Optimizing DHL's Supply Chain for Carbon Reduction

Running head: OPTIMIZATION 1
MGMT20005 Business Decision Analysis
Assignment 2
DHL Supply Chain
Name:
Institution:
Business Decision Analysis Assignment 2

Contents
Introduction.........................................................................................................................................3
Literature review.................................................................................................................................4
Methodology........................................................................................................................................6
Implementation....................................................................................................................................7
How the original supply chain was optimised on a budget of CNY 3 billion..............................7
The extent of the reduction in CO2 emission if the budget were increased by 10 per cent to
CNY 3.3 billion.................................................................................................................................8
Discussions and Conclusions...............................................................................................................9
References..........................................................................................................................................11
Appendix............................................................................................................................................12

Introduction
This study is based on a case study of DHL, a transport and logistics firm. The supply
chain team has undertaken a mission to embrace the go green environmental protection
program. In order to achieve this mission, the company has undertaken to improve the
efficiency of carbon dioxide across the global operations by 30% compared to the 2013
baseline. The aim is to ensure that there is no excess or limited emission of carbon dioxide
into the environment.
The supply chain team has undertaken to achieve the objective of go green initiative
by re- evaluating the supply of their electronic products, specifically LCD TV sets (LCD23
and LCD 42 TV SETS). The major objective of this report is to help the supply team in
determining the optimal number of LCD TV sets produced by different sub-contractors. The
company had a total of seven sub-contractors each of which were expected to produce
different number of LCD TV sets.
The company is further interested in determining the optimal means of transport that
would support the go green initiative that they hand undertaken. The company had different
transport means which they could use depending on the availability and efficiency. The
transport modes available include regular air, air express, road, road LTL (less than
truckload), road network, rail and water. Shipping times vary from 2 to 10 days depending on
the distance and the mode of transport used.
Other cost that are anticipated in the transport of the TV sets are the government
incentives and legislations to reduce emission of carbon dioxide into the atmosphere. Further,

the team anticipated a rise in the brand value of the TV sets due to the increased awareness
among the customers.
The major task of the team is to find out how the maximum potential reduction in the
carbon dioxide emission could be made possible through a potential CNY 3.3 billion budget
for manufacturing and shipping LCD TV sets from the ODMs and Dc. This objective has
been achieved by establishing the maximum number of LCD TV sets from the ODMs and
Dc.
Literature review
Past restudies by the world economic forum discovered that there is a great amount of
carbon dioxide gas emissions into the atmosphere. The studies further that a significant
percentage of these emissions are resulting from the transport and logistics sector. This
implies that transport and logistics firms have to really think of the best way possible to curb
the possible effects and reduce the amount of carbon dioxide emissions into the environment.
In fact, the summary of the study stated that “Significant movement is expected
towards reduced supply chain carbon intensity. This will create both opportunities and risks
for logistics and transport firms, with changes in supply and demand driven by regulation of
carbon emissions, higher and more volatile fuel prices and evolving consumer demand. The
sector can play an influential role in decarbonisation, both in its own operations and through
broader supply chain optimization. This provides direct benefits through reduced costs,
managed risks and business growth.” The study further recommended a switch in the mode of
transport if possible to curb the continuous increase in emission of this gas into the
environment.
There are other several literature that links transport with increased emission of
carbon dioxide into the atmosphere. According to the study by (Alexander, Sergey, Mei, Ray,
& Anvar, 2010), an increase in the accumulation of carbon dioxide and biomass is linearly