The effect of adopting collaborative transportation management by Taiwanese computer manufacturers - Model building and empirical studies

Collaborative transportation management (CTM) enhances the value of the supply chain mainly through the cooperation between the shipper and the carrier. For the computer industry, the mechanism of CTM may reduce the transportation cost and the inventory cost. This paper developed the cost function of domestic computer industry based on the cost data from the thirteen listed companies during the period from 1999 to 2005 in Taiwan. The results of the empirical study showed that there is a substitution relationship between the transportation element and the inventory element in the whole computer industry. Additionally, the cross elasticity of the OBMs is higher than the one of the OEMs/ODMs. This means that the OBMs can significantly reduce the inventory cost by the efficient transportation. In the analysis of economic characteristics, the whole computer industry exhibits increasing returns to scale. Three OBMs, Asus, Acer, and Lemel, and three OEMs/ODMs, Wistron, Iventec, and Quanta, approximately possess constant returns to scale. That is to say, they almost achieve the optimal scale. Since internal costs will increase or reduce after introducing CTM, this research estimated the cost differences between computer companies with and without CTM base on the data in 2006.Then, we analyzed the changes in the cost differences under three different scenarios which are set by the accuracy of CTM and the degree of information sharing in the supply chain. The results indicated that computer industry saves the total cost ranging from 1.5% to 6.1% after implementing effectively.