Greening Supply Chains: Impact on Cost and Design

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