Sergio Rubio1♣, Juan-Ramón Sicilia1 and Beatriz Jiménez-Parra2

1 School of Industrial Engineering. University of Extremadura. Badajoz (Spain) 2 Faculty of Economics and Business Management. University of León. León (Spain)

URBAN AND REVERSE LOGISTICS An application to commercial areas

Póvoa de Varzim, November 16th 2017

Seventh International Conference on

Business Sustainability 2017

♣ Sergio Rubio thanks Junta de Extremadura and European Union for their financial support through the grant GR15007. This research was partially supported by the project "Promoting Sustainable Freight Transport in Urban Contexts: Policy and Decision-Making Approaches (ProSFeT)", funded by the H2020-MSCA-RISE-2016 programme (Grant Number: 734909).

Outline

1. Urban and reverse logistics

2. Challenges and opportunities for

collaboration

3. Analysis of commercial areas in Badajoz: – Shopping Street at Menacho

– Shopping Centre at El Faro

4. Some proposals for improvement

5. Conclusions 2

Urban Logistics

• According to United Nations (2015), globally, more people live in urban areas than in rural areas: – 54% of the world’s population residing in urban areas in

2014

– By 2050, 66% of the world’s population is projected to be urban

– Northern America (82%), Latin America and Caribbean (80%) and Europe (73%) are the most urbanized regions

• European cities continue to grow: – The level of urbanisation in Europe is expected to rise to

82% by 2050 (90% in DK, BE, and NL)

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Urban Logistics

• A growing urban population will lead to increased demand for goods and services, so increased demand for urban logistics

• Urban Logistics may be defined as meaning the movement of goods, equipment and waste into, out, from, within or through an urban area (European Commission, 2013).

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Urban Logistics

• Urban (city) logistics can contribute towards making urban areas more attractive and productive (Taniguchi et al., 2014)

• Urban freight transport is one of the main challenges in this context:

– emissions,

– pollution,

– congestion, etc.

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Urban Logistics

• Some data on urban freight transport:

– Urban freight is an important traffic component in cities (10-15% of vehicle equivalent Kilometres)

– Urban freight is approximately 6% of all transport GHG emissions

– The load factors for delivery vehicles in cities are very low (38% for vans in London)

• Sustainable city logistics must be the solution to the social, environmental and economic negative impacts caused by freight transport in many cities around the world (Grosso et al., 2014).

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Reverse Logistics

• In recent years, Reverse Logistics (RL) has attracted the attention of companies and academia.

• Apple, Canon, Caterpillar, Dell, Electrolux, Hewlett-Packard, or IBM include Reverse Logistics practices in their operational processes.

• RL is focused on the management of the recovery of products once they are no longer desired or can no longer be used by consumers, in order to obtain an economic return through reuse, remanufacturing or recycling (Flapper et al. 2005).

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Reverse Logistics

Drivers for implementing RL systems:

• Social reasons: CO2 emissions, waste generation,…

• Legal reasons: Environmental legislation: WEEE, packaging material, EOL vehicles, etc. Extended Producer Responsibility.

• Economic reasons:

Direct: raw materials, disposal costs, added value from returned products

Indirect: green image, improve customer relationships

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Reverse Logistics

According to De Brito and Dekker (2004), RL can be defined as:

“the process of planning, implementing and controlling backward flows of raw materials, in process inventory, packaging and finished goods, from a manufacturing, distribution or use point, to a point of recovery or point of proper disposal”

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Reverse Logistics

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Raw materials

Components and parts Manufacturing Distribution Customer

RECYCLING REMANUFACTURING REUSE COMMERCIALRETURNS

DISPOSAL

FORWARD FLOW

REVERSE FLOW

Flows in the Supply Chain

Challenges & Opportunities

• In the European context some initiatives have been developed:

– ERTRAC: European Road Transport Advisory Council

– ALICE: Alliance for Logistics Innovation through Collaboration in Europe

• The ERTRAC-ALICE goal:

To identify research priorities related to urban freight, returns and urban logistics in order to improve the efficiency, the sustainability and the safety of these activities

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Challenges & Opportunities

According to ERTRAC-ALICE initiative it is necessary to research the following issues:

• Integration of direct and reverse flows: implications of e-commerce, recycling and commercial returns .

• Logistics management models in an increasing recycling society urban environment .

• Combining flow waste from industry (construction material and the others) and domestic.

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Challenges & Opportunities

• Reverse logistics developments in the field of the design of networks for recovery of EoL products could be very useful.

• Issues related to reverse logistics and urban freight logistics to be analysed:

– Network design for waste management

– Commercial returns in urban areas

– Business trends: e-commerce, home and personalised deliveries.

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Analysis of commercial areas

• Based on a methodology (Sanz & Pastor, 2009) that helps to take decisions about how to design a logistic model able to achieve an efficient urban freight distribution in any given scenario.

• Our contribution includes:

– A reverse logistics approach

– A measurement scale

– A quantitative example

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Analysis of commercial areas

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Urban context

Point of Sale

Reverse logistics

Quantitative analysis

Sensitivity analysis

Results

Proposals for improvement

Analysis of commercial areas

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URBAN CONTEXT (30%)

POINT OF SALE (40%)

REVERSE LOGISTICS

(30%)

• City (25%) • Neighbourhood

(25%) • Street (25%) • Surroundings (25%)

• Facilities (60%) • Demand (40%)

• Waste mgmt. (70%) • Returns (30%)

Weights and scales were suggested by experts

Analysis of commercial areas

1) Urban context: 1.1) City:

• City population

• Entries to the city

• Logistics platforms

• Entries to the commercial areas

• Congestion level

• Urban consolidation centres

• Traffic decision support systems

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Analysis of commercial areas

1) Urban context:

1.2) Neighbourhood:

• Entries to the neighbourhood

• Residential vs commercial neighbourhood

• Congestion level

• Architectonic elements: streets, pavement, historic downtown, etc.

• Traffic decision support systems

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Analysis of commercial areas

1) Urban context: 1.3) Street:

• Sort of street: pedestrian area, vehicle restrictions, time windows, etc.

• Congestion level

• Structural or physical restrictions in the street

1.4) Commercial area surroundings:

• Drop-off facilities

• Pavement state

• Accessibility

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Analysis of commercial areas

2) Point of sale (POS): 2.1) Facilities:

• Loading and unloading space, parking and regulations

• Systems and mechanisms for loading and unloading

• Merchandise routes to POS

• Useful area of POS

2.2) Demand:

• Relevance of the POS

• Demand forecast

• Opening hours

• Commercial offer variety

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Analysis of commercial areas

3) Reverse logistics:

3.1) Waste management:

• Collection containers availability

• Waste collection system organization

3.2) Commercial returns:

• Own system vs 3PL provider

• Timetable

• Collection points

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Analysis of commercial areas

• Shopping street at Menacho – Menacho is the main shopping street in Badajoz

– More than 140 shops

– Parking area for 750 vehicles

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Analysis of commercial areas: Menacho street

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URBAN CONTEXT POINT OF SALE REVERSE

LOGISTICS

• Pedestrian area • Access restrictions • Parking restrictions

for delivery services

• Opening hours 10.00-21.00

• Load/unload public areas (8.00-13.00 and 16.00-18.00)

• Non-priority deliveries

• Excellent access with pallet trucks

• Warehouses available for hiring

• Online shop project

• Public waste management system (WMS)

• Waste collection shared with residents

• Different waste management behaviour

• Recycling and waste separation are not promoted

Analysis of commercial areas

• Shopping centre at El Faro – El Faro is a mall located at the border with Portugal

– 78 shops and 16 restaurants

– Parking area for 2,500 vehicles

– 66,000 m2 for shopping, leisure and food services.

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Analysis of commercial areas: El Faro

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URBAN CONTEXT POINT OF SALE REVERSE

LOGISTICS

• Access by car, bus and bicycle

• Highway access • Free parking for

2,500 vehicles • Traffic information

service

• Opening hours 10.00-22.00

• Seven load/unload decks (6.00-10.00)

• Priority deliveries • Direct access from

decks to shops • No lockers or

distribution centres

• Centralised waste management system

• 7 compactors for cardboard waste

• 1 compactors for organics waste

• 1 compactor for plastic waste

• Waste collecting hours (22.00-10.00)

Analysis of commercial areas: Menacho street

Criteria Sub-criteria Score Max Score (0-10) Weight Final score

Urban context

City 20.5 80 2.56 25% 0.64

Neighbourhood 14 50 2.80 25% 0.70

Street 12 40 3.00 25% 0.75 Surroundings 29 50 5.80 25% 1.45

Sub-total 3.54 30% 1.06

Point of Sale Facilities 58 60 9.67 60% 5.80 Demand 20.3 40 5.08 40% 2.03

Sub-total 7.83 40% 3.13

Reverse Logistics

Waste Management 20 60 3.33 70% 2.33

Commercial Returns 5 20 2.50 30% 0.75

Sub-total 3.08 30% 0.925 TOTAL 5.12

Analysis of commercial areas: El Faro

Criteria Sub-criteria Score Max Score (0-10) Weight Final score

Urban context

City 20.5 80 2.56 25% 0.64

Neighbourhood 29 50 5.80 25% 1.45

Street 36 40 9.00 25% 2.25 Surroundings 45 50 9.00 25% 2.25

Sub-total 6.59 30% 1.98

Point of Sale Facilities 50 60 8.33 60% 5.00 Demand 27.5 40 6.88 40% 2.75

Sub-total 7.75 40% 3.10

Reverse Logistics

Waste Management 55 60 9.17 70% 6.42

Commercial Returns 15 20 7.50 30% 2.25

Sub-total 8.67 30% 2.60 TOTAL 7.68

Analysis of commercial areas: Results

Criteria Shopping Street

Menacho Shopping Centre

El Faro

Urban Context 3.54 6.59

Point of Sale 7.83 7.75

Reverse Logistics 3.08 8.67

TOTAL 5.12 7.68

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Some proposals for improvement

• For Menacho shopping street, based on a SWOT analysis:

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Strengths: • Location • Wide commercial offer

Weaknesses: • Congestion • Shared load/unload areas • Poor reverse logistics

Opportunities: • E-commerce project • A new pedrestrian area

Threats: • Shopping centres • Traffic regulations in this

area

– P1: Urban consolidation centre

– P2: Centralised waste management system

Some proposals for improvement

• For El Faro shopping centre, based on a SWOT analysis:

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Strengths: • Entries and access • Low cogestion • RevLog organization

Weaknesses: • Deliveries time window,

just in the morning

Opportunities: • Close to the new

logistics plattform • New entry from South

Threats: • Engagement of public

administrations in urban logistics

– P1: Deck management system for deliveries

– P2: Lockers for night deliveries

Conclusions

• Commonalities between urban logistics and reverse logistics: social, legal and economic drivers

• Contribution of RL to new issues in urban logistics: – Network design for waste management, – Commercial returns in urban areas, – Business trends: e-commerce, home and personalised

deliveries. • An analysis of urban and reverse logistics was

developed and applied to commercial areas • Some proposals for improvement were highlighted

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References • De Brito, M.P., Dekker, R. (2004). A Framework for reverse logistics. En Dekker, R.,

Fleischmann, M., Inderfurth, K., Van Wassenhove, L.N. (Eds.): Reverse logistics. Quantitative models for closed-loop supply chains (pp. 3-27). Ed. Springer-Verlag. Berlin.

• European Commission (2013). Together towards competitive and resource-efficient urban mobility. A call to action on urban logistics. SWD (2013) 524 Final. Brussels.

• Flapper, S.D.P., Van Nunen, J.A.E.E., Van Wassenhove, L.N. (2005). Managing closed-loop supply chains. Ed. Springer. New York.

• Grosso, R. Muñuzuri, J., Cortés, P., Carrillo, J. (2014). City logistics: Are sustainability policies really sustainable? Dirección y Organización 53, 45-50.

• Sanz, G., Pastor, R. (2009). Metodología para la definición de un sistema logístico que trate de lograr una distribución urbana de mercancías eficiente. Dirección y Organización 37,60-66.

• Taniguchi, E., Thompson, R. G., Yamada, T. (2014). Recent trends and innovations in modeling city logistics. Procedia – Social and Behavioral Sciencies 125, 4-14.

• United Nations (2015). World Urbanization Prospects: The 2014 Revision. Department of Economic and Social Affairs, Population Division. (ST/ESA/SER.A/366). 32

Questions?

Muito obrigado!

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Sergio Rubio1♣, Juan-Ramón Sicilia1 and Beatriz Jiménez-Parra2

1 School of Industrial Engineering. University of Extremadura. Badajoz (Spain) 2 Faculty of Economics and Business Management. University of León. León (Spain)

URBAN AND REVERSE LOGISTICS An application to commercial areas

Póvoa de Varzim, November 16th 2017

Seventh International Conference on

Business Sustainability 2017

♣ Sergio Rubio thanks Junta de Extremadura and European Union for their financial support through the grant GR15007. This research was partially supported by the project "Promoting Sustainable Freight Transport in Urban Contexts: Policy and Decision-Making Approaches (ProSFeT)", funded by the H2020-MSCA-RISE-2016 programme (Grant Number: 734909).