Shared Milkrun Problem Resolution
Written by John Willman
A prospective customer recently asked me, “What are the top 3 problems your shared milkrun model solves?” This question caught me off guard somewhat as our service addresses many budgetary and operational concerns facing a supply chain manager. Narrowing it down to 3 just doesn’t do it justice. After giving it some thought (and wiping the sweat from my brow), I gave her my perspective.
First and foremost, the Shared Milk run enables a customer to level schedule their inventory and therefore streamline cash flow. The premise behind this is a supplier’s daily pull quantity versus weekly. In its most basic form, a standard 53’ trailer typically has 26 pallet positions, and if the freight is double stacked, 52. If the plan assumes a maximum 850 LBS. per skid, the total truckload weight is 44,200 LBS. Instead of moving 52 pallets and 44,200 LBS. once per week, the schedule would call for just over 10 pallets and 8,500 LBS. each day. It is important to note that in addition to cash flow gains, “lean” savings in terms of floor space; labor; and transportation expenses are also realized.
Secondly, the challenge of achieving maximum value for logistics spend is addressed. In this example, trailer utilization for the truckload shipment is optimized. In the shared model, Carter’s routes are planned at 80-85% efficiency (the 15-20% variance allows for some supplier over shipping from time to time). The greater the overall weight and cube factors then, the greater the “shared” savings for all customers shipping on the route. The KPI for this factor is CWT (Cost per Hundred Weight) which equals total cost divided by total weight (LBS.) multiplied by 100. The goal, then, is to add as much legal shipment weight as possible in order to drive down the CWT factor.
Finally, the shared solution provides different avenues of realized cost savings that could be overlooked or possibly taken for granted. A good example of one of these avenues is returnable container management. All Carter routes are closed-loop, whether collection or delivery. This dynamic allows for returnable containers to be loaded from customer assembly locations back to our cross docks. From there, the containers are then loaded onto Carter collection trailers so that upon arrival at a customer’s supplier location for pick up, their returnables are given back to them. Without this option, customers have to provide an additional means to manage this process, typically an LTL solution or a trailer spotted on site that doesn’t ship until it is full. These options are obviously more expensive.
One other cost savings advantage that is worthy of mention is better control or possible elimination of expedited transportation needs and expenses. Remember, the ideal plan is for a daily shipment. If for some reason a supplier isn’t able to ship on a given day (line down; force majeure; part shortage; etc.), they can always rely on a pickup the following day to collect two days’ material to get back on schedule.
These are 3 highlights that I think are a good start for better understanding the value of Carter’s solution. A good sense check for this understanding is to work directly with our team of analysts and continuous professionals as well. Often thought of as “extensions of our customer’s logistics teams”, they are certainly open to responding to different customer challenges presented to them. They very well could speak to 3 other top problems that Carter has solved in the past which in turn could benefit a prospective client as well. It’s certainly well worth the time to ask the question…and in doing so test the mettle of the Carter Sales Guy!
For questions concerning the Shared Milkrun model or any of the other services Carter has to offer, please feel free to contact me.