Strategic Evaluation of Environmental Trade-Off Solution in Logistics: A Multi Criteria Decision Making Approach

The purpose of this paper is to propose a multi-criteria decision-making model capable of strategically evaluating environmental trade-offs during the logistics planning phase. The objective is to build an optimization model for route planning with a trade-off solution for three criteria; cost, emission and time. The proposed model is tested at Northvolt (NV), a Swedish start up producing lithium-ion batteries. The results obtained from the optimization model were based on an emission calculation framework and weights assigned to the three selected criteria by five decision makers. The analysis shows that increased costs do not have a clear correlation with reduced emissions or transportation time. It also demonstrates that transporting goods on sea would increase the transportation time but decrease the emissions. The conclusions of the study are that costs can be reduced by 8%, emissions by 6% and transportation time by 14%, compared to their current operations. Short-term recommendations address the need of being agile in the route planning and analyse each shipment individually where the weights of the criteria should be alternated depending on the status of the project. This requires increased communication with the installation team on site and negotiation of contractual rates from additional ports in Sweden. Long-term recommendations emphasize the importance of developing and using emission key performance indicators to set targets in combination with a strategy in order to steer daily operations.