Asynchrony and Distribution Centers

Asynchrony and Distribution Centers

Freight distribution is characterized by asynchronous behavior, implying that supply and demand are never perfectly matched in time and space. A temporary buffer is thus required to bring a level of synchronism, particularly in light of the four main forms of asynchrony that challenge freight distribution:

  • Production and consumption (time asynchronism). Both the supply and the demand can experience substantial fluctuations depending on the related supply chains. While large scale manufacturing processes are designed to provide stable output, consumption is often characterized by daily, weekly, or seasonal fluctuations. On the opposite, food production is commonly seasonal, while demand is relatively stable. A distribution center can thus accommodate the fluctuations of production with the fluctuations of consumption. In recent decades, the manufacturing sector has shown a growing agility level, coping with higher levels of fluctuations in consumption. As such, inventories tend to spend less time in a distribution center.
  • Load unit (size asynchronism). Because of economies of scale and intermodal integration, there is a tendency towards the massification of shipments to reduce transportation costs, particularly over long distances. Distribution centers are able to cope with the asynchrony of shipment sizes by being able to consolidate or deconsolidate shipments. Transloading is an example of an activity focusing on using a distribution center to change shipment size.
  • Supply and demand (network asynchronism). Contemporary sourcing strategies, the complexity of products, and the variety of retail inventories often imply a diversity of suppliers, many of which are located abroad (offshoring). The distribution center thus enables reconciling the temporal and geographical asynchrony of suppliers and customers. For instance, a cross-docking distribution center is designed to synchronize various suppliers and regional retail outlets. There are also uncertainties in supply and demand that require a buffer to deal with temporary disruptions in supply chains.
  • Market area (scale asynchronism). Distribution centers are supplied by different supply chains of various geographical extents (local, regional, global). Many distribution centers located at gateways provide an interface between global and regional flows. The flows of global supply chains are processed through inbound maritime and air cargoes with regional flows. They allow access to a market area through the storage and distribution of the imported inventory. Alternatively, some distribution centers act as consolidation points of regional output, which is then distributed on global markets. They are thus meant to reconcile freight distribution systems at different geographical scales.

It is important to note that each of these factors commonly operate in conjunction.