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Industrial logistics

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What is industrial logistics?

Also known as production logistics, industrial logistics refers to the application of traditional logistic methods with a view to optimizing production flows. From the company’s point of view, industrial logistics consists in outsourcing their logistic activities to ensure better organization within its supply chain.

The main purpose of industrial logistics is to manage material and resource flows pertaining to a company’s production. It can be broken down into several activities, such as:

  • Demand management;

  • Quantifying the materials and components required for production;

  • Supplying the goods;

  • Stock management (from raw materials to finished products).

Industrial logistics can take the form of services such as product acceptance, product identification, completion of a physical inventory, etc.

Industrial logistics encompasses all production infrastructures, warehouses for upstream logistics (storage for raw materials and products required for production), intermediary warehouses and warehouses for downstream logistics (storage for finished products prior to customer delivery).

Another facet of industrial logistics consists in optimally managing the use of resources (human and material), both when used and when not used.

Specificities of industrial logistics

Industrial logistics is governed by three main principles:

  • Market constraints (fluctuating demand, return processing, etc.);

  • Technical constraints (size of the storage infrastructures, limited resources, etc.);

  • Regulatory constraints (processing and recycling production-related waste, measures for fighting against air pollution, etc.).

Examples and practical applications

In practice, industrial logistics should take the following into consideration:

  • The randomness of market demand (variations according to criteria such as seasonality);

  • Product complexity (creation of item sheets);

  • Different products requiring common components;

  • The cost of certain infrastructures, that can be reduced by pooling certain resources;

  • The specifications to be complied with (production lead times, quantity to be produced, complying with production costs so profit margins are not affected, etc.);

  • How effective the information system is.

It would be wise for a company wishing to solely focus on its production activity to call upon a provider to outsource its logistics. Indeed, a large number of companies specialized in industrial logistics are available for these tasks. They all offer their expertise in managing a production and distribution chain, and some have substantial assets (storage warehouses). By retaining the services of an expert provider in industrial logistics, the company will boost its productivity and efficiency when it comes to organizing its flows.

In their work, logisticians are required to:

  • Manage production-related data (sheets);

  • Manage product demand (forecasting);

  • Calculate raw material and component needs for manufacturing the products;

  • Following up on the production process;

  • Providing solutions to any malfunctions within the production process;

  • Managing stock levels optimally;

  • Managing the delivery schedule for finished products;

  • Optimizing production costs through the use of optimization algorithms amongst other tools.

Industrial logistics in figures

The field of logistics and transport represents over 2 million jobs.

Logistics is the 5th largest economic activity in France, right behind industrial work, construction work, sales and hotels-catering.

(Source: https://www.regionsjob.com/actualites/logistique-transport-chiffres-cles.html)