Published in Operations and Supply Chain Terms category by MBA Skool Team
What is Milk Run?
Milk run 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 picking up milk from multiple suppliers and delivering it to a common point for further process. 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 center individually would be very expensive, hence a scheme is designed as per the requirements and accordingly all different units are procured and transported.
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.
It has become a critical concept in lean and agile companies where saving costs is very important. It is quite aligned with just in time and makes sure that the deliveries of materials happen at optimum times. It involves routing of materials with multiple pick up points and delivery to locations where the demand is high. One of the main aspects of milk run is the planning and routing aspect. A route which maximizes the pickups from multiple points and brings them to a central point with minimum amount of time and cost. Once the route is optimized, milk run starts showing a lot of benefits in the long run.
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 center and deliver fresh bread and collect the leftovers
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.
Hence, this concludes the definition of Milk Run along with its overview.
This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.
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