Session 37 Maria Huge-Brodin

The future business model forsustainable logistics

Maria Huge-BrodinLinköping University

Department of Management and EngineeringDivision of Logistics Management

Now…and then?• Today’s green logistics

– A growing awareness over the past few years among all types ofstakeholders

– Coupling between costs, delivery service and environmental aspects– A questioning of the “compulsory” 24-7 delivery service concept– A growing number of positive examples

• Tomorrow’s needs– Incorporation of environmental aspects into regular business, not just as

add-ons. BUSINESS MODELS!– Demands better knowledge, better tools and more general guidelines…– …and more cooperation across organisational borders.

• “Competitive business models for sustainable logistics systems”– Research project 2008-2011, VINNOVA financing of 8MSEK– 4 senior researchers and 3 PhD students

Maria Huge-Brodin, Linköping University

Business model - a general perspective

• ”How the firm puts its strategies into action”• Many models exist, many origin from the E-development.• Based on Kindström 2005 and Chesbrough 2007:

Market Position- target market-value network

-competitive strategy

Offering-value proposition

-revenue mechanisms

OperativePlatform

-value chain structure


Green Logistics Based Business Models:What is it? A Model of a Model (1)

• Target Market– Which will be the future demands on our target market? Do we

want to change target market? The role of society on markets?– Present state, much of traditional thinking. What if a the total

market turns into prioritizing environmental aspects; how can webe prepared?

• Market position– Which is our position on present markets, and what position do

we want to maintain in the future regarding environmentalexcellence?

– Awating attitude (for demands, for offerings, for rules andlegislation…)

– A high potential for those who dare take the first step



• The value proposition– What is offered regarding the environment in a logistics service

offering? What is delivered/transferred, and what represent othernon-tangiable values?

– Measurement services are sometimes offered, often as add-ons.– More comprehensive value propositions, including environmental

aspects, and relating to system borders and roles: still missing.

• Revenue Mechanisms– Tools and models that relate and communicate the business value

of environmental aspects, to be part of the total revenuemechanisms, are missing.

– Problems with allocating emissions on products, flows,companies…



• The value chain (organising internal activities andresources)– At present fairly mature on an operational level, although not in a

strategical.– Problems in measuring the performance related to allocation

problems– A high potential on organising resources for simultaneous cost-,

service- and environmental benefits.

• The Value System (extends to external resources)– Needs to be matched with the internal value chain– Difficulties in controlling the value system over many tiers of

suppliers, depending on power position.– Difficulsties in measurement and follow-ups, due to lack of

standardised models.Maria Huge-Brodin, Linköping University

So, where are we going?Predicting the future through scenario development

Based on Huge-Brodin, Björklund, Maack, Martinsen & Abrahamsson (2009)presented at the LRN Conference in Cardiff September 2009

Scenario development• Thinktanks (Interactive Workshops) as empirical source

• 3 groups• 5h “Thinktank” for each group• 5-10 practitioners• 5-6 researchers

• Plenary and group sessions– A scenario task in plenum– Discussions in smaller groups– Presentation and discussion of the results in plenum

• The researchers’ roles– Encourage active, interactive and creative discussions– Create an open and creative atmosphere– Focus 2020, No contemporary issues and problems– To listen and take notes– Document– (Include participants comments on the documentation)– Analyse the information --> build “sharper” scenarios


-- Some options in 2020 ---


Do it yourself: Home assemblies are here to stay

“The flat-box concept taken beyond furtnitures…”

• Type of products:– Media, home electronics…

• Benefits:– Decreased volumes due to e.g. flat packages– Increased Lifetime-in-use, upgrade by changing components at home– Postponed final assembly, decreased risk for obsolesce

• Business model alteration:– Exploring new target markets– Assembly is performed by the consumer (changing roles and value chain

configuration)– Offering the same value to a lower price (the product), and the value of

more efficient resource usage in the transport chain


JLFB®

Going faster by slowing down“By shortening the most time sensitive link in the SC through better

administration, the lead time is at least the same as before, but nowby road and rail transport.”

• Type of products:– Sensitive spare parts (e.g. for automotive industry, process industries…)

• Benefits:– Same or decreased lead times– Potentially lower costs– Decreased environmental impact– ? More profitable with local warehousing

• Business model alterations:– Improved internal value chain organisation– No external change; same target market and position– Improved value offering if CO2 taxation increases, and if customers value

environmental improvement


A flower for collaboration

“A new system for city distribution is developed. All goods into the city isconsolidated and delivered by a “neutral” fleet. Where all trucks carrythe mutual symbol; the flower, no matter which LSP is responsible forthe delivery…”

• Type of products:– Mainly consumer products

• Benefits:– Decreased costs– Improved local environment through fewer deliveries– Less time spent on off-loading (customers/shops/outlets)– Potentially increased brand value for the LSPs…

• Business model alterations:– New roles in the value system and on the market: co-opetition

(cooperation among competitors)


Conclusions on the scenarios• Most Thinktank results are previously more or less

acknowledged in previous research– The perspective of 2020 is too close to provoke bound-breaking ideas– Complements general global development trends with more down-to-earth

expectations• Most members from all groups acknowledge some degree of

responsibility– But “another group” is often more responsible, and needs to take lead!– Companies seem more positive than authorities…

• All actors expect a change to come– The environment cannot be ignored– Economical incentives are crucial, and will come in some form– Environmental aspects must somehow be included in the total-cost model

for logistics systems– “With one voice”: the almost compulsory 24-hour delivery times are not

necessary, delivery precision will rule…– Toward increased or decreased warehouse centralisation???


Some final notes onthe business model approach

• Today…– Stable but rigid configurations of value chains (internal) and value

systems (external)– Only few and non-comprehensive attempts to compare

envronmental aspects with other performance measurements– A slumbering but awakening market and awakening actors…

• …and future challenges– Finding new solutions, and taking wider system perspectives– Finding ways of effective charging of environmental effects (CO2-

trading extended?)– Potentially large changes in market conditions and in customer

demands, which will alter the target markets for LSPs…– … and a potential to take a stronger position


Thank you for yourattention!

Questions

Technology

Session 37 Maria Huge-Brodin