Flow of Goods Analysis

What Does a Flow of Goods Analysis Include?

A thorough flow of goods analysis encompasses both the physical movements within the warehouse and the digital workflows that support them. Here are the key elements the analysis should cover:

1. Mapping the physical movement of goods

The first step is to analyze the physical journey products take through the warehouse – from receiving, to temporary storage, picking, packing, and finally shipping. This is where unnecessary movements, inefficient routing, and wasted handling time can be identified. The goal is to ensure the flow is as direct and efficient as possible.

2. Warehouse layout analysis

The physical setup and structure of the warehouse are critical to how quickly and easily staff can locate and pick items. This step assesses whether fast-moving items are positioned near the picking zone, whether heavy items are placed ergonomically, and whether the warehouse is logically segmented (e.g., by product groups, order types, or seasons). Optimal warehouse layout is closely tied to effective inventory management.

3. Throughput time

Throughput time measures how long it takes from when an item arrives at the warehouse to when it’s ready to be shipped – either as part of a customer order or for further distribution. A short throughput time typically signals a healthy flow of goods, while delays may point to inefficient order management or problematic warehouse procedures.

4. Bottleneck identification

A central part of the analysis is identifying where the flow slows down. Bottlenecks may occur at receiving, due to insufficient staffing during picking, issues with printing packing slips, or limited access to goods. Addressing these bottlenecks enables companies to make better use of their WMS (Warehouse Management System) and free up capacity.

5. Data analysis

A modern flow of goods analysis should be data-driven. Key performance indicators are collected from the company’s inventory management system – such as inventory movements, picking errors, return rates, and delivery times. With this data in hand, businesses gain a stronger foundation for daily operations and long-term planning – including purchasing management and resource planning throughout the entire supply chain.

Why Is Flow of Goods Analysis Important?

Efficient inventory management is not just about tracking stock – it’s about ensuring that goods are moved quickly, accurately, and with minimal handling. A flow of goods analysis allows for full process optimization and provides several concrete benefits:

Reduce inventory costs: By eliminating wasted time and unnecessary steps, warehouse operations become more streamlined, freeing up both space and workforce.

Improve delivery times: With an optimized flow through the warehouse, order-to-delivery time is reduced, improving customer satisfaction.

Minimize errors and returns: Standardized and transparent processes lead to fewer picking and packing mistakes, which in turn reduces returns.

Increase employee productivity: Structured and intuitive workflows free up time for value-adding tasks and contribute to a better working environment.

Lay the foundation for automation: Before investing in warehouse automation, it’s necessary to understand and streamline the current flow. A flow of goods analysis is a critical step toward digitalization and automation in both warehouse and order management.

Who Uses Flow of Goods Analyses?

Flow of goods analyses are especially relevant for companies where warehouse operations play a central role in daily business. This includes:

Wholesale and distribution companies: With continuous goods movement and a need for high accuracy and fast dispatch.

Manufacturing: Where effective purchasing management, material flow, and inventory control are essential for production capacity and delivery capability.

E-commerce and retail: With high order volumes and fast delivery expectations, optimized order management and product flow are key competitive factors.

Food and pharmaceutical industries: Where traceability, temperature control, and precise handling throughout the supply chain are critical.

Logistics and 3PL providers: Managing large volumes for multiple clients requires a highly efficient WMS and full visibility of warehouse processes.

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