Optimise 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 as effectively as possible.

Sometimes complex, these logistical flows sometimes reveal numerous problems with stocks, warehouses, high costs, and even the quality of finished products, which leaves something to be desired. Yet they are the key to smooth production, and optimising 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 optimised? 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 throughout the manufacturing and distribution chain for a product. These activities are characterised by physical movements (of components, materials, sub-assemblies, work-in-progress or finished products) and information. This is also referred to as an activity chain or value stream.

Logistics flow management involves managing these activities in order to optimise the supply chain as a whole.

The different types of logistics flow

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:

• transformation
• 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 the supplier to the 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 shop. These flows take the form of a chain of operations:
  • packaging
  • handling
  • transport
  • storage.

The different production methods

Push flow

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

✅ Advantage: everything is ready to satisfy orders instantly.

❌ Disadvantage: risk of financial losses (overstocking and production costs) if demand does not materialise, but also a risk of shortages if demand does not increase.

Pull flow

The make-to-order method uses actual demand as the basis for production planning. As soon as the order is validated, the production process starts up to meet demand, without creating any stocks.

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

❌ Disadvantage: longer delivery times.

Just-in-time

The just-in-time method relies on regular supply of raw materials upstream and finished products downstream, in order to minimise stocks and work-in-progress as much as possible. This "just-in-time" technique means that we can meet actual demand as closely as possible, delivering to the points of sale that need them as quickly as possible. To succeed in this challenge, it is essential to have a perfectly optimised supply chain.

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

❌ Disadvantage: additional costs linked to the frequency of deliveries and non-optimised transport.

Synchronous flows

The synchronous flow method is a type of organisation where the various materials and parts are supplied as the production process progresses. They are delivered at the time they are to be used, thus avoiding high storage costs. As with the just-in-time method, it requires a precise, calibrated logistics organisation.

✅ Advantage: good resource management.

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

How can logistics flows be optimised?

Logistics is a crucial stage in the supply chain for goods, and if it is optimised, efficiency can be improved.

Every company must aim to operate at optimum efficiency, by improving all resources and processes and meeting two challenges: limiting waste and concentrating on high added-value activities.

1 - Understanding the objectives of logistics flow management

Limiting waste

It is essential to study and analyse 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 (unnecessary conveyance),
• Storage (high costs, unnecessary storage),
• waiting times,
• production (overproduction, manufacturing defects), etc.

Distinguish between activities with and without added value

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 maximised productivity and profitability.

By eliminating activities that are sources of waste and loss, the company can gain greater 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 set about mapping logistics flows.

This is a method of representing the various flows (physical and informational) in the 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 work in progress),
• handling and transport (cost and number of movements),
• use of resources (output, efficiency, productivity),
• information flows (nature and quantities), etc.

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

☝️ For greater flexibility and customisation, 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. analyse each flow to identify potential for improvement, waste and non-value-added activities, and then eliminate them. Produce a new map of the future situation, using different colours to highlight areas for improvement;
3. think about 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 do you properly read and understand a map? Here's the answer in video:

3 - Defining a flow management strategy

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

It is based on the work you have 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 mobilise, etc. ;
• In-depth analysis to identify which processes can be improved, or eliminated if they don't add any value for you;
• definition of a schedule for implementing the corrective actions identified. To manage your logistics project:
  • assess the timescales and costs involved,
  • Set up monitoring tools to assess the progress of actions,
  • appoint people to report to you regularly.
    
    

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

• on which items do you want to reduce waste: lead times, unnecessary stocks, manufacturing defects, unnecessary movements or transport, under-utilisation of skills, etc.?
• What performance indicators are you going to monitor: customer satisfaction rate, accuracy of your sales forecasts, stock turnover rate, etc.?
• how can you speed up, simplify and secure your management? Have you thought about equipping yourself with dedicated digital tools to automate and optimise 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 by improving the various logistical links and the involvement of the various 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 synchronise and automate the logistics flows that govern them.

This has a number of advantages, including

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

🛠 Software like Monstock enables you to digitise, 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, picking up orders in shop or online, etc.),
• unified tracking of upstream and downstream order processes, right through to distribution to the end customer.

5 - Manage your logistics flows using a dashboard

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

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

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

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

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

Setting up workflows (based on the formalities to which you are subject) ensures that your operations comply with customs and regulatory requirements, while automatic updates to shipment tracking help you to anticipate logistical contingencies.

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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, and better coordination of activities and partners along the supply chain.

And 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 several things you can do about it:

• use green or renewable energy
• 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 the overall control of your flows, and more generally with that of improving the productivity and profitability of your activities.