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The impact of logistics uncertainty on sustainable transport operations

Vasco Sanchez-Rodrigues, Andrew Potter and Mohamed M. Naim
Cardiff University Innovative Manufacturing Research Centre, Cardiff, UK
Abstract
Purpose The purpose of this paper is to rene a logistics triad uncertainty model taking a supply chain perspective, to determine and assess the different causes and sources of supply chain uncertainty that impact on the sustainability of the UK road freight transport sector. Design/methodology/approach To clarify the link between sustainability and transport uncertainty, a methodological triangulation strategy is applied combining the results of eight focus groups and an online structured questionnaire. Findings The ndings indicate that the main drivers impacting the sustainability of transport operations are delays, variable demand/poor information, delivery constraints and insufcient supply chain integration. The consequence of these problems is to reduce the efciency of transport operations. Research limitations/implications The model has been rened based only on participants perceptions. Therefore, the nding should also be veried through the investigation of real-world situations. Moreover, the transport uncertainty model needs to be incorporated within a wider business process re-engineering approach to evaluate solutions to reduce transport uncertainty within supply chains. Practical implications The ndings further strengthen the understanding of the main uncertainty sources within supply chains in the UK. The internal root causes of uncertainty can be mitigated while external issues have to be accommodated; therefore, mitigation techniques, methods and strategies for reducing external and internal supply chain uncertainty in transport operations need to be identied through the research. Originality/value This paper determines the industry perceived economic and environmental risks associated with transport operations in four UK sectors. Keywords Transport management, Risk management, Sustainability, Supply chain management, Freight forwarding, United Kingdom Paper type Research paper

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Received March 2009 Revised September 2009 Accepted October 2009

Introduction Supply chain uncertainty is a major obstacle to the delivery of superior customer value (Davis, 1993; Mason-Jones and Towill, 1998). Manufacturing companies in the supply network will typically mitigate variability by investing in more robust information and communication technology (ICT) systems or else buffer themselves against such variations through inventory. Either way, uncertainty leads to increased total costs. Traditionally, the focus of managing uncertainty has been on manufacturing operations and comparatively little attention has been paid to the causes and consequences of uncertainty within freight transport operations. However, it is being increasingly recognised that transport represents an important part of the supply chain (Stank and Goldsby, 2000) and that the performance of transport can impact upon the wider supply chain (Tracey, 2004). Consequently, there are requirements for increased

International Journal of Physical Distribution & Logistics Management Vol. 40 No. 1/2, 2010 pp. 61-83 q Emerald Group Publishing Limited 0960-0035 DOI 10.1108/09600031011018046

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exibility in transport services to meet a variety of customer demands, and the involvement of the shipper, carrier and customer as part of a logistics triad (Bask, 2001; Naim et al., 2006). Uncertain events can affect the ability of transport operations to satisfy customers. Therefore, a need exists to codify and examine the causes of freight transport uncertainty as a means of improving the effectiveness of management. A conceptual model that categorised the causes of supply chain uncertainty impacting on transport operations has previously been developed (Anon, 2008). At this stage of our research, the relative importance of these causes of supply chain uncertainty needs to be determined by measuring the level of risk that they represent for transport operations. Our aim is to rene this model by taking a supply chain perspective, and assess the risk that different causes and sources of supply chain uncertainty have in terms of the sustainability of road transport operations in a UK context. To do this, the paper proceeds by introducing the literature on supply chain uncertainty. After that, the potential links between supply chain uncertainty and sustainability are established through the application of a conceptual framework previously developed in the green logistics literature. The methodology applied to undertake the research is explained, and subsequently, the results of the study are presented and analysed. In the last section of the paper, the main research ndings are highlighted together with further research opportunities. Supply chain risk, vulnerability and uncertainty Sometimes the term uncertainty is confused with risk, so it is important to clarify how these two concepts differ. According to van der Vorst and Beulens (2002):
Supply chain uncertainty refers to decision making situations in the supply chain in which the decision maker does not know denitely what to decide as he is indistinct about the objectives; lacks information about its environment or the supply chain; lacks information processing capacity; is unable to accurately predict the impact of possible control actions on supply chain behaviour; or, lacks effective control actions.

Uncertainty occurs when decision makers cannot estimate the outcome of an event or the probability of its occurrence. By contrast, risk is a function of outcome and probability and hence it is something that can be estimated. If the likelihood that an event could happen is low but the impact of that event can have a highly detrimental impact on performance, its occurrence represents a signicant risk. However, uncertainty increases the risk within supply chains, and risk is a consequence of the external and internal uncertainties that affect a supply chain. A considerable amount of research has been undertaken on uncertainty in supply chain management, but in such work transport has typically been regarded as a marginal activity within supply chains and has not been considered explicitly. Davis (1993) dened three distinctive sources of manufacturing uncertainty shippers, manufacturing and customers. From the work of Davis (1993), Mason-Jones and Towill (1998) developed the uncertainty circle model as a way of dening the different sources of uncertainty that affect supply chain performance. They conrmed that uncertainty is a strategic issue in supply chains, and suggested that it originates from four main sources: the supply side, the manufacturing process, the control systems and the demand side (Mason-Jones and Towill, 1998). Subsequently, the uncertainty circle model has been extended and adapted. van der Vorst and Beulens (2002) develop

a typology of supply chain uncertainty adding three dimensions to each source of uncertainty quantity, quality and time. Geary et al. (2002) identify the main issues associated with different types of uncertainty based on research from the automotive sector. They link the causes and effects of uncertainty or supply chain disruption, such as data errors or excess variances. Furthermore, Peck et al. (2003) add a dimension of exogenous events to the uncertainty circle, e.g. political problems and/or natural disaster that can cause unexpected disruptions within the supply chain. Transport uncertainties in the supply chain can increase risk and vulnerability. Based on the aforementioned criticism regarding transport in these uncertainty frameworks and the logistics triad concept, Anon (2008) developed the logistics triad uncertainty model. As shown in Figure 1, this model includes ve uncertainty sources that can have a negative effect on transport operations. This represents an expansion of the literature on manufacturing uncertainty. The uncertainty types are dened as: (1) Shipper. Any uncertainty originating from of the point of despatch for the goods, which directly impacts upon transport performance. These may relate to raw material sourcing, the production process or the activities involved in the loading process. (2) Customer. Any uncertainty initiating from the receiver of products, e.g. forecasting and ordering products or any delivery restrictions imposed by the customer. (3) Carrier. Any inefciency originated by the carrier and directly affecting the delivery process, such as vehicle breakdown or insufcient drivers.
External uncertainty Control systems External uncertainty

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Carrier Supplier Customer

External uncertainty Physical flow Source: Anon (2008) Information flow

External uncertainty Relationships

Figure 1. Logistics triad uncertainty model

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(4) Control systems. Any issues originated by inadequate and fragmented ICT systems within the logistics triad, or the lack of physical quality control systems. (5) External uncertainty. Any disturbance caused by external factors that are not under the control of the supply chain, including unplanned road congestion and volatility of fuel prices. Linking supply chain uncertainty to sustainability Recently, the link between the supply chain and the sustainability of transport operations has been established at a macro-level. McKinnon (2007) developed a framework where six sustainability ratios link supply chain processes with the CO2 emissions of freight transport operations (Figure 2). However, these ratios can also be inuenced by uncertainty in freight transport at an operational level. In the specic case of road freight transport, as we can shown Figure 2, there are six ratios that can impact on the level of CO2 emissions of transport operations. These ratios are handling
Outputs Weight of goods consumed Handling factor Weight of goods transported Average length of haul Total tonne-Km Modal split Key ratios

64

Road tonne-Km

Average load on laden trips Average % of empty running

Total vehicle Kms

Fuel efficiency Energy consumption

Figure 2. Framework for analysing opportunities for CO2 reduction

Carbon emissions Source: McKinnon (2007)

factor (the number of links in the supply chain), average length of haul, modal split, average load on laden trips, average empty running and fuel efciency (McKinnon, 2007). Transport uncertainty can have a negative impact on these key ratios: (1) Handling factor. This is affected by supply chain structure. At an operational level inappropriate sourcing in terms of supplier unreliability and wrong location (Christopher and Lee, 2004; Giunipero and Eltantawy, 2004), problems in supplier capacity (Cavinato, 2004) and location and storage uncertainty (van der Vorst and Beulens, 2002; Fowkes et al., 2004) can have a negative impact on supply chain structure. These can make the information ow and communication between supply chain partners less transparent and reliable. (2) Average length of haul. The efciency of vehicle routeing inuences this ratio. A rigid routeing plan can lead to inefciencies in the transport routeing process (Naim et al., 2006). This can cause diversions due to unplanned congestion. Also, insufcient eet capacity can be a cause of disruption of transport operations, delaying the delivery process to customers (Fowkes et al., 2004). This can have an adverse effect on the frequency and ultimate on the length of delivery. (3) Modal split. The choice of transport mode can affect this ratio. Carriers usually need to interlink their operations with other less polluting transport modes like rail and water. Lack of communication between 3PLs and other transport modes can inhibit opportunities to achieve modal shift (Choy et al., 2007). Moreover, unpredictability in arrival times and reduction in the efciency of multimodal hubs can inhibit the split from road to rail (Fowkes et al., 2004). (4) Average load on laden trips. This ratio can be affected by two factors: vehicle utilisation on laden trips and vehicle carrying capacity by weight and volume. If carriers have single vehicle conguration, carriers are forced to choose a type of vehicle which may not always match the customer requirements in terms of volume and commodity type (Naim et al., 2006). Also, transport delays due to inefciency at the shipper and/or carrier can have a negative effect on the average load on laden trips (McKinnon and Ge, 2004), since due to delays a potential full load in a single vehicle can become two half-full vehicles. (5) Average empty running. The level of back haulage can affect this ratio. If demand for transport is not managed in a holistic way, empty miles between destination of inbound shipments and origin of outbound shipments can increase (Esper and Williams, 2003), and as a result, the overall vehicle utilisation can decrease. The level of back haulage is a key factor in achieving high levels of eet utilisation. Difcult and non-standard orders in terms of location of destinations can have a negative effect on the level of back haulage (Boughton, 2003; Fowkes et al., 2004; Vickery et al., 1999). (6) Fuel efciency. The degree of exposure to trafc congestion can affect this ratio. Road congestion is increasingly affecting transport operations (McKinnon and Ge, 2004). If congestion levels are predictable, then this can be planned for, but in many cases congestion results in variable and less predictable travel times and hence a less reliable service (van Schijndel and Dinwoodie, 2000; Golob and Regan, 2001). However, when a lorry is running at low speed because of high levels of trafc congestion its fuel efciency can be negatively affected.

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Supply chain uncertainty can signicantly impact on the efciency of transport operations. Inefciencies in road freight transport can cause an increase in the level of CO2 emissions in supply chains. Therefore, the mitigation of supply chain uncertainty within transport operations can minimise the risk of disruptions in the delivery process, so transport resources can be utilised in the most efcient and less polluted manner. This paper aims to determine and assess the causes and sources of supply chain uncertainty that impact on the sustainable performance of the UK road freight transport sector. Method The research was undertaken in two phases. In Phase 1, a series of eight focus groups were run to explore the root causes and sources of supply chain uncertainty in transport operations. In Phase 2, a wider scale survey was undertaken to assess the impact that the uncertainty sources, derived from the focus groups phase, have on the sustainability of transport operations. In order to achieve an appropriate balance between research rigour and industrial relevance, a methodology triangulation research strategy was applied as recommended by Easterby-Smith et al. (1993), New and Payne (1995), Arlbjorn and Halldorsson (2002) and Mangan et al. (2004). In Phase 1, a series of eight focus group discussions were held from late March to early July 2007 in six different locations across the UK. An invitation letter together with an information pack that described the aim of the focus groups was sent to 192 potential participants. The invitees were from manufacturers, retailers, 3PLs, technology providers, trade associations, government and logistics consultancy companies were initially invited. From the initial mailing, 26 positive responses were received. A follow-up process was undertaken. This consisted of a telephone call to all the invitees that did not respond in the rst place followed by an electronic invitation sent by email. As a result, the nal number of participants was 65, giving a response rate from 192 invites of 34 per cent. The aim was to have eight participants per focus group, as this represents the optimum size according to Krueger (1998). In reality, the size of focus group varied between 5 and 12 (Morgan, 1998). Each session ran from 9:30 a.m. till 12:30 p.m. and had a coffee break of 20 minutes. At least two of the authors were present, one to facilitate and the other to take notes. Audio recordings were also taken and, with the notes, formed a written transcript of each focus group. In each focus group, the question posed was: Q1. What are the most important causes of uncertainty that inhibit effectiveness of your transport operations? When this question was asked, each participant wrote their suggestions on Post-It notes, one comment per note. After that, each participant presented and discussed individually their notes, while the other group members were encouraged to intervene in the discussion so ideas may be developed further. In this discussion, participants said why their selected uncertainty causes have a signicant impact on their operations. The group as a whole then categorised the individual Post-It notes into clusters. We stated to the participants that, given the phrasing of the question posed, we were assuming that the number of Post-It notes reected each issues relative importance. Although no one objected to this assumption, the facilitator ran

a discussion asking participants to conrm that the largest cluster represented the biggest challenge for their operations and/or industrial sectors. The clusters form the main unit of analysis of this paper. The data were synthesised using a two-way table to compare individual uncertainty causes with top-level uncertainty clusters. This two-way table had two data levels, aggregated, which included the number of Post-It notes per uncertainty cluster, and disaggregated, which calculated the number of Post-It notes per sector. In order to add more depth to the analysis the data from the two-way tables was triangulated with the information from the transcribed audio recordings. Also, clusters were compared with the participants sector to see to what extent the participants background may inuence their perceptions. The sector classication is based on the UK Standard Industrial Classication codes (2007). In Phase 2, an online questionnaire was designed based on the clusters or sources of transport uncertainty derived from the focus groups. An online questionnaire was preferred over a mail questionnaire, since the sample targeted had access to internet and for participants it could be faster to ll an online questionnaire rather than a postal questionnaire. Also, the cost of the online questionnaire was 60 per cent of the cost of postal questionnaire. In the questionnaire, practitioners were asked to: . Provide background information about their companies: annual turnover in pounds, percentage of that transport cost represented from the annual turnover, industrial sector and supply chain role (shipper, carrier or customer). . Select and rank the top four clusters of uncertainty that impact more on their businesses, based on the 15 uncertainty clusters found in the focus groups. . Assess the economic and environmental impact that their top four uncertainty clusters selected have on their companys transport operations using a ve point-Likert scale from 1 low impact to 5 high impact. . Evaluate the frequency of occurrence for their top four uncertainty clusters. A ve-item frequency scale was given daily, weekly, monthly, quarterly and annually. . List up to ve analysis and design tools that your company uses to improve the efciency of logistics operations. This was not exclusively limited to ICT solutions. Additionally, a denition of each uncertainty cluster was available in the electronic survey, again based on the focus group ndings. These denitions were developed as an outcome of the focus groups. Table I shows the denitions included as part of the online questionnaire. A total of 15 practitioners were selected from focus group participants to pilot the online survey rst. Postal invitation letters were sent, and eight pilot participants responded to the online pilot questionnaire. As a result of the pilot, a number of changes were made to improve the readability, relevance and practicality of the survey. For the full survey, a total of 5,000 companies were identied by using the Financial Analysis Made Easy (FAME) database, from all industrial sectors where the companies would be expected to either move goods or be directly involved in the movement of goods. The only constraint imposed was a minimum company size of 250 employees. An online survey was developed, more details of which can be found in

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Cluster Delays

Denition

68

Table I. Denitions of the 15 logistics uncertainty clusters found in the focus groups

Delays occur when a delivery process takes place later than scheduled. Delays are mostly caused by three factors: road network congestion, supply disruptions, and operational problems in unloading and loading Demand and The demand from customers may be highly volatile and sudden changes information issues may occur due to seasonality and unexpected promotions. The main causes of this include demand volatility, poor demand forecast accuracy and lack of information visibility Delivery constraints Delivery constraints are restrictions in the delivery process that can limit normal transport operations. Delivery constraints are a result of three main factors: delivery curfews at the customer facilities, restricted delivery windows imposed by the customer, and limited storage capacity at the customer depots Rigid infrastructure The infrastructure of the road and rail network is not exible in the short term and so inhibits the performance of transport. Rigid infrastructure can occur at company, supply-chain and macro-level Supply chain Integration within the logistics triad allows a holistic planning and execution integration of all the logistics triad activities in the transfer of information and materials ow. Insufcient supply chain integration lessens the visibility and transparency of information within the triad. Uncertainty occurs when the logistics triad processes are not properly synchronised, the communication and information ow is not effective. The main factors that cause a lack of supply chain integration within the triad are high customer demand for transport exibility, disconnections between sales and logistics departments at the company level and lack of integration between carriers and customers Cost Cost uncertainty relates to staff and asset utilisation. Macro problems like driver shortages, volatility of fuel prices and congestion charges can considerably affect cost. Internally, companies have operational issues that negatively impact on cost as well Technology The logistics triad members can have different levels of technology capability causing unavoidable operational distortions in the ICT ow and problems in the delivery process Legislation Legislation determines the basic rules of the transport sector in the UK. It must be sufciently exible so companies do not have constraints in terms of staff and assets. However, legislation can impose restrictions on logistics companies that can affect as usual trends Complexity Complexity can increase if there are many variables involved in the delivery process, leading to uncertainty. Causes include different and diverse requirements from customers and drop deliveries to diverse portfolio of customers Inventory management An ineffective and fragmented inventory management approach can cause issues operational problems in transport originating from a lack of stock available within the supply chain, and sub-optimal inventory policies imposed by the customers Lack of communication Poor communication within the logistics triad at all levels leads to information uncertainty within the logistics triad. Serious operational problems can originate through: lack of communication regarding delivery failure from carrier to customer insufcient driver-carrier communication communication errors between shipper and customer that cause delivery refusals (continued)

Cluster Returns

Denition

Any operational issues originating from the reverse supply chain, including processes like recycling, return of defective products and logistics equipment, and remanufacturing Global-sourcing Global sourcing imposes a challenge to the logistics triad, since the high dispersion of raw materials increase the length of the supply chain. Causes of uncertainty include operational problems of information visibility, insufcient stock and quality of products Lack of managerial In the company boardroom, there may not be a clear vision of the logistics vision consequences from strategic decisions. Logistics as a strategic activity is not embedded in other areas such as sales, design and manufacturing Inter-modal operations A lack of t between different transport modes, e.g. rail and road, can cause operational problems in inter-modal operations. Also, operational issues originating by rigid inter-modal facilities can cause problems in the delivery process

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Table I.

Appendix 1. The initial invitation letter was directed to a person that from the company board identied in the FAME database, since companys logistics manager and/or director names and contact details are not available in FAME. However, it was requested that the details be passed to a person responsible for leading the logistics department of the company. The survey was available between December 2007 and February 2008. Follow-up activities included two e-mail reminders plus a sample of 25 per cent of the population was contacted by telephone. As part of this process, the names and contact details of the person in charge of the logistics function of the company was obtained for at least 30 per cent of the companies, and communication was directed to these people instead. By February 2008, 56 practitioners had completed the survey. As Table II shows, responses were only received from a limited range of industrial sectors, with four sectors particularly well represented. Based on the sectors that responded, the response rate of the survey was just 3.6 per cent. While this is low, we are able to also use the focus group data to give added depth to the analysis. Other supply chain researchers also combined focus groups and survey ndings where a low-response rate has been obtained (for example, New and Payne, 1995). In Table II, we have indicated the four sectors where we have used focus group data for extra depth.
Description Grocery manufacturing Retail Road freight transport Automotive Ofce Machinery Chemical Electrical Furniture Metal Total Focus group data Yes Yes Yes Yes No No No No No Population 248 153 291 161 35 212 110 161 187 1,558 Responses 10 11 20 9 1 2 1 1 1 56 Response rate (%) 4.0 7.2 6.9 5.6 2.9 0.9 0.9 0.6 0.5 3.6

Table II. Survey sample

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Furthermore, as recommended by Armstrong and Overton (1977), in order to estimate the degree of non-response bias of the survey, two different non-parametric statistical tests have been run: the independent-samples t-test and Spearmans correction. The independent-samples t-test was used to compare the means between two data samples, the early respondents and the late respondents. The result of this test was that not signicant difference between the two samples and that point towards the absence of non-response bias. The Spearmans correction was applied to test the relationship between the rankings of all the uncertainty clusters selected by the 56 participants and the number of days they took to response to the online questionnaire. This test did not found a signicant correction between the rankings and time to response to the survey, and as a result, non-response bias was not found. To analyse the data, the 56 responses were categorised depending on their company logistics cost and industrial sector. The total rankings of the 15 uncertainty clusters were calculated. After that, the economic and environmental risk was calculated from the multiplication of frequency and impact (Pug and Romisch, 2007). In order to assess the relative importance of the 15 uncertainty clusters, the risk that each of them represents was measured. In order to take account of the average as well as the variation, the means and standard deviations of the risk scores were calculated for each of the 15 uncertainty clusters. To calculate each individual risk score, the impact was multiplied by the frequency. The former was already based on a numerical Likert scale while, for the latter, the times were converted into a numerical scale where daily was given a score of 5 and annually a score of 1. These ndings were then analysed in more detail based on the sectors of the respondent companies with a focus on those sectors with both better response rates in the survey (between 4 and 9 per cent) and comprehensive focus group results to provide extra depth to the analysis. As seen in Table II, these sectors are grocery manufacturing, retail, road freight transport and automotive. Frequency versus economic and environmental impact matrices were drawn, with the ndings broken down by sector. Moreover, a categorisation of the tools that companies applied to mitigate uncertainty was undertaken and an analysis based on the links between the main four uncertainty clusters found and the mitigation tools categories has been carried out. Overall results In analysing the overall ndings, we rst consider the ranking of the uncertainty clusters; Figure 3 shows a comparison of the results from the focus groups and survey. The results shown in Figure 3 are based on the total number of Post-It notes from the focus groups and the rank given by the survey participants. In order to compare the focus group and survey overall ndings, the number of Post-It notes per uncertainty cluster from the focus groups and the sum of the ranking from all the survey respondents for each uncertainty cluster were both normalised to a scale from 0 to 100. The uncertainty cluster with more Post-It notes and higher survey ranking was given a normalised frequency of 100. For both methods, this cluster was delays. From this, the normalised frequencies for the other 14 uncertainty clusters were calculated taking delays as a reference point. According to the focus groups results, the four main uncertainty clusters are delays, demand and information issues, delivery constraints and insufcient supply chain integration. The survey conrms these as the transport uncertainty clusters in the

Demand and information issues

Insufficients supply chain integration

Inventory management issues

Rigid infrastructure

Insufficient communication

Lack of logistics vision

Delivery constraints

Global-sourcing

Complexity

Technology

Inter-modal operations

Legislation

Returns

Delays

Cost

100 90 80 70 60 50 40 30 20 10 0

Normalised frequency

Normalised survey rank Normalised focus group rank

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Figure 3. Normalised rankings from focus group and survey results

Uncertainty cause

UK operations. However, there are some slight differences between the focus group and survey results. In the focus groups, insufcient supply chain integration is the third most relevant uncertainty cluster followed by delivery constraints whereas, in the survey, delivery constraints as an uncertainty cluster is the third most important and insufcient supply chain integration is the fourth. Moreover, in the survey results, complexity and legislation have more weight than in the focus groups. The results for economic and environmental sustainability are shown in Table III and are taken from the survey. The economic and environmental risk scores of each of the 56 responses were calculated by multiplying their responses on frequency and impact. The means presented in Table III were calculated by averaging the economic and environmental risk scores of the 56 responses. The economic risk measures have the same pattern as the normalised rankings of the uncertainty clusters shown in Figure 3. However, the environmental risk scores are generally lower and their rank is also different. Delays as an uncertainty cluster have the highest economic and environmental mean scores, but have also the highest standard deviations in the two cases.
Economic risk Mean SD 18.4 15.4 16.6 16.3 17.1 14.6 14.4 15.7 11 11.4 16.3 17.6 11.8 10.5 8.3 10.2 8.8 7.4 9 8.8 8 8.1 7.8 4.8 4.7 5.4 5.2 4.5 3.2 2.3 Environmental risk Mean SD 16.3 12.6 16.1 16.1 13.8 13.4 12.6 13.9 6.3 11.7 14.8 18.4 9.5 16.3 10 10 8.1 7.3 9.1 7.7 7.3 7.3 7 3 4.9 5.1 5.4 3.5 5 2.5

Uncertainty cluster Delays Demand and information Insufcient SC integration Delivery constraints Cost Complexity Lack of communication Legislation Inventory management issues Global-sourcing Technology Returns Rigid infrastructure Lack of logistics vision Inter-modal operations

n 34 28 25 22 18 17 15 13 10 9 6 5 5 3 3

Table III. Mean and standard deviation of the economic and environmental risk scores

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This means that even if this uncertainty cluster has a high mean, there is more dispersion within its 34 responses. Therefore, there are a number of respondents that perceive delays representing lower economic and environmental risk for their transport operations than the average response. On the other hand, demand and information issues as an uncertainty cluster has lower economic and environmental mean risk scores and higher standard deviation than insufcient supply chain integration, delivery constraints and cost. In addition, in terms of environmental sustainability, the risk scores are lower than the economic risk measures. Apart from that, there are other signicant differences between the economic and environmental mean risk scores. Demand information issues as an uncertainty cluster has a lower mean and a higher standard deviation than delivery constraints, cost and complexity. Another relevant trend in the environmental mean risk score trend is that technology and returns have considerably high means and low standard deviations. However, these two uncertainty clusters have only ve and six responses, respectively. Moreover, global sourcing, rigid infrastructure and inter-modal operations have the lowest economic and environmental mean risk scores and the lowest standard deviations. These three uncertainty clusters do not seem to represent a considerable challenge for the vast majority of the sample. Sectoral analysis of uncertainty As noted earlier, it is possible for four sectors to compare and contrast the ndings, based on the survey and the focus group results. These sectors are automotive, grocery, retail and road freight transport. It is important to clarify that the grocery sector is formed by manufacturers of grocery products and the retail sector includes retail companies that distribute and sell fast moving consumer goods (FMCG), clothing and grocery products. It is the intention to use the survey results to evaluate the risk scores for each of the top four uncertainty clusters, using the focus group ndings to provide more depth of understanding to aid the analysis. Frequencies are ranked as high, medium and low, where ranks daily and weekly are high, monthly is medium and quarterly and annually are low. As such, the risk analysis is more qualitative in nature. Delays Figure 4 shows the risk assessment for delays for the four sectors. Generally, delays occur daily or weekly and have a high economic impact. According to the survey participants, delays seem to have higher economic than environmental impact on transport operations in the automotive, grocery and retail sectors. However, the only exception to this is the road freight sector, where delays are perceived as having equally high economic and environmental impact. This can be explained by the fact that delayed vehicles missed the load allocated to them, so this originate the needed of extra trips that add into the total transport cost and the CO2 emissions. Also, delays occur very frequently in the grocery, retail and road freight sectors, whereas the frequency of this uncertainty cluster is lower in the automotive industry. In the focus groups, participants from these sectors provided the root causes of delays. In the case of the automotive sector, delays were caused primarily by two factors, lack of reliability on the delivery process at the carrier and unplanned congestion. The carrier moving components for this sector does not communicate failures on time to the manufacturer and does not have an effective system in place to predict unplanned

Frequency L M H L

Frequency M H

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H Environmental impact Economic impact

Automotive Retail

Grocery Road freight 100% 80% 60% 40% 20% Percentage of responds 0%

Figure 4. Economic and environmental impact and frequency of delays

congestion. In the grocery, retail and road freight transport sectors, the factors impacting on delays are failures at the shipper side and disruptions in the loading and unloading processes. Vehicles need to wait for the load longer than advised at loading bays, since often the product in not ready for despatch. Also, vehicles are usually warehouses on wheels (to quote one participant) waiting for the products to be unloaded. If a vehicle is held at loading and/or unloading points, this can affect the next delivery scheduled for that vehicle and can originate the need for an extra trip. Demand and information issues According to the survey participants, demand and information issues have higher economic than environmental effect on transport operations in the grocery, retail and road freight sectors (Figure 5). However, in the automotive sector, 100 per cent of respondents perceive this uncertainty cluster as having a very high economic and environmental impact on transport operations. This can be explained by the fact that product demand uncertainty can affect vehicle demand in grocery and retail, but through the application of transport consolidation this problem can be mitigated. Also, demand uncertainty affects the inventory holding cost more than the transport cost. In the automotive sector, transport operations are more specialised, so there are less opportunities to consolidate deliveries. Moreover, demand and information issues happen very frequently in all the sectors that took part in the survey. Most of companies have continuous replenishment or just-in-time delivery as a supply chain strategy while retailers offer very frequent promotions to the end consumers. From the focus group data, the root causes of variable demand and inaccurate information in transport operations are derived. In the automotive sector, demand and information issues originate primarily by two factors, changing business patterns at

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H Economic impact

Frequency L M H L

Frequency M H

H Environmental impact Grocery 100% 80% Retail Road freight 60% 40% 20% 0% Percentage of respondents

74

Figure 5. Economic and environmental impact and frequency of demand and information issues

Automotive

the strategic level and lack of demand accuracy. The business rules in this industry can change very frequently, and the source of raw materials can vary depending on how the total cost varies. This can greatly affect transport operations in this industry. Also, the lack of supply chain visibility can affect the accuracy of the demand forecast, since the rst and second tier suppliers need to estimate the demand for products, which produces demand amplication throughout the supply chain. In the grocery and retail sectors, the factors inuencing more on demand and information issues is daily volume changes on the customer requirements, because the retailers very often offer promotions to the end consumers and these promotions are not properly communicated to the carrier and the grocery manufacturer. Furthermore, in the retail sector, there are also other root causes of uncertainty, e.g. lack of information visibility and sub-optimal inventory policy. The communication, particularly in regards of management of demand forecast processes throughout the logistics triad, is often not the best. Delivery constraints Figure 6 shows a risk assessment of delivery constraints for the four sectors studied in more detail. With the exception of the automotive sector, delivery constraints happen daily or weekly and have a high-economic impact. Also, in the grocery and retail sectors, delivery constraints have an equally high proportion of respondents that perceive delivery constraints having a high-economic impact and high-environmental effect on transport operations. In the road freight transport sector, 88 per cent of the respondents perceive delivery constraints having a high impact on the economic performance of their companys transport operations whereas 100 per cent of respondents think that this uncertainty cluster has a high impact on the environment. However, in the automotive industry, more respondents think that delivery constraints have more

Frequency L M H L

Frequency M H

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H Environmental impact Economic impact

Automotive Retail

Grocery Road freight 100% 80% 60% 40% 20% Percentage of respondents 0%

Figure 6. Economic and environmental impact and frequency of delivery constraints

impact on the environment than the economic performance of their company. In the grocery, retail sectors and road freight sectors, due to delays at unloading bays at stores, vehicles cannot achieve their scheduled backloads, so extra trips are needed to react to this issue. This has a direct effect on cost and CO2 emissions. On the other hand, in the automotive sector, delivery restrictions are less critical to the performance of transport operations, since there are less volume of vehicles arriving to loading and unloading bays, so the queuing time could be much less. Next, the root causes of delivery constraints are briey explained. In the automotive sector, delivery restrictions originate primarily by inefciencies within the delivery process at load consolidation locations. These inefciencies can make the vehicles miss backloads scheduled in the initial plan, so extra trips are needed. In the grocery and road freight transport industries, the factors impacting more on this uncertainty cluster are delivery curfews at stores located in urban areas and limited storage capacity within secondary distribution channels. This originates the need for tighter and tighter delivery windows that ultimately have a negative effect on subsequent scheduled trips. Therefore, this can also generate the need for unnecessary extra trips. Furthermore, according to the focus groups participants, the retail sectors usually do not perceive the impact that delivery restrictions have on other members of the logistics triad. This is because, they impose delivery windows on their partners, but they do not have the opportunity to see the consequence that this delivery restriction has on the overall performance of the logistics triad. Insufcient supply chain integration As can be shown in Figure 7, most of the survey participants from the road freight sectors perceive insufcient supply chain integration having an equally very high economic and environmental effect on their transport operations. In the automotive

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H Economic impact

Frequency L M H L

Frequency M H

H Environmental impact Grocery Road freight 100% 80% 60% 40% 20% Percentage of respondents 0% Retail

76

Figure 7. Economic and environmental impact and frequency of insufcient supply chain integration

Automotive

sector, a higher number of respondents perceive insufcient integration having a high impact on economic performance than on environmental performance. The grocery sector presents a different trend to the retail sector, 87 per cent of the respondent perceives insufcient supply chain integration to have a high-environmental impact whereas 71 per cent of them think that this uncertainty issue has a high-economic impact. On the other hand, in the retail sector, 50 per cent of respondents think that insufcient supply chain integration has a high economic and a environmental impact on transport. One explanation to this may be that there is little impact on retailers as consumers have alternative products that they can purchase and some buffer stock is held at DCs to cope with uncertainty. An alternative consideration is the alleged pressure put on suppliers to make deliveries (Blythman, 2004), resulting in a low level of delivery failures even when there are integration issues. In the automotive industry, this uncertainty cluster is caused mainly by excessive exibility on service level excepted from manufacturers and the increasing complexity within distribution networks. This can increase the frequency of deliveries scheduled by the manufacturer, so delays can occur and as a result extra trips can be needed. In the retail sector, the factors affecting on this uncertainty cluster are disconnections between the sales and logistics department within the shipper and the carrier. At the shipper, the sales department agrees a very loose contract with their customers and the logistics department cannot execute it with the expected level of efciency. Therefore, there are a high proportion of extra miles that can be avoided if the logistics department is involved in the negotiation of new contracts. Also, horizontal network duplication between third party logistics providers can affect the level of supply chain integration in the retail sector, since usually carriers do not interact from the planning process and if they have a sudden increase in volume they need to subcontract an extra trip at the last minute. This is very typical in the retail sector

because of the fact that a high proportion of the demand for transport uctuates because of promotions. Furthermore, in the grocery sector, supply chain integration does not seem to be on top of the priority list for the focus groups participants. Moreover, in the road freight transport sector, disconnections between the sales department and the logistics departments is the main factor that impact on the degree of supply chain integration of the logistics triad. Tools applied to mitigate logistics uncertainty According to the survey ndings, a high proportion of respondents applied analysis and design tools that can support their companies to mitigate the effect of the four main uncertainty clusters found. Table IV shows the link between the main four uncertainty clusters and the mitigation tools that companies that responded to the survey applied. In the case of both delays and delivery constraints, the results suggest that a combination of strategic optimisation (such as network modelling software), operational optimisation (for example, vehicle scheduling and routing software) and quality management tools (like total quality management) are used. Strategic optimisation ensures that the distribution networks are robust to disruptions, while operational optimisation allows businesses to respond to uncertainty as quickly as possible while minimising the overall impact. Quality management allows the causes of uncertainty to be addressed, to reduce their frequency and impact in the longer term. Demand and information issues were frequently dealt with through forecasting tools, which are designed to improve accuracy and therefore reduce uncertainty. These tools may often encourage information sharing between businesses and therefore address supply chain integration issues as well. Integration issues can also be accommodated within the distribution network through strategic design. Concluding remarks The aim of this paper has been to investigate the links between uncertainty in transport operations and their impact on economic and environmental sustainability. Through the focus groups and surveys, four main areas have been identied as causing uncertainty in transport operations delays, demand and information issues, delivery constraints and insufcient supply chain integration. Survey respondents indicated that there are signicant consequences that arise from these uncertainty sources, both in economic and environmental terms. In the grocery, retail and road freight transport sectors, road congestion represents the biggest individual issue leading to uncertainty. While congestion due to road works and peak trafc ows can be incorporated into transport planning, unplanned congestion (for example, due to an accident) leads to greater disruption. The presence of delivery windows further compounds this issue. The challenge for transport providers is to mitigate the impact of this unplanned congestion without impacting signicantly on the efciency of their operations. Also, the disconnection between the sales and logistics departments has a considerable impact on integration within the logistics triad, which can lead to distorted information ows through the supply chain. Referring back to the framework proposed by McKinnon (2007, Figure 2), the impact on environmental sustainability can be seen more clearly. The root causes identied for delays and delivery constraints particularly have an impact in terms of the average load on laden trips and empty running. The results suggest a lack of supply chain integration and information distortion can also affect these key ratios.

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Uncertainty cluster X X X X X X X X X

Delays Demand and information issues Delivery constraints Insufcient supply chain integration

Table IV. Tools applied to mitigate logistics uncertainty Mitigation tool Strategic optimisation Operational optimisation Demand forecasting Quality management Percentage of usage amongst respondents who ranked the cluster as HighHigh High-economic environmental frequency impact (%) impact (%) (%) 64 90 100 80 66 90 100 80 83 50 88 80

However, there may be additional impacts in terms of the length of haul and handling factor. The only key ratio that we have not found any link to is modal split. This may be because the focus of respondents has been on their current operations rather than strategic decisions such as choice of mode. With regards to the mitigation tools applied by UK companies to lessen the effect of delays and delivery constraints, the companies more affected these uncertainty clusters apply strategic optimisation tools when designing the network, operational optimisation tools to set the transport plan and quality management tools to monitor the execution of the transport plan. Moreover, respondents stated that demand forecasting tools are applied to lessen the effect of variable demand and/or inaccurate forecast, and at the same time, to achieve better supply chain integration within the logistics triad. With regards to research limitations, the ndings are based on the perceptions of participants from the focus groups and the survey. The demographics of participants in each phase of the data collection differ. The survey includes only practitioners from shippers, carriers and customers, whereas representatives from trade bodies and government institutions took part in the focus groups. Therefore, the ndings are not perfectly comparable. The targeted prole of participants was middle to senior management, which may distort their perceptions of different types of uncertainties and their impacts. Finally, the survey sample size was small, with a low-response rate, which affects the generalisability of the ndings. To further the research, the ndings should be veried through the investigation of real-world situations, measuring the marginal impact, in economic and environmental terms, of logistics disruptions from the loading process at shipper facilities up to the unloading process at distribution centres and stores. This can be achieved by measuring impact of uncertainty on transport performance in terms of additional distance run and unnecessary time added to the transport plan during the execution of the delivery process. These uncertainty assessments will need to be undertaken in distribution networks from the sectors that took part in the focus groups and survey. Moreover, the transport uncertainty model needs to be incorporated within a wider business process improvement approach to proactively develop and evaluate solutions to reduce transport uncertainty within supply chains. In order to do this, the different mitigation approaches applied by transport operations in the sectors that took part in the research need to be explored, and their effectiveness evaluated for example, through business process simulation. Finally, given the importance that the focus groups participants attribute to unplanned road congestion, the economic and environmental impacts of unplanned road congestion need to be measured by accessing accurate telematics data of actual versus planned miles at an individual trip level. Also, it is important to establish whether unplanned road congestion is the major cause of delays and/or also generate unnecessary miles run due to vehicle diversion from the optimal route.
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Arlbjorn, J.S. and Halldorsson, A. (2002), Logistics knowledge creation: reections on content, context and processes, International Journal of Physical Distribution & Logistics Management, Vol. 32 No. 1, pp. 22-40. Bask, A.H. (2001), Relationships among TPL providers and members of the supply chains a strategic perspective, The Journal of Business & Industrial Marketing, Vol. 16 Nos 6/7, pp. 470-86. Blythman, J. (2004), Shopped: The Shocking Power of British Supermarkets, Fourth Estate, London. Boughton, R.F. (2003), Addressing the escalating cost of road transport, Logistics and Transport Focus, Vol. 5 No. 3, pp. 36-43. Cavinato, L.J. (2004), Supply chain logistics risks: from the back room to the board room, International Journal of Physical Distribution & Logistics Management, Vol. 34 No. 5, pp. 383-7. Choy, K.L., Li, C.-L., So, S., Lau, H., Kwok, S.K. and Leung, D.W.K (2007), Managing uncertainty in logistics service supply chain, International Journal of Risk Assessment and Management, Vol. 7 No. 1, pp. 19-43. Christopher, M. and Lee, H. (2004), Mitigating supply chain risk through improved condence, International Journal of Physical Distribution & Logistics Management, Vol. 34 No. 5, pp. 388-96. Davis, T. (1993), Effective supply chain management, Sloan Management Review, Summer, pp. 35-46,. Easterby-Smith, M., Thorpe, R. and Lowe, A. (1993), Management Research: An Introduction, Sage, London. Esper, T.L. and Williams, L.R. (2003), The value of collaborative transportation management (CTM): its relationship to CPFR and information technology, Transportation Journal, Vol. 42 No. 4, pp. 55-65. Fowkes, A.S., Firmin, P.E., Tweddle, G. and Whiteing, A.E. (2004), How highly does the freight transport industry value journey time reliability and for what reasons?, International Journal of Logistics: Research and Applications, Vol. 7 No. 1, pp. 33-43. Geary, S., Childerhouse, P. and Towill, D. (2002), Uncertainty and the seamless supply chain, Supply Chain Management Review, July/August, pp. 52-61. Giunipero, L.C. and Eltantawy, R.A. (2004), Securing the upstream supply chain: a risk management approach, International Journal of Physical Distribution & Logistics Management, Vol. 34 No. 9, pp. 698-713. Golob, T.F. and Regan, A.C. (2001), Impacts of highway congestion on freight operations: perceptions of trucking industry managers, Transportation Research Part A: Policy and Practice, Vol. 35 No. 7, pp. 577-99. Krueger, R.A. (1998), Focus Groups: A Practical Guide for Applied Research, 2nd ed., Sage, London. McKinnon, A. (2007), CO2 Emissions from Freight Transport in the UK, Logistics Research Centre, Heriot-Watt University, Edinburgh. McKinnon, A. and Ge, Y. (2004), Use of a synchronised vehicle audit to determine opportunities for improving transport efciency in a supply chain, International Journal of Logistics: Research and Applications, Vol. 7 No. 3, pp. 219-38. Mangan, J., Lalwani, C. and Gardner, B. (2004), Combining quantitative and qualitative methodologies in logistics research, International Journal of Physical Distribution & Logistics Management, Vol. 34 Nos 7/8, pp. 565-78. Mason-Jones, R. and Towill, D.R. (1998), Shrinking the supply chain uncertainty circle, Control, September, pp. 17-22. Morgan, D.L. (1998), Focus Groups as Qualitative Research, Sage, London.

Naim, M.M., Potter, A.T., Mason, R.J. and Bateman, N. (2006), The role of transportation exibility in logistics provision, The International Journal of Logistics Management, Vol. 17 No. 3, pp. 297-311. New, S.J. and Payne, P. (1995), Research frameworks in logistics: three models, seven dinners and a survey, International Journal of Physical Distribution & Logistics Management, Vol. 25 No. 10, pp. 60-77. Peck, H., Abley, J., Christopher, M., Haywood, M., Saw, R., Rutherford, C. and Strathen, M. (2003), Creating Resilient Supply Chains: A Practical Guide, Craneld University, Craneld. Plug, G. and Romisch, W. (2007), Modeling, Measuring and Managing Risk, World Scientic, London. Stank, T.P. and Goldsby, T.J. (2000), A framework for transportation decision making in an integrated supply chain, Supply Chain Management: An International Journal, Vol. 5 No. 2, pp. 71-7. Tracey, M. (2004), Transportation effectiveness and manufacturing rm performance, International Journal of Logistics Management, Vol. 15 No. 2, pp. 31-49. van der Vorst, J. and Beulens, A. (2002), Identifying sources of uncertainty to generate supply chain redesign strategies, International Journal of Physical Distribution & Logistics Management, Vol. 32 No. 6, pp. 409-30. van Schijndel, W.J. and Dinwoodie, J. (2000), Congestion and multimodal transport: a survey of cargo transport operators in the Netherlands, Transport Policy, Vol. 7 No. 4, pp. 231-41. Vickery, S., Calantone, R. and Droge, C. (1999), Supply chain exibility: an empirical study, Journal of Supply Chain Management, Vol. 35 No. 3, pp. 16-24. Further reading Sanchez-Rodrigues, V., Potter, A. and Naim, M.M. (2007b), Determine the uncertainties hindering sustainability in the UK transport sector, Proceedings of the 12th Logistics Research Network Conference, Newcastle, 5-7 September, pp. 359-64. United Kingdom Standard Classication (2007), Structure and Explanatory Notes, Ofce for National Statistics, Newport. Appendix 1. Copy of the online questionnaire Purpose of the questionnaire The purpose of this questionnaire is to collect information about supply chain uncertainty in logistics triads in the UK and their impact on economic, environmental and societal sustainability. Supply chain uncertainty refers to decision-making situations in the supply chain in which the decision maker does not know denitely what to decide. In practical terms, the main causes of supply chain uncertainty can be classied as followed: . The decision maker does not have enough and/or reliable information, e.g. stock level, lead time, customer satisfaction, supplier performance and so on. . ICT systems available to the decision maker do not have the capacity to process sufciently disaggregated information. . The forecasting and planning tools available to support decision making are not sufcient accurate, and as a result the decision maker is misled. . Throughout the different supply chain stages, disruptions can occur that can ultimately have a adverse effect on the subsequent processes (van der Vorst and Beulens, 2002). This questionnaire forms part of the research for the Green Logistics project sponsored by the Engineering and Physical Science Engineering Council (EPSRC). The questions are based upon

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the ndings of eight focus groups. Therefore, this survey is a conrmatory tool of previous research and informs future research within the project. The results of this survey will be published on the Green Logistics web site, www.greenlogis tics.org, and they will be available to all the practitioners that take part. Please, avoid using the back button in your internet explorer browser while you are answering the questionnaire, since that could disrupt the ow of the questionnaire. If you have any queries with a question, please click on the question mark provided, this will open a pop-up window. In order to test whether you have pop-up blocker enable, please click on this question mark (?). The survey works best with pop-up blocker disable. Part 1. Background information Information sought within this section included: . the type of company (Shipper, carrier, customer and other); . the size of company by number of employees; . annual turnover in the UK (m); . logistics costs as percentage of turnover in the UK; and . industrial sector. Part 2. Sources of pains within the logistics triad

Question number 1

Wording List what you consider to be the four most common sources of disruption/uncertainty in the day-to-day logistics operation of your business. A denition of each term is available including exemplar causes of uncertainty Rank the four sources of disruption identied above, with the most serious ranked as 1 For each of the four sources identied above, what is their impact on economic and environmental sustainability? (The scale is between 1 and 5, 1 is a signicantly low impact and 5 is signicantly high impact) How frequently are your logistics operations disrupted by each of the four main sources identied above?

Response mode Tick box against list of uncertainty causes

2 3

Ranking scale (only the four selected in Q1 were presented) Likert scale

4 Table AI.

Frequency scale

Part 3. Logistics triad uncertainty mitigation Question 5. List the ve analysis and design tools that your company uses to improve the efciency of logistics operations (a denition of tools was provided). Part 4. Acknowledgement and benets We thank you for taking part in this survey, and will send you a nal report with the results of this research early in 2008. You will receive update information while the project evolves, such as new published academic papers, executive reports of all the research streams and user-level access in the Green Logistics webpage, develops up to June 2010. If you would like further

information on the Green Logistics project including regular updates on forthcoming activities, please provide your details below. This information will be kept condential.

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About the authors Vasco Sanchez-Rodrigues graduated his rst degree in Chemical Engineering at the Simon Bolivar University in Venezuela. After completing his bachelors, he worked in Bimbo Organisation, the leader in the bakery sector in North and Latin America, performing management roles in manufacturing and projects. He reinitiated his academic career at Cardiff University, where he graduated Master of Business Administration in 2005. Following the completion of his masters, he initiated his career in supply chain management and logistics research in Logistics Systems Dynamics Group (LSDG), working in the Fabric-to-Furniture Project in an early stage, and currently he is a Research Associate in a Green Logistics project sponsored by the Department for Transport and funded by the EPSRC. Vasco Sanchez-Rodrigues is the corresponding author and can be contacted at: sanchezrodriguesva1@cf.ac.uk Andrew Potter is a Lecturer in Transport and Logistics at Cardiff University. The main focus of his research has been on the interaction between transport and the rest of the supply chain. He is particularly interested in how transport can be better integrated into the supply chain. This formed the basis for his PhD thesis, which was awarded a Highly Commended award in the 2nd Annual EFMD/Emerald Outstanding Doctoral Research Awards in 2006. Mohamed M. Naim, a Member of the Chartered Institute of Logistics and Transport in the UK, is a Professor in Logistics and Operations Management at Cardiff Business School. He is a Director of the Logistics Systems Dynamics Group and the EPSRC funded Cardiff University Innovative Manufacturing Research Centre, where he is leading a programme of research on Sustainable Logistics. Research includes the establishment of transport collaboration models for supply chain management and the derivation of exibility measures for supply chain system archetypes. He is a former Editor-in-Chief of the International Journal of Logistics and is an Advisory Committee Member for the International Symposium on Logistics. He has published over 60 journal papers including publications in the American Society of Transportation and Logistics Transportation Journal, International Journal of Logistics Management, International Journal of Logistics: Research and Applications, and International Journal of Physical Distribution & Logistics Management.

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