Gain Sharing in Horizontal Logistic Co-operation: A Case Study in the Fresh Fruit and Vegetables Sector
More and more companies start to notice the potential of setting up a logistic co-operation. They realize however that this idea is also a source of new challenges and impediments. We will focus on the challenge of dividing the total coalition gain among all partners. In this chapter, we show that significant differences exist between allocation methods and we examine the impact of defining gain defining gain sharing on a short term (daily) or a long term (monthly) basis. Too often, the selection of an appropriate allocation mechanism is considered as an independent decision with fairness as the single criterion. The companies involved, however, should realize what the impact of a certain allocation method might be, when applied in the broader context of horizontal co-operation. A selection of well known allocation methods and concepts is introduced and applied to a real life case study of fresh produce traders, jointly organising their transportation from the auction to a joint transport platform.
KeywordsAllocation Method Grand Coalition Cost Allocation Total Transportation Cost Logistics Service Provider
The authors would like to thank Alex Van Breedam, Bart Vannieuwenhuyse and Sven Verstrepen from Tri ≡ Vizor, for their insights into the case study of fresh produce traders and the provision of real life data.
This research is supported by the Research Foundation—Flanders (FWO—Ph.D. fellowship) and the Interuniversity Attraction Poles (IAP) Programme initiated by the Belgian Science Policy Office (COMEX project).
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