Impact of information and communications technology on transport(13)

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618D. Banister and D. Stead

Information Box 2.Just-in-time production

The disk-drive manufacturer Maxtor supplies companies such as Dell,Compaq and HP in Asia and America, often within 48 hours. The supplychain is managed and optimised by Exel, one of the world’s leading firm ofpure logistics (formed from a merger of a shipping line and a road haulier),Increasingly specialist companies like Exel are taking over from moretraditional supply chain management to provide customised services andeffectively manage production.

(The Economist, 7 December, 2002, p. 94)In the automobile industry, where it used to take 10 business days toassemble a car, firms are now aiming to respond to specific vehicle orderswithin 5 or even 3 days. With the support of information and communica-tions technology, customers will be in a position to customize their new caronline to their preference, but without having to wait many weeks fordelivery. This requires massive changes in the way manufacturers (andsuppliers) approach the entire process of ordering supplies, producing anddelivering parts. The need to sequence the delivery of parts to the vehicleassembly line on time, and in the proper order, is leading to the formationof supplier villages around each vehicle assembly plant. This means shortdistances for the transport of supplies, which could lead to a reduction intraffic. Efficient enterprise resource planning systems as well as customermanagement systems are a prerequisite for achieving the goal of shortassembly times.

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advantages of ICT is that it provides the potential to cut costs and increaseefficiency (by some 20–30%) through electronic transactions that allow the useof computer-aided manufacturing and electronic data interchange. Nearly allaspects of the manufacturing process are now interconnected with ICT (Saxenaand Sahay, 2000), and even virtual fabrication (Hsieh et al., 2002).

Production schedules can be changed weekly according to the variability indemand patterns, and suppliers are increasingly acting as retailers. Suchdevelopments have led to a reduction in the transport requirements as orders arenow processed electronically from the supply of goods to the invoicing ofcustomers. However, as requirements become more demanding, there may be anincrease in the number of deliveries required to meet production deadlines withsmaller loads. As the customer demands have become more individualized,production lines are being converted to individual requirements (as is happeningwith computers and cars). Supply chains may become more extended as sourcingis international, but it may also lead to clusters and strong agglomerationeconomies as suppliers seek to reduce their risk and locate around the assemblyplants (Banister and Berechman, 2000).

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