How Milk Run Logistics Can Streamline Your Inbound Supply Chain

Despite its origins in old milk delivery practices, these days a milk run in logistics can be used to transport all types of goods. This consolidated delivery strategy can help your business maintain efficient inventory levels and production times.

Key Takeaways

• Milk run logistics involve consolidating shipments from several different sources on their way to the same final destination.
• This delivery strategy is rooted in methods of milk delivery used in the early to mid 20th century.
• Less-than-truckload (LTL) differs from a milk run in that a truck shipping an LTL load may deliver to multiple destinations rather than one.
• A milk run strategy supports a lean and efficient logistics model, but requires multiple vendors to entrust their shipments to a single delivery vehicle.

What is a Milk Run in Logistics?

In modern logistics, a milk run is a delivery solution that moves goods from various suppliers to a single end-stage destination, such as a warehouse or distribution center, all in one trip. This method depends on using a fixed route with a single supply vehicle carrying multiple mixed loads. 

You may wonder why this practice is called a milk run in the first place. Before we get into further detail about whether milk run logistics could help your business, let’s take a moment to examine the term’s historical context.

Origin of Milk Run Deliveries

In the early 20th century, horse-drawn carriages were commonly used for local deliveries. Part of the milkman’s responsibilities was to gather milk from different dairy farmers and deliver that milk to a distribution center (DC) for bottling.

Later, he would deliver fresh milk to each residence, replacing empty bottles with full ones. This process saved costs on using multiple carriages and provided the distributor with an idea of consumer demand. Eventually, the carriages gave way to milk trucks and tankers, but the same basic principle remained.

While consumer demand is usually projected via specialized software these days, the idea of consolidating shipments from several farmers into one load headed for the same facility gave us the modern practice of milk run logistics: a single route between multiple suppliers sending shipments to the same customer. 

What is an Example of a Milk Run Delivery?

Let’s say you run a small wheel and tire shop. Items in your inventory include:

• Off-road, highway, and all-terrain tires
• Steel and aluminum wheels
• Valve stems, lug nuts, and other small items needed for installation

In order to maintain a diverse stock of goods, you purchase them from several different manufacturers. You could have each of these suppliers send you their goods on separate trucks, which is a very basic logistics practice.

However, having a single vehicle pick up stocking orders from each manufacturer in order to deliver all of them to your shop at once may be preferable from an efficiency standpoint. Doing so would be an example of a milk run delivery.

We can take this one step further by closing the delivery loop entirely, which would look like this:

1. Once you receive your delivery, the carrier picks up the pallets from a previous order.
2. The carrier then returns the pallets to your suppliers on their next round of pickups.
3. Once offloaded, the suppliers load your next shipments on the returned pallets
4. They are then loaded back onto the truck for your next delivery, and the cycle continues.

For businesses moving goods through the supply chain on a set schedule, this method contributes to a lean logistics model. Such a model balances meeting consumer demand with preventing capital from being unnecessarily tied up in extra inventory.

On a smaller scale, milk runs can also be used within manufacturing and assembly facilities. A warehouse worker may use a warehouse utility vehicle to gather components from multiple storage areas for delivery to an assembly line. 

In either scenario, timing and proper scheduling are key to a successful milk run. 

Related: Types of Warehouse Management Systems

What is the Difference Between LTL and Milk Run?

If you have some experience with different types of delivery strategies, you might look at the elements of a milk run and find them almost indistinguishable from those of a less-than-truckload (LTL) delivery. 

I’ve put together the following chart to highlight the similarities and differences between these two strategies.

As mentioned earlier, a carrier might return pallets and/or containers from previous shipments to vendors en route. However, any actual goods carried are intended for a single destination.

Related: How Pallet In Pallet Out Can Improve Your Inventory Flow

Advantages and Disadvantages of Milk Run Logistics

Like almost any distribution strategy, milk runs have their strengths and weaknesses. Businesses seeking to refine their logistics process should consider the following pros and cons when deciding if implementing milk runs would be beneficial.

Pros:

• Reduced Carrier and Warehousing Expenses: There is an inherent cost savings associated with freight consolidation. Additionally, keeping your pipeline inventory on a tight schedule using fixed routes ensures you don’t take up too much warehouse space.
• Production Strategies: This form of logistics aids suppliers and customers in avoiding stockouts and unintentional overstocks. 
• Smooth Operation: A properly executed milk run system keeps the wheels turning in supply replenishment on your pre-determined schedule. This prevents supply disruptions and helps maintain steady production.

Cons: 

• Possible Transportation Issues: A milk run is a bit like putting all your eggs in one basket. Traffic accidents, malfunctioning delivery vehicles, and other factors will impact your entire stocking order rather than just part of it.
• Complex Route Management: It’s important for your carrier to use real-time route management software to plan the most efficient course for pickup and delivery. Even minor issues can lead to significant hiccups in your supply chain and production schedule.
• Staging Shipments From Multiple Warehouses: This system requires all vendors involved to have shipments staged and ready to go in time for the carrier to pick those shipments up. Any delays at a single vendor’s warehouse or distribution center would have the same effect as the previously mentioned route management issues.

Ultimately, the milk run strategy is most ably implemented by logistics professionals with the experience to overcome challenges and meet your business needs. Given the tight timing and scheduling requirements this strategy demands, it’s wise to work with a trusted and proven carrier with a track record of successful time-sensitive deliveries.

Related: 10 Reasons You Need to Outsource Inventory Management to a 3PL

One-Stop Logistics Solutions From Fulfillment and Distribution

From milk runs to complete third-party logistic (3PL) partnerships, Fulfillment and Distribution has the network and know-how to handle all of your warehousing and delivery needs. 

Our full list of services also includes:

• Logistics consulting sessions
• Reverse logistics
• Expiring product fulfillment
• And more

Give us a call at (866) 989-3082 or request a quote online today. No matter what products you need to store and ship, we’re standing by to help your business succeed.