Milk-Run
Milk-Run or the “milkman's rule” is a certain manifestation of direct sourcing and defines a route in which products are transported from one supplier to multiple customers or from multiple suppliers to one customer.
Brief description
In the case of Milk-Run, the delivery is organized by the customer in such a way that the forwarder tasked with the job goes around a certain group of suppliers according to a fixed route, „collects” the deliveries and then returns to the principal.
This principle is based on the idea of efficient and environmentally friendly delivery systematics. However, it requires a thorough ability to coordinate orders with a variety of suppliers, primarily in accordance with local and logistical-production criteria. In the case of Milk-Run, deliveries are generally settled according to the principle: loco factory. In principle, Milk-Run should consist of two to ten suppliers to achieve optimum utilization of loading capacity.
Tasks and objectives
With the help of grouping and linkages, minimized costs in transportation can be achieved. In addition to this important point, it should also be said about the creation of better control in procurement especially for manufacturing companies. Demarcation to forwarders from a given territory only highlights this benefit. The concept of a territorial forwarder is most often suppliers who pass orders to forwarders. These combine the routes of more suppliers to one customer. Milk-Run is driven by the manufacturer and is used to better manage delivery processes.
Features and assumptions
The option, direct delivery, requires an established route plan of so-called Milk-Runs regarding destinations, quantities and sections without including handling equipment.
The establishment of Milk-Run routes requires intensive planning and selection of the right suppliers and parts at a later stage. This selection is directed at local and physical criteria. With geographic criteria, a selection of possible suppliers is made.
Application
An example of combining Milk-Run with Just-in-Time is Toyota. Toyota has been practicing Milk-Runs in Japan and in the US with success, and has secured JIT production. The structure in Japan allows different Assembly factories to be supplied by a single supplier using Milk-Run. Due to the distances involved, this occurs in the United States from multiple suppliers to one Assembly factory.