Low Carbon Logistics through Supply Chain Design and Coordinations

Project summary:

In this project, we will address carbon emissions in logistics through supply chain design, planning, and coordination. We argue that (1) supply chain design, planning, and coordination can help reduce carbon emissions significantly; (2) collaboration across supply chains can lead to lower emissions at lower cost for all involved; and (3) imposing supply-chain-wide emissions limits (instead of individual firm limits) can make emission reductions more economical for the entire supply chain by recognizing the differential capabilities of firms in meeting emissions standards and by allowing internal carbon offsetting to take place between firms within the same supply chain. In this project, we plan to develop supply chain and network logistics optimization models to support decisions that take into account both cost and carbon footprint. These models can be used by individual firms to reduce their individual carbon footprints (or to adhere to restrictions on carbon emissions) without compromising profitability. They can also be used by firms to coordinate and share the burden of reducing carbon emissions and by government agencies and regulatory bodies to design regulatory policies and incentives and to determine the type and capacity of infrastructure in which to invest. We will analyze a variety of regulatory settings, including settings with and without opportunities for carbon offsets and with and without markets for carbon trading. We will develop a test-bed for a specific chain (the national milk supply chain). The test-bed will be driven by actual data, either directly collected or obtained from public sources. The test-bed will allow us to assess the supply chain, and its associated logistics operations, at various levels of granularity. We will also use the test-bed to validate various proposed supply chain strategies. In addition to the detailed analysis of the milk supply chain, we intend to look broadly at various industries (drawing from our other ongoing projects), including food, fossil and bio-fuels, automotive, and consumer electronics. In addition to guiding managerial decisions, we expect results from our research to be useful to policy makers in devising regulatory policies for emission mitigation and control.