The arrangement of shipments from supplier to manufacturer to carry less product – to more destinations in one trip – more frequently than traditional delivery methods. In traditional deliver methods a truck is completely filled before setting off to its destination, and returns directly.
More frequent runs lower inventories for both supplier and purchaser, and improve response times for the purchaser. Some amount of safety stock is kept on hand to allow for delays due to weather, traffic, etc., but by locating supplier and purchaser closer together these factors are less likely. Transportation costs are reduced too, of course, when trips are shorter.