An initial framework for implementing a modal shift in a fast moving consumer goods supply chain in Western Europe
Faculty of Applied Economics
Conference proceedings of 28st Vlaams Wetenschappelijk Economisch Congres
University of Antwerp
Road freight transport in Europe is growing at an unsustainable rate and is posing serious problems regarding environment, congestion and road safety. Despite the efforts by the European Commission to support intermodal freight transport, the all-road transport solution is still a prevailing trend. In line with this trend, Fast Moving Consumer Goods (FMCG) companies are mainly using road transport for their finished product distribution. An efficient supply chain management, with wellcontrolled transport and inventory management, is indispensable for sustained profitability of an FMCG company. Implementing intermodal transport in finished product distribution poses serious challenges to this industry. With the aim of implementing a mode shift for finished product distribution of a FMCG company and eliminate other transport inefficiencies, an initial framework is presented in which the concept of smart logistic hubs is introduced. The network of smart logistic hubs focuses on optimizing and shifting the transport of goods from the road to other, more sustainable transport modes, without compromising the current service level requirements. This shift materializes through consolidation and balancing of trade flows of several companies, the use of state of the art transhipment technology and intelligent transportation systems. In addition, the framework involves co-location and integration of warehousing services of several companies and optimizes storage by segmenting fast moving and slow moving product flows, optimizing loading unit fill rate and performs other value added services. The initial framework developed was applied to a large FMCG company active in Western-Europe (P&G) with the aim of attempting a substantial mode shift of the freight flows. A first analysis demonstrated that in some specific corridors the freight volume is high enough to apply the concept of smart logistic hubs to this company. However in other corridors the company would need to partner with others to be able to introduce this framework. In any case, better results could be achieved if FMCG-companies and/or retailers would collaborate to make the mode shift happen via the concept of smart logistic hubs.