Professional Documents
Culture Documents
InstitutionalandOrganizational
Innovations
inTransportSystems
September1618,2008
(Lectures4&5)
Paralleltothephysicalinnovations(e.g.containers)
therehasbeenaflurryofnonphysicalinnovationsin
transportation
Therearetheinstitutionalandorganizational
innovations.
Suchnonmaterialinnovationsareoftwo
types:
A. Changeofeconomicinstitutionsgoverning
transport.
e.g.deregulations,privatizationliberalization
B.Changeofoperationalprocessesofgoods
transport
EconomicInstitutionsGoverningTransport
RecentReform:
Theriseoffreetraderegimes
creationofIMFandtheWorldBankGeneralAgreement
onTariffs&Trade(GATT)
WTO
NAFTA,EU,MERCOSUR
AnAdvancedTransport&TradeFacilitation
System
ComponentsofanAdvancedTransportandTrade
FacilitationSystem
PhysicalInfrastructure
Transportsubsystems
Informationsubsystems
Nonphysicalinfrastructure(knowledgeand
competenciesintransportandtradefacilitation)
Overallgovernanceoftransportandtradefacilitation
Businesslogisticalsystems
Financialcoordination
Governanceofphysicalflows
PromotionofCrossborderFlows
A.DeregulationofTransportServices
Removalofcabotage
Privatizationoftransportinfrastructure
Reformofcommercial&legalframeworks
Reinventionofthecustomsfunction
B. NewBusinessLogisticsSystems
(Lowercosts,minimuminventory,quickmarketfeedback
&expandingmarketreach)
C. BetterFinancialCoordination
(Newpaymentsystems,lowerrisk)
D.UseofITandotherknowledgetechnologiesto
speedupcrossborderflows
Logistical
Innovations and the
'New'
Transportation
Enterprise
Globalization
& Competitive
Forces
Public Policies of
Trade & Transport,
Deregulation,
Liberalization &
Competition
Emerging
Knowledge Society:
Changing Nature of
Work & Work Force
Drive for
Corporate
Advantage
Changes in
Firm &
Industry
Structure
Business Factors
CostperTonMile,1995Dollars
RailroadOperatingCostsperRevenueTonMile,
CostsperRevenueTonMile,19801995,in1995
Dollars
95'
OperatingCostsofLessthanTruckload
andTruckloadCarriers,19881995,in
1995dollarspervehiclemile
1995
ThePassengerCostfortheAirlineIndustry,
198020000(incurrentUSD)
Post1990,TransportLogisticalStructure
TheLogisticalChannel
JustinTime(JIT)
QuickResponseServices
Containerstrackedaroundtheworld&visibleintransit
OldpapersystemoncargoreplacedbyElectronicData
Interchange(EDI)andemail
Freightflowfaster,cheaperandmorereliable
NewtypesofTransport&LogisticalServices
(e.g.reliability&timeliness
strategicoutsourcingofafirmsdistributionfunction
flexibilityindestinationchoices
additionalproductionvalueandstrategiccompetitive
advantage
operationofdistribution&warehousingfacilities
wheretosourceintermediategoods
Managementofvaluechainsofotherfirms
Movingintoecommerce
Consumerdemandorientedpullsystem
TheEvolutionofNovelFreightService
Attributes,LogisticalSystems,and
EconomicBenefits
Transport sector
productivity
effects
4% Administration
6% Order Processing
24% Inventory Carrying Cost
61%
Logistics
Systems
27% Warehousing
RealInventorySalesRatioforDurableGoods
inManufacturingIndustry(19802005,
quarterlydata)
RealInventorySalesRatioforMotorVehicles
inManufacturingIndustry(19802005,
quarterlydata)
TheContext
Globalization
ProcessCrossnationalintegrationacrosstheworld
Attributes
Multidimensionalcultural,political,economic,
spatial
Economicfunctionalintegrationof
production/consumption
Spatialcoordinationofdemand/supplyacross
internationalboundaries
ConvergentForcesLeadingtotheRiseofthe
GlobalizationandDynamicCities
ChangeFactors
ChangeAgents
Outcomes
EconomicandSpatialEvolution
Material
Technologies
A.GlobalTransformation
(KnowledgerichTransport
Communications&
ProductionTechnologies)
Globalorganizationof
productionsystems(economic
volatility)
NonMaterialTechnologies
&Infrastructures
(NeoliberalIdeologies,OpenTrade
Regimes,Logistical,PropertyRights
andFinancialInnovations,
EntrepreneurshipasaPervasiveModel)
A.GlobalNetwork
Corporations,
DynamicSmalland
Mediumsize(SME)
Enterprises
B.RiseofDynamicLearning
Regions
B.PublicSector
EntrepreneurialAgents
RiseoftheEntrepreneurialCity
(EmphasisonWealthCreation)
C.SocialSector
EntrepreneurialAgents
A.TheproductionofUrban
DynamicCompetitiveness
B.InnovationsinGovernance
inPolicies
inInstitutions
WeakeningoftheEarlier
EconomicRegime
[Riseofcustomizedproductionand
qualitycompetition&demandfor
variety;theweakeningoftheNational
Keynesianapparatus]
C.DeemphasisofRedistributive
Functions
GlobalNetworkCorporations(GNC)
Majoragentsofcurrentglobalization
(e.g.GE,Toyota,Microsoft,Pfizer,GM)
Takeadvantageof:
Economiesofscaleinknowledge
EconomiesofscopeintheuseofcorporateNetworks
(knowledge,financial,marketingetc.)
Variationsinlocallabor&otherinputcosts
Create&maintainproductionunitsaroundthe
worldinurbanareaswithhighglobalaccessibility.
GlobalCorporationsusecitiesandurbanregionsas
organizationalstructurestomaximizereturnsoncapital.
continued.
ProductionConsequences
Competitiveandcomparativeadvantages
GlobalSourcingharmonizationacrosseconomic
systems
JITleanandflexibleproduction
FlexibleSpecializationhorizontalreplacingvertical
integration
CostAdvantagesofSpatialEconomiesinadditionto
scaleandscopeeconomies
IncreasingTradeas%ofGDP
TransportImplicationsofGlobalization
ObjectiveReliabledeliverythroughlowcost/highvalue
services
Worldwidecoordinationofproductionand
distribution
Captureupstream/downstreamadvantagesof
materialcomponentoutputlinkagesforcost
reductionacrosssupplychain
AttributeTechnologyAdvances
Transportationlarger,faster
InformationSystems
LogisticsInnovations
TransportationLogistics:SupplyChain
StrategicandOperationalIssues
Strategic
Tactical
Supply
Chain
Site/
location
Transportation
Shipment
Warehousing
Warehouse
location
Internal/
outsourcing
Warehouse
layout
Capacity
sizing
Fleet
composition
Dispatch
centers
Levelof
automation
Sourcing,
production
and
marketing
coordin.
Fleet
forwarding
decisions
Production
planning
Routing
strategy
Sourcing
Delivery
frequency
Network
alignment
IT
Operational
Enterprise
resource
planning
(ERP)
Fleetsizing
Material
handling
designand
equip.
Modechoice
Storage
retrieval
Zonealignment
IT
infrastructure
Loadsize
Transittime
minimization
Vehicle
dispatch
Storageand
stocking
Communicat.
infrastructure
Order
handling
Orderpickup
LogisticsDefinitionandComponents
DefinitionIntegratedmanagementofoverallvaluechain
throughtimecompression.
ObjectivesEfficientmovementandstorageofrawmaterials,
intermediateandfinalgoodswithassociatedinformation
flowsthroughthesupplychain.
Effectiveinventorymanagementanddistributionforcost
minimization.
Rightproduct,rightplaceatrighttime.
TransportationandSupplyChainLinks
SupplyChainConsideration
InboundNetwork
DistributionNetwork
Production
Center
Vendors
Customers
Distribution
Center
TransportationConsideration
Infrastructure
Logistics
operation
environment
Airports,
rail,ports,
roads
Assets
Warehouse
depots
Fleetsizeand
composition
Source:Chatterjee(2000).
Equipment
Drivers
TypesofLogistics
IntegratedLogisticsManagementGlobal
Optimization
TransportLogistics
Inbound/OutboundLogisticsmovementofgoods
throughthesupplychain
Effectivemanagementoftransportation,
warehousinganddistribution
PullLogistics
Outboundlogistics
Inbound
logistics
Value
addedin
production
Transport
to
warehouse
Harmon
ization
of
supply
chain
with
product.
needs
Demand
forecasting
Inhouse/
thirdparty
logistics
Network
Design
central
regional
Warehouse
location
Sourcin
gand
procure
ment
Manageme
nt
total
quality
mgt
justin
time
others
Production
design
Transpo
rtmode
choice
sea
river/ca
nal
air
rail
road
Location
choice
Frequency
ofdelivery
Mode
choice
Fleetsize
Fleet
compositio
n
Optional
routing
Warehouse
characteristics
Warehouse
Internal
Layout
Quantityand
inventory
ITandEDI
for
harmonizing
ordersand
shipments
Distribu
tion
network
direct
delivery
to
factory
wareho
use
Delivery
to
customer
Market/
vendor
choice
Network
pattern
huband
spoke
pointto
point
route
Transporta
tionmode
frequency
on
demand
daily
weekly
monthly
Transportation
Logistics:
StrategicIssues
intheValue
Chain
Speedof
delivery
Tracking
equipment
Shipment
size
package
LTL
TL
Damage
considerati
on
breakage
spoilage
theft
accident
Ontime
delivery
Cost Speed/
cycletime
Source:Chatterjee(2000).
Agility/
Accuracy
flexibility
TNT
InformationSystems
Integratedlogistics
Inbound
logistics
Import
import
clearance
transport
tofactory
Localraw
materials
transport
Inventorymgmt
Transport
system
design
Manufacturing
materialsmgmt.
Purchasing/order
placement
Invoicepayment
Warehousedesign,
layoutandmgmt
(dedicatedorshared)
Productionordertaking
Picking
Deliverytoproduction
line/warehouse
Production
Not
tradionally
contracted
out
Finishedgoods
warehousing
Warehouse
design,
layoutand
mgmt
(dedicatedor
shared)
Inventory
management
Distribution
wholesale
retail
enduser
Export
logistics
Delivery
ordertaking
Customs
clearance
Picking
Transport
toport
Assembling
Packing
Security
systems
Transport
EDI
capabilitites
/warehouse
fromplant
toretailer,
wholesaler,
consumer/
enduser
Cross
docking
ElementsoftheIntegratedSystemofTNT
Post
delivery
service
Invoicing
Product
installation
Inquiry
handling
Customer
followup
interviews
Returnof
defects
Trends
Preproduction/Postproductiondecisionsto
locationandproductiondecisions
Internetandecommerce
TraditionaltoWeblogistics
ReverseLogistics
Traditional
Logistics
Supply
Chain
Order
Flow
Logistics
Material flow
Retail
Outlet
Information flow
Source: Greis and Kasarda, 1997
RethinkingtheLogisticsSupplyChain:Web
SupplyChainCharacteristicsofNewly
IndustrializingCountries
Supply
chain
characteristics
Supply
Limitedlocal
supply
Manufacturing
Verticalintegration
Distribution
Distributorsplaythe
majorrole
Laborintensive
processes
Growthofeconomic
processingzones
Inadequate
infrastructure
Limitedavail.of
logisticsservices
Emerging
Trends
Increaseduse
ofsuppliers
drawnfrom
advanced
economiesand
otherNICs
Concentrationof
productionin
metropolitanareas
Investmentin
production,
transportationand
communication
technology
Assemblyoperation
offinalgoods
Retail
50%ormoresales
throughinformal
markets
Directstore
deliveries(DSD)
Consumer
Smallmiddleclass
Developmentof
improved
transportationservice
Increasing
multinationalretail
presence
Growingmiddleclass
purchasingpower
Thirdpartylogistics
Increasinginfoabout
productdiversity,quality
andnamebrand
Increasingcompet.
betweenmultinlfirms
formarketshare
Exportsof
componentsand
intermediatedgoods
Source:ModifiedfromWaller(1995).
Highproportionoflow
incomeconsumers
Consumerswithbuying
powerconcentratedin
largecities
LogisticsChallengesinIndonesia
Supplier
(manufacturers)
Coordination of
wide network
of distributors
Cost
management
Low customer
service levels
Distribution
Transport
Customer
Achieving geographic
and store coverage
- Heavy investment
in fleet and facilities
- Mgmt. of lg.
number of subscale
transport agents
Managing high-SKU
but low-vol. deliveries
to retail outlets
- frequency
- narrow delivery
windows
Expensive, less-thantruckload shipments
Lack of
equipment
available en
route
Coordination of
>100 deliveries
per day at each
outlet
Lack of
professionalism
- goods
mishandling
- delays
Lack of central
warehousing
on lg. storage
facilities
Substandard
trucks
Slow order
processing
system with
suppliers
(high lead
times)
Warehousing
security
Note:SKU=stockkeepingunit
Source:Knoop,(1996)
ComparativeInformationonSelected
LogisticsMarkets
Market
United
Kingdom
North
America
Europe
Australia
Asia
Estimated Estimated
market
growth
size($
rate
billion)
100
1520
Years
behindUK
inmarket
maturity
0
%of
companies
outsourcing
4050
>300
>15
1030
250
1.02.5
>250
2025
>20
>25
10
5
15
1020
2030
<5
TimeDelayandExports