Milk Run: Optimized collection strategy
“ Even with all the advantages, before implementing the Milk Run system, correct strategic planning is necessary”
In a free translation, Milk Run would be the same as the Milk Race. This is a collection strategy created in England in the 20th century, where a truck traveled an optimized path, without going back over the planned route and always at the same time, collecting the milk produced by the cattle ranchers and having the dairy industry as its destination. Made the purchase.
It seems obvious. But at the time it wasn’t. And for that very reason it was revolutionary. Optimized milk collection and later the same strategy was used by large corporations around the world. Toyota, the industry that developed the Just In Time methodology , was the first vehicle manufacturer to apply Milk Run in its transport routes. The success of the strategy lies in its simplicity. We are talking about scheduled collections, which provide a series of advantages in the operational routines of a company.
The Umov, Mundo Logística and Rabbot websites list some of the benefits that the Milk Run strategy provides:
- Scheduling shipments according to customer needs;
- Use of collection windows with pre-established date, time, and quantities;
- Thanks to this prior programming, there is the possibility of standardizing loads, which facilitates the operational routine;
- Reduction of inventories due to the dispersion of shipments;
- Reduction of internal traffic in the factory or warehouse, also streamlining daily operations;
- Optimization of cargo space in vehicles, reducing costs related to the movement of goods;
- Improvement of cargo handling services, due to the standardization of packaging that occurs at Milk Run , therefore, greater agility in the vehicle loading and unloading processes;
- Reduction of costs with inventory maintenance and freight table;
- Increase in inventory turnover, reducing possible losses in the area;
- Rationalization of fleet size, allowing maintenance and fuel costs to be cut;
- Implementation of the Just in Time System (JIT ) between suppliers and companies;
- Reduction in the rate of breakdowns and losses during the journey;
- Reduction of general costs in Logistics;
- Increase in the company’s profit margin.
Oh! One more plus. As the movement of the fleet will be rationalized, the companies will be able to reduce the release of carbon into the atmosphere. After all, the combustion engine has not yet been surpassed. According to the report presented at the 24th United Nations Conference on Climate Change, COP 24 (which took place in Katowice, Poland), 21% of CO2 emissions on the planet are generated by trucks.
And are there any downsides? Yes. But not many. Here are the main failures detected in the last decades in which the strategy has been used:
- The need for synchrony between suppliers and customer demands, as there can be no errors;
- Real risk of commitment for all involved when there are delays in the availability of inputs or in the manufacture of products, (therefore, it is important to have support vehicles for emergencies);
- Concrete chances of losing credibility with suppliers and customers if something goes wrong in the operational routine;
- Losses of new business, should opportunities arise, due to the standardization of loads and reduction of routes;
- Low flexibility to serve customers with different goods or collect on alternative routes.
And how to introduce Milk Run into the corporate routine? According to the Supporte Logística website, “ even with all the advantages, before implementing the Milk Run system, correct strategic planning is necessary so that everything can work perfectly. One of the main points is to align the demands of the factory with its suppliers, so that everyone is synchronized, which is essential to avoid stoppages due to lack of material, for example, or even excessive trips that could end up increasing the total cost with freight. That is, to function correctly, all areas need to work together. And remember: if your company needs one more trailer, renting may be the best option.”. That is, it is necessary to carry out a data collection and a careful analysis of the implementation process, choosing good partners, signing solid contracts, training the employees involved and establishing KPIs to evaluate the performance of everyone involved in the strategy.
According to Fabio E. Scocca, university professor and specialist in logistics, in an interview with the Digital Intermodal website, “ the Milk Run strategy is recommended when working with a specific product and with a portfolio of customers who have a shopping routine, being so it is possible to schedule times for delivery and collection ”. The logistics professor also comments that “ unlike what happens in Cross Docking , where there is a crossing of docks, which can be divided into two parts (before and after the distribution center), in this modality there is no stock and the maximum lead time permanence of the merchandise does not exceed 24 hours ”.
Is it feasible then to use Milk Run for deliveries and not just for collections? Yes, depending on customers, their orders and delivery addresses. But this cannot limit the sale of items, as it would also be limiting the company’s growth.