Lead Logistics Provider and its Effect on Supply Chain Alliances - A Case Study on Taiwan Motor Industry

Abstract

The increasing competition due to globalization and e-Business development has stimulated manufacturers to pursue supply chain alliances more aggressively. The primary motivation for this is to minimize overall costs and gain mutual benefits through supplier-manufacturer integration. Supply chain alliance is one of the key strategic co-operations adopted by manufacturers to simultaneously reduce costs and improve service. The advancement of supply chain alliance is moving from a Third-Party Logistics System to a Lead Logistics Provider Management System. The Lead Logistics Provider plays the role of logistics manager who lead the logistics operations across the entire supply chain with the ability to provide superior expertise in transportation services, warehousing capabilities, information technology, and materials replenishment among the other logistics activities. A Lead Logistics Provider system framework is composed of three components that include Resources Management, Information Central System, and Logistics Synchronization. This study presents a case of a Taiwanese automotive supply chain illustrating the application of supply chain alliances via the Lead Logistics Provider system. Significant improvement on inventory costs and improvement on the transportation performance is reported resulting from the application of this system. This scheme also showed enhanced service quality that creates business opportunities among the supply chain partners.