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...industry. transportation of goods to and from organizations is a vital link in the JIT process. If the materials used in JIT production are not delivered on schedule, there can be an interruption in production further along the supply chain. If the materials needed are not delivered on schedule, production lines could be halted and organizations could suffer a loss in profits and long-term reputation. Thus, as a vital part of the supply chain, transportation and logistics must be integrated in order for JIT benefits to be maximized (A Strategy for Businesses to Deliver Goods, 1995).
The ability to meet exact production schedules under JIT becomes a key selling feature for transportation companies. According to Quinn (1989), no longer do providers deliver up to a week prior to or after an agreed-upon delivery date, but in many cases products must be there within a specified hour, requiring transportation services to be extremely efficient. High levels of reliability are now possible due to the advances in information and communication technology that allow the capturing and processing of vast amounts of real-time data so deliveries can be timed and scheduled precisely. At the Case Corporation, for example, the materials requirements are electronically transmitted to suppliers and the goods arrive some four hours later (Minahan, 1997). Before JIT, customers were lucky if the delivery arrived on time 60% of the time says Raia (1990). Under JIT, late deliveries are not acceptable and some manufacturers fine suppliers for late deliveries and, conversely, may even charge warehouse and stock holding fees for early deliveries. Missing just one scheduled delivery could prove to be a major problem with the tightly linked production scheduling under JIT, since as many as 70% of the companies using JIT have daily shipments of both inbound and outbound goods (Lieb, 1990).
Transportation Modes
Companies must decide which transportation mode or multimodal combination is the most cost effective and reliable in order to deliver goods to the manufacturing facility as well as to the customer as quickly and cost-effectively as possible. Along with the primary transportation modes, multiple modes or combinations of transportation modes are available to meet the needs of JIT customers. This article examines the four primary transportation modes: trucking, rail, water and air.
Trucking
The trucking industry is most frequently mentioned when discussing JIT transportation needs. Road transport is flexible and can reach almost any location within the supply chain. While shipping volumes and competitors in the trucking industry grew dramatically from 1997 to 1999, volumes are forecasted to be down for the end of 2001 and beyond due to general economic conditions (Mele, 2001). With the increased use of JIT and with deregulation of the transportation industry, trucking companies face increased expectations and demands from customers. Some of these expectations include faster, more frequent, error-free deliveries, electronic transmittal of ordering and tracking information, and strict adherence to negotiated shipment delivery schedules and arrangements. In response, trucking executives have developed strategies to meet customer demands. Harrington (1996) outlines these strategies, which include controlling costs, improving planning and communication through information technology, outsourcing, and meeting safety and industry standards.
Ground truckers, including United Parcel Service and Federal Express Ground, are working to meet the needs of JIT customers. UPS in certain cases holds parcels in trailers until specific delivery times. Federal Express even holds inventory for customers in its own warehouses at hub sites and ships products when directed by manufacturers and distributors. These expedited small package carriers also have air delivery units and can offer shippers a choice or combination of delivery modes depending on cost and time requirements.
Rail
Blanchard (2001) reports domestic freight carried on railroads is a $35 billion dollar market out of a total freight market of $540 billion. While trucking has the largest share of transportation, railroads are forming cooperative ventures and offering more services and improving reliability in response to industry changes. A venture between Portland & Western and Union Pacific railroads is an innovative less-than-carload boxcar shuttle service. In another example, to enhance delivery reliability, Norfolk Southern's J. T. Rail program loads parts from more than 150 vendors in manufacturing's sequence use on boxcars that are delivered to assembly plants,...
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