Eliminate Milk Runs and Run a Tighter Tank Delivery Business Using Digital Monitoring

What is a Milk Run in Logistics?

While the exact origin and meaning of the term “milk run” varies across different vertical markets, the concept of operational inefficiencies and loss of product is consistent across all of them. However, tank monitoring applications help increase delivery methods based on factual tank inventory level readings. This helps ensure that deliveries are aligned with customer requirements as efficiently as possible.

Many different factors affect how efficient your tank delivery process can be but converting from milk runs or traditional manual methods to a digital one can significantly impact your profit margins almost immediately. The antiquated task of manually sticking tanks to get a read on tank level is resolved by using digital tank monitoring technology.

Now, imagine how your team can forecast customer deliveries better because they now have accurate knowledge of all, or a portion of your customer’s tank levels in one dashboard. This allows you to plan your deliveries based on precise inventory figures and real-time customer requirements.

Milk Run Concept in Logistics

Without digital tank monitoring software and sensor technology, the process of manually identifying and supplying product to tanks, whether it be fuel, chemical, or any other type of liquid or gas, is simply a guessing game.

So, why do so many companies still operate this way? What are the barriers to implementing a more efficient digital monitoring process when this method results in minimal costs at a higher efficiency threshold?

One of the main reasons can be attributed to the lack of pinpointing inefficiencies specific to your organization. On the other hand, if you are in the early phases of adopting monitoring technology, your team may not fully understand how to utilize best the tank monitoring tools to capture the data correctly for it to work in your favor.

Most Tanks are Over-Serviced by 35%

Let’s assume your organization is delivering at only a 40% level of efficiency as opposed to the industry target of 75% efficiency. When applying this concept to a typical 1000 gallons customer tank with an average cost of delivery of $75, your organization would be over-servicing its tanks by $.09 per gallon. If you extrapolate this same math across your entire fleet of tanks, the cost of over-servicing can be staggering.

Scenario 1:      40% Efficiency = 400 gallons delivered at $.19 per gallon.

Scenario 2:      75% Efficiency = 750 gallons delivered at $.10 per gallon.

milk run concept in logistics

By implementing a SkyBitz tank monitoring systems, you gain clear visibility into the actual level of the tanks in your fleet, so you avoid over-servicing or even worse, run-outs. In addition to improving your bottom line, you reduce wear and tear on your trucks, maintain accurate inventory, improve driver productivity, and increase customer satisfaction.