Everyday Lean Logistics: Tips to Successful Milk Run Routing
Looking back in our Lean Digest archives, I found this Ask Orlo letter from an associate:
We recently began our lean transformation and brought in consultants to help us along the way. They encouraged us to reduce production batch sizes so we can be more flexible and react more easily to shifts in customer demand. To enable that, they recommended we bring in materials from our suppliers more frequently and in smaller lot sizes. These consultants also suggested milk-run routing as a preferred transportation method so we don’t experience substantial increases in transportation costs. We tried a few of these and I honestly think they are causing more problems than they are solving. Sometimes the trucks are running empty, sometimes we are running out of trailer space and expediting material, and other times they are simply late and causing impacts to our production line. Any advice on how we can improve this system?
Suzanne, Materials Manager
I think I’m like you: I want to know why I should be doing something instead of just doing it because a consultant said so. Milk runs are a great way to achieve the three central lean logistics concepts: lot size reduction, increased frequency of delivery, and leveled flow. Where we tend to see them fail is around a lack of understanding in the level of discipline required to effectively manage a network of milk run routes. It is a detailed system and requires a high level of attention. It all starts with a Plan For Every Part or PFEP. A simple PFEP is composed of:
- Part Dimensions
- Part Weight
- Packaging Dimensions
- Packaging Weight
- Part Level Consumption Or Demand Data
- Stack-Ability Constraints
- Parts Per Container
- Containers Per Pallet
- Haz-Mat Information
- Additional Pertinent Information
The PFEP is important because through understanding consumption and space requirements at the part level, you can begin to make informed decisions on which parts and suppliers should be combined together on a trailer and eventually how often you should bring them in. Do you currently have any similar documentation? PFEPs can be incredibly difficult to gather so be prepared for the work. The way we utilize PFEP data at LeanCor is to employ a number of logistics engineers whose primary purpose is to use the PFEP to engineer the network in a manner providing the lowest overall systems cost. When changes occur to the production schedule, these same engineers revise the routing network accordingly so costs will be minimized and materials will reach our customers when they are needed.
Another critical element to successful milk-run routing is pipeline visibility in real-time. There should be a process that alerts you immediately if a route is not running according to plan. If there is a delay, you need to update all suppliers on the route of the new ETA and put a contingency plan in place if needed. Usually, this type of work is also handled by the same team of engineers who manage PFEP data. There is more to effectively managing a network of milk-run routes (ex: documented supplier and carrier expectations), but if you can tackle the PFEP and have the right team in place who embraces disciplined standard work, you’ll be well on your way to improvement. The benefits of space requirement and inventory carrying cost reduction combined with increased problem exposure typically far outweigh the additional administrative costs.
Written by Derek Browning, Lean Deployment Executive at LeanCor
- New Lean Logistics and Supply Chain Workbook Explains How to Increase Value While Reducing Costs (eon.businesswire.com)