milliken lagrange isye 6203 project evaluation of consolidation strategy for ltl shipments
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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

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

Chunhao GAO

Halil Ozan GOZBASI

Hashai PAPNEJA

Jin SHI

Lin WAN

Jie ZHU

company overview
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
project topic
Project Topic
  • Evaluation of consolidation option for Less-Than-Truckload (LTL) shipments
  • Plant in Lagrange,GA
  • Customers, almost every state in USA
less than truckload vs ftl consolidation
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

solution approach
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
data analysis cost structure
Data Analysis- Cost Structure

Consolidation Strategy to decrease LTL costs

data analysis aggregation
Data Analysis - Aggregation

Number of 3-Zip Customers: 792

90% Tail : 325

Size reduced by ~60%

model building
Model Building
  • Parameters
model building1
Model Building
  • Decision Variables
parameter estimation
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

results
Results

Benefits from Consolidation Strategy is Related to Frequency

frequency consolidation
Frequency & Consolidation
  • Low frequency increases consolidation of loads into each truck
  • Less number of trucks are used in consolidation
implementation
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
conclusion future work
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
thanks
Thanks..
  • Milliken Company
  • Prof. Vande Vate
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