Collaborative Logistics: The Shipper Collaboration Problem

 

Dr. Özlem Ergun

 

 

 

ABSTRACT

 

Traditionally companies have focused on improving their own internal business processes when faced with pressures to operate more efficiently and more cost effectively. However, a system-wide focus, e.g., a collaborative focus, opens up cost saving opportunities that are impossible to achieve with an internal company focus. We discuss an application of collaboration in logistics from the trucking industry where a buyers' collaboration is established by a group of shippers pooling together their shipment requests. This way a tour consisting of shipments from several different shippers is submitted to the carrier with the expectation that the quoted total price for the tour will be less then the sum of the prices quoted for each shipment if they were submitted separately. We first present the underlying optimization problem and introduce efficient solution algorithms. Then we discuss issues which arise in designing stable mechanisms for managing the collaboration and sharing its benefits/costs in a fair way.