Four tips for effectively managing logistics flows

Controlling and optimizing logistics workflowsis of paramount importance to every company managing stocks of goods.

This involves, of course, not only the physical flow of goods but also the flow of information.

While this requires deployment of a specific strategy and the appropriate tools to meet the objectives, it brings substantial benefits over time.

Here are our best tips for optimizing your supply chain  and workflow management.

What is a logistics flow?

Logistic flow: a definition

Originally, the term “logistics flow” was used in the military in reference to the acquisition, transportation and storage of supplies and equipment.

It was then adopted in the business world to refer to the flow of goods and information, as well as the production, packaging, storage, transportation and even security of goods.

In an enterprise, we distinguish between internal and external logistics flows:

• Internal logistics flows, or “production flows,” which include the movement of raw materials and other components through the production chain.
• External logistics flows, which cover all flows of supplies from different suppliers as well as distribution flows to different customers.

Note : a logistics flow can sometimes be referred to as a “value chain”..

The different types of logistics flows

Push

Push logistics: a definition

Also known as “make to stock”, push logistics is an approach designed to produce and store products in anticipation of future orders. Production is therefore based on the company’s order forecasts.

Thus, when the products are manufactured (or ordered), the company is not certain that it will shift the goods. The typical example of a “push” logistics flow is in the retail food sector, where shortages must not be allowed to occur.

Advantages & and disadvantages of push logistics

This approach has the advantage of shortening delivery times, for the product is already ready when the customer places an order. On the other hand, it also entails additional costs for the company, which has to store finished products and raw materials for an open-ended period.

The lack of parity between actual demand and actual production can lead to overstocking, and consequently to “dormant” cash or stock shortages and the resulting loss of orders.

Pull

Pull logistics - a definition

The pull model is also called “make to order”. Contrary to the push model, in pull logistics we wait for a customer to place an order before proceeding to production. Thus the product is manufactured and assembled to order, which implies that there is no stock already in the production chain.

The craft industry uses this method extensively for custom-made manufacturing. Pull logistics are also applied extensively in the agri-food industry to limit waste.

Pull logistics: advantages and & disadvantages

This method eliminates storage costs and is more responsive to potential customer requirements on product design. However, delivery times are lengthened and problems on the production chain can make them even longer, which negatively impacts the customer.

Lean production

Lean production: what is it?

In logistics, lean production is a production management model that combines the benefits of pull and push. With this model, production occurs on an ongoing basis, matching market demand as closely as possible.

Lean production is also known as “just in time” production. This method is particularly used in the automotive industry, where it was first adopted by Toyota.

Advantages & and disadvantages of lean production

The advantage of the lean production management model is that it reduces the overstocking of finished products while reducing delivery times to the customer. Lean production requires a perfectly optimized supply chain to function properly.

Synchronized

Synchronized flows: a definition

Synchronized flow is a concept applied to inward logistics flows and describes a supply chain in which raw materials and components arrive at the exact time the production chain needs them.

Materials and components are supplied in the order in which they are used in production. Like lean production, the synchronized flow model is particularly used in the automotive world.

Synchronized flows: advantages and &disadvantages

Synchronized flows make it possible to avoid overstocking of raw materials. However, like just-in-time logistics, the synchronized model requires a perfectly optimized supply chain. Any delay in supply will systematically cause a delay in production, which means longer delivery times for the customer.

Why optimize logistics flows?

Every supply chain involves different types of flows that need to be monitored to optimize the value chain in its totality. It’s not only about the flows of goods upstream and downstream of the enterprise, but also about the flow of information.

Different flows can be optimized on various fronts: stock management, transport, track and trace etc.

1. To reduce stock management costs

First off, better supply chain management reduces the amount of inventory stored, eliminating unnecessary costs. To improve stock management, the roles played by enterprises, tools and infrastructure must be re-though. This is essential if you’re to boost the profitability of your company by eliminating hidden costs.

2. To reduce your transportation budget

As with stock, good supply chain organization  can significantly reduce your transportation budget. For example, you can improve your management of transportation flows by optimizing driver routes to achieve significant savings.

Good management of transportation flows also requires comparing the offers of different carriers to obtain the best quality-price ratio available.

Reducing costs in this way can result in higher profitability (where the costs are borne by the enterprise) or higher competitiveness (where the transportation costs are borne by the customer).

3. To improve delivery tracking

Using digital tools for supply chain monitoring gives you access to all the information you need, in real time and with high reliability.

These tools provide optimal visibility, which enables better communication with customers, and better management of restocking.

Improved tracking enables logistics teams to be more responsive to problems, while significantly increasing customer satisfaction and your company’s image.

4. To prevent risks

Preventing the risk of supply problems is a fundamental issue in an increasingly international market. With more intermediaries and more borders, the risks of the delay, loss or hold-up of goods are higher.

Optimizing supply chain management helps reduce these risks at every stage of the supply chain. Fewer risks means fewer incidents. Risk prevention therefore ensures the whole supply chain functions properly by anticipating possible disruptions before they occur.

Anticipating problems is the surest way to guarantee customer satisfaction and preserve your company's image.

How best to manage and optimize logistics flows?

Establish rules of procedure and follow them

Implementing specific processes and best practices in your enterprise helps reduce operational errors and thereby reduce the risk of unforeseen expenses. However, if your strategy is to work, it's essential to get your employees behind the enforcement of these procedures.

The methods used for securing employee support vary from one team manager to another:

• Congratulate,
• Reward,
• Report the improvements
• etc.

Certain activities have to be framed in a common perspective of quality and productivity. These include reception and shipping schedules, stock, packaging, quality control, facility management and tracking.

Track your stock daily

Daily monitoring of stock is essential to prevent loss, theft and damage. An efficient stock management system allows you to determine how many items to ship, the location of each item in the warehouse, and the packaging requirements for each product.

Daily stock counts also address issues such as shrinkage, operational objectives, product performance, optimization of the ordering process and the preparation of orders.

For manual stock counts, it's a good idea to invest in inventory software that allows you to computerize data so you can track and share information with your entire logistics team.

Keep your warehouse and equipment in perfect condition

Making sure your warehouse, offices and vehicles are well organized and in perfect working order prevents the damage and loss of important goods and documents. It also helps reduce the risk of delayed pick-up and delivery to customers.

To optimize the management of your enterprise’s workflows, it's also important to review your storage arrangements. Storage must be clearly structured in terms of:

• Warehouse zoning: each part of your storage space must be dedicated to a specific activity. That means you have to designate a loading zone, an unloading zone, a storage zone, an overstock zone, a cold room etc.
  
• Addressing of goods: if goods do not have a designated location within the warehouse, your employees will waste a lot of time looking for them. To avoid this waste of time, each product must be assigned a place in the storage racks and must only be stored in this designated place.
  
• Signage: once the different products have been assigned their places in your warehouse, it's essential to put up signs showing how to reach them. This saves time and improves the productivity of your logistics team. It also reduces order picking errors, thereby increasing customer satisfaction and avoiding product returns and exchanges.
  

Think about the scalable automation of your supply chain

Implementing a supply chain automation system is essential to increase your efficiency and boost profitability.

To introduce automation in your value chain, you first have to invest in special software, then consider which kind of physical automation solution is right for you:  for example a robotics-driven goods to man system.

However, if it’s to be fully adapted to your business, this automation system must meet all the logistical requirements of your enterprise and support the processes already in place.

When you automate, it isn’t a question of adapting all your company’s logistics processes to fit the automation system: either you’re equipping a new warehouse and have the option of integrating automation from the outset, or (and more likely) you’re automating your existing processes step by step.

You only change what’s really worth changing to optimize your supply chain processes.

As long as the IT system and the existing process are compatible, you can connect your automation system to customers and suppliers.

With this arrangement you can efficiently manage physical and information workflows by offering all actors in the process a fully integrated supply chain environment and enhanced track and trace of goods.

As a result, end-to-end supply chain tracking is easier for everyone and communication is simplified at all levels.

Note: every computer system must be regularly re-evaluated and upgraded to remain effective.

Choosing the right logistics tools

Depending on the areas most in need of optimization in the management of your workflows, a number of special IT tools exist:

• ERP (Enterprise Resource Planning): a suite of software modules that allow you to manage all of your company’s processes, not just production. From order taking to billing, ERP allows you to monitor the customer relationship from end to end. It also allows you to monitor and plan your company’s production, as well as keep track of finances and human resources. Put simply, ERP can be used to manage almost every aspect of your business - it depends on the modules you select.
  
• Warehouse Management System (WMS): a solution for in-depth management and organization of warehouses. Stock movements, batches, dates, packaging, rack locations, and more: all the data required for managing your warehouse is stored in the WMS.
  
• Transportation Management System (TMS): this is a dedicated solution for optimized transportation-related operations. TMS is particularly useful for managing truck fleets and organizing loading schedules.
  

For 100% optimized warehouse management, ERP and WMS can be interfaced with robotic systems to increase productivity and further optimize logistics flows in your warehouse.

For example, with the assistance of logistics robots such as Scallog’s, order picking is faster.

By reducing costs and improving customer satisfaction, optimized logistics and workflow control is the key to boosting your company’s profitability. By radically re-thinking your supply chain and following our recommendations, you can implement the right tools, make the right responses, and improve the management of your logistics flows.

Choose a high-performance supply chain management solution where operator comfort and continuous automation are priorities!