5 steps to an optimal logistics process
Setting up optimum logistics processes has many advantages, such as faster, more efficient order processing, a lower chance of errors and more satisfied customers. But what are logistics processes? According to Wikipedia, “Logistics is generally the detailed organization and implementation of a complex operation. In a general business sense, logistics is the management of the flow of things between the point of origin and the point of consumption to meet the requirements of customers or corporations.” This includes the entire process, from the development and procurement of a product, through production and distribution, to the end customer.
In practice, the various components such as planning, production, order picking and transport have their own logistics process. Logistics processes can be set up according to different models, including supply chain management (SCM), enterprise resource planning (ERP) or activity based costing (ABC). A model provides a good basis and can be adapted to align with your specific processes. In order to arrive at that optimum logistics process, you go through five steps:
1. Describing the logistics process
Identifying a logistics process begins by describing it. The logistics process for a webshop is very different from that of a physical store or wholesale distributor, just as the logistics process for e-commerce is different from fresh food or handmade furniture.
Think carefully about the processes in place within your organization. This could be the planning, the production process or the order picking in the warehouse. Describe the steps in the process and the lead time per step (e.g. taking order, entering order in the system, checking order, releasing order, preparing order, sending order, etc.). Also describe who does each step.
2. Defining the logistics objectives
Now that you have an understanding of your logistics processes, you are going to set the logistics objectives. What do you want to achieve through the optimization? Do you want to save costs? Do you want to be able to carry out the process with fewer people? Do you want to reduce stock levels? Does order fulfillment need to be accelerated? Does the number of complaints need to be reduced? Establish those KPIs so that you can monitor the optimization and make adjustments where necessary.
3. Analyzing the logistics process
You have described the logistics process, and the objectives are clear as well. Now it’s time to analyze the processes. Look at both the planning processes and the operational and supporting processes.
What are the steps in the process, how much time do those steps require and how many employees are involved in each step? Where are the bottlenecks? Can some steps be merged? Are any steps illogical? Can any steps be done faster or more efficiently, with less human intervention required? What can you automate in order to reduce both human effort and errors? Use the reports to identify any areas for improvement that contribute to your logistics goals.
4. Improving the logistics process
Now it’s time to actually improve the logistics processes. The starting point is, of course, your objectives and the areas for improvement that came up during your analysis. The most important aspect of an optimum logistics process is logic. Identify logical walking routes in the warehouse (this can even be done automatically using special software), place frequently ordered products at the front and place products that are often ordered in combination next to each other on the shelves.
Automation also generates a lot of profit. There are all kinds of logistics improvement methods you can use, such as Lean, Kazien or PDCA (Plan Do Check Act). Once you have redesigned the processes, it is important to monitor them continuously and adjust them where necessary.
5. Working out whether to outsource the logistics process
Outsourcing your logistics processes can be a good decision to make. It means you have less to worry about, you can shift the operational and financial risks, you need less warehouse space and fewer employees, and you can fully concentrate on your own core business activities. Outsourcing can also be a good option if your business or e-business is growing faster than expected.
If you are increasingly struggling for space, make an obligation-free appointment to spar with a logistics partner such as PON.