Evaluating the Applicability of Merge‐in‐transit

Abstract

The physical distribution of goods is one of the key success factors in fast moving markets. Many companies are involved in the search for efficient distribution alternatives, as the lead times for customer order fulfillment need to be shortened while the costs and risks of warehousing need to be minimized. Merge‐in‐transit is a distribution model where several shipments originating at different dispatching locations are consolidated into one customer delivery, without inventories at the consolidation points. This removes the need for distribution warehouses in the supply chain, and allows the customers to receive complete deliveries for their orders. However, no guidelines are available for logistics managers on how to evaluate the applicability of merge‐in‐transit operations for their particular business situation. This paper presents a systematic procedure for the evaluation of merge‐in‐transit distribution in a specific supply chain of a company. The procedure is based on recent research on activity‐based costing models in distribution operations. Additionally, the paper clearly defines merge‐in‐transit and makes a distinction between it and cross‐docking with which it is often confused.