Quick wins: how to optimize cost/time effectively your logistics site?

A comprehensive guide from diagnosis to implementation

Intralogistics is a key factor in supply chain performance which evolved significantly over the last few decades. From the rise of e-commerce to increased volume demands and the necessity for quicker delivery times, the activity has progressively shifted from manual to more automated processes. Today the push towards greater automation is not just about efficiency but also improving work ergonomics and focusing manpower on tasks with higher added value. Rationale to invest accordingly, though, collide with the hectic economic environment.

When business projections fluctuate, companies face dilemmas in committing to extensive automation projects with long-term return on investment. However, the most recent evolution in technology and in service (equipment leasing, SaaS for logistics IT…) offer new, flexible and scalable solutions, allowing for more gradual and less capital-intensive approaches to automation.

If you are assessing your intralogistics and wish to automate but are not ready yet to invest in a large-scale project, this quick wins’ guide is for you. Designed with France Supply Chain’s Lab Digital & Technologies, it provides actionable insights, and presents automated systems that require few resources to implement. It will help you navigate through intralogistics with practical, quick-win solutions.

It was written thanks to contributions from logisticians, manufacturers, service providers, equipment manufacturers and consultants, sharing their expertise on the challenge of automation.

The guide unfolds a structured methodology to tackle intralogistics challenges in 3 steps:

1. Diagnosis principles: Assessing current logistics systems, whether automated or manual, to identify weaknesses and areas for improvement.
2. The 3 phases of an accurate diagnosis: from taking ownership to identifying inefficiencies and delivering an action plan.
3. Operational strategies for “quick wins”: Pinpointing opportunities where automation can deliver rapid gains for an investment of less than €1 million and within a year.

1 – DIAGNOSIS: FROM THOROUGH ANALYSIS TO SOLUTIONS

The logistics diagnosis of your warehouse’s supply chain consists in analyzing the various internal and external processes in your warehouse, as well as their level of performance, their status, and their specific features. This enables you to identify your warehouse’s weak points, whether automated or not, and enables you to determine potential areas for improvement.

The Logistics Diagnostic occurs once the site is designed and implemented. It is not intended to review your logistics strategy (number of warehouses, their location, route-to market choices, etc.), nor the technical solutions adopted (often predefined site surface, constraints). The first key step consists in specifying the scope of the project. This involves deciding on the number of warehouses or processes to be reviewed, as well as the product lines or distribution channels impacted. To close this initiation phase, we will identify the parameters that could affect the roadmap, such as the expected level of ROI, the timeframe for implementation or the duration of the assignment.

The aim of a diagnosis is to define an action plan to improve your site’s cost-service performance in the short and medium term. Nonetheless it spans a wide range of actions, from your specific customer promise (BtoB or BtoC), logistics resources and operations, supply management, demand and procurement, supply chain-oriented information systems as well as organization and KPIs.

Once the actual company’s performances are assessed they are compared with main competitors’ ones. The benchmark is led in the field, identifying best practices and defining the future or desired customer promise.

When closing the logistics diagnosis, solutions are identified for each problem highlighted by the analysis, as well as the challenges, risks and impacts associated. The final step consists then in clarifying priorities and setting up a roadmap to implement the selected actions.

2. THE 3 PHASES OF AN ACCURATE DIAGNOSIS

A typical diagnostic approach into 3 phases, and generally lasts 3 to 4 months.

In Phase 1, which spans approximately one month, the focus is on the appropriation phase, involving deep immersion into the warehouse environment to understand existing processes. This is achieved through a mix of field studies (including visits and interviews) and quantitative methods (like data and cost analysis, benchmarks, and best practices). Analysts are taking ownership of the project, gathering diverse information sources to apprehend warehouse processes comprehensively. Performance is evaluated using key indicators derived from warehouse data, analyzing aspects such as flows, space usage, and staffing. Field surveys and discussions with operational teams are crucial for getting insights unattainable through mere analysis, such as out-of-process activities, misplaced parcels, conveyor blockages, aisle congestion, etc. They contribute to draw the detailed picture of the actual situation. Cost analysis and benchmarking, both internally against past performance and targets, and externally against market best practices, are then used to identify or confirm sources of operational inefficiencies.

Phase 2 is the effective diagnosis phase and lasts typically from one to two months, depending on the complexity of the initial situation. Nurtured by data and analysis gathered during the appropriation phase, the assessment is delivered articulated around 4 key areas:

1. Logistics & Transport Costs: This includes evaluating productivity, fill rates, fixed costs, and interim rates.
2. Flexibility & Risk Management: Here, the focus is on how dependent performance is on transport organization and the mix of B2B/B2C operations.
3. Quality: This encompasses measuring error rates, rates of breakage or missing items, and overall breakage rates.
4. Service: This involves assessing preparation or delivery times, delivery support, and the sorting level in the warehouse.

For each issue or inefficiency pointed in these areas, operational strategies are identified. The impacts of these strategies are then evaluated both quantitatively, in terms of time savings and financial benefits, and qualitatively, considering improvements in visibility and working conditions. Additionally, the level of investment required for each strategy and the estimated return on investment (ROI) are also calculated.

The third and final diagnosis phase consists in converting the operational strategies into an actionable list of detailed actions encompassing all the project’s challenges identified. To rationalize decision making, actions are rated according to their potential impact (in terms of efficiency, quality, service…) and the time frame expected for results. They are also mapped in a diagram measuring the complexity faced in implementation process and the requested implementation time. Quick-wins actionable (high impact/low complexity) changes are easy to single out and the actions are prioritized, selected, and scheduled according to an implementation roadmap. The action plan is designed to optimize the entire warehouse supply chain. Actions can therefore cover all kind of activities, from product reception to dispatch, as well as team management.

3.OPERATIONAL STRATEGIES IN AUTOMATION FOR QUICK WINS

A quick win in our context refers to actions which can be implemented with limited resources, but which have concrete, rapid outcome for the company. In the warehouse, this translates into measures which cost less than € 1 million and take less than one year to implement.

Quick wins in automation can be secured both for warehouse without automated systems and already automated warehouses. In non-automated warehouses, it is possible to introduce automation solutions that require little initial investment and can be implemented quickly. Some low-capex systems offer gains in several areas. Typical direct earnings are: £

• Productivity/Speed: Automation reduces order processing times, streamlines operations, and lowers piecework costs. Additionally, it simplifies monitoring for further efficiency enhancements.
• Service Quality: Mechanization reduces human errors, improve service quality and operational efficiency, and decreasing the need for rework.
• Working Conditions: Automated systems handle heavy lifting, reduce the need for non-ergonomic positions and extensive walking, and operate in challenging environments (extreme cold, noise, etc.). This improves worker conditions, reduces absenteeism, and eases staff recruitment by minimizing physical constraints.
• Capacity: Using automated system can expand storage capacity by utilizing vertical space for high-bay or deep-bay storage. This enables smoother handling of peak activity periods and optimizes operation capacity within the existing building.

In automated warehouses, quick gains come from enhancements which do not involve a complete redesign of the existing system. Acknowledging the root causes of a downturn in performances enables to pick up the adequate solution to make “quick wins”. Most frequent problems faced are:

• Equipment/system performance not achieved, which can originate in non-flowing parcel traffic, bottlenecks, shortage of work on certain sub-systems, lack of buffers at strategic points, but also come from operator performance, or equipment failure.
• Product mapping/slotting is sometimes inadequate, as to make the most of the added value offered by automation, it should be used first to handle low-volume references that require more energy for preparation, rather than products which have the largest flows.
• Deterioration in system use or monitoring: launch and order mix management is crucial when managing automated systems. Typical issues met are: size of waves launched not compatible with buffers used, coverage rate too high or too low, unreliable forecasts / pre packing calculations, WCS/WMS rules, or team organization problems
• Aging installations: time can take its toll on automated systems. Maintenance and upgrades are key to keep pace with changing flows. Problem can occur due to inadequate maintenance or complexity of absorbing growing volumes.

The current trend indicates a shift towards automation with minimal upfront investment. This approach involves installing, leasing, or financing equipment on a pay-as-you-go basis, with the flexibility to relocate it as needed. This model, already familiar in the forklift and logistics IT sectors, is attractive in markets where long-term economic forecasts are uncertain. Technology use comes at lower costs with limited risk, focusing on immediate gains. More comprehensive solutions like automated storage or sorting. remain vital for maximizing storage or activity in limited spaces and are often justified by their construction savings. This evolution allows businesses to start small and scale up or down, rent, or move equipment as needed.