Milk-Run logistics is a generic name of a logistics procurement method that uses routing to consolidate goods by the buyer. It is a method of goods collection in which the user (i.e. car assembly manufacturer) dispatches one truck at a specified time period to visit various suppliers (i.e. parts supplier) following a predefined route to collect parts or products, and deliver them to the factory . In general, the reasons why Milk-Run logistics has been widely employed are:
1. Reduction in transportation costs due to consolidated transportation offsetting even the use of small lot transport.
2. Improvement of the assembly manufacturer’s production line and greater accuracy of JIT goods delivery due to synchronization. Milk-Run logistics can provide consolidated collection of goods necessary to improve logistics procurement systems.
3. Improvement of the vehicle loading rate, shorten the total distance traveled. It can achieve various suppliers and manufacturers of coordination, improve agility supplies and flexibility, but also improve the ability of the manufacturer’s response and system efficiency.
4. It reduces the risk of product quality if problems. Manufacturers can quickly discover and inform the corresponding suppliers, to minimize the impact on sales.
5. It changes logistics strategies, using third-party logistics significantly reduce in-process inventory, increased capital flows, reduce investment risks.
Source: Milk Run Logistics: Literature Review and Directions (Gurinder Singh Brar and Gagan Saini )