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1、The application of third party logistics to implement the Just-In-Time system with minimum cost under a global environment AbstractThe integration of the Just-In-Time (JIT) system with supply chain management has been attracting more and more attention recently. Within the processes of the JIT syste
2、m, the upstream manufacturer is required to deliver products using smaller delivery lot sizes, at a higher delivery frequency. For the upstream manufacturer who adopts sea transportation to deliver products, a collaborative third party logistics (3PL) can act as an interface between the upstream man
3、ufacturer and the downstream partner so that the products can be delivered globally at a lower cost to meet the JIT needs of the downstream partner. In this study, a quantitative JIT cost model associated with the application of third party logistics is developed to investigate the optimal productio
4、n lot size and delivery lot size at the minimum total cost. Finally, a Taiwanese optical drive manufacturer is used as an illustrative case study to demonstrate the feasibility and rationality of the model.1. IntroductionWith the globalization of businesses, the on-time delivery of products through
5、the support of a logistics system has become more and more important. Global corporations must constantly investigate their production systems, distribution systems, and logistics strategies to provide the best customer service at the lowest possible cost.Goetschalckx, Vidal, and Dogan (2002) stated
6、 that long-range survival for international corporations will be very difficult without a highly optimized, strategic, and tactical global logistics plan. Stadtler (2005) mentions that the activities and processes should be coordinated along a supply chain to capture decisions in procurement, transp
7、ortation, production and distribution adequately, and many applications of supply chain management can be found in the literature (e.g. Ha and Krishnan, 2008, Li and Kuo, 2008andWang and Sang, 2005).Recently, the study of the Just-In-Time (JIT) system under a global environment has attracted more at
8、tention in the Personal Computer (PC) related industries because of the tendency towards vertical disintegration. The JIT system can be implemented to achieve numerous goals such as cost reduction, lead-time reduction, quality assurance, and respect for humanity (Monden, 2002). Owing to the short pr
9、oduct life cycle of the personal computer industry, downstream companies usually ask their upstream suppliers to execute the JIT system, so that the benefits, like the risk reduction of price loss incurred from inventory, lead times reduction, on-time delivery, delivery reliability, quality improvem
10、ent, and lowered cost could be obtained (Shin, Collier, & Wilson, 2000). According to the JIT policy, the manufacturer must deliver the right amount of components, at the right time, and to the right place (Kim & Kim, 2002). The downstream assembler usually asks for higher delivery frequency and sma
11、ller delivery lot sizes so as to reduce his inventory cost in the JIT system (Kelle, khateeb, & Miller, 2003). However, large volume products are conveyed using sea transportation, using larger delivery lot sizes to reduce transportation cost during transnational transportation. In these circumstanc
12、es, corporations often choose specialized service providers to outsource their logistics activities for productivity achievement and/or service enhancements (La Londe & Maltz, 1992). The collaboration of third party logistics (3PL) which is globally connected to the upstream manufacturer and the dow
13、nstream assembler will be a feasible alternative when the products have to be delivered to the downstream assembler through the JIT system. In this study, the interaction between the manufacturer and the 3PL will be discussed to figure out the related decisions such as the optimal production lot siz
14、e of the manufacturer and the delivery lot size from the manufacturer to the 3PL, based on its contribution towards obtaining the minimum total cost. In addition, the related assumptions and restrictions are deliberated as well so that the proposed model is implemented successfully. Finally, a Taiwa
15、nese PC-related company which practices the JIT system under a global environment is used to illustrate the optimal production lot size and delivery lot size of the proposed cost model.2. Literature reviewThe globalization of the network economy has resulted in a whole new perspective of the traditi
16、onal JIT system with the fixed quantity-period delivery policy (Khan & Sarker, 2002). The fixed quantity-period delivery policy with smaller quantities and shorter periods is suitable to be executed among those companies that are close to each other. However, it would be hard for the manufacturer to implement the JIT system under a global environment, especially when its products are conveyed by transnational sea transportation globally. Therefore, many corporations are tryin
