The SCM capstone Optimizing the Life Cycle of Last-Mile Packaging was authored by Christina Aguirre and Omar Pineda Carrilo and supervised by Dr. Selene Silvestri (selsil@mit.edu), Dr. Juan Carlos Piña Pardo (juanpina@mit.edu), and Dr. Matthias Winkenbach (mwinkenb@mit.edu). For more information on this research, please contact the thesis supervisors.
E-commerce has expanded by over 500% in the last decade, and 25% of global retail purchases are expected to be online by 2027, per Forbes. Packaging specialists estimate that e-commerce companies ship over 608 million goods annually, with the majority using new cardboard shipping cartons. This practice has an estimated cost of $800,000 in packaging daily. These enormous numbers and the expectation of rising e-commerce show the need to reduce packaging costs. Besides cost, the e-commerce boom has huge environmental ramifications for last-mile logistics enterprises. Making 1.6 million cardboard boxes daily deforests and warms the planet. Our research aims to develop a solution that helps last-mile companies reduce the amount of cardboard waste, enabling them to save money on shipping cartons while moving toward the objective of net-zero carbon emissions.
The results of our model illustrate the relationship between CO2 emissions savings and the decision to collect and reuse cardboard shipping cartons by integrating collection into existing delivery routes. Using an optimization model, we solved 350 real-world instances based on Amazon data to determine the trade-offs between CO2 emissions savings and parameters such as environmental factors and the total logistics budget available for collecting boxes.
Our research yielded two key insights:
1. Investing significant additional time does not necessarily reduce CO2 emissions.
Our results show that additional time for pickups leads to higher emissions savings. However, CO2 emissions eventually reach their maximum potential savings without requiring additional time investments.
2. The collection of all boxes is not required to achieve the highest possible reduction in CO2 emissions.
E-commerce companies must optimize their delivery and pickup routes according to the locations of the stops. If the locations are not close to each other, there is a high likelihood that only a small number of boxes would be eligible for pickup.
Our findings indicate that collecting more boxes does not always result in higher emissions savings. The trade-off between box collection and emissions reductions is determined by two factors: cardboard weight and extra driving distance. Customers with a higher cumulative cardboard weight and locations near delivery points are more likely to be visited. Whereas those in outlying areas and with the smallest cardboard box sizes are more likely to be ignored, demonstrating that distance and weight are deciding factors, but the number of boxes is not. The pickup decisions prioritize the weight-distance ratio when deciding which customers should be visited.
Leading companies in the e-commerce industry have already set climate pledge objectives for 2040, identifying two potential approaches to meet the targets: one focuses on supply chain decisions, while the other invests in innovative technology that delivers carbon savings. Our initiative focuses on optimizing supply chain decisions in the last-mile delivery segment, allowing businesses to achieve short-term emissions savings with substantially less expenditure than greener technology development.
For more about this capstone project, and to see the full results of this research, visit the Supply Chain Management Review online at SCMR.com.
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