A survey on obstacles and difficulties of practical implementation of horizontal collaboration in logistics

• Author: Franco Basso,Mikael Rönnqvist,Andrés Weintraub,Sophie D'Amours
• Published date: 01 May 2019
• DOI: http://doi.org/10.1111/itor.12577
• Date: 01 May 2019

Intl. Trans. in Op. Res. 26 (2019) 775–793

DOI: 10.1111/itor.12577

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RESEARCH

A survey on obstacles and difficulties of practical

implementation of horizontal collaboration in logistics

Franco Bassoa, Sophie D’Amoursb,MikaelR

¨

onnqvistband Andr´

es Weintraubc

aEscuela de Ingenier´

ıa Industrial, Universidad Diego Portales, Santiago, Chile

bD´

epartement de G´

enie M´

ecanique, Universit´

e Laval, Qu´

ebec, Canada

cDepartamento Ingenier´

ıa Industrial, Universidad de Chile, Santiago, Chile

E-mail: franco.basso@udp.cl [Basso]; sophie.damours@gmc.ulaval.ca [D’Amours];

mikael.ronnqvist@gmc.ulaval.ca [R¨

onnqvist]; aweintra@dii.uchile.cl [Weintraub]

Received 16 March 2018; receivedin revised form 6 June 2018; accepted 8 July 2018

Abstract

During recent years, horizontal collaboration in logistics has gained attention because of achieved potential

benefits such as cost reduction, an increase in fulfillment rates, and a decrease in CO2emissions owing to

reductions in traveleddistances. Successful real-world cases, however,are rare since horizontal cooperation in

logistics is not usually sustainable. This paper pays attentionto this paradox of the lack of cases and discusses

16 identified practical issues that could explain this phenomenon. We propose a taxonomy composed of

four categories categorizing the practical issues according to a value chain approach: design, planning and

operations,market/business, and behaviors. Furthermore, we proposeand discuss some measures to mitigate

these problems.

Keywords:collaborative logistics; horizontal collaboration; transportation;supply chain

1. Introduction

Horizontal collaboration in logistics has received increasing attention in past years, often driven by

the large potential in cost reduction, reduction of uncertainty, and environmental concerns (Ver-

donck et al., 2013; Du et al., 2016). Many articles deal with new methods in sharing principles and

joint planning in literature, though few articles report on successful implementation in practice. In

this article, we focus on practical issues in horizontal collaboration. We define horizontal collabo-

ration as cooperation between companies at the same level of a supply chain, for example, carrier

companies. Practical issues are meant to describe real-world problems stakeholders face when they

try to implement such collaboration.

The main goal of collaborative logistics is to achieve an improved logistic chain, ensuring that

the total fulfillment costs are smaller than the sum of the companies’ individual costs without

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2018 The Authors.

International Transactionsin Operational Research C

2018 International Federation ofOperational Research Societies

Published by John Wiley & Sons Ltd, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main St, Malden, MA02148,

USA.

776 F. Basso et al. / Intl. Trans.in Op. Res. 26 (2019) 775–793

collaboration. Examples of horizontal cooperation in logistics include group purchasing, use of

a common inventory location to share fixed costs, collaborative transportation (Quintero-Araujo

et al., 2017), and production lines sharing. Horizontal collaboration in logistics has been studied

in the maritime shipping (Sheppard and Seidman, 2001), disaster relief (Schulz and Blecken, 2010;

Ergun et al., 2014; Garrido et al., 2015), and airline fields (Oum et al., 2004; Garrette et al., 2009;

Weng and Xu, 2014). However, collaborative ground transportation is quite an unexplored area.

In theory, many benefits can be achieved with collaboration, chief among them are cost reduc-

tion and increasing fulfillment rate. On the social side, collaboration usually decreases the traveled

distance by carriers, which implies fewer emissions. In that way, collaboration encourages green

logistics and reduces negative environmental impacts. These benefits have been shown in method-

ological and case study scientific papers, but few applications have been reported and captured

expected benefits. For instance, in Audy et al. (2011), a collaborative transportation agreement is

studied for the furniture industry. Even though theoretically important savings could be perceived

by collaboration, the negotiation to establish how benefits were shared was impossible to carry

out. One of the most important challenges in horizontal collaboration has been to agree on the

sharing principles. Recently, Guajardo and R¨

onnqvist (2016) published an extensive survey in cost

allocation methods in transportation collaboration. In Frisk et al. (2010), eight companies analyzed

the potential to collaborate with Swedish forest transportation authorities to obtain an expected

saving up to 14%. Nowadays, this agreement is no longer in operation. Suzuki and Lu (2017) state

that “two real-world cases in which collaborations were attempted based on the idea similar to that

of our concept, their results may not be used to assess the cost-saving potential of the concept,

because in neither of these two cases, the idea was fully implemented.”

This raises a need for a better understanding of the underlying reasons for this phenomenon.

We would like to better comprehend why collaboration has so many advantages in theory, but is

rarely successful in practice. We have conducted an extensive literature review enhanced with expert

knowledge. We have identified what we have called practical issues in logistics collaboration. To

the best of our knowledge, no papers deal specifically with practical issues in horizontal logistics

collaboration.

The literature is rich in vertical cooperation (Huang et al., 2018; Liu et al., 2018), butthe environ-

ment is quite different. A recurrent example of vertical collaboration is found in the Collaborative

Planning Forecasting and Replenishment (CPFR), where manufacturers and retailers share infor-

mation and make common forecasting to improve demand visibility, thereby improving supply

chain efficiency. We can anticipate that some practical issues in vertical collaboration apply also

to horizontal collaboration. For a complete review of supply chain collaboration, including some

practical issues, we refer the reader to Kanda and Deshmukh (2008).

Following a supply chain perspective, we propose a taxonomy for the practical issues with cat-

egories: design, planning and operations, business/market, and behaviors. Design practical issues

are described as challenges of building efficient, stable, sustainable, and fair collaborations. The

planning and operational practical issues are related to the difficulties arising from the implementa-

tion of such collaboration. The business/market practical issues comprise the collaborative impact

on the firms’ strategical level and explain how agreements impact the whole market. Finally, we

understand the behavioral practical issues as the human relationships challenges.

This classification is organized from a macro- to microperspective with a supply chain point of

view. We first focused on practical issues coming from the design process, that is, issues caused

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2018 The Authors.

International Transactionsin Operational Research C

2018 International Federation ofOperational Research Societies