Horizontal Collaboration among SMEs through a Supply and Distribution Cooperative

Abstract

Introduction: The 2030 Agenda for Sustainable Development encourages the governments of low and middle-income countries to support specifically small and medium enterprises to reach sustainable economic conditions. Strategic collaborative alliances among small and medium enterprises help these companies to overcome difficulties confronted in supply chain processes, such as procurement and transportation. This study describes a horizontal collaboration among small and medium enterprises (i.e., customers) where the demands are satisfied by a supply and distribution cooperative in Turkey. The cooperative is responsible for making bulk purchases with a discounted price that is not attainable for individual customers and making product deliveries to the customers. The benefits of establishing a supply and distribution cooperative that involves horizontally collaborating customers are assessed through a proposed decision support model. Methods: The model comprises a dynamic programming-based heuristic to determine a distribution plan and simulation to calculate total cooperative profit and customer profit shares. The model incorporates a comprehensive energy estimation approach for conventional vehicles that allows decision-makers to better estimate fuel consumption and, therefore, transportation emissions. Results and Discussion: The results show that horizontal collaboration among customers does not always guarantee profit. The amount of financial gain is dependent on many factors, such as logistics network, monetary demands, or discount rate observed due to the bulk purchase of the cooperative. Furthermore, such strategic alliances could allow companies to improve the efficient use of resources to have sustainable logistics systems. Conclusion: The proposed model can be used (i) to provide a detailed evaluation of the related costs and revenues, (ii) to provide analyses of the effects of the discount rate and the sector demand rate changes on the total cooperative profit, and (iii) to analyse the effects of uncertainties in several parameters on the total cooperative profit and customer profit shares.