Project name: 4C4D (4C for Distribution)

Expected start date: January 1, 2011

Expected end date: January 1, 2015

Project participants: Applicant: Tilburg University, Prof.dr. G. KantParticipants: Knowledge institutes:

Tilburg University: Prof.dr. G. Kant, dr. R. Peeters TU Eindhoven: Dr. T. van Woensel TU Delft: Prof.dr. L. Tavasszy, dr. H. Quak TNO: H.J Quak

Business (alphabetical) Ahold: dhr. G. Buitenhuis Cornelissen Transport: dhr. M.Zwart Etam Retail Services: dhr. J. Otter ORTEC (SME): dhr. J. Poppelaars Peter Appel Transport: dhr. P. Appel TNT: dhr. P. Heijne TransMission: dhr. P. Tjalma

Others (alphabetical) TLN – KDN: mevr. drs. Ing. B.P.A.M. van de Loo

Keywords:(max. 20 words)

Collaboration in distribution, City logistics, Sustainability, Alternative transportation methods

Research theme 4C

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SummaryAn important challenge in the transition towards the Dutch vision of “Regieland” is the question how to improve the quality (e.g. carbon footprint and air quality in cities) and quantity (e.g. transport move-ments) of the distribution activities by a better orchestration of the different physical flows. Especially in urban areas, there is a huge potential for bundling of distribution flows that are now fragmented. Although there are first signs of co-operation between logistic service providers and retailers, recent reviews show that there are hardly any examples of commercially successful, environmentally sustain-able collaborative solutions in urban areas within Europe. Research into feasible collaborative supply chain designs, the associated business models and the critical questions of risk and revenue manage-ment, specifically in an urban context, is limited

The focus of this research project is collaboration in distribution and coordination between logistics service providers and between LSPs and retailers, i.e. the bundling of physical good flows into (urban) areas, resulting in fewer negative impacts (decongestion, less nuisance in cities). We are convinced that increased collaboration will lead to innovative distribution concepts that are based on sound busi-ness models, while meeting objectives and restrictions set by municipalities. The project proposed here has favorable circumstances to make a big step forward in this respect: The Netherlands has very dense urban areas; hence there is a strong need and urgency among all

parties to improve the current distribution approaches. These solutions should act as best prac-tices towards other dense city areas in Europe.

We involve key players in this field, from both more scientific area and the industry from various angles, eg. multinationals and MKB-representatives (see the list of contributors at the first page of this proposal) who have a strong attention on city distribution and willingness to explore this.

Our focus is not primarily on possible policy scenarios for local government. Rather, we consider op-portunities for the industry parties involved (like retailers, LSPs, etc.), given the conditions of the local government. The fact that ‘city distribution’ was one of the five innovation themes of the “Committee van Laarhoven” roundtable (2007) with key-persons from the Dutch industry, indicates that this is an important area for logistics innovation.

We define five important work packages / activities:1. PhD project Consolidation and coordination at urban retailers. We consider opportunities for con-

solidation at a single retailer, and collaboration between multiple retailers, building on the combi-nation of inventory and routing.

2. PhD Project Consolidation and coordination at logistics service providers. We consider network co-operation between LSPs to improve city logistics. Opportunities are to use a city distribution centre, or alternative transport modes.

3. Consolidation and coordination at the city level: innovative business models for 4C for distribution in urban areas, based on collaboration between retailers and service providers. Combining the insights from WP1 and WP2, we provide an architecture for cross chain coordination at city level.

4. Master Thesis projects: in order to make new scientific research practical, and to involve consor-tium partners as much as possible, we will organize at least 18 Master Science projects. Results, insights, and non-confidential information will be shared in seminars and meetings.

5. Valorization and knowledge dissemination: During the project, the findings of all packages are integrated, resulting in innovative and ready to use concepts and tools for improving city logistics. We will define at least two Dinalog demo-projects for valorization and produce high-level scientific publications. Next to that, dissemination activities will be employed to the industry, e.g., by imple-menting seminars and best practice meetings. A key person will be assigned to take care of this.

Currently there is a high willingness to improve the city logistics in the Netherlands by all major play-ers. Given the strength, support and interest of our consortium, we expect overall at least 20% reduc-tion in emissions in transport at lower logistics cost. The new best practices and the additional val-orization activities should attract more added value towards the campus from companies involved in the project. To this end we offer 18 MSc student internships to implement the knowledge created. We also aim at active involvement of SME’s in our research and we expect more involvement of SME’s when demonstration projects are started.

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A. Orientation and Project Goals

MotivationAn important challenge in the transition towards the Dutch vision of “Regieland” is the question how to improve the quality (e.g. carbon footprint and air quality in cities) and quantity (e.g. transport move-ments) of the distribution activities by a better orchestration of the different physical flows. Especially in urban areas, there is a huge potential for bundling of distribution flows that are now fragmented. Although there are first signs of co-operation between logistic service providers and retailers, recent reviews show that there are hardly any examples of commercially successful, environmentally sus-tainable collaborative solutions in urban areas within Europe. Research into feasible collaborative supply chain designs, the associated business models and the critical questions of risk and revenue management, specifically in an urban context, is limited. . And innovation in urban freight transport is essential; the last mile is the most expensive part of the transport. Besides, in the urban area, trucks and vulnerable road users share infrastructure, and nuisance caused by distributing transport is no-ticed especially in cities. And on the other side, carriers face inefficiencies due to local authorities’ regulations and shopkeepers’ demands.

The focus of this research project is collaboration in distribution and coordination between logistics service providers and between LSPs and retailers, i.e. the bundling of physical good flows into (ur-ban) areas, resulting in fewer negative impacts (decongestion, less nuisance in cities). We are con-vinced that increased collaboration will lead to innovative distribution concepts that are based on sound business models, while meeting objectives and restrictions set by municipalities. The project proposed here has favorable circumstances to make a big step forward in this respect: The Netherlands has very dense urban areas; hence there is a strong need and urgency among

all parties to improve the current distribution approaches. These solutions should act as best practices towards other dense city areas in Europe.

We involve key players in this field, from both more scientific area and the industry from various angles, eg. multinationals and MKB-representatives (see the list of contributors in at the first page of this proposal) who have a strong attention on city distribution and willingness to explore this.

Relation to Dinalog´s innovation themesThis research is related to the Cross Chain Control Centers (4C) area as defined by Van Laarhoven. Last mile city distribution activities are currently quite often uncoordinated and can be characterized by the many different delivering trucks that often block other trucks in narrow city streets. Many differ-ent actors are involved in city distribution activities or the results of distribution, but these actors hardly communicate with each other, let alone that there is a form of coordination. Regional players (e.g. carriers) and local players (receivers, local carriers, authorities) have difficulties in communica-tion and therefore understanding each others problems and stakes is lackin in the city context. Many initiatives in this area fail since the actors that are responsible for the transport are not involved. This should result in ways for carriers and retailers to actively improve urban freight transport efficiency and sustainability. Also, the focus on ‘city distribution’ was one of the five innovation themes of the “Committee van Laarhoven” in their roundtable meeting (January 2007) with key-persons from the Dutch industry.

Objectives and goalsOur objectives and goals are (at the next paragraph ‘expected results’ we define this as SMART as possible): 4C architectures (i.e. functional and organizational designs including appropriate business mod-

els) for innovative, collaborative distribution structures for urban areas.o Collaborative distribution structures between retailerso Collaborative distribution structures between LSP’so Collaborative distribution structures at city level using 4C

A number of innovative and validated concepts and tools:o Model to show relationship between amount and characteristics of stops and inner

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city characteristicso Model for revenue management and pricing mechanisms between involved partieso Feasible business models for city logistics

Best practices and concepts on improved city logistics with 20% city emission reduction, while reducing overall logistics costs

Basic setups for at least two demonstration projects. Presentations at international scientific conferences, international publications in high-ranked ISI-

journals Education through 18 MSc Theses, lectures and master classes in course programs 2 PhD Theses

Expected results SUSTAINABILITY: we expect overall at least 20% reduction in city emissions in transport by

lower transportation cost, hence should make city logistics commercially attractive (which is unique in itself). This should be used as show cases towards the Dutch and European industry, on how to reach a higher level of organization within supply networks, increasing the chances to create new jobs.

4C: As an outcome, one of the project results is expected to be a 5C (a city cross chain collabo-ration centre). The 5C is run by one of the project partners (year 4), for example: collaboration (due to coordination) between food deliveries and express deliveries in a city by an LSP (in elec-tric trucks).

HUMAN CAPITAL: Through our concept of a student pool of at least 18 students the project also contributes to the development of human capital in logistics and supply chain management. Those students will become available to the Dutch logistics industry. Next, due to efficiency gains fewer truck drivers will be needed, which will help to solve the problem in the next future; i.e. shortage of high quality distribution drivers. The jobs will be replaced by higher-graded jobs in planning and collaboration and coordination activities. This specific knowledge should be ex-ported to other cities (also outside the Netherlands).

SCIENCE: The project contributes substantially to the development of scientific knowledge in various industry domains as retailers, LSPs and the collaboration between them and city logis-tics. Also we will contribute to innovative themes like alternative pricing mechanisms, business models and revenue management.

SME: We also aim at active involvement of SME’s in our research (ORTEC and TNO work closely together with SME’s and are already project participant) and we expect more involvement of SME’s when demo projects are started. The valorization specifically aims at SME as well.

The next steps should be that logistic results in this area should create new jobs in the industry and the Supply Chain Campus for exploring these innovative techniques, in both a domestic and interna-tional context. Next, the project will contribute to a better accessibility in cities and decongestion.

Specific Measurable Acceptable Realistic TimingSustainability Less energy

usage and emissions due to less trucks;

20 % less emission in the city, while reducing over-all transporta-tion costs.

This goal is more ambi-tious, than most current city logistics projects, but should be achievable, based on some pilots.

The ambition is based on the tacit knowledge of innovative logistics ser-vice providers and involved retailers.

Assuming a demo project starts at 2012 we expect the first results by 2013 and the objective is met in 2014

4C Knowledge on collaborative transportation planning

A City Cross Chain Control Centre (5C)

Involved Con-sortium Part-ners have either experi-

Should be achievable, given the current cli-

Starting in 2014, given the experi-ences we

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ences or am-bition in this direction.

mate on this. obtain in coming years.

HumanCapital

Pool of MSc students de-veloping and acquiring 4C skills

≥ 18 supply 4C workers

This number of highly skilled work-ers can easily be absorbed by industry; yet we focus on 4C roles

The MSc supervision team is very experienced.

Every year about 4 stu-dents will become avail-able.

Science Publications in scientific journals

≥ 10 scientific papers of which 2 in top journals

Given the practical ori-entation, we cannot aimed at much more

The faculty involved has shown its capability to get industry-driven re-search in top journals and others

Given the time lags between sub-mission and publication, we expect the first papers in scientific jour-nals in 2014 and top jour-nal publica-tions in 2015.

SME Involve-ment

ORTEC At least 2 SME compa-nies involved

We build on the foreseen demo projects linked to 4C4D to get more SME involved

The compa-nies involved are committed to get demo projects started as they see a more immedi-ate impact thereof

1 SME from the kick off and at least one more in 2013

Relation to government policyAll the objectives of the project strongly support government policy, for example sustainable city logis-tics is very important for the Netherlands, noticing also initiatives as the “Ambassadeur Stedelijke Distributie”, “Lean and Green Award”, etc. The project relates to local governmental policy goals, i.e. it will contribute to reduction of nuisance in cities, reduction of local emissions (and therefore an im-provement of the air quality) and an increase of the livability and accessibility in the cities. And the project should add to the reduction of disturbing policy restrictions (e.g. time-windows and vehicle restrictions) for the (participating) companies, due to an increase in possibilities due to collaboration and innovative business models, (i.e. city distribution and the regulations is one of the top irritations of the Dutch trucking industry). Besides, the project contributes to other policy goals, for example reduc-tion in CO2 emissions, fewer trucks on the roads (at peak hours).

Governmental policies are taken into account during the project, because the policies determine the playing field for the carriers and retailers. We do not aim at changing the policies, but we aim at showing (local) authorities the carriers’ best practices (both in valorization activities and in demonstra-tion projects), in order to make it possible that governments start to reward carriers for their results (by providing privileges).

OrientationResearchers from TU Delft, TU Eindhoven and TNO in the consortium participated in earlier public-private collaboration projects such as KLICT and Transumo. The focus in these projects was primarily

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on planning concepts and implementation at individual companies. No attention has been paid to business models, which may have been a reason why some projects with the aim to implement sup-ply chain collaboration, have not resulted in sustainable relationships. With our focus on business models, the 4C concept sold as a service, three research projects aimed at developing 4C service content and one on ICT as enabler, we expect to remove obstructions that have been faced in earlier research. The principal applicant from Tilburg University is working at both university and at ORTEC, leading consultancy firm on logistics optimization in the Netherlands. He is very familiar with the focus on valorization and exploring the scientific results in demonstration and other projects. From his rela-tionship with leading companies like Ahold and TNT, he is very familiar with the current research topic.

Another reason why we expect to be successful is that all researchers believe in industry-driven re -search. They all have either a strong track-record on publishing relevant research in top journals or already a strong link with leading industry-driven companies (like TNO and ORTEC). TNT and Ahold can be seen as leading companies in supply chain optimization and collaboration. TNT, as number one in the Dow Jones Sustainability Index, has a very strong profile and incentive for innovative city logistics concepts, and is very committed to this project.

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B. Activities and Work Packages

Activity 1: PhD project Consolidation and coordination at urban retailers4 years

R&D Activity 2: PhD project Consolidation and coordination at logistics service providers4 yearsActivity 3: Consolidation and coordination at the city level: innovative business mod-els for city logistics4 years

Activity 4: MSc student pool

Valorization Activity 5: Implementation and knowledge dissemination – 3,25 years

Deliverables/Milestones:

Papers in scientific journals, conference contributions, PhD theses, workshops, demonstration projects and presentations for practitioners.

Activity 1: Consolidation and coordination at urban retailersDescription:AbstractWithin urban environments, a major source of transport demand arises from the large number of retail -ers. Clearly, the historical evolution leads to fewer inventories in the retail outlets. Specifically, the interplay between inventory and handling processes versus (shelf) space usage leads to inventory ordering and demand for transport. Many inefficiency examples exist where the (same or different) LSPs visit the same street multiple times per week, but each time visiting another retailer for small orders. Finally, many goods are delivered following a very fast service pattern while the necessity, in many cases, is not there.

In this work package, we focus on consolidation at one retailer and coordination between retailers. Retail deliveries are typically driven by inventory management systems that aim at inventory cost mini-mizations (e.g. the automated ordering system at Albert Heijn). As such, they only consider the costs of ordering versus holding. Retail practice and academic research show that shelf space utilizations, handling costs, transportation costs, etc. are rarely considered in the ordering decisions. Considering the true costs of shipping inventory in the stores, leads to more consolidation at the retailer itself, re -sulting in less transport shipments with higher utilizations. Considering multiple retailers leads to sig-nificant coordination issues. In redesigning the usually specific delivery schedules, the visits to the stores physically close to each other could be clustered, but keeping the overall week schedule bal-anced. By looking at consolidation at retailers and coordination between retailers, we are able to ex-amine the opportunities and incentives that companies have to modify their delivery schedules (e.g. night time) and the associated logistical versus environmental cost trade-offs. Collaboration options between Etam Retail Services and Ahold (e.g. Gall&Gall) are investigated.

Research proposalRetailers are faced with an ever increasing requirement on their ability to provide high and diverse service offerings in their stores (e.g. broad assortment, no stock outs, etc.). Store managers have to deal with these higher service requirements at increasingly lower costs leading to increased pressure on the efficiency and effectivity of retail store operations. Faced with this increasing challenge of pro -viding the right product in the right place at the right time and at the right price (Fisher et al., 2000), many retailers are concentrating on improving the efficiency of their operations. Effective management of store operations is crucial to the retailer’s own success (Pal and Byron, 2003) and often critical for the performance of the entire supply chain. Many believe that the last mile of the retail supply chain up to the shelf represent both the highest supply chain cost and the biggest customer service risk (Supply Chain Effectiveness Survey, 2002). An essential objective for retailers is to provide a high availability of their products at low operational costs. This ultimately challenges retailers to formulate good plans,

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well executed (Fisher, 2009).

Inventory management remains a key strategic weapon for many retailers. The academic research and studies on inventory management systems is rather abundant (see Silver (2008) for a recent re-view). However, much of the research remains rather theoretical and there is still a gap between the-ory and practice. Many of the retail inventory management models and methods use assumptions that were developed for application areas other than retailing. It is often assumed that unmet demand is backordered, while in retailing, unmet demand is typically lost. The inventory control problem of many grocery retailers has several other features in common, additional to lost sales. Demand for products is stochastic; the store orders on a periodic basis and receives replenishment according to a fixed schedule. For example, some products are ordered daily, others are order every second or third day. Typically, the replenishment lead times are rather short in the grocery sector. The orders placed in the morning are often received at the end of the day, or the beginning of the next day. In any case, the replenishment lead time is typically shorter than the length of the review period. Furthermore, the or-ders are usually constrained to batches of fixed sizes (the case packs), generally dictated by the man-ufacturer from the need to coordinate inventory and transportation of several items. Upon order receipt at the store, the replenishment stock needs to be stacked on the shelves, and this activity is part of the shelf stacking process at the stores. Shelf space allocation of many products is limited, dictated by marketing constraints, and surplus stock, which does not fit on the shelf, is temporarily stored in the stores’ backroom, often a small place, poorly organized (see Van Donselaar et al., 2010).

An empirical study of Broekmeulen et al. (2004) gives a distribution of the costs (collected for a num-ber of Dutch retail chains). Focusing on the last mile of the supply chain, we note that the handling costs at the store level together with the transportation costs dominate the other inventory cost in the retail stores (see Figure 1). As the transportation activities are done within an urban area, it is ex -pected that these costs are more likely to increase, leading to a larger share in the cost pie. Complete retail models that consider all these relevant aspects are not available at this moment. On top of this, no models exist that assist different retailers in order to align their operations to each other. This re -search work package will focus on two important aspects: (1) consolidation at a single retailer and (2) coordination between different retailers. We detail out each of these two research questions.

Figure 1: Cost structure of a retail supply chain (Broekmeulen et al. 2004)

Research question 1: Consolidation at a single retailerCurrently, models that assess the overall operational costs in retail stores on multiple dimensions are not available. Much of the academic model-based research in retail operations has focused on issues such as inventory, marketing, or planograming decisions separately (see e.g. Corstjens and Doyle, 1981; Dreze et al., 1994; Urban, 1998; Cachon, 2001).

At a retail store, different operational processes interact with each other. Specifically, key activities are inventory management, product handling and (shelf) space allocations lead to demand for transport. Proper control of store operating expenses typically requires balancing transportation, inventory, shelf space and handling costs. Retail inventory management systems usually only consider inventory or-

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dering costs versus inventory holding costs. Moreover they only look into each product individually rather than at multiple products (i.e. single item inventory models versus multi item inventory models). This research question extends the current state of knowledge in two directions:

1. The current single item inventory replenishment models do not consider the transportation costs in the objective function. Identifying how the transportation costs can be added to the model and obtaining the optimal policy for this setting will be the focus of this extension of the established lost-sales inventory models.

2. Clearly, transportation is done with trucks having a finite capacity over multiple items. The single item inventory models thus need to be extended to consider multiple items together. On top of this, other capacity requirements in the stores (e.g. people availability) need to be taken into account.

Concluding, we develop and solve several lost-sales single and multi item inventory control models, which take into account the key characteristics of the retail environment: transportation costs, batch ordering, handling costs, shelf space and backroom operations. We use stochastic dynamic program-ming to model and solve the inventory control problem. Since optimal policies have rather complex structure, we also propose heuristic policies.

Research question 2: Coordination between different retailersRetailers are often located relatively close to each other, e.g. in the same shopping street. In almost all cases, retailers act independently of each other. Specifically, it would be interesting from a trans-port consolidation point of view, to coordinate the inventory ordering process among different retailers. Delivery schedules need to be adapted among different retailers employing different inventory poli -cies.

From a scientific literature point of view, decision questions with regards to the level of centralization need to be addressed. Chen et al. (2001) studied a distribution channel where a supplier distributes a single product to retailers, who sell the product to consumers. The demand in each retail market ar-rives continuously at a constant rate that is a general decreasing function of the retail price in the mar-ket. They characterized an optimal strategy, maximizing total system profits in a centralized system. Interestingly, they also showed that the same optimum level of profits can be achieved in a decentral -ized system, but only if coordination is enforced via pricing mechanisms. In their paper, the authors also provide numerical examples to illustrate the value of coordination. Alternatively, many authors (Waller et al., 1999) focus on the value of VMI (Vendor Managed Inventory) to facilitate coordination among retailers. VMI is one of the most widely discussed partnering initiatives for improving multi-firm supply chain efficiency. In retail supply chains, there is seldom any coordination of orders from the different buyers. Orders often arrive simultaneously, making it impossible to fulfill all delivery requests on time. With VMI, greater coordination supports the supplier’s need for smoother transportation with-out sacrificing the retailer’s service and inventory objectives. The general framework within which the above issues are considered is usually production logistics rather than distribution logistics.

In this research question, we build on the inventory-routing literature, within the framework of distribu-tion logistics. This literature is characterized by the simultaneous relevance of routing and inventory issues. Many models have been proposed for ordinary inventory and lot sizing problems where no routing issues are considered, or transportation costs are just considered as a fixed cost (Hahm and Yano, 1995). More specifically, when several destinations are involved, the Joint Replenishment Prob-lem is relevant (Anily and Federgruen, 1990). Conversely, for problems involving routing aspects only, several problem types have been studied (Fisher, 1995). Baita et al. (1998) give an excellent overview of the inventory-routing research considering dynamics where repeated decisions have to be taken at different times within some time horizon, and earlier decisions influence later decisions. Clearly this fits the retail environment as described earlier in this work package.

References Anily, S. and Federgruen, A. (1990) One warehouse multiple retailer systems with vehicle routing

costs. Management Science 36, 92-114. Broekmeulen R, van Donselaar K, Fransoo J and van Woensel T. 2004. Excess shelf space in

retail stores: An analytical model and empirical assessment. BETA working paper 109, Techni-

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sche Universiteit Eindhoven, Eindhoven. Cachon G (2001). Managing a Retailer’s Shelf Space, Inventory, and Transportation. Manufactur-

ing & Service Operations Management 3: 211-229. Chen F., A. Federgruen and Y. Zheng, Coordination Mechanisms for a Distribution System with

One Supplier and Multiple Retailers, Management Science, Vol. 47, No. 5 (May, 2001), pp. 693-708

Corstjens, M., P. Doyle. 1981. A model for optimizing retail space allocations. Management Sci-ence, vol. 27, pp. 822-833.

Dreze X, Hoch SJ and Purk ME. 1994. Shelf management and space elasticity. Journal of Retail -ing 70, 301-326.

Fisher, M.L., Raman, A., McClelland, A.S. 2000. Rocket Science Retailing Is Almost Here-Are You Ready?, Harvard Business Review, July-August, 115-124.

Fisher, M. 1995. Vehicle routing. Handbooks in Operations Research and Management Science, Vol. 8: Network Routing. eds. M. O. Ball, T. L. Magnanti, C. L. Monma, and G.L. Nemhauser, pp. 1±33 Elsevier, Amsterdam.

Fisher, M. 2009. Rocket Science Retailing: The 2006 Philip McCord Morse Lecture, Oper. Res. 57(3), 527-540.

Hahm, J. and Yano, C. A. 1995. The economic lot and delivery scheduling problem: powers of two policies. Transportation Science 29, 222-241.

Urban, T. (2002), The interdependence of inventory management and retail shelf management, International Journal of Physical Distribution & Logistics Management, 32(1-2), p.41.

Pal, J.W. and Byron., J.W. 2003. The five Ss of retail operations: a model and tool for improve-ment, International Journal of Retail & Distribution Management, 31(10):518-528.

Silver, E.A. 2008. Inventory management: a tutorial, canadian publication, practical applications and suggestions for future research.

http://haskayne.ucalgary.ca/haskaynefaculty/files/haskaynefaculty/2007-03.pdf Supply Chain Effectiveness, survey. 2002. Prepared by Kurt Salmon Associates. Van Donselaar K., V. Gaur, T. Van Woensel, R.A.C.M. Broekmeulen, J.C. Fransoo. 2010. Order-

ing Behavior in Retail Stores and Implications for Automated Ordering, Management Science. Waller M., M.E. Johnson, T. Davis. 1999. Vendor-managed inventory in the retail supply chain.

Journal of business logistics.

Planning:Start: 2011Completion: 2015The length of the project is 4 years. For the practical elaboration of this research project, we propose the following planning.

Year 1: In the first phase that takes about a year throughput time, the focus of the Ph.D. student is on acquiring skills through an educational program and understanding of the different modeling concepts through literature research.Summary:• Literature study on models and optimization• Education (courses of the research school BETA and the “Landelijk Netwerk Mathematische Besliskunde”)

Year 2+3: After the preparation phase, the second phase is dedicated to in-depth research and the derivation of results to be published in a number of papers. The in-depth research involves the elabo-ration of Research Questions 1 and 2. During the second phase, software will be developed that en-ables extensive experimenting. The software will be applied to a number of real-world cases. The throughput time of the second phase is about two years.Summary:• Formulation and analysis of new quantitative models• Education• Writing of three papers

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Year 4: The third and last phase with a duration of one year is dedicated to finalizing the research, papers and writing a Ph.D. thesis.Summary:• Writing of one paper• Writing of the Ph.D. thesisWork distribution:The proposed project will be organized as a Ph.D. project. The group members and times spent per person are as follows.

Name Discipline Hours/weekDr. T. van Woensel Operations Management 4Prof. Dr.Ir. J.C. Fransoo Operations Management 1Ph.D. Student See below 40

Dr. Tom van Woensel is the workpackage leader and will take care of the daily supervision of the Ph.D. student. The second supervisor will be Prof. Dr. Ir. J.C. Fransoo. Every three weeks, meetings with the student and the two supervisors will be scheduled to monitor the progress of the research project. The promotor of the Ph.D. will be Prof. Dr. Ir. J.C. Fransoo, the intended co-promotor is dr. van Woensel. The Ph.D. candidate for this project can be someone with a M.Sc. degree In Operations Research or Applied Mathematics (e.g. combinatorial optimization) and a strong interest in practical problems or someone with a M.Sc. degree in industrial engineering and strong mathematical skills.

Expected results/deliverables/milestones:It is expected to have a number of scientific research papers (as a guideline one paper per year or four papers) and a doctoral thesis. Moreover the PhD student will have to present his research on a number of international conferences and meetings (e.g. INFORMS) and participate in workshops and presentations for practitioners.

Activity 2: Consolidation and coordination at urban logistic service providersDescription:AbstractIn this work package, we focus on improving the carbon footprint at urban environments while de-creasing the overall cost from an LSP-perspective. There are different methods and initiatives to be considered in more detail: collaboration between LSP: (a) using a cross-dock location just outside the urban area and combining deliveries from multiple LSPs in one round, (b) moving distribution from day towards night time, to avoid traffic jams during the day, (c) convincing small customers in the real city center (‘high street’) to be delivered by the same LSP.

In the past several experiments have been done on a ‘case study’ basis, but more fundamental re -search is lacking. Therefore, commercial success of these initiatives is limited. Based on these experi-ences, the newest technology in transportation and collaboration modeling, we are able to examine new opportunities and incentives for improving urban environment distribution, which can be applied in a European context as well.

Research proposalThe demands and requirements of transportation, in particular towards urban environments, are in-creasing. In particular the local rules and legislation have a strong impact on the way LSPs can opti -mize their transportation schemes. Time-access regulations and vehicle restrictions are increasingly used, especially in Western Europe, to improve social sustainability in urban areas. These regulations considerably affect the distribution process of retail chain organizations as well as the environmental burden. In (Quak and De Koster, 2009) the impact of several local regulations on the transportation costs is considered. Also the ‘Binnenstadservice’ project was based on earlier research on sustainable urban distribution (Quak and Tavasszy, 2010). Dablanc (2007) considered several methods for goods

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transport in European cities.

In this project we will not consider systematically the effects of possible new local regulations, but we will take the current (or most likely in the near future) regulations as a starting point. The need for a more efficient way to transport urban freight is getting bigger and bigger, due to the fact that conges-tion and emission is increasing in a city, customer are getting fragmented collection and deliveries, and overall the transportation companies are facing an increase in delivery costs. Delivering goods within urban environments is a challenge for a long history. Many retailers, outlets and consumers have their own logistic service provider (LSP) to deliver the goods. As a result, a considerable amount of LSPs visits the same street at the same day, but for different customers, different product types or different contracts. Since many streets in (historical) city centres are narrow, these different vehicles cause congestion in the shopping streets during the time-window periods as vehicles have to wait for another vehicle to be unloaded before being able to drive through the narrow streets. Consolidation on street level could be effective to solve these problems.

New techniques and insights have become available to support collaboration between different LSPs or different distribution networks. Collaboration of course implies methods and pricing between the involved parties, to maximize the engagement and an honest way of sharing cost and benefits. In his PhD – thesis, Cruijssen (2006) explores methods to exploit synergy in transportation. Also Groothedde (2005) focuses on exploring new techniques in network solutions and collaborations be-tween LSPs.

Research question 1: Relation between distribution structure and emissionIn the last years, the impact of local legislation rules on the total distribution cost for an urban environ -ment has been considered (e.g., see Quak and De Koster, 2009). Also, several databases for emis -sion behavior have been organized for multiple National and European cities (e.g., by DHV, 2010). However, in general, the emission impact of individual deliveries, with their characteristics on size, product type in an urban environment is missing. If this information would be known, it would give insight what the effect is when an LSP can avoid a small number of deliveries in a city by outsourcing them. More precisely, this will give a relationship between the amount of deliveries of an LSP and impact on cost and emission for a certain geographical area. Comparing geographical areas on sev-eral characteristics (local regulations, spatial area) will give a method to compute the impact for areas, which were unknown until now. The answer on the first research question enables the carriers to esti-mate the environmental benefits of collaboration for a certain geographical area for a certain type of product and a certain volume. This information is useful to make an estimation on the sustainability of collaboration (or other city logistics initiatives). Based on this information the societal value of different forms of LSP collaboration should be easier to estimate (in a consequent manner).

Research question 2: Collaboration between LSPsThe horizontal collaboration between LSPs is a well-known topic. Groothedde has explored new tech-niques in network solutions and collaborations between LSPs (Groothedde, 2005). For sustainable urban distributions, cross-docking locations just outside the area, are considered to be an interesting model (Quak and Tavasszy, 2010), but requires more investigation to be successful. In particular the pricing model between the LSPs requires attention. A first model, made by Cruijssen (Cruijssen, 2006) is based on game theory. This model gives a method how to allocate synergies to participants in a fair and sustainable way using the Shapley value (Shapley, 1953). Further research (Cruijssen et al., 2010) has shown that for instance supplier-initiated outsourcing (called ‘insinking’) is very promising. Besides the size of the synergies and the allocation method also the order in which and the offer with which potential partners are invited should be determined. In practice typically collaborations start small and then grow and game theory provides a theoretic framework to model this process. Given the characteristics of urban environments, cross-docking options and the important role of environmental synergies further research in this area can be done and looks promising. Based on the strong group in game theory at the Tilburg University (P. Borm and others) we expect to bring this strong method a big step forward. Moreover, the potential overall benefit (in cost and emission) should become clear in the overall supply chain over multiple LSPs. This requires to adapt a strategic VRP-modeling to compute the potential benefits, e.g., in relationship to amount of stops, cross-docking locations, and service (is

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it possible to reach the cross-dock location in time), without knowing all the details about the deliveries (Figlozzi, 2009). It should also help the LSPs to find suitable partners for collaboration (at different stages in the collaboration). With this information and model, LSPs should be better equipped to find the right local (and / or regional) partners to make their (city) distribution more efficient, and at the same time share the benefits (and potential costs) in a fair way. A specific case that is considered is network collaboration; in case several LSPs collaborate in a network and exchange their volumes at low peak periods (for example the nights), trucks can enter cities next morning fully loaded for one city. Currently, TransMission (a consortium partner) makes urban deliveries like this, and, for example consolidates the volume of different local LSPs for one region and one LSP; this results in bundling in which over 85% of the goods delivered in for example Amsterdam come from network partners of the local TransMission LSP. In this research question we examine ways for carriers to collaborate in net-works and so to bundle deliveries for regions.

We will also look at possibilities for LSPs to collaborate in distribution concepts, such as the use of LHV (longer and heavier vehicles, i.e. ecocombies) for distribution. These ecocombies contain one truck and two city-trailers in the national distribution, whereas for the distribution in cities the city-trail -ers are decoupled and can be separately pulled by a single truck. This truck can run on (for example natural gas, consortium partners Cornelissen and Ahold are already experimenting with this concept). In this research we examine how collaboration between LSPs can be used for designing shared de-coupling locations at city borders for these ecocombies and whether it is possible to deploy the natural gas truck (or pool of trucks) (fewer local emissions and noise nuisance) for the collaborating LSPs (and how to govern and set up such a form of collaboration). We foresee that these best practices on this case study will be obtained by involving MSc. Projects.

Research question 3: Combining different transportation flows of LSPsBased on the fundamentals of questions 1 and 2 we consider different aspects of combining trans-portation flows in this work package’s third research question. Based on the model on collaboration between LSPs (RQ2) and the relationship between emissions and deliveries (RQ1) we develop best distribution practices from a city perspective; examples could be (depending on the results of ques-tions 1 and 2):(a) What are the impacts of moving transportation from day to night time (e.g. decreasing the pollution

due to less congestion, fewer problems with vulnerable road users, noise nuisance, etc.)?(b) Consolidation at street-level, for example deliver small high-value stores in one street by the same

LSP and in another street by another LSP (based on cross-docks at the city border), this would improve the utilization of the trucks at the ‘high street’ and decrease waiting times at the narrow streets.

To get insight in possible solutions for these combinations of transport flows insights are necessary in the special characteristics and volume. Based on research questions 2 and 3 combined, this third question examines the possibilities of different pricing structures and the benefits of avoiding busy hours (and so less pollution) could lead to more generic answers for collaborations between LSPs in urban and inter-urban transport networks. This third research question is answered in parallel with the third research question of WP3.

References Cruijssen, F. (2006), Horizontal Cooperation in Transport and Logistics, PhD. Thesis, Tilburg

University, Tilburg, Cruijssen, F., P. Borm, H. Fleuren and H. Hamers (2010), Supplier-initiated outsourcing: A

methodology to exploit synergy in transportation, EJOR 207, pp. 763-774. Dablanc, L. (2007), “Goods transport in large European cities: Difficult to organize, difficult to

modernize,” Transportation Res. Part A, v41, pp. 280-285. Groothedde, B. (2005), Collaborative Logistics and Transportation Networks, PhD. Thesis,

Delft University of Technology, Delft. Figlozzi, (2009), Planning approximations to the average length of vehicle routing problems

with time window constraints, Transportation Research Part B-Methodological 43, pp. 438-447.

Quak, H.J. and M.B.M de Koster (2009), Delivering Goods in Urban Areas: How to Deal with

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Urban Policy Restrictions and the Environment, Transportation Science 43, pp. 211 – 227. Quak, H.J, and L.A. Tavasszy (2009), Customized solutions for sustainable city logistics:

lessons learned after one year Binnenstadservice. In: Van Nunen, J. P. Rietveld and P. Hui -jbregts. Transitions in sustainable mobility. Springer (to appear)

Shapley, L. (1953), A value for n-person games. In H. Kuhn and A. Tucker (Eds.), Contribu-tions to the Theory of Games 2, pp. 307-317, Princeton University Press, Princeton.

Planning:Start: 2011Completion: 2015The length of the project is 4 years. For the practical elaboration of this research project, we propose the following planning.

Year 1: In the first phase that takes about a year throughput time, the focus of the Ph.D. student is on acquiring skills through an educational program and understanding of the different modeling concepts through literature research.Summary:• Literature study on models and optimization• Education (courses of the “Landelijk Netwerk Mathematische Besliskunde”)

Year 2+3: After the preparation phase, the second phase is dedicated to in-depth research and the derivation of results to be published in a number of papers. The in-depth research involves the elabo-ration of Research Questions 1 and 2. RQ3 will be done in parallel with WP3, resulting in case studies on carriers’ current practices in city logistics (and the business models that are used) and writing a paper on it.

Summary:• Formulation and analysis of new quantitative models• Education• Writing of three papers

Year 4: The third and last phase with duration of one year is dedicated to finalizing the research, pa-pers and writing a Ph.D. thesis.Summary:• Writing of one paper• Writing of the Ph.D. thesis

Work distribution:The proposed project will be organized as a Ph.D. project. The group members and times spent per person are as follows.

Name Discipline Hours/weekDr. R. Peeters Operations Research 4Prof. Dr. G. Kant Operations Research 1Ph.D. Student See below 40

Prof. Dr. Goos Kant is the work package leader. Under his overall leading the daily supervision of the Ph.D. student will be done by Dr. R. Peeters. Every three weeks, meetings with the student and the two supervisors will be scheduled to monitor the progress of the research project. The promoter of the Ph.D. will be Prof. Dr. Goos Kant, the intended co-promotor is dr. Peeters. The Ph.D. candidate for this project can be someone with a M.Sc. degree In Operations Research or Applied Mathematics (e.g. combinatorial optimization) and a strong interest in practical problems or someone with a M.Sc. degree in industrial engineering and strong mathematical skills. Dr. H. Quak (responsible for WP3) will be involved for specific questions of WP2, also to guarantee the close links between the work pack-ages.

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Expected results/deliverables/milestones:It is expected to have a number of scientific research papers (as a guideline one paper per year or four papers) and a doctoral thesis. Moreover the PhD student will have to present his research on a number of international conferences and meetings (e.g. INFORMS) and participate in workshops and presentations for practitioners.

Activity 3: Innovative business models for 4C in city distribution (4C4D)

IntroductionCity logistics practices seem to be dominated by failing (and often subsidized) initiatives and typically concern very local approaches (Quak, 2008). Rather paradoxically, with the aim to reduce urban freight’s nuisance, local authorities make efficient city distribution more difficult, resulting in problems and irritation for carriers as well as an increase in emissions. Local regulations like time windows are often not harmonized between cities, resulting in vehicle utilization problems, inefficient transport oper-ations, extra emissions and serious additional costs for carriers and shippers (see Quak and De Koster, 2007; 2009). The symptoms of this lack of co-ordination are clear; for example, the handful of economically feasible city distribution centers in Europe handle only a small percentage of all last mile freight, while the rest (we suspect >95%) moves unchanged under harsh regulatory conditions. Urban freight transport problems are complex and compound, however, as a solution for one actor forms the base of a new problem for another actor (Browne and Allen, 1999). Clearly, a higher level of co-ordi-nation is needed to arrive at economically feasible, sustainable structures for higher volumes.

Work package 1 and work package 2 focus on finding new approaches for distribution, starting from respectively the retailers’ and the LSP’s perspective. It is likely that there will be both interference or opportunities between the business models of these actors, as well as interference with the regula-tions and pricing regimes imposed by local authorities. Here we integrate these perspectives together into a cross-chain consolidation center (4C) perspective. In this work package we aim at finding feasi-ble business models for collaborative activities between LSP’s and retailers, that enables to efficiently make last mile deliveries in a sustainable way, taking into account the relevant public sector policies. We identify feasible collaborative business models using in interaction with the first 2 work packages and examine the dynamics of building up collaborative structures through revenue management. Fi-nally, this work package will bring the insights from the feasible business models together in a design, together with the participating companies, of a cross chain collaboration center for city distribution (4C4D).

Business models for last mile city distributionAcademic research (as well as political interest) in the field of city logistics has increased over the last two three decades. And although this increasing interest is encouraging, it is striking that a vast major-ity of research and initiatives did not lead to an actual improvement in city distribution nor in improve-ments of the sustainability of urban freight transport activities (see also Quak, 2008, Dablanc, 2007 and Browne et al. 2005). Quak and Tavasszy (2010), Browne et al. (2005) and Quak (2008) mention several reasons for the failure to improve city distribution, that eventually boil down the fact that many initiatives are not viable, a good business model is lacking. Many initiatives are set up by local authori -ties, by researchers or by new formed NGO’s, and carriers are quite often not involved. In our re-search we will examine and design the business models for the last mile city distribution together with the participating companies, the carriers. According to Teece (2010) a business model should outline how a business enterprise delivers value, considering the revenues, costs and profits. Osterwald (2004) distinguishes four areas (including nine building blocks) that a business model must address; Chesbrough (2010) argues that this approach to construct maps of business models (see Figure 1) is useful to experiment with different business models. This will be our starting point to develop collabo-rative business models for city distribution.

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Figure 1 Decomposition of a business model (Chesbrough, 2010)

The organizational models from WP1 and WP2 will be evaluated, as well as possible combined orga-nizational models that emerge from these WPs.

The business models that are used for current innovations in city distribution in the Netherlands (with the participating partners) are examined based on case study research approach (see Voss et al. 2002, Eisenhart, 1989 and Yin, 2003). An example of a case that will be studied is LinX at Cornelissen and another example is the TNT mobile depot: deliveries for multiple rounds are brought to the city center by a trailer, and delivered to the final customer by bike or other equipment or the Cargohopper in Utrecht (by Hoek Transport, part of TransMission).

The case studies’ outcomes should be translated to other situations (i.e. other cities and other carriers in and outside the Netherlands) – this will be done in close cooperation with activity 5: valorization. The business models can be used by carriers to start (or continue) successful city distribution activi-ties. The case studies and the resulting generalizable business model answer the question what (pri -vate) carriers can do to organize their final distribution in an efficient and environmental and financial sustainable way. The four areas that have to be considered in a business model are: product, cus-tomer interface, infrastructure management, and financial aspects. The designed business models add to current literature on city logistics as it provides answers on what can be successful (and what not) and for which reasons (from the carrier-perspective, in contrast to the many opportunistic initia -tives). Currently, this way of examining city logistics initiatives is hardly done (in practice nor in re-search). Quak and Tavasszy (2010) make a first attempt in using the business model approach to examine a city consolidation centre. Next, it also adds to the literature on business models, since the business models that are required for successful city distribution require compliance with the complex environment these activities take place in (many stakeholders with conflicting interests and local au-thorities’ regulation). This implies that interactions with authorities, receivers, residents and other rele-vant stakeholders have to be included in the business models as well, although the (carriers’) value proposition in the business model will not directly affect some of these stakeholders.

One of the problems in city logistics activities is that many stakeholders do not have an incentive to change their behavior. In Quak, Agatz and Van Nunen (2008) the idea is discussed to ‘seduce’ stake-holders to cooperate with carriers in such a way that carriers can organize their last mile more efficient and at the same time more sustainable. An example of how the use of revenue management practices can lead to lower costs and better performance can be found in Agatz (2009) as well as in Mar-morstein et al. (2003) and Talluri and Ryzin (2004). We will examine the dynamics of building up col-laborative structures (between carriers, retailers, receivers and authorities) through revenue manage-ment. We extend these business models by examining how alternative value propositions (see also figure 1 and Teece, 2010) could result in a better business model for the carriers, the receivers (and maybe even the authorities). Currently, carriers do not have direct contact with actors that are active at the city level (i.e. the local authorities and the receivers), see also figure 2. Many carriers face seri-ous problems in delivering receivers in cities, due to the combination of governmental time windows and the time slots defined by the receivers. We examine how this could be improved by introducing smart incentives to make collaboration work in practice.

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Figure 2 Relations between stakeholders (adapted from Quak, 2008).

Finally, this results (also based on the results of the other activities, i.e. the two PhD researches and the trial-and-error approach in the demonstration projects that have to start, how in a certain city a Cross Chain Collaboration center for City Distribution (4C4D) could be designed. Finally we develop a 4C4D architecture based on the business model approach explained earlier in this work package.

This activity aims at combining scientific research and practical use of the results. The case studies will directly help participating companies in improving their final distribution, whereas the later results will help them innovate in their city logistics activities. There is a very strong connection between the research in this work package and the valorization and dissemination activities in work package 5, since the same persons are involved (although the organizations differ).

References Agatz, N. (2009) Demand Management in E-Fulfillment. PhD thesis, ERIM, Rotterdam. Browne, M., M. Piotrowska, J. Allen and A. Woodburn (2005). Urban freight consolidation

centres – final report. TSG, University of Westminster, London. Browne, M. and J. Allen (1999). Chesbrough, H., 2010, Business Model Innovation: Opportunities and Barriers, Long Range

Planning (forthcoming). Dablanc, L. (2007). Goods transport in large European cities: difficult to organize, difficult to

modernize. Transportation Research Part A 41(3), 280-285. Eisenhardt, K.M., 1989, Building theories from case study research, Academy of Management

Review, 14, 4, 532-550 (1989). Marmorstein, H., J. Rossomme and D. Sarel (2003). Unleasing the power of yield manage-

ment in the Internet era: Opportunities and challenges. California Management Review 45(3), 146-167.

Osterwalder, A., 2004 The Business Model Ontology – PhD thesis, university de Lausanne. Quak H.J. and L.A. Tavasszy (2010/1, forthcomming). Customized solutions for sustainable

city logistics; lessons learned after one year Binnenstadservice, in: J. van Nunen, P. Rietveld en P. Huijbregts (eds.) Transitions towards sustainable mobility, Springer, Berlin.

Quak, H. J., J. Van Nunen, and N. Agatz (2009). Customized policies for sustainable urban distribution, in E. Taniguchi and R. G. Thompson (eds.), City Logistics V, 335-350, NOVA Science Publisher, New York.

Quak, H.J. and M.B.M de Koster (2009). Delivering Goods in Urban Areas: How to Deal with Urban Policy Restrictions and the Environment, Transportation Science 43, pp. 211 – 227.

Quak, H. (2008). Sustainability of urban freight transport. PhD thesis, ERIM, Rotterdam.

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Quak, H.J. and M.B.M de Koster (2009). Exploring retailers' sensitivity to local sustainability policies. Journal of Operations Management, 25(6), 1103-1122..

Talluri, K. and G. van Ryzin (2004). Revenue management under a general discrete choice model of consumer behavior. Management Science, 50(1), 15-33.

Teece, D.J. (2010) Business Models, Business Strategy and Innovation, Long Range Plan-ning, forthcoming.

Van Duin, J.H.R., L.A. Tavasszy and E. Taniguchi (2007). Real time simulation of auctioning and re-scheduling processes in hybrid freight markets. Transportation Research part B, 41(9), 1050-1066.

Voss, C., N. Tsikriktsis and M. Frohlich, Case research in operations management, Interna-tional Journal of Operations & Production Management, Vol. 22 No. 2, 2002, pp. 195-219

Yin, R.K., 1989, Case study research, London, Sage.

Planning:Start: 2011Completion: 2015The length of the project is 4 years. For the practical elaboration of this research project, we propose the following planning.Year 1: Case studies on carriers’ current practices in city logistics (and the business models that are used)

and writing a paper on it.

Year 2+3: Understanding of revenue management practices in other industries through literature research. Formulation and analysis of revenue management practices in city distribution. Design of innovative business models and revenue management practices for city logistics (and

writing a paper on it).

In the 4the year the last research question (the development of a 4C4D architecture) is undertaken, based on the business models examined in the previous years.

Close collaboration with all other activities is required in developing the business models for a 4C4D architecture. The research in this activity will be in close collaboration with the valorization of the re-sults with (participating) companies (activity 5).

Work distribution:The proposed project will be organized as follows:

Name Discipline Hours/weekDr. H.J. Quak Logistics 4Prof. Dr.Ir.L.A. Tavasszy Logistics 1

Dr. Hans Quak is the workpackage leader and will take care of the research. Besides, he will be avail -able for the support of the the Ph.D. student from activity 2. The researcher will collaborate with Prof. Dr. Ir. L.A. Tavasszy.Expected results/deliverables/milestones:This activity is expected to result in at least four research papers, like conference proceedings, book chapters and journal papers. We expect to organize frequent workshops and presentations for practi-tioners (in combination with TNO, see activity 5).

Activity 4: MSc student poolThe student pool should be the connecting element between the scientific partners and the partners

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from industry. The student pool is coordinated by TU/e. MSc students will be involved to evaluate and improve carriers’ urban freight transport initiatives, retailers’ inventory decisions and carriers’ distribution activities. The MSc students work in this project to support the development of scientific knowledge by gathering data, developing tools and doing research themselves (with existing tools from ORTEC or TNO). The students also play an important role (at a later stage in the R&D project) in implementing research results (acquired by PhD students) in practice in the context of demo projects set up by the companies participating in this research project.

Defining relevant research projects (by and for companies that are suitable for an MSc thesis) takes serious efforts, as well as supporting the students from both industrial partners and universities. Selecting, preparing and allocating students from the participating universities to the research projects and the demo projects is a substantial effort.Work distribution:We aim at at least 18 MSc projects that are evenly spread over the three universities; this implies that all work package leaders will coordinate 6 MSc student projects over the 4 years of this project.

Expected results/deliverables/milestones:At least 18 MSc projects

Activity 5: Implementation and knowledge disseminationThe results of the research projects must be translated into working solutions at participating compa-nies and into parts of the services provided by new 4C companies. There are multiple ways to achieve this:1. The MSc students play an important role to validate and implement the new scientific ideas into

practice, and close the bridge between theory and practice (see activity 4).2. TNO and ORTEC are involved in this Dinalog-project. They also have the intention to explore and

implement the new ideas into practice. In the project budget 60k euro is reserved for valorization and knowledge dissemination. The consortium plans to hire TNO for valorization, demonstration, and knowledge dissemination in the person of Hans Quak. TNO is the right partner for valoriza -tion, since this is the role TNO naturally fulfills (bridge between science and practice). This person will be responsible for a valorization plan (which should be finished within 3 months after the Dina-log subsidy is awarded. The valorization plan will be updated every year and discussed with Dina-log. The valorization plan includes concrete actions based on the research progress and the op-portunities in the market.

3. Involved companies will learn from the techniques during seminars and workshops (organized at least at a yearly basis by the research institutes involved. Money is reserved for organizing semi-nars and workshops in the budget (if possible in cooperation with participant TLN). Seminars and workshops are a good way to disseminate the knowledge to a broader audience. The companies can start up to implement the ideas, given their interest in this topic. We organize at least one seminar per year. This will also be the platform to present and review the valorization and knowl -edge dissemination plan.

4. We will apply demonstration projects in the future, which is also a good method for a next step in the implementation of the ideas and results. Examining possibilities for demonstration projects together with (participating) companies is one of the responsibilities of the valorization coordinator (proposed H.J. Quak, TNO). We expect to initiate at least one demonstration project per year (which is not necessarily financed by Dinalog; we expect that companies are willing to invest in good ideas themselves).

5. The knowledge institutes are responsible for making easy to use tools and manuals available, next to the scientific outputs (with help of TNO and ORTEC, if this is necessary). Concretely this will result in the following outputs:

a. A tool to evaluate inventory decisions for retailers (WP1)b. A tool to evaluate combined inventory-routing decisions in collaboration (WP1).

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c. A tool to find the CO2 footprint as well as the local emissions (and nuisance) of a sin-gle delivery (for different city-types) (WP2).

d. A tool (or manual) on setting up horizontal collaboration in urban environments (WP2)e. A manual for creating a business model to initiate financially viable urban last mile

deliveries (WP3)f. A tool (or manual) for collaboration between carriers and the receivers (and in case it

is relevant authorities) (WP3)g. An useable (easy to implement) architecture for a 4C for city distribution (all WPs

under coordination of WP5).

Work distribution:Proposed to hire TNO (for 60k euro in 4 years) in the person of Hans Quak. He will then be the val -orization coordinator. The other WP leaders are involved in valorization (product development based on the research as well as presenting at seminars and workshops).

Prof.dr. G. Kant : overall project managerDr. T. van Woensel: WP Consolidation and coordination at urban retailers and coordinator activity 4.Dr. R. Peeters: representative WP Consolidation and coordination at logistics service providersDr. H. Quak: representative WP Consolidation and coordination at the city level (TU Delft) and respon-sible for valorization (i.e. activity 5 – TNO).

Expected results/deliverables/milestones:Valorization plan (finished in month 3 after the Dinalog subsidy is granted. The valorization plan in -cludes a overall plan for the 4,5 years the project runs and a specific action plan for year 1. The val-orization plan as well as the execution of the plan is supervised by the steering committee (see D) of this consortium. Implemented solutions, achieving the goals and results, as described in Section E.

PlanningPlanning

In the figure below we give an overview of the project plan.

2011

-Q2

2011

-Q3

2011

-Q4

2012

-Q1

2012

-Q2

2012

-Q3

2012

-Q4

2013

-Q1

2013

-Q2

2013

-Q3

2013

-Q4

2014

-Q1

2014

-Q2

2014

-Q3

2014

-Q4

2015

-Q1

2015

-Q2

2015

-Q3

Activity 1Activity 2Activity 3Activity 4Activity 5

Overview of the project plan.

All relevant more detailed information can be found in the work packages descriptions above. We also refer to the project organization described below as well as the evaluation and monitoring process that is aligned with this project plan.

.

Role 4C Retail 4C LSPs 4C Business MSc student Valorization

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Model poolLeading company

ETAM Retail Services

TNT Cornelissen TU/e TLN

Core mem-bers

Ahold TransMission Peter AppelTransMission

All companies All partners

Other part-ners

ORTEC ORTEC, TNO TNO TNO

Research partners

PhD Consolida-tion and coordi-nation at urban retailers

PhD Consolida-tion and coordi-nation at logis-tics service providers

TU Delft All knowledge institutes

TNO

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C. Consortium and Project Organization

Research team (see Annex at the end for short CV and publications of the R&D Re-searchers):Name partner Role and input Specific competence

Prof. dr. G. Kant Overall project managerInvolved in managing large projects, also in commer-cial and industrial context.

Dr. T. van Woensel Researcher WP1Expert on logistics in urban areas and sustainable lo-gistics

Prof. dr. G. Kant Researcher WP2Expert in transport opti-mization, involved at EM-Log and TNT Go Academy.

Dr. R. Peeters Researcher WP2Expert in optimization tech-niques, also links to gam-ing theory for pricing

Prof. dr. L. Tavasszy (TUD) Researcher WP3Expert on logistics in urban areas and sustainable lo-gistics

Dr. H. Quak (TUD) Researcher WP3Expert on logistics in urban areas and sustainable lo-gistics

Dr. T. van Woensel (TU/e) Coordinator WP4 MSc Student pool

Experience with supervi-sion over many MSc stu-dents, in related projects.

Dr. H. Quak (TNO) WP5 leader: Implementation and knowledge dissemination

TNO is the natural party for valorization and knowledge dissemination. Experi-enced person and expert.

Dhr. G. Buitenhuis Ahold Manager Transport Europe

Dhr. M. Zwart Cornelissen Transport Director

Dhr. J. Otter ETAM Retail Services Manager Distribution Cen-tre & Facility Services

Dhr. J. Poppelaars ORTEC Principal Consultant

Dhr. P. Appel Peter Appel Transport CEO and Owner

Dhr. P. Heijne TNT Project Director City Logis-tics TNT

Dhr. P. Tjalma TransMission Managing DirectorMevr. Drs. Ing. B.P.A.M. van de Loo TLN – KDN Deelmarkt secretaris

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D. Evaluation and Monitoring

The project will be evaluated on the measurable outputs described above. Each PhD project follows the evaluation process that is standard at universities. On top of that, we evaluate the progress against the targets three times a year during our regular project meeting at Dinalog. This meeting ensures that the individual projects are aligned, relevant information can be exchanged, in particular with respect to empirical data for case studies and tools that can be implemented. This evaluation process starts in Q1-2012, i.e. after a year. The 4C4D meetings start in Q1-2011 with a kick-off meet-ing to assess our objectives and to refine and adjust when needed. These meetings will also be used to share best practices (from participating companies) as well as from other Dinalog projects (if appli -cable). Also during this meeting the valorization plan (WP5) will be presented and adjusted, if neces-sary.

We will set up a steering committee with representatives from the companies and universities in-volved (but others than the WP project leaders), and the director of Dinalog. The steering committee meets every year shortly after the project meetings. The key role of the steering committee is to en-sure that the Dinalog objectives are met. We propose the following evaluation and monitoring struc-ture: the steering committee will supervise the project progress, based on project outcomes. The steering committee will not supervise the academic progress, but the project outcomes, i.e. easy to use manuals and tools based on the project planning and the valorization plan (see E. Valorization and knowledge dissemination). Supervision on academic progress will be done by the PhD supervi -sors. The supervision will be based on the project planning (which has to be made after the project subsidy is awarded by the work package leaders. The WP leaders will report the progress to the steering committee and prepare the meetings. The steering committee reports to Dinalog.

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E. Valorization and Implementation Strategy

Valorization and knowledge disseminationIn financial project structure, money (60k euro) is reserved to hire TNO for valorization and knowl -edge dissemination activities (see also activity 5, in B). The aim of the project is to make the results easy to use, for example step by step frameworks or manuals on:

how to use a business model to execute (sustainable) urban freight transport; how to collaborate between LSP a tool for evaluating transport and inventory decisions, etc.

The knowledge institutes make efforts (supported by ORTEC and TNO) to make easy and useable products for carriers and retailers based on the academic results. This will also be supported by the MSc students pool. TNO will actively support (not-participating) companies in using the developed product (together with the developing knowledge institutes). These manuals together result in best practices book, where all manuals are bundled and show cases are described. The participating com-panies can direct research during the project meetings and at times researchers are working at the participants´ or with the participants.

Valorization and knowledge dissemination are very important (according to the project participants). Valorization and knowledge dissemination is a separate activity in this proposal (activity 5, see part B) in which all project partners participate. After receiving the Dinalog subsidy, making the valorization plan is one of the first activities (see planning and activity 5). The consortium will hire TNO to be re -sponsible for valorization. We distinguish several activities: Make results available in academic world: the consortium partners will publish results in journals

and presents results in City Logistics conferences (responsibility of research partners). Make results available in Europe: city distribution and urban freight transport is a topic for many

European cities, governments (including the EU) and carriers. Organizations such as Polis and Eurocities will be used to spread the results (TNO responsible, TNO already has a good position to spread the results in Europe, due to the many European partners from European research projects). Next, TNO will bring in the results in other European networks and projects.

The results are shared with institutes (or instances) in the Netherlands that are active in city dis-tribution or the support companies that support SMEs in this field. The consortium partners have good contacts with the Ambassadeur Stedelijke Distributie (for valorization useful until 2013, after that year the ASD stops). The results will also be actively transferred to Agentschap.nl, CROW, VNG and other institutes that are active in urban freight transport (advice), TNO will be responsi-ble for spreading these results (obviously, other partners play a role here as well, TNO will coor -dinate the activities and steer by making, updating and following the valorization plan.

Actively communicate results to companies active in city logistics.

For participating companies and start-ups valorization possibilities lie in:1. Consultancy and Advice on cross chain collaboration, such as:

a.Business models for collaboration in the last mileb.(Collaborative) transport and inventory decisionc. Innovative urban freight transport solutionsd.Collaboration between LSPs

2. Products:a.Modelsb.Manuals

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ImplementationThe results of this research and development project have to be applicable for the participating com-panies. The private companies that are involved in this project are already leaders in innovative (city) distribution, especially from a technological point of view. The outcomes of this project have to be translated in workable 4C solutions that are applicable in cities, and that make the vehicle technologi-cal solutions more financially feasible in short term. Eventually a 4C company that (partly) coordi -nates the currently very fragmented final distribution in urban areas should be implemented (and probably run by a LSP).

Concretely, this project’s outcomes will result in financially healthier city distribution solutions (year 2) and cooperation between different LSPs (year 3) in last mile deliveries. Finally, the project results in at least one 5C (a city cross chain collaboration centre), that differs from the existing city distribution centre initiatives, which have failed frequently in the past. The 5C is run by one of the project partners (year 4), for example: collaboration (due to coordination) between food deliveries and express deliv-eries in a city by a LSP (in electric trucks). The benefits of the collaboration and coordination deliver-ies in urban areas should be so evident, that (at least) the participating companies start to do so. Possibly, extra budget is required to involve more partners in the collaboration, we intend to enroll new partners in the 5C idea during the project.

Next, the consortium partners plan to implement new innovative ways to make urban freight transport more sustainable. At this moment, we do not need extra funding for implementing these projects, and in case extra budget is required, we plan to start (Dinalog) demo-projects.

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ANNEX CV’s of INVOLVED RESEARCHERS

Prof. dr. G. (Goos) KantProfessor of Operations Management and IT – Tilburg UniversityTeacher at TiasNimbas Business School on Transport Optimization (EMLog and TNT Go Acad-emy)Managing Director and Partner at ORTECEditor-in-Chief STAtOR (Quarterly journal, focused on applications of scientific Statistics and Operations Research results in practice).

Education Ph.D. in Computer Science – June 1993, Utrecht University, Subject: Network Optimization

and Graph Algorithms, Promotor: Prof.dr. Jan van Leeuwen M.Sc. in Computer Science – August 1989, Utrecht University, Supervisor: Prof.dr. Jan van

Leeuwen

ResearchThe research of Kant is mainly focused on transportation planning, linked to related processes as inventory management and retail operations. Research includes both primary and secondary transport, as well as operational and tactical planning. In the latter case, the goal is to optimize the frequency and delivery days towards the customer, while balancing the utilized capacity over the week and clustering the rounds per day. Kant has published over 20 papers in academic jour-nals, has over 150 citations in the last 7 years, and his h-index is 9. The research of Kant in the last years involved Master Thesis projects at leading companies like TNT, Schiphol, Heineken, Coca-Cola and ORTEC. Kant was awarded as runner-up for the Global Franz Edelmann Award 2007 (award for best applied optimization technology world-wide).

TeachingKant is responsible for the Master Course “OR/MS in Practice” at Tilburg University, involved in teaching at the TiasNimbas EMLog and TNT Go Academy for transport optimization, as well as in guest lectures at several other universities and institutes. Kant is involved in lectures at several academic and non-academic conferences and seminars. He is co-author of the recently appeared publication “Het Nieuwe Plannen”, based on the Dutch Logistic Price Award for ORTEC (2009).

Five Selected Publications1. Hoendervoogt, A., G. Kant and P. Hulshof, Heuristic Approach for the Inventory Routing

Problem with Workload Balancing, Working Paper, Tilburg University, forthcoming.2. Kant, G., M. Jacks and C. Aantjes (2008), “Coca-Cola Enterprises Optimizes Vehicle Routes

for Efficient Product Delivery”, Franz Edelmann Award Paper, Interfaces 38 (2008), pp. 1 – 11.

3. Kant G. (2006), “Ruim Baan! OR en IT in Transport en Logistiek”, Inaugural speech, Tilburg University, The Netherlands.

4. Poot, A., G. Kant, A.P.M. Wagelmans (2002), “A savings based method for real-life vehicle routing problems”, J. Oper. Res. Society 53 (2002), pp. 57 – 68.

5. Verweij, A.M. (2000), “Selected Applications of Integer Programming: A Computational Study”, PhD. Thesis, Utrecht University, Co-promotor.

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dr. ir. ing. M.J.P. (René) PEETERSAssistant Professor of Mathematics and Operations Research, Tilburg University

Education Ph.D. in Mathematics and Operations Research, June 1995, Tilburg University, Advisor: Prof.

Dr. Willem Haemers M.Sc. Technical Mathematics, June 1991, University of Eindhoven

ResearchThe research is done in the field of combinatorial optimization and combinatorial graph theory. Especially complexity issues and applications of combinatorial optimization and linear algebra techniques to graph theory have his attention. Together with Maaike van Krieken and Hein Fleuren he worked on the development of a solver for the set partitioning problem.

TeachingPeeters participates in a number of courses (Bachelor and Master level) as faculty in the Depart-ment of Econometrics and Operations Research in Tilburg University.

Five Selected Publications1. Haemers W. and R. Peeters (2010), The maximum order of adjacency matrices with given

rank, submitted to Designs, Codes and Cryptography. 2. Van Krieken, M., H. Fleuren and R. Peeters (2004), A langrangean relaxation based algo-

rithm for solving set partitioning problems, Center Discussion Paper 2004-44.3. Peeters R., The maximum edge biclique problem is NP-complete, Discrete Applied Mathe-

matics, 131, 651-654.4. Peeters R. and P.J.B. Galesloot (2002), Estimating daily fat yield from a single milking for

herds with an automatic milking system, Journal of Dairy Science, 85, 682-688.5. Peeters R. (2002), On the p-rank of adjacency matrices of distance-regular graphs, Journal

of Algebraic Combinatorics, 15(2), 127-149.

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dr. Tom VAN WOENSELAssociate Professor of Operations Management and Logistics (Chair in Transporation Planning under uncertainty)Executive Board Member European Supply Chain ForumMember of the OPAC Group board (responsible for Education portfolio)Member of the BETA Research School for Operations Management and Logistics

Education Ph.D. in Applied Economic Sciences (Operations Management) - January 2003, University of

Antwerp, Advisor: Prof. Dr. Nico Vandaele Doctoral Program in Applied Economic Sciences - July 2000, University of Antwerp, degree:

Magna Cum laude M.Sc. Applied Economic Sciences (Quantitative Economics) - July 1997, University of

Antwerp, UFSIA, degree: Cum laude

ResearchThe research is mainly focused on transportation planning under uncertainty and retail opera-tions. Despite numerous publications dealing with efficient offline routing scheduling methods, very few addressed the inherent stochastic and dynamic nature of reality. Consequently, we mainly work in a priori setting, with a strong focus on adding stochasticity and dynamics related to traffic congestion, customer demand, etc. into the company’s transportation decision problems. He published over 30 papers in academic journals (including Management Science, Production and Operations Management, Computers and Operations Research, Transportation Research, European Journal of Operational Research, Journal of Mathematical Modeling and Analysis, and International Journal of Production Economics) and several chapters in international books.

TeachingVan Woensel participates in a number of courses (Bachelor, Master, Phd level and Executive teaching) as faculty in Eindhoven and in the Université Catholique de Louvain. He also held visit-ing teaching appointments at the University of Antwerp (Belgium), Lessius University College (Belgium) and the MIT-Zaragoza Logistics Center (Spain).

Five Selected Publications1. Van Donselaar K., V. Gaur, T. Van Woensel, R.A.C.M. Broekmeulen, J.C. Fransoo, Ordering

Behavior in Retail Stores and Implications for Automated Ordering, Management Science, forthcoming

2. Gabali, O., T. Van Woensel, A.G. de Kok, C. Lecluyse and H. Peremans, Time-Dependent Vehicle Routing Subject to Time Delay Perturbations, IIE Transactions, forthcoming

3. Gür Ali O., S. Sayın, T. Van Woensel and J. Fransoo (2009), Pooling Information Across SKUs for Demand Forecasting with Data Mining, Expert Systems with Applications, Vol-ume 36, Issue 10, Pages 12340-12348

4. Van Woensel T. and F.R.B. Cruz (2009), A stochastic approach to traffic congestion costs, Computers and Operations Research, 36, 6, pp. 1731-1739

5. Van Woensel, T., R. Creten and N. Vandaele, Managing the environmental externalities of traffic logistics: the issue of emissions, Production and Operations Management journal, Special issue on Environmental Management and Operations, 2001, Vol. 10, nr. 2

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Prof.dr. L.A. (Lori) Tavasszy senior advisor Mobility & Logistics at the research institute TNO in Delft Professor in Freight and Logistics at the Delft University of Technology

Prof. dr. ir. L.A. Tavasszy (Lóri) is senior advisor Mobility & Logistics at the research institute TNO in Delft and Professor in Freight and Logistics at the Delft University of Technology. He studied Civil Engineering at the Delft University of Technology with specialisations in transport modelling and spatial development. He completed his PhD. study in 1996 on a strategic model of freight transport flows within Europe. His research has since then focused on the modelling of linkages between logistics, freight transport and spatial development.

He has extensive experience in project management for Dutch and European clients in the area of logistics, transport forecasting and policy analysis. Member of Association for European Trans-port; Chair of Committee, Freight & Logistics of the European Transport Conference; Scientific Committee Member Mo.Ve Mobility Forum (2003-2005); International Member of Transportation Research Board Freight Modelling Task Force (2005-2007); Board of Management Transport & Mobility Leuven; Expert Member of National Council for Transport, Waterways and Public Works; Member of ERTRAC (European Road Transport Research Advisory Council) Working Group on Long Distance Freight Transport; NECTAR (Network on European Communications and Trans-port Activities Research); Academic member of Logistics knowledge council of Dutch shippers' association EVO.

Reviewer for various Journals and conferences (ETC, TRB, ERSA, WCTR, TVW, TRAIL, JTEP, EJTIR, JTP, TRC); editorial board of EJTIR and Netherlands Transport Science journal, advisory board of ETRR. Awards: 1998 Yokohama Prize at World Conference for Transport Research in Antwerpen, Bel-gium Lectures on freight transport modeling and policy at the Faculty of Civil Engineering and Faculty of Systems Engineering and Policy Analysis of Delft University. Guest lectures abroad at several institutes (MIT Boston, MA; RAND, Santa Monica, Cal.; UCNL, London, UK; UGD, Gdansk Poland; Leuven University, Belgium; RUG, Groningen, NL, DTU Den-mark, ITMMA, UFSIA, Antwerpen University).

Five selected publications1. Tavasszy, L.A., Smeenk, B., C.J. Ruijgrok (1998), A DSS for modelling logistics chains in

freight transport systems analysis, International Transactions. in Operational Research, Vol. 5, No. 6, pp. 447-459. Republished in K. Button, P.Nijkamp, A. McKinnon (eds), Classics in Transport Analysis: Transport Logistics, Edward Elgar Publishers, 2003

2. Tavasszy, L.A., C.J. Ruijgrok, M.J.P.M. Thissen (2003), Emerging global logistics networks: implications for transport systems and policies, Growth and Change: A Journal of Urban and Regional Policy, Vol. 34 No. 4, pp. 456-472

3. Groothedde, B., C.J. Ruijgrok, L.A. Tavasszy (2005), Towards collaborative, intermodal hub networks. A case study in the fast moving consumer goods market, Transportation Re-search E, Vol. 41 Issue 6, pp. 567-583

4. Koike, A., L.A.Tavasszy, K. Sato (2009), Spatial Equity Analysis on Expressway Network Development in Japan, Transportation Research Record 2133, 46-55 Tavasszy, L.A, I.

5. Tavasszy, L.A., F. Combes (2010), Endogeneous value of time in freight transportation mod-els, in: van de Voorde, E., T. Vanelslander (eds.): Applied Transport Economics, a man-agement and policy perspective, Uitgeverij de Boeck: Antwerpen

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H.J. (Hans) Quakadvisor Mobility & Logistics at the research institute TNO in Delft Assistant Professor in Technology, Policy and Management, section Transport Poloicy and Logis-tics’ Organization at the Delft University of Technology

H.J. (Hans) Quak Ph.D. has been working at TNO Mobility and Logistics from 2007 on. He especially focuses on logistics in urban areas and the external effects. Besides he has been involved in several research projects on sustainable logistics and the influences of external factors (e.g. transport policy or climate change) on the logistics organization in companies. He was project manager of the Transumo-project ‘Transition towards sustainable urban freight transport’ and (co)authored several reports and papers on freight transport, logistics and (local) policy in these areas (e.g. logistics hotspots in the Netherlands, city logistics and road pricing). Hans is also appointed as assistant professor for one day a week at the Delft University of Technology (Technology, Policy and Management, section Transport Policy and Logistics' Organization).

Before, from 1997 to 2002 Hans studied Business Administration at the Erasmus University Rotterdam after which he started as a Ph.D. candidate at the Rotterdam School of Management in January 2003. In his Ph.D. research he focused especially on urban freight transport (city logistics), urban access restrictions, sustainability and retail logistics. Hans successfully defended his PhD thesis ‘Sustainability of Urban Freight Transport’ in March 2008. Hans published papers in international top journals, such as Journal of Operations Management (best paper 2007 finalist award) and Transportation Science. Next to the research activities, Hans was also responsible for courses in the International Business Administration program. Hans presented his research at several (international) conferences and published in international journals and (reviewed) books.

Five Recent publications1. Quak, H.J. and M.B.M de Koster (2009). Delivering goods in urban areas: How to deal with

urban policy restrictions and the environment, Transportation Science, 43(2), 211-227. 2. Quak, H. J. and M. B. M. De Koster (2007). Exploring retailers' sensitivity to local sustainabil-

ity policies. Journal of Operations Management, 25 (6), 1103-1122.3. Quak, H.J. (2010, forthcomming) Urban freight transport; the challenges in making it more

sustainable, in C. Macharis en S. Maria Melo (eds.) Sustainable city distribution, NECTAR. 4. Quak, H. J., J. Van Nunen, and N. Agatz (2009). Customized policies for sustainable urban

distribution, in E. Taniguchi and R. G. Thompson (eds.), City Logistics V, 335-350, NOVA Science Publisher, New York.

5. Quak H.J. and L.A. Tavasszy (2010, forthcoming). Customized solutions for sustainable city logistics; lessons learned after one year Binnenstadservice, in: J. van Nunen, P. Rietveld en P. Huijbregts (eds.) Transitions towards sustainable mobility, Springer, Berlin.

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