Directorate of distance education

Shipping via Distribution Centre Using Milk Runs
As the name itself says, this transportation network design is the 
extension of direct shipping with milk runs, where there is inclusion of 
a distribution centre in between supplier and customer as shown in Fig. 
For instance, Pepsi and Coca-Cola distribute their soft drinks as per this 
network design.

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Notes
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Supplier 
Destination 
Point 
Plant 1 
Plant 2 
Plant 3 
Customer A 
Customer C 
Customer B 
Distribution 
Centre 
Customer D 
Shipping via Distribution Centre Using Milk Runs.
This design ensures lower plant-to-warehouse as well as warehouse-
to-customer transportation costs for small lots suiting small customers, 
whereas there are increases in inventory and warehousing costs along 
with complexity of coordination.
Summary
Apart from economic and non-economic benefits, transportation 
is the main artery of logistics and supply chain management for the move-
ment of goods from the point of inception to the point of consumption. At 
the advent of growing awareness about the overwhelming contribution of 
logistics and supply chain management, transportation services have be-
come more imperative for speeder and timely delivery goods, economies 
in operation, minimum in-route handling and documentation to mini-
mize transportation costs which include tariff of transport mode, transit 
time cost, obsolescence cost, protective packaging cost, transit insurance 
cost, etc.
There are five basic modes of transportation, namely; airways, 
seaways, roadways and pipeline having contradictory characteristics. 
Earlier, these modes were competing with each other. But after realizing 
their own strengths and weaknesses followed by scope coordination for 
better prospects, nowadays, they are coordinating with each other, which 

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has given impetus to the concept of multi-modal transportation in the 
form of piggyback, fishy back, trans-ship, and air truck.
The current transport infrastructure of India is major bottleneck in 
the achievement of logistical objectives, mainly due to poor government 
policy, networks, road/rail track conditions, vehicle quantity, and 
coordination between various agencies and transport organizations.
The determination of transport rate and prices are normally based 
on economic, shipper and carrier factors, followed by alternative pricing 
strategies. The design of the transportation network refers to routing and 
scheduling of transportation vehicles for the purpose of minimization of 
transportation cost and maximization of customer service which vary from 
industry to industry, company, and product to product due to diversity of 
requirements of industry, company as well as product.