5 Steps to Optimize Your Transport Company's Logistics Flows and Processes
If you are a logistics manager or own a transportation company, you know that optimizing your logistics flows and processes is key to improving efficiency, reducing costs, and increasing profit. By streamlining and automating the movement of goods from supplier to customer, you can ensure that your supply chain runs smoothly and your customers are satisfied. In this article, we will discuss the various steps you can take to optimize your logistics flows and processes for improved efficiency and profit.
What is a workflow?
A workflow is a series of steps or tasks that are required to complete a specific process. Workflows can be used to describe the steps involved in a variety of processes, including those in manufacturing, healthcare and of course Supply chain, logistics and transportation.
What is the difference between workflow and business process?
The terms workflow and business process are often used interchangeably.
People often use the term workflow to describe simple, linear sets of tasks and activities, while business process is a more general term that can encompass more complex and multi-faceted processes. However, the distinction between the two terms is not always clear-cut, and they may be used interchangeably depending on the context.
The term workflow typically refers to the intersection of business process and technology, while business process on its own is usually agnostic to technology.
In recent years, the term "intelligent workflow" has gained popularity as a way to describe workflows that are optimized and automated using advanced technologies such as data analytics and machine learning. This approach allows organizations to streamline their processes and improve efficiency and decision-making. More in the rest of this article.
So, what are these in Logistics and Supply Chain?
Logistics flow can be seen as the physical movement of goods throughout the value chain. The physical flow will be accompanied by information flows. Both following a series of activities that take place throughout the lifecycle of a product, from its production to its distribution.
These activities may include the movement of finished products, raw materials, packaging materials, components, and sub-assemblies.
There are typically three main categories of logistics flows:
- Internal Logistic
- Inbound Logistic
- Outbound Logistic
- Reverse Logistic
What is Internal Logistics
Internal logistics flows and processes, also known as "production flows," involve the movement of physical items and information within an organization. These flows include the handling and management of raw materials, machining, transformation, and intermediate stocks as they are moved through the production process. The goal of internal logistics is to ensure that raw materials and packaging materials are delivered to the production or assembly lines at the right time so that finished goods can be prepared for outbound logistics.
What is Inbound Logistics
Inbound logistics involves the movement of goods from suppliers to a production facility. This process involves the storage and transportation of raw materials, components, and other products, as well as the flow of information about these products, from suppliers to the warehouse and on to production facilities for processing and production. Inbound logistics from suppliers can derail your business.
Inbound logistics involves the transportation of raw materials, tools for manufacturing, consumable products, spare parts, and other components needed for production. Efficient inbound logistics management can make the entire process more streamlined and integrated, and can have a significant impact on the success of an organization.
What is Outbound Logistics
Outbound logistics involves the movement of finished products from production facilities to the next link in the supply chain. This may include the transportation of goods through warehouses and on to the point of consumption, or the end-user. This process, also known as order fulfillment, is the final step in the distribution of a product.
Using a manufacturer as an example, after the goods are manufactured , they may be sold and distributed to retailers, who will then sell them to the end-user. The movement of the goods from the warehouse to the customer's hands is considered outbound logistics.
What is Reverse Logistics
Reverse logistics involves the movement of goods from the end-users back through the supply chain to the appropriate party. This can occur when products are returned, require servicing or repair, are being refurbished, need to be resold, recycled, recovered, or properly disposed of (if they cannot be recycled and must be safely broken down). This flow includes all activities that take place after the point of sale or end of the product life cycle. Reverse logistics is commonly seen in the automobile and electronics industries.
How to Optimize Logistics Flows and Processes for Improved Efficiency and Profit?
1. Be clear on where the focus should be
- Analyze the current flow of goods and information within your organization and identify any bottlenecks or inefficiencies that are causing delays or increased costs.
- Should the analysis focus be on transportation, goods in, handling, inventory?
- A good idea is to collect current issues and identifying bottlenecks if to use techniques such a: the 7 Mudas, 5S, the Theory of Constraints)
2. Streamline the supply chain: remove everything not necessary
- Identify opportunities to streamline the supply chain by: reducing the number of intermediaries or optimizing routes within a site or network, eliminate document bureaucracy and other unnecessary processes, etc.
- Evaluate the all other opportunities their impact using a cost-benefit analysis.
- Implement quick wins
3. Where automation seems useful, get into the details to make sure your do not go for ruth(use)less automation. Often, automation does not eliminate work for the long run but rather displace it to other employees that have to maintain the tech stack.
- First, dive into further detail by mapping the logistics processes both physical and informational. Start from the beginning and take a customer order, a supplier order, anything relevant to you that is specific. Once a first end to end mapping is done, generalize from there building a more exhaustive picture. You will save time that way. It is best to involve several stakeholder to have a complete pictures of the org
- Identify simplification and automation opportunities, think about process automation (BPA), Robotic Process Automation (RPA), OCR, and AI, machine learning and intelligent workflow orchestration.
- Build a business case from scratch or go first for a pilot or Proof of Concept to validate it
What are the benefits of optimized logistics flows?
By improving logistics flows and processes, a company can increase efficiency, reduce costs, and improve customer satisfaction.
- Deliveries arrive on time in full with full traceability and consistent service level delighting customers
- Handling of last minute issues and hazards lightning fast
- Increased velocity in the transfer of information throughout, better synchronization and collaboration between stakeholders for faster decision making
- Direct cost reduction as less time is spent on admin tasks and more on the actual value add work for customers
- Improve accuracy of current and future raw and packaging material costs, workload and other key operational indicators
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