Addressing the challenges of road freight transport industry – sustainable supply chain business model perspective

Lästid: 3-5 minuter
Kategorier: The PhD Blog
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There are many challenges that effect the industry of road freight transportation – increasing environmental and social impact of the industry, growing business responsibility via diverse stakeholders’ pressures and continually changing market requirements. Several ways exist to address these challenges, however, one of the scarcely addressed areas in the industry is the perspective of a sustainable supply chain business model. The main components of such model comprise: the business solution that includes the product designed under the life cycle performance thinking, the services that improve environmental and social performances of the actors involved via value co-creation processes, the costs and revenues calculated along the life cycle, and long term relationships based on trust. The important principle of such a model include an increase of the product-in-use value, which in road freight transport industry can mean an increased transport equipment utilization. Other principles refer to sustainability integration into core values and strategies along the supply chain, transparency in the operations and goals, and learning and information sharing enhancement, also via IT innovations.

The relationship in supply chain management is known as a very important issue to consider for increased efficiency, enhanced collaboration and integration. It is even more important in the growing field of sustainable supply chain management as sustainable business require the longevity principle through the long-term value co-creation. In road freight transport industry, this shows to be an important aspect of some business relationships, while the actors of the industry: transport equipment manufacturer, dealers/sales representatives and transport companies are involved in the collaboration based on trust and transparent information sharing while co-creating value. Co-creating value, when the manufacturer has the customer’s and customer customers’ business knowledge for better solution design, may lead to more sustainable business model with increased value-in-use.

Another side of the longevity principle can be an extension of value-in-use. The concept of product life extension, in the case industry referring to improved vehicle utilization, is one of the ways towards more sustainable transport and supply chain systems in general. This can be achieved through the product service systems leading towards more sustainable business model while delivering functionality and experience, and even further, the performance of the product rather than its ownership. In the case of road freight transport supply chains, the increase of the product-in-use can be influenced by some specific added services such as driver training and coaching, maintenance. Further, performance based solutions (addressing service dominant logic with improved heavy-vehicle utilization can be achieved through performance cost allocation (business solutions based on rental of the transport equipment, total integrated transport solutions or ‘Uber for trucks’). The effects of the increase of such business solutions can extend the overall product usage and a more sustainable approach. For this to succeed, the actors within road freight transport supply chain need to integrate sustainability into core values and strategies, enhance information sharing and transparency through the collaboration. Diverse IT systems (for example, Fleet Management Systems) can facilitate transparency in the operations.

Another component of sustainable supply chain business model includes the way how the costs are calculated. The value of the product increases when the cost is calculated based on the use of product and services over the life-time including relevant external costs and benefits, however, increasing the complexity as well. From the transport company perspective, the consideration of product life-time cost refers not only to the acquisition cost (when buying a transport equipment), but to the costs allocated while the product is being in use (together with added services). Further, the life cycle of the product is to be considered. The processes of the production and reuse/remanufacture also refer to the life cycle of the product. These can create specific challenges, but also offer long term opportunities. So, the business focus in road freight transport industry must be on the environmental and socially as well as economically viable business models designed for the road freight transport supply chains addressing diverse stakeholder needs.

 

 

veronikaVeronika Pereseina

Doctoral Candidate Business Administration

 

 

 

 

 

 

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