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Importance of factors driving firms’ decisions on spatial distribution structures

The design of a spatial distribution structure is of strategic importance for companies, to meet required customer service levels and to keep logistics costs as low as possible. Spatial distribution structure decisions concern distribution channel layout – i.e. the spatial layout of the transport and storage system – as well as distribution centre location(s). This paper examines the importance of seven main factors and 33 sub-factors that determine these decisions. The Best-Worst Method (BWM) was used to identify the factor weights, with pairwise comparison data being collected through a survey. The results indicate that the main factor is logistics costs. Logistics experts and decision makers respectively identify customer demand and service level as second most important factor. Important sub-factors are demand volatility, delivery time and perishability. This is the first study that quantifies the weights of the factors behind spatial distribution structure decisions. The factors and weights facilitate managerial decision-making with regard to spatial distribution structures for companies that ship a broad range of products with different characteristics. Public policy-makers can use the results to support the development of land use plans that provide facilities and services for a mix of industries.

Factors determining distribution structure decisions in logistics: a literature review and research agenda

Distribution structures, as studied in this paper, involve the spatial layout of the freight transport and storage system used to move goods between production and consumption locations. Decisions on this layout are important to companies as they allow them to balance customer service levels and logistics costs. Until now there has been very little descriptive research into the factors that drive decisions about these structures. Moreover, the literature on the topic is scattered across various research streams. In this paper we review and consolidate this literature, with the aim to arrive at a comprehensive list of factors. Three relevant research streams were identified: Supply Chain Management (SCM), Transportation and Geography. The SCM and Transportation literature mostly focus on distribution structure including distribution centre (DC) location selection from a viewpoint of service level and logistics costs factors. The Geography literature focuses on spatial DC location decisions and resulting patterns mostly explained by location factors such as labour and land availability. Our review indicates that the main factors that drive decision-making are “demand level”, “service level”, “product characteristics”, “logistics costs”, “labour and land”, “accessibility” and “contextual factors”. The main trade-off influencing distribution structure selection is “service level” versus “logistics costs”. Together, the research streams provide a rich picture of the factors that drive distribution structure including DC location selection. We conclude with a framework that shows the relative position of these factors. Future work can focus on completing the framework by detailing out the sub factors and empirically testing the direction and strength of relationships. Cooperation between the three research streams will be useful to further extend and operationalize the framework.

On the cost elasticity of inter-regional distribution structures: a case study for the Netherlands

Several studies show that logistics facilities have spread spatially from relatively concentrated clusters in the 1970s to geographically more decentralized patterns away from urban areas. The literature indicates that logistics costs are one of the major influences on changes in distribution structures, or locations and usage of logistics facilities. Quantitative modelling studies that aim to describe or predict these phenomena in relation to logistics costs are lacking, however. This is relevant to design more effective policies concerning spatial development, transport and infrastructure investments as well as for understanding environmental consequences of freight transport. The objective of this paper is to gain an understanding of the responsiveness of spatial logistics patterns to changes in these costs, using a quantitative model that links production and consumption points via distribution centers. The model is estimated to reproduce observed use of logistics facilities as well as related transport flows, for the case of the Netherlands. We apply the model to estimate the impacts of a number of scenarios on the spatial spreading of regional distribution activity, interregional vehicle movements and commodity flows. We estimate new cost elasticities, of the demand for trade and transport together, as well as specifically for the demand for the distribution facility services. The relatively low cost elasticity of transport services and high cost elasticity for the distribution services provide new insights for policy makers, relevant to understand the possible impacts of their policies on land use and freight flows.

Integrating city logistics in spatial planning - Creating the conditions for decarbonisation and hubs.

Factors driving the spatial layout of distribution channels

Research statementOur study analyses the factors that drive decision-making on distribution structures, including the layout of distribution channels and the locations of distribution centres. Distribution is a primary firm activity, which strongly influences logistics costs and logistics performance. Distribution is a challenging activity as customer demand is often volatile and unpredictable. Consumers continuously expect higher service related to distribution, e.g., same day delivery and more flexibility in delivery locations. Therefore, it is of strategic importance to shippers and Logistics Service Providers (LSPs) to decide which distribution channel layout to use and, accordingly, plan distribution centre location(s). Distribution structure selection concerns the number and locations of distribution centres, as part of the larger corporate planning process. The main questions we strive to answer in this paper are: (1) what are the main criteria that determine the spatial layout of distribution structures? and (2) how important are these criteria, relative to each other?Methodology The literature on distribution channel design mostly revolves around optimization methods; we are not aware of literature that takes a descriptive approach. We therefore develop a descriptive conceptual model that includes these factors, developed from the contextual literature around this decision. The second part of the study concerns the measurement of the relative importance of these factors. We implemented an elaborate survey and used the Best-Worst Method (BWM) to identify these weights. The survey considers different experts (e.g., logistics managers versus logistics professors) and population segments (e.g., in-house versus outsourced distribution).Data and resultsCurrently we are completing the survey dedicated to evaluating the above factors. We have received sufficient response to estimate a first model. These first estimations already provide useful results. Final estimations will be completed and reported in June 2017. At the I-NUF conference we will be able to present the results and analysis of all factors when comparing respondents and parameters.Preliminary conclusionsBased on literature review, eight main factors – divided into 33 sub factors – are included in our research: 1) Demand factors, 2) Service level factors, 3) Product Characteristics factors, 4) Logistics costs factors, 5) Proximity-related location factors, 6) Accessibility-related location factors, 7) Resources-related location factors and 8) Institutional factors. A number of hypotheses were built from the literature analysis relating, for example, to the relative importance of service- and cost- related factors within different industries. We will revisit these hypotheses and provide the quantitative results of the importance of the individual factors in our paper and at the conference.

AI Application in Transport and Logistics

The aim of this research/project is to investigate and analyze the opportunities and challenges of implementing AI technologies in general and in the transport and logistics sectors. Also, the potential impacts of AI at sectoral, regional, and societal scales that can be identified and chan- neled, in the field of transport and logistics sectors, are investigated. Special attention will be given to the importance and significance of AI adoption in the development of sustainable transport and logistics activities using intelligent and autonomous transport and cleaner transport modalities. The emphasis here is therefore on the pursuit of ‘zero emissions’ in transport and logistics at the urban/city and regional levels.Another goal of this study is to examine a new path for follow-up research topics related to the economic and societal impacts of AI technology and the adoption of AI systems at organizational and sectoral levels.This report is based on an exploratory/descriptive analysis and focuses mainly on the examination of existing literature and (empirical) scientific research publica- tions, previous and ongoing AI initiatives and projects (use cases), policy documents, etc., especially in the fields of transport and logistics in the Netherlands. It presents and discusses many aspects of existing challenges and opportunities that face organizations, activities, and individuals when adopting AI technology and systems.