The document summarizes key points from a research project on developing sustainable logistics business models. It discusses how environmental aspects are currently treated as add-ons rather than integrated into regular business models. The project aims to develop models that incorporate environmental performance into revenue mechanisms and value propositions. Scenarios for 2020 were developed through workshops and indicate expectations for more collaboration across organizations and industries to reduce environmental impacts through approaches like consolidated city deliveries. Overall, the document argues that business models must adapt to changing market conditions and demands to integrate sustainability.

1. The future business model for
sustainable logistics
Maria Huge-Brodin
Linköping University
Department of Management and Engineering
Division of Logistics Management

2. Now…and then?
• Today’s green logistics
– A growing awareness over the past few years among all types of
stakeholders
– Coupling between costs, delivery service and environmental aspects
– A questioning of the “compulsory” 24-7 delivery service concept
– A growing number of positive examples
• Tomorrow’s needs
– Incorporation of environmental aspects into regular business, not just as
add-ons. BUSINESS MODELS!
– Demands better knowledge, better tools and more general guidelines…
– …and more cooperation across organisational borders.
• “Competitive business models for sustainable logistics systems”
– Research project 2008-2011, VINNOVA financing of 8MSEK
– 4 senior researchers and 3 PhD students
Maria Huge-Brodin, Linköping University

3. Business model - a general perspective
• ”How the firm puts its strategies into action”
• Many models exist, many origin from the E-development.
• Based on Kindström 2005 and Chesbrough 2007:
Offering
-value proposition
-revenue mechanisms
Market Position
- target market
-value network Operative
-competitive strategy Platform
-value chain
structure
Maria Huge-Brodin, Linköping University

4. Green Logistics Based Business Models:
What is it? A Model of a Model (1)
• Target Market
– Which will be the future demands on our target market? Do we
want to change target market? The role of society on markets?
– Present state, much of traditional thinking. What if a the total
market turns into prioritizing environmental aspects; how can we
be prepared?
• Market position
– Which is our position on present markets, and what position do
we want to maintain in the future regarding environmental
excellence?
– Awating attitude (for demands, for offerings, for rules and
legislation…)
– A high potential for those who dare take the first step
Maria Huge-Brodin, Linköping University

5. Green Logistics Based Business Models:
What is it? A Model of a Model (2)
• The value proposition
– What is offered regarding the environment in a logistics service
offering? What is delivered/transferred, and what represent other
non-tangiable values?
– Measurement services are sometimes offered, often as add-ons.
– More comprehensive value propositions, including environmental
aspects, and relating to system borders and roles: still missing.
• Revenue Mechanisms
– Tools and models that relate and communicate the business value
of environmental aspects, to be part of the total revenue
mechanisms, are missing.
– Problems with allocating emissions on products, flows,
companies…
Maria Huge-Brodin, Linköping University

6. Green Logistics Based Business Models:
What is it? A Model of a Model (3)
• The value chain (organising internal activities and
resources)
– At present fairly mature on an operational level, although not in a
strategical.
– Problems in measuring the performance related to allocation
problems
– A high potential on organising resources for simultaneous cost-,
service- and environmental benefits.
• The Value System (extends to external resources)
– Needs to be matched with the internal value chain
– Difficulties in controlling the value system over many tiers of
suppliers, depending on power position.
– Difficulsties in measurement and follow-ups, due to lack of
standardised models.
Maria Huge-Brodin, Linköping University

7. So, where are we going?
Predicting the future through scenario development
Based on Huge-Brodin, Björklund, Maack, Martinsen & Abrahamsson (2009)
presented at the LRN Conference in Cardiff September 2009

8. Scenario development
• Thinktanks (Interactive Workshops) as empirical source
• 3 groups
• 5h “Thinktank” for each group
• 5-10 practitioners
• 5-6 researchers
• Plenary and group sessions
– A scenario task in plenum
– Discussions in smaller groups
– Presentation and discussion of the results in plenum
• The researchers’ roles
– Encourage active, interactive and creative discussions
– Create an open and creative atmosphere
– Focus 2020, No contemporary issues and problems
– To listen and take notes
– Document
– (Include participants comments on the documentation)
– Analyse the information --> build “sharper” scenarios
Maria Huge-Brodin, Linköping University

9. -- Some options in 2020 ---
Maria Huge-Brodin, Linköping University

10. Do it yourself: Home assemblies are here to stay
“The flat-box concept taken beyond furtnitures…” J LF
B®
• Type of products:
– Media, home electronics…
• Benefits:
– Decreased volumes due to e.g. flat packages
– Increased Lifetime-in-use, upgrade by changing components at home
– Postponed final assembly, decreased risk for obsolesce
• Business model alteration:
– Exploring new target markets
– Assembly is performed by the consumer (changing roles and value chain
configuration)
– Offering the same value to a lower price (the product), and the value of
more efficient resource usage in the transport chain
Maria Huge-Brodin, Linköping University

11. Going faster by slowing down
“By shortening the most time sensitive link in the SC through better
administration, the lead time is at least the same as before, but now
by road and rail transport.”
• Type of products:
– Sensitive spare parts (e.g. for automotive industry, process industries…)
• Benefits:
– Same or decreased lead times
– Potentially lower costs
– Decreased environmental impact
– ? More profitable with local warehousing
• Business model alterations:
– Improved internal value chain organisation
– No external change; same target market and position
– Improved value offering if CO2 taxation increases, and if customers value
environmental improvement
Maria Huge-Brodin, Linköping University

12. A flower for collaboration
“A new system for city distribution is developed. All goods into the city is
consolidated and delivered by a “neutral” fleet. Where all trucks carry
the mutual symbol; the flower, no matter which LSP is responsible for
the delivery…”
• Type of products:
– Mainly consumer products
• Benefits:
– Decreased costs
– Improved local environment through fewer deliveries
– Less time spent on off-loading (customers/shops/outlets)
– Potentially increased brand value for the LSPs…
• Business model alterations:
– New roles in the value system and on the market: co-opetition
(cooperation among competitors)
Maria Huge-Brodin, Linköping University

13. Conclusions on the scenarios
• Most Thinktank results are previously more or less
acknowledged in previous research
– The perspective of 2020 is too close to provoke bound-breaking ideas
– Complements general global development trends with more down-to-earth
expectations
• Most members from all groups acknowledge some degree of
responsibility
– But “another group” is often more responsible, and needs to take lead!
– Companies seem more positive than authorities…
• All actors expect a change to come
– The environment cannot be ignored
– Economical incentives are crucial, and will come in some form
– Environmental aspects must somehow be included in the total-cost model
for logistics systems
– “With one voice”: the almost compulsory 24-hour delivery times are not
necessary, delivery precision will rule…
– Toward increased or decreased warehouse centralisation???
Maria Huge-Brodin, Linköping University

14. Some final notes on
the business model approach
• Today…
– Stable but rigid configurations of value chains (internal) and value
systems (external)
– Only few and non-comprehensive attempts to compare
envronmental aspects with other performance measurements
– A slumbering but awakening market and awakening actors…
• …and future challenges
– Finding new solutions, and taking wider system perspectives
– Finding ways of effective charging of environmental effects (CO2-
trading extended?)
– Potentially large changes in market conditions and in customer
demands, which will alter the target markets for LSPs…
– … and a potential to take a stronger position
Maria Huge-Brodin, Linköping University

15. Thank you for your
attention!
Questions