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The application of third party logistics to implement the Just-In-Time system with minimum cost under a global environmentAbstractThe 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 system, 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 manufacturer 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 production 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 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 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, transportation, 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 attention 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 product 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 improvement, 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 smaller 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 circumstances, 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 downstream 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 size 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 Taiwanese 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 traditional 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 trying to outsource their global logistics activities strategically in order to obtain the numerous benefits such as cost reduction and service improvement. Hertz and Alfredsson (2003) have stated that the 3PL, which involves a firm acting as a middleman not taking title to the products, but to whom logistics activities are outsourced, has been playing a very important role in the global distribution network. Wang and Sang (2005) also mention that a 3PL firm is a professional logistics company profiting by taking charge of a part or the total logistics in the supply chain of a focal enterprise. 3PL also connects the suppliers, manufacturers, and the distributors in supply chains and provide substance movement and logistics information flow. The core competitive advantage of a 3PL firm comes from its ability to integrate services to help its customers optimize their logistics management strategies, build up and operate their logistics systems, and even manage their whole distribution systems (Wang & Sang, 2005).Zimmer (2001) states that production depends deeply on the on-time delivery of components, which can drastically reduce buffer inventories, when JIT purchasing is implemented. When the manufacturer has to comply with the assembler under the JIT system, the inventories of the manufacturer will be increased to offset the reduction of the assemblers inventories (David and Chaime, 2003, Khan and Sarker, 2002andSarker and Parija, 1996).The Economic Order Quantity (EOQ) model is widely used to calculate the optimal lot size to reduce the total cost, which is composed of ordering cost, setup cost, and inventory holding cost for raw materials and manufactured products (David and Chaime, 2003, Kelle et al., 2003, Khan and Sarker, 2002andSarker and Parija, 1996). However, some issues such as the integration of collaborative 3PL and the restrictions on the delivery lot size by sea transportation are not discussed further in their studies. For the above involved costs, David and Chaime (2003) further discuss a vendorbuyer relationship to include two-sided transportation costs in the JIT system. Koulamas, 1995andOtake et al., 1999 describe that the annual setup cost is equal to the individual setup cost times the total number of orders in a year. McCann, 1996andTyworth and Zeng, 1998 both state that the transportation cost can be affected by freight rate, annual demand, and the products weight. Compared to the above studies which assume that the transportation rate is constant per unit, Swenseth and Godfrey (2002) assumed that the transportation rate is constant per shipment, which will result in economies of scale for transportation. Besides, McCann (1996) presented that the total logistics costs are the sum of ordering costs, holding costs, and transportation costs. A Syarif, Yun, and Gen (2002) mention that the cost incurred from a distribution center includes transportation cost and operation cost. Taniguchi, Noritake, Yamada, and Izumitani (1999) states that the costs of pickup/delivery and land-haul trucks should be included in the cost of the distribution center as well.The numerous costs involved will be formulated in different ways when the manufacturer operates the JIT system associated with a collaborative 3PL under a global environment. Kreng and Wang (2005) presented a cost model, which can be implemented in the JIT system under a global environment, to investigate the most appropriate mode of product delivery strategy. They discussed the adaptability of different transportation means for different kinds of products. In this study, the implementation of sea transportation from the manufacturer to the 3PL provider will be particularized, and the corresponding cost model will also be presented to obtain the minimum total cost, the optimal production lot size, and the optimal delivery lot size from the manufacturer to the 3PL provider. Finally, a Taiwanese company is used for the case study to illustrate and explore the feasibility of the model.3. The formulation of a JIT cost model associated with the 3PLBefore developing the JIT cost model, the symbols and notations used throughout this study are defined below: B 3PLs pickup cost per unit product (amount per unit)Cj 3PLs cost of the jth transportation container type, where j=1, 2, 3,n (amount per year)DP annual demand rate of the product (units per year)Dr annual demand of raw materials (units per year)D customers demand at a specific interval (units per shipment)E annual inventory holding cost of 3PL (amount per year)F transportation cost of the jth transportation container type from the manufacturer to the 3PL, where j=1, 2, 3,n (amount per lot)F freight rate from the 3PL provider to the assembler (amount per kilogram)Hp inventory holding cost of a unit of the product (amount per year) Hr inventory holding cost of raw materials per unit (amount per year)Ij average product inventory of the jth transportation container type in the manufacturer, where j=1, 2, 3,n (amount per year)I annual profit margin of 3PL (%)K ordering cost (amount per order)Kj number of shipments from the 3PL provider to the assembler when the delivery lot size from the manufacturer to the 3PL provider is Qj with the jth transportation container type, where j=1, 2, 3,n(kj=Qj/d)M optimal number of shipments that manufacturer delivers with the optimal total cost actual number of shipments of the jth transportation container type with the minimum total cost, where j=1, 2, 3,nMj number of shipments of the jth transportation container type, where j=1, 2, 3,n number of shipments of the jth transportation container type with the minimum total cost, where j=1, 2, 3,nN optimal production lot size of the manufacturer (units per lot) optimal production lot size of the jth transportation container type, where j=1, 2, 3,n (units per lot)Nj production lot size of the jth transportation container type, where j=1, 2, 3,n (units per lot)Nr ordering quantity of raw material (units per order)P production rate of product (units per year)maximum delivery lot size of the jth transportation container type, where j=1, 2, 3,n (units per lot)q optimal delivery lot size of the manufacturer (units per lot)qj actual delivery lot size of the jth transportation container type, where j=1, 2, 3,n (units per lot)Rj loading percentage of the jth transportation container type, where j=1, 2, 3,n(Rj=qj/Qj)Rj real number of shipments from the 3PL provider to the assembler when the delivery lot size from the manufacturer to the 3PL provider is qj with the jth transportation container type, where j=1, 2, 3,n(rj=qj/d)S setup cost (amount per setup)W weight of product (kilogram per unit) quantity of raw materials required in producing one unit of a product (units)Tomas and Griffin (1996) considered that a complete supply chain should consist of five participants, including the raw materials supplier, the manufacturer, the assembler, the warehouse operator, and the consumer. This study mainly focuses on the relationships among the manufacturer, the 3PL provider and the assembler within the JIT system under a global environment. In order to achieve the fixed quantity-period JIT delivery policy, which implies that the actual delivery lot size has to be determined by identifying the downstream assemblers needs instead of the upstream manufactures economical delivery lot size, higher transportation costs with higher delivery frequency are necessary. Since the JIT system are more appropriately executed among those companies that are close to each other, a collaborative 3PL connected the upstream manufacture with the downstream assembler is necessary when the products have to be delivered from the upstream manufacture to the downstream assembler by sea transportation over a long distance. This study proposes a JIT cost model to obtain the optimal production lot size, the actual delivery lot size, the most suitable transportation container type, and the exact number of shipments from the manufacturer to the 3PL provider at the minimum total cost.This study makes assumptions of the JIT system as follows: (1) There is only one assembler and only one manufacturer for each product.(2) The production rate of the manufacturer is uniform, finite, and higher than the demand rate of the assembler.(3) There is no shortage and the quality is consistent in both raw materials and products.(4) The demand for products that the assembler receives is fixed and is at regular intervals.(5) Qj is much greater than demand at a regular interval, d.(6) The transportation rates from the manufacturer to the 3PL and from the 3PL to the assembler are computed by the number of shipments and the products weight, respectively, and,(7) The space of the manufacturers warehouse is sufficient for keeping all inventories of products that the manufacturer produces.According to the above assumptions from (1), (2), (3)and(4), Fig. 1 illustrates the relationships among the manufacturer, the 3PL provider, and the assembler, where the Fig. 1 represents the inventory of manufacturers raw materials, the inventory of products inside the manufacturer, the inventory of the 3PL provider, and the inventory of the assembler from top to bottom (Kreng & Wang, 2005). This study also adopts the Fig. 1 to demonstrate the collaboration of the 3PL provider which will be an interface connecting the manufacturer and the assembler. During the period T1, the inventory of products with the manufacturer will be increased gradually because the production quantity is larger than the demand quantity. However, during the period T2, the inventory of products will be decreased because the production has been stopped.中文翻译:在全球环境下第三方物流以最小的成本实现了Just-In-Time系统的应用摘要:JUST-IN-TIME(JIT)系统,供应链管理的整合,最近已经吸引了越来越多的关注。在JIT系统的过程中,上游制造商必须提供产品使用更小的供货批次的大小,在一个更高的发货频率。对于上游制造商采用海上运输提供的产品,可以作为上游厂商和下游合作伙伴之间的接口,因此可以在全球提供的产品以较低的成本满足JIT需要一个合作的第三方物流(3PL)下游的合作伙伴。在这项研究中,定量JIT成本模型第三方物流中的应用与开发的总成本最低的最优生产批量和交货地块面积调查。最后,台湾光盘驱动器制造商作为一个典型案例研究,证明了该模型的可行性与合理性。正文:1介绍随着全球化的企业,按时交付产品通过物流系统的支持下,已成为越来越重要。全球企业必须不断研究他们的生产系统,销售系统,物流战略,在尽可能低的成本提供最好的客户服务。Goetschalckx,沙,多安(2002)指出,没有一个高度优化,战略和战术的全球物流计划的远距离国际企业的生存将是非常困难的。 Stadtler(2005年)中提到的活动和过程应沿供应链进行协调,决定在采购,运输,生产和销售充分捕捉,在文献中,可以发现许多应用程序的供应链管理(如哈和Krishnan,2008年李,郭,2008年,王和生,2005年)。最近,-IN-TIME(JIT)系统研究了全球性的环境,吸引了更多的关注在个人计算机(PC)相关产业的垂直分工的趋势。实施JIT系统,可实现许多目标,如降低成本,减少交货时间,质量保证,以及对人性的尊重(Monden,2002年)。由于个人电脑行业的产品生命周期短,下游企业通常会问他们的上游供应商执行的JIT系统,像这样的好处是,所产生的价格损失的风险降低库存,减少交货时间,准时交货,交货的可靠性,改善品质,降低成本可以得到(新庄,和Wilson,2000)。根据的JIT政策,制造商必须提供适量的组成部分,在正确的时间,并在正确的地方(金金,2002年)。下游汇编程序通常要求更高的发货频率和更小的供货批次的大小,从而减少库存成本的JIT系统(凯莱,khateeb,和米勒,2003年)。然而,大批量的产品使用海上运输,输送大量使用较大的尺寸以降低运输成本,在跨国运输输送。在这种情况下,企业往往会选择为生产力的成就和/或服务增强(LA Londe二氏与马尔兹,1992年),专业的服务供应商外包其物流活动。合作的第三方物流(3PL),这是全球网络相连的上游厂商和下游汇编将是一个可行的替代产品时,被传递到下游的汇编,通过JIT系统。在这项研究中,制造商和第三方物流企业之间的互动进行讨论,以找出相关的决定,如制造商的最优生产批量大小,从制造商到第三方物流的出厂批次大小,根据其贡献获得最低的总成本。此外,相关假设和限制以及审议,该模型已成功实施。最后,台湾PC相关的公司,一个全球性的环境下实行JIT系统是用来说明拟议的成本模型的最优生产批量和交货地块面积。2。文献综述网络经济的全球化已导致传统的JIT系统与固定数量的周期交货的政策(汗Sarker,2002年),在一个全新的视角。固定数量较小数量的和较短的时间期间交付策略是适合于被执行的公司之间,彼此接近。然而,这将是很难的制造商实施JIT系统的全球环境下,尤其是当其产品所传达全球跨国海上运输。因此,许多公司正试图将其全球的物流活动外包战略,以获得的诸多好处,如降低成本和改善服务。赫兹和雷德松(2003)指出,第三方物流,这涉及到一个公司,作为一个中间人的产品,但外包物流业务,在全球分销网络中一直扮演着非常重要的角色。王和生(2005)还提到,第三方物流公司是一家专业物流公司获利的一部分或整体物流在供应链中的重点企业负责。第三方物流连接供应商,制造商和分销商在供应链中,并提供物质运动和物流信息流。第三方物流企业的核心竞争优势来自从能力整合服务,以帮助客户优化其物流管理战略,建立和经营自己的物流体系,甚至管理他们的整个分销系统(王生,2005年)。齐默(2001)指出,生产取决于深深的准时交货的组件,这些组件可以大大减少缓冲库存,JIT采购的实施。当制造商有遵守的汇编程序的JIT系统下,制造商的存货将被增加抵消减少的汇编的库存(大卫和Chaime,2003年,汗和Sarker,2002年和Sarker和Parija,1996年)。经济订货量(EOQ)模型被广泛使用,以计算出最佳的地块面积,以减少总成本,它是由订货成本,安装成本,库存持有成本为原材料和制成品(大卫和Chaime的,2003年,凯莱等人,2003年,汗和Sarker,2002年和Sarker和Parija,1996年)。然而,一些问题,如协作的第三方物流企业的整合,通过海上运输的出厂批次大小的限制,不能在他们的研究中进一步讨论。对于上述涉及的成本,大卫和(2003)Chaime进一步讨论,包括双面运输成本的JIT系统的供应商与买家的关系。 Koulamas,1999年,1995年和大竹等人描述的个人设置成本倍,总的订单数量在一年内,每年的安装成本是相等的。麦肯,1996年和Tyworth,曾,1998年的运输成本,运价,每年的需求,产品的重量可能会受到两种状态。 Swenseth和Godfrey(2002)假设运输率是恒定的每单位的上述研究相比,假定每次装运的运输率是恒定的,这将导致在用于运输的规模经济。此外,麦肯(1996)提出的总物流成本的总和订货成本,持有成本和运输成本。一个SYARIF,云和创(2002)提到,从配送中心所产生的成本,包括运输成本和运营成本。谷口,则武,山田,Izumitani的的(1999)指出,皮卡/送货和土地长途车的成本应该包括在配送中心的成本。涉及的许多成本,将制定以不同的方式,当制造商经营的JIT系统与第三方物流企业的全球环境下的协作。 Kreng和王(2005)提出了一个成本模型,该模型可以

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