An optimised supply chain inevitably involves agile, reliable and connected flow management. This allows delivery times to be met, ensures continuous stock replenishment and makes order picking easier. To boost its supply chain, each company must properly understand these logistics flows, apply the right strategies and focus on technologies.
Logistics flow in a company: Definition
The logistics flow refers to all the processes through which a product goes through, namely its production, storage and distribution. Moreover, it covers all the movements of physical goods, but also information and finances.
For companies, the challenge is to ensure a continuous and efficient products flow throughout the supply chain. This is why optimising logistics flows is a prerequisite for improving visibility, flexibility and overall efficiency.
There are multiple objectives: Reducing costs, shortening lead times and optimising stock levels, in order to better satisfy the end customer and increase productivity across the value chain.
The different types of logistics flow
Within a company, two main types of logistics flow are commonly distinguished.
Internal logistics flows
The first type is internal flows, also known as production flows. It focuses on the movements of raw materials or goods within the company, including the processes of receiving, manufacturing, handling, storing and transporting finished or semi-finished products. Optimising these internal flows involves close coordination between the company’s various departments, aimed at minimising costs and maximising efficiency at every stage.
External logistics flows
On the contrary, external flows relate to the movements of goods, information and finances between the company and its external partners. This includes suppliers, service providers, distributors and customers. Among external flows, a distinction is made between procurement flows (upstream flows), which are upstream of the production chain, and distribution flows (downstream flows), which are downstream. Regardless of the type, external flows require transparent communication and solid partnerships to ensure customer satisfaction.
For optimal logistics flow management, these two types of flows must be perfectly aligned.
Different logistics flow management strategies
To optimise their logistics chain, companies can implement several logistics flow management strategies.
Push flows
The push flow strategy is based on forecasting demand. The company plans the resources it needs based on market forecasts. This logistics management strategy can shorten delivery times and thus improve customer satisfaction. However, it also carries a major risk of overstocking.
Pull flows
With the pull flow strategy, the company is based on actual demand. In this case, production is only initiated when an order is placed by a customer. While this approach lengthens delivery times, it still has advantages. It avoids overproduction, overstocking and waste, including associated costs.
Just-in-time flows
With just-in-time flows, the company focuses on very short production and delivery times. It produces the quantity that most closely matches market demand. This flow strategy requires perfect coordination between actors in the logistics chain. While it is particularly complex to manage, it allows storage costs to be reduced while offering fast delivery times for customers.
Synchronous flows
Lastly, the synchronous flow strategy applies to external flows. It involves procuring components based on their order of use in production management. In fact, these are delivered when needed. This helps optimise the just-in-time strategy while reducing stock levels and associated costs.
Technology at the service of logistics flows
The digitalisation of the supply chain and the development of technological solutions are two essential levers for increasing efficiency and better managing logistics flows.
Management software
First of all, companies benefit from relying on software to implement an efficient logistics process. From product manufacturing to order delivery, these tools promote optimal management of teams and resources.
There are three essential tools:
- ERP (Enterprise Resource Planning) to manage all activities in the value chain;
- WMS (Warehouse Management System) to improve warehouse management;
- TMS (Transport Management System) to optimise goods transportation.
Technologies for facilitating communication
In an era where system interactions and real-time exchanges are the norm, EDI (Electronic Data Interchange) is particularly popular with companies. This communication technology allows information flows exchanged between business partners to be streamlined and optimised, in terms of time, cost and quality.
In addition to this technology, APIs (Application Programming Interfaces) are also being used. By enabling applications to communicate with each other, these interfaces further facilitate information exchange and service interoperability. This paves the way for smart supply chains, logistics that are ever more intelligent, personalised, agile and faster.
Upcoming new technologies
Lastly, new technologies are also making their way into the logistics function.
Big Data, combined with Artificial Intelligence, allows the entire supply chain to be rationalised based on external and internal data. Thanks to predictive models, it is now possible to forecast stock levels and adjust procurement according to certain parameters. These technologies thus enable companies to better manage their logistics flows.
IoT (Internet of Things) devices can also facilitate stock management. By installing sensor systems on racks or shelves, companies can detect stock levels in real time. Ultimately, this could replace physical inventories, providing a precise view of logistics flows at any time.
Today, every company must optimise its supply chain through efficient logistics flow management. This is an essential step to remain competitive and sustain operations in an ever-evolving environment. Adjusting the different flow strategies and integrating technologies are two key levers towards an agile, efficient supply chain aligned with the company’s overall objectives
