Applying Milk-run Method to Optimize Cost of Transport: an Empirical Evidence

Document Type: Case Study

Authors

1 Faculty of Industrial and Energy Management, Electric Power University, Hanoi, Vietnam

2 Toyota Motor Vietnam Co., Ltd.

Abstract

Logistics and supply chain play important roles to support enterprises’ operations that aims to satisfy customers’ demands. Moreover, the globalization of the world economy and the emergence of the fourth industrial revolution pushes manufacturers to optimize their operations, particularly transportation and supplying activities. The main objective is to maintain competitive advantages and guarantee the expected benefit. Milk-run, a well-known transportation approach had been adapted successfully in practice, is adopted in this study to simultaneously minimize transportation and inventory costs in a just-in-time production environment. The results of this study show that the milk-run approach helps to reduce transportation and inventory costs for the studied company. The milk-run approach, therefore, is proved to be suitable for companies that operates under just-in-time philosophy.

Keywords