Value of Access -Manufacturing Supply Chains

Transcription

1 1 Value of Access -Manufacturing Supply Chains Sharada Vadali, Ph.D Shailesh Chandra, Ph.D April 10, 2014

2 CONTENTS 2 Introduction & Bacground Measuring Access/Directness Index Applications Concluding Remars

3 Introduction & Bacground-Value of Manufacturing and Access 3 $1.32 approximate multiplier 12.5% GDP $3.2 trillion spent on materials Capital expenditures ($147 million) 85% on machinery, parts 17.4 million employment Source: Annual Survey of Manufacturing, 2012 National Association of Manufacturing Production costs Economies of scaledelivered prices costs

4 Introduction & Bacground- Access, Supply Chains and Productivity Supplier s Supplier 2 4 End User/Buyer 1/Final Maret Supplier s Supplier 3 Supplier 1 Buyer s buyer 1 Consumer/Buyer Supplier 2 Buyer s Buyer 2 Supplier s Supplier 4 End User/Buyer 3/Final Maret Supplier s Supplier 1 End User/Buyer 2/Final Maret Value Chain Local Spatial Manifestations: Supplier clusters and productivity implications Better access to a pool of employees, and suppliers Access to specialized maret, technical, and competitive information Complementarities

5 Measuring Access (Within Supply Chains) A Threshold-bound Buyer-Supplier Index (TBI) 5 1. Behavioral basis-based on a threshold drive time around the given firm. 1. Single day drive 2. Just in time /just in sequence criteria 3. Other sourcing criteria Threshold-free Index (TFI) 1. Over a region All measures bound [0, 1] Cover the broadest range of supplier marets: Labor, raw materials, parts, energy N None of this is typically captured in traditional input-output models

6 Proximity: Threshold Bound Index (Level 1 Firm and Level 2- Industry) (I) Level -1: The Firm- Specific Industry Access Indicator ( belonging to type industry sector 1,2,..., K Upstream A 1 i, = S i s=1 S i s=1 η i,s α i,s ω i,s α i,s B i + η i,b b=1 B i + ω i,b b=1 where i = firm unit for which the index is to be calculated, α i,b α i,b s and b are the respective supplier and buyer industries with s 1,2,..., S i and b 1,2,..., B i S i = number of direct suppliers to industry unit i belonging to type B i = number of buyers of industry unit i belonging to type = 1 if the supplier industry s of unit i belonging to type is within the threshold drive time is, ib, through the shortest path transportation networ, otherwise 0 = 1 if the buyer industry b of unit i belonging to type is within the threshold drive time is, through the shortest transportation networ, otherwise 0 = 1 if the supplier industry s of unit i belonging to type is within the threshold drive time ib, based on Euclidean travel time = 1 if the buyer industry b of unit i belonging to type is within the threshold drive time based on Euclidean travel time A ) for an firm unit i U i, 1, is defined as follows: 1,2,..., Downstream (II) Level-2 TBI ( A 2 ) for the industry type or sector is given by: A 2 = U i=1 A 1 i, U where U is the total number of firms in the cluster sector. is, (or, ib, i (or b) of type. ) is the weight for travel or interaction between industry s (or i of type ) to industry

7 Proximity(Contd.): Threshold Free Index (Level 1 Firm and Level 2- Industry (Gravity Formulation) I) Level-1 Transport Accessibility Index ( belonging to type 1,2,..., K L ) for an industry unit i U i, 1 with U as the number of industry units is defined as, 1,2,..., 7 L 1 i, = S i s=1 α i,s τ i,s + B i b=1 α i,b τ i,b where i = industry unit for which the index is to be calculated, s and b are the respective supplier and buyer industries with s 1,2,..., S i and b 1,2,..., B i S i s=1 α i,s i,s S i = number of direct suppliers to industry unit i belonging to type B i = number of buyers of industry unit i belonging to type is, + B i b=1 α i,b i,b = travel time via the shortest path networ from supplier s to industry unit i of type = travel time via the shortest path networ from industry unit i of type to buyer b ib, = travel time from supplier s to industry unit i of type, using Euclidean distance is, = travel time from industry unit i of type, to buyer b using Euclidean distance ib, II) Level-2 TFI ( L 2 ) for the industry type L 2 = U L 1 i, U where U is the total number of firms in the cluster sector. i=1

8 Practical Applications of Measures 8 Influence of transport networs in influencing business connectivity New or improved lins and associated impacts on transport costs, reliability and speed Connections to input marets OR downstream bottlenecs in getting goods to marets Analyzing and understanding freight flows Non-transportation applications lie worforce access, economic development applications

9 Evaluation Example: Automobile Industry Chain Alabama, US 9 Cities as Retail Marets (Total 60) (Stage 3) OEM Assembly Plant (Total 2, Mercedes- Benz USA LLC and Honda Manufacturing of Alabama) (Stage 2) Automotive Suppliers (Total 40 for Mercedes- Benz USA LLC and 38 for Honda Manufacturing of Alabama) (Stage 1) Wholesale Trade Marets (Total 341)

10 Evaluation of a Corridor Improvement- TBI (Levels 1 and 2)- 120 m JIT supplier threshold(oem Plants as buyers) ( ) 10 Stage 2/3 Buyer- Supplier Access Indices Mercedes- Benz USA LLC Honda Manufacturing Level -1 TBI (With Supplier (S)-Buyer (B) percentage increase/dec rease) S (upstream) = +9.3%, B (downstream) = +0.9%) S = +31%, B = +39% Level -2 TBI

11 Concluding Remars- Indices are. 11 Generic and allow the possibilities for extension to multi-modal networs and subsequently broader geography. Geography of final demand Geography of inputs- supplier marets Applied to a transport project evaluation exercise for 2 local chains (Mercedes; Honda, Al). Project level connectivities influence both positively (local chains benefit), but reveal differences in how individual chains may be affected. Can be part of a proactive transportation planning strategy and economic development strategy in areas where manufacturing chains exist

12 Concluding Remars 12 Generic for any manufacturing industry type and the marets they represent for enabling agglomeration effects within the value chain Lin to inputs in a production process y= f(, l, e, m, R&D) Innovation and R&D instensive Regional processing Manufacturing Sectors Labor intensive Energy intensive

13 Challenges and Opportunities 13 Integration into planning Data Geography and scale Potential adaptation of Web Tag Guidance on agglomeration considerations via the effective density metric (UK). In the US, the TTI developed two sets of tools under SHRP2- C11 (2012). Specialized labor and/or input marets Effective density (zonal measure-gravity formulation).

14 14 Than You 1. Vadali, S and S. Chandra. Buyer-Supplier Transport Access Measures for Industry Clusters, Journal of Applied Research and Technology, Vadali, S and S. Chandra. Supply-Chain Consistent Access Measures for Mega Region Economic Development. Transportation Research Record, Texas A&M Transportation Institute SHRP2-C11 Maret Access Tools (Vadali, S and S, Chandra, 2012) in Collaboration with G. Weisbrod, A.Winston et.al. (2012).