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Logistics/Supply Chain/optimize number id trolleys at vendors end


QUESTION: I want to optimize number of pallets that my supplier should have. He gives me material in trolleys or Pallets. Material flows from supplier to warehouse to my company's store to line side assembly. Now after the pallet or trolley is emptied it goes to return area. and when certain number of trolleys accumulate in return area which is sufficient for full truck load I return it to suppliers. Now I want to calculate the number of trollies that supplier should own such that it is a win win situation for both of us.I am incurring transportation cost and he is incurring cost of trolleys. My warehouse should always hold atleast 7 days of inventory and my company store should accomodate 3 days of inventory. Please help me in solving these problem. How can I solve this and what data I will be needing.  And if you can assume data on your own and solve this problem by giving an example it would be really helpful.

ANSWER: Hi Saurabh

I understood your problem you need reduce your return transportation cost at the sametime you should get sufficient inventory so that your 7 day and 3 day inventory levels are maintained.

I would like ask you a few questions to get to the depth of the situation, these below questions may give a dimension you may have not thought. Do run through them let me know your view.

1. Material Handling Unit Dimension -

a) Is your Inbound Transportation Optimal meaning you are using Trolleys and Pallets, i see that there is no standardization as you are using different types of Material Handling Units (Trolleys and Pallets). Have you thought a way to standardize your Packaging and Material Handling methods so that you can use the least number of Material Handling Units

b) Does all your SKUs need to be shipped in a Fixed Material Handling Units (Trolleys and Pallets) are there collapsible Material Handling Units that can collapse so that you can use cheaper Transportation methods during your Return Transportation

2. Transportation Frequency Dimension -

a) Can you maintain a Dynamic Inventory Service Level by Inbound Shipment meaning you determine the required Inventory based on Very Good Forecast Accuracy. This means doing away from having a Fixed Inventory Service Level

b) How are Supplier Returns handled, Returns means Part Returns and Material Handling Unit Returns. Can you combine your returns transportation across Multiple Suppliers by doing a Multi Stop Milk Run Type Transportation


---------- FOLLOW-UP ----------

We are using different type of packaging because it is a necessity as per quality standards set by my company. But there are many suppliers from which we are procuring material only in trolleys. And regarding milti shop milk tum transportation we  are already  doing this wherever possible.
We need to tell our suppliers  the number of trolleys he should own so that the whole closed loop supply chain can be run without any fault. So I need a method to find out the minimum number of trolleys that will help us in doing our operation with all our requirement like safety stock fulfilled.

Hi Saurabh

Lets go with this calculation

Count A = (Total Trolleys Received Actual = Actual Count of Trolleys received from the Supplier)

Count B = (Total Trolleys that should have been received in terms of calculation = ((Total Inventory Volume in terms of Packages Received in Trolley A / Trolley Capacity A) + (Total Inventory Volume in terms of Packages Received in Trolley B / Trolley Capacity B) + ........ (Total Inventory Volume in terms of Packages Received in Trolley "nth" / Trolley Capacity "nth"))

If Count A <= Count B then your Inbound Operations are very Optimal. In this scenario your supplier has to invest in more number of Trolleys so that you can ship for example 1 Return Vehicle say for every 4 or 5 Inbound Vehicle.

If Count A > Count B then you have lot of space for optimization. You need to check if Packages are efficiently stacked. Else you can define Stacking Rule by Package Type by Trolley so that your supplier stacks it efficiently, thereby bring in lesser Trolleys.

Also did u consider my suggestion on Collapsible Material Handling Unit ?

Let me know if i answered you

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mohamed sheriff


Transportation, Warehousing, 3PL Operations, Logistics IT, SCM Strategy and Execution


Logistic Operations and Logistic IT

Participated and presented papers at a few Leading Conferences on Logistics and SCM, Written an Article on RFID for CII Logistics

M.S in Logistics

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i am Certified Supply Chain Manager from ISCEA

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FedEx, Kuhne Nagel, DHL Exel, UTI

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