Motivations and background

In the current challenging business environment, turbulent and volatile markets have become the norm, product life cycles have shortened and globalization has increased uncertainty. As many markets are dynamic and difficult to predict, supply chain management (SCM) is now focus on “shifting from the idea of cost as an order winner to responsiveness as the market winner” (Christopher and Towill, 2002).

Notably, most organizations are driven by forecasting rather than demand.

Furthermore, recent economic trends have de-emphasised the benefits of vertical integration－economies of scale, access to capital, and large physical infrastructure investment, and instead have improved the benefits of specialization － speed, agility, and rapid growth (Samaranayake, 2005). In response to this shift, companies should take advantage of changing opportunities. However, to achieve competitive advantage in a global marketplace, the ability to respond rapidly to changes, called “agile supply chain management,” has become increasingly important.

An agile supply chain thus should posses the ability to respond appropriately to changes occurring in its business environment (Lin et al., 2006). Agility, then, can be defined as the ability of an organization/supply chain to respond rapidly to changes in market and

typically characterized by volatility and turbulence, and unpredictable demand. To cope with such instability, several companies have adopted agile supply chain practices in respond to the unique needs of customers and markets. For instance by Baker (2008), Argos, a unique retailer sells general merchandise and products for the home over 700 stores throughout the UK and Republic of Ireland, online, and over the telephone. The company has experienced rapid growth, five distribution centers were opened and one closed, adding a net 1.3 million ft2 (121,000 m2) to the warehousing capacity within a three-year period. Besides the peak season throughput of Argos is about three times above the average level for the year; Avon cosmetics in Europe faces a further challenge in quantities ordered with more case picking now needed from the largely narrow aisle pallet store; And a global drinks company produces a wide range of alcoholic drinks with many global brands in UK. A key challenge for the company is handling of the seasonal peak when about 60% of the annual volume is dispatched within a three-month period. The changing conditions of competition and market turbulence require organizations to become increasingly responsive to customer needs.

Hence, the increased urgency of the search for agility exists and the importance of agility be recognized.

Generally, in an agile supply chain, manufactures search globally for cheap, quick, and flexible manufacturing. However, such agile manufacturing operations also create new demands and challenges for the

and outbound suppliers and the market in which it operates (Arif et al., 2009). Additionally, efficient distribution is critical to successful supply chain management as it involves transport multiplicities, in the forms of path, time, place, and quantity across the chain. Transport multiplicity implies that transportation modes are diverse varieties. When international trade increases as global manufacturing expands, various transportation modes are needed. Global distribution typically involves overseas and domestic transportation. Overseas transportation usually comprises air and sea modes, whereas domestic transportation is via rail, trucks, air and river mode. Delivering products worldwide may be complex due to the need to utilize multiple modes and routes. Moreover, both a shorter planning horizon and increasing transportation costs extensively disturb the product distribution management (Mentzer et al., 2004). Goetschalckx et al. (2002) further observed that managers are concerned with transportation modes and routes o increase the efficiency of product distribution. Therefore, enterprises must determine the appropriate modes and routes when dealing with transport multiplicity.

Superior service and strengthening customer satisfaction are important goals for physical distribution providers. A distribution system providing reliable service reduces supply chain uncertainty and the amount of inventory required throughout a supply chain (Korneliussen and Grønhaug, 2003). Hence, it is essential for planning and service provider in the transport logistics and physical distribution industry to respond appropriately to evolving dramatically market changes in a

make good use of resources, such as warehousing, freight transportation, inventory control, order processing, intermodalism, market forecasted and customer service, to achieve a rapid changing flow of goods through an agile supply chain. The operating efficiency of a company can depend on how well distribution nodes are interconnected. Particularly as regards in rapid growth, it will become increasingly difficult as flows move forward due to congested distribution or the limited capacity of warehouses, ports, and rail (Maskell, 2001). It has responded by pooling resources to establish an outbound distribution system with higher performance efficiency. Therefore, distribution resource planning (DRP) has a critical role in agile supply chain. Companies require adaptable and flexible distribution to achieve responsiveness in volatile markets. However, few studies have examined the precise role of distribution within agile supply chain. Most studies address the concept of agile supply chain, and applied qualifying methods or statistics analyses. Therefore, this study examines how organizations operate their outbound distribution into modeling with emphasis on uncertain transport environment, in order to provide an appropriate and prompt response within an agile supply chain.

Furthermore, the proposed model takes into consideration from operational perspectives, reflecting a dynamic, changing, and unpredictable transportation environment.