Optimize your logistics flows for greater fluidity and profitability

As you know, each of your company's logistics flows encompasses a number of stages, raw materials and service providers, all of which need to be coordinated in the best possible way.

Sometimes complex, these logistical flows sometimes reveal problems with inventories, warehousing, high costs, and even finished product quality that leaves much to be desired. Yet they are the key to smooth production, and optimizing them can improve the overall profitability of the supply chain, and more broadly of your company's logistics function.

But what exactly is a logistics flow? What are the different types of flow? And how can they be optimized? All the answers in this article!

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Definition of a logistics flow

A logistics flow is a set of activities carried out successively along a product's manufacturing and distribution chain. These activities are characterized by physical movements (of components, materials, sub-assemblies, work-in-process or finished products) and information. They are also referred to as activity chains or value streams.

Logistics flow management involves managing these activities to optimize the entire supply chain.

The different types of logistics flows

Internal logistics flows

Internal logistics flows, also known as production flows, refer to the movement of materials and components. These flows take the form of a chain of operations:

• processing,
• machining
• handling,
• management of intermediate stocks.

External logistics flows

External logistics flows can be broken down into two types:

• supply flows (or upstream flows), which refer to the movement of materials and consumables from supplier to warehouse;
• distribution flows (or downstream flows), which involve the movement of finished and semi-finished products from a company's warehouse to a customer's store. These flows take the form of a chain of operations:
  • packaging
  • handling
  • transport,
  • storage.

Different production methods

Push flow

The make-to-stock method involves forecasting future orders on the basis of past orders and market conditions. Human and material resources are then mobilized to produce and stock products while waiting for demand to materialize.

✅ Advantage: everything is ready to satisfy orders instantly.

❌ Disadvantage: risk of financial losses (overstocking and production costs) if demand fails to materialize, but also a risk of shortages if we are unable to satisfy an increase in demand.

Pull flow

The make-to-order method takes actual demand as the starting point for production planning. As soon as the order is validated, the production process starts to meet demand, generating no stock.

✅ Advantage: good resource management and elimination of storage costs and delays.

❌ Disadvantage: longer delivery times.

Just-in-time

The just-in-time method relies on a regular supply of raw materials upstream and finished products downstream, in order to minimize inventories and work-in-progress as much as possible. This "just-in-time" technique enables us to keep as close as possible to actual demand, delivering as quickly as possible to the points of sale that need them. To succeed in this challenge, it is essential to have a perfectly optimized supply chain.

✅ Advantage: good resource management, very low storage costs.

❌ Disadvantage: additional costs linked to delivery frequency and non-optimized transport.

Synchronous flows

The synchronous flow method is a type of organization where the supply of different materials and parts takes place as the production process progresses. They are delivered when they are needed, thus avoiding high storage costs. As with the just-in-time method, this requires precise, calibrated logistics organization.

✅ Advantage: good resource management.

❌ Disadvantage: an unforeseen event (e.g. a strike) can halt production and therefore downstream deliveries.

How to optimize logistics flow management?

Logistics is a crucial stage in the supply chain of goods, and if optimized, can lead to greater efficiency.

Every company must aim for optimal operation, through the improvement of all resources and processes, by taking up two challenges: limiting waste and concentrating on high value-added activities.

1 - Understanding the objectives of logistics flow management

Limiting waste

It's essential to study and analyze the supply chain on a regular basis, in order to identify when resources are being wasted. Identifying the cause is the first step towards improvement, which is possible thanks to feedback and the implementation of corrective actions.

Waste can occur in :

• transport and handling (superfluous conveying),
• storage (high costs, unnecessary storage),
• waiting times,
• production (overproduction, manufacturing defects), etc.

Distinguish between value-added and non-value-added activities

Distinguishing between value-added and non-value-added activities in order to eliminate the latter is an exercise that can ultimately confer a significant competitive advantage, thanks to maximized productivity and profitability.

By eliminating activities that are sources of waste and loss, the company can gain in efficiency in the management and quality control of value-generating activities.

2 - Draw up a logistics flow map

Once the challenges and objectives of good flow management have been clarified, you can begin to set up a logistics flow map.

This is a method of representing the various flows (physical and informational) of your business in the form of a diagram. This visual representation makes it easier to see where improvements can be made.

Also known as value stream mapping, it uses symbols, pictograms and arrows to highlight:

• production lead times,
• quality (manufacturing defects, damaged products),
• intermediate products (batch sizes, stocks and WIP),
• handling and transport (cost and number of movements),
• resource utilization (output, efficiency, productivity),
• information flows (nature and quantities), etc.

You can use a logistics flow mapping model, easily found on the Internet, which can be completed with your own information.

☝️ For greater flexibility and customization, you can also use flow simulation software such as Simecore-Simul8, one of the specialists in this field.

To map your value chain, the platform recommends following these 3 steps:

1. map the current situation to understand it;
2. analyze each flow to pinpoint potential for improvement, identify waste and non-value-added activities, and eliminate them. Make a new map of the future situation, using different colors to highlight areas for improvement;
3. consider corrective actions and draw up a schedule for their implementation, with associated deadlines and costs. Set up steering and control tools to monitor the impact of the actions implemented.

💡 How to properly read and understand a cartography? Here's the answer in video:

3 - Define a flow management strategy

Defining a strategy will enable you to optimize your logistics flow management.

It builds on the work you've done with your flow mapping:

• observation of all the activities that make up your flow: their nature, their sequence, their execution time, the resources they mobilize, etc. ;
• in-depth analysis to detect which processes can be improved, or eliminated if they provide no added value;
• definition of a schedule for implementing the corrective actions identified. To manage your logistics project:
  • assess the deadlines and costs involved,
  • set up monitoring tools to assess progress,
  • appoint people to report to you on a regular basis.
    
    

To go further and refine your strategy, ask yourself the following questions:

• on which items do you want to reduce waste: delays, unnecessary stock, manufacturing defects, unnecessary movements or transport, under-utilization of skills, etc.?
• What performance indicators are you going to track: customer satisfaction rate, sales forecast accuracy, inventory turnover ratio, etc.?
• how can you speed up, simplify and secure your management? Have you thought about equipping yourself with dedicated digital tools to automate and optimize your activities?

4 - Automate flows with supply chain management

Supply chain management encompasses all the methods, tools and software used to automate supply chain tasks.

This enables companies to anticipate different needs, in order to :

• deliver the right product, at the right time, to the right place,
• achieve or maintain a high level of quality,
• control costs.

Beyond the purely technical control of flows, the aim is to achieve a certain fluidity, or even harmony, throughout the supply chain, thanks to the improvement of the various logistical links, and the involvement of the different players.

The supply chain is generally made up of a more or less complex set of activities, players and products that interact with each other, and certain tools can be used to synchronize and automate the logistics flows that govern them.

This offers numerous advantages, such as

• continuous improvement in customer satisfaction,
• shorter lead times,
• higher margins and improved sales.

🛠 Software like Monstock enables you to digitize, simplify and automate all your logistics processes, thanks in particular to:

• complete traceability of products and activities throughout the supply chain management,
• integration with over 2,500 applications (e-commerce, CRM, etc.) to automate all types of flow (giving preparation orders, retrieving orders in store or online, etc.),
• unified tracking of upstream and downstream order processes, right through to distribution to the end customer.

5 - Control your logistics flows with a dashboard

Inventory and logistics flow management software enables you not only to track your entire supply chain (warehousing, transport, procurement, distribution, etc.), but also to monitor it all on a dashboard.

🛠 Erplain, for example, offers an intuitive dashboard, enabling you to gain in efficiency thanks to :

• data updated in real time,
• advanced statistics (profits, margins, identification of best-sellers, inventory value, etc.),
• the ability to generate customizable reports.

☝️ If you're a trading, distribution or industrial company that also operates internationally, your logistics tracking is subject to many specific requirements.

In this case, turn to a specialized tool such as TRADE.EASY. In addition to logistics and inventory management modules that take into account the particularities of these sectors, this ERP offers a specific module for tracking import-export operations.

Workflow settings (based on the formalities to which you are subject) guarantee the customs and regulatory compliance of your operations, and automatic updates of shipment tracking enable you to anticipate logistical contingencies.

See all software Supply Chain Management

Controlling flows and environmental impact

Opting for efficient management of your logistics flows offers a definite competitive advantage, thanks to a reduction in lead times, costs, waste and non-value-added activities, as well as better coordination of activities and partners along the supply chain.

But what if controlling your logistics flows also meant controlling your impact on the environment? Ecology seems to be playing an increasingly important role in the logistics landscape, and there are many ways in which you can take action:

• use green or renewable energies,
• use recycled or recyclable materials,
• treat and recycle your waste,
• limit empty transport,
• taking care of end-of-life products, etc.

Finally, the objectives of green logistics (or ecologistics) seem to converge with those of global control of your flows, and more generally with that of improving the productivity and profitability of your activities.