Tuesday, 4 October 2011

Deciding on Lean or Green

Imagine getting into your car, entering your destination into the satellite navigation system and getting not only the two obvious options for the shortest or fastest route, but also the most sustainable one. What would you think of that? Calculating the shortest or fastest route is easy from an Operations Research perspective, just use Dijkstra’s shortest path algorithm. How about the most sustainable one? Whether a route is sustainable or not depends on many factors; maximising sustainability therefore is different from minimising travel time or distance. There is however a linear relationship between fuel consumption and CO2 emissions. So when fuel consumption can be taken into account, optimising for the most sustainable route would become possible. That is exactly what two of my colleagues at ORTEC, Goos Kant and Patrick Schittekat, did when researching the net effect of focussing on sustainability in logistics.

Fuel consumption is influenced by factors like engine type and aerodynamics of your car, the type of fuel used, traffic density, variance in driving speed, the weather and not to mention your driving habits. Some of these factors can be modelled easily while others, like the weather, are more challenging. Research as reported by UK’s National Atmospheric Emissions Inventory (NAEI) shows that CO2 emission levels can be expressed as a function of vehicle type, fuel type and engine type and of course speed. So when we know these parameters, we are able to calculate emission levels.

In calculating an optimal route, a digital road network is required. Companies like NavTeq and AND provide these maps. A digital road network consists of points and segments connecting these points, representing the road network in the real world. The segments are of different types, representing different road types each with a different speed. Think op motorways, regional roads, local roads and city areas. Given the length of each segment and speed of a vehicle on each of the segment types, the shortest and fastest route can be calculated. An interesting new development is that more and more information is added to digital networks, like the time/day dependent average speed at which these road segments have been travelled, allowing for a better estimation of actual travel time and therefore speed.

Using the formula for CO2 emission levels, the sustainability cost for each segment in the road network can be calculated, using the travel times reported in the digital network segments. Using Dijkstra’s algorithm, the most sustainable route (lowest emission levels) between each point in the network can be calculated and a comparison can be made with the shortest and the fastest routes. Research of my colleagues Goos and Patrick indicate that the greenest route is about 5% slower than the fastest, while the shortest is 35% slower. Also the greenest route is 2% longer than the shortest, while the fastest route is about 6% longer. Comparing on costs (using social cost per ton CO2 as reported by DEFRA and associated cost for vehicle and driver) the greenest route is about 1% more expensive than the fastest, while the shortest is 17% more expensive. So in short taking the green road home is only slightly slower and costs a little bit more than the fastest (time is money after all).

In logistics making the trade off’s between lean or green isn’t common yet but will change in the near future. A example of this trend is the special programme (Sustainable Logistics) in which Dutch companies have committed themselves to achieve a 20% reduction in CO2 emision levels by the end of 2012. Incorporating emission levels in logistic optimisation models will help create insight and guide companies towards more sustainable choices. By the way, focussing on efficiency (cost reduction) will also lead to more sustainable solutions. Driving less kilometres because routes have been optimised by changing the order in which customers are visited or changing the assignment of customers to routes will directly lead to reduced emission levels. So not Green or Lean but Lean & Green!

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