Every product a customer buys has to be manufactured, packed, shipped to a warehouse or distribution center, stored, and then packed and shipped again before it finally lands on their doorstep or a retail store’s shelves. Within this complicated supply chain process, intralogistics focuses on the portion that involves the warehouse or distribution center.
Each company has a unique intralogistics process, tied to its product (and whether it can spoil), order volume, geographic locations of production and sales, and whether manufacturing is conducted in-house or by a third party, among other factors.
What is intralogistics?
Traditionally, intralogistics focuses on improving product movement inside warehouses—processes like storage and order picking and packing through innovations like robotics, automation, and software. For small businesses that typically contract out their warehousing, intralogistics has a broader application to all processes post-manufacturing, including shipment to warehouses and delivery to customers. The concept is relevant to both big corporations and small businesses with various warehouse setups. Intralogistics helps improve efficiency to ultimately reduce costs, boost productivity, and provide a superior customer experience.
Intralogistics systems and inputs differ wildly from company to company. A bakery, an apparel company, and a furniture retailer will each have an entirely different set of intralogistics inputs. Take Rocco’s Super Smart Fridge, a sleek smart fridge designed to stand in living rooms, offices, workshops, or studios. Rocco is based in New York City, but the refrigerators are manufactured in China, shipped to the US, and stored in one of two US warehouses, potentially moved to one of the 25 last-mile hubs, and then delivered to customers. All of these steps are part of Rocco’s intralogistics.
Intralogistics categories
Intralogistics varies from business to business, contingent on size, scale, and whether a business manufactures, warehouses, and transports in-house or contracts third parties. In general, the overall process falls into three main categories:
Internal flow of materials and goods
Manufactured goods flow through multiple buildings—factories, warehouses, delivery hubs—by freight, air, or truck. Intralogistics focuses on optimizing those processes, improving inefficiencies like delays in warehouse shipments or damaged deliveries to customers.
Information flow and inventory levels
Intralogistics includes the accessibility to pertinent information by employees along the supply chain to run an efficient, profitable operation. Large established businesses might use a supply chain management system like SAP or Blue Yonder to assess their internal processes, like material flows, inventory levels, or real-time monitoring of products in transit. However, smaller companies might use simpler tools like Google Sheets or custom Excel spreadsheets to track key elements of their intralogistics processes.
Warehouse management
Traceability within warehouses is critical to a business’s internal transportation precision and speed, whether it’s incoming deliveries, distribution, or simply moving products from one area to another. Most large warehouse operations have digitized warehouse management systems. Shelf sensors, automated storage and retrieval systems, and robotics are used to manage and track materials and goods.
Best practices for effective intralogistics
- Be choosy about tools
- Map intralogistics practices to customer needs
- Choose dedicated partners
- Pay for quality
- Consider the customer experience
Optimizing intralogistics operations differs from business to business, but these best practices apply to most ecommerce businesses, regardless of product, size, or scale.
Be choosy about tools
Businesses with complex supply chains and warehouse networks might opt for comprehensive warehouse management software or software-as-a-service (SaaS) platforms like SAP, Oracle, or Microsoft for their storage systems. Smaller operations might opt for a more human, low-tech approach.
Rocco’s intralogistics tech stack is simple. “Shopify speaks to an order allocation system called Nomad, which then gets it into the warehouses,” Rocco cofounder Sam Naparstek explains. “If there’s any issue from the warehouse, that’s actually just an email or a Slack correspondence on the individual order.”
Sam only considers deploying new tools when the team knows what they want. “Oftentimes, people plug a tool in, but it does things that they didn’t want, or they didn’t know what they needed,” he says. To avoid this pitfall, he builds a model in Google Sheets first to figure out the inputs and refine the functionality.
“By creating an MVP [minimum viable product] tool in Google Sheets and running a pilot in the field, you learn a lot more about what you, in fact, need that you couldn’t have known before,” Sam says. “Once you’ve done that, then you can better seek a tool.”
For example, when Rocco was cycling through freight carriers, the team opted to build their own model for allocating between carriers and warehouses. “We actually didn’t know how we wanted the load balancing to work,” Sam recounts. So his team built a model in Google Sheets, including inputs like transit times, inventory levels, cost of delivery, time of delivery, and more. Once they knew what functionality they needed, they started shopping for a tool that could meet those needs.
“I guess it’s the management consultant in me,” Sam says, citing his experience at BCG and McKinsey. “I think you want to build the model the way you want it first and then you layer on the tools.”
Map intralogistics practices to customer needs
Sam believes that a company’s intralogistics should map to the customer’s needs. For Rocco’s customers, peace of mind is paramount, since it’s a costlier product.
“For us, people are buying an expensive product. It’s a considered purchase; it’s a precious item,” Sam says. “Being able to communicate clearly and honestly about when and how the product is going to arrive is all about creating that peace of mind.” Sam has observed that customers don’t mind if the delivery timeline for a big-ticket item is longer than that of an Amazon purchase, as long as they have clarity about when and how the product will arrive.
Sam contrasts this with customer expectations of a suitcase brand, which is all about speed of order fulfillment. Since customers might buy their new suitcase only a few days before a trip, if delivery doesn’t happen fast enough, they’ll likely return the product.
But Rocco’s customers usually don’t have a time-sensitive need for the product. “It’s very rare that on a Wednesday someone goes, ‘I have an event Saturday; I need a fridge,’” Sam says. “When you’re at the last stage of planning an event, you’re not really thinking, ‘Oh, let’s change the furniture.’”
With Rocco’s customers’ needs in mind, Sam focuses the team’s intralogistics on clear, timely communications and maintaining a very low defect on arrival rate.
Choose dedicated partners
Reliable, trustworthy, and communicative partners will optimize intralogistics processes, improve cost efficiency, and give companies a competitive advantage, even when those contracts are more expensive. “You need an individual on that side who gets it in the same way that you do,” says Sam. Rocco’s current manufacturer in China is “obsessive about quality,” according to Sam, with “a trained eye that has looked at thousands and thousands of fridges.”
For Rocco, intralogistics also extends to home delivery to the customer, which is the brand’s only human touchpoint with its customers. “The only time that a Rocco representative is physically in your home, are our delivery drivers,” Sam says. “And so our intralogistics are actually really built around that moment.”
This is an experience Sam firmly believes in paying a premium for. Their current delivery company employs an owned-asset model, meaning the drivers are employees of the company, not subcontractors. The customer experience and operational efficiency, e.g., not breaking fridges or damaging customer property, lowers operational costs overall, according to Sam. Rocco fridges are not only delivered intact, but customers also have positive interactions.
Pay for quality
Paying partners and suppliers well typically results in a workforce that will support you back. “Many people just try to slash every cost immediately, and it just doesn’t work. It needs to be a relationship,” Sam says of partners.
His philosophy is to optimize for a small team with high accountability, even if that costs more per employee. “We can keep a tight team because we pay a little more for the right partner,” he says.
Regarding manufacturing partners, he adds, “You want factories to have a strong balance sheet. You want your employees to be that little bit happier when times get tough.” Even the janitorial staff in the factory in China gets a gift from Sam when he visits.
While Rocco might have higher labor costs than similar companies, all intralogistics tasks are completed with expertise, which helps Rocco maintain a defect-on-arrival rate that’s less than 1%.
Consider the customer experience
Listening to feedback from intralogistics partners and customers helps Rocco optimize its intralogistics processes. “We use every single touch point with the customer as a potential feedback loop,” says Sam, adding that the delivery company sends photos of every delivery. “We’re a young company, and so a big part of that is creating trust.”
Rocco, like other businesses that use third-party partners for manufacturing, warehousing, and shipping, has varying levels of access to warehouse management systems, but can ask partners for specifics by email, text, or Slack, so any customer questions are addressed.
Intralogistics FAQ
What is the meaning of intralogistics?
Intragolistics are a company’s internal logistics processes. They’re an essential part of the supply chain cycle, from the point when raw materials or manufactured goods enter a facility to managing internal movement within warehouses to final delivery to customers. There is often a focus on warehouse efficiency and mitigating inefficient processes, resulting in better customer satisfaction and reduced operational costs.
Why is intralogistics important?
Smooth and efficient intralogistics are vital for businesses that produce or assemble goods for sale. Intralogistics emphasises improving warehousing, shipping, and delivery operations through software, robotics, or data analytics, as well as information flows within companies and between partners. Intralogistics solutions help companies to eliminate redundant or outdated machinery, from material handling equipment to storage and retrieval systems that cause delays and are costly.
What systems are used for intralogistics?
Supply chain management systems like SAP and Blue Yonder are used for the intralogistics portion of supply chain management, along with more specialized warehouse and storage software or SaaS platforms like VersaBox or ShipBob. Companies also invest in automation and robotics systems for their warehouses, along with data management. Many emerging young companies build their own models with Google Sheets or Microsoft Excel to manage and track the flow of goods from a manufacturing facility, through warehouses, to the customer.
