Developing internal logistics in manufacturing requires expertise and experience. When a company’s own resources aren’t enough to improve operations, a partner’s first line steps onto the field.
During my two decades in the automotive industry, I witnessed how internal logistics can be refined and efficient to the highest degree. The entire logistics chain supports production. Years ago, trucks were already considered part of the warehouse there. When a vehicle arrives at the factory, its cargo goes directly into production.
Logistics in the automotive industry is precise. Unloading times are known to the quarter-hour and are non-negotiable. This level of precision is still rare in other industries. While services and applications offering exact logistics information are available, companies either don’t know how to implement them or are unwilling to do so.
Boosting productivity with data
The automotive industry’s internal logistics models are gradually being adopted by several large industrial companies. There’s still much work to be done and gains to be made.
Here’s the incentive: developing internal logistics creates clear business benefits that show up on the bottom line. When goods flow directly from reception to production and inventory values approach zero, business management is pleased.
Looking at the past decade through an optimistic lens, the utilization of information technology has begun to gradually enhance industrial internal logistics. Data from information systems is being leveraged to control and optimize logistics. When throughput times, handling times, and other metrics are monitored – at best in real-time – bottlenecks can be addressed.
Fix the processes, Don’t just fight fires
Let’s return to the automotive industry, where operations must proceed at a pace of hundreds of cars per day according to a precisely timed production process. It’s largely assembly line work where there’s no room for disruptions.
For production to run smoothly, the logistics chain must be continuously monitored, not just when a truck arrives – or fails to arrive – at the yard. This differs from the internal logistics of many manufacturing companies I know, where too much time, money, and expertise is spent on fighting fires.
I’ve pondered why there’s resistance to developing operating methods. Why is change perceived as difficult or frightening? One reason is the lack of perseverance. Development projects often take years, and results aren’t visible in just a couple of months. Another reason runs deeper: the role of internal logistics in generating profits and improving competitiveness isn’t understood.
Partner takes the reins
If developing internal logistics is perceived as too difficult internally, outsourcing to a service partner is an alternative. Goals for internal logistics development are agreed upon with the partner.
Once objectives are jointly defined and metrics agreed upon, the partner takes control of internal logistics resources and processes. Then a work study is conducted: where are we now, where are the bottlenecks, and how can these bottlenecks be eliminated to reach the desired goal.
Development consists of concrete actions. All aspects of internal logistics are examined in depth. For example, how many steps are taken, how much time is spent solving problems, where are the deviations, and how are different functions resourced. Once the big picture is clear, the development project moves forward step by step.
A competent logistics partner offers real-time supplier monitoring of the supply chain alongside the detailed development project. This enhances not just logistics but the entire production process.
Close collaboration
Resource shortage is a problem in almost every development project. Few organizations have extra personnel who can be made responsible for collaboration with an internal logistics partner. Development work is done while simultaneously fighting fires.
Persistence pays off. Long-term work achieves results: monetary savings, increased productivity, or better service quality. At best, all three.
When results are achieved, the work study is updated: how has the development work affected practical operations, how has the investment impacted work quality, and what effect has the change in internal logistics had on the company’s bottom line.
The first line gets the job done
Core competency is an important reason why companies should consider transferring their internal logistics to a partner. Industrial companies’ core competency lies in their own operations. Consequently, investments are primarily directed toward production development, not internal logistics. Logistics is unfortunately often relegated to a secondary role.
An internal logistics partner has accumulated experience from customer projects across different industries over the years. Experiences from dozens of work studies and ERP projects give us a strong foundation for finding key development areas in each customer’s processes. Logistics experts are playing in the first line.
Blog was written by Janne Marttila. HUB’s Business Director, who brings practical and efficient solutions to industrial intralogistics with over 20 years of experience.
Read also:
Why invest in industrial logistics?
The development of internal logistics brings efficiency to production
