Merge in transit

Merge-in-transit (MIT) is a distribution method in which several shipments from suppliers originating at different locations are consolidated into one final customer delivery. This removes the need for distribution warehouses in the supply chain, allowing customers to receive complete deliveries for their orders. Under a merge-in-transit system, merge points replace distribution warehouse. In today's global market, merge-in-transit is progressively being used in telecommunications and electronic industries. These industries are usually dynamic and flexible, in which products have been developed and changed rapidly.

Purpose of merge-in-transit

Merge-in-transit allows company to assemble and transport goods simultaneously. It aims to remove the needs for distribution warehouse in the supply chain, targets at cutting down the amount of inventory stored in firm warehouses into zero, and allows customers to receive complete deliveries of their orders. Thus, transportation expenses can be lowered. From customer perspective, merge-in-transit provides value since it facilitates the delivery of a single and consolidated shipment rather than multiple smaller shipments. This also helps firms to reduce the overall inventory and process lean manufacturing.

Methodologies of merge-in-transit

There are basically two ways of approaching merge-in-transit, either merging and forwarding or synchronization. Merge-in-transit depends on several factors, including the availability of multiple vendors for a customer, regularity of shipments to the customers, order size and the availability of a strategically located merge point. When these elements have been identified, a MIT operation can be created.

Merging and forwarding

A logistics company receives the goods from multiple origins, and assembles them at a single point near a customer, which is called "merge point" or "merge centre". Shippers pick up separate shipments from several suppliers and deliver them to a location near their final destination (merge points), where a merge process is being undertaken. However, no colossal inventory is stored at these merge points. This kind of just-in time sequence delivery shorten the time required to consolidate, which allows an efficient delivery to customers. For example, a company bought electronic devices from three sources in Southwest Michigan. Instead of paying for three separate lorries from Southwest Michigan to Phoenix, the three shipments can be combined in Southwest Michigan, followed by a single lorry to Phoenix.

Synchronization

Merge-in-transit can also be regarded as a synchronization of production, in which logistics and transportation operation prevents stocking of final products. Various shipments of goods will be delivered from multiple vendors, which they are all delivered to the customers at the same time. Synchronization is different from merging and forwarding, which the former neglects consolidation process.

Advantages of merge-in-transit

Merge-in transit has various advantages comparing to the traditional method, which includes the following:

Increase in flexibility

Merge points can often be start-up expeditiously and cheaply, depending on the type of merge-in-transit system. MIT system simplifies the receiving and deposit processes by eliminating various shipments and receipts, making it accessible for manufacturer and supplier to work together.

Elimination of redundant transportation

The transportation time can be diminished as there are no double shipments of goods from the suppliers to the principal and the principal to the customer. Goods can be sent to the customer directly and instantly from the vendor to the customer, without the principal looking at the product.

Reduction of inventory

The most direct benefit is the reduced inventory that used to sustain the system. Many organizations target cut their inventories to zero by the replacement of merge points, whereby they no longer require warehouses to store inventory. For example, Micron technology does not store monitors or printers in their own warehouse.

Curtail transportation and administration costs

Products are handled less frequently in merge-in-transit system due to the reduction of transportation and Inventory. Receiving and storing are not required as the products do not actually go into inventory. Also, goods are delivered directly to the customer rather than the principal then to the customer. Even the locations of merge points are placed near the customer. Consequently, the transportation and inventory costs could be exceedingly low.