ÅKERS SWEDEN AB OUTBOUND LOGISTICS - PDF

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ÅKERS SWEDEN AB OUTBOUND LOGISTICS Reduction of Environmental Effects Anders Gustafsson Carina Larsson Henric Sundström BACHELOR THESIS 2009 INDUSTRIAL ENGINEERING AND MANAGEMENT Logistics and Management

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ÅKERS SWEDEN AB OUTBOUND LOGISTICS Reduction of Environmental Effects Anders Gustafsson Carina Larsson Henric Sundström BACHELOR THESIS 2009 INDUSTRIAL ENGINEERING AND MANAGEMENT Logistics and Management ÅKERS SWEDEN AB UTGÅENDE DISTRIBUTION Reducering av miljöpåverkan Anders Gustafsson Carina Larsson Henric Sundström Detta examensarbete är utfört vid Tekniska Högskolan i Jönköping inom ämnesområdet logistik. Arbetet är ett led i den treåriga högskoleingenjörsutbildningen. Författarna svarar själva för framförda åsikter, slutsatser och resultat. Handledare: Karin Havemose Omfattning: 15 högskolepoäng (C-nivå) Datum: Arkiveringsnummer: Postadress: Besöksadress: Telefon: Box 1026 Gjuterigatan (vx) Jönköping Preface Preface This thesis work was initiated by Åkers Sweden AB in January 2009 and finished in May The work has been a great experience and has brought us a good view of Åkers Sweden AB s distribution and their distributors. We want to send our gratitude to Mikael Andersson, Master Planner, Åkers Sweden AB for his initiative and advices during our work. Also, thanks to Ulrika Scherberg, Logistics Manager, Åkers Sweden AB for initiate guidelines. Furthermore, thanks to Åkers Sweden AB s distributors represented by: Christel Johansson, Christer Jakobsson, Mats Möllersten, Mats Nilsson, and Thomas Edström. Special thanks to our opponents, Carolina Lassas and Charlotte Westling, and our supervisor Ph.D. Karin Havemose. Jönköping, May, 2009 Anders Gustafsson Carina Larsson Henric Sundström I Nomenclature Nomenclature BPEV CH 4 CO CO 2 EC EEA EEC EU FCEV GHG HC HEV ICEV IMO IPCC ITS NO X NTM PM SO 2 T&E UNFCCC Battery powered electric vehicle Methane Carbon monoxide Carbon dioxide European Commission European Environmental Agency European Economic Community European Union Fuel cell electric vehicle Green House Gas Hydrocarbon Hybrid electric vehicle Internal combustion engine vehicle International Maritime Organisation Intergovernmental Panel on Climate Change Intelligent Transportation Systems Nitrogen oxides Network for Transport and Environment Particulate matter Sulphur dioxide European Federation for Transport and Environment United Nations Framework Convention on Climate Change II Summary Summary Environmental issues have become increasingly more important the last decade. It is of great importance to reduce emissions of green house gases (GHG) and the transport sector contributes to a large part of GHG emissions. The transport sector is the only sector that actually has increased the emissions during the last decade. This is a result of a growing economy and an increased demand of both carriages of passengers as well as freight transports. To reduce GHG emissions there is a need of smart, effective logistics solutions and new technologies. This thesis will contain a review of Åkers Sweden AB s outbound logistics of rolls. The aim of this thesis is to identify environmental improvements without increasing further costs. A questionnaire for environmental evaluation of transport suppliers will also be developed in this thesis. Initial question formulations of this thesis are: 1. What are the environmental effects of the different modes of freight transports that are used in the case of Åkers Sweden AB? Are there any environmental improvements possible to establish without increasing costs? 2. How can distributors be evaluated regarding environmental effects? Emissions and energy use of Åkers Sweden AB s transports is calculated with the calculation model NTMcalc version This model is developed by the Network for Transport and Environment (NTM). Examined modes of transport are road, rail and sea transports. Both theory and result in this thesis demonstrate that rail transports should be preferred to road transports from an environmental point of view. A disadvantage of rail transports is longer transport time in most cases. Longer transport time contribute to higher capital cost of goods during transit. Another disadvantage is that rail transports are limited between terminals or that customers have an industrial railway track. That leads to an increased need of reloading and handling costs. Potential alternative with less impact on the environment has been developed. This involves less impact than current alternative. The new alternative will decrease freight costs by 37 %. However, an increased capital cost by 84 % has been identified due to additional transportation time that is required for the alternative suggested. Transport costs are poorly connected to the real cost on the society. Governments throughout the world need to encourage transport buyers to choose more environmentally adapted alternatives by using management control measures. Also, a questionnaire for environmental evaluation of transport suppliers has been developed. It contains questions of the environmental organisation of the company, how they work with education of staff and reporting of environmental effects. Keywords Environmental effects, environmental evaluation, logistics costs, outbound logistics, transport modes III Sammanfattning Sammanfattning Under senare tid har miljöfrågor fått en alltmer framträdande roll i samhällsdebatten. Det är av största vikt att reducera alla utsläpp av växthusgaser och transportsektorn står för en betydande del av dessa. Transportsektorn är den enda samhällssektorn som ökat utsläppen av växthusgaser under senare år. Detta till följd av en växande ekonomi och ett ökat behov av både person- och frakttransporter. För att reducera utsläppen krävs smarta, effektiva lösningar och ny teknologi. Detta examensarbete kommer att innehålla en fördjupning av Åkers Sweden AB:s utgående distribution av valsar. Målet är att försöka hitta en distributionslösning som är mer miljövänlig än nuvarande alternativ, men samtidigt inte dyrare. Även ett förslag till miljöbedömning av transportleverantörer kommer att utvecklas i detta examensarbete. Detta arbete syftar att svara på följande frågeställningar: 1. Vilken miljöpåverkan har de olika typer av frakttransporter som används av Åkers Sweden AB? Kan ett mer miljövänligt alternativ utvecklas utan att kostnaderna ökar? 2. Hur kan transportleverantörer utvärderas ur ett miljöperspektiv? Utsläpp och energiförbrukning vid Åkers Sweden AB:s transporter beräknades med hjälp av kalkylverktyget NTMcalc version Denna modell är utvecklad av Nätverket för Transporter och Miljön (NTM). De transportslag som undersöks är vägsjö- och järnvägstransporter. Både teori och resultat i denna rapport visar att järnvägstransport bör föredras ur ett miljöperspektiv framför vägtransport. Nackdelen med järnvägstransporter är att de oftast har en längre transporttid under framförallt kortare transporter. En längre transporttid ger högre kapitalbindning i produkter under transport. En annan nackdel är att järnvägstransporter är bundna mellan terminaler eller är beroende av att kunden har industrispår. Därmed krävs omlastning vilket leder till att hanteringskostnader ökar. I detta examensarbete har ett mer miljövänligt alternativ har utvecklats. Detta alternativ har en betydligt mindre miljöpåverkan än i nuvarande situation. Fraktkostnaden minskar med 37 % i det nya alternativet. Eftersom transporttiden ökar, stiger kapitalkostnaden för det nya alternativet med 84 %. Transportkostnader speglar sällan den totala kostnaden de har för samhället. Regeringar runt om i världen behöver med hjälp av ekonomiska styrmedel uppmuntra transportköpare att välja ett miljövänligare alternativ. Ett formulär för miljöbedömning av transportleverantörer har även utvecklats. Detta innehåller frågor kring hur företaget arbetar med miljöorganisation, utbildning av personal och rapportering av miljöpåverkan. Nyckelord Distribution, logistikkostnad, miljöbedömning, miljöpåverkan, transportslag IV Table of contents Table of contents 1 Introduction BACKGROUND PURPOSE AND GOAL QUESTION FORMULATIONS DELIMITATIONS Method SCIENTIFIC APPROACH Positivism Hermeneutics Choice of scientific approach SCIENTIFIC ASSAULT APPROACH Deduction Induction Choice of scientific assault approach DATA ACQUISITION Research methods - quantitative or qualitative Choice of research method Data acquisition - primary data and secondary data Choice of data acquisition METHOD REVIEW Validity and reliability Validity and reliability of this thesis WORKING PROCESS Theoretical background TRANSPORT TRENDS Globalisation Infrastructure Research and Technological Development (RTD) MODES OF TRANSPORTATION Rail Road Sea Comparison of different transport modes Intermodal transport FUELS AND EMISSIONS Fuels Emissions Environmental impact NTMcalc version TRANSPORT SUPPLIER EVALUATION HOW TO CALCULATE TRANSPORT COSTS Transport cost How to calculate total logistics costs INCOTERMS A survey of the four Incoterm groups Differences Incoterms analysed Company description ÅKERS GROUP History V Table of contents 4.2 ÅKERS SWEDEN AB Products Åkers Marketing and Sales Result and Analyse PRESENT SITUATION Rail routes Road routes Sea routes NEW ALTERNATIVE Rail routes Road routes COMPARISON Freight cost Capital cost of goods during transit Environmental effects ENVIRONMENTAL EVALUATION OF TRANSPORT SUPPLIERS Suggestion for evaluation form Discussion CHOICE OF TRANSPORT MODE PRESENT SITUATION NEW ALTERNATIVE CALCULATION MODEL NTMCALC VERSION EVALUATION OF TRANSPORT SUPPLIERS SUGGESTION FOR FURTHER INVESTIGATION GOAL ACHIEVEMENT Conclusion References Search words Appendices APPENDIX I APPENDIX II APPENDIX III APPENDIX IV APPENDIX V APPENDIX VI APPENDIX VII APPENDIX VIII APPENDIX IX APPENDIX X APPENDIX XI APPENDIX XII APPENDIX XIII APPENDIX XIV APPENDIX XV APPENDIX XVI APPENDIX XVII APPENDIX XVIII APPENDIX XIX APPENDIX XX APPENDIX XXI APPENDIX XXII APPENDIX XXIII VI Table of contents Figures FIGURE 1 DIFFERENCE IN GLOBAL MEAN TEMPERATURE 1 FIGURE 2 GHG EMISSIONS BY SECTOR EU-27 2 FIGURE 3 COMPARISON BETWEEN FOUR TRADITIONAL MODES OF TRANSPORT 14 FIGURE 4 POSSIBLE PATHWAYS FOR ENERGY FROM PRIMARY RESOURCE TO FINAL END USE 16 FIGURE 5 STRUCTURE OF TRANSPORT COSTS 27 FIGURE 6 MANUFACTURED ROLLS 33 FIGURE 7 PRINCIPLE OF ROLLING 34 FIGURE 8 ROLL MANUFACTURED BY ÅKERS SWEDEN AB 35 FIGURE 9 ENVIRONMENTAL EFFECTS, ÅKERS STYCKEBRUK - BERLAIMONT 38 FIGURE 10 ENVIRONMENTAL EFFECTS, ÅKERS STYCKEBRUK - GOTHENBURG 39 FIGURE 11 ENVIRONMENTAL EFFECTS, ÅKERS STYCKEBRUK - GERMANY 40 FIGURE 12 ENVIRONMENTAL EFFECTS, NORTH AMERICA 41 FIGURE 13 ENVIRONMENTAL EFFECTS, BERLAIMONT - CUSTOMERS 42 FIGURE 14 ENVIRONMENTAL EFFECTS, INDIA 43 FIGURE 15 ENVIRONMENTAL EFFECTS, GOTHENBURG - CUSTOMERS 44 FIGURE 16 ENVIRONMENTAL EFFECTS, ANTWERP - CUSTOMERS 45 FIGURE 17 ENVIRONMENTAL EFFECTS, ÅKERS STYCKEBRUK - GOTHENBURG 47 FIGURE 18 ENVIRONMENTAL EFFECTS, ÅKERS STYCKEBRUK - GERMANY 48 FIGURE 19 ENVIRONMENTAL EFFECTS, HATTINGEN - CUSTOMERS IN GERMANY 49 FIGURE 20 COMPARISON OF ENVIRONMENTAL EFFECTS, ÅKERS STYCKEBRUK - GOTHENBURG 52 FIGURE 21 COMPARISON OF ENVIRONMENTAL EFFECTS, ÅKERS STYCKEBRUK - GERMANY 53 Tables TABLE 1 RAIL - EMISSIONS (G/TONNE-KM) 19 TABLE 2 ROAD - EMISSIONS (G/TONNE-KM) 19 TABLE 3 COMPARISON OF FREIGHT COST 50 TABLE 4 COMPARISON OF CAPITAL COST OF GOODS DURING TRANSIT 51 VII 1 Introduction Introduction The first chapter introduces the reader to the thesis. A background to the environmental situation in the world today is included. Furthermore, the purpose and goal as well as boundaries are included to give the reader information on what the thesis will discuss. The chapter concludes with an outline of the thesis. As a part of the Bachelor of Science program Industrial Engineering and Management - Logistics and Management at School of Engineering in Jönköping, students are supposed to perform a thesis within the area of their studies. Due to the increased debate about environmental effects of transports it is interesting to investigate how different modes of transports effect the environment. Smart solutions and efficient flows can both be cost effective and better for the environment. It will become more and more important to deal with those issues in the future. This thesis will look into Åkers Sweden AB s distribution to their customers. Both logistics costs as well as environmental effects will be reviewed. 1.1 Background In the last decade discussions about environmental issues have increased rapidly. Climate change is already happening and is probably the biggest threat that needs to be dealt with today (European Commission [EC], 2009a). The increase of temperature is widespread over the entire globe but is greater in northern latitudes. This has a huge Figure 1 Difference in Global Mean Temperature (IPCC, 2007b, p.253) 1 Introduction impact on climate. Arctic ices are melting, the temperature is rising and biological systems are being affected (Intergovernmental Panel on Climate Change [IPCC], 2007a). The global warming has occurred in two phases in the last century (figure 1). From the 1910s to the 1940s global mean temperature has increased by 0.35 ºC and from the 1970s to the present it has increased even more by approximately 0.55 ºC. Over the last 25 years an increasing rate of global warming has taken place. In 2007, 11 of 12 warmest years had occurred in the last 12 years (IPCC, 2007b). In 1997 an international agreement of 37 industrialised countries was made in Kyoto, Japan. The Kyoto Protocol sets targets for these countries as well as for the European Community for reducing GHG emissions. In average these countries should reduce the emissions of GHG with 5 % compared to their values in This should be made during a five-year-period between 2008 and th of January 2009, 183 countries and the European Economic Community (EEC) accepted or approved the agreement (United Nations Framework Convention on Climate Change [UNFCCC], 2009). EEC has set an even higher target on reducing emissions of GHG to 8 %. In March 2007, European Union (EU) leaders committed to reduce its GHG emissions by 30 % of 1990s levels by 2020, provided that other developed countries commit to make comparable reductions under a global agreement (EC, 2009a). The combustion of fossil fuel in the transport sector contributes to emissions of GHG. Due to a developing economy the past decade, the need for freight transport has increased. Between year 1995 and 2006 goods transport growth was about 2.8 % per year. As shown in figure 2, the transport sector was the only one with steadily increasing rate of GHG emissions between 1990 and The level of 1990s GHG emissions have index = 1, in the diagram (EC, 2008). Total Transport Total Households Energy Industries Services, etc. Industry Other e.g. Waste Figure 2 GHG Emissions by Sector EU-27 Million tonnes CO 2 equivalent (EC, 2008, p.186) To offset this growth in the transport sector it will be significant to improve its energy efficiency to reduce emissions of GHG. Effective flows and smart solutions for goods transports can both reduce costs as well as the negative influence on the environment. Most environmental initiatives are expensive, even those which will save money in 2 Introduction the long term. Due to present recession, there is a risk that these initiatives will be set aside. But there are still some key pressures that force companies to look into environmental initiatives. Most important is the desire to be a thought leader for environmental sustainability, which can lead to competitive advantages. Also, rising cost of fuel and energy is an important issue to consider. Åkers Sweden AB is a world leading roll maker situated in Åkers Styckebruk in the midst of Sweden. The assignment of this thesis is to take control and calculate the environmental effect of their distribution of rolls to customers and to the production facility in Berlaimont, France. A suggestion of a new alternative will be presented. The new alternative will be compared to present situation and the authors expectation is that the new alternative will be more cost effective and environmental friendly. In addition to this a suggestion on how to evaluate distributors will be developed. Due to the heavy products of Åkers Sweden AB, not all modes of transportation can be considered. The focus will be on road, rail and sea transports. 1.2 Purpose and goal The purpose and goal of this thesis work is to: 1. Make a description of the present situation of Åkers Sweden AB s outflow distribution and to investigate and analyse other solutions to reduce cost and environmental effects. 2. An investigation of how Åkers Sweden AB s distributors can be evaluated according to environmental effects will be examined. 3. Also, this thesis should give deeper knowledge about different modes of freight transport and fuels and the environmental effects of them. 1.3 Question formulations The thesis work aims to answer the following questions: 1. What are the environmental effects of the different modes of freight transports that are used in the case of Åkers Sweden AB? Are there any environmental improvements possible to establish without increasing costs? 2. How can distributors be evaluated regarding environmental effects? 3 Introduction 1.4 Delimitations This thesis contains the outbound logistics of Åkers Sweden AB s finished goods to customers and blank rolls to the production facility in Berlaimont, France. The analysis will focus on emissions, capital cost of goods in transit and transport costs. Though, handling and transhipment costs in harbours will not be analysed due to Åkers Sweden AB s varied procurements of transports and difficulties to separate handling costs from total costs. Furthermore, the authors have not calculated with the dimensions of rolls, only the weight is considered during transport. The outbound logistics will be analysed according to Incoterms negotiated with Åkers Sweden AB s customers. Incoterms divide responsibility of distribution between manufacturer and customer. Therefore, environmental effects and costs will be analysed to the point where responsibility turn to the customer. Åkers Sweden AB s has customers all over the world but this thesis will focus on their largest markets because they make the largest impact, both on cost and environment. The largest markets are China, Egypt, Germany, India and North America. 4 Method 2 Method The method chapter presents the thesis methodology. Theory and the authors' choice of methodological approach are presented. The expectation is that problem formulation and purpose made by the authors will be understood through the scientific choices. The working process is presented at the end of the chapter. 2.1 Scientific approach In the performance of a thesis it is important to consider the scientific approach to understand the aim, purpose and methodology. Two well-known and separated approaches are hermeneutics and positivism. Differences between them are interpretation and explanation (Andersson, 1979) Positivism Basic of positivism is scientific rationality and that a statement is true only if it is agreed with reality. The methods should give reliable knowledge and it should be considered from measurements instead of estimations and judgements. The knowledge should be measured in terms of reliability and validity (Wallén, 1996). Both the human observer and technique used in a study should be neutral. The scientist should not involve personal feelings in the research. The most important thing is objectivity in terms of positivism (Denscombe, 2002). The knowledge that originates from positivism leads to universal causes and effects (Andersen, 1994) Hermeneutics Hermeneutics is about interpretation of the meaning in a broad sense and can be translated as learning through interpretation (Wallén, 1996). According to Andersson (1979) hermeneutics has no ca
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