Published by MBA Skool Team, Last Updated: June 11, 2019
What is Milk Run?
Milk run term is a delivery method in logistics which ensures that different deliveries from different vendors can be handled with maximum capacity utilization and minimal costs . The name Milk Run has been derived from the method used by the trucks to deliver the daily requirements of milk to the dairy co-operatives. A milk run ensures that that minimum distance is travelled and the maximum demand is carried into the truck or delivery vehicle so as to meet both the demand requirement and effective transportation with least cost.
This is applied where the load is scattered in many different places and in smaller units.
In such a case carrying from each centre individually would be very expensive, hence a scheme is designed as per the requirements and accordingly all different units are procured and transported.
Importance of Milk Run
Milk run as a process in Operations is quite important as it advocates a method which results in minimal costs at higher efficiency. Instead of each supplier or vendor sending multiple deliveries to a central point of demand, a single delivery vehicle makes trips to different points and picks up the goods. This makes sure that the costs are less and one vehicle is completely utilized. It goes around in a circular motion.
Typical Milk Run Steps
1. The vehicle starts from first central point.
2. There is loading at each supplier point.
3. There is unloading if any at each supplier point
4. There is final unloading at central point.
Milk Run Example
Let us assume there are 20 different vendors of bread and they send bread to a central point to meet customer's demands and collect leftover bread from previous day. There are 2 ways to do it.
1. The suppliers send their own delivery trucks to the demand centre and deliver fresh bread and collect the lefovers
2. There is one truck which starts from the central point and go to each supplier 1 by 1 and collects fresh bread and leaves the leftover to the corresponding supplier. There can be multiple trips as well
The milk run is the second method.
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