Using milk run to deal with uncertainty in demand in a car assembler

Abstract

This work presents a collaboration process between university and a company to solve a specific problem using geographic information systems and logistics modelling process applied to transportation. Car assembler companies in the periphery of Europe have an additional challenge when building their attractiveness in the scope of the economic groups they belong to as longer distances to receive their supplies involve additional costs. Adding to this challenge, the economic crisis brought a new scenario of uncertainty in demand, which is translated into additional inventory costs. In order to deal with these additional costs as well as to reduce transportation costs, the purpose of this research was to develop a logistics model, based on custom made software that allows generating transportation runs that was able to reduce inventory and transportation costs without sacrificing service quality for the analysed car assembler company.