Modelling environmental and economic sustainability of logistics

Abstract

Purpose Research on sustainability has progressed from a singular focus on one aspect to a simultaneous focus on more than one aspect of the triple bottom line. However, there is a dearth of research that explains why sustainability-related decisions in business often do not bear the expected results. Research that provides managers with a tool to achieve environmental sustainability of logistics without compromising the economic sustainability is scarce. Hence, the purpose of this paper is to bridge the above gaps and to explore the factors that affect investment in technology to balance environmental and economic sustainability of logistics. A model based on system dynamics approach explains the simultaneous interplay of these factors. Simulating the model helps the managers of logistics function decide the size of investment in technology, to achieve environmental efficiency without negatively influencing the economic performance. Design/methodology/approach A model based on system dynamics approach explains the simultaneous interplay of these factors. Simulating the model helps the managers of logistics function decide the size of investment in technology, to achieve ecological efficiency without compromising with the economic performance. Findings Collaboration with regulatory authorities and with players within the same industry and across industries is a must so that eco-logistics does not become an economic burden for businesses. The decision to invest in technology for eco-logistics is further accentuated if the technology promises some added economic benefits. Research limitations/implications From a theoretical perspective, the research has added to the less extensive literature on system dynamics modelling, which is a mixed methodology, combining both qualitative and quantitative techniques. The research is also one of the few attempts that have attempted to simultaneously study more than one aspects of sustainability in business, quantitatively through simulation. Simulation was demonstrated through a single case study, Future works can aim to apply the causal loop diagram to firms in varied sectors. Practical implications The managers can use the causal loop diagram to assess the environmental performance of logistics and decide on appropriate level of investment to balance ecological and economic performance of logistics. Originality/value The causal loop diagram has been developed through primary data collection via semi-structured interviews. The results were validated by presenting them to respondents to ensure they represent their view points. The results are, therefore, practical and original. This research does not build upon an existing data set or aims to test the applicability of any existing model. The model for this research has been developed from the grass-roots level.