Merge in Transit : A non-stock distribution structure

Abstract: The overall purpose of this study is to contribute to a better understanding of the emerging distribution structure Merge in Transit. In order to do this the purpose of this thesis is to describe and define Merge in Transit and to identify and explain differences in performance between Merge in Transit and a traditional structure with central and local warehousing.The study consits of two parts, a pre-study where main characteristics of Merge in Transit were studied, and a in-depth study where differences between Merge in Transit and structure with central and local warehousing were studied. In the comparison between the distribution structures the focus was on activities, resources and the performance in the form of costs and throughput times. In order to explain the differences in performance the effects and the reasons for the effects found in the cases were compared with reasons for performance improvements found in the literature, foremost process literature and literature about scale economies.Based on the result from the study Merge in Transit could be described as a distribution structure where deliveries from different sources are co-ordinated and brought together at merge points and where goods and order flows are monitored and controlled in a central order unit. This means that Merge in Transit is characterised by:Centralised monitoring and control of order and goods flowPoint of sales data, that is sent to producer and central warehousesNon- or centralised inventory between producers and customersMerge point for merging goodsA transport net for deliveries to customers premises', i.e. the physical take over of goods isat the customer's premisesAccording to the findings I propose the following definition of Merge in Transit:Merge in Transit is the centralised co-ordination of customer orders where goods are delivered from several dispatch units consolidated into single customer deliveries at merge points, free of inventoryThe main effects on costs from Merge in Transit compared to a structure with central and local warehousing are the reduction of inventory, warehousing and administration and an increase or decrease of transport costs. The main effects on service are complete deliveries to customers premises and an increase of customer order lead time for products previously stored locally. Other effects from Merge in Transit are increased range, increased complexity and reduced storage time.Explanation of the reasons for differences in performance depends on the perspective used in the analysis. From a processual perspective the explanation of the effects are elimination and postponement of activities. From a functional perspective the effects are centralisation of resources, i.e. use of scale economies.