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Increasing customer value and decreasing distribution costs with merge‐in‐transit

Mikko Kärkkäinen (Department of Industrial Engineering and Management, Helsinki University of Technology, Helsinki, Finland)
Timo Ala‐Risku (Department of Industrial Engineering and Management, Helsinki University of Technology, Helsinki, Finland)
Jan Holmström (Department of Industrial Engineering and Management, Helsinki University of Technology, Helsinki, Finland)

International Journal of Physical Distribution & Logistics Management

ISSN: 0960-0035

Article publication date: 1 March 2003

4337

Abstract

A broad product assortment is usually valued highly by customers. However, holding a great number of product variants in inventory increases the costs of a supplier. It is possible to reduce need for warehousing with direct deliveries from manufacturing units, but customer value is reduced when orders are received on several shipments. Merge‐in‐transit is a distribution method in which goods shipped from several supply locations are consolidated into one final customer delivery while they are in transit. This article examines the effects of merge‐in‐transit distribution on delivery costs. The analysis is performed with a maintenance, repair, and operations products distributor as the case company. The evidence in this article supports the claim of merge‐in‐transit being a cost efficient distribution alternative in business networks. Based on the results advocates that companies in multi‐company networks should study the possibility of using the merge‐in‐transit delivery model.

Keywords

Citation

Kärkkäinen, M., Ala‐Risku, T. and Holmström, J. (2003), "Increasing customer value and decreasing distribution costs with merge‐in‐transit", International Journal of Physical Distribution & Logistics Management, Vol. 33 No. 2, pp. 132-148. https://doi.org/10.1108/09600030310469144

Publisher

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MCB UP Ltd

Copyright © 2003, MCB UP Limited

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