The impact of online shopping demand on physical distribution networks: a simulation approach

Lim, Hyunwoo and Shiode, Narushige 2011. The impact of online shopping demand on physical distribution networks: a simulation approach. International Journal of Physical Distribution & Logistics Management 41 (8) , pp. 732-749. 10.1108/09600031111166401

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Abstract

Purpose – The purpose of this paper is to study how cost efficiency and the reliability of a physical distribution network are affected by changes in online shopping demand and to suggest how logistics service providers can respond to such changes. Design/methodology/approach – Based on a discrete event simulation approach, possible adaptive measures to online shopping demand increase are tested at three levels of decision making in parcel distribution network: priority assignment in the main hub (operational), introduction of sub-hubs (tactical), and increase in the hub-terminal capacity (strategic). The feasibility of the simulation is tested with parameters adopted from the logistics service data of an existing major parcel carrier in South Korea. Findings – Findings from the simulation model suggest that the existing physical distribution network can improve its cost efficiency and service reliability by evolving into a more centralized network structure with increased capacity of transshipment facilities if the online shopping demand is expected to increase consistently over the long run. Practical implications – This research will help logistics service providers to have good insights into performances of their distribution networks at different levels of demand and to devise a plan for adaptation to meet future demand. Originality/value – This paper provides a framework to understand the complex relationship between network configurations, service levels, costs, and other decision-making processes with respect to changes in online shopping demand based on a simulation approach.

Item Type:	Article
Date Type:	Publication
Status:	Published
Schools:	Geography and Planning (GEOPL)
Subjects:	H Social Sciences > HT Communities. Classes. Races
Uncontrolled Keywords:	Demand management, Discrete-event simulation, Distribution management, Logistics service, Online shopping, Parcel delivery services, Physical distribution networks, South Korea
Publisher:	Emerald
ISSN:	0960-0035
Last Modified:	07 Nov 2019 09:06
URI:	https://orca.cardiff.ac.uk/id/eprint/10823

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