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In-Transit Distribution Strategy: Hope for European Factories?

  • Per HilletofthEmail author
  • Frida Claesson
  • Olli-Pekka Hilmola
Conference paper

Abstract

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.

Keywords

Distribution Strategy Customer Order Safety Stock Case Company Enterprise Resource Planning 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Springer-Verlag London Limited 2011

Authors and Affiliations

  • Per Hilletofth
    • 1
    Email author
  • Frida Claesson
    • 1
  • Olli-Pekka Hilmola
    • 2
  1. 1.School of Technology and SocietyUniversity of SkövdeSkövdeSweden
  2. 2.Lappeenranta University of TechnologyKouvolaFinland

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