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Distribution Strategies - Intermediate inventory storage point strategies

5 important questions on Distribution Strategies - Intermediate inventory storage point strategies

Which intermediate inventory storage point strategies exist?

Traditional warehousing strategy
Cross-docking strategy
Centralized pooling strategy
Transshipment strategy

What is a cross-docking strategy?

In this system, warehouses function as inventory coordination points rather than as inventory storage points. In typical cross-docking systems, goods arrive at warehouses from the manufacturer, are transferred to vehicles serving the retailers, and are delivered to the retailers as rapidly as possible.

Why are cross-docking systems very difficult to manage?

Distribution centers, retailers and suppliers must be linked with advanced information systems to ensure that all pickups and deliveries are made within the required time windows.
A fast and responsive transportation system is necessary for a cross-docking system to work.
Forecasts are critical, necessitating the sharing of information.
Cross-docking strategies are effective only for large distribution systems in which a large number of vehicles are delivering and picking up goods at the cross-dock facilities at any one time. There is enough volume every day to ship with full trucks.

Why can customer search be more effective with a decentralized system?

If a customer will search for the product at another dealer from the same company when the first dealer has been out of stock, then we will most likely have the highest chance to find the product with a decentralized system compared to a centralized system as a centralized system causes the same inventory pool for all dealers.