THE SYSTEM FRAMEWORK FOR EVALUATING THE EFFECT OF COLLABORATIVE TRANSPORTATION MANAGEMENT ON SUPPLY CHAIN

Abstract

More and more factories operate on a just-in-time basis. In order to shorten planning cycles and minimize inventory levels in the value chain, transportation plays a critical role in the supply chain process. Collaborative Transportation Management (CTM) is based on the interaction and collaboration between trading partners and carriers on the supply chain, in order to avoid the inefficiency of physical distribution and accomplish the objective of improving the efficiency of supply chain management. This paper proposes a concept of CTM and a system framework for evaluating the benefits of CTM. Based on the beer game, we develop a beer game model of supply chain with CTM, and present the different simulation scenarios: (1) Constrained transportation capacity in beer game with CTM; (2) Constrained transportation capacity in beer game without CTM; and (3) Unconstrained transportation capacity in beer game without CTM. The manufacturers, distributors and carriers in the supply chain are considered as the partners of CTM. Results of the simulation reveal that CTM can significantly reduce the total supply chain costs, including inventory costs and backlog costs, and improve transportation capacity utilization.