Horizontal Logistics Collaboration

Background

In 1993, eight competing medium-sized Dutch producers of sweets and candy came to an agreement of intensive cooperation designed to increase the efficiency of their delivery processes. The cooperation was called “Zoetwaren Distributie Nederland” and was moderated by Prof. Jos Vermunt. Together, the companies supplied around 250 drop-off points (e.g. retail distribution centers), the majority of which received goods from more than one of the eight producers on a daily basis. A Logistics Service Provider was hired by the group to consolidate and deliver the shipments to their customers. Although the prime goal of the cooperation was to cut transportation costs, at the same time customer service was increased because the consolidated shipments reduced the number of deliveries, which in turn reduced unloading and handling costs. Moreover, customers were able to access a broader product assortment more easily.

Today, initiatives such as the above are occurring more frequently than ever. The economic downturn of 2008-2010, shortening of product life cycles, fierce competition in global markets and the heightened expectations of customers have generally caused companies’ profit margins to shrink. As a result there exists a strong incentive to decrease costs of non-value adding activities, such as basic distribution and warehousing. In addition, from the point of view of the service providers, the accumulating number of mergers and acquisitions provides an impetus for companies to re-optimize their logistics processes. All in all, the logistics market is undergoing a fundamental reorganization. Among others, this opens up the possibility to start innovative (horizontal) partnerships. […]

Horizontal logistics collaboration (.pdf)

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