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liers, an independent third party can be employed to help manage the VMI initiative ?Thirdparty consolidates the shipment from various suppliers ?Third party facilitate the information exchange between manufacturer, consolidation and loading center, and the suppliers ?Information is neutral to both suppliers and manufacturers, signaling transfer of ownership according to preagreed terms ?Thirdparty can help manage inventory, unpacking, kitting, sequencing and delivery to line, milkrunning the inbound parts and potentially placing purchase order on manufacturers’ and suppliers’ behalf ?Ownership remains unchanged before or after VMI is implemented 15 However, internal resistance against outsourcing the VMI service remains generally very strong ? No mon understanding of how thirdparty can help smooth the VMI operation ? Staff currently in charge of inbound logistics are afraid of losing jobs ? General belief to hold potential ―profit‖ within the pany ? No cost benchmark to pare the overall cost under thirdparty management ? Resistance to share inventory data with thirdparty ? A cultural adjustment as well as a significant reanization of everyday job duties is required to acplish a major change of pany operations VMI will achieve its acceptance gradually, especially after the anticipated petitive environment in 23 years 16 A Chinese OEM outsourced its inbound logistics to China Logistics for operating assets, skills and better management OEM — Inbound Logistics ? The OEM was preparing for mass production of a new passenger car model on a totally new plant ? In the past, the suppliers were asked to deliver all ponents to the line side warehouse ? There are not enough inhouse operation staff and space to cope with expansion of production ? The management of the OEM would like to focus on manufacturing of vehicles, while outsource most of its logistics to third party ? China Logistics refurbished a 4,500 Sq. M. warehouse situated 8 km from the assembly line ? In addition, emergency orders can be dispatched within ten minutes of notification and delivered to line side within 30 minutes ? Parts are stored, picked and marshalled according to where they are used on the assembly line, with loads configured in directtoline order ? Scale ramped up from 40 units per day in November 20xx to 180 units in March 20xx ? In a typical week, the China Logistics team handles more than 3,000 different product lines and makes some 250 justintime deliveries to lineside receiving points China Logistics’ Approach Situation Selected Case Studies 17 There are several different factors to consider in designing an appropriate inventory level ? Order—todelivery lead time ? Order size and frequency ?Annual throughput ?Per SKU demand ?Complete vehicle sales volume ?Car parc (peration rate) ? Total number of SKUs ? Kitting or other needs ? Pu