3-7. Data Analysis Methods and Their Utilization in Logistics Facility Planning
To secure a competitive advantage over competitors and build a lean supply chain, an objective, data-driven logistics facility planning that does not rely on intuition or experience is indispensable.
When constructing a new center or reorganizing existing hubs, simply "building a large warehouse" will not lead to success. It is necessary to analyze and consider from multiple perspectives: "delivery convenience" regarding how much the lead time to deliver packages to customers can be shortened, "traffic location conditions" such as access for large trucks and proximity to expressway ICs, and securing an "employment location" to maintain stable in-warehouse operations over the long term.
This article provides a detailed explanation of logistics data analysis methods that enable the minimization of delivery lead times and optimal location selection, along with specific utilization procedures.
1. Background and Role of DATA Analysis
In designing logistics centers and reorganizing hubs, quantitative data analysis serves as the starting point for all logistics facility planning. Determining the location and scale without conducting data analysis can cause unexpected cost inflation and operational delays.
1-1. Why is DATA Analysis Necessary?
The primary purpose of analyzing logistics data goes beyond merely streamlining operations inside the warehouse; it lies in identifying the most advantageous location conditions for the company and making lean capital investments.
For example, by analyzing shipping data, regional biases in customers and the frequency of orders become visible. Consequently, the optimal location area that can achieve both a "reduction in average lead time" to major delivery destinations and a "reduction in transportation and delivery costs" is naturally narrowed down. Furthermore, by grasping work fluctuations per time zone, the required number of part-time and temporary workers can be accurately estimated, and it is also utilized as an evaluation index for employment locations such as the surrounding labor population.
1-2. Who Conducts the DATA Analysis?
Ideally, analysis should be conducted by a "project team" that integrates not only on-site operations managers but also corporate planning, sales, IT departments, and external 3PL providers and consultants. This is to formulate a logistics facility plan that satisfies both the "ease of operation" from an on-site perspective and the "location return on investment (ROI)" from a management perspective.
1-3. When is DATA Analysis Conducted?
It is conducted continuously not only during the "initial conceptual phase" when launching new hubs and selecting locations, but also during periodic reviews (business improvement phase). Flexibly reviewing lead times and operations in response to changes in customer demand leads to maintaining a sustainable logistics structure.
1-4. Information Required for DATA Analysis
1-5. Knowledge and Tools Required for DATA Analysis
2. DATA Analysis Methods and Specific Analysis Procedures
The core of logistics facility planning consists of "ABC analysis" and "EIQ analysis." Through these, everything from the layout inside the warehouse to the required hub scale and the optimal location environment is logically derived.
1) ABC Analysis
ABC analysis involves arranging items in descending order of inventory volume or shipping volume and dividing them into three groups: A (high liquidity), B (medium liquidity), and C (low liquidity). (It is primarily used for sales analysis by item and evaluation of storage efficiency).
■ Utilization in Logistics Facility Planning: By placing Rank A products with extremely high shipping frequencies near the shipping port (shortest traffic line), picking time in the warehouse can be reduced, dramatically shortening the internal lead time from order receipt to shipping.
Analysis Procedure
- Sort products in descending order by sales amount or shipping volume.
- Calculate the overall total of shipping volume.
- Calculate the composition ratio for each product (what percentage of the total it accounts for).
- Calculate the cumulative value of that composition ratio.
- Create a graph placing the cumulative composition ratio (%) on the vertical axis and the product names (SKUs) on the horizontal axis.
- Draw the trajectory of the cumulative composition ratio as a line graph (Pareto chart).
- Divide into groups at the boundaries where the cumulative composition ratio reaches 70% (Rank A), 90% (Rank B), and 100% (Rank C).
- Allocate storage equipment (automated warehouses, flow racks, etc.) suited to the product characteristics of each rank.
2) EIQ Analysis
EIQ Analysis (Entry Order, Item, Quantity) is a method for multi-dimensionally analyzing the characteristics of a logistics center from the interrelationship among the number of orders (E), items (I), and shipping quantities (Q).
It is used as a criterion for deciding whether the picking method should be "Single Order Picking (by individual order)" or "Consolidated Picking & Assorting Method."
By arranging items in descending order of shipping frequency on the vertical axis and shipping destinations in descending order of order lines on the horizontal axis, the order quantities are written into the matrix, and the optimal working system is selected based on its distribution density.
Analysis aggregation results are output in an EIQ Matrix table (Tera Calculation 1)
2-2. Relationship Between Grasping Shipping Characteristics and Delivery Efficiency
The extent to which customers and the on-site team grasp their own "shipping characteristics" determines the margin by which lead times can realistically be shortened. By quantifying shipping concentrations (peak fluctuations) by time zone, it becomes possible to eliminate truck docking waits and enable smooth shipping.
2-3. The 3 Elements of EIQ Analysis and Their Application
1) Components of EIQ Analysis
The EIQ method was developed by logistics consultant Mr. Shin Suzuki, and uses the following 3 elements (key factors), which are the fundamentals of logistics, as the basis for analysis:
- E (Entry / Order): Number of orders (number of purchase orders/slips). Indicates the number of delivery destinations and the granularity of orders.
- I (Item): Number of types (number of items/handled SKUs). Directly links to required storage space and number of locations.
- Q (Quantity): Volume (number of shipped items/total volume). Serves as a standard for the processing capacity of transport equipment and the number of trucks to arrange.
* Furthermore, by conducting an "SEIQ analysis" that adds S (Size / Shape) representing the shape, dimensions, and weight of products, a more precise selection of storage and material handling equipment becomes possible.
2) Visualization via EIQ Graphs and Scatter Plots
By using scatter plots, numerical data can be visually grasped as a "distribution." Understanding where large-lot orders are concentrated or in which time zones small-lot piece shipments spike allows for optimal personnel allocation.
2-4. Utilization of EIQ Scatter Plots
2-5. Current Status Survey Form for Logistics Planning
To succeed in logistics facility planning, it is essential to comprehensively investigate not only data analysis but also qualitative and quantitative information related to location conditions and employment locations, as shown below.
📦 Inventory and Storage Characteristics
- Number of registered items (Master registration count)
- Number of actual inventory items (Constantly active count)
- Average / Maximum inventory volume (Cases/Pieces)
- Storage format (Pallets/Cases/Pieces)
- Range of seasonal inventory fluctuation (Space required at peak)
🚚 Shipping and Location Conditions (Delivery Access)
- Shipping unit (Pallet/Case/Piece)
- Number of delivery destinations per day and regional distribution
- Arrival lead time to major customers (Same-day/next-day delivery, etc.)
- Truck types (Large/Medium) and number of vehicles
- "Traffic location conditions" from expressway ICs and arterial roads
👥 Work Structure and Employment Location
- Working time zones (Presence of early morning/night shifts)
- Required number of personnel (Total working hours per day)
- Surrounding population and public transport (Ease of securing employment locations)
- Hiring unit price for part-time/temporary workers (Regional wage level)
💻 Information Systems & Operational Integration
- Order cutoff times and timing of shipping instructions
- Presence of a WMS (Warehouse Management System) and location management
- Inspection methods (Handy terminals, image inspection, etc.)
- Real-time capability of delivery tracking (Traceability)