Quantifying Logistics to Drive Operations
—Practical Methods for Standardization and Decision-Making That Do Not Rely on Experience and Intuition—
■ What You Will Learn in This Document
・The root causes of why logistics improvements and large-scale investments stall
・Concepts for managing operations using data instead of relying on experience and intuition
・The three elements of standardization to reduce reliance on specific individuals and align quality and man-hours
・Methods to improve the accuracy of decisions regarding staffing, WMS modifications, material handling investments, and warehouse relocations ・How to create a common language for collaboration between shippers and contractors, and between sales and logistics departments
■ Recommended for
・Managers who feel challenged by logistics center productivity and staffing
・Those considering WMS modifications/replacements or automation investments such as AMR
・Project managers preparing for warehouse relocation or the launch of a new center
・Those who want to shift outsourcing fee negotiations with 3PL companies or logistics subsidiaries to discussions based on numerical evidence
Introduction: Why Doesn't the Workplace Change Even After Improvements?
The environment surrounding logistics is changing significantly. Labor shortages, rising labor costs, compliance with legal regulations, fluctuations in volume due to the expansion of e-commerce, and even WMS modifications and the introduction of material handling equipment are requiring difficult decisions from both the workplace and management.
On the other hand, there are many companies where improvement activities and system investments do not lead to the expected results. Shipments stall after a warehouse relocation. Input work increases even after modifying the WMS. AMR is introduced, but the preceding and subsequent processes become congested, failing to lead to overall optimization. Behind these failures lies a common issue: the actual situation on the ground is not sufficiently visible.
In a workplace without numerical data to serve as a basis for judgment, staffing and investment decisions rely on the experience of veterans or the intuition of site managers. While this may support the workplace in the short term, it does not create a reproducible operating model. This document explains the concepts for visualizing workplace tasks, standardizing them, and transforming them into a state where decisions can be made based on data.
Chapter 1: Three Dysfunctions Caused by "Invisible Logistics"
1. Staffing Plans Cannot Escape from Experience-Based Values
In many logistics centers, site managers create shifts based on experience while looking at the next day's volume. Decisions are made such as, "There are many shipments tomorrow, so let's add two people to picking," or "Inspection seems to be delayed, so let's send support." While this seems rational as a workplace response, because there is no standard for calculating the required number of people, both increased labor costs due to overstaffing and overtime/shipment delays due to understaffing can occur. Furthermore, it is impossible to verify after the fact how many people were actually needed.
2. WMS Modifications and Automation Investments Fall into Partial Optimization
A common failure in WMS renewal is to incorporate current complex operations into the system as they are without organizing how the work should be. It is not rare for exception handling and double entry to remain, requirements to bloat, and only modification costs to increase.
The same applies to automation investment. Even if only the picking process is accelerated, if the processing capacity for receiving inspection, shelf stocking, and packing cannot keep up, the bottleneck will simply shift. Unless you grasp the process balance of the entire center rather than the performance of individual equipment, it will not lead to the expected logistics improvement.
3. Shippers and Contractors, Sales and Logistics Clash
Discussions about logistics costs tend to become emotional because there is no common yardstick. Shippers demand cost reductions, and contractors defend themselves citing rising labor costs and workplace burden. The sales department requests extensions to order deadlines, and the logistics department pushes back, saying the workplace cannot handle it. If both parties are not looking at the same data, the discussion will be swayed by the strength of their respective positions.
Chapter 2: Three Standardizations to Create an Operational "Form"
1. Standard Operating Procedures (SOP) — Structuring Work Patterns
A standard operating procedure is not just a system operation manual. It defines the correct procedures, including the flow of work, workplace layout, equipment, and even the movements of the workers.
For example, even in sorting operations, multiple work patterns exist depending on the packaging, inspection method, and sorting method by store. It is necessary to pre-determine not only normal operations but also judgments for exceptions, such as when a barcode cannot be read, a label is missing, or a product is damaged. The goal is to reduce the time spent hesitating in the workplace and to create a state where anyone can process the work using the same procedure.
2. Standard Work Takt — Converting Busyness into Man-Hours
The next requirement is the standard work takt, which involves breaking down tasks into operational units and defining the time required for each. For picking, this means dividing the process into actions such as checking the slip, moving, retrieving the item, scanning, and confirming the quantity.
By multiplying the standard time for each action by the frequency of occurrence, you can calculate the required man-hours for each process. What is important here is to use as a benchmark not the fastest time achieved by an expert, but a value that a worker who has received a certain level of training can maintain without strain. The standard takt is not a figure used to push the site, but a benchmark for creating a feasible staffing plan.
3. Basic Actions and Basic Rules: Suppressing Variation
Even if procedures and standard times are established, if the method differs from worker to worker, the actual results will not be stable. Therefore, it is necessary to standardize posture, movements, storage locations, equipment usage, and safety rules.
In the case of forklift operations, clarify the insertion position of the forks, the temporary storage location for pallets, and the orientation of display labels. By aligning basic actions, variation in work time is suppressed, and actual results will approach the standard takt.
Chapter 3: How Numbers Change Staffing and Investment Decisions
Once standard work instructions, standard work takt, and basic actions/rules are in place, the logistics center transforms from a site that relies solely on experience and intuition into an operation that can grasp its status and make decisions based on numbers. Once required man-hours can be calculated from volume, you can provide objective grounds for important decision-making, such as WMS upgrades, automation investments, and warehouse relocations, in addition to daily staffing.
1. Calculating Required Personnel Backwards from Volume
Once the standard work takt is in place, you can calculate the required man-hours from volume data such as the next day's shipment quantity, number of lines, and number of locations. Because the required time for each process is known, it becomes easier to adjust the number of personnel assigned to picking, inspection, and packing. As a result, you can reduce both overstaffing and overtime, and refine daily shift design.
2. Demonstrating ROI for WMS Upgrades in Advance
At one site, workers were manually attaching kanban cards with order numbers to outer boxes after picking. Since verification, label peeling, and attachment took a total of 12 seconds, they partially upgraded the WMS to change the operation to printing the order number directly onto the shipping slip.
By estimating the effect based on daily processing volume and the reduced takt, it was confirmed in advance that the 150,000 yen upgrade cost could be recovered in about 10 months. If you can demonstrate not just that it will be 'more convenient,' but exactly 'how many seconds will be reduced, how many hours per year, and how much cost will be saved,' the quality and speed of investment decisions will change significantly.
3. Predicting Startup During Warehouse Relocation
When relocating a warehouse or launching a new center, man-hour estimation that considers the ratio of new employees, changes in flow lines, and training periods is essential. In one project, the site manager expected to be able to operate with 160 hours per day. However, when calculated reflecting the post-relocation layout and proficiency levels, it was found that 206.5 hours per day were required at the beginning of operations.
The difference is 46.5 hours. By grasping this difference in advance, they were able to temporarily assign skilled workers from other bases to prevent shipping delays. Rather than denying experience, supplementing it with numbers leads to a reduction in startup risk.
Chapter 4: Making Numbers a Common Language and Turning Conflict into Collaboration
The effects brought about by visualization and standardization are not limited to productivity improvements within the logistics center. By having the same numbers as a common language, stakeholders with different positions, such as shippers and 3PLs, or sales departments and logistics departments, can discuss based on facts rather than emotions or experience. This chapter considers mechanisms by which numbers turn inter-organizational conflict into collaboration.
1. Shippers and 3PLs Sharing Improvement Effects
If there is a standard takt, the contractor can demonstrate improvement proposals with concrete effects. For example, suppose that by reviewing location placement, walking time per picking can be reduced by 8 seconds. By multiplying this by the monthly number of items, you can calculate the reduction in man-hours and the impact on logistics costs.
If both parties can confirm the improvement effect, a gain-share type contract that returns a portion of it to the contractor can also be considered. The contractor's profits increase as they improve, and the shipper can reduce logistics costs. Numbers become the foundation for turning unit price negotiations into joint improvement.
2. Sales and Logistics Deciding Based on Company-Wide Optimization
The sales department's request to extend the order deadline by one hour can also be examined based on man-hours and costs, rather than emotion. If it is known that the overtime pay and additional transport costs required by the extension are 1.2 million yen per month, it can be judged based on whether the marginal profit obtained from that measure exceeds 1.2 million yen.
Instead of looking only at sales increases or only at site burden, creating a state where decisions can be made as company-wide profit. This is the perspective necessary to treat logistics as a management issue.
In Place of a Conclusion
What Should Be Prepared First Is Not the System, But the Criteria for Judgment
In order to succeed in logistics DX, WMS renewal, automation investment, and base reorganization, what is needed first is not expensive systems or equipment. It is to visualize on-site operations and prepare a common yardstick consisting of standard work instructions, standard work takt, and basic actions/basic rules.
With this foundation, you can discuss staffing, improvement measures, investments, and outsourcing fee negotiations using the same metrics. Conversely, if you implement a system without these standards, you risk merely digitizing existing personalized operations.
Based on the expertise cultivated through the launch, operation, and improvement of 3PL sites, Seeos provides end-to-end support, from the visualization and standardization of logistics operations to system construction, including WMS, and the introduction of automated equipment. If you have questions about where to start visualizing your own site, or what needs to be organized before WMS modifications or warehouse relocation, please consult with us from the initial stage of organizing your current situation.
[Author of this article]
Seeos Inc.
General Manager, Operation Management Division
Eishu Onishi
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About Seeos Inc.
Seeos is a solution company that has specialized in the logistics field for over 25 years.
We have developed our business by viewing "logistics" not merely as the movement of goods, but as a critical area directly linked to corporate value. Since our founding, we have maintained a specialized team dedicated to the logistics sector. As a partner with strengths in both on-site understanding and strategic planning, we work alongside numerous companies in manufacturing, retail, and e-commerce to solve their challenges.
We provide a full lineup of services, ranging from strategic consulting and system development to WMS (Warehouse Management Systems), TMS (Transportation Management Systems), cutting-edge AMR (Autonomous Mobile Robot) solutions, and even the outsourcing of on-site operations.