Milliken Lagrange ISYE 6203 PROJECT Evaluation of Consolidation

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 1

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

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

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

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

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

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

Mapping the Demand by Total Freight 8

Mapping the Demand by Total Trucks 9

Candidate DC Selection 10

Model Building n Parameters 11

Model Building n Decision Variables 12

Objective & Constraints 13

Parameter Estimation n CZARLITE LTL Pricing Software n Prices from each candidate DC to every 3 -digit customer region which are closer than 700 miles. n 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 14

Results Benefits from Consolidation Strategy is Related to Frequency 15

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

Frequency 3: Shipment Type Region Size LTL from Plant 59% DC 1 in NC 17% DC 2 in AL 11% DC 3 in CA 12% Total Assignment to DCs 41% 17

Frequency 3: LTL from Plant 18

Frequency 3: DC 1 in NC 19

Frequency 3: DC 2 in AL 20

Frequency 3: DC 3 in CA 21

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

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

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

Additional Slides 25

Frequency 2: LTL from Plant 26

Frequency 2: DC 1 in NC 27

Frequency 2: DC 2 in AL 28

Frequency 1: DC 3 in CA 29