1. Chunhao GAO Halil Ozan GOZBASI Hashai PAPNEJA Jin SHI Lin WAN Jie ZHU
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

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 Aggregating Customers
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: Shipment Type Region Size LTL from Plant 59% DC1 in NC
17%
DC2 in AL
11%
DC3 in CA
12%
Total Assignment to DCs
41%

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: Second 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