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Milliken Lagrange ISYE 6203 PROJECT “Evaluation of Consolidation Strategy for LTL Shipments”

Milliken Lagrange ISYE 6203 PROJECT “Evaluation of Consolidation Strategy for LTL Shipments”. Chunhao GAO Halil Ozan GOZBASI Hashai PAPNEJA Jin SHI Lin WAN Jie ZHU. Company Overview. Textile Manufacturing Industry Produces finished fabrics for rugs and carpets

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Milliken Lagrange ISYE 6203 PROJECT “Evaluation of Consolidation Strategy for LTL Shipments”

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  1. Milliken LagrangeISYE 6203 PROJECT“Evaluation of Consolidation Strategy for LTL Shipments” Chunhao GAO Halil Ozan GOZBASI Hashai PAPNEJA Jin SHI Lin WAN Jie ZHU

  2. Company Overview • Textile Manufacturing Industry • Produces finished fabrics for rugs and carpets • Synthetic fabrics used in such goods as apparel, automobiles, tennis balls, and specialty textiles • Milliken operates more than 60 plants worldwide

  3. Project Topic • Evaluation of consolidation option for Less-Than-Truckload (LTL) shipments • Plant in Lagrange,GA • Customers, almost every state in USA

  4. Less-Than-Truckload vs. FTL Consolidation Customer 1 • Small shipments • Send Directly from Plant to Customers LTL LTL DC FTL Customer 2 LTL Plant LTL

  5. Solution Approach • Data Analysis • Cost Structure • Parcel, LTL, FTL • Aggregating Customers • 3-Zip Customers (30332, 30345, 30358)-> 303) • Reduce Number of Customers • Focus on customers which constitute 90% of the transportation cost

  6. Data Analysis- Cost Structure Consolidation Strategy to decrease LTL costs

  7. Data Analysis - Aggregation Number of 3-Zip Customers: 792 90% Tail : 325 Size reduced by ~60%

  8. Mapping the Demand by Total Freight

  9. Mapping the Demand by Total Trucks

  10. Candidate DC Selection

  11. Model Building • Parameters

  12. Model Building • Decision Variables

  13. Objective & Constraints

  14. Parameter Estimation • CZARLITE LTL Pricing Software • Prices from each candidate DC to every 3-digit customer region which are closer than 700 miles. • For numerical comparability We have real LTL from Plant to Customers Discount_Rate= Real_LTL_Cost / CZARLITE LTL Cost Update all prices by LTL(model) Cost= CZARLITE LTL Cost* Discount_Rate

  15. Results Benefits from Consolidation Strategy is Related to Frequency

  16. Frequency & Consolidation • Low frequency increases consolidation of loads into each truck • Less number of trucks are used in consolidation

  17. Frequency 3:

  18. Frequency 3: LTL from Plant

  19. Frequency 3: DC1 in NC

  20. Frequency 3: DC2 in AL

  21. Frequency 3: DC3 in CA

  22. Implementation • First Approach: • Ship from Plant to DC`s in a pre-agreed frequency-regardless of the loads • Second Approach: • Estimate a Threshold Level for each DC • Check accumulated shipments • If total load is greater than Threshold • Send a Full Truck to DC • Else • LTL to customer from Plant

  23. Conclusion & Future Work • Develop implementation techniques • Estimation of Threshold Levels • Take more product types into consideration (such as chemicals) • Try to use LTL rates from current carriers instead of Czarlite for a more accurate model solution • Consider other costs related to consolidation • DC space cost • Material Handling cost

  24. Thanks.. • Milliken Company • Prof. Vande Vate

  25. Additional Slides

  26. Frequency 2: LTL from Plant

  27. Frequency 2: DC1 in NC

  28. Frequency 2: DC2 in AL

  29. Frequency 1: DC3 in CA

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