Optimisation of milk run logistics for an automotive component manufacturer – A case study

Manufacturing firms in India prefer the Milk Run concept in logistics to procure raw materials and other parts for their production and assembly lines. This study conducted in a German automotive component manufacturer in India proves that through milk run logistics parts procurement can be controlled. A milk run logistics system comprises of round trips through which either the goods collected from several suppliers are transported to an individual customer or the goods collected from a distinct supplier are delivered to a diverse group of customers. Through participant observation and value stream mapping, an attempt is made to map, assess and evaluate the present routes of milk run trucks. The study also attempts to identify probable opportunities for re-routing in such a manner to minimise the procurement cost of the raw materials. Hence the number of trucks used for transportation of goods can be reduced which in turn would reduce the operating cost by saving fuel and time. This study contributes to increasing the company’s profit margin by reducing the production cost.