In logistics, resource efficiency and optimisation are essential. One of the strategies that has gained popularity in recent years is “milk run” logistics. This method, inspired by the old milk delivery routes, seeks to improve transport efficiency and inventory management by consolidating shipments. We take a detailed look below at what this strategy involves, its advantages, disadvantages and practical applications.
Milk run concept
In logistics, the “milk run” is a transport strategy that optimises the collection and delivery of goods from multiple suppliers to a common destination. This method is characterised by consolidating shipments in a single route, which helps maximise transport efficiency and minimise costs.
Milk run logistics operation
In “milk run” logistics, a vehicle follows a predetermined route to collect partial loads from different suppliers. These loads are consolidated and transported together to the final destination. This approach requires meticulous planning to coordinate collections and deliveries, ensuring that schedules are met and resources are optimised. The key is precise synchronisation between all actors in the supply chain to avoid shortages and to ensure operational efficiency.
Advantages of milk run logistics:
Implementing milk run logistics offers several benefits:
- Cost reduction: By consolidating shipments, transport costs are reduced and vehicle use is optimised. This results in a significant saving compared to traditional shipping methods.
- Improved efficiency: Facilitates continuous inventory replenishment, avoiding supply chain disruptions. This is especially useful in industries that require a constant flow of materials, such as the automotive sector.
- Sustainability: Less travel means a lower carbon footprint, contributing to more sustainable logistics practices. Reducing emissions is an important benefit in the current context of environmental responsibility.
- Inventory management: Enables better inventory management, being aligned with just-in-time strategies to minimise overstock. This helps reduce storage costs and improves operational efficiency.
Disadvantages of milk run logistics:
Despite its benefits, milk run logistics presents certain challenges:
- Precise coordination: Requires exact synchronisation between suppliers and the final destination to avoid delays and shortages. Any planning error may have a significant impact.
- Complex planning: Creating efficient routes and managing collection and delivery times can be complicated, especially in environments with high variability in demand. This requires advanced logistics planning and management tools.
- Dependence on suppliers: The system depends to a large extent on supplier timeliness and reliability. Any failure can negatively affect the entire process.
- Less flexibility: Any unexpected changes in demand can make milk run logistics less flexible, since routes and schedules are predetermined.
- Risk of disruptions: Any incident on part of the route can directly affect the whole system, causing delays and possible shortages.
Milk run logistics applications
Milk run logistics is especially useful in sectors such as the automotive sector, where a constant supply of parts and components is essential. It is also implemented in manufacturing and distribution centres that handle large volumes of goods, such is the case of the use of logistics trains within a warehouse to move products between different production areas, improving efficiency and reducing waiting times.
For example, in an automobile assembly plant, a truck can follow a predetermined route to collect engines, transmissions and other components from various suppliers. These components are consolidated in the truck and delivered together to the plant, ensuring that the production lines have a constant flow of materials without having to store large inventories.
Traditional logistics vs. Milk run logistics
A comparison can be made between milk run logistics and traditional logistics in several key aspects. These aspects include shipping, transportation costs, operational efficiency, environmental impact, inventory management and planning.
The main differences between these two methods are detailed below:
- Shipping: In traditional logistics, shipments are sent individually by each supplier, which can result in multiple trips. Conversely, milk run logistics consolidates shipping into a single route, collecting products from several suppliers in one trip.
- Transport Costs: Transport costs in traditional logistics are high due to multiple trips necessary to collect products from different suppliers. By comparison, milk run logistics reduces operating and fuel consumption costs.
- Operational Efficiency: Traditional logistics tends to be less efficient operationally, with possible work flow disruptions due to the fragmented nature of the shipments. Milk run logistics improves operational efficiency by allowing a continuous replenishment of different types of inventory, which reduces disruptions.
- Environmental Impact: Traditional logistics has a higher carbon footprint due to the multiple trips necessary. By contrast, milk run logistics has less environmental impact, since it optimises routes and reduces the number of trips required.
- Inventory Management: In traditional logistics, there is normally more inventory in stock to offset possible shipping disruptions. Milk run logistics makes it possible to have less inventory in stock.
- Planning: Traditional logistics planning is less complex, but also less efficient due to lack of shipping optimisation. Milk run logistics requires more complex planning to coordinate routes and collection times, but is generally more efficient.
Technologies and tools in milk run logistics
Efficient implementation of milk run logistics is based on the use of advanced technologies that optimise planning, execution and monitoring of transport routes, such as:
- Transport Management Systems (TMS): These systems are essential for planning and optimising collection and delivery routes, managing schedules and monitoring transport performance in real time. A robust TMS can significantly reduce operating costs and improve the timeliness of deliveries.
- Internet of Things (IoT): IoT devices, such as such as sensors and GPS trackers, provide real-time data on the location and status of vehicles and goods. This improved visibility enables a more precise control of the supply chain, facilitating informed decision-making and a quick response to any incident.
- Big Data and Predictive Analytics: The analysis of large volumes of historical data in real time helps identify patterns and trends that optimise route planning and stock management. Predictive analytics tools are crucial for anticipating demand and adapting logistics operations accordingly.
- Collaboration Platforms: These platforms facilitate communication and coordination between all supply chain actors, from suppliers to carriers and customers. Effective collaboration is essential for the precise synchronisation that logistics requires.
- Automation and Robotics: In distribution centres and warehouses, process automation and the use of robots can improve efficiency in loading and unloading goods, as well as in consolidating shipments. This minimises handling times and reduces human errors, contributing to a more efficient operation.
Milk run, a commitment to innovation and sustainability
Milk run logistics represents an innovative and efficient solution for supply chain management. By consolidating the shipments of multiple suppliers in a single route, this method not only reduces transport costs, but also improves operating efficiency and contributes to environmental sustainability. Although it requires precise planning and coordination, the benefits outweigh the challenges, making milk run logistics an attractive option for industries that seek to optimise their logistics processes. Leading companies have shown how this strategy can be successfully integrated in their operations, ensuring a constant and efficient flow of essential materials for production.
If you are looking to improve the logistics efficiency of your warehouse with quality storage solutions, at AR Racking we are here to help you. Contact us for personalised advice to find the best options suited to your specific requirements.
