Shipment consolidation is one of main initiatives to reduce CO2 emissions and transportation cost. It reduces the number of shipments per customer and reduces transportation costs by using larger shipments. This paper investigates the temporal consolidation process in a central consolidation center in a make-to-order supply chain. This research was motivated by a case study of a design furniture company that has many suppliers and customers in large parts of Europe. Simulation was used to check the effect of a new and a special time-based temporal consolidation on the response time in outbound logistics. A soft delivery deadline that is less than the average lead time was used because of the long lead time. Arena Software was used to model the supply chain in order to find the best circumstances to use consolidation. Results showed that temporal consolidation could be more effective when order preparation time is with larger variability. The useful waiting is more when there is at least one order every four days. A formula that approximates the percent of reduced shipments was found. Furthermore, many shipments can be reduced without severely affecting the average response time. The value of the study is that it investigates consolidation problems in a high-mix low-volume environment that was overlooked by previous research.
Modeling Freight Consolidation in a Make-To-Order Supply Chain: A Simulation Approach
