Off-Peak Deliveries

from a Business Model Perspective

KATARINA ALLMÉR SOFIA FEYCHTING

Master of Science Thesis Stockholm, Sweden 2016

Off-Peak Deliveries from a Business Model Perspective

Katarina Allmér Sofia Feychting

Master of Science Thesis INDEK 2016:138 KTH Industrial Engineering and Management

Industrial Management SE-100 44 STOCKHOLM

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Master of Science Thesis INDEK 2016:138

Off-Peak Deliveries from a Business Model Perspective

Katarina Allmér

Sofia Feychting

Approved

2016-06-23 Examiner

Jannis Angelis Supervisor

Andreas Feldmann

Commissioner

Scania CV AB Contact person

Ulf Ceder

Abstract Withanincreasingurbanpopulationaroundtheworld,theneedforurbanfreightdistributionisconstantlygrowing.Manycitiesfaceproblemswithtrafficcongestion,especiallyduringpeakhoursinthemorningandafternoon.Atthesametime,theroadsareoftennearlyemptyduringnighttime.Insomecities,likeStockholm,heavyhaulageisnotpermittedtoenterthecityduringthenight.Thismeansthatcarriersareforcedtoperformthesedeliveriesduringtheday,whichleadstoinefficientdistribution.

Toinvestigatethepossibilitiestousenighttimehoursfordeliveries,whichcouldleadtoamoreefficient distribution system and increased sustainability of the city, a pilot project has beeninitiatedby theCity of Stockholm to test off-peakdeliveries.Other similar trial projects haveencountereddifficultieswithgettingbusinessestoparticipate,andtheincentivestoshifttooff-peak deliveries have been unclear. Therefore, this thesis aims to investigate what incentivesthereareforactorswithinasupplychaintomakethisshiftandthekeyfactorsthatenablethesupplychaintobenefit.

Thethesis isperformedasacasestudyonthepilotproject inStockholm,andusesabusinessmodelperspective toanalyzehowvalue iscreatedandcapturedthroughout thesupplychain.Theresultsshowthatthereispotentialforsupplychainstoincreaseitstotalvaluethroughoff-peakdeliveries as a result of increasedefficiency, improveddelivery reliability and increasedutilizationoftrucks.Pricingmodelsandrelativenegotiationpowerbetweenactorshavealargeeffect on how the value is distributed. Themain contributors to creating increased value aresufficientdeliveryvolume,compatibleprocesses,andfullutilizationoftrucks.Thepossibilitytouseoff-peakdeliveriesformarketingisrelativelyunexploitedandcouldpotentiallycreatemorevalue.

Key-words Off-peak deliveries, urban freight distribution, sustainable transport solution, value creation,valueproposition,valuecapturing

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Examensarbete INDEK 2016:138

Nattliga leveranser från ett affärsmodellsperspektiv

Katarina Allmér

Sofia Feychting

Godkänt

2016-06-23 Examinator

Jannis Angelis Handledare

Andreas Feldmann

Uppdragsgivare

Scania CV AB Kontaktperson

Ulf Ceder

Sammanfattning Med en ökande befolkning i städer världen över ökar också behovet av varudistribution istadskärnor.Mångastäderharproblemmedträngsel i trafiken, isynnerhetunderrusningstidpåmorgonenoch eftermiddagen. Samtidigt är vägarna ofta nästan tommapånatten. I en delstäder,somStockholm,ärdet förbjudetattköratung lastbil i innerstadenundernatten.Dettabetyderattdistributörerär tvingadeattutföradessa leveranserunderdagtid, vilket leder tillineffektivdistribution.

Förattundersökamöjligheternaattutnyttjanattenstimmartillleveranser,vilketskullekunnaleda till ett mer effektivt distributionssystem och en ökad hållbarhet för staden, har ettpilotprojekt initierats av Stockholms Stad för att testa nattliga leveranser. Andra liknandeprojekt har stött på problem med att få företag att deltaga, och incitamenten för att flyttaleveranser till nattetid har varit otydliga. Därför syftar detta arbete till att undersöka vilkaincitament som finns för aktörer inom en försörjningskedja att göra detta byte och vilkahuvudfaktorersommöjliggörattkedjankandrafördelavdet.

Arbetet utförs i form av en fallstudie på pilotprojektet i Stockholm, och använder ettaffärsmodellsperspektivförattanalyserahurvärdeskapasochfångasinomkedjan.Resultatenvisar att det finns potential för försörjningskedjor att öka sitt totala värde genom nattligaleveranser som ett resultat av ökad effektivitet, förbättrad leveranssäkerhet och ökadnyttjandegrad av lastbilen. Prismodeller och relativ förhandlingsmakt mellan aktörer har enstor påverkan på hur värdet fördelas. De faktorer som bidrar mest till ett ökat värde ärtillräckligleveransvolym,kompatiblaprocesserochhögnyttjandegradavlastbilar.Möjlighetenatt använda nattliga leveranser för marknadsföringssyfte är relativt outnyttjat och skullepotentielltkunnaskapamervärde.

Nyckelord Nattliga leveranser, godsleverans i städer, hållbar transportlösning, värdeskapande,värdeerbjudande,värdefångst

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TableofContents1 Introduction..................................................................................................................................................................7

1.1 Background..........................................................................................................................................................7

1.2 Purpose..................................................................................................................................................................9

1.3 ResearchQuestion.............................................................................................................................................91.4 Delimitations.......................................................................................................................................................9

1.5 Contribution......................................................................................................................................................10

1.6 Disposition.........................................................................................................................................................10

2 Methodology..............................................................................................................................................................11

2.1 ResearchApproach........................................................................................................................................11

2.2 ResearchProcess............................................................................................................................................11

2.3 ValidityandReliability.................................................................................................................................16

3 LiteratureStudy.......................................................................................................................................................18

3.1 SupplyChains...................................................................................................................................................18

3.2 TheoreticalFrameworkforOff-PeakDeliveries...............................................................................21

4 EmpiricalBackground...........................................................................................................................................26

4.1 PreviousStudiesofOff-PeakDeliveries................................................................................................26

4.2 ThePilotProjectinStockholm..................................................................................................................29

4.3 ClientCompany................................................................................................................................................30

5 EmpiricalStudy........................................................................................................................................................31

5.1 ValueCreationfromOff-PeakDeliveries..............................................................................................31

5.2 ValueProposition...........................................................................................................................................475.3 ValueCapturing...............................................................................................................................................48

5.4 TruckManufacturers’PartinOff-PeakDeliveries...........................................................................56

6 Discussion...................................................................................................................................................................59

6.1 ValueCreation..................................................................................................................................................59

6.2 ValueProposition...........................................................................................................................................60

6.3 ValueCapturing...............................................................................................................................................61

6.4 Comparingresultswithpreviousoff-peaktrials..............................................................................62

6.5 Limitationsofthestudy...............................................................................................................................63

7 Conclusion..................................................................................................................................................................64

7.1 SuggestionsforFutureResearch.............................................................................................................65

References..........................................................................................................................................................................67

AppendixA:InterviewGuides...................................................................................................................................71

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TableofFiguresFigure1.Researchprocess..........................................................................................................................................12Figure2.Overviewofthecase...................................................................................................................................12Figure3.Thefocusofbusinessmodels.................................................................................................................23Figure4.Thethreecomponentsofthebusinessmodelframework........................................................24Figure5.Theflowofdeliveriestothegrocerystores.....................................................................................31Figure6.Theflowofdeliveriesfromthewholesalertotherestaurantsandhotels.........................32Figure7.Theeffectsoflongercontracts...............................................................................................................41Figure8.Distributionofprofitsandcostsincase1.........................................................................................51Figure9.Adisplayofthebusinesscaseofcase1.............................................................................................52Figure10.Distributionofprofitsandcostsincase2......................................................................................53Figure11.Adisplayofthebusinesscaseofcase2...........................................................................................53Figure12.Createdvaluefromoff-peakdeliveries..........................................................................................59

TableofTablesTable1.Interviewsduringthepreliminaryinvestigation............................................................................13Table2.Maininterviews..............................................................................................................................................15Table3.Pricingmodelofcase1................................................................................................................................49Table4.Pricingmodelofcase2................................................................................................................................49Table5.Pricingmodelofthetruckmanufacturer............................................................................................58

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1 IntroductionThis chapter provides a background for the master thesis. Why there is a need to furtherinvestigateoff-peakdeliveriesisexplainedandthepurposeandresearchquestionsaredescribed.Thescopeofthestudyaswellasitscontributionandstructureconcludesthischapter.

1.1 BackgroundAsthepopulationandtheeconomicgrowth inurbanareashavecontinuedto increaseduringrecent decades, the demand for urban freight transportation has also increased. Road-basedtransportation of goods has a large negative impact on cities since it contributes to trafficcongestion,airpollutionandnoisepollution.Thereisadependencyongoodstransportationbyroad,whichcreatesaneedtopromoteamoresustainabletransportindustryinordertoreducenegativeeffectssuchasgreenhousegasemissions(Browne,etal.,2012).

There should be considerable incentives for the industry to achieve increased transportefficiency,given that it impliesreducedresourceconsumptionwithout loweringperformance.Being able to decrease costs can often lead to a lowered environmental impact as well,especially in regard to transport efficiency, which would benefit the industry as well as thesociety(Arvidsson,etal.,2013).However,theefficiencyofurbangoodsdistributionisoftenlowandthereishighdegreeofresistancewhenitcomestoindustrychanges.Theinsufficientrateofnew implementations to increase the sustainability of the industry is evenmore problematicconsideringthatmanyproblemareaswithintransporthavealreadybeenidentifiedandseveralsolutions and improvements have been discussed and accepted; yet few are developed intoaction and implemented (Arvidsson, et al., 2013). In general, the profit margins of carriercompanies are very small,which reduces the ability tomakenew investments into transportefficiency;manycarrierscansimplynotaffordit,evenifthelargeinvestmentsareprofitableinthelongrun(Holguín-Veras,etal.,2014).

Severalcities intheUSandinEuropearepromotingcargodeliveriesduringoff-peakhoursinurbanareasasawaytoreducetrafficcongestionandimprovethesustainabilityofurbangoodstransportation. A shift to nightly deliveries has proved successful as a way to make thedeliveriesmoreefficient.TrialrunsinNewYorkcityshowedthatthetruckswereabletoreachtheir firststop75%fasterandthe followingstops50%fasterwhendeliveringgoodsduringoff-peakhours(Rudra&Verrall,2013).Otherinvestigationsofoff-peakdeliveriesshowthatitcreates great opportunities for the transport companies to increase their utilization of thetrucks, as well as improving the working conditions for the drivers (Holguín-Veras & Hart,2012).

Manystores,restaurantsandhotelsexpecttoreceivegoodsduringashorttimespanduringthemorninghoursinorderhaveacompletestockasthebusinessdaystarts(Cherrett,etal.,2012).Previous studies of off-peak deliveries show that by switching to off-peak deliveries, theserequirementscanstillbemetbutwithabetterreliabilityofthedeliveriessincethereisnoriskof congestion affecting delivery times. Furthermore, the utilization of the trucks can beimproved through both nightly and daily deliveries, which can lead to possibilities such asdecreasingthenumberoftrucksinthefleet(Georén,2015).Hence,off-peakdeliverieshavethepotentialtocontributetomoreefficientcargotransportation,thusimprovingthesustainabilityofthedeliveryindustry.

In Stockholm, there are also concerns regarding heavy traffic congestion and air pollutioncaused by the transport sector. Similarly to other European cities there are restrictions inStockholmregardingheavyhaulageduringnightlyhoursduetonoisepollutioncausedbythevehiclesandtheunloadingofgoods.After10pmandbefore6amitisprohibitedtodriveheavy

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haulage(over3.5tons)inmostpartsoftheinnercityofStockholm(Trafficadministration,Cityof Stockholm,2012). Instead,haulage contributes to thedaytime traffic congestion in the cityand theefficiencyofdeliveries is low.Therefore, theCityofStockholmhas initiatedaprojectwiththepurposeofevaluatingthebenefitsofallowingtruckstodelivergoodsduringoff-peakhours. The project is a collaboration that also includes Svebol Logistics AB, Lidl Sverige KB,Martin&Servera,ScaniaCVAB,ABVolvo,theRoyalInstituteofTechnologyandChalmers.TheRoyalInstituteofTechnologyactsasacoordinatoroftheproject.Thefieldtrialsstartedin2014andwillcontinuethroughout2016withtwotrucksdeliveringgoodstothreeLidlsupermarketsandalimitednumberofrestaurantsandhotels.

Rescheduling deliveries from daytime to off-peak hours affects all parts of the supply chaindifferently, and inorder to establishawillingness toparticipate there is aneed todetermineclear incentives for each actor. The stakeholders involved in off-peak deliveries constitute asystemandtheremustbeanaddedvalue,oratleastnotaloss,foreachparticipantandforthesystemasawhole inordertoacceptatransformationwithinthesystem.Thereisalsoaclearinterdependencywithin the system; the transport companies cannot deliver goods at night ifthe stores and restaurants are not willing to handle goods reception during these hours.However,itisnotclearwhetherallofthestakeholderswillbenefitfrombeingapartofoff-peakdeliveries. Off-peak trials in other cities have experienced difficulties in convincing certainstakeholders to be a part of an off-peak delivery system. The delivery solution has beensuccessfulforsomeparticipantswhilequitemanyhaveendedtheirparticipationafterthetrialperiod was over, according to Holguín-Veras et al. (2014). Different conditions, logisticalstructuresandbusinessstructuresamongthestakeholdershavealargeimpactonthesuccessrateofnightlydeliveriesandneedstobeinvestigatedfurther.Whenreviewingthedifficultiesofpreviousattempts it isevidentthat thestakeholdersarenotabletotakefulladvantageof thevalue created through off-peak deliveries. Therefore, this thesis aims to investigate whatincentivesthereareforactorswithinasupplychaintomakethisshiftandthekeyfactorsthatenablethesupplychaintoprofit.Howvalueiscreatedandcapturedthroughoff-peakdeliverieswillthereforeconstitutethekeypartoftheinvestigationofoff-peakdeliveriesinStockholm.

Theefficiencygains,asaresultofoff-peakdeliveries,areturnedintosavingswithinthesupplychain.Dependingonwhereinthesupplychaintheefficiencygainsarecreated,anddependingon the pricing models used between the stakeholders, more savings will be distributed tocertain stakeholderwhile somemight not achieve any savings at all fromoff-peakdeliveries.Dependingonthedifferentprocessesandresourcesofthestakeholders,thevaluecreationwilldiffer fromcase tocase.The interactionsbetween thestakeholderswill also impact thevaluecreationandvaluecapturing.InordertotakepartinthepilotprojectinStockholm,thecarrierhas to operate eco-efficient trucks and this will most likely be a requirement of any futurenightlypermit;henceoff-peakdeliverieshastogenerateenoughsavingforthestakeholdersforthemtoaffordmoreexpensivetrucksandequipment.Thereispotentiallyagreatdealofvaluethatcanbecreatedwhenswitchingtooff-peakdeliveries,notjustfortheactiveparticipantsinthesupplychainbutalsoforthecityofStockholmandthetruckmanufacturersthatprovidethedistributionwithanewkindtransportsolution:quietgoodstransportationatnight.

This master thesis is conducted on behalf of Scania, with the purpose of increasing theirunderstandingof thisnew transport solution. In order toprovide its customerwith the rightkindofproductsandservice, there isaneedtounderstandnot just thecustomerbutalsothecustomer’scustomerandthesupplychainasawhole.

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1.2 PurposeThe purpose of this thesis is to increase the knowledge about what incentives there are foractorswithinasupplychaintoswitchtooff-peakdeliveries.Tounderstandthis,itisimportantto investigate how value is created within the supply chain when switching to off-peakdeliveries,andhowthisvalueiscapturedanddistributedbetweenthestakeholders.Basedonthis, it is possible to identify the key aspects thatmake off-peak deliveries beneficial for thestakeholdersandhowtofurtherincreasethevaluecreatedfromthenewtransportsolution.

1.3 ResearchQuestionBasedonthepurposeofthethesis,thefollowingresearchquestionshavebeenformulated:

• How is value created from off-peak deliveries and how is this value captured anddistributedbetweenthestakeholders?

o Whatare thekey factors that enable the stakeholders tobenefit fromoff-peakdeliveries?

Basedontheresultsoftheinvestigationofthefirstresearchquestion,possibilitiestocreateorcapturemorevaluewillbeanalyzed;thusthefollowingquestionwillbeanswered:

• Whichfactorsallowmorevaluetobecreatedandcapturedfromoff-peakdeliveries?

1.4 Delimitations TheinvestigationwillfocusonthepilotprojectinStockholm;hencetheoff-peaktrialsinothercitieswillonlybeused togathersecondarydata togainmoreknowledgeabout the transportsolution.

Forthepurposeofthisthesis,off-peakdeliveriesaredefinedasdeliveriesthatoccurbetweenthehoursof22:00-06:00,whichwaspreviouslyarestrictedtimezonefordeliverieswithheavyhaulageinStockholmCity.

Theinteractionsbetweenthestakeholderscanbeseenaspartofasystemsurroundingoff-peakdeliveries. The carrier, shipper and receiversmakeup a part of the supply chain thatwill beaffectedbyoff-peakdeliveries.Thetruckmanufacturerisalsoconsideredastakeholdersinceitisaffectedbythevaluethatiscreatedbymoreefficientdeliveriesanditsofferingispartoftheconditionsthatenabletheexistenceofoff-peakdeliveries.

Thestudywillnotcontributewithanynewconclusionsregardingtheenvironmentalimpactofcargodeliveriesatnight,norwillthenoiselevelsofthedeliveriesbeinvestigatedfurther.Itisalsonotpartof the scope toquantify all of the costs and savingswithinoff-peak; instead theintentionistocreateanunderstandingofhowthecostsandsavingsimpacttheincentivesofthedifferentstakeholdersthroughqualitativeinterviews.

Theregulationsregardingoff-peakdeliveriesthattheCityofStockholmwillformulatewillonlybeusedasboundaryconditionsinthecasestudy.AssumptionsregardingthefuturepolicywillbemadebasedoninterviewswiththeCityofStockholmandusedinthiscase.ThebenefitsandtheweaknessesofthetransportationsolutionfortheCityofStockholmandthesocietywillbeapartofthecontext.

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1.5 ContributionThe thesiswill contribute toan increasedunderstandingofhowaddinganight shiftwithinasupplychainaffectsthestakeholdersindividuallyandaspartofasysteminregardtothevaluethatiscreatedandcaptured.

The practical contribution is to increase the understanding of the incentives that exist forcompanies toswitchtooff-peakdeliveriesandthekey factors thatenable thesupplychaintobenefitfromthistransportsolution.

1.6 DispositionThedispositionofthethesisisoutlinedasfollows;

1. IntroductionThischapterincludesbackgroundtotheresearch,aswellaspurpose,researchquestion,delimitationsandcontribution.

2. MethodologyThechosenmethodandresearchdesignispresentedinthischapter.

3. LiteratureStudyThis chapter includes a reviewof relevant literature and the theoretical framework ispresented.

4. EmpiricalBackgroundThe empirical background includes previous studies of off-peak deliveries and adescription of the pilot project in Stockholm. A presentation of the client companyconcludesthechapter.

5. EmpiricalStudyThe empirical data is presented in this chapter and analyzed in accordance with thetheoreticalframework.

6. DiscussionThis chapter presents a discussion regarding the findings and a generalization of theresults.

7. ConclusionIn this chapter, a conclusion regarding the findings is presented as well as arecommendationforfutureresearch.

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2 MethodologyIn this section the methodology used in this study is presented. First, the research approach isdiscussedandmotivated,followedbyadescriptionoftheresearchprocessandadiscussionofthevalidityandreliabilityofthestudy.

2.1 ResearchApproachTheresearchofthisthesishasbeenperformedasacasestudy.AccordingtoEisenhardt(1989),thecasestudyisaresearchstrategythatfocusesonunderstandingthedynamicspresentwithinsingle settings, and is particularly appropriate when little is known about a specificphenomenon or current perspectives seem inadequate. A case study provides in-depthknowledgeofaphenomenonexploredwithinitsnaturalsettingwherethecontext isessential(Collis&Hussey,2014).Sincethephenomenonofoff-peakdeliveriesisnewwithinthespecificsettingsofStockholm,thecasestudyisthereforeasuitablemethodtogaindeepunderstandingabout theparticularcircumstancespresent there.Althoughdrawinggeneralizableconclusionsfromcasestudiesisachallengeandneedstobedonewithcare,theresultscanhavehighimpactandhighvalidityamongpractitioners(Voss,etal.,2002).

Vossetal.(2002)emphasizethepossibilityofthecasestudytobeusedforexploratoryresearchas one of its outstanding strengths. Exploratory studies are appropriate when there are fewexistingstudiesaboutthespecificissue,andareusedtofindpatternsandideas,andgaininsightand familiarity with the problem. They also aim to create rather than test and confirmhypotheses(Collis&Hussey,2014).Thelimitedresearchonoff-peakdeliveriesthereforemakesthis kindof research suitable for this thesis.Becauseof the complexity of the studied systemwiththeseveraldifferentactors involvedandtherelationshipbetweenthoseactorsasoneofthemainunitsofanalysis,thisstudyhasfocusedonqualitativedatatoachievesufficientdepthanddetail.

2.2 ResearchProcessIn contrast to what the following, rather linear description of the research process mightindicate, thisstudy is theproductofan iterativeprocesswithcontinuouschangesofresearchquestionsandpurposeaswellasstudiedtheory,asnewdiscoverieshavebeenmadeduringthecourseoftheresearch.AccordingtoBlomkvistandHallin(2014),thisiscommonincasestudyresearchandusuallyleadstoamoreinterestingresult.Also,thedifferentstagesoftheresearchhaveoverlappedandseveralactivitieshavebeenperformedsimultaneously.

Theresearchproblemwasoriginallypresentedbytheclient,andwasthereaftercontinuouslydevelopedandnarroweddowninordertoreachafocusedandrelevantresearchquestion.Thisprocessstartedwithapreliminaryinvestigationofpreviousoff-peaktrials,aswellasareviewofabroadrangeofliteratureinordertoidentifyusefultheoreticalframeworks.Thedecisiontoperformtheresearchasacasestudywasmadeandthestructureandtimelineoftheresearchwassetup.CollisandHussey(2014)breakdownthecasestudymethodologyintothefollowingmainstages:

1) Selectingthecase2) Preliminaryinvestigation3) Datacollection4) Dataanalysis5) Writingthereport

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Thesestageseachconsistedofseveralactivities,andanoverviewoftheresearchprocesswithactivitiesperformedduringeachstageisdisplayedinFigure1.Amoredetaileddescriptionofeachstageofthestudyfollowsbelow.

Figure1.Researchprocess

2.2.1 CaseSelectionTheselectionofthecasehappenednaturallysincetheresearchproblempresentedbytheclientwas closely linked to the particular case. To study the case of the current off-peak trials inStockholm was therefore decided from the start, and the research problem and researchquestionsweredevelopedbasedontheavailablecase.Thescopeofthecaseandtheactorsthatweregoingtobestudiedweredetermined.Withinthecase,twoclearsub-caseswereidentified.Themaindifferenceisthatinonecasethesamecompanyactsastheshipperandreceiver,andintheotherthereisashippersupplyingmanydifferentreceivers.Sincethiswasconsideredanimportant difference, it was decided to study the two sub-cases separately and analyze theimpactofthedifferentlogisticsetups.Thetwodifferentsub-casesaredescribedfurtherbelowandanoverviewofthecaseispresentedinFigure2.Throughoutthisreportthetwodifferentsub-caseswill,forsimplicitypurposes,bereferredtoas“case1”and“case2”respectively.

Figure2.Overviewofthecase

Figure2displaysthesupplier-customerrelationshipswithinthecase,andnotthephysicalflowof goods. The truckmanufacturer is not included in the twodifferent sub-cases since its rolewithinoff-peakdeliveriesisindirect.

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Case1The first sub-case consists of a carrier and a grocery chain. The carrier provides the grocerychainwith the serviceofdeliveries to their stores.Thegoodsarepickedup from thegrocerychain’s own central warehouse, and then transported to stores in and around the city ofStockholm.Thismeansthatthegrocerychainactsasboththeshipperandreceiverinthiscase.Thegrocerychainisalsotransportbuyerasthecustomerofthecarrier.Withinthescopeoftheoff-peak trial project, one electric hybrid truck has permission to deliver to three inner-citystores.Thedeliveriestothesestoresarealsothesubjectofstudyincase1.

Case2In case 2, the participating actors consist of one carrier, one wholesaler, and 10 of thewholesaler’scustomers,mostlyhotelsandrestaurants.Thewholesalerprovides itscustomerswithgoods,andthecarrierprovidesthedeliveries.Thecarrieristhesamecarrierasincase1,anddelivers onbehalf of thewholesaler. Thewholesaler thereby acts as the shipper and thetransportbuyerinthiscase,whilethehotelsandrestaurantsactasreceivers.

2.2.2 PreliminaryInvestigationCollis and Hussey (2014) describe the preliminary investigation as the process of becomingfamiliar of the context within which the research will be conducted. For this thesis, thepreliminaryinvestigationwasaimedatgainingabasicunderstandingofthedifferentactorsandthe way they interacted within the case, in order to identify aspects that needed furtherinvestigationandcouldposeforamorefocusedresearchproblem.Thiswasdonebyconductingsemi-structured interviews with representatives of each of the key stakeholders about theirownparticipationinthetrials.Theinterviewswerekeptonahighlevelasthepurposewastogaingeneralknowledgeandunderstandingandthereforetherewasnotmuchfocusondetailedinformation.Thepreliminaryinvestigationalsohadthepurposetoestablishthecontextofthestudy,whichwasdoneby interviewinge.g.representativesof theCityofStockholmaboutthepoliticalandlegalparameters.TheinterviewsubjectsandtypesofinterviewsconductedduringthepreliminaryinvestigationarespecifiedinTable1.

Table1.Interviewsduringthepreliminaryinvestigation

As anotherpart of thepreliminary investigation, a reviewof previous off-peak trials in othercountrieswasconducted.Thiswasdoneinordertogainagreaterunderstandingoftheoff-peakphenomenonandwhatsuccessfactorsandchallengeshadbeenidentifiedinotherprojects.

Roleofinterviewsubject TypeofinterviewOwner,carriercompany InpersonHeadofLogistics,grocerychain InpersonHeadofTransport,wholesaler InpersonTransportEfficiencyResearcher,KTH,Off-Peakproject InpersonTransportEfficiencyResearcher,KTH,Off-Peakproject InpersonTransportPolicyResearcher,KTH,Off-Peakproject InpersonUrbanFreightResearcher,UniversityofChalmers,Off-Peakproject TelephoneTrafficPlanner,TheCityofStockholm,Off-Peakproject InpersonTrafficPlanner,TheCityofStockholm,Off-Peakproject InpersonIndustrialandFinancialManagement&LogisticsResearcher,UniversityofGothenburg

Telephone

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The literature reviewof this thesis hasmainly focused on the existing research about supplychain management, urban freight distribution, sustainable supply chains as well as businessmodels.Searchengines,suchasthesearchtoolPrimoprovidedbytheKTHlibraryandGoogleScholar,wereusedtofindrelevantarticlesfrompeer-reviewedjournals,andalargenumberofarticles were read and categorized according to content as suggested by Collis and Hussey(2014).Theresearchperformedwithinthisthesisinvolveschangedconditionswithinasupplychain that affects the supply chain management and urban distribution, and therefore theresearchwithinthisareawasexplored.Duringthepreliminarystudyofpreviousoff-peaktrials,apotentialproblemareawasidentifiedtobethevaluecreationandvaluecapturefromoff-peakdeliverieswithin the supply chain.Thiswasconsidered tobeworth investigating furtherandformedapreliminary researchproblem.Tostudy thisproblem,abusinessmodelperspectivewas deemed suitable to use as a theoretical framework to structure the research. Therefore,researchaboutbusinessmodelswasalsoincludedintheliteraturestudy.Differentdefinitionsof a businessmodelwere compared and assessed and from that an appropriate definition tobase the study on was concluded. The resulting definition, and the included breakdown ofcategories,wasthenusedasthefoundationoftheconceptualframeworkthatwasusedinordertostructurethedatacollectionaswellastheanalysisoftheresults.Vossetal.(2002)arguethatsuch a conceptual framework is important, even for inductive research approaches, tounderstand the general constructs and categories one intends to study, as well as theirrelationships.Thishelpstoselectwhatkeyfactors,constructsandvariablesthatareimportantandaretobeincludedinthestudy.

Basedon the informationgatheredand insights gained in thepreliminary interviewsand thereviewofpreviousoff-peaktrials,thepurposeandresearchquestionswererevisedtoachieveamorefocusedstudy.

2.2.3 DataCollectionThefirststepofthedatacollectionstageisdeterminingthesamplethatisgoingtobestudied(Collis&Hussey, 2014). In this thesis, the samplewas selectednaturally basedon the actorsinvolvedinthepilotproject.

Thenextstepistoselectthedatacollectionmethod.AccordingtoCollisandHussey(2014),themethodsfordatacollectionusedincasestudiesincludedocumentaryanalysis, interviewsandobservation.Interviewsareconsideredanappropriateresearchmethodwhentheaimistogainan in-depth understanding of a phenomenon and to discover new dimensions (Blomkvist &Hallin, 2014).Becauseof the complexityof the studied case andmany stakeholders involved,interviewswerechosenastheprimarymethodofdatacollectioninthisstudy.

The interviews were conducted in a semi-structured manner, with mostly open-endedquestions and discussions on relevant topics. Interview guides were constructed beforehandbased on the conceptual framework used, to make sure all the important aspects would becoveredduringtheinterview.Theintervieweeswereselectedinordertomakesureallactorswere included and on the basis of their knowledge about the involvement in the off-peakproject.Theinterviewguideswiththecoveredtopicsareincludedintheappendix.Someoftheinterviewswereconductedinperson,andsomewereconductedoverthephone.Theinterviewsubjects and types of interviews conducted during the data collection phase are specified inTable2.

Theobjectivewiththeinterviewswastogainadeeperandmoredetailedunderstandingaboutthe different actors’ businesses and business models, the benefits and challenges with theirparticipation in the off-peak project, and their relationships and interactions with the otheractors in the system. The focus of the interviewswas the value creation and value capturing

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resulting fromoff-peakdeliveries.The interviewsubjectswerealsoasked toquantify savingsandcosts, although inmanycases thesehadnotbeenmeasured.Thismeant that conclusionsregarding the profitability of off-peak deliveries had to bemade in a qualitativemanner andbasedontheinterviewees’perceptions.Thelimitedaccesstoquantitativeinformationhinderedthefinancialimpacttobeproven,andthiswasratherdiscussedasindications.

Table2.Maininterviews

Roleofinterviewsubject TypeofinterviewOwner,carriercompany InpersonHeadofLogistics,grocerychain InpersonHeadofTransport,wholesaler InpersonManager,restaurant TelephoneManager,cateringbusiness TelephoneFood&DrinkManager,hotel TelephoneDistrictManager,caféchain TelephoneKitchenManager,restaurant TelephonePurchasingManager,restaurant Telephone

2.2.4 DataAnalysisThedata analysiswithin a case study canbeperformedaswithin-case analysis or cross-caseanalysis (Collis & Hussey, 2014). Since this case study involves only one case, a within-caseanalysiswasused.Theideawithwithin-caseanalysisistobecomeintimatelyfamiliarwiththecase,whichmakes it possible to see theuniquepatterns (Eisenhardt, 1989). Somecross-caseanalysiswasalsousedtocomparethetwosub-cases.

Forthedataanalysisprocessinthisstudy,non-quantifyingmethodswereusedandaproceduresimilartothegeneralanalyticalprocedure,presentedbyCollisandHussey(2014),wasapplied.This procedure includes three simultaneous activities; reducing the data, displaying the dataanddrawingconclusions.Theseactivitiesoverlap,andstartalreadyduringthedatacollectionphase.

The reduction of data involves activities such as selecting, focusing and simplifying the datacollected(Collis&Hussey,2014).Duringtheinterviews,alargenumberoftopicswerecoveredand some of the information gathered was later determined to be irrelevant and thereforediscardedandnotpresentedintheresultsandanalysis.Thereductionwasdonebycategorizingthedatafrominterviewsinrelevantcategoriesaccordingtothetheoreticalframework,andthedatathatdidnotfitinanycategorywasdiscarded.

Displayingdataisawaytovisuallypresentinformation,whichhelpstodrawconclusionsfromcomplexdata(Collis&Hussey,2014).Inthisthesis,analyzingrelationshipsbetweenactorsaswell as internal factorswithin the stakeholders’ organizationswere important, and graphicalfiguresweresometimesusedtovisualizetheseresultstomakethemmorecomprehensible.

Conclusionshavebeendrawntosomeextentfromearlyonintheprocess,althoughtheywerekeptveryopenatfirst.Asmoredatawerecollectedanddeeperanalysiswasconducted,someconclusionschangedandothersgrewstronger.

2.2.5 WritingtheReportThewritingofthereporthasbeendonecontinuouslythroughouttheresearchproject,withthemainportionoftheworkloadconcentratedattheend.Thishasalsobeenaniterativeprocess,

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startingwithshortdraftsofsomeofthesectionsandaddingtoandchangingthecontentastheworkprogressed.

2.3 ValidityandReliabilityIn this section, the validity and reliability of this thesiswill be discussed. The discussionwillfollow the framework proposed by Gibbert et al (2008). With this framework, the authorssuggest four aspects, three on validity and one on reliability, which should be used whenevaluating a case study. These aspects are explained and presented below, followed by adiscussionabouttheirapplicationtothisstudyandidentifiedareasofimprovement.

Internalvalidity refers to the causal relationshipbetweenvariablesand results.This involveswhether the researcheruses causal arguments and logical reasoning that is strongenough todefend their conclusions. Internal validity can be enhanced using three measures: a clearresearch framework,patternmatching,and theory triangulation. (Gibbert,etal.,2008) In thisstudy, patternmatching has been attempted by comparing patterns found in this case studywith those found inprevious studies about off-peakdeliveries.However, the internal validitycould be improved by comparing patterns more thoroughly with predicted ones and fromdifferentcontexts.

Construct validity refers to whether the study actually investigates what it claims to, and towhatextenttheusedprocedureleadstoacorrectobservationofreality.Theaspectofconstructvalidity is important to considerduring thedata collectionphaseof the study.Twomeasuresare suggested to enhance construct validity: to establish a clear chain of evidence and totriangulate.(Gibbert,etal.,2008)Theconstructvalidityofthisstudycouldbecriticizedonthebasisof the lackof triangulation.Theresultsarebasedalmostsolelyonqualitativedata frominterviews,andcouldbeimprovedifquantitativedatawereusedasacomplement.Theuseofsurveys could ensure that conclusions could be drawn based upon quantitative evidence. Ifaccess was granted, internal documentation from the different involved companies could beusedasfurtherevidenceforanalysesandconclusions.

Externalvalidity,alsocalledgeneralizability,isbasedontheideathattheoriesmustbeproventoapplytostudiedphenomenanotonlyintheparticularsettinginwhichtheyarestudied,butin other settings as well. Methodologists describe two different kinds of generalization:statistical and analytical generalization. Statistical generalization indicates that conclusionsdrawn from one sample can be drawn about the entire population. Due to its nature, a casestudydoesnotallowforstatisticalgeneralization.Analyticalgeneralization,ontheotherhand,referstogeneralizationsfromempiricalobservationstotheory,ratherthantoapopulation.Atleast 4-10 different cases should be studied in order to provide a basis for analyticalgeneralization.Toenhancegeneralizability further, researchersareadvised toprovideaclearrationale for thecaseselection,andsufficientdetailson thecasestudycontext, forreaders tounderstand the sample. (Gibbert, et al., 2008)Beinga single case study, albeitdivided in twodifferentsub-cases,thegeneralizabilityofthisstudycanbeconsideredweak.Sincethestudiedphenomenonisratherunexploredinthespecificsetting,itisdifficulttodrawconclusionsfromthe results thatareguaranteed tobeapplicable ingeneral.To improve thegeneralizabilityofthestudy,moresimilarcaseswouldneedtobestudiedandcompared.

Reliability refers to the absence of random error, whichmeans that subsequent researcherscould reproduce the same results by conducting the study again. Reliability is abouttransparency and replication. Enhanced transparency can be achieved through carefuldocumentationofresearchprocedures,whichcanbedonebyproducingacasestudyprotocolthatspecifieshowthestudyhasbeenconducted.Toenhancereplication,acasestudydatabase

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canbesetupwherenotes,documentsandnarrativesarecollectedandmadeavailabletolaterinvestigators. (Gibbert,etal.,2008)To increasetransparency, themethodologysectionof thisthesis has been intended to be as specific as possible about how the studywas conducted. Amoredetailedcasestudyprotocolcould,however,havebeenprovidedinordertoimprovethetransparency even more. Furthermore, for replication, the interview guidelines used duringinterviews have been included in the appendix. However, since large parts of the interviewswereconductedinadiscussion-likemanner,someofthetopicscoveredmightnotbeincludedintheguidelines.Toimprovethereplicationofthestudy,therecordingsoftheinterviewscouldhavebeenmadeavailabletootherresearchers.

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3 LiteratureStudyThischaptercontainsanoverviewofrelevantsupplychaintheories.Thisisfollowedbyareviewoftheories regarding business models, which will constitute the theoretical framework for theinvestigationandanalysis.Theconceptofbusinessmodelswillbebrokendownintocomponentsthathavealargeimpactonoff-peakdeliveries,thuscreatingaframeworkthatcanbeusedintheanalysisoftheempiricaldata.

3.1 SupplyChainsSupplychainsarecomposedofflowsofproductsorservicesbetweenbusinessentitiesthatareconnected in a complex network (Serdarasan, 2013). The objective of a supply chain shouldalways be tomaximize the overall value generated in the chain. This value is also called thesupply chain surplus, and is the difference between the value of the final product to thecustomer,andallcoststhesupplychainincurstofulfillingthecustomer’srequest.Thismeansthatthesupplychainsurpluscanbeincreasedbyincreasingthevalueoftheproductorservice,orbyreducingthecostsincurredwhenproducingit.Supplychainprofitabilityisthedifferencebetween thepriceof theproductand the incurredcosts in thechain.Thesuccessofa supplychain should be measured by the supply chain profitability, and not the profitability of theindividualactorsinthechain(Chopra&Meindl,2013).

Themanagementofsupplychainsinvolvescoordinatingtheflowsofproductsorservicesonasystemicandstrategiclevel,bothwithinandacrossbusinessentities.Supplychainmanagementcan lead to a competitive advantage by reducing costs and increasing customer satisfaction,both for thedifferentbusinessesand for theentire supplechain.Asupplychain is adynamicand complex systemwhere the different relationships, processes and interactionswithin thesystemwillimpactthevaluecreatedinthesupplychain(Serdarasan,2013).

According to Morana (2013), supply chain management consists of three elements: therelationalstructureoftheactorswithinthesupplychain,themanagementofprocesseswithinthesupplychain,andthemanagementofcomponentswithinthesupplychain.Thecomponentscanincludemorephysicalandtechnicalcomponentssuchasthestructureoftheorganization,product flows and planning and control methods, while there are also managerial andbehavioural components suchas leadership structures, risk and rewardmanagement and thecultureandattitude.

Themostcommondefinition,accordingtoMorana(2013),describessupplychainmanagementas “the systematic, strategic coordination of the traditional business functions and the tacticsacrossthesebusiness functionswithinaparticularcompanyandacrossbusinesseswithinthesupply chain, for the purposes of improving the long-term performance of the individualcompaniesandthesupplychainasawhole.”

AccordingtoMelnyketal.(2009),supplychainmanagementisrelativelynewasaresearchareaandacademicfieldofstudy.Itisalsorelativelynewasanareaofbusinessdevelopment.Inthepast,themainfocusforsupplychainmanagementwasonpurchasingandmanagingorderandinformation flows.Thishaschanged intoawider focus thatalso includesmanagementof riskexposure,newproductdesignprocesses,improvingthecontinuityofsuppliesorevencustomerservicemanagement.Byincludingamuchwiderspectrumofresponsibilitieswithinthesupplychain,themanagementbecomesevenmorecomplex.

The theories of supply chain management have also continued to develop but according toChicksandetal.(2012),thereisalackofconsistencywithinthefield.Therearealsogapsinthetheoryandtherehasyettodevelopaparadigmsurroundingsupplychainmanagement.Österle

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etal.(2015)alsoarguethatthefieldhasaweaktheoreticalbasissinceithasitsorigininmanydifferentdisciplinarystudies.

As arguedbyMelnyk et al. (2009), supply chainmanagement is also changing rapidly due tonew technology,more complex customer demands and government initiatives that affect thevaluecreationwithin thesupplychain.Similarly, theyconclude that the field largelyreliesonexperientialknowledgeoriginatingfrompractitioners,thustheacademicliteratureisrelativelylimited.Hence, there isaneedto furtherstudychangeswithinsupplychainmanagementandhowthechangesaffecttheperformancewithinthechain.

Melnyk et al. (2009) also acknowledge that supply chain management is more than anintegrationofoperations,purchasing,and logistics,andstress thepoint thatother issuesalsoneed tobeanalyzed suchas strategicpartnershipsand relationshipswithin the supply chain.Resources and processes as well as relationships within the system determine how value iscreatedanddeliveredtothecustomers.Externalinfluencesalsoaffectthevaluecreationwithinthe supply chain but there is some disagreement regarding which factors to study. Withconstantly changing processes and networks, the managers of supply chains are not givenefficient tools to work well in such an environment, due to the gaps between theory andpractice.

3.1.1 UrbanFreightDistributionFreightdistribution is alsoavitalpartof the supply chainandconsistsof an intricatewebofstakeholders. In this thesis, urban freight distribution is the system that is studied. Theimportanceofahigh-performingurbanfreightdeliverysystemisgenerallyrecognized,duetothevalueofensuringsupplies tostoresandotherbusinesses (Österle,etal.,2015).However,there is a lack of attention given to urban freight movement as a research field. AccordingÖsterle et al. (2015), much more research has been conducted regarding the movement ofpeopleinurbanenvironmentsanditisimportanttoconductfurtherresearchonurbanfreightdistribution.Furthermore, coordination,partnershipsandcollaborationbetweenstakeholderswithin urban distribution systems should also be emphasized more, since these factors canincrease the value created within the system and are considered to be are crucial whendevelopingmoresustainableurbanfreightsystems.

Efficiencythatcanbedirectlylinkedtotheprofitabilityofacompanyisusuallythefactorthatdetermines which measures that will be taken within the urban supply chain, andenvironmentalandsocialaspectsareoftendisregarded.Consequently,goodsdistributionstillhasanegativeimpactontheenvironmentandcontributestoairpollution,noisepollutionandcongestion(Österle,etal.,2015).

3.1.2 SustainableSupplyChainsMore recently, sustainabilityhasbeen allowed toplay a biggerpartwithin thewide scopeofsupplychainmanagement.Eventhoughmanysupplychainsarefarfromsustainable,thereisanincreasedawarenessregardingtheimportanceofsustainabilityandmoreactionsaretakentoincrease the sustainability of supply chains. The efforts that are made into advancingsustainabilityalsocontributetomorechangeswithinthesupplychains.Itcanalsobetheotherway around, that constant changes to the structures and configuration of supply chainscontributetocompaniestakingactionstoimplementcorporateresponsibilitypractices(Beske,etal.,2014).The literaturecommonlyaccepts that theenvironmentcanbepositivelyaffectedby supply chainmanagement and sustainable supply chains have been receiving increasinglymore attention from researchers and practitioners during the last 10-15 years (Rossi, et al.,2013).

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AccordingtoSeuringandMüller(2008),thedefinitionofsustainablesupplychainmanagementcan be recognized as “themanagement of material, information and capital flows as well ascooperation among companies along the supply chain while taking goals from all threedimensionsof sustainabledevelopment, i.e., economic,environmentalandsocial, intoaccountwhich are derived from customer and stakeholder requirements.” Hence, within sustainablesupplychainmanagement,thereisanemphasisoncooperationamongthestakeholderswithinthe system, which is also something that is often present in other academic studies on thesubject. The stakeholders do not only consist of the companieswithin the chain but are alsomade up of other suppliers, legal authorities and other government branches (Beske, et al.,2014). However, according to Rossi et al. (2013), when initiating environmental actions, thestakeholdersoftenhaveaninternalcompanyviewratherthanasupplychainview,hencemanyimportantaspectsarelost.

When implementing initiatives to increase the sustainability of the supply chain, manycompanies experience a higher efficiency and improved logistics performance and resourceutilization(Beske,etal.,2014).AsstatedbyRossietal.(2013),itisgenerallyacknowledgedthatthesekindsofinitiativesresultinahigherperformancewhileatthesametimereducingcosts.Many companies still view eco-efficient practices as increasing the costs within the supplychain, but in general the literature supports these practices as a strategic way of creatingcompetitive advantage. What is still lacking is literature covering practical applications ofenvironmental initiatives in regard to performance and environmental issues within thelogistics industry.Additionally,manycompaniesexperiencea lackofcontrolofmanypartsofthe supply chain and a lack of competence regarding eco-efficient initiatives. The role of thelogistics service providers within these initiatives have also not been studied enough, butconsideringthelackofcontrolandexpertiseitwouldbebeneficialtoincorporatetheseactorsevenmore.Thecollaborationbetween thestakeholderswithin thesupplychainalsoneeds tointensify since it is often insufficient according to the literature (Rossi, et al., 2013).Furthermore,itisnotclearhowcompaniesevaluatetheenvironmentaleffectoftheinitiativesandtheeffectoftheincurredcosts.Inregardtotheevaluationofeco-efficientpractices,thereisalso a lackof knowledge regardinghow the companiesmeasureorperceivebenefits that aremore difficult to quantify. These softer values are nonetheless important which is why theirimpactforthecompaniesneedstobestudiedfurther.

3.1.3 RegulationsandSupplyChainsResearchoneco-efficientsupplychainmanagementhaveemphasizedtheimpactofseveralkeydrivers when aiming to make the supply chain management contribute to an increasedsustainability and eco-efficiency. According to literature, the most important driver whendeveloping environmental initiatives is to have supporting regulations in place. After that,marketpressurewasalsoconsideredanimportantdriveraccordingtoempiricalevidence(Lee,etal.,2014).Manychangeswithinsupplychainsarisefromchangesinregulationsandcanhaveanimpactthroughoutthesupplychain.

According toÖsterle et al. (2015), there is a lackof awarenessamongst companies regardingregulations and government practices that are specifically designed to increase thesustainability of freight operations. Due to the knowledge gap between companies andgovernment,thereisariskthattheimpactoftheseinitiativesisreducedorthatithasanegativeeffect for the companies if their operations clash with the new regulations or initiatives.Therefore, it is important to involve companies when creating new structures surroundingfreightplanninginordertoincreasetheunderstandingoftheimpactthatitwillhave.Thiscanalso lead to a better outcome of the initiatives and increase the effectiveness. Österle et al.(2015)emphasizean increasedcollaborationbetweenthepublicandprivatesectorregarding

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eco-friendlyinitiativeforfreightoperations.Itiswidelyknownthatcitylogisticsprojectshaveamuch better success rate with strong cooperation between stakeholders. However, theyconcludethatthereareveryfewcasestodatewherethepublicandprivatesectorhavecreatedsuch collaborations where the companies start to pay more attention to improving freightoperationwithintheoveralltransportplanningprocess.

3.2 TheoreticalFrameworkforOff-PeakDeliveriesAdistinctproblemareaforthesupplychainthatisapartofoff-peakdeliveriesisthatthevaluecreation from switching to nightly deliveries is insufficient or highly uncertain for manystakeholders compared to the incurred costs, or the value is captured unevenly between thestakeholders.Furthermore,manyof the stakeholders thatwouldbeable toachieve increasedsavings fromnightlydeliverieshavebeenunable toprovide their customerswithabeneficialvalue proposition in regard to off-peak deliveries; hence they have been unable to convincetheircustomerstoswitchtooff-peakdeliveries.Thisconclusioncanbemadebasedonotheroff-peak trials, where the financial incentives in the form of savings have not been enough tomotivateashift tooff-peakhours. It tookamassive increase in trafficduring theOlympics tomotivate businesses and freight operators in London to change to nightly deliveries. Severalreports from the trials inNewYork imply that thereshouldbeenough financial incentives tomotivateashifttooff-peakdeliveries,andthatitconstitutesamarketfailurethattherearenotmorenightlydeliveriestakingplace;insteadthecityofNewYorkhadtocreateagrantschemetoconvincecompaniestoimplementoff-peakdeliveries(Holguín-Veras,etal.,2014)(Holguín-Veras,2007),whichisreviewedfurtherinsection4.1.

Whenstudyingsupplychains,itisnotuncommontousetheoriesfromotherdisciplinesinordertoexplainthephenomenoninquestion(Chicksand,etal.,2012).Theissuewithintheoff-peaksupply chain that is studied in this thesis has to dowith value creation and value capturing;hencetheissuewillbestudiedfromabusinessmodelperspective.Thebusinessmodelsofthedifferent stakeholderswill determine the rate of successwhen investing in a new innovativewayofoperatingthebusiness.Therearemanychangesatanoperative level,but it isstill thedifferentcomponentsofthebusinessmodelsofthestakeholdersthatwillexplainhowvalueiscreatedandcapturedinregardtothesechanges.

3.2.1 BusinessModelsA business model describes how value is created and captured and how innovations andbusinessopportunitiesaremadeprofitable,thusmakingitavaluableframeworkforcompanies,which is generally accepted in the literature on business models (Carayannis, et al., 2014).During the last two decades there have been an increasing number of academic papersanalyzing business models and its practice, however there are still disagreements on manylevels over what a business model is. Theories regarding business models have developedwithincertain researchareasandcontainconceptualdifferencesacross theseareas;oneareabeing strategic issues, such as value creation, competitive advantage, and firm performance,which will be relevant for this thesis. On the other hand, there is still consensus regardingcertain aspects such as the ability of business models to explain value creation and valuecapturing,andprovideageneraldescriptionofthewayafirmdoesbusinessonasystemlevel.Businessmodelsconsistofavalueproposition,arevenuemodelandanetworkofrelationshipswheretheinteractionbetweenthesedifferentpartsisanimportantaspect(Zott,etal.,2011).

AccordingtoHacklinandWallnöfer(2012),theperformanceofcompaniesishighlyaffectedbythebusinessmodelsincethestructurebehindvaluecreationandvaluecapturingisdeterminedby the business model. Therefore, business model plays an important part in creating a

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competitive advantage. Given the intense competition when it comes to logistics services, itcreatespressure toevaluatebusinessmodelaspectsand transform thebusinessaway fromafocusonminimizingcostsandtowardsstrategicfactorsthatwillcreateamorelong-termvalueandcompetitiveadvantage(Chapman,etal.,2003).

Companies can analyze different elements of the business by using the business model as acognitiveframework,whichfacilitatestheintegrationandorganizationoftheseelements.Thisprovidesagoodfoundationwhenventuringintonewbusinessopportunities.Businessmodelsalsotakeexternalstakeholders intoconsideration,whichmeansthat it isamoreefficienttoolcomparedtomorefirm-centricconcepts,thusitissuitableinregardtobusinessopportunitieswithinmulti-actorsystems(Hacklin&Wallnöfer,2012).

3.2.2 ChangesandLargerTransformationsAccording to Zott et al. (2011), when companies face systemic changes in the way of doingbusiness, the business model is a useful framework for dealing with these changes. Bytransforming the business model and making it more effective, given the conditions andchallengesthatthecompanyencounters,onecanachieveagreatervaluecreationandincreasedcompetitive advantage. Thus, companies are able to compete through business modelinnovation.

Evenwhenfacedwithsmallerchanges,thiscanhaveasignificantimpactonthevaluecreationand value capturing of a company; hence the company can turn to its business model todeterminehowthechangesarecompatiblewiththestructuresandprocessesof thebusiness.Forcompaniesthatarefacedwithloweredmarginsandhighcompetition,whichlowerspricesandincreasesthecost-pressure,itcanbeverybeneficialinthelongruntoassessthebusinessmodelinregardtoadaptabilityandinnovation(Carayannis,etal.,2014).Adaptingthebusinessmodel,asdescribedin“ReinventingYourBusinessModel”byJohnsonetal.(2008),willenablenewbusinessopportunities tobe fullycaptured.Thus,by identifyinghowthebusinessmodelstructure for each stakeholderwithin off-peak is useful when fulfilling the value propositionthat the transportation solution contributes to, one canmore easilydistinguishwhich factorsthatarecrucialtocapturingthevaluethatiscreated,andwhichchangesthatcanincreasethevaluecreationandvaluecapturing.

Whentransformingthebusinesstobecomemoresustainable,companiesareoftenfacedwithahigh level of uncertainty, hidden systemic effects and complex coordination within systems,which complicates the decision-making process, according to Sommer (2012). Gauthier andGilomen (2016) argue that previous studies of sustainable transformations of supply chainshaveusuallynotpaidenoughattentiontoconnectionstootherbusinessmodelcomponents.Forexample, there is not enough consideration of the company’s value proposition and revenuemodels.Furthermore,thesesortsofchangesareusuallybuiltoncollaborationswithmanyotherstakeholders,which create aneed for the research to focuson collective implementation andmanagementandhowthisaffectsthevaluepropositionsofthestakeholders.

3.2.3 BusinessModelComponentsWhendescribing thedifferent componentsof abusinessmodel, the literatureoftenmentionsvalue creation, valuedeliveryandvalue capturing.Value creationexplainshowprocessesarecarried out and resources are transformed into value for a specific customer, while valuedeliverydescribeshow thevalue isdeliveredand towhom.Lastly, value capturingaddressescostmanagementandrevenuestreams(Carayannis,etal.,2014).Dividingthebusinessmodelintodifferentcomponentscanbeausefulanalyticaltool;eachcategorycanbestudiedin-depth

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while still analyzing how the different categories are inter-connected. This enables a holisticviewandprovidesaframeworkforacomprehensivestudy.

Many scholars place their main focus on components consisting of value creation and valuecapturing(Hacklin&Wallnöfer,2012),asdisplayedinFigure3.Whenreviewingtheliteratureonbusinessmodels,Shaferetal.(2005)found12differentdefinitionsofbusinessmodelsand42 different business model components. The authors argue for their own definition of abusinessmodel,whichisbasedonthetwocomponentsvaluecreationandvaluecapturing,withavaluenetworkasthesurroundingcontext.

Figure3.Thefocusofbusinessmodels

Value proposition is also an element that frequently appears in the literature on businessmodels. According to Teece (2010), the elements that the businessmodel describes are alsowhat support the value proposition of the company. Tongur and Engwall (2014) define thecomponentsofabusinessmodelframeworktoconsistofavalueproposition,valuecreationandvalue capturing,while Johnsonet al. (2008)divide thebusinessmodel into four components;customer value proposition, profit formula, key resources and key processes. The valueproposition describes how the offering is valuable to the customer, while the profit formularepresents the value capturing. The last two components, key resources and key processes,describehowvalueiscreated.

For this thesis, the business model framework will be divided into three components: valuecreation,valuepropositionandvaluecapturing,asrepresentedinFigure4.Thisisasimpleyetcomprehensivecategorizationofabusinessmodelthatisalsousedfrequentlybyotherstudies,whichiswhyitwillbeusedinthisthesiswhenanalyzingtheimplicationsofoff-peakdeliveries.When analyzing the empirical data, the value creation component will be divided intosubcategoriesconsistingofresourcesandprocessesinordertoobtainmoredetailedknowledgeregardinghowvalueiscreated.ThefocusonresourcesandprocesseshasbeeninspiredbythearticlebyJohnsonet.al(2008).Sincethisarticleoccursfrequentlyinotherstudiesonbusinessmodelsandisappliedtoageneralcontext,itscategorizationofabusinessmodelisconsideredtobesuitableinregardtooff-peakdeliveries.

Many other businessmodel frameworks are adapted to e-businesses according to Zott et al.(2011) and are therefore used in very different contexts compared to off-peak deliveries,makingthemlesssuitableforthisthesis.

ValueProposi-on

Valuecapturing

Valuecrea-on

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Figure4.Thethreecomponentsofthebusinessmodelframework

ValueCreationThevaluecreationasgenerallydescribedinbusinessmodelsconsistsofvaluecreatedforboththecompanyanditscustomer.

ValueCreatingResourcesPeople, relationships, technology, equipment, facilities and the channels that are needed tocreatevalueforthecompanyanditscustomersfallunderthiscategory.Standardresourcesthathaveaninsignificantimpactonthevaluecreationwillnotbeconsideredinthiscategory;onlytheresourcesthatcontributetoacompetitiveadvantageareinfocus(Johnson,etal.,2008).Theresources fall intocategoriessuchasphysicalresources, intellectualresourcessuchasbrandsand partnerships, human resources and financial resources (Osterwalder & Pigneur, 2010).Whenchangingdeliverymethods,manykeyresourcesareaffectedornewonesmaybeneeded.

Theownershipoftheresourceswillalsoaffecthowwellvalueiscreatedanddelivered.Havingcontroloverkeyresources,forexamplebyintegratingmoreofthevaluechain,isanimportantfactorwhencreatingacompetitiveadvantage(Richardson,2008).

CollaborativeValueCreationThroughPartnershipsMany successful companies create partnershipswith their customers in order to get a betterunderstandingofthecustomerandtobeabletocreateinnovativesupportservicesthatareinlinewith the identified customer need. Industries have becomemore customer-oriented andservice-focusedinordertoachieveagreatercompetitiveadvantage,wherethefocusisontheentirevaluechain(Chapman,etal.,2003).

Complex relationships and interactions between multiple actors will be key factors whenassumingabusinessmodelperspectiveonvalue creation.Many scholars focuson joint valuecreation,cooperationandpartnershipswhenstudyingbusinessmodels(Zott,etal.,2011),anditwillalsobeanimportantunitofanalysisinregardtooff-peakdeliveriessinceitismadeupofasystemofactorswheretheinteractionsarekeytothevaluecreationwithinthesupplychain.

Partnerships can also contribute to value creation since they can be an efficient tool toidentifying flawed routines and strategic blind spots, thus reducing risk and uncertainty andfacilitatingorganizationallearning,accordingtoSommer(2012).Rossietal.(2013)arguethatinnovationcapabilitiesoftenarisefrominter-organizationalpartnerships, thuscontributingtoimprovedvaluecreation,whichinturncreateasubstantialcompetitiveadvantage.

ValueCreatingProcessesA company’s key processes are essential to a successful value creation and consist of bothoperational and managerial tasks such as development, manufacturing, sales, planning andservice(Johnson,etal.,2008).Processesandactivitieswithinnetworkscanalsoconstitutekeyprocesses that contribute to the value proposition and the value capturing (Osterwalder &Pigneur,2010).

In order for a business model to be executed effectively, especially in regard to businesstransformations,companieshavetocontinuouslylookforneworadaptedprocesses,accordingtoSommer(2012).

ValuePropositionThe value proposition describes the value that is provided to the customer; Johnson et al.(2008)explain itasacompany’ssolution to thecustomer’s fundamentalproblem. Inorder tocreate a successful offering, the company has to understand the customer need and the

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processesinvolvedinfulfillingthecustomerneed.AccordingtoCarayannis(2014),aconvincingvaluepropositioncreatesvalueforthecustomerbutthevalueistargetedtospecificsegmentsandhowitispresentedanddeliveredwillalsoimpactthevalueoftheoffering.

Service-BasedValuePropositionAccording toKindström(2010), there is a trend that companies are trying to transform theirvalue proposition to focus less on products and more on services in order to achieve acompetitive advantage. Addingmore services is oneway to increase the value being created,thus improving the value proposition. This can be very effective in industries with highcompetition, where decreasing margins and low-cost competitors pose a threat. With anincreasedfocusonservices,manycompaniesexperienceadeepercustomerinteraction,whichcreatesarelationaldimensiontotheoffering.Thevalueoftheofferingcanincreaseasaresultof more customer input, increased trust and long-term partnerships, thus increasing themotivationforcompaniestochangetoaservice-basedvalueproposition.

ValuecapturingThebusinessmodelalsoexplainshowacompanycapturespartof thevaluethat iscreated. Itdescribesbothrevenuestreamsaswellasthecostmanagement(Johnson,etal.,2008).

PricingStrategiesThepricingmethodwillhavealargeimpactonthevaluethatacompanyisabletocaptureforitself.Matthyssensetal.(2008)describehowanindustrywithalargefocusoncostcontainmentandasalesvolumeorientationwillhavedifficultiesinintroducingnewvalueconceptsasjointoperations between suppliers and customers since the supply chain relationships are moreadversarial with mainly short-term perspectives. By changing pricing structures, as well ascollaborativemethods,newopportunitiesforvaluecreationandvaluesharingcouldinsteadbemadepossibleaccordingtotheauthors.

In regard to service industries, for example the goods transportation industry, the pricing isbased on parameters such as hourly billing or a fixed price per activity,whereas productioncompanies usually base the pricing on unit sales. Service industries can also utilize moreadvanced pricing mechanisms such as a price based on the increased productivity that theserviceenablesforthecustomerorothertypesofprofitsharingmethods(Kindström,2010).

ProfitSharingBeing innovative inregardtopricingprovidesacompanywithmanyopportunitiestocapturemore of the value for itself. Some sort of profit sharing mechanism is considered to be aninnovativepricingmethodthatisoftensuitableforservice-basedbusinessmodels.Inordertosuccessfullyuseprofitsharingmethods,thesupplierandthecustomermusthaveaclearviewon what to measure and how it should be measured (Kindström, 2010). Cost-based pricing,uncertaintyregardingthevaluecreationandanunevenbargainingpositionscancreatebarriersand prevent a profit sharing scheme which in turn will lower the supplier’s portion of thecreatedvalue(Töytäri,etal.,2015).

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4 EmpiricalBackgroundThis chapter contains a review of off-peak trial in other cities in order to create a greaterunderstandingoftheissuesthatarestudied.ApresentationofthepilotprojectinStockholmisalsoprovided.Thechapterisconcludedwithadescriptionofthemasterthesis’clientcompany,Scania,andtheirinterestinoff-peakdeliveries.

4.1 PreviousStudiesofOff-PeakDeliveriesOff-peak deliveries constitute a change within the supply chain that affects all of thestakeholders in different ways. It is also an eco-efficient initiative, which increases thesustainability of goods distribution. In many European cities, the delivery method has beenmadepossible due to changed regulations regarding driving heavy haulage at night,which isotherwise banned inmany cities. The lifted regulation is usually replacedwith requirementsregarding noise level or routes taken, whichmeans that the carriers, shippers and receivershavetoadapttheiroperationstothenewrequirementsaswellasthefactthattheoperationstakeplaceduringthenight.

Off-peak deliveries are usually conducted with assisted goods reception, meaning thatpersonnelarepresenttoreceivethegoods,orwithunassistedgoodsreception,whichimpliesthatthecarrierhasaccesstoastorageareaandunloadsthegoodswithoutanyofthereceiver’spersonnelbeingpresent.

Manycitieshaveingeneralfounditdifficulttoestablishoff-peakdeliveriesatawiderscale,duetotheaddedstaffcoststhatareimposedonthereceiversthatdonothaveunassisteddeliveryzones. Instead,many receivers have to extend personnel hours in order to receive the goodsduringoff-peakhours,whichoften implies that there is alsoan increasedsalary costbecausethe staff isworkingduringunsocial hours. Therehas alsobeen a resistance tomaking largerchangestothelogisticalstructure,forexampleimplementingunassistedgoodsreception,sincethere is still ahigh levelofuncertainty regarding thebenefitsofoff-peakdeliveries (Holguín-Veras, et al., 2014).Without knowing that investmentswill eventually becomeprofitable, thereceivers are unwilling tomake any investments.Without the receivers on board,many trialrunshavefailedtoestablishoff-peakdeliveriesasaviabletransportsolution(Holguín-Veras&Aros-Vera,2015).However,NewYorkCityhasmanaged toextendoff-peakdeliveriesbeyondthepilotstagebycreatingmoreincentivesforthereceivers(Holguín-Veras&Aros-Vera,2015).Since two trialperiodshavebeen concluded, over400businesseshave started tousenightlydeliveries,tosomeextent(Holguín-Veras,etal.,2013).

AccordingtoHolguín-Veras(2007),theinteractionsbetweenthereceiverandthecarrierhavealarge impact on the likelihood of switching to off-peak deliveries. Several studies haveconcludedthatthereceivers,andtosomeextenttheshipper,usuallyhavemoreinfluenceoverdelivery decisions compared to the carrier (Georén, 2015) (Holguín-Veras & Silas, 2012)(Holguín-Veras,etal.,2014).

4.1.1 NewYorkInNewYork,therehasnotbeenanystrictrestrictionregardingnoiselevelsanddeliverieshavebeenallowedtotakeplaceduringthenight.Inordertoincreasetherateofnightlydeliveries,ashorterpilotprojectwasinitiatedtoencouragemorecarriers,shippersandreceiverstomovegoods distribution to off-peak hours. The first pilot phase ended in 2010 and a laterimplementation phasewas introduced in June of 2011 (Holguín-Veras, et al., 2013). The firstpilotprojectincluded25receiversand8carriersthatshiftedtooff-peakdeliveriesduringonemonth(Holguín-Veras,etal.,2013).

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InNewYorkCity,themainobstaclewhenimplementingoff-peakdeliverieshasbeentheaddedcosts for the receivers, therefore they have generally been unwilling to make this change.AccordingtoHolguín-Verasetal.(2008),asmuchas95%ofthedeliveriesinthecitytakeplaceduringregularhourswhichmakes it clear that there isaneed toemphasize the incentivesofnightlydeliveriesforthereceivers.

Theurbandelivery industry ishighlycompetitivewithpricesusuallysetat themarginalcost.DaytimetollsinNewYorkhasbeenviewedasanincentivetoswitchtooff-peakdeliveriesbutithas failedtogarner furthermotivationtochangethedeliverytimestooff-peakhours.Studieshaveshownthatthecarriersareunabletotransferthecostofthedaytimetollstothereceivers;hence the incentive to switch to off-peak deliveries remains with the carrier. Given thedominanceofthereceiverinregardtodeliverydecisions,thedaytimetollsarenotaneffectivetooltodirectdeliveriesawayfrompeak-hours(Holguín-Veras,2007).Foraslittleas9%oftheoperations, thecarriersmanagedto transfer thecost to thereceivers,andthecostofdaytimetollsisgenerallyalotlowerthanthecostforthereceiverstoadjusttosuppliesduringoff-peakhours(Holguín-Veras&Aros-Vera,2015).

DuringthepilotruninNewYork,thereceiversweregivenfinancialcompensationtocovertheincreasedcostsofadjustingtheiroperationstooff-peakdeliveries,inordertomotivatethemtoparticipateintheproject.Thecompensationwasfinancedwiththehelpofthedaytimetollsanditwasconcludedthatthesubsidieswereaneffectiveincentiveasthewillingnesstoparticipateincreased(Holguín-Veras,2007).Consequently,whenthetrialrunsendedandsubsidieswereno longer administered, the participants that used staffed goods reception switched back todailydeliveriessince thecostofkeeping thestaffduringoff-peakhourswas toohighwithoutthesubsidies.However,mostoftheparticipantsthatusedunassistedgoodsreceptioncontinuedtouseoff-peakdeliveries, since thesegoods receiversdidnot experienceanyaddedpersonalcosts with nightly deliveries. They experienced mainly benefits such as a superior deliveryreliability,whichmeantthattheycoulddecreasesafetyinventorylevels.Havingthedeliveriesinplacewhen thebusinessdaystartedmade itpossible to identifydeliveryerrorsearlieron,which left more time to correct the order and resulted in fewer operational disruptions(Holguín-Veras&Aros-Vera,2015).

However, theunassisteddeliveriesrequireahigher levelof trustbetweenthecarrierandthereceiver since it often involves the receiver handing over keys to the facility or part of thefacility.Unassisteddeliveriesareusuallypreferredwhenthecarrier,shipperandreceiverareapart of the sameparent company or a related company, orwhen the receiver has a strongerpartnership with the carrier. Otherwise, more modifications of the storage facility might beneeded inorder toonlygive thedriveraccess toasmallpartof the facility.Furthermore, thenumber of receivers that are able to use assisteddeliveries is far greater than those that arewillingtoswitchtounassisteddeliveries,accordingtoHolguín-Verasetal.(2014).

Studieshaveshownthatwithanintegratedcarrier-receiveroperation,theincentivescreatedbyoff-peakdeliveriesbecomemoreeffectivesinceallofthestakeholderscantakeadvantageofthebenefits.Forindependentoperations,certainincentivesonlyimpactonestakeholderanddonotprovidebenefits tothesystemasawhole.Therefore,off-peakdeliveriesaremore likelytobeacceptedbyintegratedoperations(Holguín-Veras,2007).

Many studies of off-peak in New York have focused on the carrier being able to provide thereceiverswithadiscountfordeliveriesduringoff-peakhourssincedeliveringduringthenightcould provide the carrierwith a lot of savings, such as deliveringmore volumeduring fewerhours and increasing the utilization of the truck. However, due to the low margins of thecarriers and because the current delivery volumes during off-peak hours are too small toproduce enough profits, they cannot afford to discount the prices at this stage, which also

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hindersthedeliveryvolumesduringoff-peakhourstoincrease,thusconstitutingaviciouscycle(Holguín-Veras,etal.,2014).

4.1.2 LondonIn London, road transportation is used to delivermore than 90% of all freight, hence goodsdeliveriescontributeheavilytothecongestioninthecity(TransportforLondon,u.d.).Severalstudies show that the almost half of all urban deliveries in the UK are conducted during thehoursof06:00-12:00,andthemajorityof thesedeliveriescoincidewith theheaviestmorningcongestion period. For example, food retailers usually receive their deliveries in themorninghoursbefore09:00 (Cherrett, et al., 2012). InLondon,25%of the trafficduring07:00-11:00consistoffreightvehicles(TransportforLondon,u.d.).

LikeStockholm,urbanareas inEnglandalsohaverestrictionsregardingheavygoodsvehiclesduringnighttimeduetothenoiselevelsofthedeliveries.However,therehasbeenarelaxationof these restrictions to allow for trials to be conducted that evaluate the benefits of nightlydeliveriesandassessnoiselevelsandnoisereductionmethods.In2009,aschemetotestquietdeliverieswasestablishedandthetrialsstartedin2010atfivedifferentretaillocationsacrossEngland. The trials were deemed successful even though there were only marginalimprovements regarding delivery times and fuel consumption. Instead, themain focus of thetrialwas tomanage the increasednoise levels.A contributing factor to theperceived successrateof theprojectwasthewell-functioningpartnershipsandcooperationbetweencompaniesandlocalgovernment(Douglas,2011).

A new off-peak trial was initiated in London before the Olympics 2012, due to the heavydaytime traffic that theOlympic gameswould contribute to. Before the trial, only 3% of thebusinesseswerealreadytakingpartinnightlydeliveriesbutduringtheGames,15-20%ofthebusinesses and about a third of the freight operators had shifted to off-peak deliveries(Transport for London, 2012) (Transport for London, 2013). Over 50% of the participantsreported that they did not experiencing increased costswhen changing delivery hours,while38% of businesses and 32% of freight operators said to have experienced cost increases(TransportforLondon,2013).Thismeantthatasubstantialportionoffreightvehiclesshiftedtooff-peak hours and resulted in an adequate accessibility of the road networks during theOlympics(TransportforLondon,2012).

AftertheOlympics,only5%ofthebusinessesand3%ofthefreightoperatorsthathadchangedtonightlydeliveries continued todelivergoodsduringoff-peakhoursaccording toTransportforLondon(2013).Thereport“Travel inLondon”byTransportforLondon(2012)foundthatabout 25%of the freight operators that had switched to off-peakdeliveries or increased thedeliveries intended to keep delivering goods during off-peak hours after the Olympic games.According to Transport for London (2013), the key factors that motivate a use of off-peakdeliveriesarestatedasfollowed:

• Thereislesscongestionduringthesehours(mainreason),• Thebusinessisalreadya24-hoursoperation,• Customerrequirementsdemandoff-peakdeliveries,• Toasmallextent,costbenefits(cheaperdeliveries).

4.1.3 LosAngelesAsaresultofthesubstantialgrowthincontainertrafficbetween2000and2004attheportsofLos Angeles and Long Beach, a program was initiated in 2005 to reduce truck traffic andpollution by shiftingmore of the traffic to off-peak hours. During peak hours (Monday until

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Friday, 03:00-18:00) the carriers have to pay a feewhen accessing a terminal, thus creatingincentivestomoveoperationstooff-peakhours(PierPass,2016).Thefeeisusedtofinancetheaddedlaborandoperationalcoststhatincurwhenshiftingtooff-peakoperations.

Morethan30%ofthecontainercargohassincebeenshiftedtooff-peakhours(Holguín-Veras,2007)(LaBelle,2015).Thesuccessof theprogramcanbemainlycontributedto thedesignofthe fee. Since the fee is paidper20or 40 feet container, it is chargeddirectly to the shipperinstead of the carrier. Hence, the program is able to create incentives to switch to off-peakdeliveriesforthekeydecisionmaker,inthiscasetheshipper,whichcreatesanefficientcontrolmeasure.Thefeeisrelativelyhighwhichhasalsocontributedtothesuccessrateoftheprogram(Holguín-Veras,2007).

4.1.4 DenmarkIn Denmark, an off-peak trial project was initiated in 2012, where off-peak deliveries wereintroduced and evaluated in the country’s four biggest cities. The results show a significantpotential forhigherefficiency,bothfromafinancialandenvironmentalperspective,aswellasanincreasedqualityofdeliveries.Theprojectidentifiedbenefitsintermsoftimesavings,betterutilizationofmaterial(trucks)andfuelsavings.(Trafikstyrelsen,2014)

The project found some challenges with off-peak deliveries, such as sub-optimized deliveryroutes when only a small portion of receivers agreed to accept off-peak deliveries. Certainstoresarebannedfromnighttimedeliveriesbecauseofriskstodisturbnearbyresidents,whichadds to the problem of increasing volume of off-peak deliveries. They also identified somecomplicationswithreceiversthatdonothavestaffpresentatthetimeofdelivery,whichneedsto be solved with carrier access to the receiver’s facilities. However, this solution generallyrequireshighlevelsoftrustbetweenreceiverandcarrier.(Trafikstyrelsen,2014)

Anotherconclusionfromtheprojectwasthatsomesortofpoliticalinstrumentmightbeneededto create enough incentives for companies to invest in new technologies that enable off-peakdeliveries,astherearerisksinvolvedwithsuchinvestments.(Trafikstyrelsen,2014)

4.2 ThePilotProjectinStockholmIn Stockholm, there are restrictions regarding heavy haulage during the night due to noisepollutioncausedbythevehiclesandtheunloadingofgoods.After10pmandbefore6amitisprohibited to drive heavy haulage (over 3,5 tons) in the inner city of Stockholm (Trafficadministration,CityofStockholm,2012).TheCityofStockholmhasinitiatedaprojectwiththepurposeofevaluatingthebenefitsofallowingtruckstodelivergoodsduringoff-peakhours.Theproject is a collaboration that also includes Svebol Logistics AB, Lidl Sverige KB, Martin &Servera, Scania CV AB, AB Volvo, the Royal Institute of Technology and Chalmers. The RoyalInstituteofTechnologyactsasacoordinatoroftheproject.Thefieldtrialsstartedin2014andwillcontinuethroughout2016withtwotrucksdeliveringgoodstothreeLidlsupermarketsandalimitednumberofrestaurantsandhotels.

Theprojectstartedinmid-2014withnightlydeliveriestothethreeLidlstores.Inmid-2015,agas truckwas added to deliver goods during off-peak hours to approximately 10 restaurantsandhotelsthatarecustomersofMartin&Servera(Georén,2014).

TheCityofStockholmexpressedarequirementofthetrucksinthepilotprojecttobeclassifiedas clean trucks when giving the exemption to deliver goods at night. By formulating theregulationstoonlypermitcleantrucksduringoff-peakhours,theprojectcouldcontributeevenmoretoanincreasedsustainabilityinthetransportsector.Theexpressedaimistoincludesuch

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arequirementiftheregulationsarechangedinthefutureandageneralpermittodriveheavyhaulageduringoff-peakhoursincentralStockholmiscreated.

One gas truck from Scania and one hybrid truck from Volvo have been chosen for the pilotproject since these trucks fulfill the preliminary requirements. The trucks and the loadingequipment that are used in the project have been developed to keep the noise level to aminimum, which is also part of the requirements. Transport efficiency, the workingenvironmentandnoiselevelswillbemeasuredcontinuouslyduringtheprojectperiod(Georén,2014).By theendof2016, theprojectwillbeevaluatedbeforeanydecision ismadewhethertheoff-peaktrialswillcontinueandbeexpandedtoincludemoreparticipants.IthasyettobedeterminedwhatthetechnicalrequirementswouldlooklikeifthecityofStockholmdecidestoextendtheoff-peakdeliveryexemption.Any limitationtowhichroutes in thecity thatwillbeallowedhasalsonotbeendetermined(Brolinson&Skogens,2016).

However, the general view of the Traffic Administration in the City of Stockholm is that aschemethat includessubsidieswillnotberelevant forStockholm. Instead, theyhopethat thestakeholderscancreateenoughbenefitsfromoff-peakdeliveriestomakesubsidiesredundant.Therefore,itisevenmoreimportanttostudythevaluecreationandvaluecapturingofoff-peakdeliveriesinStockholmsinceitisverylikelythatsubsidieswillneverbeintroduced.

4.3 ClientCompanyThemasterthesisisconductedonbehalfofthecommercialvehiclemanufacturer,Scania.Scaniahas approximately 42 000 employees spread across 100 countries, with the head office inSödertälje,Sweden.Scaniareceivesitsrevenuesmainlyfromvehiclesandengines,repairsandmaintenance,financingandinsurances,andusedvehicles.Scaniaaimstoincreaseitscustomers’revenuesbyprovidingthemwithflexiblesolutionswithhighcapacity,whileloweringcostsforthecustomers, suchas fuelcosts.Scaniaalsoplacesa lotofvalue inunderstanding theentiresupplychain,whichmeansthatanunderstandingof thecarriers’customers issomethingthatScania strives for as well. By understanding the need of the companies that purchase theservicesof Scania’s customers, Scania is ableprovide its customerswith solutions that createvaluefurtherdowninthesupplychain(Scania,2015).

Consequently,Scaniahasaninterestinoff-peakdeliveriesandhowthistransportsolutioncanbe profitable for all of the stakeholders. With an increased understanding of the dynamicswithinoff-peakdeliveries,Scaniacanimproveitsvaluepropositiontoitscustomersinregardtothenewtransportsolution.

Scania’scurrentbusinessmodelisstillbasedonsellinghighqualityproductsandservicestoitscustomers that increase the profitability of the customers. Scania aims to build partnershipswith its customers and the customers’ customer, although the majority of the customerrelationshipsare,asoftoday,ofatransactionalnature(Bäck&Lewenhaupt,2015).

Scaniahassuppliedagastrucktobeusedforoff-peakdeliveriesinStockholm.ThegastruckisPIEKcertifiedwhichmeansthatthenoiselevelfromthetruckmustbelowerthan72dB(A)atadistanceof7,5metersfromthetruck.Comparedtoanormaldieseltruck,thiskindofvehicleisconsiderably quieter. A regular diesel truck produces noise almost twice of the PIEK level(Scania,2015).

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5 EmpiricalStudyIn this chapter the empirical results are presented and analyzed in regard to the theoreticalframework. The results fall under three categories: value creation, value proposition and valuecapturing.Theempiricalresultsarebasedoninterviewswiththestakeholderswithintheoff-peakproject and separated into two cases. Case 1 includes the carrier and the grocery chain whilecase2includesthesamecarrierbutalsoawholesalerthathastheroleofshipperandthereceiversthatconstituteagroupofrestaurantsandhotels.

5.1 ValueCreationfromOff-PeakDeliveriesThemain value created fromoff-peakdeliveries consists of increased transport efficiency forthe deliveries, increased utilization of the trucks, increased quality, and to some extent animprovedmarketpositioning.Awiderangeofactivitiesandresourceshasalargeimpactonthevaluecreation.Thetwocaseshavedifferentset-upsregardingprocessesandresources;hencethe extent of the value creationwithin the two cases differ. Firstly, the route design is quitedifferent in the two cases, where the truck delivering to the grocery stores drives longerdistancesbackandforthfromthestoragefacility,whilethewholesalerdistributesgoodswithonlyoneor two truckloads, as seen inFigure5andFigure6.The following sectionsdescribehowvalueiscreatedandhowitdiffersbetweenthecases.

Figure5.Theflowofdeliveriestothegrocerystores

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Figure6.Theflowofdeliveriesfromthewholesalertotherestaurantsandhotels

5.1.1 ValueCreationfromIncreasedTransportEfficiencyThetransportefficiencyreferredtointhissectionconstitutesimprovementsthathaveadirectimpactonoff-peakdeliveries.Inthiscase,itisthefactthatthetrucksareusedmoreefficientlyduring off-peak deliveries, which is one of the greatest quantifiable values since it results inlowereddeliverycostsbecausefewerhoursoftruckusageareneededintotal.Threefactorsarethemaincontributorstotheefficiencygain:fasterdeliveriesduetolesstraffic,betteraccesstoloadingzonesandmoredisperseddeliveries, i.e.beingabletoensurethatthecustomershaveaccesstothegoodsatthestartofthebusinessdaywhilestilldeliveringthegoodsduringalargetimeperiodduringthenightwhichenablesamoreefficientusageofthetrucks.

FasterDeliveriesperDrivingDistanceFasterdeliveriesduetolesstrafficcongestionsresultinfewerhoursoftruckusageforthesameamountofdeliveriesorbeingabletoreachmorereceiversduringthesameshift.ThetimegainhasnotbeenexactlydeterminedwithintheStockholmproject.Thereport“TheEfficiencyofOff-peakDeliveriesinStockholmCity”byLi(2015)estimatesthetimegainofthedeliveriestothegrocery stores to be at least 21 % and probably more in many instances. The time gain isvaluablesinceitresultsinareducedcostperdeliveredunit.

Case1–TheGroceryChainThedeliverytimetothethreegrocerystoresishighlyaffectedbythereducedtrafficduringoff-peakhours.Accordingtotheheadoflogisticsatthegrocerychain,theincreasedefficiencythatthe faster deliveries contribute to enables them to distribute the same volumes of goods butwith lower costs. They estimate that they save about two hours per 12-hour-shift from theincreased speed of driving at night.When compared to extreme traffic situationswith heavycongestion,theestimationisthatthetimegaincanbeuptofivehours.However,thesetimegainestimationshavenotbeenproperlymeasuredorverified.

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Case2–TheShipperandReceiversForthesecondcase,thedrivingtimeperkilometerisalsoperceivedtobeimprovedbutthereisnocomparativedata for thedrivingspeedwhentakingthesamerouteduringdaytimetraffic.The carrier and the shipper estimate that there is a time gain, given that the traffic ismuchlighterduringoff-peakhours,yetithasnotbeenquantified.Therefore,itisnotpossibletoputalotofemphasison thevaluecreated from increaseddrivingspeed incase2.According to theheadoftransportattheshipper,thetimegainislargelycounteractedbytwofactors,describedbelow,whichmeansthatthevalueofincreasedspeedofdrivingatnightisnotassubstantialasincase1.

Onefactorthatcounteractsthetimegainslightlyisthelongerroutetakenduringthenight.Oneof the receivers that used to operate in the inner city of Stockholmmoved its operation to asuburb outside of Stockholm, which has extended the driving distance and somewhatcounteractsthetimegainfromtheimproveddrivingspeed.However,accordingtothecarrier,thedistancebetweenthestopsisonaveragenotmuchlongerthanthedailyroutes.Someoftheafternoon routes are even more spread out while the morning routes usually have shorteraveragedistancescomparedtotheoff-peakroute.

It also takes longer to unload the truckswhendelivering during off-peak hours,which is thesecond factor that counteracts the timegain.Firstly, slightlymore time is spentonunloadingbecause the driver needs to be more careful when unloading to keep the noise level down.Secondly,thedriveroftenneedstocarrythegoodsfartherandplacethegoodscorrectlyinthestoragefacilitywithregardstochilled, frozenordryfood.Thisincreasedlevelofservicefromthedriveroccursmuchmorefrequentlyduringoff-peakdeliveries,comparedtodailydeliveries.Theextraactivitiestakemoretimeandaccordingtotheheadoftransportatthewholesaler,thiserases a lot of the time gain attained from the increased driving speed and it is difficult toestimate how much of an impact the time gain has on the overall performance of off-peakdeliveries.

MoreDispersedDeliveriesHavingtoreachmanyreceiversduringashorttimeperiodusually leadstomoretrucksbeingneeded which reduces the filling degree. To counteract this, the routes can be designed toinclude stops with more dispersed delivery times in order to increase the utilization of thetruck, but the tradeoff is usually longer routes. Off-peak deliveries create a larger deliverywindow,whichcanimproveboththefillingdegreeaswellastheroutestaken.

Although, it is not necessarily the nightly delivery period that enables this according to theowner of the carrier; several companies are already able to keep a high filling degree of thetrucksandplantheroutesmoreefficientlybyspreadingoutthedeliveriesduringtheday.Itistheconditionsandrequirementsof thecustomer’sbusiness that is thedetermining factor ifahigh filling degree and efficient routes can be achieved. As previously mentioned, manyreceiversofgroceriesprefer tohaveaccess to thegoods in thebeginningof thebusinessday,often before 9 in themorning. Formany of the receivers in both cases, thework intensifiesgraduallyduringthedayandafteracertaintimeperiod itbecomesverystressful toalsotakecareofdeliveries.Somereceiversalsoneedtohaveaccesstothesuppliesbeforeacertaintimeinordertohavetimetoplantherestofthebusinessday.Thiscreatesasmallerwindowoftimefor the deliveries and often results inmore trucks being needed in order to reach all of thecustomers within the given time span, which results in a lower filling degree. Under theseconditions, off-peak deliveries create a larger window of time for the distribution, whichimprovesthefillingrateofthetrucks,whilestillensuringthatthecustomershaveaccesstothegoodswhenthebusinessdaystarts.

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Case1–TheGroceryChainBeforeoff-peakdeliverieswereallowedtothethreegrocerystores,threedifferenttruckswereusedwhendeliveringgoods,inordertoensurethatallofthestoreswouldgetsuppliesaround7inthemorning.Inordertoimprovetheutilizationofthetrucks,theyusedtodelivergoodsinothercitiesmorethan10milesawayfromStockholm,beforedeliveringtotheinnercitystoresinStockholm,whichmeantthattheroutedesignwasfarfromoptimal.

Whenusingoff-peakdeliveries, thegrocerychainonlyusesone truck for the three innercitystores,sincethetruckisusedduringtheentirenightshift.Theotherdeliveriesthatweremadewhen using three trucks still remain but the logistics have improved drastically with muchshorterroutesandalargetimespanforcompletingthedeliveries,whichintheendmeansthatfewertrucksareneededtocarryoutdeliveries.Thisisoneofthegreatestbenefitsofoff-peakdeliveriesforthegrocerychain.

Case2–TheShipperandReceiversFor the shipper, one truck has beenmoved from daily deliveries to nightly deliveries,whichmeans that the same number of trucks is still being used in the regular fleet. Before usingnightlydeliveries,theyweresometimesforcedtorequestextratrucksinordertodeliverallthegoodsduringtherequireddeliveryperiodinthemorning,accordingtotheheadoftransportattheshipper.Whenimplementingoff-peakdeliveries,theymainlymovedthedeliveriesoftheirlargercustomerstooff-peakhours,whichprovidedsomerelieftothedailyroutessincealargequantity of these deliveries could be spread out during the night instead of being deliveredduringashort timeperiod in themorning.Thisalsoreducedtheneed forextra trucksduringthe morning and created enough free capacity to increase the delivered volume during themorninghours.However,itisuncleartowhatextenttheuseofextratruckshasdecreasedandthe financial impact that this has on the business. According to the head of transport at theshipper, off-peak deliveries constitute a long-term investment and there are not any clearsavingsforthemasofnow.

Theconditionsregardingtheflexibilityofthenightlydeliverytimesarealsodifferentincase2,compared to case 1. Many of the receivers in case 2 use assisted deliveries during off-peakhours, whichmeans that they are less flexible regarding delivery times, thus decreasing thedelivery timespan.Someof thereceiversuseunassisteddeliveriesbutdonotgive thedriveraccesstothechilledstoragefacilityduetosafetyreasons;insteadthegoodsareplacedinroomtemperature.Therefore, theoperation reliesondelivering thegoodscloser to the startof thebusiness day, allowing the receivers to take care of the goodswithin a short time span, thusmakingsurethatthegoodsarenotaffectedbybeinginroomtemperature.Thisalsodecreasestheflexibilityandlengthofthedeliveryperiod.

Overall,nightlydeliveriesstillhaveapositiveimpactontheabilitytodispersethedeliveries.Bymovingdeliveriestooff-peakhoursandfreeingupcapacityduringthemorningdeliveries,eventhe reliability of the daily deliveries has improved slightly. The ability to add a few newdeliveries to the morning routes due to this extra capacity is also valuable according to theshipper. The more dispersed deliveries give the shipper the possibility to complete moredeliverieswhileusingthesamenumberoftrucks,thusthesamecosts.Theheadoftransportattheshipperbelievethattheywouldbeabletodecreasethenumberoftrucksusedifthevolumeofdeliveredgoodsduringoff-peakhoursweretoincrease.Giventhatonlyasmallernumberofreceivers have agreed to off-peak deliveries, the positive effects regarding the deliveryefficiencydonothaveasubstantialimpact,asoftoday.

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BetterAccessToLoadingZonesThe deliveries are also more efficient because of the elimination of unnecessary routes thatoccurwhenthedriverisunabletodeliverthegoodsbecausetheloadingareaisoccupied.Whenoperatingduringthedaytime,otherbusinessesalsoreceivedeliveriesanditisnotuncommonthattheloadingdockisoccupiedwithothertrucksmakingdeliveriestonearbycompanies. Intheseinstances,thedriverhastoeithercircletheblockuntiltheloadingareabecomesavailableor continue the delivery route and return to the occupied slot later on when it might beavailable again, which is very time consuming and reduces the number of stops that can bemade per truck and hour. In some instances, the driver parks illegally which increases thenumber of parking tickets that the carrier receives. In the inner city there is generally notenoughloadingdocksandmanyofthemaresharedbyseveralbusinesses,butduringoff-peakhoursthereisnotanycompetingtrafficattheloadingzoneswhichresultsinaneliminationofextra routes. There is, however, an increased risk that cars are blocking the loading zonesduringthenight,buttheoverallavailabilityisincreased.Duetothereducedtrafficatnight,thetruckisalsolesslikelytoblockotherdriverswhenparkinginthestreetatnight.

Case1–TheGroceryChainThisdoesnotcreatemorevalue inthecaseof thegrocerychainsince ithas itsownallocatedloadingzonesformoststores.

Case2–TheShipperandReceiversWhendeliveringtosmallerbusinesses,asinthiscase,theincreasedavailabilityofloadingareasduringoff-peakhourscreatesalotofvaluewithinthesupplychain.Manyofthereceiversinthiscasedonothavetheirownloadingzone;hencetheroutesbecomemoreefficientwithoff-peakdeliveries, which increases the overall efficiency of the deliveries. The pricingmethod of thecarrier towardstheshipperwilldeterminewhoprofits themost fromthisefficiency,which isdiscussedfurtherintheanalysisinsection5.3.1.

5.1.2 ValueCreationfromIncreasedQualityOff-peakdeliveriesdonotonlycontributetovaluecreationintheformofincreasedefficiency,butalsoincreasesthequalityofthedeliveries.

ImprovedReliabilityofDeliveriesAnother observed value creation from off-peak deliveries is the improved reliability of thedeliveries. There are twoways of defining reliability for the customers. Either the customersneed to receive the deliveries before a specific time in the morning, which means that thereliability is improved with off-peak deliveries since the goods are always in place in themorning when delivered during the night, or the customers need to receive the goods at aspecific time,whichmeans that thereliability is improvedbecauseofadecreasedvarianceofthedrivingspeedduetolesstraffic.

For both cases that were studied, value is created for the carrier because of the increasedreliabilityofdeliveries.Decreasedvariancewhenmakingdeliverieswillmake iteasier forthecarrier to complete all of the deliveries within the contracted time period. This is not justconnectedtothefactthatthereisanincreaseddrivingspeedperkilometer.Whencontractsaredrawn up, the general driving speed is taken into account when determining the amount ofstopsthatcanbecompletedwithinacertaintimespan.However,duringpeak-hours,thereisahigher risk that the deliveries are not completed in time because the level of congestion canvaryalot.Thisresultsinovertimepaymentsfortheremainingtimethatittakestodeliverthegoods. During off-peak hours the variance of the driving speed is very low (Li, 2015),whichimpliesthatthedeliveryscheduleiseasiertocompleteontime.

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Byreducingdelays,thereceiversalsohavemoretimetocorrectdeliveryerrorssuchasmissingproducts or incorrect products, which is valuable for the stakeholders of both cases since itimproves the quality of deliveries and reduces obstacles for the regular business of thereceivers.However,thisisalsodifficulttoquantifyintermsofsavingsandcosts.

Case1–TheGroceryChainFor the grocery chain, the main value from more reliable deliveries is derived from alwayshavingaccesstothegoodsinthebeginningofthebusinessday,whichenablesamoreefficientsorting of the goods. Before off-peak deliveries were introduced in the inner city, the storesneededmorepersonnelavailableduringalongerperiodoftimeinthemorningsincetheydidnotknowwhenthegoodswouldarriveandhowmuchtimetheywouldhavetosortthegoods.Thegrocerystoresdonotuse large interimstorageareas for thegoods; instead theaim is tostoreasmuchaspossibleontheshelves,toahigherextentthanothergrocerystores.Therefore,itisahighprioritytostocktheshelveswithnewdeliveriesassoonasthebusinessdaystarts,sincemanyshelvesareemptyoralmostempty fromthepreviousbusinessday.Furthermore,the grocery stores receive large volumes of goods every day, which means that they needseveralemployeespresenttohandlethedeliveries.Withoff-peakdeliveriestheycanreducethenumberof employees thathandledeliveries, and thenumberof hours assigned towards this,sincetheyknowmorepreciselywhenthisassignmentcanstartandhowlongitwilltake.

Theabilitytodeliveratamoreexacttimeisalsovaluabletothegrocerychainsincethestorethatreceivesthefirstdeliveryduringthenightusesassistedgoodsreception,whichcreatesaneedtomatchthedeliverytimewiththescheduleoftheemployees.Itisalsoimportantthatthedeliveries arrive before the store closes. If the deliveries arrive later than that, the storewillhavetopayovertimetotheemployees.

While the increasedefficiencyof thedeliveries results in largersavings for thegrocerychain,theincreasedreliabilityisagreatimprovementofqualitysinceitcontributestoensuringthatthecustomershaveaccess to thegoodswhen thestore isopen. If thedistributionofgoods isdelayed,itincreasestheriskofrunningoutofcertainitemsinthestore.Thiscanbecomecostlyinthelongrun,giventhatalowerqualityofservicecanresultinfewercustomers.

Case2–TheShipperandReceiversForthesecondcase,thereliabilityofdeliveriesisalsoveryimportantandcreatesalotofvaluewithinthesupplychain,especiallyforthegoodsreceivers.Howimportantitistoensureaccessto the deliveries before a certain time or how important it is to be able to deliver at amorespecific time varies depending on the arrangement at the receivers and their businessoperation. Some of the customers have assisted deliveries, which in general make it moreimportanttodeliveratamorespecifictime,atleastduringthetimespanwheretheemployeesareactuallypresent.Somehavebothassisteddeliveriesaswellasbusinessoperations takingplaceduring thenight,which increase the importanceof being able to receive the goods at aspecifictimetoensurethatthebusinessisnotobstructedbyearlyorlatedeliveries.Onlyforafewof the receiverswithin this case, off-peakdeliverieshave contributed to fewerpersonnelhoursneededtohandlethedeliveriesofgoods.Sincethereceiversknowwhentheywillhaveaccess to thedeliveries, it is easier to schedule personnel to sort the goods and reducing thetimeneededasasafetymargin.

Inthiscase, the improvedaccessibility to loadingzonesalso improvesthereliabilitysincethedeliveriesarenotdelayedbecauseofoccupiedloadingzones.

Accordingtotheheadoftransportattheshipper,theincreasedreliabilityisthemostvaluableaspectofoff-peakdeliveriessince itgreatly improvescustomersatisfaction,which ishowthe

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shipperkeeps itscustomersandreinforces itsbrand–resulting in increasedsales in the longrun.

However, the delivery method is not without fault. There have been instances when thedeliveriesarrivetooearlywhenthepersonnelresponsibleforreceivingthegoodsareoccupiedwiththeregularbusinessactivities,whichcausesdisruptionsforthereceivers.Although,thesesortsoferrorshavebeenreducedovertimeasthestakeholdershaveimprovedtheirroutinesregardingthedeliverychange.

DifferentWorkingEnvironmentfortheDriversWorking night shifts is generally believed to have negative health effects for the employees,which is why it is difficult to state that off-peak deliveries contribute to improved workingconditions.Butaccordingtotheownerofthecarrier,thedriversthatdonotmindworkingnightshiftsperceiveoff-peakdeliveriesasawaytoimprovetheirworkingenvironment,whichcanbeseen as an improved quality aspect surrounding the deliveries. Since the variation in drivingtimeisreduced,duetolesstrafficatnight,itismucheasierforthedriverstodeliverallofthegoods in linewith the schedule,which lowers the stress level for thedrivers. Theyhave alsoexperiencedthatthereducedtrafficcontributestofewertrafficaccidents,whichbothimprovesthe working conditions for the drivers as well as slightly lowers the cost of repairs for thecarrier.The improvedworkingenvironment isahighpriority for thecarriereven though thevalue isnotalwayseasilyquantified.Theownerof thecarrierbelievesthat thosedriversthatcanacceptnightshiftsobtainclearlyimprovedworkingconditionsandthatthisleadstofewerregistered cases of sick leave, whichwould imply lower costs. However, the sick leave rateshave not been quantified and given that night shifts are considered to have negative healtheffectsinthelongrun,itisdifficulttovalidatethisclaim.

Thereareotherimplicationsofthedifferentworkingconditionsduringoff-peakdeliveries.Theperformanceof thedriversusuallyhasarather large impactontheprofitabilityof thecarriercompanysincetheworkpaceofthedriverswillaffecttheabilitytocompletethedeliveriesontime.Ifthedriversdonotfinishthedeliveriesonschedule,it isthecarrierthathastoassumethecostsfortheextratimeneededtocompletethedeliveries.However,unpaiddeliveryhourscanbeavoidedtoagreaterextentduringoff-peakdeliveriessince it iseasier tocomplete thedeliveriesontimewhenthereislessvarianceindrivingspeed.Therefore,theworkpaceofthedriverwillhavelessimpactontheprofitabilityofthecarrier,whichmeansthattherewillbeahigher levelof acceptance regarding the individualworkpaceof theemployees.According totheownerofthecarrier,thedailydeliveriesputsahigherpressureonthedriverstohaveahighworkpace,whichmeansthatoff-peakdeliveriescouldleadtoalowerturnoverrate.Thisisalsosomething that has not been substantiated with any data, which means that it is morespeculativeandbasedontheexperienceoftheownerofthecarrier.

Case1–TheGroceryChainInthecaseofthegrocerychain,off-peakdeliveriesgreatly improvetheworkingconditionsofthedriversprovidedthat thedriverscanmanageworkingnightshifts.Even ifnightshiftsarenot preferred by some drivers, the improvement of the working conditions during off-peakhourscanstilloutweighthenegativeaspectsofnightshifts.Whendeliveringgoodsduringoff-peakhourstothegrocerychain,thenightshiftsstartsbefore10pm,andcoverstheentirenightwhichenablesthedrivertohaveatwenty-fourhoursrhythm,albeitworkingduringthenight.

Case2–TheShipperandReceiversInthecaseofthecarrierdeliveringgoodsfortheshipper,off-peakdeliveriesstillcreatemanyofthepositive aspectsmentioned above regarding theworking conditions.However, due to thestartingtimeoftheworkshift,thenegativeaspectsofworkingduringunsocialhoursincrease.

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Theshiftstartsat3inthemorning,whichmeansthattheshiftisneitherpurelyanightshiftnora morning shift. According to the head of transport at the shipper, this has created somedifficulties for the drivers when trying to create a daily routine that works. Therefore, itbecomesmoredifficulttofinddriversthatcanworksuchanoddshift.

5.1.3 ValueCreationfromImprovedUtilizationoftheTrucksImprovedutilizationofthetrucksalsoconstitutesincreasedtransportefficiencybutisplacedinits own category since it does not have a direct impact on the efficiency of the deliveries inquestion; instead it affects the overall logistical operations of the stakeholders. In these twocases, theutilizationof the trucks canbe improvedbyusing the trucksbothduring thenightshiftandthedayshift.Thiscanresultinaneedforasmallertruckfleet,whichwillgreatlyfavorcostmanagement.Thereareotherfinancialvaluesaswell;thecostofthetruckwillbespreadout overmore hourswhen increasing the utilization of the day, since the cost per day fromdeprecationofthetruckremainsthesame.Eitheritgivesthecarrierincreasedearningsperdayfrom the truck or it gives the shipper a lower price per shift, since the cost of the truck isdistributedovermorehoursofusage.Othercosts,suchas thesalarycostof thedriver,areofcourseaddedwhenincreasingtheutilization.Thereisalsomorewearandtearperday,whichmeans that the truckwillneedservicemoreoftenand the life spanof the truckwill likelybeshortened, but according to Löfstrand et al. (2015) and Williamsson (2016) the increasedearningsoutweightheseextracosts fromwearandtear.Thevaluecapturingof the increasedutilizationisdiscussedfurtherinsection5.3.

Case1–TheGroceryChainThehybridtruck isonlyusedduringthenight; thereforethere isno increasedutilizationthatcreatesvalueforanyofthestakeholders.Thereasonwhyitisnotusedduringthenightisnotconnectedtooff-peakdeliveries,insteadithastodowiththegenerallogisticalplanningofthecarrierandthegrocerychain.

Case2–TheShipperandReceiversBesides the night shift, the gas truck is also used during a shortmorning shift aswell as anafternoonshift,whichmeansthattheutilizationisatahigh levelandthestakeholdersdonothavetoaddanewtruckforthedaytimeshifts.Theheadoftransportatthewholesalerimpliedthatitcouldbeutilizedevenfurtherbutsincethenightshiftendsratherlate,theyarenotabletouseitforaregularmorningshift.Byusingthetruckmore,thecostperhourisdecreased.

5.1.4 ValueCreationfromImprovedMarketPositioningAvaluethatissignificantforthestakeholders,butnoteasilyquantified,isthemarketpositionthatoff-peakdeliveries contribute to.According to theownerof thecarrier, this is theaspectthat creates the most value for the carrier as well as its customers. The value of a positivemarketpositioningiscreatedfromthedifferentbeneficialqualitiesofoff-peakdeliveries;itisasolutionthatgreatlyimprovesboththeefficiencyandqualityofthedeliveriesanditplacesthecompaniesatthefrontieroftechnologicalandsustainabledevelopmentofurbandeliveries, incomparisontothecompetition.

An importantaspect forbothcases is that thestakeholderswithin theoff-peakprojectaresocalledfirst-moversinregardtooff-peakdeliveriesinStockholm.Thevaluethatiscreatedwhenswitching to nightly deliveries results in an improved offering to the customers and thesestakeholdersare the firstcompanieson themarket tooffer thisnewsolution, thus improvingthemarketpositioningevenfurther.

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By contributing to increased sustainability, the branding is also improved for the companies.Theprojecthas received somemedia attentionbecauseof its focusonmoreenvironmentallyfriendlytechnology,whichbenefitsthedifferentstakeholderswithintheproject.Severalofthestakeholdershavealsobeenvisibleinindustrypressduetooff-peakdeliveries.

For the carrier it is very important to have this position, in regard to both the studied cases.Accordingtotheownerofthecarrier,theycontinuouslymakeinvestmentsinnewtechnologyinorder to improve the offering to the customer, which positions them as a strong businesspartnerandthisistheirwayofcompetingonthemarket.Itwasstatedthatbeingabletoofferasolution such as off-peak deliveries earns the company new business opportunities andincreasedsales.

However, it isextremelydifficult toquantify thevalue fromthe improvedmarketpositioning.Therefore,theincentivethatitcreatesisnotasstrongasthepotentialsavingsthatareachievedfromincreasedefficiency.Thevalueofanincreasedmarketpositioningisalsomoreindirectasit will eventually affect the sales volumes in a positive way, whereas the value from theincreased reliability has a direct impact on the receivers since it has an immediate effect ontheiroperations.

TheExceptionProvidedbytheCityofStockholmAkeyfactorthatstrengthensthemarketpositioningevenfurtheristheconditionsofthepilotproject.Aspreviouslymentioned,theformatofaresearchprojectprovidesmoreopportunitiestogarnermediaattention,butanotherfactorthathasagreatimpactistheexceptionprovidedbytheCityofStockholmthatallowstheparticipantsintheprojecttodriveheavyhaulageintheinnercityduringnighttime.Thismeansthatthestakeholderswithintheprojecthaveexclusivityin offering off-peak deliveries, which naturally creates possibilities of added sales. This alsoresults in a lock-in effect; customers that prefer to receive goods during off-peak hours arerequiredtostaywiththeonlysupplierthatcanprovidethesekindsofdeliveries.

Regardingtheexclusivityandthe lock-ineffect, thecarrier is favored inbothcasessince theyaretheonlyonesthatcanprovideoff-peakdeliveriestocustomers.

Thenegative effect ofhaving anexceptionwithin theproject is that it ismoredifficult to getinvestedinoff-peakdeliverieslong-termsincethereisanuncertaintyregardingthedurabilityoftheexception.Ithasyettobedeterminediftheexceptionwillbeextendedaftertheprojecthasendedandifageneralexceptionwillbeintroduced.Thereluctancetoinvestcompletelyinoff-peak deliveries will hinder the development of new technology needed for the deliverymethod.Theuncertaintysurroundingitcanalsodiscouragecustomersfrommakingnecessaryinvestmentsthatareneededforoff-peakdeliveries.

Case1–TheGroceryChainThegrocerychainisaffectedmoreindirectlybythepositivemarketpositioningsinceoff-peakdeliveries are not a part of its offering to its customers. There is an indirect effect since thepositive attention that the grocery chain receives from off-peak deliveries will improve itsbrandingtowardsitscustomer.Itbecameclearfromtheinterviewsthatthereisagreatvalueinimprovingthegeneralviewofone’sbrand,whichiswhythegrocerychainhasinvestedfurtherfundsintopromotingtheirparticipationintheproject,suchasstripingthetruckwithitslogo.Thegrocerychaindoesnothavealock-ineffectsinceitdoesnotofferoff-peakbutare,fornow,locked to the carrier in order to continue to use off-peak deliveries for the three inner citystores.

Thegrocerychainisalsoreceivingpositiveindustrypublicity,suchasalogisticsaward,whichindirectly can have an impact on marketing if industry acknowledgement reaches the

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customers.At thispointhowever, it isunclear towhatextent this reaches the customers andveryfewmeasuresaretakentoactivelypromotethistowardsthecustomers.Accordingtothehead of logistics, it ismost likely notwidely known amongst the customers that the grocerychainisusingmoresustainabledeliverymethods.Nonetheless,thisisanaspectthatimprovesthecompany’scorporatesocialresponsibility,whichisalsovaluable.

Case2–TheShipperandReceiversIn the second case it is thewholesaler, in the role of shipper, that is affected directly by theimproved market positioning since transporting goods is a part of their offering to thecustomers. The lock-in effect that off-peak provides during the project phase also has a verypositive impact on thewholesaler, and it creates closer cooperationwith the customers. Thecustomersaredependentonthewholesaleriftheywanttokeepreceivingoff-peakdeliveries.

Although, transportation isnotapartof their corebusiness since it isoutsourced to carriers.Given that it is not a part of the core business, the effect on the market positioning can beconsideredtobelesssubstantialcomparedtothatofthecarrier.

The wholesaler has produced marketing material in order to highlight their participation insustainable solutions and get more receivers to choose off-peak deliveries. The head oftransport at thewholesaler believes that it is still notwidely known that off-peak deliverieshavebeen initiatedandthepotential that ithas. Instead, itseemstobemorevaluable for thewholesalertoinformthecustomersdirectlyofthisinitiativeaspartofthesalesprocess.

The receivers are also only indirectly affected by an improved market positioning, and to amuch lesser extent than the grocery chain. From the interviews it seemed as if none of thereceiverswereactivelyusingoff-peakdeliveriestopromotethemselves.Although,onereceiverisapartoftheshipper’smarketingmaterial,whichatleastprovidesthemwithsomeattentionwithintheindustry.

5.1.5 ValueCreationfromSpecificResourcesandProcessesTheunderlyingprocessesandresourcesofthecompaniesarecrucialwhenvalueiscreated.Asapartoftheempiricalstudy,theresourcesandprocessesthatchangedwheninitiatingoff-peakdeliverieswere identifiedandtheir impactonvaluecreationwithin theoff-peaksupplychainwereassessed.Theimpactonthevaluecreationfromnewresourcesandprocesseswerealsoevaluated and already existing resources and processes that became crucial to off-peakwereidentified.Theresultsarepresentedbelow.

ValueCreatingResources

ContractsLong-termcontractswerealreadyanexistingresourcebetween thecarrierand its customersbutthecontractsbecameincreasinglyimportantwheninitiatingoff-peakdeliveriessincetheymade it possible for the carrier to make larger investments for its customers that werenecessarytomeettherequirement,thusmakingthecontractsanindirectvalue-creatingfactor,assummarizedinFigure7.Thecontractsreducetheriskoflargerinvestmentssincethecarrierhave secured its revenues by guaranteeing payment over a longer period of time from itscustomers.Theyalsocreatemorestablepartnerships,whichenables thecarrier to focusonahigher level of customization. Customized deliveries and investments in new technologyconstitute both necessary requirements at this stage for off-peak deliveries as well ascontributingfactorsforthevaluecreation.

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Figure7.Theeffectsoflongercontracts

CompetenceOff-peak deliveries create a need for greater capabilities regarding technology compared tonormaldeliveriesandisanindirectfactor inthevaluecreationfromoff-peak,sinceitenablesotherdirectvalue-creatingfactors.Thecarrieraswellasbothcompaniesthathavetheroleofshipper, i.e. the grocery chain and the wholesaler, mention the importance of technologicalcompetence.Off-peakdeliveriesinStockholmrequiretheuseofbothenvironmentallyfriendlytechnologyandnoisereducingtechnologywhichmeansthatatleastoneactorwithinthatpartofthesupplychainneedstounderstandthetechnologyandbeabletokeepthecostsdown.Inboth cases this has mainly been the responsibility of the carrier, while of course all of thestakeholders are more or less active when it comes to implementation. The considerableexpertise of the carrier is also one of the reasons the grocery chain agreed to sign a longercontract with the carrier; it was a crucial part of the value proposition from the carrier,accordingtotheheadoflogisticsatthegrocerychain.

Nonetheless, the grocery chain has also obtained increased knowledge regarding quietequipment, since theyhavehad tomakemore investments intonew technology compared tothe shipper of case 2. The truck manufacturers also have to possess certain capabilitiesregarding the modifications of the trucks used for off-peak deliveries. Scania had alreadyproduced silent trucks for PIEK certification (a certification regardingmaximumnoise level),butsincetherearedifferentregulationsindifferentcities,itputsmorepressureontheabilitytoproducequiettrucks.

ValueCreatingProcesses

UnloadingofGoodsOff-peakdeliverieshave led to a change in theprocessofunloadinggoods. Inboth cases, thedriversneedtobemoreaccuratewhenunloadingthegoodsanditismoreimportantwherethegoodsareplacedafterunloading.Sincemanyofthereceiversuseeitherunassisteddeliveriesoruse personnel that are not accustomed to receiving goods, more responsibility has beentransferredtothedriversregardingtheplacementofthegoods;hencetheactionsofthedriverhavebecomemorevaluablewithinoff-peak.Thisistrueforbothcase1and2.

Forcase2,thishasresultedinhigherlevelofserviceofferedbytheshippertothereceivers.Theworkloadofthedriverhasincreasedsincetherearemoreactivitiessurroundingtheunloadingof goods, which takes more time. More time is also spent on unloading since it has to beconductedasquietlyaspossible.Thissomewhatcounteractstheefficiencygaincreatedbyoff-peakdeliveries.Accordingtotheheadoftransportattheshipper,theestimatedtimegainisstillpositive,butnotsubstantialenoughtocontributetoquantifiablesavings.Therehavealsobeen

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instanceswhenthechilledandfrozengoodsareplacedinthewrongpartofthestoragefacility,e.g. in roomtemperature,whichoftenresults inhaving to throwawaysomeof the food.Thiscausesalotofdisruptionsforthebusinessoperationssincethesedeliverieshavetobereplacedquicklyduringthemorningorthemanagerhastoredotheplanning.

CommunicationIn both cases, the communication between the stakeholders increased initially, which werenecessary inorder to implement off-peakdeliveries, hence the communicationwas crucial tothe value creation, although it constitutes an indirect value-creating factor. After theimplementation,thecommunicationreturnedtoanormallevel.

Inthecaseofthegrocerychainandthecarrier,thecommunicationisjustslightlyabovenormalatthispoint,sincetheystillhavetodosomefollow-upworkregardingnoiselevels.Therouteplanning has become more micromanaged according to the head of logistics at the grocerystore,whichincreasesthecommunicationtosomeextent.

Forthewholesalerofcase2,thecommunicationwiththecustomershasinsomeinstancesevendecreased since there are fewer delays when using off-peak deliveries; therefore thecommunicationregardingdelayshasdecreased.

Some of the communication has been transferred further down in the organization since thedemand for accuracywhen sorting and loading of the goodshas increasedwhichmeans thatthere ismore communication at an operative level according to the owner of the carrier. Ingeneral the view from the interview is that the communication has improved and becomeclearerratherthanincreased.

5.1.6 Case-SpecificResourcesandProcessesThecasesarequitedifferent;hencesomeresourcesandprocessesareonlyusedinthespecificcase.

Case1–TheGroceryChain

Resources

OwnerStructureoftheGroceryStoreThecentralizedownerstructureofthegrocerystoredoesnotnecessarilyincreasethevalueofoff-peakdeliveriesbut ithasmade itmucheasier to implementaswitch tonightlydeliveries.Accordingtotheheadoflogisticsatthegrocerystore,theorganizationalstructurecontributestoshorterleadtimeswhenitcomestodecision-making,wherethedecisionsaremadecentrally.Furthermore,thesupplychainishighlyintegratedwhichenablesalogisticalplanningthatcanutilizeeconomiesofscaletoagreaterextent.

Asdescribed inpreviousstudiesofoff-peak insection4.1, it canbeproblematic thatbenefitsfromoff-peakdeliveriesareobtainedunevenlythroughoutthesupplychain,sinceitlowerstheincentivestobeapartofthedeliverymethodforcertainstakeholders.However,thisaffectsthegrocerychaintoalesserextentbecausethecompanyisabletoobtainvaluefromseveralpartsofthesupplychainsincetheyownawiderpartofthechain.Byowningthegoodsandchannels,theycancontrolalargerpartofthesupplychainandcanoptimizetheiroperationsonalargerscale.

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ExperienceThe grocery chain has conducted off-peak deliveries for practically all of the stores wherenightlydeliveriesareallowed,suchasinthesuburbsofStockholm.Therefore,theyareusedtothese processes and have not been forced to change any of the methods at the centralwarehousefacility,whichmeansthatthecompanyhavemanagedtoavoidsomeofthepotentialcost increases of off-peak deliveries. Therefore, havingmade fewer changes to the operationdefinitelybringsvaluetothecompany.

Thecarrieralsohasalotofexperienceinnightlydeliveries.50%ofthecarrier’sdeliveriestakeplace during the night, which means that they are already experiencing the positive effectsassociatedwithnightlydeliveries.This,however,makesitmoredifficulttoquantifythepositiveeffectsofthestudiedoff-peakdeliveriessinceitishardertodeterminewhicheffectsaredirectlylinkedtotheinnercitytrials.

HybridTruckThehybrid truckboth contributes to the value creation and constitutes a requirementof off-peak deliveries. It contributes to the value that is created from the improved marketpositioning, since it isan innovativeproduct thatalsobenefits theenvironment.The rangeoftheelectricdriveisunfortunatelynotmuchmorethanakilometer;hencethefuelconsumptionofthetruckisonlyloweredbyapproximately4%.Thepriceofahybridtruckisconsiderablyhigherthanaregulardieseltruckbutwillbediscussedfurtherinsection5.3.

ModifiedLoadingZonesandSpecialEquipmentTherehavebeenseveralmodificationsoftheloadingzones,includingsofterasphalt,arampandquiet forklifts. Thesemodifications have beenmade to uphold the requirement of the City ofStockholm and do not contribute directly to the value creation for the companieswithin thesupplychain.Themodificationsarevaluableindirectlysincetheyenablethatoff-peakdeliveriescanbepermitted.

Processes

UnassistedDeliveriesThegrocerychainonlyusesassisteddeliveriesatoneofthethreeinnerstores,duetothefactthattheconditionsatthestoremadeitimpossibletorebuilditintoanunassistedfacility.Usingmainlyunassistedgoodsreceptioncreatestheincreasedflexibilityregardingdeliverytimethatenables more dispersed deliveries, thus using the trucks more efficiently. Therefore, thisresource constitutes a factor that enables value creation but does not increase the valuecreationitself.

LogisticalPlanningSinceoff-peakdeliverieswereimplemented,thelogisticshasbeenimproved,bothinregardtoroutesandtruckusage,butalsointermsofpersonnelhoursusedforsortinggoodsatthestores.The benefits to the logistical planning is that off-peak deliveries have createdmore logisticaloptionsandimprovedqualitythathasenabledastreamliningoflogisticalactivities.Byutilizingthelogisticalpossibilities,thevaluecreationhaveincreasedsinceresources(suchasthetrucks)arenowusedmoreefficientlywhichlowersthecostsoftheoperation.

Initially theamountof time spenton logisticalplanning increasedduring the implementationphasebecausemanydifferent logistical flowswereaffected,butthiswasonlytemporary.Thegrocerychainmanagesitsownplanningoflogisticsandthecarrierhastoadapttotheschedule.The downside of the logistical change for the three inner city stores is that the off-peakdistributionintheinnercityhasonlybeengivenatemporarypermissiontodeliverduringthe

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night and is a part of a researchprojectwhichmeans that the three stores arebound to onespecifictruckanditisnotpossibletochangethelogisticsofthissetup.Hencethelogisticsisnotasflexibleasitcouldhavebeen.

Case2–TheShipperandReceivers

Resources

LoadingZonesManyofthecustomersofthewholesalerdonothavesufficientareastounloadthetrucks,andthereforetheloadingzonesoftenconstituteaninadequateresourceinthiscase.Thechangetooff-peakdeliveriescontributetothatthisresourcebecomeslesssignificanttotheoperation.Aspreviously mentioned, the loading zones are more accessible at night due to less competingtraffic, and if the receiverdoesnothavea loadingareanearby there is alsoa lowered riskofblockingthestreetduringthenight.

GasTruckThegastruckisasignificantresourceinthesamewayasthehybridtruckisincase1,sinceitcontributes to the value creation of the positive market positioning by constituting a moresustainableinvestment.ItisalsopartoftherequirementoftheCityofStockholm.

Processes

SortingofGoodsattheWarehouseThe sorting and packaging of goods has to be conductedmore carefully now, since the newdelivery method requires a more accurate loading of the goods, with a clear separation offrozen,chilledanddrygoods.Themoreaccurateprocesshastostartalreadyatthewarehouse.Havingseparatedthegoodsinthecorrectcategoriesinthetruckwilleasethedriver’sworkatthecustomerfacility.Thisisnecessarywhenthedeliveriesareunassistedanditisthedriver’sresponsibility to carry in the goods and make sure that they are stored at the righttemperatures. It isalsonecessaryduringassisteddeliveries if thereceivingpersonnelarenotusedtosortthegoodsthemselves,forexampleifajanitorhasthisresponsibility.

Thisisanecessarysupportfunctionthatabsorbstimeandresourcesbutwithoutcreatinganyvalue on its own.Theprocesses at thewarehouse takes a bit longerwith off-peakdeliveries,about20-30minutespernight,but thewholesalerhasnotbeen forced to increasepersonnelhoursaccordingtotheirheadoftransport.Itwasdifficulttoimplementthischangeinprocessesand it tookawhilebefore inaccuracieswere reducedand theemployeesgotused to thenewprocedures. The opinion is that this could be improved further and that the more detailedmanagement of the goods could start even further back in the supply chain. This is alsoconnected to the communicationamongst thepersonnel, bothat the storage facility andwiththe drivers. The communication was crucial to the implementation of new processes at thestoragefacility.

AMixtureofDeliveryMethodsAllofthereceiversofcase2havetheirownspecificdeliveryneedsandrequirements;hencethedeliverymethodsvarybetweendifferentreceivers.Bothassistedandunassisteddeliveriesareusedbutthemajorityofthereceiversuseassisteddeliveries.Accordingtotheheadoftransportatthewholesaler,theaimofthedeliverymethodistokeepthecostsdown;otherwisethecostswouldoutweighthebenefitsofoff-peakdeliveries,andtonotcausedisruptionsfortheregularbusinessofthereceivers.Itwasevenstatedduringtheinterviewswithboththewholesalerandthe receivers that the receivers would not accept off-peak deliveries if it required toomany

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changesoftheregularoperationandifitresultedanyaddedcosts,wherethecostfactorwasthemostimportantone.Thefollowingtextdescribesthedifferentmethodsused.

Assisted deliveries are only used when the receiver has its regularly scheduled personnelavailabletoacceptthegoodsduringoff-peakhours.Although,itvariesfromcasetocaseifthesamepersonnelthatusedtoreceivethegoodsbeforeoff-peakdeliverieswereused,orifotheremployeeshavetoacceptgoods,suchas janitorsorcleaningpersonnel. In thiscase,allof thereceiversthatuseassisteddeliverieshavenotbeenforcedtoextendpersonnelhoursinordertobepresentforthedeliveries,whichkeepsthecostsdown.Accordingtotheinterviewswithboththereceiversandtheshipper,thisconstitutesarequirementtobeabletotakepartinassistedoff-peakdeliveriessinceextrapersonnelhoursaretoocostly.Theyarealsoexposedtotheriskofchangingworkscheduleswhichcanmakeit impossibletocontinuewithoff-peakdeliverieswithoutextendingpersonnelhours.Onereceiverthatinitiallywasapartofoff-peakdeliveriesreducedtheiropeninghours,whichmeantthatthechefsthatusedtoreceivethegoodsduringoff-peakhourswerenolongerabletoacceptthegoodsduringtheirregularworkinghours.Thecostofextendingtheirshiftwasdeemedunacceptable forthecompany,which ledtoaswitchbacktodaytimedeliveriesinstead.

Many of the unassisted and the some of the assisted deliveries, typically those that usepersonnelthatusuallydonotsortgoods,aredependentonaclearseparationofthedeliveredchilled, frozenanddrygoodsand that it is thedriver that takes responsibility for sorting thegoodsandplacingthegoodscorrectlyinthestoragearea.Thishasbeenproblematicbutasthetimeprogressed,manyofthedeliveryerrorswereeliminated,aspreviouslymentioned.

Except for thedeliveryerrorswhensorting thegoods, theunassisteddeliveriesarebeneficialsincetheyaremoreflexibleandthereisnoriskofaddedpersonnelcosts.Thereceiversinthiscase that use unassisted deliveries have not rebuilt any part of their storage area, since thiswouldresultinaddedcosts,whichisgenerallynotaccepted.Severalreceiversmentionedthatitisnotanoptionforthemtogivethedriversaccesstothestoragepremisesincethismeantthatthedriverswouldhaveaccess to theentire facility,whichwas considered toogreatof a risk.Instead the goods are placed in a locked area in room temperature andhave to be deliveredcloser to the opening hours of the receivers. Placing the goods in room temperature is not apreferredmethod since there is a risk of reducing the quality of the goods even though thepersonnelarriveshortlythereafter.Thesekindsofunassisteddeliveriesmakeitmoredifficulttohandlegoods returnaswell, since they cannot leave the incorrectdeliveriesof chilledandfrozengoodsinroomtemperatureintheeveningwhenthetruckarrivesintheearlymorning.Instead,theshipperhassometimessentatrucktopickupthereturnedgoodsduringtheday.Forunassisteddeliverieswherethedriverhasaccesstothefreezersandrefrigerators,itisstilldifficulttocommunicatewhichproductsthataresupposedtobereturned.

Fortheshipper,itispreferredtouseassisteddeliveriessincetheresponsibilityofthegoodsistransferredtothereceiverafterthedriverhasdeliveredthegoods.

LogisticalPlanningThe time spent on planning the logistics has not increased that much according to both theshipperandthecarrier.Themaindifferenceisthatwhenanewcustomerhassignedontooff-peakdeliveries,theshipperandthecarrierhavetovisitthereceiversandspendmoretimeonassessing whether it will be possible to deliver goods during off-peak hours, which deliverymethodthatisappropriateandotheradjustmentthatareneeded.Thiscanbetime-consumingbutwill ensure that fewer disruptions occurwhich could counteract the benefits of off-peakdeliveries;henceitcanalsobeseenasanimportantsupportfunction.

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Off-peakdeliverieshavealsomeantthatthewholesalerplansthelogisticssurroundingthegastruck during off-peak hours. When using daily deliveries, the wholesaler transferred thelogisticalplanningtothecarrierssincethisresultedinagreatermotivationforthecarrierstobecomemoreefficientwhichbenefitsthewholesalerintheend.

For the receivers that take part in off-peak deliveries, the planning surrounding themanagementofthegoodsiseasiersincetheyknowexactlywhentheyhaveaccesstothegoods.Just as the case with the grocery chain, a few of the receivers have reduced the number ofpersonnelhoursneededtotakecareofthedeliveredgoods. Ingeneral, thegoodsreceptionisnow less disruptive to the regular business operations.Due to the different conditions of thebusinesses,thesesavingsarenotassubstantialasincase1,sincethereceiversincase2handlesmallervolumesofgoodsandarenotaspressuredtohandlethegoodsquickly.Aspreviouslymentioned,thegrocerychainhastorefillemptyoralmostemptyshelvesbeforethestoreopens,whichmeant that before off-peakdeliveries theyhadmorepersonnel available to handle thegoodsincaseofdelays.

SellingOff-PeakDeliveriesConvincingreceivers tobeapartofoff-peakdeliveries is crucial to thevaluecreationsinceasufficientvolumeofgoods isneededtoretainahigh fillingdegreeof thetruck.Otherwisethecostperdeliverystoporperdeliveredvolumeincreases,whichmeansthatthetruckisnotbeusedefficiently, thuscounteractingtheefficiencygainsofe.g. fasterdrivingspeed.This isalsorelatedtothepricingmodelused,whichisdiscussedfurtherinsection5.3.1.

Whenoff-peakdeliverieswereinitiated,thecarrierfirstconvincedthewholesalertobeapartofthenewdeliverymethod.Subsequently, itwasthewholesalerthathadtheresponsibilitytopitch off-peak deliveries to its customers. The sales team of the wholesaler has mainlyapproached customers with suitable conditions for nightly deliveries, either those that havenightly operations or at least personnel present during the night. Some customers have alsorequested a different delivery method if they have experienced problems with the daytimedeliveries.Inthosecases,thesalesstaffhassuggestedoff-peakdeliveries.

Thegeneralruleregardingthereceiversincase2isthattheonesthatacceptoff-peakdeliveriesonlydosoif therearenoaddedcostswhichmeansthatthenewdeliverymethodshavetobecompatiblewiththeregularbusinessoperations.Accordingtosomeofthereceivers,theychosetoswitchtonightlydeliveriesbecausetheywerenotsatisfiedwiththedeliveryreliabilityofthedailydeliveries,buteven in thesecases theydonotacceptaddedcosts for thedeliveries.Thecost-sensitivity is a problem when pitching off-peak deliveries and reduces the number ofpotential prospects. Evenwhenoff-peakdeliveries prove successful for the receivers there isstillalackofwillingnesstopayextrafornightlydeliveries.Thiswasalsoaproblemduringoff-peaktrialsinothercities,whichisdescribedinsection4.1.

Whenproposing a switch tonightlydeliveries, thewholesalerhas alsobeen forced tooffer ahigher service level in regard to sorting and carrying the goods to the storage facility of thereceiver,inorderforthereceiverstoacceptoff-peakdeliveries.

According to both the wholesaler and the carrier, there is a lack of information from thewholesaler to its customers regarding off-peak deliveries. The sales effort is not enough andthereisalsoasurprisinglylargeamountofcustomerswhoturndownoff-peakdeliverieswhensuggested to them. The sales process is rather risky which is why the personnel are morepassiveinregardtosellingoff-peakdeliveries.Ifoff-peakdeliverieswouldbecomeproblematicfor a customer, there is a substantial risk that the customer will leave and hire anotherwholesalerinsteadofjustchangingbacktodailydeliveriesagain.Thatiswhythesalesteamis

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sometimes reluctant to sell off-peak to larger customers. They are not as risk prone as theywouldneedtobeinordertoconvincemorecustomerstochangetooff-peakdeliveries.

When the wholesaler has been successful in convincing a customer to switch to off-peakdeliveries it becomes easier for the sales team to retain the customer because of the lock-ineffectcreatedbytheexclusivepermissiontodriveatnight,whichwasdiscussedinsection5.1.4.However, the negative side of the exclusive permission is that it is only temporary, whichincreases the risk associated with selling nightly deliveries. The reluctance to pitch off-peakdeliveriesincreasessincethereisariskthatthepermissionisterminatedaftertheprojectends,which will leave the receivers disappointed if they have gotten used to off peak deliveries.Customersatisfactionisveryvaluablewhichiswhythesekindsofrisksareavoidedifpossible.

According to the shipper, they want to promote off-peak deliveries by emphasizing theincreased quality of deliveries. For them, it is not an option to give the receivers a discountwhen switching to nightly deliveries, partly because the delivery method does not produceenough savings compared to the costs in this early phase of the implementation. The sameobservationwasmadeduringe.g. thetrials inNewYork; that thesavingswerenotenoughtodiscount off-peak deliveries. However, the difference is that in New York it was mainlysuggestedthatthecarrierswouldbetheonestoobtainenoughsavingstolowertheprice.Thisisdiscussedfurtherinsection6.4.

5.2 ValuePropositionThevaluecreationofoff-peakdeliveriesgeneratesanimprovedvaluepropositionforseveralofthestakeholders.Notallofthevaluecreationasdescribedinsection5.1isapartoftheofferingtoacustomer;insteaditcontributestoincreasedinternalvalueforthestakeholders.However,muchof the value creation impacts theoffering fromsomeof thedifferent stakeholders. It isalso important to have stated how off-peak deliveries affect the value proposition of thestakeholders when analyzing the value capturing since this will make it clearer how thestakeholderscapturepartofthevaluethatisofferedtothecustomer,whichisdescribedlateroninsection5.3.

The following section describes how the value proposition of the stakeholders is improvedwhenswitchingtooff-peakdeliveriesinStockholm.

Case1.

TheCarrier’sImprovedValuePropositionTowardstheGroceryChainMoreefficientdeliveries–off-peakdeliveriesincreasethedrivingspeedduetoreducedtrafficatnight.

Greaterpossibilities to improve logistics –withoff-peakdeliveries, thecarrierenables thegrocery chain to meet the delivery requirements of the individual grocery stores while stillimprovingtheroutesandthetruckusage.

Improved delivery reliability – off-peak deliveries provides better conditions for planningpersonnelactivitiessincethegrocerychainwillknowmorepreciselywhenthedeliveriesarrivefromthecarrier,whichleadstolesspersonneltimeneededtohandlethegoodsafterdelivery.

Nocongestionfees–therearenocongestionfeesduringoff-peakhours.

Moreenvironmentally friendlydeliveries – theoffering enables the grocery chain tobe inthe forefront of sustainable development, which also includes positive market attention andprovidesthegrocerychainwithmarketingopportunities.

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Case2.

TheCarrier’sImprovedValuePropositionTowardstheShipperImprovedcustomersatisfaction–withoff-peakdeliveries,thecarrierimprovestheshipper’svaluepropositiontowardstheshipper’sexistingcustomers.

Improved market positioning – the offering from the carrier places the shipper in theforefront of technical and sustainable development with increased efficiency and quality ofdeliveries.Theofferingalsoincludesapositionasanexclusiveproviderofoff-peakdeliveriestotheshipper’sowncustomers.Italsocreatespositivemarketattentionandprovidestheshipperwithmarketingopportunities.

Greaterpossibilitiestoimprovelogistics–off-peakdeliveriesenabletheshippertomeetthedelivery requirements of its customerswhile creating some relief for themorning deliverieswhenmovingdeliveriestooff-peakhours,thuscreatingopportunitiestoincreasethedeliveryvolumeduringthedaywithoutincreasingthecostofthetrucks.

Fewer parking fines – off-peak deliveries result in fewer parking fines since it is easier toaccessloadingzonesduringthenight,hencethereislessofaneedtoparkillegally.

Nocongestionfees–therearenocongestionfeesduringoff-peakhours.

TheShipper’sImprovedValuePropositionTowardstheReceiversImproveddeliveryreliability–createsbetterconditionforplanningpersonnelactivitiessincethecustomersknowmorepreciselywhenthegoodsarrive,whichleadstolesspersonneltimeneededtohandlethegoodsafterdelivery.Itreducesthenumberofdisturbancestotheregularbusinessthatusedtobearesultofdelayeddeliveries.

Provides a greater window of time to correct delivery errors – this also reducesdisturbancesfortheregularbusiness.

Increasedservice levelwhenunloading thegoods – the receivers tonothave touse theirownpersonnelforsomeofthegoodssorting,insteadthisiscarriedoutbythedriver,withoutchargingthereceiversfortheservice.

More environmentally friendly deliveries – many companies are more aware of theirenvironmentalimpactandplacevalueinbeingabletoreducetheirimpactontheenvironment,bothasaninternalpolicyandinregardtoexternalscrutiny.

5.3 ValueCapturingThissectionwilldescribehowthedifferentstakeholderscapturetheaddedvaluethatiscreatedfrom off-peak deliveries. First, the pricing models used in the studied relationships arepresented,followedbyadescriptionofhowthisaffectsthedistributionofprofitsandcosts.

5.3.1 PricingmodelsUnderstanding the pricing models used is important to identify how the created value iscapturedanddistributedthroughoutthesupplychain.Thisalsoaffectstheincentivesforeachstakeholdertostriveforgreaterefficiency,andalsotheincentivestoshifttooff-peakdeliveries.Thepricingmodelsfordeliveriesaredisplayedforalltransactionalrelationshipsinthestudiedpartofthesupplychain.Thepricingmodelsareshownasbeforeoff-peakdeliveries,ornormaloperations,andduringoff-peakdeliveries.“Duringoff-peakdeliveries”impliesthepricingusedduringthepilotproject.

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Case1.Thepricingmodelusedfornormaloperationsandforoff-peakdeliveriescanbeseeninTable3.The carrier charges the grocery chain a fixed price per shift purchased (a certain amount ofhoursofdisposingonetruckwithdriver),aswellasavariablepriceofeachkilometerdriven.Thefixedpriceisbasedonthecostsforthetruckanddriver,whilethevariablepriceisbasedonfuelconsumption,wearontiresetc.Thecarrieralsotransfersallofthecongestionfeesdirectlyto the customer, and sometimes also fines. The pricing model between these actors has notchangedwiththeshifttooff-peakdeliveries.

Table3.Pricingmodelofcase1

Supplier Customer Normaloperations Off-peak

Carrier Grocerychain• Pershiftandperkm• Transferredcongestioncharges

• Pershiftandperkm

CostStructureThesalarycostof thedriverconstitutesa largerpartof thepriceof transport, approximately44% according to the owner of the carrier. The cost of the hybrid truck constitutesapproximately25-26%of the totalpriceof transport,while the costof anormaldiesel truckusuallyconstitutes18%ofthepricefortransportaccordingtotheownerofthecarrier;hencethe use of a hybrid truck in this case increases the price somewhat for the grocery chain.However,ifthehybridtruckwerepurchasedattoday’svalueitwouldconstituteapproximately35%oftheprice.Although,thiswouldonlyleadtoanestimated4%increaseofthetotalpriceof deliveries. The extra salary that thedriver receives forworkingunsocial hours constitutesapproximatelya20%increasedsalarycomparedtoworkingregularhours.

NointernalinvoicingThereisnointernalinvoicingbetweenthegrocerychainanditsstores,andthecarriersendsitsbills to central office of the grocery stores; hence the different stores do not pay for thedeliveries.Thestoresalsodonotpayforanyofthemodificationsorreconstructionsthathavebeenneededtouseoff-peakdeliveries.Theownerstructureofthestoresiscentralizedandthecostsandsavingsinregardtooff-peakdeliveriesareunderthecontrolofthecentraloffice.

Case2.Thepricingmodelbeforeandduringoff-peakdeliveriescanbeseeninTable4.

Table4.Pricingmodelofcase2

Supplier Customer Normaloperations Off-peak

Carrier Wholesaler

• Performancebased:perdeliverypoint,cage,returncage

• Somedeliverieshourbased• Transferredcongestioncharges

• Sometransferredfines

• Hourbased• Sometransferredfines

Wholesaler Receivers

• Includedinpriceofpurchasedgoods

• Deliveryfeeaddedforverysmallvolumes

• Includedinpriceofpurchasedgoods

• Deliveryfeeaddedforverysmallvolumes

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PricingBetweentheCarrierandtheWholesalerDuring normal operations, the carrier charges thewholesaler a performance-based fee, i.e. afixed price per delivery point, per cage delivered and per cage taken in return.However, fordeliveriesduringpeakhoursintheafternoon,theychargeperhourofdispositionoftruckanddriver.Thisisduetotheuncertaintyregardinghowmuchtimedeliveriesatthattimewilltakedependingontraffic,andifthestandardperformancebasedfeewasused,thecarriermightgetundercompensatedifthedeliveriestakelongerthananticipated,sinceitisthecarrierthathastobearthecostofworkingovertime.Thisriskisconsideredtoohighduringtheafternoonpeaktraffic,andthereforeaper-hourchargeisused.Thispricingmodelisalsousedfortheoff-peakdeliveries, except there is a minimum charge of 8 hours. This is due to the low volume ofdeliveriescurrentlyperformedduring thenightshift.Therearenotenoughdeliverypoints touseperformance-basedpricing,thereforethecarrierchargesforaminimumof8hourstomakesure the investment into off-peak deliveries is covered. As in case 1, congestion charges, andsometimesfines,aretransferredtothecustomer.

CostStructureThesalarycostof thedriverconstitutesa largerpartof thepriceof transport, approximately44%accordingtotheownerofthecarrier.Thecostofthegastruckconstitutesapproximately22-24% of the total price of transport, while the cost of a normal diesel truck usuallyconstitutes 18% of the price for transport according to the owner of the carrier. The extrasalary that the driver receives for working unsocial hours constitutes approximately a 20%increasedsalarycomparedtoworkingregularhours.

PricingBetweentheWholesalerandtheReceiversGenerally, the wholesaler does not charge the receivers explicitly for deliveries. Instead, thereceiversonlypayforthegoodspurchased,andthedeliveryisincluded.Naturally,thepricesofthegoodsaresettocoverthecostofthedeliveries,butthisisnon-transparenttothecustomersandnotspecifiedoninvoicesetc.However,forordersofverysmallvolumes,adeliverychargeisaddedtocoverthecostsofthetransport.Thepricingmodelhasnotchangedduringtheoff-peakproject,andthereceiversstillonlypayforgoodspurchased.

5.3.2 DistributionofProfitsandCostsThepricingmodelsdescribedaboveaffectthedistributionofprofitsandcoststhroughoutthesupplychain.Thefiguresbelowshowwhereinthechainsavingsandcostsoccur,andalsohowthey are transferred to other actors through pricing. The items considered are those thatdirectlyimplyafinancialgainorlossasaresultofswitchingtooff-peakdeliveries.

Case1.AsshowninFigure8,thegrocerychainultimatelyendsupwiththemostsignificantsavingsandalsoallofthecostsincase1.Thisisduetothepricingmodelused,wherethecarrierchargesafixed rate foreach shift.Thepriceof the shift includes costs for themoreexpensive truck, aswellassupplementarypay forthedriver,whichmeans that thesecostsaretransferredtothegrocery chain. The pricing model also leads to savings for the grocery chain as a result ofincreased transportefficiency.Themoreefficientdeliveriesmeans that thegrocery chain canget a higher volume of goods delivered during one shift, and thereby they can reduce thenumberofshiftspurchased.

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Theincreaseddeliveryreliabilityleadstosignificantreductionofpersonnelcostsatthestores.At thestoresusingunassisteddeliveries, thegoodsarealwaysaccessiblewhen thepersonnelarriveinthemorning,whichmeanstheycanstarthandlingthegoodsimmediately.Beforetheuseofoff-peakdeliveries,thepersonneloftenhadtowaitforthedeliveriesandtheirtimewasnotutilizedinanoptimalway.Atthestoreusingassisteddeliveriesduringoff-peakhours,thetimeofdelivery ismorereliableandthus less time isspentwaiting for thedeliveries.Forthecarrier,thereduceduncertaintyoftimespentintrafficalsoresultsinlessnon-chargeabletimeforthetruckanddriver.Thepricingmodelwherethegrocerychainpaysa fixedprice fortheshiftregardlessifittakesmoretimethanassignedcanotherwiseresultinunpaidhourswhenthedeliveriesaredelayedduetoheavytraffic.

Thereisalsoafeepaidperkmdrivenwhichincludesastandardfeeforfuel.Sincethetruckisan electric hybrid, which consumes less fuel than a standard diesel truck, some savings arecreatedforthecarrier;however,thereductioninfuelcostsisonlyabout4%accordingtotheownerofthecarrier.Congestionfeesaretransferreddirectlytothegrocerychain,whichmeansthatthereducedamountofcongestionfeesasaresultfromdrivingatnight,comparedtoduringpeak hours when the congestion fees are at their highest, becomes a saving for the grocerychain. The reduced repair costs due to less traffic incidents result in a saving for the carrier,howeverithasnotbeenquantified,thereforeitisnotcertainhowbigofanimpactithasonthetotalcostmanagement.

Figure8.Distributionofprofitsandcostsincase1

Thegrocerychainhadsomeinitialcostsattributedtothereconstructionofunloadingzonesatthestoresto facilitateunassisteddeliveries,aswellasdevelopmentcostsofsilentequipment,butthesewereone-timeinvestmentcosts.Insum,thegrocerychainendsupwithmostofthesavingsaswellastheextracosts.Thesavings,primarilyfromthereducednumberofshiftsandreducedpersonnelcostsatthestores,outweightheextracostsandthereforemakesthisanetfinancialgainforthegrocerychain.Thegrocerychainhasmanagedtoquantifythesavingsfrom

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the reducednumberof truck shifts and thepersonnel hours forhandling the received goods.Thereforeithasbeenpossibletocalculateapaybacktimeinthiscase,whichindicatesapositivebusiness case for the grocery chain. For the carrier, many of the savings have not beenquantifiedbutbasedontheinterviewswiththecarrier it ispossibletoconcludethattheyarenotassubstantialasthesavingsofthegrocerychain.However,sincethecarriertransfersallofthecoststothegrocerychain,itispossibletoconcludethatthebusinesscaseforthecarrierispositive. According to the owner of the carrier, the improved market positioning is verybeneficialforthecompany,butithasnotbeenpossibletoquantifythisasaddedsalessinceitisverydifficulttodeterminethedirectimpactofoff-peakdeliveries.Therefore,itisalsodifficultto estimate the magnitude of the financial gain from the improved market positioning,comparedtotheothersavingsofoff-peakdeliveries.ThebusinesscasesaredisplayedinFigure9.

Figure9.Adisplayofthebusinesscaseofcase1

Case2.Incase2,thedistributionofprofitsandcostsismoredispersedthanincase1,partlybecausetherearemoreactors involved.Ascanbeseen inFigure10, theextracosts for the truckandsupplementarypayforthedriveraretransferredtothewholesaler,justastheyaretransferredto thegrocery chain in case1.Thewholesaleralso incursa small cost for a fewsilent rollingcagesthataremarginallymoreexpensivethanregularones,fortestingwithintheproject.

Thereducedcongestionfeesandsomeofthetrafficfinesbecomesavingsforthewholesalerastheyaretransferredfromthecarrier.Thetrafficfinesthatareadirectresultofnon-existentorinsufficient loading zones at the receiver’s facility are transferred to the wholesaler. Thereducedrepaircostsbecomeasavingforthecarrierasincase1.

Theutilizationrateofthetruckisinthiscaseabenefitforthecarrier.Thepossibilitytousethetruckbothduringthedayandnightmakesitpossibletoincreasetheearningspertruck.Duringtheday shift, thewholesalerdoesnothave topay for themoreexpensive technology, i.e. theextracostofagastruck(comparedtoadieseltruck).Thecostofthetruckthatthewholesalerpaysforduringthedayshiftconstitutesapproximately18%ofthetotaltransportprice,hencethis amountwill constitute extra earnings for the carrierwhen also selling a shift during theday,sincethecostofdepreciationisalreadycoveredduringthenightshift.

Noextracostsaretransferredtothereceiversfromthewholesaler,andtheydonotincuranyextracostsontheirend.Furthermore,afewofthereceiversenjoybenefitsofreducedpersonnelcostsbecauseof increaseddelivery reliability.Hence, this is financiallyneutralor results inafinancialgainforthereceivers.

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Figure10.Distributionofprofitsandcostsincase2

Incase2,thecarrierreceivesthegreatestfinancialnetbenefitsatthecurrentstage,primarilydue to the utilization rate of the truck. A few of the receivers also haveminor savings fromreducedpersonnelhoursneededtotakecareofthedeliveredgoods,becauseofthe increaseddeliveryreliability.Also in this case,manyof thesavingshavenotbeenable tobequantified.Although,giventhat thecarrier transfers itscosts to thewholesaler, it ispossible toconcludethatthebusinesscaseofthecarrierispositive.Thereceiverstonothaveanyaddedcosts,whichiswhythebusinesscaseispositiveforafewthatachieveloweredcostsandneutralfortherest.Allof the receiversbenefit from the improved reliability since it causes fewerdisruptions fortheregularbusiness,eventhoughthisdoesnotresultindirectsavingsformostofthereceivers.Accordingtotheheadoftransportatthewholesaler,theyareoptimisticaboutthepossibilitiesofoff-peakdeliveriesbutcannotstateanysavingsasoftoday.Sincethecostsofunsocialhoursandthemoreexpensivetruckaretransferredtothewholesalerandthereisalackofsavings,itcanbeconcludedthat thebusinesscase isnotpositive for thewholesaler.ThebusinesscasesaredisplayedinFigure11.

Figure11.Adisplayofthebusinesscaseofcase2

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5.3.3 AnalysisoftheValueCapturingThepricingmodelsusedinthestudiedsupplychainsaretheresultsofmanydifferentaspects,suchaseachactor’spreferencesandgoals, therelativenegotiationpowerbetweentheactors,andexternalfactors.

NegotiatingPowerThe shippers generally have more negotiation power in this kind of supplier-buyerrelationships than the carriers, since the transport business is a competitive business, withmany competing actors providing a simple and often undifferentiated service. In the studiedcases,theshipper(wholesaler)andshipper/receiver(grocerychain)havebothmanagedtogetthepricingmodeltheypreferfromthetransportcompanyduringnormaloperations.

Thewholesalerandthegrocerychainprefertopayafixedpriceforthecarrier’sservices,eitherbypayingpershiftorusingaperformance-basedpricing,i.e.payingperdeliverypointandpercage.Giventhesepricingmodels,thecustomerisnotaffectedbydelaysortraffic–insteadthecarrieristheonetakingtheriskofnotreceivingpaymentforextratimeneededtomakeallofthedeliveries.Thismeansthatthecostsfortransportforthewholesalerandgrocerychainarepredictable.Ontheotherhand,thepreferredpricingmodelofthecarrieristoreceivepaymentonanhourlybasis,meaningthattheygetpaidforthetimethatitactuallytakestodeliverallofthe goods. This pricing model eliminates the risk for the carrier of uncompensated workinghours.However, thispricingmodel reduces incentives for the carrier tooperatewith greaterefficiency.

Thereisanexceptionregardingpricingmodelsincase2,wheretheshipperhasagreedtopayan hourly price for some deliveries. This occurs during the afternoon since the risk of notdelivering on time is considered to be too high, which would lead to substantial amount ofunpaidhoursforthecarrier.Anhourly-basedpriceiscurrentlyalsousedforoff-peakdeliveries,due to the lowdelivery volume.Byusing anhourly-basedprice in case2, the carrier obtainssavings because there are no longer any unpaid overtime, which can otherwise be the casewhenthecarrierchargesafixedpriceandisunabletodeliveronschedule.Thissavingwouldstillbepossibleduringoff-peakhoursevenwithafixedpricesincetheincreasedefficiencyandreliability created by reduced traffic and more accessible loading zones make it easier tocompletethescheduleontime,hencetheriskofunpaidovertimeissubstantiallyreduced.

Performance-BasedPricingDuringOff-PeakDeliveriesIf the volume were to increase, performance-based pricing is likely to be used for thesedeliveriesinthesamewayasduringthenormaloperations.Naturally,thispotentialchangeofthe pricingmodel would affect the distribution of profits and costs in the supply chain. Onefactorthatimpactstheperformance-basedpriceistheincomethatthecarrierneedsperhourtocover costs; hence they estimatehowmany stops that canbe reachedperhour to be able todeterminethepriceperstop.Thetransportcostsarehigherduringoff-peakhoursbecauseofthehigher salarycosts for thedriverand themoreexpensive truck.On theotherhand, if thetransportefficiencyissufficientlyincreasedduetoreducedtraffic,morestopscouldpotentiallybereached inonehour;hence thecostsperdeliverystopwouldbereduced.However, this isdependentonthatthereisenoughvolumetodeliver.Ifthereareveryfewreceiversduringoff-peakhours, thecostof the truckwillbedistributedover fewerstops;hencethecostperstopwillbeveryhigh,whichcancounteractthebenefitsoftheincreasedtransportefficiency.Butiftheavailablevolumeand theefficiencygainwere largeenough, thereducedcostswouldbeadirectgainforthecarrier,sincethepriceisfixedperstopandpercage.Hence,thecarrierwouldbeabletocompletemoredeliveriespertimeunit.However,thepriceislikelytoberenegotiated

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bytheshipperinthiscase,whichwouldleadtotheprofitsbeingsharedbetweentheseactors,orperhapsbeingtransferredtotheshipperaltogether.

ThePricingModel’sImpactontheReceiversAfewofthereceiversincase2makerealfinancialsavingsfromoff-peakdeliveriesalready,duetoreducedstaffhours.Allof themexperience increasedvalueof thedeliveriesbecauseof theimprovedreliability.Thisvalue issomethingthattheycurrentlyarenotpayingfor,sincetheypay thesamepriceas theywould fordaytimedeliveries.Since thewholesaler incursahighercost for the off-peak deliveries at the current stage, this is a kind of discount given to thereceivers. Despite this, the wholesaler still experiences reluctance from other receivers toparticipate, which is something that has been found in several off-peak projects. With anincreasedvolumeandtherebylargersavingsfromefficiency,profitsharingwithreducedpricescouldbepossiblethroughoutthesupplychain,whichcouldcreateincentivesformorereceiverstoparticipate.However,achallenge is togetmorereceivers toparticipateat thisstage,whilethesavingsareslimandthereforethereisnoprofittoshare.

ThePriceLevelofOff-PeakDeliveriesReducingthepricesofoff-peakdeliverieswithresultinglossesintheshorttermcouldbeviablewith promises of profit when the delivery volume increases, but there is a risk that theparticipationstillwouldnotbecomelargeenough.Forthecarrier,thelowmarginsalsomakeitdifficulttoreduceprices,especiallyconsideringthattheirprofits inthelongtermareunclear.Forthewholesaler,thepricingmodelcomplicatesreducingpricesfordeliveriessincetheyareimplicitlyincludedinthepriceofpurchasedgoods.Toreducepricesfordeliveries,theywouldneed to use some kind of discount on the goods, which is less transparent and morecomplicated. The wholesaler also expresses reluctance to use price reduction to convincereceivers to shift to off-peak deliveries. They would rather use the increased quality of thedeliveries and the added value for the customers as an incentive to switch. Therefore it isimportant to find receivers forwhomoff-peakdeliveries adds enough valuewithout creatingextracostsinordertoreachasufficientvolume.

Areluctancetopay fordeliverieswas identifiedwiththereceivers incase2.Eventhoughthecostsofdeliveriesareincludedinthepriceofthegoods,thereceiversdonotperceivethiscost.Theproblemwithnotchargingfordeliveriesisthatitmakesitdifficulttosendpricesignalsfordeliveries that result in higher costs, such as complicated delivery situations or deliveries atpeak hours. This reduces incentives for receivers to contribute to reducing total costs in thesupply chain. However, changing this way of pricing is difficult, considering the customers’aversion to delivery fees and their negotiation power in relation to the shipper. Charging fordeliverieswouldreducecustomersatisfaction,andmightmakethemswitchsupplier.

UnbalancedValueCapturingOff-peakdeliveriescreateincreasedvalueinthesupplychain,andinthissectionthecapturingofthatvaluehasbeenstudied.Oneofthelargestvaluesistheonecreatedasaresultfromtheincreasedtransportefficiencyduetoreducedtraffic.Incase1,itisclearthatalthoughthisvalueiscreatedbythecarrierandisapartofthecarrier’svaluepropositiontowarditscustomer,thecarrierdonotcapturethatspecificvalue.Instead,thisisanaddedvaluethatresultsinsavingsforthecustomer,thegrocerychain.Thisisalsothecasewiththevalueofthedeliveryreliability.Thisisnotnecessarilyaproblemsincethecarriercancaptureothervaluessuchasanimprovedmarketpositioningthatisaresultofe.g.beingabletoofferincreasedtransportefficiency,butitwillaffecttheincentivesofthedifferentstakeholders,particularlyifthecertainvaluesaremoreeasilyquantifiedcomparedtoothers.

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Incase2,thelowdeliveryvolumereducesthevalueforthewholesaler,butifthevolumewereto increase and all of the transport hours that are paid for would be utilized, the value ofefficiencywouldmakeoff-peakdeliveriesmorefinanciallybeneficial.Withapossiblechangeofpricingmodelintoaperformancebasedone,thecarriercouldcapturesomeofthevaluecreatedbyefficiencyandreliability,dependingonhowpricesarenegotiated.

The delivery reliability is an added value for the receivers, which is not captured by thewholesaler. However, the added value increases the customer satisfaction and, for now, animportant competitive advantage. The increased service level of drivers carrying goods intostorage areas etc., is another added value that is not captured by neither the carrier nor thewholesaler. This increased service level also results inmore time being spent at the deliverystops.Thisisnotaproblemaslongasthevolumeislow,butanincreasedvolumecouldreducetheefficiencygain.

Another possible value is the increased utilization of the truck. This value is captured by thecarrierincase2,wherethecompanyisabletousethetruckbothduringthedayandnight.Incase1, the truck isonlyusedby thegrocery chainatnight and it isnotusedduring theday.Therefore,thevalueofincreasedutilizationisnotcapturedincase1.Sincethetruckisstripedwiththegrocerychain’slogo,itwillbedifficultforthecarriertousethistruckwhendeliveringtoothercustomers.However,deliveringtonewcustomersduringthedayshiftinsteadofusingthedayshiftforthesamecustomerasthenightshiftsshouldenablethecarriertocapturemostofthevalueoftheincreasedutilizationforitself. Ifthesamecustomerutilizesthedayshiftaswellasthenightshiftitismorelikelythatthecustomerwilldemandapricereductionsincethecostofthetruckisdistributedovermorehours.Iftwoseparatecustomersutilizethedifferentshifts it decreases the risk of them demanding that kind of profit sharing since they are lessawareofit.

SummaryStudying thevalue capturing in these twocases indicates that there ispotential for transportbuyerstomakesignificantsavingsduetotheincreasedefficiencyofoff-peakdeliveries,andthatsufficientvolumeisimportanttorealizesuchsavings.Italsoshowsthatthereisapossibilityforreceivers tomake savings as a result of the increaseddelivery reliability. Thepricingmodelsusedaffecthowthesesavingsaredistributedandhowthevalueiscaptured,andeventhoughsomeof thevalue isnot captured, thebusinesscases forall includedparties seempromising.For the wholesaler the business case will be dependent on increased volume and sufficientefficiencygaintoreducecosts,butothervalueslikeincreasedcustomersatisfactionandlock-ineffectsareveryimportantandneedtobetakenintoconsideration.

5.4 TruckManufacturers’PartinOff-PeakDeliveriesThe truck manufacturers do not have an active part in the everyday distribution within thesupply chain but they are still considered to be stakeholders within the supply chainsurrounding off-peak deliveries since they provide products that are necessary for off-peakdeliveries. The truck manufacturers have a special interest in new initiatives within thedistributionindustryandaimtogenerateproductsandservicesthatincreasethevalueforthecarriers and the customers of the carriers.When changing regulationwithin the distributionindustry, the truck manufacturers are also affected and need to adapt their products andservices.

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5.4.1 ValueCreationOff-peak deliveries also create value for truck manufacturers since a new niche market iscreatedformoreexpensivespecializedtrucks,giventherequirementsoftheCityofStockholm.Environmentally friendly trucks are more expensive than regular diesel trucks and thedevelopment and production costs are high while sales volumes are very low compared todiesel trucks. There is a lot of uncertainty regarding the residual value of e.g. hybrid trucks,according to theownerof the carrier, since thisproduct isnot commonlyused.Beingable tofindcustomersforthesemoreexpensiveproductsisveryvaluableforthetruckmanufacturersandthatiswhyoff-peakdeliverieshavealotofpotential.

Fromanenvironmentalperspective,off-peakdeliveriesarealsovaluablesincethenewdeliverymethod improves the market positioning of the truck manufacturers. Contributing tosustainablegoodsdistributionisdefinitelybeneficialforthetruckmanufacturersandimprovestheirbrandingpossibilities.Theyareabletoprovidethecustomerwithacomplexsolutionthatincreases the efficiency, quality and sustainability of deliveries, and this can definitivelyimprovethetruckmanufacturers’positiononthemarket.

Itis,however,veryuncertainhowlargethemarketwillbeforoff-peakproductsinthefuture;thereforeitisnotpossibletoevaluatetheimpactonthetruckindustry.Theparticularlysmallscopeofoff-peakdeliveriesseverelylimitsthevaluecreationatthisstage.Sinceonlytwotruckshavebeensoldasapartofthepilotproject,thevaluefromsalesisnegligibleatthisstageandthevaluefromtheimprovedmarketpositioningisdifficulttoquantity.

5.4.2 ValuePropositionOff-peakdeliveriesalsoaffectthetruckmanufacturer’sofferingtothecarrier.

TheTruckManufacturers’ImprovedValuePropositiontotheCarrierTrucktechnologythatreducesnoiselevels–theofferinghelpsthecarriertocomplywiththerequirementsofthecityofStockholm.

Moreenvironmentallyfriendlytrucks–theofferingimprovesthemarketpositioningofthecarrier. Using eco-friendly truckswill provide the carrierwith an opportunity to improve itsbrandinregardtosustainabilityandattractcustomersthatprioritizesustainability.

5.4.3 ValueCapturingThetruckmanufacturersonlycaptureamarginalpartofthevaluethatiscreatedfromoff-peakdeliveries,intheformofsomewhatmoreexpensivetrucks.

PricingThe pricing model between the truck manufacturer and the carrier can be seen in Table 5.Normally,thecarrierbothleasesandpurchasestrucksfromthetruckmanufacturer.Duringtheoff-peakproject,both trucksare leased.This isa financial lease,whichmeans that thecarrierwillownthetruckandisleftwiththeresidualvalueofthetruckattheendoftheleasingperiod.Theleaseincludesarepairandmaintenancecontractfornormalwearandtearrepairs.Repairsduetodamagesfromtrafficincidentsarenotincludedandarechargedseparately.

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Table5.Pricingmodelofthetruckmanufacturer

Supplier Customer Normaloperations Off-peak

Truckmanufacturer Carrier

• Leaseandfullpurchase• Repaircostsduetotrafficaccidents

• Lease• Repaircostsduetotrafficaccidents

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6 DiscussionThefollowingchaptercontainsadiscussioninregardtotheempiricalstudy.

6.1 ValueCreationThe results of this study suggest that there is a potential for an increased total value to becreatedfromoff-peakdeliveries.Incase1,itisclearthatanincreasedvalueiscreatedalreadyat this early stage. The total value in case 2 is not as clear; there is an increased deliveryreliabilitywhich is valuable for the stakeholders, and there is an increased utilization of thetruck, but the increased transport efficiency does not result in savings because of the lowdeliveryvolume.However,theresultsindicatethatthereispotentialforasignificantincreasedvalueifthedeliveredvolumesincrease.Themostsignificantaddedvaluesforthesupplychainasawholearecreatedfromtheincreasedtransportefficiency,theincreaseddeliveryreliabilityand the increased utilization of the trucks. For some of the individual actors, the marketpositioning is alsoavery importantaspect.Thisdoesnotnecessarilyadd to the supply chainsurplus,butdefinitelyincreasestheincentivesforeachactortoshifttooff-peakdeliveries.ThecreatedvalueissummarizedinFigure12.

Figure12.Createdvaluefromoff-peakdeliveries

For the aforementioned values to be realized, the nature of the business and the internalprocessesshowedtobeimperative.Atthereceivers’end,thefactthatoff-peakdeliveriesdonotdisturborforcearadicalchangeindailyoperationswasidentifiedasacommonsuccessfactor.For instance, the deliveries could in all cases bemoved to off-peak hours without having toincreasestaffhours,whichotherwisewouldhaveledtoaddedcosts.Thiswasachievedthroughutilizing staff that are already present at these hours, or through completely unassisteddeliveries.Unassisteddeliveriesproved tobeessential to thesuccessofoff-peakdeliveries inthecaseofthegrocerychain,wherethepossibilitytodispersedeliveriesoverthecourseofthewhole night led to direct savings from reduced staff costs. Many other important factorsidentifiedasreasons for thegreatervaluecreated incase1had todowith theorganizationaland ownership structures of the actors, as well as their operational strategy and processes.Sincethegrocerychainownsallofitsownstoresandcentralwarehousing,allsavingsthatarecreatedwillbeadirectbenefittooneactor.Also,withtherolesofbothshipperandreceiverinthispartofthechain,theyholdmuchofthedecisionpower.Thecentralizedownershipmakesthe savings significant for the actor with most decision power, which together with thecentralized decision-making makes the shift much easier to make, compared to many smallactorswith less clear savings and scattered decision-making. Therefore, itwas easier for thegrocery chain to shift a large delivery volume to off-peak hours, thus creating a substantial

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increase in transport efficiency. Although these characteristics make the shift more likely tooccur,theyarenotnecessarilyreasonsfortheaddedvaluetoberealizedinthesupplychainasawhole.

Instead,oneofthemainidentifiedcontributorstotherealizationofthesavingsforthegrocerychainwasthevolumeofdeliveriesthatwereinstantlyavailable.Thegrocerychaincouldutilizetheoff-peakpermissionforthehybridtruckanddelivergoodstothreeinnercitystores,thatallrequired a full truckload of goods, in one shift. This meant that, firstly, the entire shift wasutilized fully. Secondly, since the whole truckload was unloaded at only one delivery pointbeforethetruckwentbacktothewarehouse,thetruckspentalargerpercentageofthetimeonthe highway than the truck in case 2. According to Li’s (2015) findings, the time gain fromreducedtrafficisgreateronthehighway,goingintooroutofthecity,thaninsidetheinnercity.Thismeans that the totalefficiencygaincouldbegreater in case1due to the relatively largepercentageoftimespentonthehighway.Additionally,thefactthatthegrocerychain’snormalprocedure is todeliverduring thenight to all of its storesoutside the city contributed to theplanning of routes being as efficient as possible. Naturally, this fact also reduced theimplementation costs, as the inner city storeswere rather an exceptionwith need of specialtreatmentbeforethisproject.

As discussed earlier, the unassisted deliveries were another important contributor to thepossibilityofmakingsignificantsavings,astheyfacilitateddisperseddeliverieswithoutcausingextracosts.Theprocessofhandlingthegoodsatthestores,wherethestaffwouldhavetowaitfor the deliveries to stock the shelves in the store, was considered to be an additionalcontributor.Thismeantthatthestaffhourscouldbesignificantlyreducedwhenthedeliverieswerecompletedbeforethestartofthebusinessday.Incase2,manyofthesecontributorsarelacking or less distinct. The volume of deliveries is significantly smaller, which reduces thepossibilitytoutilizethetruckinthemostefficientway.Theprocessesofhandlingthegoodsatthereceiversvary,butgenerallytheydonotresultinreducedstaffhourstothesameextentasincase1.Thesedifferencesareconsideredtobethemainreasonswhythereisagreatertotalvaluecreatedincase1comparedtocase2atthisstage.However,thereispotentialforthistochangeandtherebycreatemorevalueincase2,forinstanceifthevolumeincreases.

Lookingoutsidethespecificpartofthesupplychainthat is includedinthisstudy,therecouldalso be benefits for other stakeholders with off-peak deliveries. Further downstream in thechain,theendconsumerscanbenefitfromincreasedavailabilityofgoodsetc.,whichcouldaddtothetotalvalue.Atthesocietallevel,therecanalsobebenefits.Ifmoredeliveriesweretotakeplace at nighttime, fewer trucks would drive during peak hours contributing to trafficcongestion.Moreefficientdeliveriescouldalso lead toreducingemissions,and if thiswere topromote theuseof environmentally friendly trucks it could lead toanevenmore sustainabledistributionsystem.

6.2 ValuePropositionThe value proposition offered by the studied actors does not changewith the offering of off-peak deliveries. However, the value proposition is significantly improved when the offeredservice brings an increased value for the customer. With increased delivery reliability, thedeliveryofgoodscomeswithagreatervalueforthereceivers.Andwithincreasedefficiency,theserviceofperformingthesedeliveriesgivesagreatervaluetothetransportbuyer.

At an initial stage of off-peak deliveries, a value proposition of high quality and sustainableurbantransportservicesisonethatwillbenefitmostfromthisoffering.Customerswhovaluedelivery reliability and can perhaps create savings as a result ofmore reliable deliveries are

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likelytoexperienceincreasedvaluefromoff-peakdeliveries.Valuepropositionsfocusedonlowcostscouldbe less likelytogainfromthis,sincethere isaneedfor large investmentsandthecostsarehighdue tomoreexpensive trucksandsalarycosts,which in turnwillmake itevenmorecriticaltohavealogisticalsetupthatenablessavingsfromincreasedtransportefficiencyanddeliveryreliability.However,withenoughdeliveryvolume,theefficiencygainshoulddrivedownthecosts.

6.3 ValueCapturingEvenifanincreasedvalueiscreated,itisalsoimportanthowthisvalueisdistributedandwho,intheend,thatbenefits.Thisaffectstheincentivesforeachactortomaketheshifttooff-peakdeliveries.Iftheincentivesarenotenoughfortheactorswiththemostdecisionpower,theshiftis unlikely to occur. According to both previous findings and the results of this study, thereceivershavethemostdecisionpowerinthiskindofsupplychain, followedbytheshippers.Thismeansthattheincentivesfortheseactorsneedtobesignificantenoughtomakeoff-peakdeliveriesrealistic.Thispowerrelationshipalsoaffectsthe pricingmodels used, which in turndeterminethedistributionofcostsandprofits,andtherebytheincentives.

Asmentionedbefore,thelargestaddedvaluestothesupplychainaretheincreasedefficiency,improveddeliveryreliability,andincreasedutilizationoftrucks.Eventhoughthesevaluesareimprovementstothevaluepropositions,thesupplierswhoofferthesevaluepropositionsrarelycapture the added values of them. The increased delivery reliability is an improved valuepropositiontowardthereceivers,butthisvalueisnotcapturedbythewholesaler.Furthermore,theincreasedtransportefficiencyisanimprovedvaluepropositiontowardthetransportbuyer,butthevalueisnotcapturedbythecarrier.Thisisaresultofthepowerrelationshipbetweentheactors.However, therecanbeotherbenefits for thesuppliers,which justifynotcapturingthe value of the improved value proposition. For instance, improving the value propositionwithoutchargingextraforitincreasescustomersatisfaction,andinacompetitivebusinesswithlowswitchingcosts for thecustomers, this is important inorder tokeep them.Naturally, thiscould also bring in new customers who value the improved value proposition. For thewholesaler,notchargingfortheincreasedvaluecanalsobejustifiedbythepotentialtoachievesavingsfromtheincreasedefficiency.However,anotherimprovedvalueofferedtothereceiversistheincreasedservicelevelfromthedrivers,whichisalsonotcapturedbythewholesaler,andthis issomethingthatcancounteractthebenefitsfromreducedtrafficandtherebyreducetheefficiencygain.

Thepowerrelationshipandthecompetitivesituationareprobablypartof thereasonsbehindthepricingmodelsusedintheserelationships.Chargingfordeliveries,forexample,couldhurtthe customer satisfaction with the wholesaler, since receivers are so reluctant to pay fordeliveries.The importanceof customer satisfaction is also very evidentby the resources thatarespentonkeepingthedeliveryreliabilityrelativelyhighandmeetingcustomerdemandsofdelivery times.The shortwindowof time togetherwithunpredictable trafficmakes this verydifficultduringthenormaldaytimedeliveries,andyetthewholesalerworkshardtomeetthesedemands.Naturally, thecostsof thisaretransferredtocustomers,but thepricingmodelusedfailstosendclearpricesignalstoreceiversofhowcostlytheirdeliveriesare.Additionally,theaddedvalueofoff-peakdeliveriesisreducedwhenthedeliveryreliabilityiskeptrelativelyhighduringtheday,forexamplebysometimesaddingextratrucksforthedeliveries,whichiscostly.Without charging for deliveries, this difference is invisible to the receivers. In an integratedchain, like inthecaseof thegrocerychain, thedifferencebecomesapparentsincethecostsofkeepinghighdeliveryreliabilityandthebenefitsfromitariseforthesameactor.Ifthepricingmodel reflected the costs in case2, themost cost efficient solution could appear in a similar,

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naturalway.However, asmentionedbefore, charging fordeliveries could affect the customersatisfactionnegativelyandachangeisthereforeconsideredunlikelytooccurinthiscase.

Anotheraspectthathindersthevaluecapturingforsomeofthestakeholdersistheinabilitytomeasurethevaluesthatarecreated.Asdiscussedwithinthetheoretical frameworkinsection3.2,profitsharingmethodswillbemoredifficulttousewhenthereisnotaclearviewofwhatvalues to measure and how to measure them, according to Kindström (2010). If the carriercouldbeabletoquantifymoreofitssavingsfromoff-peakdeliveries,thentheshipperincase2wouldnothavetocoverallofthecarrier’scosts,whichwouldleadtoabetterbusinesscaseforthe shipper until the delivered volume has increased.When the delivered volume increases,therewillbe lessofaneedto lowerthecosts for theshippersince thisstakeholderwouldbeabletoobtainsavingsfromtheincreasedtransportefficiency.AccordingtoTöytärietal.(2015),uncertaintyregardingthevaluecreationandanunevenbargainingpositionwillpreventprofitsharing.Theunusualaspectinthiscaseisthattheshipperagreedtothetermsofthecarrierbypaying for8hourseven thoughthedeliveriesneeded4-5hours,even thoughtheshipperhasmorenegotiatingpower.Usuallyitisthesupplierthatfailstocapturemoreofthecreatedvalue(Töytäri, et al., 2015). However,without this pricing agreement, a shift to off-peak deliverieswould not have been possible since the carrier would not have been able to cover itsinvestment.Given theexception to thebanonnightlydeliverieswithheavyhaulage thatwascreatedbytheCityofStockholm,thisprovidesthecarrierwithacertainexclusivityinofferingoff-peakdeliveries,whichalsoincreasesthenegotiatingpowerofthecarrier.

6.4 Comparingresultswithpreviousoff-peaktrialsAsmentionedinsection4.1,thepreviousstudiesofoff-peakdeliveriesinforexampleNewYorkfocusonthecarrierbeingabletoobtainenoughsavingstobeabletoprovideadiscounttothereceivers that agree to use off-peak deliveries. According to Holguín-Veras et al. (2014), thecarrier benefits from the increased driving speed and other productivity gains such asmoreaccessible loading zones. This focus constitutes the largest difference between the previousstudies of off-peak and the case study of off-peak deliveries in Stockholm, since thisinvestigation has showed that it is the shipper that receives most of the savings from theincreasedtransportefficiencyduetopricingmodelused.

Similartopreviousstudies, thereareclearbenefitsofhavinganintegratedsupplychainsinceallthesavingsareobtainedbythesamecompany,whichmakeiteasiertomakeacost-benefitanalysis and complicated profit sharing betweenmore or less adversarial businesses can beavoided. This increases the chances of being able to switch to off-peak deliveries and takingadvantageof thesavings thatarise.However, incase1 it isnotan integratedcarrier-receiveroperation,butratheranintegratedshipper-receiveroperation.Asstatedabove,theshippercanobtain significant savings fromoff-peakdeliveries, anddue to the integrated shipper-receiveroperation, these savings and the added costs for the receiver are obtained by the samecompany;thusmakingiteasiertocreateacompletesharingofprofitsandcosts.

Thelackofwillingnessofthereceiverstoswitchtooff-peakdeliveriesthathasbeenobservedby thestudiesofoff-peak trials inothercitieshasalsobeenobserved in thisstudy.Although,this investigation has focused on the pricing model between the shipper and the receiverswhich,duetothelowtransparencyofthepricing,failstoprovideapricesignalthatcandirectthe customers towards themost efficient transport solution.The shipper’s costsofhaving to,occasionally,useextratrucksduringthemorninghourstokeepthereliabilityatahighleveldonot impact the receivers; hence they areunwilling to change to otherdeliveryhours. InNewYork, they have tackled this problem by providing the receivers with subsidies to accept

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deliveriesduringoff-peakhours.Asmentionedinsection4.2,thiswillprobablynotbecomethecaseinStockholmwhichiswhythisinvestigationfocusedonotheraspectsinstead.

6.5 LimitationsofthestudyThelimitationsofashorttimeframeaswellasrestrictedaccesstoinformationhasresultedinsomecompromiseshaving tobemade thatmayhaveanegative impacton the reliabilityandgeneralizabilityoftheresultsofthisstudy.Studyingmanydifferentactorswithoutaccesstoallrelevant internal information has required information to be provided by the interviewsubjects, and therefore the results have been based on the personal conceptions of thesesubjects.Thesmallscaleofthepilotprojectandthecaseinstudyhasalsolimitedthesampletoaverysmallnumberofinterviewsubjects,whichhasmadeitdifficulttoverifytheresults.Theviewsofafewpeoplehavehadaratherlargeimpactontheresultspresented.Thefactthatallactors in the study have an interdependent relationship within the supply chain, might alsoaffect theviewsand information sharedduring interviews. It is alsopossible that the studiedactorshavebeenmoreinclinedtofocusonthepositivesidesofoff-peakdeliveriesratherthancostsanddrawbacks.

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7 ConclusionThischapterprovidesasummaryoftheanswerstotheresearchquestions.

HowisValueCreatedfromOff-PeakDeliveriesandHowisThisValueCapturedandDistributedBetweentheStakeholders?Off-peak deliveries create value for the stakeholders in the form of increased transportefficiency, improved delivery reliability and increased utilization of the trucks. The improvedmarket positioning is also an important advantage of off-peak deliveries but the value is noteasilydefinedandquantifiable.

The different requirements and operations of the stores, restaurants and hotels have a largeimpactonthevaluecreationfromoff-peakdeliveriesanddeterminehowthevalueisperceived.Companiesthatneedtoreceivedeliveriesduringashorttimeperiodinthemorningwillbenefitmore fromoff-peakdeliveries compared to companies that can receive deliveries throughoutthe day.When the delivery reliability is highly prioritized, off-peak deliverieswill also provegreatlybeneficial.Atthispoint,off-peakdeliveriescontributetoanimprovedreliabilitybutthevalueof the increasedtransportefficiency ismoredependentonthe individualprocessesandresources of the stakeholders, and is highly affected by the delivered volume; when onlyachieving smaller volumes, the value from the transport efficiency is counteracted by highercosts.

Duetothepricingmodel,theactorthatofferstheimprovementrarelycapturesthevalueoftheimprovement; instead the value is often transferred to the customer. For instance, the valueproposition from the carrier to the grocery store in regard to off-peak deliveries include anincreasedtransportefficiency,yetthepricingmodelofpayingpertruckshiftcombinedwiththeincreased efficiency results in fewer truck shifts needed by the stores. However, all of theincreasedcostsofoff-peakdeliveriesforthecarrieraretransferredtothegrocerystore;hencethedistributionofprofitsandcostsisfairinthiscase.

Theamountofvolumethatcanbedeliveredduringoff-peakhourswillalsohavealargeimpactonthevaluecapturing.Thelowvolumeofdeliveredgoodsduringoff-peakhourwithincase2has also resulted in apricingmodel thathas a large impacton thevalue capturing. Since thewholesalerpaysformorehoursthanneededtodeliverthegoods,allofthevaluecreatedfromthe efficiency gain is not captured. Furthermore, the improved availability of loading zonesduringoff-peakhours,whichimprovesthetransportefficiency,doesnothaveafinancialimpactforthecarriersincethereisnolongerariskofworkingovertimewhenthewholesalerpaysformorehoursthanneeded,asmentionedabove.

Withincase2,thecarrieralsotransfersallofthecoststothewholesaler,eventhoughoff-peakdeliveries do not create any savings for the wholesaler at this point. Furthermore, thewholesalerdoesnotchargeitscustomerforoff-peakdeliveries,despitetheincreasedqualityofdeliveriesthatisprovided;hencethedistributionofprofitsandcostsarenotasevenasincase1.Ingeneral,thetransparencyofthepricingwillaffecttheabilitytocapturevaluefromoff-peakdeliveries.Even though the reliabilityofoff-peakdeliveries is superior to thedailydeliveries,the wholesaler does manage to achieve a sufficient reliability for the daily deliveries, butaccomplishesthisatahighcost, forexamplebyaddingextratrucks.Bynotaddingthecostoftransportation as a separate expense for customers, the wholesaler is unable to send pricesignals to its customers. This creates barriers both in regard to charging for the improvedqualityofoff-peakdeliveries,andinregardtosteeringthecustomertowardsthemostefficientsolution. However, using a more transparent pricing model with an individually settransportationpricewould,inthelongrun,benefitthemostefficienttransportsolution.

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Whatare theKeyFactorsThatEnable theStakeholders toProfit fromOff-PeakDeliveries?Atthereceivers’end,thefactthatoff-peakdeliveriesdonotdisturborforcearadicalchangeindailyoperationswas identifiedasacommonsuccess factor.Usingpersonnelalreadyavailableto receive deliveries or the possibility to use unassisteddeliverieswas important in order toavoid incurring extra costs that would counteract the savings and benefits from off-peakdeliveries.

Sufficient volume of goods to deliver is important in order to create savings from increasedefficiency. One of the main identified contributors to the realization of the savings for thegrocerychainwasthevolumeofdeliveriesthatwereinstantlyavailable.Thelargevolumemadeit possible to utilize the truck for awhole shift,which togetherwith the increased efficiencyenablessavings.

Increased utilization of trucks is another contributor to increased value. In case 2 itwas theutilizationofthetruckthatwasakeyfactorinthevaluecreation.Beingabletousethetruckformultipleshiftsperdaymakesitpossibletoincreaseearningspertruck.

Acentralizedownerstructurewillfacilitatethedecisionandcanallowsufficientvolumetobeavailableimmediately,whichallowsforsavingstocreated.Withsavingsandcostsconcentratedatonepoint,thepossibilitytobenefitfromashiftbecomesapparentandtherebyashiftismorelikelytooccur.

For a non-integrated supply chain, volumes are likely to be insufficient at the initial stage. Inthatcaseitisimportantwithanactorwithalong-termperspectiveandwillingnesstoinvestinnewopportunities,inordertogetitstarted.

WhichFactorsWillAllowMoreValuetobeCreatedandCapturedfromOff-PeakDeliveries?The potential to use off-peak deliveries for marketing purposes is generally unexploited. Toadvertisetheuseofsustainabletransportsolutionsisapossibilityforpositiveattention,whichcouldattractcustomersandtherebycreatemorevalue.

Inoneofthecasesthetruckisonlyusedatnightandtherebynotutilizedfully.Usingthetruckforadayshiftaswellwouldincreasethevalue.

Increased delivery volumewould generate significantlymore value in case 2. The volume incase1iscurrentlylimitedbythescopeofthepilotproject,butifmoreinner-citystorescouldbeincluded,thevolumecouldincreaseandcreateevenmorevalueinthiscase.

The selling of off-peak deliveries is also limited by the temporary permit. If and when thepermission ispermanent,suppliersdonothavetheriskofsellingsomethingtheywould laterhavetotakebackandriskcustomerdissatisfaction.Thiscanenablegettingmorereceivers toparticipateandtherebyincreasevolume.

7.1 SuggestionsforFutureResearchThe aim of this thesis was to gain in-depth understanding of the phenomenon of off-peakdeliveries. Therefore, only one case has been studied very thoroughly. This has given some

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useful insights about the possibilities to increase value in a supply chain through off-peakdeliveries. However, in order to drawmore generalizable conclusions about this,more casesneedtobestudied.Whenthereismoreresearchreadilyavailableontheactualefficiencygainfromdrivinganddeliveringatnightcomparedtoduringtheday,moregeneralbusinesscasescanbepresented.Itisalsoimportanttobeabletomeasureandquantifythesavingsandcoststhathavebeendiscussedinthisstudy,inordertopresentreliablebusinesscases.Sincegettingreceivers to participate is crucial for the success of off-peak deliveries, more research aboutpossiblewaystoincreasetheincentivesforthemwouldbeuseful.Itwouldalsobeinterestingtostudyotherindustriesthanthefoodindustrytofindifthereareotherfactorsthataffectthevaluecreatedandwhichindustriesthataremostsuitableforoff-peakdeliveries.

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AppendixA:InterviewGuidesThe questions below posed as a basis for discussion during the interviews. The questions wereadaptedslightlydependingontheinterviewsubject,andmanymorequestionswereaskedbasedonthesubjects’answers.

ValuepropositionWhatisyourvaluepropositiontowardyourcustomers?

Howdoesoff-peakdeliveriesimproveyourvaluepropositiontowardyourcustomers?

ValueCapturingWhatpricingmodeldoyouusetowardyourcustomers?Howdoyouchargefordeliveries?

Whatpricingmodelisusedforoff-peakdeliveries?

Whatpricingmodeldoesyoursupplierusetowardyou?

Whatpricingmodelisusedbyyoursupplierforoff-peakdeliveries?

Whyarethesepricingmodelsused?Howwelldotheyworkwithchangessuchas theshift tooff-peakdeliveries?

Whatkindofsavingsdoyouobtainfromoff-peakdeliveries?

Whatkindofcostsdoyouincurfromoff-peakdeliveries?

Whatkindofsavingsandcostsdoyoursupplier/customerobtainfromoff-peakdeliveries?

Can you use pricing as a way to create incentives for your customers to shift to off-peakdeliveries?

ValueCreationWhatprocessesandresourcesareaffectedbytheshifttooff-peakdeliveries?

Arethereanynewresourcesorprocessesnecessarybecauseoftheshifttooff-peakdeliveries?

Doanyexistingresourcesorprocessesgainimportancewithashifttooff-peakdeliveries?

Doanyexistingresourcesorprocessesgainimportancewithashifttooff-peakdeliveries?

Arethereanyprocessesorresourcesthatarenotcompatiblewithashifttooff-peakdeliveries?