In-Transit Distribution Strategy: Hope for European Factories?
In this research the in-transit distribution strategy is investigated by determining and analyzing key principles of the strategy. It is examined through a multiple case study and simulation. This research reveals that the in-transit distribution strategy is about considering goods that are being transported as a mobile inventory and actively dispatching goods to a destination, where there is a predicted demand before any customer orders are received. It can give major competitive advantages by offering rather short lead-times for customers without having to store products locally. This, in turn, gives lower warehousing costs, lower tied-up capital, a less interrupted manufacturing, and steady as well as continuous production volumes. It is a workable solution for European manufactures competing in distant market. To be successful with this strategy, it takes good planning, working closely with customers, first-class market knowledge, and a supporting enterprise resource planning (ERP) system. Other highlighted requirements are low variation in demand and predictable distribution lead-time. Simulation study of one hypothetical product group verified case study findings, but we find it interesting that especially manufacturing output variance is very sensitive regarding the overall results. Also increasing average customer demand results in undesired outcomes.
KeywordsDistribution Strategy Customer Order Safety Stock Case Company Enterprise Resource Planning
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