A logistics integrated service model in Taiwan FTZ for foreign key components supply of bicycle industry

It is well known that Taiwan bicycle industry plays an important role in global bicycle supply chain. In the procurement process of bicycle components, most bicycle manufacturers ask the foreign key component suppliers to deliver the components in door-to-door service. In general, the foreign key component suppliers adopt the consolidation of components with various specifications to fulfill the orders from different bicycle manufacturers under the consideration of transportation efficiency and required delivery dates. Undoubtedly, it is a heavy workload and often brings high logistics cost for most foreign suppliers. In this paper, we proposed an integrated logistics service model to motivate the foreign bicycle key component suppliers to establish distribution centers in Taiwan´s FTZ (free trade zone). In this model, a new delivery policy for key components of standard specification is designed based on the levels of safety inventory. And, a FTZ “store in the front, factory in the back” business model is introduced to implement postponement strategy for component customization until receiving an order from bicycle manufacture in Taiwan. After finishing the customization process, the 3PL which providers logistics service for foreign supplies in FTZ can deliver the components to the Taiwan bicycle manufacture in JIT policy to enhance the overall supply chain performance and reduce the components inventory in the bicycle manufacture. This paper also shows a real case of applying this logistics service model in Taichung FTZ.