Implications of Just-in-Time Production on Rail Freight Systems

"Just-in-Time" (JIT) inventory systems are currently very popular in practice and in the operations management literature. These writings have generally assumed that all shipments are done by motor freight. We feel, however, that this assumption can be misleading. The main thrusts of a JIT strategy in production management need inventory control need not restrict the method of delivery as long as that mode can meet certain JIT-created characteristics. JIT provides railroads with real opportunities to tailor their services to meet the needs of the individual manufacturer or supplier. Possibilities include guaranteed delivery dates, prearranged pickup and delivery, short-term storage, and tardiness penalties. Regularly scheduled priority trains, the bypassing of time-consuming yard functions, close communication with shippers and consignees, and efficient freight consolidation are crucial. More importantly, JIT requires working directly with suppliers, manufacturers, shippers, and freight forwarders in order to fully exploit the characteristics imposed on freight transportation by such an environment. It is the purpose of this article to examine these criteria and constraints as they relate to rail freight systems, and, in particular, to suggest ways in which the railroad industry might better compete for its share of JIT transportation. We begin by examining important characteristics of a JIT system and the perceptions of rail freight by JIT manufacturers. Following this, we discuss specific strategies for rail service in a JIT environment, including the use of contracts, intermodal freight, and boxcar/distribution center combinations. Lastly, we present our conclusions and suggestions as to the "ideal" rail JIT system