Insinking: A Methodology to Exploit Synergy in Transportation

CentER Discussion Paper No. 2005-121

25 Pages Posted: 19 Dec 2005

See all articles by F. Cruijssen

F. Cruijssen

Tilburg University - Tilburg University School of Economics and Management

Peter Borm

Tilburg University - Center for Economic Research (CentER); Tilburg University - Department of Econometrics & Operations Research

Hein Fleuren

Tilburg University - Center for Economic Research (CentER)

Herbert Hamers

Tilburg University - Center for Economic Research (CentER); Tilburg University - Department of Econometrics & Operations Research

Date Written: 2005

Abstract

Over the last decades, companies' average profit margins have been decreasing and as a result efficiency of transportation processes has become critical. To cut down transportation costs, shippers often outsource their transportation activities to a Logistics Service Provider of their choice. This paper proposes a procedure that puts the initiative with the service provider instead. This procedure is based on both operations research and game theoretical insights. To stress the contrast between the traditional push approach of outsourcing, and the here proposed pull approach where the service provider is the initiator of the shift of logistics activities from the shipper to the Logistics Service Provider, we will refer to this phenomenon as insinking, the antonym of outsourcing.Insinking has the advantage that the logistics service provider can proactively select a group of shippers with a strong synergy potential. Moreover, these synergies can be allocated to the participating shippers in a fair and sustainable way by means of customized tariffs.Insinking is illustrated by means of a case study in the Dutch grocery transportation sector.

Keywords: vehicle routing, cooperative games, retailing, insinking, Shapley Monotonic Path, Logistic Service Providers

JEL Classification: C61; C71

Suggested Citation

Cruijssen, F. and Borm, Peter E. M. and Fleuren, Hein and Hamers, Herbert, Insinking: A Methodology to Exploit Synergy in Transportation (2005). Available at SSRN: https://ssrn.com/abstract=870403 or http://dx.doi.org/10.2139/ssrn.870403

F. Cruijssen (Contact Author)

Tilburg University - Tilburg University School of Economics and Management ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands
+31 13 466 3063 (Phone)

Peter E. M. Borm

Tilburg University - Center for Economic Research (CentER) ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Tilburg University - Department of Econometrics & Operations Research

Tilburg, 5000 LE
Netherlands

Hein Fleuren

Tilburg University - Center for Economic Research (CentER) ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Herbert Hamers

Tilburg University - Center for Economic Research (CentER) ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands
+31 13 4666 2660 (Phone)

Tilburg University - Department of Econometrics & Operations Research

Tilburg, 5000 LE
Netherlands

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