Leveling tool, the Milkrun organizes transport between suppliers and the company in an objective to increase the flexibility and costs of stocks and transport.
The Milkrun, literally ” Milkman tour “, is a logistic organization concept that highlights the interest of short collection circuits dedicated to suppliers in the same geographical area. The goal is not to have 1 truck per supplier with a more or less good filling, but to have 1 truck for several suppliers with a perfect filling. It is based on three axes of work:
- Increase the delivery frequencies by passing for example from 2 weeks to 3 days.
- Mix suppliers so that the same delivery includes parts of supplier 1, Supplier 2…
- Optimize the load capacity of the means of transport.
* In the context of a synchronized production between the supplier and the customer, there may be several dozens of deliveries per day4.
The Milkrun is a tool that participates in flexibility and 0 stock. This will allow you to1 :
- Increase flexibility and responsiveness.
- Improve the reliability of supplies
- Reduce inventory levels and associated surfaces
- Reduce transportation costs
- Less material manipulation.
- Risk reduction: reduction of orders…
- Involvement of suppliers in a Lean approach.
We have 10 suppliers, each one 10km from us and between them, they are spaced 1km:
- In the traditional system: for 1 delivery per week, it will be 10 * 2 * 10km or 200km.
- With the Milkrun: 1 delivery per day, we will do (10 + 1 * 9 + 10) * 5, or 145km.
There is a gain of about 30%2.
The implementation of the Milkrun Project is entrusted to the Logistics Department3 in support of purchases and continuous production/improvement services. Upstream of the project, the team will be responsible for:
- Customer needs are consolidated over a period of about 1 month, and a vision over a 6-month horizon.
- The data is updated every 1 month and is able to be communicated to suppliers within a sufficient time (about 1 week).
- The cost of transportation in the price of a Part is known, this to be able to calculate the gains of the Milkrun.
- Suppliers must be able to hold this type of constraint and therefore be engaged in a Lean approach.
1. Map suppliers and choose the type of Milkrun
The mapping of suppliers allows to have a global view of the geographical position of the suppliers. Attention to the fact that the positions are those of the places of collection of the parts.
Then the suppliers are grouped by city, region or country. This grouping must take into account 2 data:
- The products of the supplier and the frequency at which one consumes its products.
- A driver can only drive 9hr a day, so the complete loop can no longer last.
Depending on these characteristics, the type of Milkrun is chosen:
Suppliers are in close distances (about 10km) and with near-product consumption frequencies, a single Milkrun loop can be dedicated to them.
The suppliers are in close distances (about 10km) and with near-product consumption frequencies, but they are all located at a distance of approximately 300km. The same Milkrun loop can be dedicated to them, but 2 drivers are necessary with a change of trailer at a given time of the journey.
The supplier delivers a lot of product, a Milkrun loop can be dedicated to it. We simply increase the delivery frequency and adapt the size of the trucks.
2. Calculate the logistical parameters
The objective is to quantify these loops and associated trucks by defining the necessary volumes and consumption. Thus, depending on the mode of packaging and consumption, one calculates:
- The required m3 per day.
- This volume is reported to the volume of the truck
- The number of rotations per day is deducted from the filling ratio *.
* The filling ratio must be at least 70% of the trucks.
This first estimate of the tours is refined by taking into account the following elements:
- Loading and unloading times at each point: an optimization of these zones can be carried out if it is estimated that the times are too long. For example, if the loop lasts 4 hours for 5 vendors and each time we have 30mn loading, it must be reduced. The loading and unloading times must last at most 20% of the total time.
- Legal daily driving time.
- Constitution of the loads: compatible product, respect of the safety conditions, quality of the products…
- The opening times of the suppliers.
This work allows to develop the product loading plan and validate the circuit of the Milkrun loop.
3. Selection of carriers
As a result of the study, one must in partnership with the purchases, initiate actions to select the carrier. We realize the specifications which specify:
- The Tour circuit.
- The Tour schedule.
- Advance/delay tolerance.
- The disposal of the products in the truck.
Once the estimates are received, the level of profitability of the implementation of the Milkrun is calculated.
4. Supplier information
The information of the suppliers concerned by the Milkrun project is carried out in two time:
- Inform each supplier by a joint purchase and logistics note of the implementation of the project.
- Invite to a meeting of information and presentation, all the suppliers involved in the project, the logistic provider and the stakeholders of your company.
At this information meeting, the following elements will be addressed:
- The Milkrun concept.
- The objectives of the project.
- The organizational scheme of the project.
- The validation of the logistical parameters considered.
- The logistical specifications Milkrun.
- The validation of the dates of passing of the suppliers and the start of the Milkrun.
5. Signing of contracts
The whole issue is to ensure that the different players accept the new rules and will be able to adapt to the constraints of Milkrun and production.
It is only then that we start training. In particular, for personnel dedicated to loading and unloading, it will be necessary to ensure that the standards are known and shared between the suppliers and the carrier.
But also, it must be the different planning teams that need to be trained. These must now work together to produce in a system with less stock. The teams of the client company must communicate the production schedule early enough and the supplier teams must be sufficiently responsive to implement this schedule.
7. Testing and implementation
Before official launch a test phase must be carried out. This can be done in several stages where we will test successively the phases of loading/unloading, the loading plan, the planning and communication processes, the road times… The challenge is to consolidate the project and validate all the calculations of the previous phases.
Once the boot is formalized, the device will have to be controlled for a few weeks to freeze the characteristics of the circuit. During this observation period, any identified incident will be traced back to the project manager for analysis and adjustment. At the end of this period, a point will be made with the carrier, for final validation of the circuit. If the reassembled elements question the bases of the device, the point will be extended to the suppliers for repositioning the device.
To go further
In the search for maximum optimization, one can go so far as to design specific trucks for the products with a delivery directly on production line, thus avoiding a stock store.
1 – L. Ye (2005) – The implementation Milk run project in Shanghai GM
2 – G. S. Brar, G. Sain (2011) – Milkrun Logistics: Literature Review and direction
3 – N. R. Padmanabha, B. S. Ajitkumar, S. Dhake (2007) – Implementation of Milkrun logistics system in an auto component manufacturing plant
4 – N. Toshinori, H. Katsuhiko, H. Masataka (2010) – Milk-run logistics by Japanese automobile manufacturers in Thailand
5-K. Suzuki, T. Higashino, K. Yasumoto, K. El-Faisal (2008) – Formal techniques for networked and distributed systems
M. Baudin (2004) – Lean Logistics: The nuts and bolts of delivering materials and goods
D. Gyulai, A. Pfeiffer, T. Sobottka, J. Vancza (2013) – Milkrun Vehicle routing approach for shop-floor logistics
D. Patel, M. B. Patel (2013) – Design and development of an internal milk run material supply chain system in automotive industry
G. S. Brar, G. Sain (2011) – Milk Run Logistics: Literature Review and Directions
J. Shah (2009) – Supply Chain Management
L. Zhang, Z. Hou, X. Qiu (2012) – Third Party logistics in Chinese automotive industry
T. Meethet, M. Lohatepanont (2007) – Vehicle routing in Milkrun operations