"40% Reduction in Logistics Costs through 'Geumhyeong Joint Purchase'... Expansion of 'Milkrun' Logistics System"

10th Advanced Materials, Parts, and Root Industry Technology Expo Opens and 'Milk Run Agreement Ceremony' Held
Ministry of Industry: Root Companies Participating in Joint Logistics Purchase 'Milk Run' to Save 700 Million KRW Over Next 5 Years

[Asia Economy Reporter Moon Chaeseok] The government has emphasized that logistics costs can be saved through the milk run method, where the industry jointly purchases materials and logistics.

The Ministry of Trade, Industry and Energy announced on the 23rd at 2 p.m. that it will hold the '2020 Advanced Materials, Parts, and Root Industry Technology Exhibition' and the 'Root Industry Milk Run Agreement Ceremony.'

At the agreement ceremony, the ministry stated, "Through the milk run project, 24 companies located in the Gwangju Mold Complex are expected to save 700 million KRW, which is 40% of logistics costs, over the next five years."

Earlier in May, the Ministry of Trade, Industry and Energy, the Korea Federation of SMEs, and the Korea Institute of Industrial Technology signed a Memorandum of Understanding (MOU) on 'Cooperation and Support for the Root Industry' and started the milk run project.

Through this project, the 24 companies in the Gwangju Mold Complex were able to resolve the procurement and transportation of spring and bearing parts, which were previously ordered and shipped from Sweden and Germany, by using the milk run method from Rotterdam, Netherlands.

The ministry plans to streamline the logistics system using the milk run method to diversify the supply chain and reduce costs for root companies.

An official from the ministry explained, "After implementing the milk run project, it is expected that the diversification of the global value chain (GVC) to Europe, rapid supply of mold raw materials, and a 40% reduction in logistics costs will be achieved."

He added, "The ministry plans to expand the milk run project not only to the Gwangju mold specialized complex but also to other regions and other root industries."

Meanwhile, at the 'Advanced Materials, Parts, and Root Industry Technology Exhibition' held that day, Cho Hongshin, CEO of AutoGen, received the Silver Tower Industrial Medal, and Kim Hyungcheol, CEO of Javis, received the Iron Tower Industrial Medal. Seven government awards were presented.

Minister Sung Yunmo emphasized in his congratulatory speech, "To respond to environmental changes such as COVID-19, climate change and eco-friendliness, and the digital economy transition, the materials, parts, and equipment industry, which is the 'technology within technology,' must be strong."

Minister Sung said, "Based on the 'Materials, Parts, and Equipment 2.0' and 'Root 4.0 Master Plan' policies, the government will invest more than 2.5 trillion KRW next year to aggressively and proactively strengthen the competitiveness of the materials, parts, and equipment ecosystem and promote structural transformation of the root industry."