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Since the popularization of Just-In-Time (JIT) practices in the 1980's, companies have worked to reduce inventory levJ321 els and lower overall production costs. JlT programs have had a positive impact on manufacturing and service processes, and the success has also altered the transportation industry. The 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...