A Decision Support Model for Capturing the Impact of Energy Savings and Pollution Legislation on Supply Chain Network Design

Abstract

The EU’s commitment to reduce the environmental impact of supply chain operations was initiated through the white paper proposal of 2001. Since then, several regulatory interventions have been proposed for costing the CO2 emissions produced from supply chain operations. These costs should be taken under serious consideration by supply chain stakeholders when designing their supply chain networks. This paper proposes a strategic/tactical decision support model that will assist supply chain stakeholders in evaluating the impact of incorporating CO2 emissions cost parameters in their networks design decision-making process. Specifically, we propose a model that addresses: (i) supply chain network design, including the determination of port of entry and transportation modes, and (ii) decisions on using dedicated versus shared warehouses and transportation. The applicability of the proposed methodology is illustrated through the development of a green supply chain network in the South-Eastern European region. The results indicate that: (i) dedicated transportation and shared DC operations minimize supply chain network design costs, and (ii) the potential implementation of a Maritime Emissions Trading Scheme (METS) could significantly affect strategic supply chain network design decisions.