Zero Visual Errors and One Less Operator: Improvement Techniques for a Logistics Center in Thailand
Reading this article will provide hints for solutions to challenges such as:
● Facing the limits of diverse labels and visual inspections, and seeking a
digital system that allows anyone to work without errors
● Dealing with chronic overtime due to tight storage space and multiple
check operations, and wanting to improve labor productivity through data management
● Building a robust operational system in overseas bases with different
languages and cultures that does not rely on operator judgment
1. Summary
This article introduces two operational improvement cases at an electronic parts logistics center in Thailand operated by a major electrical manufacturer's logistics company. We achieved improvements through two approaches:
introducing OCR (Optical Character Recognition) and adding free location management and duplicate check functions to address issues such as recurring visual errors in receiving verification, tight storage space due to fixed location management, and overtime caused by inefficient multiple checks during shipping.
2. Background: The Difficulty of Quality Control at Overseas Logistics Bases
As the manufacturing supply chain becomes globalized, improving logistics quality at bases in Southeast Asia, including Thailand, has become an urgent task.
On the other hand, overseas bases have unique difficulties.
･ Suppliers are multinational, and label styles, languages, and formats are
diverse
･ High costs for standardizing operations and training local staff
･ Tendency to maintain personnel-dependent operations that "must rely on visual confirmation"
･ Difficulty in expanding warehouse space, leading to accumulated inefficiencies in inventory management
In this situation, the question is "how to ensure quality through systems and mechanisms without relying on manual labor."
3. Challenges on the Front Lines: Visual Verification Errors and Tight Storage Space
The setting for this case is an electronic parts logistics center located in an industrial park in Thailand. It handles the entire process of receiving, inspecting, sorting, storing, picking, kitting, and shipping electronic parts from domestic and international suppliers.
Challenge (1): Recurring errors due to "visual checks" during receiving verification
Before the improvement, receiving operations were handled by a 3-person team. The labeler would check the Part No. and issue/attach a label, the inspector would visually check the Part No. and quantity, and the receiving scan operator would scan the QR label and sort it. This operation had three structural problems.
Problem 1 Label formats vary widely by supplier, making it difficult to identify where to check
Problem 2 The shipper's Part No. and the supplier's Part No. are mixed, requiring visual interpretation
Problem 3 Since all verification is done visually, it is time-consuming, labor-intensive, and prone to misreading
In fact, in the past, the same visual check error occurred 4 times a year, raising concerns about return costs and the impact on customer satisfaction.
Challenge (2): Space constraints due to fixed location management and inefficient shipping checks
For parts on other lines, two problems were occurring simultaneously.
Problem 4 In fixed location operations where items are "stored in a set shelf/location," when receiving volume increases, overflow items occur, and it was necessary to manually write on paper the four items: Part No., quantity, receiving date, and location. The risk of entry errors was constant, and management man-hours were ballooning.
Problem 5 At the time of shipping, there was no system function to prevent duplicate reading of Lot No., so to prevent over/under shipping, the operation involved three visual checks during picking, kitting, and packing, which was a factor in the increase in overtime hours.
4. Solution: Replacing "Human Judgment" with Systems through Two Approaches
▮ Why couldn't the existing operation solve it?
Regarding receiving verification, the development of a supplier manual to standardize label formats to some extent had already been implemented in 2020. However, that alone was not a fundamental solution, and we concluded that a mechanism to "perform verification itself via the system" was necessary. Regarding shipping checks, as long as we "continue double-checking visually," we cannot eliminate both the risk of errors and costs at the same time. A paradigm shift to replace human checks with systems was required.
Improvement (1): Introduction of OCR (Optical Character Recognition)
To address the "recurring errors due to visual checks during receiving verification" (Challenge 1), we adopted the installation of an OCR function on HHTs (Handy Terminals). OCR is a technology that reads printed text on labels as images and recognizes it as text data. Even for labels without barcodes, the system can now automatically read the supplier's Part No.
Inbound flow after improvement:
a) The operator holds the HHT over the supplier label, automatically reading the Part No. via OCR
b) The system references the product master to
automatically convert and verify against the shipper's Part No. c) If they match, 'OK' is displayed on the HHT screen; if not, 'NG' is displayed. d) Scan the shipper label's QR code to confirm and transfer the inbound data.
With this method, the visual inspection process by the checker itself became unnecessary (ECRS improvement: Eliminate). The team size was reduced from 3 to 2, achieving a reduction of one person. From the start of the study to full-scale implementation, it took about one year, with our logistics technology department, the shipper, and the system company working together to proceed according to schedule. Even after implementation, cases where OCR could not read (handwritten labels, bent labels, special fonts, etc.) occurred, but we requested improvements from suppliers through the shipper,
raising the OCR reading rate from 99.2% (immediately after HHT introduction) to 99.8% (two years after HHT introduction)
.
Improvement (2): Free location management + addition of duplicate check function
We implemented two measures to address 'space constraints and inefficient shipping checks due to fixed location management' (Issue 2).
Measure A: Transition to free location management
We abolished fixed location operations and introduced free location management, which allows for flexible storage on any shelf. At the time of arrival, storage registration is completed simply by scanning the location code and then the product barcode, and when moving, the system automatically updates just by scanning both locations and entering the quantity on the HHT. Manual overflow management by writing is now completely unnecessary.
Measure B: Addition of Lot No. duplicate check function
We added an alert function to our system to detect duplicate readings of the same Lot No. If the same reel is accidentally scanned twice, an error is immediately displayed on the HHT screen. As a result,
two out of the three visual checks that were being performed became unnecessary.
Our logistics technology department, information systems department, and the shipper collaborated, and full-scale operation began a year and a half after the study started.
5. Concrete effects: A win-win-win for cost, quality, and operational efficiency
Effects of Improvement (1): 'OCR Introduction'
The verification time per box was also reduced by an average of 4.6 to 4.7 seconds (inner box unit: 11.5 seconds → 6.8 seconds), and the burden of daily operations was significantly improved.
Effects of Improvement (2): 'Free location management + duplicate check function'
Overflow items have remained at zero since the start of operations. Space utilization efficiency has improved dramatically.
6. Horizontal deployment and application possibilities: Effective for these companies and issues
The two improvement approaches this time are particularly effective for companies and logistics managers in the following situations.
Situations where OCR introduction is effective:
- There are purchases from multiple suppliers, and label formats are not unified - Conventional labels without barcodes are mixed in - Inbound verification is done visually, and you are considering reducing errors and man-hours
Situations where free location management is effective:
- Fluctuations in the number of inventory items and arrival volume are large, and fixed shelves cannot handle them - Managing overflow items is time-consuming - Losses occur due to location confirmation every time items are received or shipped
This is a method suitable not only for electronic parts but for all warehouses that require high-mix low-volume management, such as food, daily necessities, and industrial parts. Also, although this is a case study at an overseas base (Thailand), it can be applied regardless of the industry as long as it is a base with similar label diversity and space issues, not to mention domestic warehouses.
7. Summary: On-site improvement consists of 'mechanisms' and 'cooperation with stakeholders'
The following three points are common to the two improvement cases this time.
• Understand issues with numerical data and analyze root causes
(4 errors → 'Why rely on visual checks?')
• Replace human judgment with systems (Verification by OCR, duplicate check function)
•
Realize by collaborating with diverse stakeholders such as shippers, suppliers, and IT departments
In particular, improvements at overseas bases can achieve greater effects by combining local staff expertise with head office know-how. We hope you will use this as a case study that overturns the idea that 'you have to compromise on quality because it is overseas.' At our company, we have accumulated know-how in 'organizing logistics issues from multiple perspectives and involving all stakeholders to solve them.' Why not consider logistics improvements that achieve a win-win-win for cost, quality, and operational efficiency together with us?
8. Inquiries
If you are facing similar challenges and are unsure where to start, want to improve logistics quality at overseas bases or domestic warehouses, or wish to optimize your logistics, please feel free to contact us.
We are happy to accept consultations via our inquiry form.
📩 Inquiry Form: [
https://forms.cloud.microsoft/r/AhaEAjizXW] Questions in the comments section are also welcome. We would be happy to exchange information with others in the logistics, manufacturing, or wholesale industries who have similar concerns.
Furthermore, for details on the logistics solutions, services, network, and technology provided by MD Logis, please visit our official website.
🏢 Website:[https://www.mdlogis.co.jp/]
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