Milk run logistics

Shipping is expensive—especially when you consider the costs of gas, tolls, and other necessary evils of transportation. Nonetheless, products have to arrive at the customer’s destination without delay or else you risk damaging the customer experience and loyalty to your brand. What if there were a way to cut down on shipping costs while still upholding the customer promise? For some companies, that solution may exist in the form of milk run logistics. 

To see if milk run logistics might work for your brand, it helps to first understand what milk run logistics are, how it works, its benefits, and how to implement it.

Sometimes referred to as a "milk run," or “milkrun,” milk run logistics is based on the concept of the common dairy milk truck route. To pick up milk from several dairy farms, a truck with a large holding tank travels along a route to make stops at those different farms. This eliminates the need for each dairy farm to have a separate milk load sent to the facility that collects and distributes it.

So, what is a milk run in logistics? A milk run is when a delivery service picks up small loads from various suppliers on a set route to deliver to one location.

The milk run is a lean logistics solution. With traditional logistics, there are more individual truck-to-facility shipments. For instance, there may be five partial or full truck shipments from five separate suppliers to one facility. On a milk run route, one truck stops at all the supplier locations and returns to the facility.

One example of a milk run delivery that you may be familiar with is when ordering dinner from Uber Eats (or a comparable service). Once you place your order, you’re now prompted with a window that asks if you’d like to add dessert from Jeni’s Ice Cream—for example. This added stop to pick something up (with your address still being the final delivery point) is an example of a milk run.

When implemented correctly, milk run logistics can be beneficial. However, it can be a complex transition that requires expertise and careful planning. When done incorrectly, milk run logistics can actually incur costs that could have otherwise been avoided.

Here are the primary benefits of milk run logistics:

• Improved efficiency
• Cost savings
• Stronger inventory management

Improved efficiency

With modern technologies, milk run deliveries can be predicted and scheduled in advance. They cut down on the typical downtime of traditional delivery systems. The ability to gather supplies without as many steps also contributes to efficiency. A milk run supply chain can also be more reliable and predictable. Facilitating better communication between customers and their suppliers, which can improve visibility.

Cost savings

Something to note about a lean transportation strategy is that direct, infrequent trips do not reduce costs. Instead, daily transportation optimization and management are required to save on costs. For instance, imagine that a production facility has variable weekly requirements for shipments. Based on historical data, the customer has weekly truck deliveries. The truck may be full some weeks and partially full other weeks. With milk runs, smaller and more frequent deliveries on a milk run route can help reduce space-related costs and cut down on gas and mileage.

Inventory management

For DTC brands, frequent deliveries may reduce stockout risks. Milk runs can be combined with a just-in-time delivery approach to reduce inventory levels and the costs associated with holding inventory. Suppliers have their materials delivered to one location and distributed as needed. To succeed, lean transportation networks must focus on reducing lot sizes, increasing the frequency of deliveries, and leveling the flow of materials.

In addition to reducing the number of supplier-to-facility trips, milk run logistics allows companies to have the products they need when they need them. Traditional logistics are often associated with higher on-hand inventory levels, which increases costs and risks. The milk run approach combines the strengths of less-than-truckload (LTL) and full-truckload (FTL) logistics. Instead of having multiple LTL shipments, a milk run combines several LTL shipments to create a FTL shipment to one destination.

In some ways, a milk run is the opposite of a traditional logistics through standard deliveries where a full truckload makes many delivery stops.

Although milk runs can help you build a more predictable and sustainable supply chain, the process of implementing it can be extremely complicated—especially when considering the need for accurate planning and synchronization to make it work. As such, you need to invest in technology that will bring better visibility into your supply chain to allow for better collaboration and synchronicity. 

Airhouse’s all-in-one fulfillment platform integrates with your ecommerce website and warehouse management software (WMS), which makes it easier to track your ecommerce orders as they move across the supply chain. You’ll be able to view the status of orders as they move from processing to shipping to delivered so you can better manage your warehouse logistics and plan for replenishment accordingly.

That said, there are many other ways you can cut down on fulfillment costs.