How can a transport company become more efficient? Answer: by optimizing its logistics flows and processes.
It is a matter of adopting good practices that will generate significant benefits, shared by the whole group. That is to say, both by the company and by all the players involved in its supply chain. To achieve this, it is necessary to follow a certain number of steps, in particular the implementation of adapted tools. This is the sine qua non condition to gain in fluidity, efficiency and profitability within its Supply Chain. Explanations on flows and logistics processes.
Logistics flows and processes: what are we talking about?
Before optimizing your logistics flows and processes, you need to understand what they are and how they work. This gives you an idea of what exists and what can be done to improve things.
Logistics flows and processes refer to the activities that are carried out successively throughout the life cycle of a product, from its manufacture to its distribution. This is also referred to as the “value chain” or “activity chain”.
These activities include physical movements (finished products, raw materials, components, sub-assemblies, etc.) and information flows.
Types of logistics flows
There are two main types of flows:
- There are internal logistics flows and processes, or “production flows”, which designate all physical movements and circulations (transformation, machining, handling, management of intermediate stocks).
- And external logistics flows and processes, which are themselves divided into two categories. Upstream (or supply) flows, which refer to movements from the supplier to the warehouse. Downstream (or distribution) flows, which go from the warehouse to the points of sale or to the final customers (finished products). These logistic processes are materialized by a chain of specific activities: packaging, storage, handling, transport.
The optimization of logistics processes consists in rationalizing the supply chain by adopting relevant production methods.
The different production methods
These production methods, which are so important for the management and optimization of logistics flows and processes, are the following:
- The method known as “push flow” or “make to stock”. This process consists of producing and stocking goods according to the state of the market and the order book, anticipating needs. The advantage is that stocks are ready to meet demand. The disadvantage is the risk of over-stocking and therefore additional financial charges or, on the contrary, of shortage and therefore a loss of profit for the company.
- The “pull flow” or “make to order” method. This approach aims to rationalize its logistics processes by starting from the real demand to plan production. An order leads to the manufacture of the product and its dispatch. The advantage is that there is no stock, so there are no unsold products or shortages. The disadvantage is that delivery times are greatly extended.
- The “just-in-time” method. This process relies on a regular and controlled flow of raw materials (upstream) and finished products (downstream) to minimize inventory. This is an ideal form of supply chain logistics: no stock, but no manufacturing and shipping delays either. The product arrives on site when the company needs it. This means that you can rely on an optimized supply chain. The advantage is ideal resource management. The potential disadvantage is the greater frequency of deliveries, which generates a cost.
- The “synchronous flow” method. This approach is essentially the same as the “just-in-time” approach: the supply of raw materials and spare parts is adapted to the production process, according to requirements. Here again, this is only possible with a perfectly optimized supply chain.
How to optimize your logistics flows and processes?
Optimizing logistics flows and processes means implementing strategies to manage these movements with maximum efficiency. To achieve this, you must first understand the issues, then map the flows, and finally automate and optimize them using Supply Chain Management (and dedicated tools).
Understand the issues related to logistics flows
First and foremost, you need to analyze your supply chain to identify the bottlenecks and “sweet spots” where resources are wasted. These points can be :
This preliminary audit is essential to implement corrective actions.
It is also necessary to distinguish the activities of the Supply Chain according to their added value. Not all activities have the same value: some are superfluous, sources of waste, or simply bring little value to the supply chain. Eliminating them contributes to the optimization of your logistics processes and gives you a competitive advantage, because you can focus on high value-added activities (such as quality control).
Mapping the logistics processes
The second step consists of physically representing the logistics processes (physical or informational), in the form of diagrams, in order to highlight the levers for improvement. This “value mapping” is essential: it allows you to determine in which direction you should go.
Through these visual representations, you highlight production lead times, intermediate products (stocks, work in progress, etc.), transport and handling activities, resources and their use (productivity, profitability, etc.), possible quality-related problems, and the flow of information between Supply Chain actors.
Simplify and automate flows
Once you have identified the blocking points, it is time to act on your logistics processes by simplifying and automating your supply chain. This is what we call Supply Chain Management. To do this, you need to implement the right tools, those that will allow you to…
- to efficiently manage your flows,
- establish relationships of trust between the actors of the Supply Chain,
- reduce the risks of malfunctioning by improving communication,
- reach or maintain an optimal quality level,
- make logistics processes more flexible,
- reduce your costs,
- increase your margins,
- reduce your delivery times,
- increase customer satisfaction.
You can achieve these results by adopting a transport TMS software (such as DDS Shipper), a collaborative transport platform (Join2ship), a Supply Chain Import tool (DDS Import), a Freight Forwarding solution (DDS Freight) or an international purchasing solution (DDS Sourcing). Contact DDS to find out more and to choose the tool best suited to your logistics flows and processes!