum of sold goods and
services, selection goods better, in accordance with customers’ interests,
• reduction of one’s own technical infrastructure and logistics system as a result of
more frequent use of logistics operators’ or courier companies’ services,
• saving customer’s time spent on searching for information and comparing goods
and services,
• possibility to perform effective marketing activities on the Internet by direct
promotion of one’s own goods and services, better identification of target groups
and their needs (direct contact with customers),
• global market range,
• possibility to offer customers a much broader variety of products (full scope),
• collection and making use of customers’ opinions concerning the offer and the
quality of service,
• very low costs of providing products in a digital form.
Despite a number of advantages, the e-commerce industry in a way limits both
sellers and customers. According to the same report (Chocholowski 2015), the main
limitations of this solution include:
• lack of possibility to test or inspect goods before purchase,
• limited scope of goods that can be sold online, resulting from the fact that a large
group of physical goods may not be sold in that form due to their large size,
• high cost of delivering the goods to customers, not always offset by savings
resulting from the optimisation of customer service processes and resources
used.
• increased costs related to sophisticated processes of handling returns and
complaints,
• lack of sufficient legal regulations,
• lack of direct contact with the seller and of the customer service system,
• delay in delivery resulting from deliveries made by courier companies and lack
of seller’s direct influence on the quality of services provided by couriers,
• negative environmental impact due to repeated delivery attempts to final cus-
tomers, and to handling returns,
• lack of possibility to make full use of loading space in courier’s vehicles using
first and last mile,
• threats to safety due to the protection of personal data and to the execution of
virtual financial transactions.
E-commerce is a continuously developing area. A number of aspects related to

its functioning has been thoroughly analysed and fine tuned. According to
Kadłubek (2015), however, e-logistics is an issue in e-commerce that would require
more detailed research. Matters concerning e-logistics have a particular influence on
e-commerce related to the sale of goods. For instance, the selection of packaging
and fillers may contribute both to higher and lower cost of transport and its envi-
ronmental impact.
Looking at the definition of e-commerce, it seems clear that its central purpose is
to deliver goods or services to a customer. Therefore, e-commerce, just as tradi-
tional trade, poses a challenge to logistics in terms of handling the following
processes/areas:
• goods management (forecasting deliveries, flow of information etc.),
• warehousing,
• delivering goods to customers.
When organising each of the said processes, one should take into account their
effectiveness and rules for monitoring individual stages of the process, thus the
selection of appropriate indicators, methods for their measurement, measurement
frequency and responsibility. This approach allows current monitoring of executed
processes and implementation of suitable corrective measures in case of deviations
from the plan. Another element which companies draw greater attention to is the
ecological aspect, an appropriate set of measures to evaluate this area is therefore
necessary.
According to Coyle et al. (2003), Wang et al. (2015), the popularity of
e-commerce and annually growing turnover level in this channel have brought
leading distributors of goods from different industries to massively open e-shops.
They could not allow for a customer who had so far bought goods in a traditional
shop, to change their habits and use their competitor’s virtual shop. It might seem
that large entities, which use traditional distribution chains in the B2B (Business to
Business) channel, would find it easier to adapt to B2C (business to customer)
solutions (Dant and Brown 2008). As practice shows, companies of this type also
encounter problems resulting from retail orders, which in a number of cases require
full reconstruction of warehouse and transport processes (Segetlija and Dujak 2014;
Maiti and Giri 2015). Another obstacle is the fact that these companies serve
customers both through the traditional channel and e-commerce.
Distribution logistics in the traditional channel significantly differs from the one
in e-commerce. Logistics processes on the part of distributors who until recently
have been using traditional sales channels were to a considerable degree optimised.
In numerous cases, the implementation of e-commerce solutions requires adjusting
logistic processes and additional investment, e.g. in specific warehouse infras-
tructure (automatic cabinets, scanning tables, scales etc.). What is more, the pro-
cesses which a distributor has so far used in a limited scope, require expansion in
the case of e-commerce. It mainly concerns handling returns and complaints.
In a number of cases, distributors based their operations on their own chains of

regional warehouses or reloading points, used to serve local wholesalers and shops.
Transport between individual links of distribution chains was carried out with small
carriers, who, in most cases, operated at distributor’s one request only. In the case
of direct e-commerce customer service, the process of deliveries using the said
process becomes uneconomical. Therefore, distributors must involve large courier
companies handling LTL (Less than truckload shipping) transport. It results from
the fact that logistics in e-commerce requires proper freight forwarding facilities,
while reliability of processes related to direct deliveries requires cooperation with
specialist companies.
In order to define the path of distribution structure transformation, these enter-
prises take actions related to the analysis of current situation and the simulation of
company’s operational costs in the case of changing the size of the stream of goods
flowing via the traditional channel to the benefit of e-commerce.
3 Evolution of the Supply Process Organisation

for E-Commerce
A broad set of indicators, which have been described in detail in the

Chapter “Green Logistics as the Basis for Improving Environmental Efficiency of
Transport”, is one of many elements entrepreneurs and logistics operators acting on
their request had to keep track of. Their current monitoring, analysis and conclu-
sions drawn influenced the evolution of the way deliveries to a final e-commerce
customer were organised. Obviously, all the changes introduced as part of logistics
processes could not have had negative impact on customer service level, and even
must have contributed to improving a specific indicator, and should have a positive
effect on the level of indicators defining the impact of logistics processes on the
environment.
In its beginnings, e-commerce market focused chiefly on supplying its customers
with goods of small dimensions and weight. It resulted from the fact that companies
based the organisation of supplies on distribution networks of courier companies,
whose services were quite costly, which in turn had direct impact on sellers’
margins. Considering the fact that the central goal of entrepreneurs is to maximise
profits while remaining competitive against products offered by traditional shops,
the high share of delivery costs in the price of products sold was a significant
problem.
Since the e-commerce market was growing quite rapidly more and more new
elements, such as safe payments, auction portals caring about the security of
transactions, were introduced. Streams of packages handed from entrepreneurs to
courier companies for distribution kept increasing. Competition between courier
companies contributed to lowering the margins on services provided by these
companies, in order to maintain cooperation with e-commerce traders. As it turned
out, lowering the margin was not enough. Courier companies had to start intro-
ducing changes to their operations. On the one hand, they had to give attention to
costs generated by the changes and, from the other, to the level of customer service
they offered, such as 48-hour delivery.
One of the main reasons for high delivery costs identified by couriers were
repeated attempts to deliver the package to the final customer. The majority of
customers of the e-commerce market are private persons who, in a number of cases,
were absent from specified places of delivery when drivers made last-mile deliv-
eries. The reason was simple: they were at work.
First of all, actions related to prior notification of a courier’s arrival by phone
were taken. The action, however, proved rather inefficient and did not significantly
improve cost-related parametres connected with the processes employed at courier
companies or any other ecological indicators or customer service level.
Significant development of the IT industry and IT systems applied by individual
courier companies made it possible to significantly reduce the problem. Companies
started to introduce various forms of parcel tracking by notifying customers by
email on its status, location and expected delivery time. The solution, however, did
not eliminate the problem, since the courier was able to provide only general
information about the day on which the delivery would be made. The customer still
had to spend all day waiting for the courier, which was not always possible. Courier
companies therefore failed to eliminate repeated deliveries to one address in a
satisfying extent.
One of the companies implemented a solution which provided for sending
information (by email and text message) on planned delivery date, indicating a
two-hour time frame in which a customer could expect the courier’s arrival, and
suggesting two successive delivery days as an alternative. Absence of customer’s
reply meant having accepted the company’s first suggestion. A reply containing the
specified code meant having selected one of the alternative dates. It might be
concluded that there were many more variants of cooperating with customers and
eliminating the problem of repeated deliveries than there were courier companies in
the market (RUCH 2016; DHL Express 2013; DPD Poland 2013; FEDEX 2015).
The introduction of self-service parcel pick-up stations (“Paczkomaty”) was
crucial. InPost is Poland’s leader in this solution. Implementation of this solution
has significantly changed the process of last-mile deliveries. This time, a customer
does not have to wait for a courier to deliver the parcel. The parcel waits for the
customer at a pick-up station for 72 h. As it has turned out, 72 h is enough for a
customer to come to a station located in the most convenient place, and collect the
parcel. After 72 h, a customer may pick up the parcel directly from a distribution
centre in a specific region (INPOST 2015).
InPost conducts broad research (Integer EKF 2015) and verifies upgrades which
are later introduced to the market. The solution has significantly affected the
environment, which might be discussed in a separate chapter. Here, the authors only
wanted to emphasize that self-service parcel pick-up stations have marked a
breakthrough point in the e-commerce market. It is logical that other courier
companies had to respond to the above actions to lower the costs of last-mile and
first-mile deliveries, and improve the impact of their operations on the environment.
One of the alternative solutions introduced to the market was the so-called
“Paczka w Ruchu1” (RUCH 2015). Courier companies sign agreements with
newsagent’s shops or other small points of sale located in the vicinity of recipients.
Under the agreements, a courier leaves a parcel in such a shop and informs the
customer who may pick up the parcel at the specified location e.g. after work.
Both solutions undoubtedly contribute to lowering the number of deliveries to
one location, at the same time having positive impact on the environment, as well as
on courier companies’ costs and customer service level. However, a significant
advantage of self-service parcel pick-up stations is their 24-hour availability.
Pick-up points located at newsagent’s shops are available only in their opening
hours.
Summing up the process of evolution in the e-commerce market, it seems natural
to expect the establishment of a chain of parcel pick-up stations throughout the
country, made available to all courier companies on specified business terms.
4 Indicators
Monitoring indicators is an essential element of management, and allows obtaining

information on company’s situation in its different areas (Kolinska and Cudzilo
2014).
The chapter presents indicators in three areas:
• indicators evaluating the level of quality of logistics services provided as part of
e-commerce,
• indicators monitoring ecological aspects of logistics,
• indicators monitoring aspects related to deliveries of goods.
4.1 Indicators Evaluating the Level of Quality

of Logistics Services
Monitoring indicators evaluating the level of quality of logistics services provided

as part of e-commerce is extremely important, since the organisation of logistics in
electronic commerce is to a large degree determined by customer service level,
which in turn is of highest priority to e-shops.
“Ruch” is a popular chain of newsagent’s shops in Poland.

1
The list below includes the most important indicators which allow evaluation of
the level of customer service in e-commerce:
• indicator of timeliness of deliveries [%]—determined as the share of the number
of timely deliveries in the total number of deliveries a month.
Number of timely deliveries

100 ð1Þ
Total number of deliveries in the period
• indicator of the degree of order completion [%] determined as the share of a

number of ordered units delivered to customers in a given month to the total
number of units ordered that month,
Number of ordered units delivered to customers in a specific period

100 ð2Þ
Total number of units ordered in the period
• indicator of the level of returns2 [%] determined as the share of measurement

units returned in a given month to the total number of measurement units sent to
customers in a given month,
Number of returns in the period

100 ð3Þ
Total number of orders sent to customers in the period
The indicator may also be determined on the basis of the value of returns and the
value of orders sent to customers.
Monitoring the reasons for returns, which may serve as guidelines for intro-
ducing changes to processes, is a separate element.
• average order completion time [days], where order completion time includes
time from making the order by a customer to the moment of delivering the
goods to the customer (it provides for order acceptance time, picking goods,
order shipment, delivery of the package).
Total time of the completion of all orders in the period

ð4Þ
Number of customers; orders completed in the period
2
Also marketing indicator.
4.2 Indicators/Measures Monitoring Ecological

Aspects of Logistics
The table presents the most important indicators that allow analysing ecological
aspect in the following areas:
• noise emission indicators/measures,
• indicators/measures pertaining to waste and recycling,
• indicators/measures pertaining to the emission of pollutants,
• indicators/measures pertaining to the use of natural resources.
The scope of applied indicators is individual for each company, depending on
the strategy it has adopted (Table 1).
4.3 Indicators Monitoring Aspects Related

to Deliveries of Goods
The process of delivering goods may be subject to monitoring with the use of the
following indicators/measures (Rutkowski et al. 2011):
• timeliness of deliveries,
• completeness of deliveries,
• flexibility of deliveries,
• percentage of damages,
• level of customer service.
Each of suggested indicators may be determined in an aggregated form (on the
level of the entire enterprise) or separately, according to a chosen criterion.
Frequency of determining individual indicators depends on such factors as com-
pany characteristics or dynamics of changes. Nevertheless, in the case of
e-commerce most indicators should be determined on a monthly or quarterly basis.
5 E-Commerce Trends
Taking aspects influencing operations of companies in the e-commerce segment

into account is significant from the point of view of competitive advantage. The
most important trends in e-commerce include (Borison 2014):
• Mobile—adapting the website to mobile phones to facilitate online sale.
Companies may also consider preparing a dedicated phone application to
facilitate shopping.
Table 1 Indicators/measures Noise emission indicators

monitoring ecological aspects
Level of noise emission
of logistics
Time of noise emission
Noise emission in urban areas
Indicators pertaining to waste and recycling
Level of waste
Level of waste transported to a landfill
Level of recycled products
Level of reused products
Level of biodegradable materials
Indicators pertaining to the emission of pollutants
Level of CO2 emission
Level of CO2 emission from transport processes
Level of CO2 emission from existing infrastructure
Emission of other gas pollutants
Level of leaks of harmful substances
Indicators pertaining to the use of natural resources
Consumption of fossil fuels (coal, oil, natural gas)
Consumption of water
Use of electricity
Energetic effectiveness (per tonne-kilometre)
Consumption of energy/revenues
Source Own study based on (Hajdul and Kolinska 2014;
Piotrowicz and Cuthbertson 2015)
• Consumers Hold the Reins—as a result of strong market competition and access
to applications allowing the comparison of prices or promotions, it is customers
who dictate terms to companies. Meeting their expectations increases the
probability of success.
• Efforts to Stand Out—to be noticed, a company should offer its customers such
solutions or additions which will improve customer service and streamline the
selling process.
• Comfortable payments—Although there are numerous innovations in the world
of e-payments, all of them concentrate on customers’ comfort. The possibility to
finalise the transaction by a single click (or touch of the screen) is of key
significance.
• Holiday Competition—offering additional promotions related to holidays, not
only Christmas or Easter, but also Valentine’s Day or Mother’s Day.
• Omnichannel—using all possible channels to reach final customer.
• Driving Loyalty—loyalty to customers and creating a need for a customer to be
loyal to the shop.
• Free Return Shipping—more and more companies nowadays offer their cus-
tomers free shipping and a possibility to return purchased products free of
charge.
• Using social media—Experts appreciate their vast range, possibility for a
marketing message to reach a precise target, and easy scalability.
• The content they sell—e-shops build relations with customers by offering
additional content defined as content marketing. The content may include
engaging videos that go viral in social media, guides or hints making life easier,
and interesting stories concerning offered goods (their origin, quality or
features).
The above aspects show that companies are forced to carry out continuous
actions that aim to increase competitiveness and provide customers an appropriate
level of service and satisfaction.
6 Conclusions
E-commerce is a dynamically growing market with annual growth of revenues.

Forecasts for the years to come are also very promising. Such a perspective forces
one to give attention to the ecological aspect of logistics processes which are
executed at the stages of order processing and product delivery to a place named by
a customer. Thus, it is essential to define some indicators which will allow moni-
toring the area. Monitoring and analysing the customer service area and product
deliveries are also important aspects of the matter. These two elements are reflected
in a customer’s satisfaction and consequently increase the chance that a customer
will use the services of a specific online shop once again.
Enterprises are faced by a challenge of following new trends in order to remain
competitive. Failure to regularly monitor and implement selected solutions, also in
ecological terms, may result in new customers’ lack of interest in the offer.
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Green Logistics as the Basis for Improving
Environmental Efficiency of Transport
Marina A. Zhuravskaya
Abstract The chapter is devoted to the issues of sustainable development of the

transport sector and the definition of eco-efficiency in transport. To achieve this, the
author proposed a Matrix of Transport sustainable development and the Classification
of environment-unfriendly factors, affecting the eco-efficiency on transport. The
author proposes the system Greens, based on promotion of the modes of transport
implementing green technologies and fining those modes of transport that do not pay
enough attention to environmental issues. The term ‘GreenS’ combines two economic
categories: fine (green Strafe) and reward-benefit (green Start). The chapter concludes
that the approach estimating modes of transport in terms of their integration into the
supply chain is not just reasonable, but also effective, since the use of ‘green’ logistics
principles is not just an option, but mandatory path of development, both for indi-
vidual modes of transport and for the entire transport industry.
Keywords Green logistics

Sustainable development Transport

Eco-efficiency ‘GreenS’ system
1 Introduction
Nowadays as the motto of the successful transport development it can be offered

such phrase as ‘Become greener—be a winner’.
And in the world the term ‘Green’ actively sounded at the end of 80-s of the XX
century when such ecological problems as water pollution, soil and air contami-
nation got worse and the problem of global warming appeared in the agenda. Since
that time in the countries with developed economics the attribute ‘green’ has
become the factor of competitive advantage at the enterprises working in various
industry sectors. And since 1987 the world embarked on a sustainable development
(Alexandrova 2014).
M.A. Zhuravskaya (&)

Ural State University of Railway Transport, Kolmogorova str., 66, Yekaterinburg, Russia

100 M.A. Zhuravskaya
The concept of sustainable development and environmental protection are the

problems which at most touch the society and closely connected with economics
and, naturally, transport. Modern transport systems are not sustainable. Very often
they compound ecological problems, negatively affect people’s health and nature.
That is why the global changes of the environment become a serious testing for
transport and the transition to the principles of green logistics is a good opportunity
to increase its efficiency.
Efficiency growth in transport sector is possible on the basis of adequate eco-
nomic consideration of ecological factors. The appropriate assessment of an eco-
logical factor on macro level is mostly important when defining the directions of
social and economic development in different countries. Underestimation of natural
resources and ecological damage lead to the distortion of economic development
and progress indicators, which in its turn lead to the choice of ineffective social and
economic direction of transport sector development. The existing in this sphere
traditional macro-economic indicators (gross domestic product (GDP), gross
national product (GNP), per capita income, etc.) ignore the environmental degra-
dation. The growth of these indicators today can be based on technogenic envi-
ronmental capacity development. Thereby it is created the possibility of
deterioration of economic indicators in future in case of natural resources depletion
and environmental pollution. That is why the commitment to the traditional eco-
nomic indicators in the near-term prospect can have very negative effects. It is
required the environmental adjustment of transport sector progress indicators on the
basis of sustainable development concept.
Canadian scientist T. Litman identified the problems of sustainable development
of modern transport systems, summarizing the results of over 150 studies (Litman
2015). And the other scientist Elkington (1997) claimed that the integration of
heavily interrelated economic, environmental and social aspects of sustainability
gives ‘triple practical effect’. Based on Litman’s scientific results, as well as a
matrix of sustainable development, the author developed the matrix of sustainable
transport development (Fig. 1).
The groundwork of a sustainable transport policy is universal integration. The
degree to maintain the required transport sector sustainability depends both on
economic efficiency, effectiveness in the social sphere, as well as eco-efficiency.
The above mentioned confirms the need for the transition to an adequate
up-to-date account of the transport sector eco-efficiency and its shift to the prin-
ciples of green logistics.
2 Green Logistics—Literature Review
The start of green logistics development was initiated by the German scientist
Erwin Müller in 1989. Together with colleagues, he paid great attention to transport
logistics, noting the strong link between the logistics, the environmental protection
and natural resources (Verify Technologies Limited 2006–2008).
Green Logistics as the Basis for Improving … 101
Fig. 1 Matrix of transport sustainable development, own study based on (Litman 2015)
Later German scientists from the Technical University of Dresden continued the
research and studied the interrelation between business and the environment
(Günter 2008).
There are recently many works devoted to ‘green logistics’ as part of sustainable
human development; there are several points of view on its place in the economic
activity and they are offered various approaches to supply chain management across
the ecology. For example, De Burgos and Lorente (2001) talk about environmental
improvement as about an operational objective, and the deliveries are on the second
place. Baumann et al. (2002) emphasize the development of green products within
the narrow framework of the logistic chain. Abukhader and Jönson (2004) analyzes
the interaction and interrelation of the environment and logistics. Kleindorfer et al.
(2005) conducted a review and assessment of the publications in the field of
‘Sustainable operations management’, but consider the issues related to the supply
chain. The review and assessment of publications on the topic: ‘Environmental
accounting from an economic perspective’ but with thorough study of carbon
accounting issue was held by Stechmesser and Guenther (2012).
The issues of green logistics were researched by scientists from different
countries. So a team of scientists from the University of Lublin (Slovenia) inves-
tigated the potential benefit of the use of standards when investing into transport
activity, which is environmentally friendly. They also analyzed the interrelations
between logistics, supply chain efficiency and quality standards. Particular attention
was drawn to the ISO 14001, as an effective tool to increase the sustainability of
transport and logistics services (Actual problems of logistics, 2012).
Scientists from Romania summarized the experience of green logistics solutions
for some agglomerated regions and countries, and developed a business plan on the
implementation of green logistics principles in Istanbul (Angheluta and Costea
2011).
This chapter lists only a small part of works, describing the positive experience
of implementing green logistics principles in transportation systems. However, it is
worth noting, that mostly all of them are dedicated to the study of transport systems
in European countries.
But Chinese scholars Yong Zhang, Xiangtai Bao and others note the low social
sensitivity to green logistics in China and the need to draw attention to the problem
of unfavorable ecological situation in the transport sector at the national level
(Zhang et al. 2014).
The analysis of foreign countries expertise to implement the concept of sus-
tainable development and green technologies on transport was also provided held in
the works of Russian scientists (Voronkov et al. 2012). But the authors (Kizim
2013) noted the readiness of the participants of economic relations to pay more for
‘green’ logistics solutions.
However, in paper (Zhuravskaya 2015) it is noted that the Russian environ-
mental doctrine was adopted only in 2002 by the participants of the IV All-Russian
Congress of the Environmental Protection, and the environmental policies on
transport appeared later. Thus, the corresponding order in JSC ‘Russian Railways’
was signed only in 2009, and the situation is even less optimistic on other types of
transport.
Therefore, the aim of this chapter is a synthesis of knowledge on the impact of
different types of transport on the environment and the development of recom-
mendations to improve eco-efficiency on transport.
3 Eco-efficiency: Notion, Role and Place in the Scientific

Category ‘Efficiency’
Talking of eco-efficiency, it should be remembered that according to the theory of

sustainable development it is only part of the efficiency on transport (see Fig. 1) and
serves as the indicator of its activity. The concept of logistics systems efficiency
discussed in detail in paper (Miftjakhetdinov 2010) where it is noted that there is a
general universal formula to define the efficiency: efficiency (E) is equal to the ratio
of useful eventual outcomes (R) to the resources used (costs—Z):
R
E¼ ð1Þ
Z
We will agree with the given formula of efficiency, and taking into account the
theory of sustainable development, will enlarge it:
E ¼ f ðC; T; nÞ; ð2Þ
where
C matrix of economic factors, C = (cij);
T matrix of social factors, T = (tij);
n matrix of ecological factors, n = (eij).
Generally speaking, the matrices C, T, n—can have various number of
dimensions.
Since the purpose of this chapter is eco-efficiency, let us consider it in more
detail. The analysis of the scientific literature, allowed the author to develop the
classification scheme of environmental factors affecting the eco-efficiency of
transport. First of all the factors are divided into two large groups: (1) factors, which
negatively affect the environment during the construction of transport infrastructure,
and (2) the negative factors, that appear directly in the process of transport and
logistics systems operation. These groups are subdivided into three subgroups
(Fig. 2):
• energy consumption;
• physical bioenvironmental effect;
• wastes.
These three subgroups of factors, which unfavourably affect the environment, are
presented both in the construction phase and during transport systems operation.
Fig. 2 Classification of Environmental factors in

environment-unfriendly transport
factors, affecting the
eco-efficiency on transport,
own study Construction Maintenance
Waste
Recycling Utilization
Energy consumption
Non-
Renewable
renewable
Physical impacts on the biosphere
Discharges Spills Emissions Noise

Certainly, throughout the world the negative impact of transport on the envi-
ronment will be different. The developed economies successfully solve the prob-
lems of emissions, discharges, noise reduction, and the use of renewable energy and
more effectively solve the problem of waste management. But the eco-efficiency on
transport depends both on the level of country economic development and on the
transport industry itself, consisting of different types of transport.
4 Analysis of the Transport Industry
The impact of different types of transport on the man himself and the environment
varies widely. Thus, the analysis of just one factor, ‘emissions’ from the scheme of
Fig. 2, showed that the maximum negative impact of carbon dioxide emissions is
caused by road transport, and rail (railway) transport has the minimum impact on
the environment, and this trend is typical both for Russia and for European
countries (Fig. 3a, b).
Today, however, on the roads of the world there are approximately 40 million
units of vehicles, most of which are over ten years old and don’t satisfy any
environmental standards (Voronkov et al. 2012). On average, one car burns per
every 1000 km the annual rate of oxygen needed for a man, and instead emit
poisonous mixture of about two hundred substances, including carbon and nitrogen
oxides, formaldehyde, lead compounds and others. This list includes substances
that cause many diseases such as the causative agent of cancer (cancerogene)
benzopyrene. Among residents of large cities the incidence of lung cancer is three
times higher than among rural residents. Typical diseases of large cities are allergic
diseases, diseases of the upper airways, etc.
However, air pollution—is not the only negative impact of transport on the
environment. The noise generated by road transport is stable in the range of 85–
90 db. It was found that the negative impact of megalopolis noise on a man is 36 %
more than the impact of smoking tobacco; and life expectancy reduces by 10–
12 years (Voronkov et al. 2012; Morozov 2014).
Urban area requires additional cleaning service of automotive dirt, 85 % of
which is on the asphalt pavement, worn off by studs of winter tires (studs wear off
about 5 mm of pavement per year, and it is more than 50 t of toxic dust).
All these problems are exacerbated in urban areas during so called rush hours
(Fig. 4). According to the research results the author found out that when reducing
the speed of vehicular traffic flow by factor of 2 or more, air pollution increases in
inverse proportion.
Thus, Healthcare Service and overall economy of countries receives an addi-
tional load from the unfavourable impacts of transport. At the same time, it should
be noted that in Russia the road transport doesn’t have economic responsibility to
the society: a vehicle owner pays nothing but the tax on vehicles; and the society
almost invests in this kind of transport.
Fig. 3 CO2 emissions by different types of transport: a in Russia (Solntsev 2014); b in EU

(UNIFE 2014)
Review of the role of various transport types in the context of the energy savings
identifies weak position of the road transport and strong position of the rail transport
(Table 1).
According to Table 1 it is easy to conclude that the rail transport development
really makes sense. That is why nowadays ‘green’ logistics as a tool to improve the
Increase CO2 emissions
Speed diminution
average speed
time
Fig. 4 Increase of environment-unfriendly emissions from road transport operation during rush
hours in an average city of Russia, own study
Table 1 Specific energy consumption of different types of transport

Transport Specific energy consumption (kcal/pass.-km)
Train 50
Bus 300
Plane 480
Inland water transport 550
Motor car 580
Source Bashmakov (2012)
eco-efficiency on transport—is primarily a transfer of cargo and passenger traffic

flows from road transport to the railway.
However, despite the seemingly obvious conclusion about expediency of higher
priority development of railway transport, many countries continue to actively
invest huge amounts of money into road infrastructure development. For example,
in China over the past decade, it was built about 50 thousand km of motor roads,
and by 2020 it is planned to reach the figure of 85 thousand km.
In the USA, the total length of federal roads is about 73 thousand km. India in
the next five years is going to fully upgrade its road network and daily enters into
service about 20 km of roads (http://www.autodesk.ru).
In recent years, the share of road transport in providing logistic services has also
significantly increased. It happens because road transportation beside some
disadvantages has a number of advantages, such as the ability to deliver small

consignments by ‘door to door’ principle, which is currently the main logistic
technology on transport. And besides, by low passenger and tonne-kilometers road
transport is the most cost-effective. And so to consider eco-efficiency in isolation
from the economic efficiency would not be correct.
5 Interconnection of Economic and Environmental

Efficiency
Talking about the economic efficiency of transport, we note that each mode of
transport has its own optimum range. For short distances (150–300 km) and with
small cargo and passenger traffic by railway transport it is difficult and often
impossible to compete with road transport (Zhuravskaya and Kazakov 2012;
Brusjanin et al. 2013). The range of effective operation of road transport is
determined by the change point of transport service, which is calculated by the
formula (3):
F1 F2
CP ¼ ð3Þ
V2 V1
where F1 6¼ F2 —the fixed costs of the first and second modes of transport,
respectively; V1 6¼ V2 —the variable costs of the transport modes (Fig. 5).
The graph (Fig. 5) shows that the cargo or passenger traffic, falling in the range
from 0 to the point CP is economically more profitable if transported by road and
now this range is quite high. For example, in the Russian Federation, it is about 20
thousand t-km. Indeed, in the present model environmentally unfriendly impact
factors of a particular mode of transport, social factors they are not taken into
account. In these circumstances, it is needed the mechanism of compensation of
social, ecological and economic damage caused by the offender. In Russia, fol-
lowing the experience of European countries, the principle ‘the polluter pays’
should be implemented (Kodolova 2015). According to the calculations of Western
scientists in developed countries, the damage from negative transport activity
reaches 3–5 % of GNP. According to estimates of experts in Russia economic
damage from pollution is 10–15 % of GNP.
Environmental taxes occupy a significant place in tax systems of most countries
of the European Union (Tsentr mezhdunarodnykh issledovanij). In these countries
in the sphere of tax policy it is implemented resource conservation, increase of
eco-efficiency and solving of a wide range of social problems. With regard to the
environmental trends of modern tax policy, they now cover different levels of the
economy, including the global one, and focus on the priority contamination sectors.
The main objective of environmental payments is not the replenishment of the state
budget, but a payer’s stimulation to positive environment-friendly behaviour.
Environmental taxes are the taxes that mainly serve to the environmental protection.
Costs
F2 + V2
F1 + V1
V2
C1=C2
F1
V1
F2
Passenger,
CP Cargo turnover
F1.2
Fixed costs of transport mode 1 and 2
V1,2
Variable costs of transport mode 1 and 2
F+V
General costs of transport mode 1 and 2
Fig. 5 Dependence between volume of shipments and transportation costs when choosing the
type of transport, own study (Zhuravskaya and Kazakov 2012)
In the EU 27 energy taxes account for almost 72 % of all environmental taxes,

which monetary is 220 billion Euros, or 1.8 % of GDP. The eco-balance in tax
systems is based on the idea of double benefit (the dividend). According to this
idea, economic incentives for environmental protection and resource conservation
through the introduction of environmental taxes (payments) should be simultane-
ously accompanied by a proportionate reduction of tax burden, connected with
social payments.
The author of the present study in order to effectively control the action zone of
mode of transport offers to introduce a system of ‘GreenS’. To do this, in the
formula (3) we will insert a green fine (green strafe), followed by the development
of a system of fines for each mode of transport, both on variable and fixed costs, or
green start. It is proposed to designate them (both the fine and the advantage) by a
single term: GreenS. But in this case: GreenS (the fine) will have a value greater
than 1 and GreenS (the advantage) will be in the range from 0 to 1:

GreenS 1 ) Strafe
ð4Þ
0 GreenS 1 ) Start
Table 2 The calculation GreenS Fixed costs, Fi Variable costs, Vi

of green coefficients to
determine the effective Advantage GreenS1 … …
action zone of various GreenSj−1 … …
modes of transport Fine GreenSj … …
GreenSk … …
Total ai bi
Source Own study
The amount of fines-advantages by each mode of transport will give some

coefficient (let’s call it ‘green’); the calculation results can be represented in
Table 2. And the development of ‘GreenS’ system is the subject of a separate study
and is not presented in this chapter.
Then the formula (3) will be as follows:
a1 F 1 a2 F 2
CP ¼ ; ð5Þ
b2 V 2 b1 V 1
where a1, a2—green coefficient of fixed costs of 1st and 2nd modes of transport:
X
k
a1;2 ¼ GreenSj ; ð6Þ
j¼1
b1, b2—green coefficient of variable costs of 1st and 2nd modes of transport:
X
k
b1;2 ¼ GreenSj : ð7Þ
j¼1
To get the values in the right-hand sides of the formulas (6) and (7) is the subject
of a separate study. They can be determined by methods of expert assessment or
mathematical modelling (Kazakov et al. 2011). To visualize how the change point
of the transport service CP will change with the introduction of GreenS is possible
with the help of the graphs (Fig. 6).
The graph shows that with the introduction of GreenS system the area of road
transport cover (Fig. 6—transport №2) is dramatically reducing, and the railway
transport cover (Fig. 6—transport №1) is increasing. This approach of transport
types evaluation in terms of their integration into logistic supply chain is both fair
and effective, as the use green logistics principles is a compulsory way of devel-
opment both of a separate mode of transport and the whole transport industry.
Thus, the GreenS system enables to control the cover of each mode of transport
and more accurately calculate the cost-effectiveness, and thus eco-efficiency both of
a separate mode of transport and the transport industry.
(a) (b)
Costs
F2 + V2 Costs
F2* + V2 F2 + V2
F2 + V2*
F1 + V1
V2* F1 + V1
V2
V2
F1
F1
F2*
V1
V1
F2
F2
CP* CP Passenger,
Cargo turnover CP* CP Passenger,
Cargo turnover
F1.2
Fixed costs of transport mode 1 and 2 F2*
Fixed costs of transport mode 2 with strafe
V1,2
Variable costs of transport mode 1 and 2 V1,2
Variable costs of transport mode 2 with strafe
F+V
General costs of transport mode 1 and 2 F + V* General costs of transport mode 2 with strafe
Fig. 6 Shifting the change point of the transport service with the introduction of green fines for
fixed costs (a) and variable costs of road transport (b), own study
6 Eco-efficiency Calculation
International organizations and individual countries propose the criteria and indi-
cators of sustainable development, often containing quite complicated system of
indicators. Working out indicators of sustainable development is often quite com-
plex and expensive procedure that requires a large amount of information, which is
difficult or sometimes just impossible to obtain.
From our point of view, classical calculation of eco-efficiency is well represented
in the paper (Kolinski 2013). In the other paper as indicators when assessing the
cost-effectiveness of environmental projects by reference to time characteristics, the
algorithm of calculation based on net present value, profitability index is proposed
as the indicator (Plotnikova 2008).
Environmental efficiency of production in the paper (Martynov 2010) is eval-
uated by six indicators of man’s impact on the environment. To get integral value
E3 the procedure of regulation of each type of impact on revenues or staff is used.
Then for the whole complex of enterprises they were determined the average values
of each impact out of the normalized ones, which are assumed as the norm of
100 %. Accordingly, each of six types of impacts of any company can be expressed
as a percentage to the level taken as 100, these six evaluations can be summarized
and divided by six. The obtained ratio of environmental impact and economic
potential (E3/E2) is essentially the inverse value of the eco-efficiency, which is
calculated by the relevant conversion.
In the paper (Suraeva 2011) there is an attempt to use together with the existing
synthetic indicators the integral ones, which are calculated as geometric mean value
ы in order to assess the effectiveness of innovative processes in rail transport. So the
integral indicator of environmental efficiency is determined on the basis of synthetic
indicators by the following formula:
ð8Þ
where
Kэ coefficient of ergonomics (noise, vibration, etc.);
Kcв coefficient of reducing emissions to the atmosphere;
Kcш level of reducing fines for breaking the environmental balance.
Taking this formula as a basis, we will modify it taking into account the pro-
posed classification (Fig. 2) and formula 2. It should be noted that Kcш should be
included in the proposed GreenS system, and the GreenS system itself should enter
into the economic efficiency of the mode of transport.
In the first approximation we replace the matrix of environmental factors
Ɛ = (eij) with the given scalar value, which integrally takes into account all
environmental factors:
ð9Þ
where
KW coefficient, which takes into account the activity of mode of transport with
the wastes;
KEC coefficient, which takes into account the energy consumption of mode of
transport;
KPhIm coefficient, which takes into account physical impact of mode of transport
on biosphere (emissions of NOx, SOx into atmosphere, oil outflows,
discharges to soil and water, noise, etc.).
Construction of ecological matrix in this chapter is not examined as it is a
separate sophisticated problem. Such method of assessing the eco-efficiency of
processes on transport on the basis of green logistics is based on the identification
of possible sequence of individual indicators with assessing the probability of each
intermediate index, with calculating the sum of terminal event probability.
The basis of the assessment of transport environmental efficiency is the defini-
tion of its role in building a sustainable society. In order to determine the envi-
ronmental efforts, it is necessary to accurately measure and evaluate the impact of
the activities of the transport sector on the environment and the results of envi-
ronmental activities.
Table 3 Environmental policy of JSC ‘Russian Rilways’

Measures aimed at the implementation of the environmental strategy of JSC ‘Russian Railways’
Infrastructural Technical Technological Cultural
Infrastructure Devices for Application of Formation of corporate culture by
modification renewal of solar energy-optimized involving the holding staff into
and wind train schedules nature conservation process
energy
Rolling stock Acoustic Paperless
modernization systems for document
animals’ circulation
deterrence
Sound barriers Multimodal
transportation
Source Own study
The problem of ‘green’ logistics to reduce unfavourable impacts of road transport

on the urban environment is transformed into the problem of integrating different
modes of transport, implementing their interaction, which is the task of organizing
multimodal or intermodal transportation.
As an example of successful of multimodal transportation development in Russia
it can be offered the project of implementing and developing multimodal
rail-waterway timber transportation at the site of the Sverdlovsk railway to CIS
states (Zhuravskaya and Makarenko 2012).
The pilot project of organizing piggy-back transportation with the participation
of JSC ‘Russian Railways’ on the route Ekaterinburg—Moscow is also long-range.
Piggy-back transportation is combined rail-road transportation, in which the trailer,
semi-trailer or cargo body is transported on a railway platform (Zhuravskaya 2013).
In Europe piggy-back transportation has been successfully operating for over
30 years, with yearly increasing the railway component. By 2030, it is planned to
transfer 30 % of all existing road freight flows to rail, and by 2050—50 %.
Despite the success stories, ‘green’ logistics principles will become widespread
only if the economic basis is created. In the first phase the development of ‘green’
technologies can be very costly (Piskulova 2012). It is required from the state to
conduct policies to smooth out differences in the prices on ‘brown’ technologies
(characterized by high levels of pollution) and ‘green’ ones. High price on electric
cars is still one of the main constraints of this sector development. Despite the
significant subsidies, the share of electric cars in total sales on the market in
Western Europe is still less than 1 %.
Among other important restrictions for implementing ‘green’ technologies are as
follows: lack of this sector regulation (not only in Russia but also in developed
countries); process time of their development and implementation, often with
unexpected results (which affects companies’ decisions); the complexity of the
restructuring cumbersome energy and transport infrastructure; shortage of skilled

researchers and managers; psychological unwillingness of people to major changes
in business and private life. The most significant measures of the environmental
strategy implemented by JSC ‘Russian Railways’—the largest enterprise of Russian
transport industry, are shown in Table 3, drawn up by the author on materials
(Kizim 2013; Zelenej 2014).
It is essential that such measures were developed for other modes of transport as
well. Today, the issues of greening transport services are of concern for air trans-
port, thus in the International Air Transport Association (IATA) was decided to
freeze the level of emissions by 2020, and by 2050 reduce it by 50 %.
In maritime transport since January 1, 2015 it was tightened the control of
sulphur emissions in the North and Baltic Seas, and it is expected that the level of
this chemical element will decrease. There are also examples of successful
implementation of eco-friendly projects such as the gas pipeline ‘Nord Stream’, laid
under the Baltic Sea.
Thus, the ‘GreenS’ system, proposed by the author, will allow to assess the
contribution of each mode of transport in the solution of environmental problems
for the benefit of future generations. The motto ‘Become greener—be a winner’
(‘Turn ‘green’ and you will be the winner’) exactly reflects the strategic direction of
the development of modern transport, in which rail-railway transport occupies a
special place as the most environmentally-friendly and efficient one.
Acknowledgments The author would like to acknowledge the Russian and foreign partners in the
international project TEMPUS ‘RECOAUD’ and personally Professor Edeltraud Günter.
Interesting and fruitful work in the project provided the author with positive motivation for writing
this chapter.
The author would also like to express the words of gratitude to Adam Kolinski—the author of
this monograph for inviting to co-authors and to Elena Ershova—the translator of this chapter.
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Part II
Efficiency in Sustainable Supply
Chain—Operational Aspects
Virtual Reality Based Ecodesign
Justyna Trojanowska, Anna Karwasz, Jose M. Machado

and Maria Leonilde R. Varela
Abstract In the chapter a combination of the virtual reality technology with the
ecological approach to the design of electrical appliances of everyday use has been
discussed. The case study on a hammer drill is presented. The authors present how
useful can be the virtual reality technology in the process of environmentally
friendly design of products. The basic functions of a product, its design and
operation can be evaluated by means of the virtual reality technology before the
product is put into production. The product disassembly method and duration, as
well as the waste reclamation and recycling levels, can be determined at the design
stage.
Keywords Ecodesign Virtual reality 3D systems Disassembling Recycling
1 Introduction
Ecodesign can be determined in different ways—as Design for Environment,

ecological design, sustainable product design, green design or environmental design
(Kurczewski and Lewandowska 2008). The underlying idea of ecodesign is to
manufacture products which have the least possible environmental impact
throughout their lifecycles (Luttropp and Lagerstedt 2006; Mascle and Zhao 2008).
International standards ISO/TR 14062:2002 (PKN/ISO/TR 14062:2004,
Environmental management—Integrating environmental aspects into product
design and development) and EN ISO 14040:2006 (PN-EN ISO 14040:2009
Environmental management—Life cycle impact assessment—Principles and
framework) set out the integration of environmental aspects into product design and
J. Trojanowska (&) A. Karwasz

Poznan University of Technology, Piotrowo 3, 60-965 Poznan, Poland
J.M. Machado M.L.R. Varela
University of Minho, Azurém Campus, 4804–533 Guimarães, Portugal

120 J. Trojanowska et al.
development. General principles of efficient waste management system are deter-

mined in the EU Waste Framework Directive and the Directive on hazardous waste.
The first Directive of the European Parliament on waste electrical and electronic
equipment (WEEE), Directive 2002/96/EC, entered into force in February 2003.
The Directive provided for the creation of collection schemes where consumers
return their WEEE free of charge. These schemes aim to increase the recycling of
WEEE and/or re-use.
In December 2008, the European Commission proposed to revise the Directive
in order to tackle the fast increasing waste stream. The new WEEE Directive
2012/19/EU entered into force on 13 August 2012 and became effective on 14
February 2014.
EU legislation restricting the use of hazardous substances in electrical and
electronic equipment (RoHS Directive 2002/95/EC) entered into force in February
2003. The legislation requires heavy metals such as lead, mercury, cadmium, and
hexavalent chromium and flame retardants such as polybrominated biphenyls
(PBB) or polybrominated diphenyl ethers (PBDE) to be substituted by safer
alternatives. In December 2008, the European Commission proposed to revise the
Directive. The RoHS recast Directive 2011/65/EU became effective on 3 January
2013.
European standards relevant for WEEE include the following:
• EN 50419 on the marking of electrical and electronic equipment
• EN 50574 on the collection, logistics and treatment requirements for end-of-life
household appliances containing volatile fluorocarbons or volatile hydrocarbons
• EN 50625-1: Collection, logistics and treatment requirements for WEEE—Part
1: General treatment requirements.
2 Virtual Reality
Virtual Reality (VR) is scientifically defined as an application of the computer

technology to create an effect of interactive, three-dimensional world, in which
objects have spatial form (Grajewski et al. 2015b). The virtual environment gen-
erated by the technological tools is a computerized representation of the real world.
The person is immersed in the virtual environment and is able to interact with it
(Elkind et al. 2001; Ku et al. 2003; Lalonde et al. 2013; Mujber et al. 2004). Virtual
reality simulations are often expanded with interaction with physical prototypes of
investigated objects, integrated with the virtual world, for further improving realism
of the simulation (Górski et al. 2013). In the virtual environment, interactive control
over the presented image is really important and gives the feeling of presence and of
being part of a virtual scene, not from the position of observer, but as a participant
of virtual simulation. Interaction allows a user to control the virtual object and
whole virtual scene in real time (Robles-De-La-Torre 2008; Kisielnicki 2008).
Virtual Reality Based Ecodesign 121
Virtual Reality is often regarded as an extension of three-dimensional computer

graphics with advanced input and output devices.
Virtual Reality technologies in connection with Augmented Reality environ-
ments can be used as interactive platform that allow all the actors engaged to the
lifecycle of a product to experience the product as well as the environments in
which this product will be operated. Of course, before the real product and its
environments actually exist (Riel et al. 2012).
In reality, VR is a completely new way of presenting information to the user and
obtaining input from the user. The key elements of this technology are (Jayaram
et al. 2001):
• immersion in a 3D environment through stereoscopic viewing,
• a sense of presence in the environment through tracking of the user and often
representing the user in the environment,
• presentation of information to senses other than vision, audio, haptic, etc.
• realistic behaviour of all objects in the virtual environment.
Advanced hardware and software technologies have come together to allow the
creation of successful VR applications.
Today, the virtual reality technology finds application in numerous areas of our
lives. It is used in the development of various types of simulators. The simulators
are used as aids for teaching pilotage and navigation.
Virtual reality is also widely used in medicine in training of medical students.
For example at the Faculty of Mechanical Engineering and Management University
of Technology is located Laboratory of Virtual Design. Team of engineers of
Poznan University of Technology, with a support of medicine doctors and lecturers
from Poznan University of Medical Sciences, build an interactive educational
application—a 3D human body atlas.
Created interactive 3D atlas of the human body was designed as a base appli-
cation for educational purposes, especially for lecturers and students of the medical
study programs. The application is ready to be expanded with detailed physio-
logical and pathophysiological models.
One of the practical use of the virtual body atlas are immersive exercise. While
exercise graphical interface is turned off, as well as mouse-based navigation.
Moving around the virtual body is achieved by literal moving around the room by
the user wearing the Head-Mounted Device equipped with markers of the optical
tracking system (Fig. 1).
Researchers of PUT’s Virtual Design Lab also developed interactive educational
simulations for virtual product design for recycling. Future designers (students of
mechanical engineering fields) gained possibility to improve their skills and
knowledge in the field of ecodesign through the immersive trainings (Grajewski
et al. 2015a).
Virtual reality is widely used in production. Application of virtual reality tech-
niques allows also to present the virtual prototype of the workplace in its real
operation environment. It is allows to conduct a number of analyses related to
Fig. 1 Laboratory of virtual design at Poznan University of Technology (Hamrol et al. 2013)
designed prototypes, such as: dimensions of devices and possibilities of adjustment

to height of the human operator, and arrangement of control and signalling devices
according to the rules of ergonomic design.
Prototype of the virtual stud welding workplace is an example of approach with
application of the haptic technology developed by researchers at the Poznan
University of Technology. Model of the workplace was prepared in a Computer
Aided Design (CAD) system, according to guidelines prepared for the real manu-
facturing workplace. On the workplace (Fig. 2), the following groups of activities
can be performed (Grajewski et al. 2013):
Fig. 2 Virtual stud welding workplace (Grajewski et al. 2013)

• Device control (turn the welding machine on/off, table rotation, opening/closing
the pneumatic clamps),
• Placing the semi-finished product (sheet metal) on the workplace,
• Stud welding using a special tool (weld gun).
Virtual reality is also using in the process of product design. Technology of
virtual reality make it possible to simulate the assembly and disassembly of
products already in the phase of their design. Shorten the design concept devel-
opment, monitoring the effects change, let us perform experiments on multiple
virtual versions of the product before making a final decision and before referring
the implementation of the project into production. This reduces the risk of making a
mistake construction, which can be very costly.
3 Ecodesign
Design is a complex process, very important in the life cycle of any product.
Decisions made at the design stage affect the manufacturing costs (Dostatni 2004)
and determine actions that will have to be performed in the final phase of the
product’s life cycle, after it has been withdrawn from service.
To enjoy an extended product life cycle (Fig. 3), every product should be
recycled following the period of operation. There exist a number of methods
Design
Order Supply of components
Repairs and improvements

Manufacturing and Operation and
assembly servicing
EoL
Assesment and
disassembly
Collection
Reclamation of parts and
components
Reclamation of raw
materials
Waste storage
Fig. 3 Extended product life, own study based on Weiss and Karwasz (2004)
extending the product life cycle. One of them consists in regeneration, repair and
resale. Others are based on product disassembly and reclamation of its components,
or reclamation and reuse of materials for the same or another purpose. If this is
impossible, the technology of incineration with energy reclamation can be applied.
The method of last resort is waste storage.
Research and production experience has shown (Weiss 1998) that modern
recycling technologies give the most significant results if they are implemented at
the early stages of product development, i.e. in the design stage. Therefore, the
earlier the environmental impacts are identified and included in the life cycle of a
product, the better the results of such actions. Ecodesign, increasingly popular, is an
approach where special consideration is given to environmental issues at the early
stages of design to reduce the product’s adverse impact on the environment in
further stages of its life cycle. It is also related to legal issues, as manufacturers are
legally forced to observe certain standards for material recovery from end-of-life
products.
Ecodesign is of particular importance for household equipment, as the appli-
ances consist of numerous components made of plastics. Plastics can be recycled
and re-used to make new products. Therefore, recyclability of household equipment
is crucial. A product should be designed to include the largest possible number of
standardised and recyclable materials. It is important to properly label the materials
to make them easily distinguishable in disassembly and recycling. A product made
in line with ecodesign principles should have enhanced usability, i.e. it should be
possible to re-use it (or its selected parts). Also, procedures for dealing with
end-of-life product should be established (collection and recycling of the product),
and it should have a disassembly manual. When designing a recyclable product one
must remember that the materials that must be recovered should be located close to
each other, and there should be easy access to all the parts to be removed. Another
aim of ecodesign is to minimize the consumption of raw materials. Recycling is one
of the priorities in product development. Figure 4 shows a schematic overview of
different aspects to be considered in designing environmentally friendly products.
Designers should also think about the type of joints to be used in the product.
Joints should be designed to facilitate quick and smooth disassembly, particularly
when the use of incompatible or hazardous materials is unavoidable due to func-
tional reasons.
Companies which intend to implement the ecodesign can use a broad array of
support tools. These include ecodesign methods and IT systems (Pigossoa et al.
2013), the most important of which include: “Design for Environment Matrix”
(Yarwood and Eagan 2003), “Ecodesign PILOT” (Wimmer et al. 2005),
“Environmental Effect Analysis” (Lindahl 2006; Tingstrom and Karlsson 2006),
“Environmental Quality Function Deployment” (EQFD), “Environmental Design
Industrial Template” (Spicer and Wang 1997), “Life Cycle Assessment” (Rydberg
1995; Finnveden and Moberg 2005), “Ten Golden Rules” (Luttropp and Lagerstedt
2006), “Alternative Function Fulfillment” (Van Der Zwan and Bhamra 2003),
“Strategy wheel” (Van Hemel 2002), and other.
E Longevity
N
V
I Logistics
R
O
N
M Concepts of use
E
N
T Maintenance concept
A
L
Recycled products
A
S
P
E Functionality
C
T
S Production process
O
F
Raw material productivity
T
H
E Ecological assessment and optimization
P
R
O Closing the cycle of raw material
D - ease of disassembly
U
C
- use of renewable raw materials
T - recycling of waste materials
IMPROVING APPLICABILITY
- improving disassembly possibilities
- improving repair possibilities
- repair, technological development
MATERIAL DISPOSAL
- minimizing material diversity
- single material products
- avoidance of old „forbidden” materials
WASTE AVOIDANCE
- safe disposal of harmful substances
- maximum use of recycled materials
Fig. 4 Recycling as a part of sustainable design and development of products, Own study based
on Stewart (2000)
4 Example of Ecodesign Support Systems
4.1 CATIA
Computer Aided Three-dimensional Interactive Application (CATIA) is an inte-

grated CAD/CAM/FEM system. Its modern, multi-modular structure enables
computer-aided support of the entire product life cycle. An extended set of tools
and state-of-the-art solutions for concurrent design, simulation, optimization and
manufacturing enable the enhancement of design quality and improve the utility of
manufactured products. The software supports mechanical design—from sketches
through drawings to defining the components and generating detailed design and
construction documentation (Wyleżoł 2007).
The CATIAv5 key modules include:
• Mechanical Design—an application for mechanical design, from the concept
through to details; it accelerates product creation and development;
• Shape Design and Styling—an application for creating and modifying various
types of surfaces from randomly generated planes to obtain the desired shapes;
• Equipment and Systems Engineering—an application for simultaneous design
and integration of complex electrical, hydraulic and mechanical systems;
• Analysis—an application for conducting various types of analyses, e.g. strength
analysis, functional analysis, etc.; enables visualization of analysis results;
• NC Manufacturing (Machining)—an application for numerically controlled
manufacturing; its features include generating machining paths, visualization,
verification, optimization and tool manufacturing;
• Infrastructure—an application for data overview, management and access. It
features 2D data transfer between Computer-augmented design and manufac-
turing (CADAM) and CATIA, as well as transfer of data in universal formats,
such as STEP and IGES. Moreover, it supports data transfer from STRIM and
STYLER directly to CATIA V5 and CATIA V4;
• Digital Mockup (DMU)—an application supporting overview and simulation of
digital models for any industry or manufacturing profile;
• Human Engineering—an application for creating and analysing dummies. It
features tools for analysing the dummy-product interaction;
• Knowledgeware—an application for collecting and reuse of know-how, and
dissemination of knowledge among internal system users. The design process is
based on extra intelligence and facilitates obtaining optimal parameters of a
flawless product within a reduced time period.
• Plant—an application optimizing the process of planning production lines or
even entire plants. It facilitates designing spaces, analysing area and volume,
and optimizing 3D factory layouts. Its embedded design tables support selection
of the right size of manufacturing equipment at the stage of planning a pro-
duction line or manufacturing facility. The application makes it easy to intro-
duce the desired changes or extend the plan.
4.2 Deep Exploration
The Deep Exploration software combines an explorer-type file browser with a 3D

window for displaying models and 3D scenes. It provides access to files stored in
drawing and modelling software, such as AutoCAD, CATIA, SolidWorks, and
many others. It supports design visualization and selection of materials and colours.
Moreover, Deep Exploration supports:
• access to 3D designs in AutoCAD, DWG, DXF, 3DS, VRML, U3D, SketchUp
and other formats;
• modification of 3D models and views for the purpose of creation of technical
drawings (e.g. through the application of sections and model decomposition to
create views of particular components);
• rapid conversion of 3D CAD models into 2D vector illustrations and their direct
transfer to other software tools;
• generation of visualizations from 3D designs for professional retouch or to
attach them to technical documentation or presentations.
4.3 EON Reality
The EON Reality software supports testing of product functionality, enables the
reduction of servicing costs and provides technical support and virtual training
sessions. Its key modules include:
• EON Studio—an application for constructing interactive 3D models. Users at all
levels of competence can develop high-end virtual reality applications with no
previous programming experience;
• EON Professional—an extension of EON Studio. The Physics module supports
simulation of complex mechanical objects in real time; the Human module
enables adding realistic models of human behaviour;
• EON ICATCHER—a stereoscopic projection system based on standard LCD or
DLP projectors, in combination with the EON software;
• EON ICUBE—a new, revolutionary multi wall projection system; uses from 3
to 6 walls that generate a virtual world which completely surrounds the viewer
with image and sound. The user can grab and manipulate objects drifting in the
3D space;
• EON Sales Assistant—an independent sales module, run in combination with
EON Studio. Developed for phase-based customization of automotive, real
estate, medicinal, electronic and many other types of products. It supports
multiphase configuration of products in the virtual reality technology with the
possibility to rotate and drag objects as well as verify the principles of operation
of the designed products.
5 VR Systems Applied to Pinpoint Design Weaknesses
If we want to simulate the movement of parts between them, appear like a road or a
speed dismantling in VR we must first prepare 3D product models.
Methodology of the case:
Step 1:
Create a 3D product model in a CAD system
Step 2:
Import 3D product model to virtual reality
Step 3:
Giving interaction and behaviour simulation 3D model
Step 4:
Add the disassembly tools
Step 5:
Showing the way dismantling sequels
Step 6:
Calculation of the actual time of disassembly of the device part
Step 7:
Evaluation of disassembly/collisions tool-part
Step 8:
Evaluation and analysis of the level of product recycling, dismantling
factor, time dismantling, recycling potential
Step 9: Create a new product variant or modification of the existing
An analysis of disassembly of an N-90-012 hammer drill with an electric drive
motor has been conducted to pinpoint disassembly problems and prevent them
through changes introduced at the design stage. In the study, the CATIAv5 with the
surface and solid modelling capability has been used. The hammer drill has been
modelled and its disassembly visualized with the support of the Deep Exploration
software to assign defined materials and colours to particular drill components. The
Deep Exploration software has also been used to export the model from CATIAv5
to EON Studio, where visualization of the disassembly has been made possible
using the feature of rotation.
The steps of disassembly, the list of tools used for particular operations and the
duration of the operations are presented in Tables 1, 2, 3 and 4.
After disassembly, all the parts have been weighed. The total weight of all the
parts of particular components have also been provided in Tables 5, 6, 7, 8 and 9.
The weight of a part is a significant value; it serves as the basis for determination of
the percentage share of a particular type of material in a product. It provides
information on compliance of the product with, e.g., the Act on used electric and
electronic equipment.
Disassembly problems have been defined as any operation which requires:
• the use of more than one tool at a time (e.g. a vice and a release fork);
• the use of a force that poses a risk of damaging the part.
The disassembly process can be facilitated in two ways: technologically and
design-wise. Design-wise facilitation of disassembly is achieved through intro-
ducing changes at the stage of product design, aimed to meet not only the strength,
mechanical and functional requirements, but also the requirements concerning easy
disassembly of the product. Technological facilitation of disassembly is achieved
through taking into consideration product disassembly at the design stage, where
Table 1 Disassembly scheme

No. Operation Tools used Duration
(min)
1 Disassembly of the auxiliary handle assembly Manually 1
2 Disassembly of the three-jaw chuck tightened with Release fork 2

a wrench assembly (ADG), vice
3 Disassembly of the gears assembly PH1 2

screwdriver,
pliers
4 Disassembly of the motor assembly PH2 screwdriver 3
Table 2 Disassembly scheme of the auxiliary handle assembly

No. Operation Tools Duration
used (min)
1.1 Releasing the handle from the screw in the clamp Manually 0.5
1.2 Removal of the handle from the clamp Manually 0.1
1.3 Removal of the screw which tightens the handle and the Manually 0.2
clamp
Table 3 Disassembly scheme of the gears assembly

No. Operation Tools used Duration (min)
3.1. Removal of the ratchet Pliers 0.5
3.2. Removal of the gear from the spindle Manually 0.5
3.3. Removal of the Seeger ring Seeger pliers 1
3.4. Removal of the hammer/drill mode selector knob Manually 0.2
3.5 Removal of the spindle Manually –
the fitting applied, the tolerances of the manufactured parts or the methods of
connecting the parts are all aimed to support easy disassembly of the product.
Problem identification and analysis of facilitation possibilities of disassembly
process:
• The body has been welded after the stator had been mounted; it is impossible to
disassemble the stator without damaging the body.
The disassembly can be facilitated by using screws for connecting the body
instead of welding it. Welding the body requires the use of appropriate tools and
additional control of performance. What is more, it impedes, or even prevents
complete disassembly of the body.
It should be noted here that round threads, due to the shape of notches, are wear
resistant and can be successfully applied for connecting parts exposed to wear
due to hammering action (Magnucki 2008).
• Extreme close fitting of the fan with the rotor; there is a risk of damaging the
rotor and the fan during disassembly.
Table 4 Disassembly scheme of the electric motor assembly

No. Operation Tools used Duration (min)
4.1 Releasing the Philips M1.6 5 screw PH1 screwdriver 2
4.2 Removal of brushes Manually 0.2
4.3 Removal of the gears casing Manually 0.2
4.4 Removal of the DC motor rotor Flat screwdriver 1
4.5 Removal of the fan Hammer 1
4.6 Removal of the distance holder Manually 0.1
The disassembly can be facilitated by using a multiple spline fitting between the
fan and the rotor (Fig. 5). It would not have any impact on the operation of the
fan, and would eliminate the risk of damaging the rotor or the fan made of
plastic.
Table 5 List of parts of the hammer drill—auxiliary handle

Part Quantity Weight (g) Material
Auxiliary handle
Clamp 1 100 Aluminum
Nonstandard M6 115 screw with 1 21 Steel
a hexagonal head, partly threaded
Handle 1 68 UP polyester resin
Total 3 189
Table 6 List of parts of the hammer drill—three-jaw chuck tightened with a wrench
Three-jaw chuck tightened with a wrench
Locating sleeve 1 314 Steel
Nut 1
Clamp jaw 3
Total 5 314
Table 7 List of parts of the hammer drill—gears

Gears
Gear 1 90 Steel
Gear 1 81 Steel
Body 1 200 Steel
Nonstandard M3 120 Philips screw 3 4 Steel
607-2RS bearing 1 10 Steel
Spindle 1 411 Steel
Body 1
Seeger ring 1 1 Steel
Drill/Hammer switch 1 10 MIX
619/4 bearing 1 10 Steel
Total 12 825
Table 8 List of parts of the hammer drill—electric motor

Electric motor
Philips M1.6 5 screw with a Flat head 4 0.5
Body 1 777 MIX
Stator 1
Distance holder 1 39 Plastic
Brush 2 6 MIX
Rotor 1 490 MIX
608Z bearing 1 5 Steel
607-2RS bearing 1 5 Steel
Fan 1 10 Plastic
Total 13 1334
Table 9 List of parts of the hammer drill—electric parts

Part Quantity Weight Material
(g)
Electric parts
Casing 1 70 Plastic
Casing 1 78 Plastic
Electric module with the power button, the continuous 1 10 MIX
operation button and the spindle rotation direction switch
M4 15 Philips screw with a rounded head 4 1 Steel
Total 7 159
Fig. 5 Diagram of a present fitting of the rotor and the fan, b new fitting of the rotor and the fan,
own study
6 Conclusions
The CATIAv5 software has been used for modelling a hammer drill. The software
has supported accurate mapping of the drill. The Deep Exploration and the EON
Reality software has been used for visualization of disassembly. The functionality
of interaction has made it possible to jump from one operation to another at any
time. During the disassembly, the motion of the tools used as well as the released
parts and the connectors have been tracked to measure the duration of disassembly.
The interaction between the connectors and the disassembling tools has been
checked for any collision.
The CAD3D and EON systems support analyses of assembly and disassembly of
products before the products are physically manufactured. The systems enable
reduction of the number of design errors. They can also serve as tools to anticipate
and influence the disposal of electric goods, what has become a requirement
imposed on manufacturers under the European Union regulations.
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Using CAD 3D System in Ecodesign—Case
Study
Anna Karwasz and Justyna Trojanowska
Abstract This chapter describes an approach to ecodesign using CAD 3D system.

The authors demonstrate the ability to assess the ecological products in the early
stage of design. With CAD modules it is possible to generate the design docu-
mentation of the product, detect potential collisions during the assembly and dis-
assembly of its components, simulate the motion of the cooperating elements,
perform strength calculations and analyses. Chapter describes also copyright soft-
ware DeforDis, which the main aim is to analyze the level of product recycling rate
already at the product design stage. The chapter presents a case study for disas-
sembly simulation by using CAD 3D systems on the example of microwave oven,
computer speaker and iron.
Keywords Ecodesign Recycling Computer-aided ecodesign systems
1 Introduction
Ecodesign, increasingly popular, is an approach where special consideration is

given to environmental issues at the early stages of design to reduce the product’s
adverse impact on the environment in further stages of its life cycle. It is also related
to legal issues, as manufacturers are legally forced to observe certain standards for
material recovery from end-of-life products. Manufacturers who apply ecodesign
increase their market competitiveness as their products have better quality and are
more environmentally friendly (Dostatani and Karwasz 2008). The aim of ecode-
sign is the reduction of adverse environmental impacts of products throughout their
entire life cycles. Ecodesign is performed early in the life cycle, i.e. in the product
planning and design stages (ISO14062; Yim 2007).
Eco-awareness is growing, and yet environmental impact would not be con-
sidered in product design and end-of-life management but for restrictive formal
A. Karwasz (&) J. Trojanowska

Poznan University of Technology, Piotrowo 3, 60-965 Poznan, Poland

138 A. Karwasz and J. Trojanowska
requirements. Manufacturers still see costs, efficiency and customer satisfaction as

the most important factors in developing innovative products. On the other hand,
end-users are most interested in the price and quality of the product.
There are two major goals embedded in the ecodesign directive related to the
attainment of sustainable development resource conservation and improvement in
energy efficiency of energy-related products. Energy efficiency and ecodesign have
been chosen as the two major pillars to achieve these goals. Energy efficiency is
aimed at mitigating GHG emissions to reduce climate change effects, while the
ecodesign is aimed at realizing integrated product policy or Sustainable
Consumption and Production (Wimmer et al. 2010).
European Parliament and the Council published the Directive 2012/19/EU on
waste electrical and electronic equipment WEEE (UE Directive 2012), recasting
Directive 2002/96/EC, which regulates the management of waste electrical and
electronic equipment and introduces main targets for collection, recovery and
recycling for such waste (EU Directive 2003). The Directive is aimed at reducing
waste equipment in the waste stream, ensuring its re-use and recycling, minimizing
the disposal of waste, and improving the functioning of the supply chain—manu-
facturers, distributors, consumers, and organizations that recycle electronic and
electrical equipment.
2 CAD 3D Systems
The disassembly method may be assessed already at the product design stage, by
determining how the individual elements will work together during product usage,
and which materials can be recovered and reused at the end of product life.
For this purpose, computer systems such as CAD (Computer Aided Design) are
used to facilitate the work of designers. The designer may create virtual 3D models,
simulate the motion of cooperating parts, detect collisions during assembly, make
strength calculations and analyses, create design documentation, simulate the
machining of the individual parts without having to build the actual, physical
product.
With CAD modules it is possible to generate the design documentation of the
product, detect potential collisions during the assembly and disassembly of its
components, simulate the motion of the cooperating elements, perform strength
calculations and analyses. Such systems include e.g. CATIA, SolidWorks, Inventor,
Pro Engineer and many others.
Virtual 3D models allows to show more manufactured products. With a 3D
model of the product it is possible evaluate and analyze environmental (check the
disassembly for maintenance, calculate the time disassembling, dismantling costs,
environmental costs), check the availability of tools for disassembly, simulate the
way and the time of removal (Karwasz et al. 2016).
Virtual 3D model allow to obtain information about his weight or the material
used, import them into the program evaluator which accelerates time to assess the
Using CAD 3D System in Ecodesign—Case Study 139
product. The diagram in Fig. 1 shows the steps which have to be taken with the 3D
model and the assessment of the recycling of the product.
Figure 1 shows methodology of sustainable design which is realized in eleven
steps:
start
NO Is there a 3d model
of the product?
Structure the product,

define material and weight YES
of component parts
Load the product structure
of CAD system together
with a defined material
and weight of part
Define connections and

dismantling tools
Model a product and

define the structure of the
material and weight of Verify compatibility
component parts defined materials database
benchmarks and check on
the marking of plastic
Create a new variant /

modify the product
evaluation of product
recycling
NO
YES Is there a need to create a

NO Has device reached the
different variant /
desired level of recycling?
modification of the product?
YES
Generate documentation
attesting to the level of
recycling
Stop
Fig. 1 Methodology of sustainable design by using 3D system, own study

Step 1: Create a 3D product model in a CAD system.

Step 2: Import data (product tree) to the design for disassembly program
evaluation.
Step 3: Add product tree data related to the material of parts, weight, method of
bonding, the connections between the parts. Define connections between
portions of the article (separable and inseparable connections are
selected from the database installed in the design for disassembly system
evaluation).
Step 4: Complete program information about the product dismantling tools or
disassembly selection of tools with database installed on design for
disassembly system.
Step 5: Follow-up of current levels of recovery and recycling of household
appliances.
Step 6: Check the compatibility of the materials used.
Step 7: Check the marking of plastics.
Step 8: Evaluate and analysis of the level of product recycling, dismantling
factor, time dismantling, recycling potential.
Step 9: Create a new product variant or modification of the existing.
Step 10: Re-evaluation and analysis of the product.
Step 11: Generate documentation of the product, which indicate inter alia the
level of recycling rate of dismantling, disassembly time, statistics on the
number of used materials and the number of tools disassembly.
3 Design for Disassembly
CAD system such a CATIA features several supporting modules, such as (Bernard
2003; Plantenberg 2012):
• Mechanical Design—Part Design—used to model an individual element.
• Mechanical Design—Assembly Design—allows the users to create assemblies,
analyze them, detect collisions, analyze geometric constraints, simulate the
movement of individual parts or sets.
• Digital Mockup—DMU Fitting—enables the evaluation of a design in terms of
ease of assembly and disassembly. It provides useful information on space
reserved in the event of having to disassemble the product, which should be
taken into account in future modifications of the product. It is also easier to
determine the track during disassembly.
The path of disassembly for all the product elements can be determined based on
the predetermined tracks, as shown in dashed line in Fig. 2.
The disassembly time for every part and for the entire product is calculated based
on the specified path and its length. This can be visualized by determining also the
speed expressed in m/s.
Fig. 2 Determination of the track, time and speed of disassembly, own study
After estimating the tracks for all the disassembled elements it is possible to
determine the sequence of disassembly for each element. This is made possible by
the function “Sequences and Actions”, as shown in Fig. 3.
Using the formula above we can calculate the disassembly time for each step, the
total disassembly time for the entire product, and the total number of all steps. It is
also possible to delay the disassembly of the next part due to tool replacement or
due to having to put down a disconnected part.
It is important to determine the appropriate sequence of the disassembly process.
From a mathematical point of view, the task is complicated because there are a lot
Fig. 3 Determination of the

sequence of disassembly,
including the duration, own
study
of possible solutions. The variety of positive solutions may result in the search for
the optimal solution, which requires that appropriate criteria be formulated. It is
particularly important to adopt appropriate criteria if one is searching for a disas-
sembly process which is the best, and the most cost-effective. It is also important to
decide whether the disassembly process should be destructive, non-destructive, or
partially destructive, and whether it is performed for the purposes of product
maintenance or for recycling.
The disassembly may be simulated in order to measure the disassembly time, to
determine the sequence of removing the disassembled parts, the disassembly tracks,
the locations of dangerous areas, the location of parts which require replacement or
which are defective. It is used in product maintenance or in companies dealing with
product disassembly to select recyclable materials.
3.1 DeforDis
Our own tool, created at Poznan University of Technology, DeforDis (Design for
Disassembly) offers access to product data in an automated and simple way from
the CAD 3D system (Karwasz 2009). Figure 4 shows the structure of the DeforDis
software. The main aim of the DeforDis software is to analyze the level of product
recycling rate already at the product design stage. Using this tool, we can also
evaluate a product already withdrawn from service. DeforDis compares different
variants of the product and its rate of recycling with the guidelines laid down in the
directive on waste electrical and electronic equipment—WEEE (EU Directive
2012).
The core of DeforDis is a module used to estimate the rates of recovery and
recycling, and to check the disassembly coefficient of the product.
The software includes databases, such as: the database of disassembly tools,
materials, joining techniques, and the database of standards and directives. The
database of disassembly tools includes a set of basic disassembly tools, such as a
hammer, a file, a reamer, etc. The database of compatible materials contains
information about the compatibility of different plastics for their recycling. The
database of joining techniques is a database of separable and inseparable joints,
such as screw joints, snap connections, adhesive joints, etc. The database of norms
and directives contains the information about the rate of recovery and recycling, to
use for comparison with the data on recycling and recovery rate obtained in the
evaluation.
DeforDis generates information as a set of rating indices: WDW (DRP, disas-
sembly rate of product) and WDC (DRPP, disassembly rate of product parts), as
well as statistical data, such as the number of disassembly tools, and the number of
materials included in the product. Figure 5 shows the main window of DeforDis,
and Fig. 6 shows the window of product variant development.
Figure 7 shows the analysis window, where product parts and the entire product
are analyzed.
INPUT DATA
- Product structure
- Weight of parts
- Product weight
- Material of elements
DATABASE DATABASE
CORE
- Joining techniques - ISO/TR 14062
- Evaluation model - WEEE directive
- Compatible materials
- Analysis module - EuP directive
- Disassembly tools - RoHS directive
RESULTS
- Rate of recycling
- Product variants
- Disassembly index
- Statistical data
Fig. 4 Structure of DeforDis, own study
Fig. 5 The main window of

DeforDis, own study
The first step in DeforDis product analysis consists in the manual completion
of product data or, alternatively, automatic upload of the data from a virtual data
structure of the CAD 3D system. At the same time, the designer should manually
fill in all the missing product information, such as the marking of plastic, or the
Fig. 6 Window of product variant development, own study
Fig. 7 Analysis window: a parts, b product, own study
information whether the product is hazardous. The recycling rate of the product is
determined based on the information entered to the system. The rate is then
compared to the recycling rate specified in the Act on waste electrical and
electronic equipment (the Act 2012). The designer, by modifying an existing
product or modeling a new one, may check the database to verify the compati-
bility of selected materials, the choice of connections, and the marking of
materials. It is also possible to compare several versions of the product to select
the best variant (Fig. 6). The tool shows the designer, in a descriptive manner,
which material or connection is the best from the point of view of design for
recycling, the features to be taken into account when designing the product, and
how to mark the hazardous elements. The final step consists in the generation of a
report with the information about the recycling and recovery rate and the tools to
be used during disassembly (Fig. 7).
4 Device Disassembly Evaluation with DeforDis Software
The analyzed piece of appliance was a Whirlpool microwave oven (Fig. 8) model
AVM541M/P/WH, made in China in 2002. In accordance with Art. 25 of the Act
on Waste Electrical and Electronic Equipment of 23 July 2005 (The Act 2005), as
amended, the piece of equipment belongs to large household appliances. Under
Directive 2012/19/EU and Art. 30 of the Act on waste electrical and electronic
equipment, it is obligatory to achieve a certain rate of recovery and recycling of
components for waste electrical and electronic equipment; for large appliances the
rates are, respectively, 80 and 75 %. Table 1 shows the basic parameters of the
product. Tables 2, 3 and 4 contains a list of components of the appliance.
Schematic diagram of the oven is shown on the graph (Fig. 9).
The disassembly of the oven began with the dismantling of the outer casing with
a Phillips PZ screwdriver. The casing was attached to the frame with 9 screws
(Fig. 10).
The disassembly of casing proceeded in three directions: first, the rear part of the
casing was raised—1, pulling the casing backwards—2, and removing the casing—
3. The steps are shown in Fig. 11.
Then, we dismantled the connector supporting the structure, connecting the front
and rear part of the frame. The element was attached with two screws (Fig. 12).
In the next step the control module was dismantled. The module was attached
with one screw (Fig. 13). After removing the screw it was possible to dismantle the
entire module. The positive connection used there required a two-way disassembly
(Fig. 14).
Next, parts of the control module have been removed from the casing. First, we
dismantled the knobs, fixed with a clip. These could be dismantled without tools, in
one direction. Next, we dismantled the plate, to which the electronic system was
attached. The final steps in the disassembly of the module consisted in separating
the gong from the electronic system. It was attached with two screws, and the
dismantling proceeded in one direction. A diagram of the control module is shown
in Fig. 15.
Fig. 8 Microwave oven, own study based on Wnuk (2010)

Table 1 Basic parameters of the appliance

Name Whirlpool
Model AVM541M/P/WH
Year of production 2002
Unladen mass [kg] 12.701
Number of parts 86
Power [W] 1250
Dimensions (length width height) [mm] 450 297 270
Class of equipment 1—large appliances
Table 2 List of components—part 1

Name of assembly Part name Quantity Material Weight [g]
Casing Casing 1 Steel 1383.5
Housing screw 9 Steel 1.5
Door panel Door seal 1 PP 54.0
Panel door screw 4 Steel 0.5
Bolt spring 1 Steel 1.5
Bolt 1 PEHD 11.5
Window protection 1 PEHD 14.5
Window 1 Plexiglas 509.0
Outer frame 1 ABS 258.0
Inner door 1 Steel 622.0
Turntable 1 PP 33.0
Next, the bulb guard and fan guard were dismantled. The positive connections
used there allowed for a quick removal without the use of any tools. Figure 16
shows the removal of the bulb guard on the left side, and the fan guard on the right
side.
The turntable located in the working part of the microwave oven, attached to the
motor with a clip, was then dismantled. The turntable could be dismantled on one
direction, without the use of tools. At the same time, it was possible to remove the
bottom plate, which was attached to the frame with four Pozidriv-head screws.
A diagram of the removal of the frame from the bottom plate is shown in Fig. 17.
Next, using a torx X screwdriver, we removed the emitter, attached to the frame
with four screws. Figure 18 shows the disassembly of the emitter screws.
During the removal of all the components, we determined the materials they
were made of.
Table 5 presents the list of elements made of plastic.
To evaluate the appliance for its disassembly, we used the DeforDis software
supporting design. During the disassembly we identified the following three groups
of materials used in the microwave oven: steel, plastic and electronic components.
The elements belonging to the group of electronic components were designated as

Body connector Body connector 1 Steel 50.5
Body connector screw 1 Steel 1.5
Body connector screw 2 Steel 1.5
Lamp Bulb 1 MIX 8.0
Lamp holder 1 PEHD 12.5
Bolt sensor Bolt sensor screw 2 Steel 1.5
Limit switch 3 MIX 7.0
Base 1 PP 41.0
Lamp housing 1 PP 39.5
Control panel Knob 2 PP 8.5
Electronics base 1 Steel 69.0
Electronics base screw 3 Steel 1.0
Electronics 1 MIX 118.5
Electronics screw 3 Steel 1.0
Gong 1 Steel 8.5
Gong screw 2 Steel 0.5
Outer casing 1 ABS 170.5
Bottom Bottom panel screw 5 Steel 1.5
panel + transformer Non-slip feet 2 PVC 3.0
Feet pin 2 PVC 1.0
Transformer 1 MIX 4402.5
Transformer screw 2 Steel 3.0
Capacitor 1 MIX 165.0
Capacitor screw 1 Steel 1.5
Capacitor handle 1 Steel 17.5
Bottom plate 1 Steel 647.0
PCB 1 MIX 66.0
Fan Fan screw 2 Steel 1.5
Propeller protection 1 Steel 0.5
Propeller 1 PP 12.0
Motor 1 MIX 531.5
Fan guard Fan guard 1 PP 51.5
Fan guard screw 1 Steel 1.5
Power cord fixation 1 PEHD 7.0
material difficult to remove, with the rate of recycling equal to 0 %. Figure 19

shows a diagram of the proceedings.
Table 6 presents the results of the analysis for determining the recovery rate for
every group, in accordance to Fig. 19.
The entire appliance consists of 86 parts (Table 5). The total weight is 12.72 kg,
and the total disassembly time, determined by the software based on the number of

Turntable motor Motor 1 MIX 71.0
Motor screw 1 Steel 1.0
Motor seal 1 Silicon 1.5
Emitter Emitter 1 MIX 860.0
Emitter screw 4 Steel 3.0
Temperature sensor 1 MIX 5.0
Motor screw 2 Steel 0.5
Foam 1 PVC-U 0.5
Emitter window 1 Paper 2.0
Power cord 1 MIX 185.5
Housing ground screw 1 Steel 2.5
with a nut
Frame 1 Steel 2119.0
Wiring 1 MIX 52.0
FRAME
Door Bottom plate Control panel
Turntable Electronic
Transformer Capacitor Knobs Casing
motor system
Bell
Fig. 9 Schematic diagram of the oven, own study based on Wnuk (2010)
disassembly directions, the tools used and the weight of parts is less then 15 min.
The rate of recycling was 54.87 %. According to the appliance classification the
minimum rate of recycling as set forth in the regulations is 80 %; therefore, the
microwave oven does not comply with the legal requirements.
During the study a similar product was modeled, with the same number of parts,
but with several changes aimed at improving the appliance’s rate of recycling. The
changes consisted in assigning a code to unmarked plastics, thus specifying the
material from which they were made. Out of 86 elements of the appliance, 22 were
made of plastic. Unfortunately, only 11 of the 22 elements bore information on the
Fig. 10 Screws connecting the outer casing to the frame—explanatory figure, own study based on
Wnuk (2010)
Fig. 11 The order of

dismantling the casing, own
study based on Wnuk (2010)
Fig. 12 Removal of the connector, own study based on Wnuk (2010)
Fig. 13 Removal of the screw attaching the module to the frame, own study based on Wnuk
(2010)
Fig. 14 Removal of the control module connecting, own study based on Wnuk (2010)
Fig. 15 A diagram of the control module, own study based on Wnuk (2010)
Fig. 16 Removal of the bulb guard and fan guard, own study based on Wnuk (2010)
type of the plastic from which they were made. After introducing the changes, every
element made of plastic was properly marked.
For the group of electronic elements, after the disassembly, the rate of recovery
was changed in accordance to the previously determined rate of recovery of
materials. The rate has been set at 100 %. The assumption is possible if the elec-
tronic materials used in the microwave oven will be re-used. The proceedings in the
case of change in the rate of recovery is given in Fig. 20.
The results of analysis carried out after the changes are shown in Table 7.
Fig. 17 A diagram of the bottom plate removal, own study based on Wnuk (2010)
Fig. 18 The disassembly of the emitter screws, own study based on Wnuk (2010)
If we compare the rate of recycling in Tables 7 and 8, one can note that by using
one type of material in the classification it was possible to achieve the rate of
recycling required by law. Also the weight of waste materials decreased.
A transformer is an example of an electronic element treated as waste. It is
treated as a complex assembly and its disassembly is very time-consuming. Also,
the elements that can be recovered may be only partially re-used. Figure 21 shows a
diagram of the transformer from the microwave oven.
Table 5 List of elements made of plastic

Item Part name Material Quantity
1 Door seal PP 1
2 Bolt PEHD 1
3 Window protection PEHD 1
4 Window Plexiglas 1
5 Outer frame ABS 1
6 Turntable PP 1
7 Lamp holder PEHD 1
8 Bolt sensor base PP 1
9 Lamp housing PP 1
10 Knob PP 2
11 Control panel casing ABS 1
12 Non-slip feet PVC 2
13 Feet pin PVC 2
14 Fan propeller PP 1
15 Fan guard PP 1
16 Power cord fixation PEHD 1
17 Motor seal Silicon 1
18 Foam PVC-U 1
19 Emitter window Paper 1
Fig. 19 The disassembly proceedings, own study based on Wnuk (2010)
Table 6 Appliance analysis results

Product name Whirlpool AVM541M/P/WH microwave oven
Total number of parts 86
The total weight of parts [kg] 12.72
Waste [kg] 6.98
Rate of recycling [%] 54.87
Total disassembly time [min] 14.79
Disassembly potential [kg/min] 0.86
Fig. 20 The disassembly proceedings, own study based on Wnuk (2010)
Table 7 Results of appliance analysis after the changes

Product name Whirlpool AVM541M/P/WH microwave oven
Total number of parts 86
The total weight of parts [kg] 12.72
Waste [kg] 0.50
Rate of recycling [%] 96.04
Total disassembly time [min] 14.75
Disassembly potential [kg/min] 0.86
Table 8 Tools used during the disassembly

Name The number of times the tool was used
Flat wrench 1
Hand 20
Pliers 10
Average torx screwdriver 1
PH screwdriver (Phillips) 1
Flathead screwdriver (2–4 mm) 1
Pozidriv PZ screwdriver (Phillips) 48
Torx TX screwdriver 4
The primary and secondary winding shown in Fig. 24 is made of insulated

copper wire covered with resin. The processing of such a component required the
removal of resin together with the entire insulation.
During the disassembly of the appliance we also collected the information
concerning the tools used and the weight of each element. As a result, it was
possible to specify the number of tools needed for the disassembly. The main tool
used during the disassembly operations was Phillips Pozidriv PZ screwdriver. Other
tools used in the process are listed in Table 8.
The use of the DeforDis software made it possible to determine how often each
material was used (list of incidence, Fig. 22), and the percentage share of the weight
of the given material in the total weight of the appliance (Fig. 23).
The graph shown in Fig. 22 proves that steel elements were some of the major
components in the appliance, which required the use of screws and bolts during
Fig. 21 The construction of a transformer—1 tore 2 primary winding 3 secondary winding 4 the
electronic circuit, own study based on Wnuk (2010)
Fig. 22 The incidence of

materials and plastics used in
the appliance, own study
based on Wnuk (2010)
disassembly. In spite of its frequent incidence, the share of the steel in the total
weight of the appliance is smaller than the share of the material referred to as
Mix/Electronics. The percentage share of each material in the total weight of the
appliance is given in Fig. 23.
Figure 23 illustrates how important it was to change the category of components
originally referred to as Mix. Although the material was used to build only 12
Fig. 23 Percentage share of each material in the total weight of the appliance, own study based on
Wnuk (2010)
Fig. 24 Virtual model of a

computer speaker, 1 base, 2
casing, 3 panel, 4 cover, own
study based on Szczęsny
(2009)
elements, its share in the total weight of the appliance was estimated at 50 %. As a
result of the re-classification, the rate of recycling increased by over 4 kg, which
makes up over 30 % of the total weight of the appliance.
Fig. 25 Virtual model of an

iron, 1 water tank, 2 iron
soleplate, 3 rear casing, 4, 5
front casing, 6, 7 elements
between the soleplate and the
water tank, own study based
on Chruszcz (2010)
4.1 Simulation of the Disassembly Using CAD 3D
In order to check the usefulness of the module supporting the disassembly simu-
lation, a 3D model of a computer speaker was created with the use of SolidWorks
software (Fig. 24), together with a 3D model of an iron made with CATIA software
(Fig. 25). The disassembly process follows the development of a computer virtual
model of the product, complete with all of its elements and connections among
them.
During the disassembly simulation the tracks and directions of the disassembled
connected elements were determined (marked with dashed line in the figures). The
authors indicated the manner and order of extracting the elements from the product,
the joining of parts, and the tools used during the product disassembly.
When disassembling the iron, eight steps were distinguished (see Fig. 26):
Step_1 disassembly of the rear casing with the water tank,
Step_2 disassembly of the power cord,
Step_3 disassembly of the sprinkler buttons,
Step_4 disassembly of the temperature adjustment knob,
Step_5 disassembly of the front casing,
Step_6 disassembly of another part of casing,
Step_7 disassembly of the water tank,
Step_8 disassembly of the soleplate cover.
As a result of the simulation of the disassembly process, we calculated the total
disassembly time for the iron, equal to 13 min and 21 s. Three tools were used for
the procedure: a PH2 screwdriver, a flathead screwdriver, and pliers.
During the disassembly of the computer speaker, six stages were distinguished
(Fig. 27):
Step_1 disassembly of the speaker base,
Step_2 disassembly of the panel cover,
Step_3 disassembly of the panel from the cover,
Fig. 26 Simulation of the disassembly of an iron, own study based on Chruszcz (2010)
Step_4 disassembly of elements from the panel,

Step_5 disassembly of knobs and buttons,
Step_6 disassembly of inner elements of the speaker.
Fig. 27 Simulation of the computer speaker disassembly, own study based on Szczęsny (2009)
As a result of the simulation of the disassembly process, we calculated the total

disassembly time for the speaker, equal to 5 min and 50 s. Two tools were used for
the procedure: a PH2 screwdriver, and a flathead screwdriver.
Based on the generated disassembly tracks, and knowing the number of screws
connecting the product elements, their sizes, types and length, assigning time and
duration to each disassembly step, we can calculate the total disassembly time for
the product. It is possible to check the access to and the visibility of all connections.
We are able to predict whether the tools will have access to the disassembled areas.
If we know the type of elements connecting product parts, we may estimate the
number of disassembly tools. With such a virtual model, we may introduce chan-
ges, improve, re-design, carry out further simulations for product variants, even
before the launch for production.
5 Conclusion
CAD 3D systems support the work of builders and designers of household appli-
ances. You can use them to show how the dismantling of products, availability of
tools to connect, length and way of removal. At the design stage, you can determine
the level of recycling of products, the amount of recovery. At the design stage, you
can also check whether the designed product meets the requirements of EU
directives.
References
Bernard F (2003) A history of CATIA by former CEO of Dassault Systèmes, Dassault Systems
Chruszcz M (2010) Analysis of disassembly household appliance. Poznan University of
Technology, Thesis written under the supervision of Anna Karwasz
Directive 2002/96/EC of the European parliament and of the council of 27 January 2003 on waste
electrical and electronic equipment (WEEE)
Directive 2012/19/EU of the european parliament and of the council of 4 July 2012 on waste
electrical and electronic equipment (WEEE)
Dostatni E, Karwasz A (2008) Selection of materials and connection of designed product with
regard to recycling. Scientific papers of the Faculty of Mechanical Engineering and
Management of Poznan University of Technology, No. 9, series: engineering and production
management, Poznan
ISO/TR 14062:2002 Environmental management—integrating environmental aspects into product
design and development
Karwasz A (2009) The method of assessment designed taking into account the disassembly for
recycling, ATMIA, pp. 105–112
Karwasz A, Dostatni E, Diakun J, Grajewski D, Wichniarek R, Stachura M (2016) Estimating the
cost of product recycling with the use of ecodesign support system. MPER Manag Prod Eng
Rev 7(1):33–39
Plantenberg K (2012) An introduction to CATIA V6 release 2012, SDC Publications
Szczęsny R (2009) Design of household appliance for disassembly purposes, Poznan University of
The Act of 29 July 2005 on waste electrical and electronic equipment. J Laws, No. 180, item. 1495
Wimmer W, Lee KM, Quella F, Polak J (2010) ECODESIGN—The competitive advantage,
Springer, Berlin
Wnuk F (2010) Analysis of household appliance for disassembly purposes, Poznan University of
Yim HJ (2007) Consumer oriented development of ecodesign products. Vulkan-Verlag, Essen
The Impact of Eco-efficiency in Production
on Availability of Machines
and Equipment
Adam Kolinski
Abstract Production efficiency is one of the most important problems for modern
management, both at operational and strategic levels. Ecological aspect is very
often undervalued and even missed by the management of a company. It needs to
be noticed that there is growing interest in environmental aspects not only in
production companies or whole supply chains but also in policies of many countries
in the world. This chapter focuses on the availability of working machines and
equipment as the element of operational efficiency of the production process which
affects the evaluation in ecological aspect. The author decided that the amount of
produced defects and the degree of productive resources use, has an important
impact on efficiency evaluation in ecological aspect.
Keywords Eco-production Operating efficiency Production efficiency
1 Introduction
Productive activity of companies depends on internal as well as external conditions

of their functioning. Customers’ requirements concerning products are growing and
are being individualised all the time. Such situation makes the rules of acting on the
market more strict. Fast technological development leads to creating new tech-
nologies and shortens the life of products. Spending resources, power supplies and
other components necessary in a production process causes not only economic but
also ecological threats. Presented factors have a major impact on the efficiency of
production process.
A. Kolinski (&)
Poznan School of Logistics, Estkowskiego 6, 61-755 Poznan, Poland

162 A. Kolinski
Ecological aspect is very often undervalued and even missed by the management
of a company. It needs to be noticed that there is growing interest in environmental
aspects not only in production companies or whole supply chains, but also in
policies of many countries in the world (Quariguasi et al. 2009, p. 670). The
purpose of eco-efficiency is to maximise value creation while having minimised the
use of resources and emissions of pollutants. Eco-efficiency is, in most cases,
expressed by the ratio (Verfaillie and Bidwell 2000):
Product or service value

Eco-efficiency ¼ ð1Þ
Environmental influence
The eco-efficiency is calculated using absolute values for the product value and
environmental influence (Michelsen et al. 2006, p. 291). The idea of Eco-efficiency
in production is shown in Table 1.
Companies do not need to make tradeoffs between sustainability and profitability.
Sustainable supply chain management can be translated as: (Golinska 2010):
• increasing cost of energy,
• increasing cost of raw materials,
• increasing cost of waste disposal.
On a company level the requirements of sustainability can be translated as
(Golinska and Kuebler 2014, p. 201):
• economical utilization of the resources,
• environment friendly utilization of the resources,
• utilization of the resources in the way that provides ergonomics and safety at the
facility and minimum external burden to affect the surrounding communities.
Production efficiency in ecological aspect must, therefore, include indicators of a
traditional production process, detailed analyses of production quality and indica-
tors connected with ecological aspect.
Table 1 Idea of eco-efficiency in production

Eco-efficiency in production
Problems Requirements
Which volume of waste arises in a Selection using of materials that are able to be
specific step of process? recycled, remanufactured and reused
Which emissions arise at specific Modularity using of products for remanufacturing
locations?
How big are costs connected with Minimization using of waste and remains
emissions and wastes?
Source Own study based on Golinska (2010)
The Impact of Eco-efficiency in Production … 163
2 The Role of Operational Efficiency in Production

Process
Operating efficiency is a ratio (represented as a percentage) of the actual output of a

piece of equipment, department, or plant as compared to the planned or standard
output (APICS 2004). The effectiveness of the assessment of operating efficiency
depends on the skill of transposing strategic aims to tactical and operating levels.
Effective execution of strategic plan needs to be translated into action, task results
and indicators of everyday activities. The success on the market is attainable by
communicating strategic and operating goals on each level of organizational
structure and the connection with budget of units or employee motivation
(Sliwczynski 2011). The transposing idea is based on the assumption that expenses
optimisation is more efficient tool of improving company’s result. Expenses opti-
misation is about rationalising factors which can be steered by a company and for
this reason it has a tremendous effect on the capability to generate higher profits.
However, it needs to be remembered that optimum concentration on the analysis of
production expenses is advisable only in a situation when the value of logistic
expenses rate, meaning the share of logistic expenses in company’s total expenses,
is significant (Śliwczyński and Koliński 2012). Therefore, operating efficiency deals
with the issue of optimisation and rationalisation of the production process in its
organizational and technological aspects. Figure 1 shows the place of operating
efficiency in the model for assessing production efficiency.
The collation is based on efficiency division presented by Rummler and Brache
(1995) and including the distinction between economic efficiency and operating
efficiency. Economic efficiency, according to Strategic Scorecard assumptions, is
about analysing efficiency from financial perspective, customer’s perspective,
internal business process perspective and learning and growth perspective.
Therefore, operational efficiency relates to optimizing and rationalizing the pro-
duction process, both in terms of organization, and technology aspect.
This chapter focuses on the availability of working machines and equipment as
the element of operational efficiency of the production process which affects the
evaluation in ecological aspect. The author decided that the amount of produced
defects and the degree of productive resources use, has an important impact on
efficiency evaluation in ecological aspect.
Production efficiency
Economic efficiency Operating efficiency
Efficiency Efficiency Efficiency of the Work
of the Organization of the Process Station
Fig. 1 The place of operating efficiency in the model for assessing production efficiency (Kolinski
and Kolinski 2013)
164 A. Kolinski
3 Algorithm of Availability of Working Machines

and Equipment
Availability analysis of working machines and equipment should be based on two

fundamental areas that relates to planning of workstations (or working groups)
capacity within the specified time, but also to monitor and control the actual use of
working machines. For this reason, algorithm of availability of working machines
and equipment concerns the scope of planning and control along with feedback
connections.
The scope of planning analysis of working machines and equipment should be
supported by an enumeration of range of products, in order to classify them into
various types of production. Assortments classification of products would be
considered critical for the availability analysis of machines and equipment, because
particular types of production are characterized by different and often mutually
exclusive normative scopes for production process or indicators. Due to the specific
analysis of operational efficiency of production process, the author decided this
factor as a key to conduct further analysis in ecological aspect. Figure 2 shows the
general diagram of availability analysis of working machines and equipment.
During the assortment classification of products, we can use ABC analysis in
terms of production volume for particular types of products (for each index or
manufacturing standards). This classification enables the identification of the rela-
tively small number of the product is produced in large quantities, which enables
the use of mass or batch production (group A). Group C is characterized by a large
number of product range, characterized by one-off or small-batch production.
Group B requires combination of these solutions.
Performing a further planning analysis of availability of working machines and
equipment, it should be noted that a large portion of machines and equipment
should be planned for a small group of products A. In contrast, a relatively small
part of the machine park is for a large group of products from group C. These
considerations lead to the conclusion that:
• in the case of a group of products A, availability of working machines should be
concentrated on technology,
• in the case of products from group C it should be concentrated on objects.
The technological concentration is based on the strategy of maintaining of the
machine park having a plurality of homogeneous groups of workstations, that
allows to perform the same production operations on a larger number of work-
stations. The concentration of object relates to the use of technologically universal
workstations, enabling their use to do more than one production operation.
The second stage of the availability analysis of working machines and equip-
ment in the field of requirements planning is planning of production potential,
which allows you to analyse the possible realization of production orders with
regard to the schedule of material requirements planning. To perform accurate
potential requirements planning should have a complete set of requirements
START
Basic data necessary to analyse

the production efficiency
Assortments classification of products

(ABC analisis)
Yes No
Is the product classified in Group A?
Technological focusing of availability of working No

Is the product classified in Group C?
machines and equipments
Yes
Comparison of production focused ontechnology

with production focused on objects
Object focusing of availability of working

machines and equipments
Requirements planning of production potential
OEE Analisis
(Overall Equipment Effectiveness)
STOP
Fig. 2 Availability analysis of working machines and equipment, own study

166 A. Kolinski
schedules for all the products, components and complete documentation of these
elements. Requirements planning of production potential occurs at three basic
stages:
• material requirements planning in accordance with the method of forward
scheduling,
• material requirements planning in accordance with the method of backward
scheduling,
• analysis of the differences between the variants conducted to identify possible
gaps of time, enabling a shift in the implementation of individual operations.
Taking into account the aforementioned steps, requirements planning of pro-
duction potential allows a comprehensive analysis of the working machines
availability already in the planning stages of production, also using multivariate
analysis.
An indicator that enables monitoring and controlling the realization of the
production process is OEE analysis (Overall Equipment Effectiveness), which
shows the efficiency of the production potential of machinery and equipment
reduced by the impact of distorting factors of their work (Vijaya Kumar et al. 2014).
OEE analysis is mostly used for assessing efficiency of equipment and resources
based on actual resource availability, the degree of implementation of production
and quality of the product. Table 2 shows the main types of losses taking into
account their impact on the availability, performance and productivity and quality
of working machines and equipment.
OEE is the product of availability; performance and productivity; and quality
shown in percentage terms. OEE analysis also presents the detailed method of
determining the value of the indicator, divided into components of individual ele-
ments, such as running time, operating time, etc. For this reason, analysis of the
availability of working machines and equipment takes into account the method for
determining the OEE indicator, shown in Table 3.
The overall result of OEE analysis is a percentage, showing the use degree of
machinery and equipment. The value of OEE indicator closes to 100 %, means
almost complete elimination of losings of production process. It should be noted
Table 2 Basic types of losses related to working machines and equipment

Availability Losses related to stop the machine
– Planned downtime
– Breakdowns
Performance and Losses related to the speed of working machines and
productivity equipment
– Minor stops
– Reduced speed
Quality Losses related to defective products
– Production rejects
– Startup rejects
Table 3 Example of OEE designation

No. Calculation Unit
Availability
A. Total time Minute
B. Planned breaks for working machine Minute
C. Planned production time = A − B Minute
D. Down time (= E + F+G), include Minute
E. Breakdowns Minute
F. Planned downtime Minute
G. Others Minute
H. Operating time = C − D Minute
I. Availability = H/C 100 %
Performance and productivity
J. Units produced (total pieces) Pcs.
K. Ideal cycle time Min./pcs.
L. Real cycle time = H/J Min./pcs.
M. Performance and productivity = (J K)/H 100 %
Quality
N. Defective units Pcs.
O. Quality = (J − N)/J 100 %
OEE
P. Overall equipment effectiveness = I M O %
that depending on the chosen production management strategy, excess of unused

capacity is a positive factor for concentration on time competitiveness or flexible
production (e.g. Agile Manufacturing), but negative for cost competitiveness (e.g.
Lean Manufacturing). Depending on the specifics of the enterprise and which
industry it operates, the minimum value of this indicator is mostly determined by
the management staff.
4 Availability Analysis of Working Machines

and Equipment—Case Study
For a thorough analysis of the algorithm of working machines and equipment

availability, the Authors decided to conduct a case study, taking into account the
variants of production planning according to the criterion of production potential
availability, as shown in Table 4.
In this chapter the Authors decided on the selection of options for product from
group A, because of the key importance of this assortment group in terms of
production process efficiency. The Authors decided to apply forward scheduling,
168 A. Kolinski
Table 4 Verification variants of algorithm of availability of machines and equipment

Classification of product Planning Availability of production Variant
groups method potential
A Forward Limited production potential V1
Scheduling Unlimited production potential V2
due to the higher probability of production orders on time, in case of any production
downtime caused by equipment breakdowns or late deliveries of materials.
During the verification of availability algorithm of working machines and
equipment, OEE analysis was based on the mean value and the probability of
breakdowns and defective units. As a result, this algorithm can be used in making
operational decisions regarding future period (subsequent planning periods).
The first step is to carry out the classification of ABC in order to identify factors
which influence the availability analysis of machines and equipment. In the case of
products classified in group A, the machines are focused on execution of special-
ized production orders.
In the analysed production cycle, unit Q, S and T are produced, which are
classified as group A, according to the schedules, material requirements, and
technologies presented in the following Tables 5, 6, 7, 8, 9 and 10.
Taking into account the limited production potential, if the forward scheduling is
carried out, the result of material requirements planning must be estimated
(Table 11).
In case of availability analysis of working machines with limited production
potential, it was taken daily working time of a workstation—7 h and production in
one shift (production start—7:00).
Table 5 Requirements schedule for unit Q

Q 1 2 3 4 5 6 7 8 9 10
Planned end of production 100 100
Planned start of production 100 100
Table 6 Requirements schedule for unit S

S 1 2 3 4 5 6 7 8 9 10
Planned end of production 100 100
Planned start of production 100 100
Table 7 Requirements schedule for unit T

T 1 2 3 4 5 6 7 8 9 10
Planned end of production 100
Planned start of production 100
Table 8 Technological specification for a product Q

Workstation ST1 ST2 ST3 ST4
Operations number 1 2 3 4
Duration of operation [h] 0.01 0.02 0.01 0.03
The average duration of breakdowns [min] 10 20 10 30
Probability of breakdown 0.01 0.02 0.01 0.05
The average number of defective units 5 10 5 15
Probability of defective units 0.1 0.5 0.1 0.5
The cost of electric energy consumption by the machine [zł/h] 4.78 5.76 5.28 5.09
Table 9 Technological specification for a product S

Table 10 Technological specification for a product T

Table 11 The result of material requirements planning—variant V1

Days 1 2 3 4 5 6 7 8 9 10
Workstation ST1 Q: 7–8 T: 7–8 Q: 7–8 S: 7–9
S: 8–10
ST2 Q: 8–10 T: 8–11 Q: 8–10 S: 9–11
S:11–13
ST3 Q: 10–11 T: 11–14 Q: 10–11
ST4 Q: 11–14 S: 13–14 Q: 11–14 S: 11–12
ST5 T:7–12 S: 7–10 S: 12–14 S:7–10
S: 12–14
170 A. Kolinski
On day 4 the production of two products was planned (T and S). Due to the
imposition of production schedules of these products, it is necessary to determine
the sequence of their realization. Because of the higher total workload of product T,
it was decided to execute it at first. Considering the work time constraint (pro-
duction until 14:00), part of the production order had to be carried out the next days.
The analysis of use of each workstation is shown in Fig. 3.
On day 5 the greatest use of individual workstations may be noted. However,
due to the OEE analysis for both variants, it was decided to conduct the analysis for
machine ST5 on day 7.
OEE analysis was based on data from the past and supplemented probability of
breakdown, planned downtime or defective units, in the examination period.
Therefore, performing the OEE analysis by the probability of planned downtime or
defective units, assumed constant value risk of disruption in production.
According to the technological specification, the average duration of break-
downs or unplanned downtime is 20 min, and the risk of its occurrence is 10 %.
Based on this data, it determined that in the nearest future, 2 min of breakdowns
and unplanned downtime should be taken into account. Developing the volume of
defective production is similar. According to the technological specification, the
average number of defective units is 10 pcs., which with a certain probability
(50 %) allows to establish the occurrence of defective units in the amount of 5 pcs.
per batch of 100 pieces. OEE analysis is shown in Fig. 4.
Elaborated analysis assumes the Planned Production Time as two working hours.
It is caused by the scheduling of use of this workstation only at 12:00–14:00. The
two-hour production on this machine makes the ability to produce 40 units
(100 units/5 h). However, due to the probability of breakdowns, available
Fig. 3 Availability analysis of working machines and equipment, own study

Fig. 4 OEE analysis—variant V1, own study
Operating Time was reduced to 2 min, causing at the same time reducing of Total
Pieces up to 39 units (time to produce 1 piece—3 min).
The obtained result of overall equipment effectiveness, higher than 90 % should
be considered as satisfactory. However, you should consider to extend working
time this workstation during the next working day due to the necessity of producing
a sufficient number of pieces.
Taking into account the limited production potential, if the forward scheduling is
carried out, the result of material requirements planning must be estimated
(Table 12).
In case of the availability analysis of working machines with unlimited pro-
duction potential, it was considered as a priority for completion of the production
order on the day of its beginning. Also retained under the assumption that daily
172 A. Kolinski
Table 12 The result of material requirements planning—variant V2

Days 1 2 3 4 5 6 7 8 9 10
Workstation ST1 Q: 7–8 T: 7–8 Q: 7–8 S: 7–9
S: 8–10
ST2 Q: 8–10 T: 8–11 Q: 8–10 S: 9–11
S:11–13
ST3 Q: 10–11 T: 11–14 Q: 10–11
ST4 Q: 11–14 S: 13–14 Q: 11–14 S: 11–12
ST5 T: 14–19 S: 12–17
S: 19–24
working time of a workstation—7 h (production start—7:00). On day 4 the pro-

duction of two products (T and S) was planned. Due to the imposition of production
schedules of these products, it is necessary to determine the sequence of their
realization. Because of the higher total workload of product T, it was decided to
execute it at first. The usage analysis of each workstation is shown in Fig. 5.
On day 4 the greatest use of individual workstations may be noted. However,
due to select day 7 to analysis considering the limited production potential, for
further analysis, the machine ST5 of this day.
OEE analysis for this variant was carried out analogously to the previous variant,
which takes into account the probability of breakdowns and defective units. OEE
analysis for this variant is shown in Fig. 6.
Fig. 5 The analysis of use of each workstations—variant V2, own study

Fig. 6 OEE analysis—variant V2, own study
Elaborated analysis assumes the Planned Production Time as a five working

hours. It is caused by the scheduling of use of this workstation only 12:00–17:00.
Full production cycle on the machine enables the production of 100 units.
However, due to the probability of breakdowns, available Operating Time was
reduced by 2 min, causing at the same time reducing of Total Pieces up to 99 units
(time to produce 1 piece—3 min.).
The obtained result of overall equipment effectiveness, higher than 90 % should
be again considered as satisfactory. However, you should consider to extend
working time this workstation during the next working day due to the necessity to
produce a sufficient number of pieces. It should be noted that the value of OEE is
higher than for variant V1. On this basis it can be concluded that forward
scheduling with regard unlimited production potential variant is more effective.
174 A. Kolinski
Table 13 Comparative analysis of variants

Indicator Variant Variant
V1 V2
The use of workstation ST5 [h] 2 5
Availability [%] 98.30 99.30
Performance and productivity [%] 99.20 99.70
Quality [%] 94.90 94.90
OEE [%] 92.50 94.00
The use of workstation ST5 [%] 25.00 62.50
The cost of electric energy consumption to ‘idling’ of workstation ST5 35.34 17.67
[zł]
The cost of electric energy consumption for the production of 0.59 1.47
potentially defective units [zł]
Total costs [zł] 35.93 19.14
Table 13 shows the aggregate results of OEE analysis, taking into account the
ecological aspect.
This table shows the aggregate results of both variants use. Both from the point
of view of efficiency of the workstations and the costs generated by the ‘idling’ of
machines and equipment, variant V2 can be specified as an economic variant.
However, it should be noted that the workstation ST5 is a machine of the final
production and the costs of ‘idle’ machines that perform other operations should be
taken into account. This comparison does not include planning methods (forward
scheduling and backward scheduling), which has a direct impact on lead time of
production orders. In this comparison the available production potential is not taken
into account. Table 14 shows the costs generated by ‘idle’ of individual machines.
The use of workstations in both variants (Figs. 3 and 5) provides non-working
day 1 and start working from day 2. It is worth noticing that the variant V1, assumes
limited production potential, it uses six days to carry out all production orders
scheduled for this case study. In contrast, the variant V2, carried out with the
assumption of unlimited production potential foresees the use of 7 days. Time
availability of individual machines in variant V1 defined as 8 h, but in variant V2 as
24 h. “Idling” machine is defined as unproductive time of machine in which the
machine consumes electricity, but not performing any production order.
While making a comparison, it should be noted that the variant V1, despite the
less efficient use of workstations (OEE analysis), longer lead time of production
orders (7 days), generates a much lower cost of electrical energy consumption to
“idling” of individual machines. This is due to the fact that the variant V1 only
provides the time for machines working on one work shift. It should be noted that
the shutdown of machines after the operation is completed may be unprofitable
because of the high costs associated with the start-up.
Table 14 Analysis of eco-efficiency of individual variants

Indicator W1 W2
Production cycle time [days] 7 6
Day 2 CEEI of workstation ST1 [zł] 33.46 109.94
CEEI of workstation ST2 [zł] 34.56 126.72
Total costs [zł] 1248.51 3589.24
CEEI The cost of electric energy consumption to ‘idling’ of workstation
176 A. Kolinski
Operating efficiency analysis of production process shows the complexity of the

problem in ecological terms. Case studies presented in this chapter, beyond any
doubt highlights the risk of conflicting conclusions from the analysis of cost and
ecological aspects of the same situation in production. The authors realize that this
case study does not include all cost data that occur during the production process.
However, in order to simplify tackling a problem and present the relationships
between the various decision making connections, other costs were recognised as
constant, which do not change in both variants.
This case study includes only part of comprehensive analysis of production
process efficiency, which also affects the level of complexity of this analysis.
Moreover, it should be noted that a comprehensive analysis of production process
efficiency must include not only technical and organizational analysis of the pro-
duction process, but also the economic aspect. This chapter includes an analysis of
the one indicator of economic efficiency of the production process, but the authors
point out, that the system of economic indicators should be significantly larger. The
proposal system of indicators to assess economic efficiency of the production
process has been included in the publication (Kolinski 2013). In this chapter isn’t
illustrated a comprehensive system of indicators, in purpose to focus on a specific
ecological aspect at the operational level.
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ments and trends. Hershey, New York, pp 106–120
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furniture production. J Environ Manag 79(3):290–297
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8(4):297–310
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The Analysis of Economic
and Environmental Effects of Cooperation
Between Enterprises and in the Provision
of Transport—A Case Study
Marta Cudzilo and Jakub Sobotka
Abstract The aim of the chapter is the analysis of effects of joint organisation and
provision of transport by independent enterprises. Based on the data obtained from
four independent market enterprises, the analysis of potential for cooperation in two
basic variants has been carried out and the measurable effects of this cooperation
were examined. The study demonstrated the scale of cost savings which can be
achieved as a result of combination of transport orders and the level of environ-
mental effects, understood in this case as the change in the CO2 emissions. The
obtained level of results allows the conclusion to be made that the cooperation
between the Companies is beneficial both in the micro scale (positive economic
effect for the respective companies), as well as in the macro scale (a reduction in the
CO2 emissions).
Keywords Organisation of transport Cooperation Consolidation
1 Introduction
In the recent years, the awareness of companies in reference to the meaning of

logistic process management in the building of the competitive advantage has
increased significantly. As a consequence of this, the enterprises look for solutions,
which will allow them the creation of efficient and effective logistic structures,
which will guarantee the satisfaction of the needs of the client and ensure the
M. Cudzilo (&) J. Sobotka

Institute of Logistics and Warehousing, Centre of Logistic Expertise,
Estkowskiego 6, 61-755 Poznan, Poland
J. Sobotka

180 M. Cudzilo and J. Sobotka
expected profits (Kempny 2013, pp. 17–31). At the same time, the strong influence
of the government administration offices and executive bodies of the European
Union, promoting the pro-social and pro-environmental activities of companies are
presently noticeable in the business environment. In connection with this, enter-
prises, while conducting their activities, strive to remain in compliance with the
principles of balanced development and CSR requirements (Searcy et al. 2016,
pp. 2907–2921). Due to the complex construction of the transportation system and
the fact that it comprises the elements of the environment which are part of the point
and linear transport infrastructure (Hajdul 2010, pp. 45–56), the processes related to
the movement of goods, that is, the transport processes have the greatest impact on
the permanent and sustainable development (Skawińska and Zalewski 2009,
pp. 21–35). In consideration of this, the method which enables the entrepreneurs to
run a sustainable business which will simultaneously allow the achievement of
expected economic profits is the commencement of cooperation between the
companies that are involved in the joint creation of supply chains with regards to
the organisation of transports (Fertsch 2008, pp. 1–6). The cooperation between the
companies is the method to conduct business activity, which allows the consider-
ation of both the objectives of the enterprises and the intentions of the society. It
also allows such operation that limits the possibility of occurrence of negative
phenomena, both in the enterprise itself and its environment. The possible variants
of cooperation between the enterprises in the implementation of transport processes
as well as the economic and environmental effects which this cooperation brings are
presented in this chapter.
2 Possible Variants of Cooperation Between

the Companies in the Organisation of Transports
Cooperation between enterprises on the provision of transports may be performed

in one of three variants:
• Variant 1—consolidation of supplies made on joint routes, in order to increase
the degree of use of the payload and/or capacity of the given means of transport,
this variant of cooperation is illustrated comprehensively in Fig. 1,
• Variant 2—elimination of mileage of vehicles without loads, the so called
“empty kilometres”, this variant of cooperation is presented comprehensively
in Fig. 2,
• Variant 3—combination of the two variants mentioned above, taking into
consideration the optimisation of the stock level in the supply chain.
The Analysis of Economic and Environmental Effects … 181
Fig. 1 Illustration of the idea of cooperation between companies within the framework of variant
1 (consolidation of supplies), own study
3 Evaluation of Economic Benefits of Cooperation

Between Companies in the Provision of Transport
As part of the study of the potential benefits which can be achieved as a result of
joint organisation and provision of transport by independent entities, the numerical
analysis based on real data about completed transport orders provided by four
enterprises—the partners of the project—were analysed. During the first stage, the
above-mentioned analysis was carried out on an economic basis. The aim was to
investigate the potential of economic benefits resulting from the joint organisation
of transports.
3.1 The Analysis of Economic Benefits of Cooperation

Between Companies Within the Framework of Variant 1
As a priority, Variant 1 regarding the cooperation between companies was sub-

jected to validation. The transport orders completed independently by 4 companies,
which can be consolidated due to the location of the origins and destination points,
Fig. 2 Illustration of the idea of cooperation between companies within the framework of variant
2 (elimination of empty transports), own study
were selected. The comprehensive visualisation of the routes covered within the
framework of the said orders is presented in Fig. 3.
As has been shown in Fig. 3, the total volume of all four independent orders
amounted to 29 pul (pallet unit loads) with the total weight of 9.8 tonnes. The
Polish law allows maximum total weight of the unit, i.e. the tractor with the
semi-trailer, container and goods, not bigger than 40 tonnes (in the case of vehicles
registered before the year 2003—42 tonnes). This confirms the possibility of
consolidation of loads from the 4 presented orders on one vehicle. For the purpose
of final comparison of the transport costs before the consolidation and after the
consolidation, it was necessary to diagnose the real costs, which were incurred by
the enterprises in the case of the independent provision of transport on the given
routes. Each of the companies settled the accounts with the carrier, taking into
consideration only the laden kilometres. The costs of the respective orders were as
follows:
• Company 1—route: Bytom–Kostrzyn—5 pul, 1.8 tonnes—cost: PLN 480,
• Company 2—route: Katowice–Poznan—12 pul, 4.2 tonnes—cost: PLN 876,55,
• Company 3—route: Ruda Śląska–Komorniki—9 pul, 2.8 tonnes—cost: PLN
768,
• Company 4—route: Ruda Śląska–Gądki—3 pul, 1.0 tonne—cost: PLN 594.
Fig. 3 Comprehensive visualisation of transport orders of companies demonstrating potential for

cooperation within the framework of variant 1, own study
While implementing Variant 1 for cooperation between the companies, all 4

individual orders were combined into one coordinated order, which was com-
pleted along the following route: Ruda Śląska–Bytom–Katowice–Poznan–
Kostrzyn–Gądki–Komorniki, which is presented in Fig. 4.
In order to cover the route resulting from the combination of 4 transport orders, a
vehicle of the carrier cooperating with Company 1 was selected. Its features were as
follows:
• Permissible payload [pul1]—33 pul,
• Permissible payload [t]—15 t,
• Accepted rate per km with return ensured—2.8 PLN,
• Accepted rate per km without ensuring return—3.35 PLN,
• Base location—Gliwice,
• Was the access to the first location of the route paid—yes.
In order to start the completion of the order, the selected vehicle had to reach the
base location where it is stationed, i.e. from Gliwice, to the first loading site—to
Ruda Śląska. Because of the short distance of the base location from the first
loading site (about 14 km), the travelling costs were left out while calculating the
total cost of completion of the consolidated order. The total cost of completion of
the combined order amounted to PLN 2718.55, which, in comparison with the sum
of costs of the individual orders that amounted to PLN 1606.33, allows the gen-
eration of cost savings at the level of PLN 1112.22. During the next step of
validation, the calculated savings were divided between the Companies, whose
1
Pul—pallet unit loads.
Fig. 4 Variant 1 of cooperation between companies—consolidation of loads from 4 orders, own

study
loads co-formed the order load, thus striving for the determination of the share of
the respective companies in the total cost of the order. The described activities with
regards to the division of costs and savings were performed in accordance with the
algorithm for the settlement of costs of joint operations, prepared in the Logos
project2. The results of cost analyses are listed in Table 1. It follows from the table
that the analysed variant of cooperation of the enterprises allows the cost savings at
the level of almost 41 % to be obtained. This is an economic confirmation of the
relevance of cooperation between the companies in organisation of transport.
3.2 The Analysis of Economic Benefits of Cooperation

Between Companies Within the Framework of Variant 2
After the analysis of the cases study based on Varian 1, Variant 2 of cooperation
between companies was subjected to validation. From among 4 companies, whose
orders were subjected to analysis in the first case, two companies were selected for
the purpose of testing the economic potential of the benefits resulting from coop-
eration in Variant 2. The subject of the study included two specific orders,
demonstrating the potential for cooperation because of convergence of the departure
and destination locations. The description of the case, which was subjected to
analysis, is presented in Fig. 5.
2
The Logos project bearing the title: “The model of coordination of virtual supply chains that
meets the requirements of the corporate social responsibility”, with the number PBS1/B9/17/2013,
implemented using funds awarded by the National Centre for Research and Development.
Table 1 Cost savings of companies during the cooperation within the framework of Variant 1,
own study
Company Company Company Company Total
1 2 3 4
Price for individual orders 480.00 876.55 768.00 594.00 2718.55
(PLN)
Combined order price (PLN) 1606.33
Difference in costs—savings 1112.00 40.9 %
(PLN)
Order volumes (pul) 5 12 9 3 29
Percentage share (%) in the 17.24 41.38 31.03 10.34
total load
Division of savings (PLN) 192 460 345 115 1112
Percentage savings for 40 52.5 44.9 19.4
companies (%)
Order price for each of the 288.24 416.32 422.83 478.94 1606.33
companies (PLN)
Fig. 5 Detailed visualisation of transport orders from companies demonstrating the potential for
cooperation within the framework of variant 2, own study
As has been presented in Fig. 5, the first Company (F1) completed the full truck
load order along the route running from Ruda Śląska to Komorniki, transporting a
load in the form of 32 pallet unit loads with the total weight of 11.2 tonnes. The
said company settled accounts with the carrier using the rate: PLN 3.35 per km.
Without being obliged to provide the return load to the driver. In this case, the cost
of completion of the order would amount to PLN 1286.40 (the rout of
384 km * 3.35 PLN/km = 1286.40 PLN). The second company (F2) was to
transport a load consisting of 28 pallet unit loads with the total weight of
9.8 tonnes. The conditions for the settlement of accounts with the carrier were
slightly different: the established rate per km was PLN 2.8, however the company
was obliged to ensure the load for the carrier during the return route. In the analysed
Fig. 6 Variant 2 of cooperation between companies—the combination of orders for the purpose
of elimination of “empty returns”, own study
case, company F1 was not able to ensure such a load, which practically resulted in
the necessity of payment for “empty kilometres”. The cost of the analysed order in
such a case was PLN 2066.4 (the route of 369 km * 2.8 PLN/km * 2 = PLN
2066.40). For the analysed case study, the second variant of cooperation between
the companies in the implementation of the transport processes was applied. Two
individual orders were combined into one coordinated order. The vehicle of the
carrier cooperating with Company 1 was selected to cover this route, that is, the
same one which was selected for completion of the order in the first analysed case.
The vehicle, considering the fact that the return load was ensured, is settled using
the rate in the amount of 2.8 PLN/km. The coordinated order starts with the loading
of 32 pallet unit loads in Ruda Śląska. The load is transported to Komorniki, where
it is unloaded, then the vehicle goes to Gądki wherefrom it takes the load of
Company 2–28 pallet unit loads. The load is transported to Katowice, where it is
fully unloaded. The total length of the route is 771 km. The details for the covered
route and the calculation of the costs at the respective road sections are illustrated in
detail by Fig. 6.
In this case, the division of savings resulting from the completion of the com-
bined order between the companies participating in the order turned out a bit easier.
Company 1, in accordance with the accepted assumptions, covers the cost of
travelling along the route from Ruda Śląska to Komorniki. The coverage of
Table 2 Cost savings of companies cooperating within the framework of Variant 2, own study
Company 1 Company 2 Total
Price of individual orders (PLN) 1286.40 2066.40 3352.80
Combined order price (PLN) 2158.80
Difference in costs—savings (PLN) 1194.00 35.6 %
Order volumes (pul) 32 28 60
% share in the total load (%) 53.33 46.67
Division of savings (PLN) 211 983 1194
% savings for companies (%) 16.4 47.6
Order price for each of the companies (PLN) 1075.20 1083.60 2158
travelling costs from Komorniki to Gądki and the cost of order completion along
the route from Gądki to Katowice is covered by Company 2. The results of cost
analyses in Variant 2 of cooperation between the Companies are demonstrated in
Table 2. It follows from the table that the analysed variant of cooperation between
the enterprises allows cost savings at the level of almost 36 % to be obtained. This
is another confirmation of the relevance of cooperation between the enterprises on
organisation and provision of transports.
4 Consideration of Environmental Aspects

in the Analysed Case Study
In the published White Paper on Transport, the European Commission talks about
the revolution in transport in Europe, introducing the exhaustive Transport 2050
strategy, where one of the major assumptions is the reduction of exhaust fumes
coming from transport by 60 % by the year 2050. In connection with the guidelines
of the European Commission, the initiatives taken by companies, aimed at reduc-
tion of the CO2 growth rate in the area of transport are increasingly important.
Therefore, within the framework of the analysed case, as well as demonstration of
the economic benefits resulting from the cooperation between companies, an
evaluation of the results of this cooperation in the environmental aspect was also
undertaken.
In this case, the tool used was the CO2 calculator (Korzhenevych et al. 2014)
built by the Institute of Logistics and Warehousing (Polish: Instytut Logistyki i
Magazynowania—ILiM), using the MSExcel sheets, which allows the estimation of
the amount of emissions of exhaust fumes for different types of EURO. Owing to
the use of the calculator, it was possible to carry out a detailed analysis, which
allowed the CO2 emission level both in the case of independent organisation of
transports by the analysed enterprises and in the case of cooperation on each of the
analysed variants.
Table 3 Permissible exhaust fume emission values in the respective EURO standards for the
vehicles equipped with the petrol engine, http://transporteuropejski.pl/20/nowe-normy-emisji-
spalin/
(g/km) EURO I EURO II EURO III EURO IV EURO V EURO VI
CO2 2.72 2.2 2.3 1 1 1
The basis for the calculation of the amount of CO2 emissions includes several
basic pieces of information on the conditions of the implemented transport process.
The information mentioned above constitutes the base data for the calculator. These
are:
• the size and the weight of the transported load expressed in units of measure,
• the type and size of the vehicle involved in the transport process,
• the combustion standard for the vehicle involved in the transport process—the
list of EURO standards with the specification of the permissible value of exhaust
fume emissions for each of the standards is presented in Table 3,
• the vehicle load factor and the distance with the so called empty mileage, if they
occurred,
• the total weight of the transported load and the distance between the starting
points and the reloading points.
Based on the provided data, the amount of CO2 emissions was calculated. The
analysis was carried out in several steps. The initial and the most important stage of
the analysis of CO2 was the calculation of the amount of emission for individual
routes broken down into different types of means of transport, taking into
consideration:
• the weight of the transported load,
• the permissible mass of the load which a vehicle can carry,
• the combustion standard—for the purpose of analysis, the assumed combustion
standard for the vehicles was at the level of EURO IV, as in accordance with the
performed analysis, this is the most frequently occurring combustion standard,
taking into consideration the available transportation fleet of the carriers coop-
erating with companies that take part in the model validation.
• the distance between the respective points.
By using the CO2 calculator, the calculation “before” and “after” was made, i.e.
the amount of emissions of CO2 was calculated as the priority with the assumption
of the lack of cooperation between the companies and with independent completion
of transport orders. Second, the calculations were made taking into account the
characteristics of the transport order which combines the individual orders from
companies (variant of cooperation). For each of the variants, a table containing the
information about the loading and unloading sites was presented, including the size
of the transported volume and the main information about the vehicle by means of
which the transport was realized. Another table contains, in turn, the summary of
the results of simulation and the basic information about the route and the amount
of emissions of CO2.
4.1 Analysis of CO2 Emissions in the Case of Cooperation

Within the Framework of Variant 1
The first analysis referred to four individual routes, which were covered indepen-
dently by the enterprises using different means of transport. For all the vehicles,
(used on all routes), in accordance with the assumptions, the accepted combustion
standard was at the level of EURO IV. The data concerning the realisation of all the
routes are given in Table 4.
Table 5 includes the result of the conducted simulation. The amount of CO2
emissions for the respective routes was calculated. As can be concluded on the basis
of the data, which are presented in Table 5, the greatest emission of exhaust fumes
is generated along the route from Katowice to Poznan and amounts to about 338
[kg]. The route mentioned in this specification is the second longest route and the
first one in terms of the volume which was transported. This means that the size of
the transported load has a significant impact on the amount of used CO2.
Table 4 The specification of routes covered independently by 4 companies, own study

Loading Unloading Distance Volume Vehicle Vehicle EURO Company
site site (km) (pul) payload payload
(pul) (kg)
Bytom Kostrzyn 303 5 5 3500 EURO IV Company 1
Ruda Komorniki 369 9 10 7500 EURO IV Company 3
Śląska
Ruda Gądki 322 3 5 3500 EURO IV Company 4
Śląska
Katowice Poznan 336 12 12 8400 EURO IV Company 2
Table 5 The consumption of CO2 on the routes covered independently by 4 companies, own
study
Route Distance CO2 emission (kg)
Bytom–Kostrzyn 303 239.953
Ruda Śląska–Komorniki 369 271.249
Ruda Śląska–Gądki 322 236.700
Katowice–Poznań 336 338.087
1085.990
Table 6 Specification of the combined route sections (Variant 1), own study
Loading/ Loading/ Distance (km) Volume (pul) Vehicle % Vehicle EURO
unloading unloading payload (pul) filling (%)
Ruda Śląska Bytom 23 12 33 36 EURO IV
Bytom Katowice 23 17 33 52 EURO IV
Katowice Poznan 336 29 33 88 EURO IV
Poznan Kostrzyn 24 17 33 52 EURO IV
Kostrzyn Gądki 35 12 33 36 EURO IV
Gądki Komorniki 20 9 33 27 EURO IV
Table 7 CO2 emission along Route Distance (km) CO2 emission (kg)
the sections of the combined
route (Variant 1), own study Ruda Śląska–Bytom 23 8.416
Bytom–Katowice 21 12.658
Katowice–Poznań 336 364.047
Poznań–Kostrzyn 24 13.208
Kostrzyn–Gądki 35 12.806
Gądki–Komorniki 20 4.455
415.591
The next step involved the calculation of the amount of CO2 emissions after the
consolidation of the loads. In accordance with the idea of Variant 1 regarding the
cooperation between companies, all the loads on the route were consolidated, and
the transport was organised using one means of transport. For the vehicle selected
to complete the consolidated order, (payload of 33 pul), the accepted combustion
standard was at the level of EURO IV. Table 6 shows the respective sections of the
combined route: Ruda Śląska–Bytom–Katowice–Poznan–Kostrzyn–Gądki–
Komorniki. The table also shows the length of the respective sections of the
combined route and the volume transported along these routes, taking into account
the performed loading and unloading operations, resulting from the demand of the
respective Companies, which co-participated in the combined transport order. As
follows from the data, which are presented in Table 6, it is possible to notice the
value in column “Volume” and “% of filling” increases until the moment when the
vehicle is additionally loaded in Katowice (% of filling is 88 %), and decreases
from the moment of the first unloading operation in Poznan (% of filling—52 %).
Another table (Table 7) presents the calculated amount of CO2 emissions at
respective sections of the combined route. The total amount of CO2 emissions along
the whole route between Ruda Śląska and Komorniki was about 415 kg of CO2.
The greatest emission was measured along the section between Katowice and
Poznan, which follows from the length of this section and the volume which was
transported—the consolidated load of 4 companies (29 pul).
The conducted simulation showed that not only did the cooperation between
Companies based on assumptions of Variant 1 bring economic effects, but also it
was advantageous taking into account the environmental aspects. The consolidation
of loads from 4 orders and their transport by means of one vehicle on a combined
route allows the reduction of CO2 emissions by more than a half (from 1086 to
415 kg).
4.2 The Analysis of Consumption of CO2 in the Case

of Cooperation Within the Framework of Variant 2
As the priority, by analogy to the analysis within the framework of Variant 1, the
individual routes covered independently by two companies using different means of
transport were summarised. In accordance with the assumptions, for both vehicles
(travelling along two routes), the combustion standard was assumed to be at the
level of EURO IV. The data regarding the covered routes are provided in Table 8.
As the table shows, Company 2 realises the so called “empty return” along the route
from Katowice to Gądki.
Table 9 contains the amount of the calculated CO2 emission for route 1 and
along two sections of route 2. As can be seen based on the data presented in
Table 9, the greatest exhaust fume emission is generated along the route between
Ruda Śląska and Komorniki and amounts to about 450 kg. Nevertheless, the fact of
Table 8 Specification of routes covered independently by 2 companies, own study

Loading Unloading Distance Volume Vehicle Vehicle EURO Company
site site (km) (pul) payload payload
(pul) (kg) (%)
Ruda Komorniki 369 32 33 97 EURO IV Company 1
Śląska
Gądki Katowice 308 28 33 85 EURO IV Company 2
Katowice Gądki 308 0 33 0 EURO IV Company 2
Table 9 Consumption of CO2 on the routes covered independently by 2 companies, own study
Route Distance (km) CO2 emission (kg)
Gądki–Katowice 308 319.8
Katowice–Gądki 308 6.986
776.8
generation of almost 7 kg of CO2 along the route between Katowice and Gądki,
which constitutes the so called “empty return” deserves some attention.
In another step, the amount of CO2 emissions was calculated after combining the
routes of both companies and completion of two independent orders on one route.
In accordance with the idea of Variant 2 regarding the cooperation between com-
panies, the “empty return” was eliminated. As in the previous cases, for a vehicle
(payload of 33 pul) completing the combined order, the combustion standard was
also assumed at the level of EURO IV. Table 10 shows the respective sections of
the entire route: Ruda Śląska–Komorniki–Gądki–Katowice. Along the “access”
road section, the vehicle filling is 0. It is a short section where the vehicle, after
unloading the consignment coming from order of Company 1, reaches the loading
site specified in the order issued by Company 2.
Table 11 contains the summary of consumption of CO2 along the respective
combined route sections and the summarised specification of the consumption of
the whole “circle”. A big difference between the route running along Ruda Śląska
and Komorniki, and the route along Gądki and Katowice can be seen. Both with
reference to the distance and the volume, the values for the first one of them are
higher.
The conducted simulation demonstrated that the cooperation of the Companies
based on assumptions of Variant 2, being in compliance with the developed model
of coordination of the virtual supply chains, brings positive effects from the per-
spective of evaluation of environmental aspects. Nevertheless, in this case, the
benefit observed in this aspect, expressed by the total CO2 emission, is not as
significant as in the case of analysis of Variant 1 for cooperation between com-
panies. The combination of orders of two independent companies into one route
Table 10 Specification of combined route sections (variant 2), own study

Loading Unloading Distance Volume Vehicle % Vehicle EURO
site site [km] [pul] payload [pul] filling (%)
Ruda Komorniki 369 32 33 97 EURO IV
Śląska
Komorniki Gądki 20 0 33 0 EURO IV
Gądki Katowice 308 28 33 85 EURO IV
Table 11 CO2 emission along the combined route sections (Variant 2), own study
Route Distance (km) CO2 emission (kg)
Komorniki–Gądki 20 0.5
Gądki–Katowice 308 319.8
770.4
allows the reduction of CO2 emission by almost 7 kg. In this case, the economic
benefit and the fact that its achievement does not cause negative effects for the
environment in the context of the CO2 emission are fundamental. It must be
emphasised that the assumptions on which the algorithm for calculation of CO2
consumption is based, implemented in the used calculator, has a great impact on
drawing such conclusions. In the case when each company completed their orders
separately, the total number of kilometres for both routes amounted to 985 km.
After combining the route, its length was significantly reduced—to 697 km, by
elimination of the “empty return” of Company 2. However, as it turns out, the CO2
emission along the return route in the case of Company 2 was small due to the lack
of load.
5 Conclusions
The conducted simulation demonstrated that the cooperation of the Companies

based on assumptions of Variant 2, being in compliance with the developed model
of coordination of the virtual supply chains, brings positive effects from the per-
spective of evaluation of environmental aspects. Nevertheless, in this case, the
benefit observed in this aspect, expressed by the total CO2 emission, is not as
significant as in the case of analysis of Variant 1 for cooperation between com-
panies. The combination of orders of two independent companies into one route
allows the reduction of CO2 emission by almost 7 kg. In this case, the economic
benefit and the fact that its achievement does not cause negative effects for the
environment in the context of the CO2 emission are fundamental. It must be
emphasised that the assumptions on which the algorithm for calculation of CO2
consumption is based, implemented in the used calculator, has a great impact on
drawing such conclusions. In the case when each company completed their orders
separately, the total number of kilometres for both routes amounted to 985 km.
After combining the route, its length was significantly reduced—to 697 km, by
elimination of the “empty return” of Company 2. However, as it turns out, the CO2
emission along the return route in the case of Company 2 was small due to the lack
of load.
Problems related to the organization of logistic processes in business are one of
the most complicated issues in logistics (Ceniga and Sukalova 2015, pp. 160–166),
and their solution includes selection of partners (Wu and Barnes 2016, pp. 2114–
2132) and means of transport in the organization of transport process (Hall 2003,
pp. 562–595). In this chapter was studied the case the cooperation of companies in
this field. The conducted analysis justifies both the economic and environmental
benefits of joint provision of transports by independent enterprises (Grant-Muller
and Usher 2014, pp. 149–166). The practical verification of the application of the
listed forms of cooperation between the enterprises with regards to the organisation
and provision of transports, confirmed that they correspond to the assumptions of
the European logistic and transport policy. The policy promotes effective use of
various means of transport independently and in combination with others, in order

to cause the optimal and sustainable use of resources which, in turn, will contribute
to the achievement of macro benefits.
At the same time, the analysed case highlights a number of conditions which
must be fulfilled in order to make the cooperation between companies possible. The
necessary condition is the consistency of the areas in which the entities, which wish
to cooperate, conduct their transport activities. The presented case also confirms the
potential for obtaining the synergy effect in the cooperation between the companies.
The more enterprises take a decision to cooperate in the organisation of transports,
the greater synergy effect can be achieved. The effect of this will be better results
achieved both in the micro, mezzo and macro scale.
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Efficient Demand Management
in Retailing Through Category
Management
Davor Dujak, Zdenko Segetlija and Josip Mesarić
Abstract Demand management is complex and crucial coordinating activity in

supply chain management. Its roots are at retail echelon of supply chain where it is
most efficiently conducted through category management process. This chapter
aims to highlight the importance of category management for efficient demand
management activities in the retail supply chain management through a theoretical
analysis of the category management process. The need for cooperation between
retailers with other members of the supply chain in category management is also
emphasized, especially in form of category captainship collaboration. Category
management run by retailers is the beginning and precondition for efficient and
effective demand management throughout the whole supply chain. Potential
implementation problems in certain areas of demand management in retailing are
pointed out, and finally solutions for overcoming these issues are offered.
Keywords Demand management Retailing Category management Category

captainship Planograms
1 Introduction
Supply chains are almost always characterized by a higher power of one echelon, or
one supply chain member. Over time this power usually shifts from one member to
the other because of many reasons coming mainly from market conditions and
relations, and triggered mostly by final consumers’ habits. Over the last decades
D. Dujak (&) Z. Segetlija J. Mesarić

Faculty of Economics in Osijek, Josip Juraj Strossmayer University of Osijek,
Osijek, Croatia
Z. Segetlija
J. Mesarić

196 D. Dujak et al.
retailing has become a predominant echelon in most of contemporary supply

chains. This is especially the case with food supply chains or the fast moving
consumer goods (FMCG) sector. This dominance is evident in a majority of supply
chain management areas (e.g. distribution design, packaging, coordination, inven-
tory management, demand management). Other than from their closest position to
the final consumer, the retailers’ growing power is arising from the large depen-
dence to the other members of the supply chain, caused by huge concentration
processes in retailing. In this way retailing influences both upstream and down-
stream members of its supply chain through many activities, sometimes called retail
supply chain management (RSCM). It is especially interesting to observe retail
demand management, which is mostly carried out through the concept called cat-
egory management, which strongly influences both retailers’ suppliers and final
consumers.
This chapter aims to highlight the importance of category management for
efficient demand management activities in the RSCM through a theoretical analysis
of the category management process. The need for cooperation between retailers
with other members of the supply chain in category management is also empha-
sized, namely the involvement of the supply (upstream) side of the chain in order to
successfully manage the demand of end customers. Category management run by
retailers is the beginning and precondition for efficient and effective demand
management throughout the whole supply chain. Potential implementation prob-
lems in certain areas of demand management in retailing are pointed out, and finally
solutions for overcoming these issues are offered.
2 Background
Concentration of enterprises is defined as the clustering of market share through an

over proportional growth or through the merging of multiple enterprises (Segetlija
et al. 2011). Concentration and downstream verticalization have traditionally been
enabling the development of controlled and secured distribution channels for
manufacturers (Zentes et al. 2011), but echelon processes are reversed with the shift
of channel power to retailing. This shift of power is most often presented by a
weakness of manufacturers during negotiations with retailers, which results in new
vertical systems (Zentes et al. 2011; Segetlija and Dujak 2009), mostly character-
ized by upstream verticalization. Consequently, many theorists discuss retail supply
chain management (Ray 2010; Gustafsson et al. 2009; Alagiri and Kalai Selvan
2007; Ayers and Odegaard 2008; Finne and Sivonen 2009; Dujak 2012). RSCM
can be understood in two ways (Dujak 2012). First it could imply the implemen-
tation of supply chain management activities in the retail economic operator (mostly
logistics activities). The second and prevailing understanding of RSCM is the
management of the supply chain by retailers where they take a keyword in the
supply chain initiating supply chain management activities with other members of
the supply chain, and in a way act as the manager of the whole (or the majority) of
Efficient Demand Management … 197
the supply chain. Since other members of the supply chain are largely dependent on
retailers (e.g. in the supply chains of food products), retailers’ decisions regarding
supply chain management greatly affect other members of the supply chain (not
only their logistical operations, but also their entire business). This dominant
approach to supply chain management by retailers is prevalent, especially in the
FMCG sector.
The RSCM is continuously developing and improving (Segetlija et al. 2012).
According to recent research (Randall et al. 2011), modern retailers are developing
agile management strategies that enable a faster response to changing consumer
needs and, what is extremely important, they place a greater emphasis on the
balance between costs and customer services, and reduce the prevailing focus on
just reducing the costs, which is traditionally associated with supply chain
management.
In comparison with the traditional notions of supply chain management, RSCM
has particularities in all areas of supply chain management. It is especially suc-
cessful in demand management. In order to achieve more efficient demand man-
agement, modern retailers (along with some of the other members of their own
supply chain) perform category management. This process approach to managing
product categories as strategic business units enable retailers and their suppliers to
have a significant impact on the demand of end customers. According to Dayyani
(2010), many industry experts consider category management as the most complex
activity of supply chain management. Demand management through category
management is carried out through a series of strategies and tactics, aimed largely at
the retail assortment and its space management. In this way, category management
processes become the intersection, but also the starting point of marketing and
supply chain activities of retailers.
3 Demand Management in Retailing
Demand management is a set of activities that are of crucial importance to the

supply chain, and thus an indispensable part/area of supply chain management
(Fig. 1). Demand management usually starts from a single economic entity and is
performed only in the economic entity, however, the real opportunities arrive when
the economic operator connects with other members of the supply chain and
integrates the process of demand management with the processes of suppliers and
customers (Croxton et al. 2008).
Besides being viewed as supply chain management area, demand management
can also be viewed in several other ways, some of which are:
• one of the supply chain management processes (Croxton et al. 2008)
• key part of integral operations planning in supply chains (Croxton et al. 2008;
Bowersox et al. 2010),
198 D. Dujak et al.
SUPPLY CHAIN
MANAGEMENT
INVENTORY SUPPLY NETWORK

SOURCING COORDINATION
MANAGEMENT DESIGN
DEMAND SCM in TRANSPORT &

MANAGEMENT PRODUCTION WAREHOUSING
Fig. 1 Areas of supply chain management
• holder of business operations category “Planning” in SCOR (supply chain

operations reference) model (Hugos and Thomas 2006),
• set of practices that have arisen in order to influence the demand (Hugos and
Thomas 2006),
• software module from a group of supply chain management software.
In addition to forecasting and demand planning, demand management includes
tools for influencing future demand and supply, by which the demand and supply in
the supply chain are adjusted to maximize the profits of the entire supply chain.
Demand management in the context of supply chain management can be defined as
the preparation of supply chain members for future events in the supply chain
through coordinated efforts to forecast expected future demand, jointly influencing
demand and accordingly creating their supply. There are several approaches to
divide demand management, but most authors agree that demand management
includes:
• demand forecasting and planning,
• supply planning in accordance with demand, and
• collaborative influencing demand and supply.
As we have already mentioned, demand management is a supply chain man-
agement area in which the retailer should have the most power over the other
upstream members in the supply chain. This power should be derived from the
dependence of its suppliers (and other members of the supply chain) on information
about demand that the retailer can provide. Because of its location in the supply
chain the retailer has daily contacts with customers, and is the only one at the source
of demand and the only supply chain member who is forecasting based on the data
of the independent demand (Mentzer 2004). In some cases retailers’ vendors do not
recognize the importance of independent demand data or they do not know how to
use it (this decreases the power of the retailer, but also the performance of the whole
supply chain). But in most cases demand management is driven by retailers and is
based on retailers’ point-of-sale (POS) data about sale and other data (e.g. data
about out-of-stock time are needed to calculate past demand and consequently
future demand). While collecting POS data and using sophisticated software to
analyse it, the collected data can give a good deal of information about the habits
and preferences of the customers. However, we can only see the real effects by
unifying this data with the manufacturer’s data. Given the fact that the manufacturer
monitors and analyses the behaviour of customers in relation to a much smaller
number of stock keeping units (SKU)—its brands and related product category—he
usually has more general market information about a certain product category than
the retailer (who analyses several thousand or even tens of thousands of items).
Only a joint analysis of both retailer’s and manufacturer’s data (and information
from “external” sources such as a market research agency, etc.) can be a prereq-
uisite for effective demand forecasting, and consequently planning and coordinating
supply with forecasted demand.
While analysing retail value (supply) chains, Finne and Sivonen (2009) devel-
oped a demand management process called a Shopper-oriented demand manage-
ment process model that consists of four steps:
1. shopper segmentation and positioning
2. format development and category portfolio management,
3. category management,
4. store level implementation
Because the retailer implements the first two steps only when he first starts the
business, or when he does some radical changes in the business (focus on an
entirely different customer segments while changing his own retail format), it can be
concluded that they occur very rarely and are not an everyday activity of demand
management. On the other hand, the last step of this model, implementation at
stores, in most theoretical work on category management is one of the stages of the
process of category management itself. In the end, this model comes down to the
fact that demand management in modern RSCM is actually an implementation of
category management.
4 Category Management in Retailing
4.1 Origins and Characteristics of Category Management
Category management has emerged independently as another practice of retailers

and their suppliers that is based on cooperation (the first practitioners were
supermarket retailers in 1980s that were looking for a defence strategy against new
retail formats like category killers and malls). Later, category management was
interpolated as part of a number of management concepts. The concept that is most
widely used (both in business and in science) is definitely the Efficient Consumer
Response (ECR). Since its creation in 1993 until today, ECR has evolved a number
of strategies that have been added to the ECR model (see Table 1). All strategies
200 D. Dujak et al.
Table 1 ECR strategies

Orientation ECR strategy
Demand side (category management) Efficient product (development &) introduction
(EPI)
Efficient promotion (EP)
Efficient store assortment (ESA)
Supply side (supply chain Efficient replenishment
management) Efficient operating standards (EOS)
Efficient administration/systems (EAS)
Efficient sourcing (ES)
Efficient controlling (EC)
Source Adapted according to Lietke and Toporowski (2007)
can be classified into two groups according to their prevailing orientation in the
supply chain. The first group of strategies is oriented towards demand and is
commonly referred to as (or classified under) the concept of category management,
while the rest of ECR strategies are commonly classified under supply chain
management (supply side). However, all these strategies are intertwined, they are
inseparable and take place simultaneously.
ECR has provided the most accepted definition of category management—a
retailer/supplier process of managing categories as strategic business units, pro-
ducing enhanced business results by focusing on delivering consumer value (ECR
Europe 2014). There are two key accents in the category management definition:
product/service category as seen by customers is a central point of business
activities, and it should be a joint process of retailers and suppliers. This approach
to category management is seen as marketing category management, and sometimes
it is also called micro-marketing, shelf management, space management, schematic
development or fact-based selling (Ursin 2004).
Except in marketing or selling, category management is also used within the
purchasing function. Marketing category management is focused on the product
category that is sold in the store (and on each SKU in that category) with the goal to
arrange it and promote it according to customers’ needs and buying habits to
maximize category profit. Opposite of marketing category management is pur-
chasing category management. O’Brien (2009) defines purchasing category man-
agement as the practice of segmenting the main areas of organizational spend on
bought-in goods and services into discrete groups of products and services
according to the function of those goods or services and, most importantly, to
mirror how individual marketplaces are organized. We can conclude that pur-
chasing category management is a supply-oriented process. In this chapter, as we
consider demand management in RSCM, the emphasis will be primarily on mar-
keting category management (hereinafter category management). Nevertheless, it is
important to emphasize that even in marketing category management, category
managers are engaged in purchasing.
When talking about category management, the significance of product/service

category needs to be explained. Category is a distinct, manageable group of
products/services that consumers perceive to be interrelated and/or substitutable in
meeting a consumer need (ECR Europe 2014). Most importantly, customers are
those who decide which SKU will be included in a certain category through their
behaviour during the purchase of products that meet the specific need or desire.
This behaviour is observed in different ways by different members (retailers, dis-
tributors and/or manufacturers) or non-members (e.g. market research agencies) of
the supply chain. Based on their observations they make conclusions and imple-
ment them in the category structure. All products that similarly or equally satisfy
the consumer’s need or those that meet their secondary need linked to the primary
one (e.g. toothbrush and toothpaste, shaver and razor blades, coffee and sweetener)
constitute a specific category.
Although developed in retailing (by retailers who have had problems with its
supermarket operations in the late 1980s and early 1990s), category management is
equally intended for other members of the supply chain (especially retailer’s ven-
dors). Table 2 shows some benefits of category management for main members of
the supply chain.
Table 2 Advantages of category management for members of the supply chain

Advantages of category management for
Manufacturer/Supplier Increased business profitability
Increased business knowledge
Improvement of relationships with retailers
Retailer
Financial: Increased sale
Increased margins
Decreased costs
Improved efficiency
Increased market share
Non-financial: Organizational learning
More efficient strategic implementation
Better customer service
Improved customer knowledge
Understanding of cost structure
More open communication with supplier
Improved personal relationships
Stability of business practices
Customer/Consumer Decreased customer confusion
Product choice reflects customer needs
Greater product variety
Increased product availability
Information about products
New advantages
Lower prices
Source Hogarth-Scott and Dapiran (1997)
202 D. Dujak et al.
Thus, category management in retail seeks to optimize the entire supply chain. In
accordance with the aforementioned reasons, the activities of category management
in retail can be directed in two ways in the supply chain:
A. to customers/consumers—in order to increase demand for the category by
increasing customer traffic in the store (the number of customers who visit the
store), and/or increasing the probability of purchasing in the category for the
customers who are already in the store.
B. to suppliers/manufacturers—with the aim of improving the supply and logistics
(i.e. coordination in supply chain management with suppliers) by providing
information on demand and other information required to ensure optimization
of the chain, and requesting additional work and information about the category
from supplier.
In this paper both directions are analysed through the category management
process, but the main accent is on upstream cooperation for optimal downstream
results.
4.2 Category Management Process
The category management process is carried out through eight phases when
implemented in the company or supply chain (ACNielsen et al. 2006): definition of
category, role of category, category assessment, category scorecard, category
strategies, category tactics, implementation and category review.
As shown in Fig. 2, category management is a cyclic process (Segetlija and
Dujak 2013b). During the whole process the most power, and the greatest
responsibility, lies on the category managers—employees responsible and
accountable for the overall operations related to a particular category or categories
of products, such as business owners who manage their business units. Therefore
they are involved in all stages of category management process. In the first two
phases (definition and role of category) the top management is also included. This is
of particular importance since the first two phases determine the direction in which
the economic operator will proceed and this should be aligned with the general
business strategy (or it should modify it), so it is necessary that the key people are
involved in this part of the process, having the broadest picture of the status and
capabilities of the undertaking and its environment. The next four phases (assess-
ment, scorecard, strategies and tactics) are conducted mainly in the category teams
that are formed by category manager, and they conduct a number of analyses and
plans by which they prepare the “field” operationalization. Men on the “field”—
employees in stores, usually carry out the last two phases (implementation and
review). Along with them, there are also (if necessary) so-called SWAT teams
(Special Weapons And Tactics). Analogous to the police units that are specially
trained to help in certain dangerous situations, category management SWAT teams
Fig. 2 Category management process. Source Adapted by author from ACNielsen et al. (2006)
consist of employees of category teams that assist in problems during the imple-
mentation of the previously set plans.
This original category management process is commonly used during the first
implementation of category management, and after some time companies usually
adapt it to their needs and combine different phases of the original process in a
smaller number of phases (mostly with the help of consulting companies).
Although all stages of this process achieve a full effect only in a joint action, it is
necessary to emphasize the phases of category assessment and category tactics.
Activities in the assessment phase represent a significant and demanding ana-
lytical process with a double purpose (ACNielsen et al. 2006):
• to determine the potential for possible growth of category (or some of its parts),
and
• to prepare the foundation on which retailer (alone or in conjunction with the
vendor) can create goals, strategies and tactics of category in subsequent phases
of the category management process.
Concerning the time and cost, this is probably the most demanding phase of
category management process. Permanent and multi-angle analyses have to be
performed. In doing so, the analysis can be carried out from the perspective of the
customers, from the perspective of the market, from the perspective of the retailers
and from the perspective of the suppliers. Assessment is performed at the level of
categories, but also at its subordinate levels (sub-category, segment, sub-segment,
micro-segment, SKU) to obtain a complete picture of the opportunities for growth
within the category. The retailer’s category team at this stage must do significant
204 D. Dujak et al.
analytical work and they often seek help from suppliers—best analyses are per-
formed when retailers and manufacturers collaborate.
Numerous indicators are used during the analysis of each category, and one of
the key indicators is Gross Margin Return on Inventory Investments (GMROI),
which indicates how many units of currency of gross margin retailer will earn on
one currency unit invested in inventories. It is calculated as gross margin divided by
average inventory at cost (Levy and Weitz 2012). Frequently used is group of
indicators for efficiency of length/space of retail shelves (e.g. profit/gross margin
per one cm/inch of shelf), as well as indicators of turnover, gross margin, market
share and market growth of each SKU. Also, particularly important are indicators
that indicate the influence of individual SKU (its location and the space allocated to
it) on the other SKU in the category or even in other categories (cross-category
analysis).
In the category tactics phase, operational activities of category management are
defined by four marketing elements of category management (Muller and Singh
2006): assortment, price, promotion, and shelves presentation. However, category
management is mostly focused on assortment management and the associated space
management (shelves presentation).
Assortment management is a set of methods that dynamically (usually in
monthly intervals) determine assortment for each category and for each retail format
(or a deeper division if necessary). The result of these processes is a planogram
representing optimized assortment of category (or sub-category), which should
bring maximum profitability to the retailer in the next period (e.g. one month).
A planogram can also be defined as a diagram that illustrates how and where
specific merchandise should be placed on shelves or displays to increase customer
purchases (Levy and Weitz 2012). A planogram is the main tool as well as an
evidence of strong impact of category management on consumer demand.
According to the analyses category managers decide on the strength of each
individual SKU and therefore propose strategies to replace, maintain, reduce or
increase SKU in a category, or to introduce private label SKU (ACNielsen et al.
2006). Increasing or decreasing of SKU in a category means to increase or to
decrease the number of faces of this product (SKU) on the shelf. These analyses
have contributed to a significant reduction in the number of SKUs in multiple
categories, and frequent changes in the structure. The beginning of product filtration
is indirectly initiated by purchases by final consumers, as well as directly by
retailers. By using the above methods of assortment management, retailers select
only the highest-selling and most profitable products in the category (these are the
products that are most profitable independently, but also those whose existence in
the assortment has impact on the profitability of the entire category).
One of the key restrictions of category assortment is space defined by a certain
type of store and category itself, therefore space management is an inseparable
activity of assortment management. Actually, space management is a continuation
of the location management policy in retail that can be observed at four levels:
• Macro location—represents selection of a region or city/village where the store

will open,
• Micro location—represents selection of an exact address where to build/rent a
store,
• Store layout—location of shelves or other displays with product categories in
the store (space management on the store level),
• Planogram—location of each SKU on the shelf of certain category (space
management on the category level).
Category management’s space management covers the location problems of the
layout and planogram. According to the American Marketing Association (2014)
the store layout or arrangement of departments or groupings of merchandise, has
to be organized to provide for ease of customer movement through the store and to
provide for maximum exposure and attractive display of merchandise. The pecu-
liarity of layout in category management is reflected in the allocation of retail space
according to product categories (usually 50 or more categories), as opposed to the
earlier classification by departments (4–7 departments).
Space management on the category level (space on shelf, display, floor or in the
fridge) requires more demanding complex operations. Basic factors for allocating
space to certain products are (Levy and Weitz 2012): the productivity of the allo-
cated space, the merchandise’s inventory turnover, the impact on overall store sales,
and the display needs for the merchandise. Except for these factors, many other
principles and methods have to be taken into consideration in space planning and
management (see Segetlija and Dujak 2013b). Due to huge data sets, these activities
are usually conducted through specialized space management software (e.g. Apollo
Spaceman). During this phase, experiences from all previous phases of the category
management process come to the fore.
The planogram in Fig. 3 is a planogram of the subcategory “brick juices”
(category “non-alcoholic beverages”), and represents an excellent example of basic
positioning principles in space management. This typical retail shelf consists of six
horizontal levels. The first (highest) level is the level above the eyes, the second
level is at the eye level, the third and fourth can be grouped at the level height of the
hand, while the fifth and sixth can be classified into the floor level. In this plano-
gram, horizontal multi facings and SKUs are arranged with vertical presentation in
groups, mainly according to the flavour of juices (from left to right: orange flavour,
apple, mixed or multivitamin, apricot, pineapple, dark berries and special flavours).
Since the main movement direction of the customers in most stores is from left to
right, the price gradations from the lowest to the highest priced beverage are also
arranged in this direction. Some additional merchandising rules can be observed
from Fig. 3.
The leaders (SKUs with highest market share) are positioned at the eye level as
well as private label products (products under retailer’s proprietary control were the
retailer wants to increase sales and market share due to higher margins). In this
particular case, leaders are Cappy juices in each segment and the private label is
Juicy.
206 D. Dujak et al.
Fig. 3 Planogram for subcategory “Juices in brick”. Source Internal materials of Konzum d.d.
Zagreb
Since one of the target customer/consumer groups in this category are children,
groups of small packages of brick juices are positioned at the level height of the hand
(which for children represents the eye level—the most conspicuous level for them).
This segment is horizontally presented with horizontal multi facings and has similar
rules for positioning of SKU—flavours are arranged in the same order as with other
segments (packages “for adults”), but the number of faces per SKU is decreased so
that all the items (SKUs) offered fit in one horizontal part/level of a shelf. In this way
the retailer kept compact segment for children and facilitate their easier orientation
(although it deviates from the vertical multi facings as with other segments).
The planogram as a result of assortment and space management has to be
dynamic (its maintenance should be periodical, but also according to the changes on
the market); must minimize the possibility of out-of-stock situations; must reflect
the mind-set of customers in the purchasing process; and has to result with the
highest possible profit for the category and the whole store for the retailer.
4.3 Category Management Collaboration—Category

Captainship
One of the cornerstones of a successful category management in retail is close, daily

cooperation with its suppliers, which are often also the manufacturers. This coop-
eration is not the sole condition for the existence of category management in retail,
but it is certainly a prerequisite for the optimization of the category management

process. Collaboration between retailers and suppliers is based on continuous work
to ensure timely supply of retail stores of those products that are needed in the
quickest and cheapest way. But for the category management purposes, the partners
work together to strengthen the role of categories and to jointly create an assortment
of the retailer’s category that will be different from the category of the competition
in a positive way (finding more successful ways of meeting the needs of customers
in this category). These activities build a higher degree of mutual trust than the
usual relationship between the retail and manufacturing, and are reflected in the
exchange of a large number of data relevant for the category, which were, until
then, considered a trade secret.
In the beginning of the use of category management every retailer was trying to
work closely with four to five major suppliers in each category. Soon they began to
realize that in this way they fail to achieve a truly intensive cooperation with
suppliers, and that they do not realize all the benefits that such cooperation could
provide. Therefore, retailers decided to further deepen the cooperation with only
one supplier in the category. They decide on a supplier that primarily has to be able
to contribute to the common goal more than any other supplier in this category
(increase sales based on increased customer satisfaction). In addition, the retailer
must have confidence in the main supplier (of course, it has to be mutual), and must
be able to rely on him. This means that the chosen supplier has all the resources,
capabilities and willingness to work continuously in co-operation with the retailer
on improving the entire category. This supplier is called a category captain because
of all of these characteristics. It is possible to define a category captain as a vendor
who works with the retailer to develop a better understanding of customer beha-
viour, creates assortments that satisfy consumer needs, and improves the prof-
itability of the merchandise category (Levy and Weitz 2012). Some authors report
that in practice this supplier is called the category champion (Varley 2006), while
others mention the name category adviser (Dupre and Gruen 2004).
In general, the category captain is the market leader—the best positioned supplier
or manufacturer with the largest market share. But it is possible for a smaller supplier
to make special efforts to contribute with additional information or in a better way,
thus becoming category captain. Category captain estimates that the benefits he will
achieve in long term in the privileged “position” are more valuable than the cost and
time that have been invested in the effort to become the category captain.
As already stated, the category captain is expected to contribute to improving the
sales of all products in a category, primarily through sharing or rather the provision
of information about category customers and consumers, as well as about the
category as a whole. The ability of supplying the retailer with valuable (more
detailed, more accurate, more recent) information is one of the main criteria in
deciding who will be the category captain. In developed markets, retailers often
require several suppliers to submit their “offers”, information that they are willing to
obtain and submit, and this is one of the crucial factors when a retailer selects a
category captain. On the other hand, to become category captains, suppliers are
investing additional resources in acquiring and processing information from the
208 D. Dujak et al.
market. Necessary information usually appear in the form of category customer data
(e.g. habits and behaviours of customers from the panel of households), data on
competition (e.g. market shares of brands at different retailers from research con-
ducted by the market research agency) and trends about category market (e.g. new
products forecasting, new demand trends). Also, suppliers are encouraged (and
some are themselves the initiators) to new creative marketing activities related to
the category—again with the aim of raising category sales and profit.
In exchange for the information, but also the specific advice given to retailers,
category captains become privileged suppliers. In addition to getting the POS data
for more accurate forecasts (often common forecasts) and faster response to
demand, category captains are able to propose planograms with the schedule and
the amount of space for certain products in the category. In this way, they certainly
retain a greater degree of control over the category than other suppliers have (read: a
greater percentage of its own brand on the shelf). At the same time, category
captains must at all times ensure that the proposed planograms and actions result in
the highest possible sales and profitability of the category (not just category cap-
tain’s brands) for retailers.
In reality, this kind of cooperation does not always work perfectly. For this
reason, retailers are lately beginning to work more closely with other supplier called
the category validators (Ursin 2004). The purpose of the category validator, except
to collect additional information that may not be submitted by the category captain,
is to check the information and suggestions offered by the category captain, and to
confirm or reject it. In this way excessive bias towards captain’s products (brands)
is controlled and avoided. Wal-Mart, one of the world’s largest retail chains, often
gives the category captain’s plan to the validator for a review. It is even possible
that a supplier, which has been given the confidence and function of category
captain, gets sued for exploiting his position. One such example occurred in the
United States. In May 2002, the U.S. federal appeals court has issued a verdict
punishing the U.S. Tobacco Company, the largest U.S. supplier of moist tobacco,
with $350 million in damages. The court cited evidence that the U.S. Tobacco, as a
category captain, cheated retailers in a way that gave their products more space,
which they justified with false sales data (Raskin 2003).
5 Potential Problems of Demand Management

and Coordination in RSCM
5.1 Lack of Supply Chain Relationships and Information

Sharing
The main shortcoming of demand management in the retail practice is that demand
management usually ends at the relationship between retailers and its suppliers (as,
unfortunately, most of today’s activities in supply chain management). In rare
cases, demand management extends to the suppliers’ suppliers, but in this case,
retail is usually not involved in these activities, so data about independent demand
does not come as quick as it could, or even does not reach more than one echelon
upstream.
Taylor and Fearne (2009) conducted an interesting study on demand manage-
ment in six different supply (value) chains of fresh food. They primarily found that
there is variability in demand in supply chains of fresh food, with the demand of end
customers/consumers being the least variable of all demands in the supply chain. In
other words, they confirmed the existence of the bullwhip effect in supply chains of
fresh food. Supply chain members should get together to find the causes of vari-
ability in demand and try to solve them, and for that part of the variability of
demand which cannot be resolved subsequently it is necessary to find ways to
increase the flexibility of demand by identifying bottlenecks and potential dan-
gerous places and finding cost-effective solutions (Croxton et al. 2008).
In the same study (Taylor and Fearne 2009), authors determined the operating
characteristics of the system and demand management procedures implemented in
the supply chains of fresh food. Following are some of the characteristics proven to
be problematic, especially those that do not allow the effective management of
supply chains and pose an obstacle to coordination of upstream in the retail supply
chains (Taylor and Fearne 2009):
• complexity of the procedures for managing information on demand,
• accuracy, availability and consistency of data,
• proliferation of demand—there is not one common and shared demand to the
entire supply chain. They give an example of a meat supply chain where eight
different demand forecasts have been developing, which of course lead to the
bullwhip effect,
• lack of timeliness and consistency in sending orders to suppliers,
• problems with sharing POS data.
5.2 Different Treatment for Private Labels
One of the potential problems in category management between retailers and their
suppliers again arises from the retailer’s concentration and power. Despite category
management rules according to which certain products should get less space on the
shelf (e.g. because of their lower market share), retailers allocate significantly more
space (faces) and a better position on the shelf to certain products. This is primarily the
case with the so-called private label brands. The term “private label” has many syn-
onyms like retail brand, store brand, house brand, own brand, distributer brand. Levy
and Weitz (2012) define private label brands as products developed by retailers (de-
sign or specification) that are either produced by manufacturers, or retailer working
with big vendor to develop a special version of its standard product (design, speci-
fication and production done by vendor) that will be sold exclusively by the retailer.
210 D. Dujak et al.
Vranešević (2007) defines private labels more broadly by saying that those are brands
owned by intermediaries who engage manufacturers to produce products to which the
brand will be assigned. A private label’s significance can be evaluated based upon an
increase in the private label’s share of turnover in overall retailing, and it can be
concluded that private label’s share of turnover in the FMCG sector are also higher in
economically more developed countries with a higher GDP per capita (Segetlija and
Dujak 2013a). It is also connected with the implementation of modern retail marketing
and management concepts in developed countries like category management.
Although private labels do not have market shares like big national or interna-
tional brands, they often get the same or bigger/better space on their owner’s shelf.
The reason for this is usually higher margins for retailers, but also the retailer’s
attempt to strengthen its product image and its overall (store) image with customers,
in this way eventually raising customer loyalty that would result in positive impact
on other private labels in other product categories.
This uneven treatment of some products sometimes results in confusion in
retailer-manufacturer relationships and becomes a source of conflicts, as manu-
facturers (sometimes even category captains) propose different planograms that, in
their opinion, would raise the overall sale and profit of the category even more.
5.3 Influence on Demand—Problems with the Sustainability

of Planograms and Product Availability
While a planogram indicates how a retailer (or joint retailer and its vendor) tries to
successfully meet consumer demand expressed during past periods, it is also the
main in-store tool for influencing and changing consumer demand. For
example, consider retailer’s category X consisting of a certain number of products
(SKUs) including product A and product B. Even if product A has higher market
share than product B, by allocating more shelf space and/or better shelf position to
product B than to product A, the retailer will induce greater impulse buying of
product B. Thus, category management through a planogram is changing the
product B’s share in a retailer’s category, and eventually in the same category in the
whole market (market share). Allocating shelf space to a certain product that is not
in accordance with the market share of a SKU can be caused by various reasons:
• the product has a significantly high margin for the retailer in his category,
• the product is the retailer’s private label,
• the manufacturer has provided significant marketing and/or financial support for
the product in certain time period,
• the product very positively influences the sale of other (complimentary) products
in his or some other category, that has significantly higher margin or turnover,
• the product has a very high turnover rate,
• etc.
Through activities of assortment management and space management (and

planograms as its result) retailers actually “determine” what the manufacturers
produce, and more importantly, what the consumers will buy. On the other hand,
they also strongly influence demand frequency of certain products. In this way they
take over the helm of demand management, and initiate retail supply chain man-
agement activities.
Because of its huge importance for the realization of all category management
ideas, accurate and adequate enforcement and sustainability of a planogram is
crucial. When it comes to planogram implementation or enforcement, in reality
there are numerous problems that have led to the emergence of the term realogram.
A realogram is a situation on the shelf that happens in reality or what the consumers
actually see in the store. It can also be a graphic representation of the current state of
the shelf, or shelf layout. This difference between what was planned for the shelf
(planogram) and how it really looks like (realogram) could be caused by mistakes
during shelf replenishment (shelving) and by spatial restrictions in architecture of
store layouts or shelves (this especially happens at retailers with a huge number of
outlets, and in small stores). Retailers always strive to completely align the category
planogram (what they calculate and plan for a category) and realogram, or at least
try to minimize the existing differences. This allows them to retain control over the
category management process, and provides them with feedback from customers on
the basis of decisions actually made during the process and not on the basis of the
wrong “message” arranged on the shelf. Significant differences between plano-
grams and realograms can significantly change the demand management process in
retailing.
Another problem in category management implementation is the planogram’s
unsustainability caused by out-of-stock situations. Out-of-stock in retailing is a
situation when there is no certain product on the shelf (or any other sale areas such
as displays, pallets, fridges). This situation results in unrealized sales (and lost
profits) when a potential customer enters the category space, but also potentially
leads to the loss of a loyal customer (a much higher cost). In other words, in
out-of-stock situation demand management of retailing (category management) is
not able to influence the consumer demand.
5.3.1 Ecological Efficiency as a Result of Category

Management Implementation
Category management could be also a business concept that can obtain not only
business (economic performance) efficiency, but also significant environmental
performance of the company and/or whole supply chain.
Category management as a way of demand management requires significant
changes in all distribution processes in retail supply chain. Usually retailers and
their vendors decide to change their distribution design and instead of
direct-to-store distribution (or direct distribution) system, they start to use central
distribution system. Central distribution system has proven to be more reliable and
212 D. Dujak et al.
more convenient since it allows a greater level of availability of products (and

consequently decreasing the out-of-stock situations). This is enabled through higher
frequency of delivery of goods in stores (while through direct-to-store distribution
system goods was delivered once a week or once per two weeks, the central
distribution system products are delivered three times a week, or more often if
necessary). In this way the difference between planograms and realograms are
reduced, as one of most important goals of efficient demand management.
While in direct-to-store distribution system vendors deliver goods to each store
of retailer, in central distribution system goods for all retailers’ stores are delivered
to one break-bulk point, usually retailers’ logistics distribution centre (LDC). In this
LDC retailer performs picking and preparing shipments for each store that consist
of products from all vendors. This way only one truck/shipment comes to the
retailers’ store with all needed goods. Central distribution system results in
less transport kilometres of delivery then in case of direct distribution system, and
consequently, in a significant reduction of air pollution and fuel consumption. Also,
due to less out-of-stock situation, need for additional “emergency” delivery (that is
usually done using Less-Than-Truckload (LTL) deliveries) is decreased.
Carrying out of category management usually requires implementation of central
automatic ordering system (also called Automatic replenishment or Automated
purchase order system). Automatic ordering system is based on using internal
point-of-sales (POS) data about sale and inventory level data for all retailers’ stores
—both in real time. Main benefit of automatic ordering system is one joint order
sent to supplier for all stores, instead of making order for each store separately. This
way transactional cost is decreased significantly and consequently, and paper use as
well. Additionally, both automatic ordering system and central distribution system
provide truck-load optimization (Laan 2012) (better use of trucking transport
space), resulting in less vehicles and less transport kilometres.
6 Proposals for Demand Management Improvement

in Retailing
Although shortfalls in demand management and other forms of coordination in

supply chain management can be numerous, it should be noted that retailing can
have a major impact on avoiding them and increasing efficiency. It should primarily
initiate joint development and the use of a common demand for the entire supply
chain. Although there are technological ways to more effectively share POS data as
the key material for the creation of such a joint demand, it cannot be expected from
retail to further customize information for suppliers according to their needs. This is
certainly an area where suppliers must make a breakthrough.
The area where retail still can help is in avoiding unannounced pricing and other
incentives for end customers/consumers. Through mutual agreement and the
development of pricing strategies (and other strategies for improving sales), it is
possible to reduce the effects of variability in demand to other members of the
supply chain, i.e., to help them to be better prepared. Also, it is possible, through
small shifts in coordination, to harmonize the methods and ordering time, to avoid
waiting for the supplier, and therefore, stressful and ineffective responses. These are
all areas where the small retailer concessions in coordination can ensure many
positive points for negotiations in other areas of supply chain management (e.g.,
small shipments, retail ready packaging, pre-labelling, transportation, etc.).
Through category management relationship between the retailer and his vendor
(especially through the category captainship concept), all of these activities can be
achieved. At the end, they will not only help the vendor or the retailer, but they will
ultimately raise the retail sale of focal products (by avoiding out-of-stock situations
and increasing product availability on the store shelf) as an ultimate benefit for all
supply chain members.
As in any demand management process, one of the major objectives in the
category management process is to eliminate (or minimize) out-of-stock situations.
Furthermore, category managers must keep records of out-of-stock causes, their
emergence and duration. Causes of emergence are studied in order to avoid it in the
future, and the duration of out-of-stock situations helps in forecasting future
demand (allows approximation of past demand as the sum of sales and lost sales
during out-of-stock time). Decreasing out-of-stock situations can be done through
several activities:
• better allocation of space to products in the planogram according to more fre-
quently updated turnover information,
• more efficient methods of detecting out-of-stock situation and other differences
between the realogram and planogram,
• more efficient shelf (stock) replenishment methods.
Concerning the last proposed activity, both retailers and manufacturers have
recognized the potential of so called retail ready packaging (RRP) for faster shelf
replenishment. According to Dujak et al. (2014) RRP is a form of transit packaging
designed not only for transportation purposes, but also to ease and facilitate the
process of in-store replenishment (supply chain function). By having more than one
product in a RRP box that can be easily put on the shelf simultaneously, shelf
replenishment is becoming significantly faster. At the same time, RRP packaging
enhances the shopping experience of the consumer (Pira International 2011) and in
this way benefits all the supply chain members (the marketing function).
Although RRP is a form of packaging that mostly benefits retailers, and almost all
production costs of RRP are on manufacturers, research conducted in the food
manufacturing industry in Croatia (Dujak et al. 2014) has indicated that manu-
facturers also see the advantages of RRP—mostly as a direct rise of shelf visibility
and in creating a better relationship between brands and consumers, to help with
impulse buying and brand positioning at the point of sales. In the same research,
more than half of manufacturers (56.5 % respondents) stated that RRP imple-
mentation mostly decreases their shelf replenishment costs.
214 D. Dujak et al.
7 Conclusion
By analysing the demand management process in retailing, it is possible to con-

clude that a core part of demand management is category management, and con-
sequently that category management is also a part of supply chain management.
These two statements lead us to the interdependency of category management and
supply chain management, which points to the inevitable need for cooperation in
the supply chain as a prerequisite for the success of demand management, and
therefore supply chain management.
Category management is a much more focused concept than earlier retailing
management concepts. Grouping product categories in a way that the consumer
connects them, enables us to make a much deeper analysis of consumer habits and
needs. Because the category management process directly influences assortment
decisions by reflecting the consumer’s needs or by influencing consumer habits, it
also strongly influences consumer demand itself. By changing consumer demand it
initiates and changes the order fulfilment process as a trigger for all other RSCM
activities.
Because of its great importance, an extensive knowledge of category manage-
ment activities and an understanding of its role in demand management of the entire
supply chain is essential. The key aspect is the retailer-supplier collaboration.
Through cooperation they identify potential problems in the implementation of
demand management, as well as methods for solving them.
This collaboration must of course be derived from an optimal satisfaction of the
final customer’s needs, but it can only be fully realized if it is based on long-term
sustainable benefits for all its members.
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EcoProduction.

Environmental Issues in Logistics and Manufacturing

Environmental Issues in Logistics and Manufacturing

The EcoProduction Series is a forum for presenting emerging environmental issues

More information about this series at http://www.springer.com/series/10152

ISSN 2193-4614 ISSN 2193-4622 (electronic)

© Springer International Publishing AG 2017

Printed on acid-free paper

This Springer imprint is published by Springer Nature

This book presents selection of contributions on strategic and operational aspects

Poznan, Poland Paulina Golinska-Dawson

Part I Efﬁciency in Sustainable Supply Chain—Strategic Aspects

Part II Efﬁciency in Sustainable Supply Chain—Operational

Yevhen Krykavskyy and Nataliia Mashchak

Keywords Sustainable development Supply chain Environment

Y. Krykavskyy (&) N. Mashchak

© Springer International Publishing AG 2017 3

Conﬁrmative example of this is scandal around the global automotive industry

2 Controversial Aspects of Macro Environmental Analysis

Table 1 Rate of countries according to the EPI index in 2014

Low Medium Higher

controversy that does not characterize correlations obtained by the researchers as

y ¼ 70:90 þ 0:00013 x1 0:0056 x2 ð1Þ

The coefﬁcient of determination R2 = 0.1222.

y ¼ 17:613 þ 5:554 lnðx1 Þ 0:1897 lnðx2 Þ ð2Þ

The coefﬁcient of determination R2 = 0.1224.

3 Theoretical Basis of Sustainable

Approved by countries commitments to the environment have long-term impact and

Table 2 Megatrends impact on supply chain management

2. Social criteria—fair practice in the ﬁeld of employment (compliance with labor

4 Applied Aspects of Sustainable Supply Chain

Table 4 Good practices of global enterprises in sustainable supply chain

Table 5 Tools for sustainable supply chain management

Ford—Nasz lancuch dostaw (2014) http://www.ford.pl/O_ﬁrmie/Srodowisko/Sustainability/

Roman Domański and Michał Adamczak

Abstract Within the framework of the concept of sustainable development, eco-

Keywords Re-use of materials Closed-loop supply chain Sustainable devel-

Contemporary economic growth should be considered not only in economic, but

R. Domański (&) M. Adamczak

© Springer International Publishing AG 2017 19

In order to achieve a harmonious economy growth, all possible environmental

Materials Products NO Waste

assumption provides a basis for developing analytical models of closed-loop

goods returns, warranty and post-warranty service, production wastes, packaging

Graph 1 Domestic material consumption per capita (Eurostat 2015)

Graph 2 Resource productivity (Eurostat 2015)

Total amount of waste generated by households and businesses by economic

Graph 4 Recycling rate (Eurostat 2015)

4 Selected Implementation Variants

Implementation of solutions increasing the share of recycled or remanufactured

4.1 Capacitated Dynamic Lot Sizing

4.2 Capacitated Dynamic Lot Sizing

4.3 Capacitated Dynamic Lot Sizing Problem

4.4 Dynamic Lot Sizing Problem with Capacitated

Increasing the share of material from recycled used ﬁnished products is a

Brdulak H (2012) Logistyka przyszłości (Logistics in the future). Polskie Wydawnictwo

Reinder Pieters, Paul van Beek, Hans-Heinrich Glöckner, Onno Omta

Abstract Sustainability has become an important issue in all aspects of corporate