A Novel Approach to Identify Industrial Logistics Decarbonization Opportunities: Method Development and Preliminary Validation

Abstract

This article explores how different types of inventories affect the costs of decarbonizing transportation in manufacturing companies. For these companies, it is difficult to find affordable ways to reduce emissions from transportation given their resource scarcity. Additionally, they handle numerous inventory items that have varying transportation needs based on their order frequency and value, which necessitates the development of tailored inventory management strategies. One tool to do so efficiently is the ABC/XYZ analysis, which classifies items into nine different inventory categories. These groups have different economic importance and predictability, which impacts total logistics costs. Our literature analysis contends that lower-carbon transportation alternatives yield varying abatement costs contingent upon the specific inventory categories. Subsequently, we empirically validate this proposition through discrete-event simulations in two case studies involving Austrian manufacturing enterprises, employing combined road-rail transportation as an illustrative decarbonization measure. Statistical tests substantiate the significance of the XYZ dimension in influencing carbon emission abatement costs during the transition from road to rail transportation. In conclusion, our study offers a novel perspective on decarbonization efforts, underscoring the importance of leveraging established management tools to inform strategic decarbonization decisions. This research holds promise for catalyzing progress in overcoming entrenched challenges associated with decarbonization initiatives within industrial logistics.