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

This project evaluates the effectiveness of a consolidation strategy for Less-Than-Truckload (LTL) shipments in the textile manufacturing industry. The focus is on reducing transportation costs and improving efficiency through data analysis and aggregation of customers. The project includes a model for selecting candidate distribution centers and estimating cost savings. The implementation approaches and future work recommendations are also discussed.

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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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