Reverse milk run – the logistics retrenchment strategy
Publication date: 11 December 2023
Abstract
Learning outcomes
After completion of the case study, students will be able to understand the concept of clustering and identify clusters for improving capacity utilization, analyse transport routes to optimize logistics resources, analyse the impact of a full truckload on resource optimization, evaluate unused capacity and ascertain the impact of reverse milk run to reduce the same and apply clustering and reverse milk run to optimize the logistics resources.
Case overview/synopsis
The case study is about a freight forwarding company that offered end-to-end logistics solutions for the exporters based in India. Within a short time span, the company became one of the sought-after service providers for its clients. However, when the company planned to expand its business by expanding its client base, the efficiencies reduced and hurt the profitability of the company. It was all excellent with the limited number of clients, but as the number of distantly located clients surged, the operating costs increased. Trucks were running with partial loads, thus reducing efficiency. The rate of increase in cost surpassed the rate of revenue every time. The cost per mile of transportation was on the rise. The surging fuel prices were adding to the heat. In spite of being one of the first choices for clients, the company could not generate good profit margins. If they chose to increase prices, the company would have lost customers to the cheaper unorganized players in the market. It was time to choose between growth and survival. The company could not sustain itself without devising a mechanism to reduce costs. The company would not have sustained itself without devising a mechanism to reduce costs. To sustain in the business, the company had to device a mechanism to reduce costs. Whether to continue operating the conventional way or to transform? Was there a logistics strategy that would have improved transportation efficiency and reduced the costs for the company?
Complexity academic level
The case study is suitable for teaching post-graduate management courses in operations and logistics, supply chain management and supply chain analytics, as well as entrepreneurship-related courses.
Supplementary material
Teaching notes are available for educators only.
Subject code
CCS 9: Operations and logistics.
Keywords
Acknowledgements
The authors express their sincere gratitude towards Dr Michael Goldman, chief editor, Emerging Markets Case Studies, Emerald Publishing and Dr Vandana Sonwaney and Dr Aasha Sharma, guest editors of Innovative Start Ups in Emerging Markets: Special Issue, for conducting the case writing workshop and being encouraging through this case writing journey.
Disclaimer. This case is written solely for educational purposes and is not intended to represent successful or unsuccessful managerial decision-making. The authors may have disguised names; financial and other recognizable information to protect confidentiality.
Citation
Sarkar, B.D., Joshi, P.V. and Shah, N. (2023), "Reverse milk run – the logistics retrenchment strategy", , Vol. 13 No. 4. https://doi.org/10.1108/EEMCS-11-2022-0437
Publisher
:Emerald Publishing Limited
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