| Written by Mark Buzinkay
Table of contents:
- What is the scope of internal logistics?
- What are the core processes of internal logistics?
- How to optimise internal logistics?
- Milk runs and internal logistics
- FAQs
- Takeaway
- Glossary
What is the scope of internal logistics?
Internal logistics in manufacturing refers to the set of processes and systems that ensure the timely and efficient movement of materials, components, and semi-finished goods within a production facility. While production is concerned with the physical transformation of raw materials into finished products, internal logistics guarantees that the right materials are delivered to the right place, at the right moment, and in the right condition. Baudin and Netland, in their book Introduction to Manufacturing: An Industrial Engineering and Management Perspective, stress that logistics should not be seen as secondary to production but as an integral enabler of efficient manufacturing operations.
The scope of internal logistics can be best understood through the three types of value it adds: time, place, and presentation. Time value arises from the ability of logistics to synchronise material flows with the production schedule. A part that arrives too early becomes unnecessary inventory, tying up working capital and consuming space; one that arrives too late creates disruption and delays. Logistics, therefore, reduces lead times and ensures that operations proceed without interruption, effectively serving as the rhythm keeper of the production system. Place value refers to the positioning of materials at the correct workstation or cell. In modern manufacturing, where lean principles prevail, the physical location of parts is critical. Internal logistics ensures that workers do not waste time searching for or transporting items, allowing them to focus entirely on value-adding transformation tasks. Finally, presentation value concerns the condition and format in which materials are delivered. Components must be packaged, kitted, or sequenced in ways that make them immediately usable, minimising handling effort and errors. For instance, delivering parts in the exact order of assembly supports flow and reduces cognitive load on operators.
The boundaries between logistics and production are often blurred, since both domains are interdependent. Production lines cannot function without material supply, and logistics exist only to support production. Baudin and Netland describe logistics as an enabling system, distinct from but tightly integrated with manufacturing. The practical challenge lies in defining where one ends and the other begins. For example, when an operator spends significant time unpacking or arranging materials, production and logistics responsibilities overlap. Advanced production systems address this by creating specialised logistics functions—such as supermarket replenishment or milk-run deliveries—so that operators concentrate exclusively on transformation.
Another important boundary is that between the plant and the rest of the world. Internal logistics connects with external logistics at the gates of the factory. Inbound logistics delivers raw materials, parts, and consumables, while outbound logistics takes charge once finished goods leave the facility. The effectiveness of internal logistics depends on how smoothly it interfaces with these flows. Poor coordination with suppliers can result in erratic material availability, while weak alignment with distribution partners can lead to bottlenecks in finished goods storage. As Baudin and Netland emphasise, manufacturing systems should be conceived as open systems, where internal logistics plays the pivotal role of bridging the internal processes of production with the broader supply chain.
In summary, the scope of internal logistics in manufacturing extends far beyond mere material handling. By providing time, place, and presentation value, it ensures that production runs smoothly, efficiently, and with minimal waste. Its boundaries with production are fluid, demanding careful organisational design, while its boundary with the external world highlights the importance of integration with the supply chain. Far from being a supporting activity, internal logistics is an indispensable driver of competitive manufacturing performance.
Reference (1)
What are the core processes of internal logistics?
Inbound operations inside a manufacturing plant typically follow a recognisable pattern, even though each facility adapts it to its own products, technologies, and constraints. As Baudin and Netland highlight in Introduction to Manufacturing: An Industrial Engineering and Management Perspective, the core sequence begins with parts arriving at the plant, usually in palletised form. These materials are unloaded, checked against documentation, and then transferred into internal storage areas. Forklift operators are central actors in this flow, moving pallets from receiving docks into designated warehouse zones, often organised as single-deep pallet racks to facilitate straightforward access.
The integration of digital systems plays a crucial role in coordinating these flows. Manufacturing Execution Systems (MES) or Warehouse Management Systems (WMS) typically issue work orders, routing slips, or pick lists that specify which pallets need to be retrieved, where they should be delivered, and in what sequence. The logic behind these instructions is to synchronise the availability of materials with production requirements, minimising both idle time in assembly lines and excessive buildup of inventory. Once instructions are received, forklift operators retrieve full pallets and transport them to the correct production area, staging them close to the line or in supermarkets designed for shorter replenishment cycles. This process forms the backbone of inbound logistics, enabling production to run without disruptions caused by shortages or misplacements.
While this pattern is widespread, the idea of a universal, one-size-fits-all approach to inbound operations is illusory. Plants differ enormously in product mix, production volumes, spatial layouts, and levels of automation. A facility producing high-volume, standardised goods may find single-deep pallet racks and conventional forklift movements sufficient, whereas a plant handling complex assemblies with thousands of unique parts may require advanced kitting, automated guided vehicles, or just-in-sequence delivery. Even within the same industry, the diversity of supplier networks and order variability means that no single inbound design can guarantee optimal performance across contexts.
Baudin and Netland emphasise that internal logistics must be tailored to the specific demands of each manufacturing system. Standard practices, such as forklift-based replenishment, are easy to implement but may become inefficient if, for example, space is limited or if ergonomic considerations demand smaller unit loads. Similarly, reliance on pallet storage can create bottlenecks when rapid retrieval is needed or when part variability exceeds rack capacity. The illusion of a single best approach stems from the apparent simplicity of the common pattern, but in reality, effective inbound logistics requires continuous adaptation, balancing cost, speed, flexibility, and safety. In this sense, every plant must design its inbound operations as a bespoke solution, aligned with its broader production and supply chain strategy.
How to optimise internal logistics?
In-plant transportation encompasses the movement of materials, parts, and semi-finished goods within a factory, linking storage areas, production lines, and supporting services. Although it does not transform products directly, Baudin and Netland in Introduction to Manufacturing: An Industrial Engineering and Management Perspective stress that internal transportation strongly shapes efficiency, safety, and overall flow. Every meter travelled inside the plant represents cost, risk, and time that do not add value to the product. This is why reducing, streamlining, and intelligently organising these movements is central to high-performing manufacturing.
A key method for optimisation begins with mapping and analysing the most heavily travelled routes. These high-traffic corridors often expose inefficiencies and safety risks, such as unnecessary crossovers with pedestrian zones or congestion near receiving docks. Identifying these routes allows managers to ask whether material flows can be reorganised. Sometimes, the answer lies in relocating frequently used items closer to the point of use, or in adjusting the minimum transportation quantities so that materials move in smaller, more frequent lots rather than in bulk, reducing waiting time and line-side congestion. In other cases, simply redesigning the layout can cut transportation needs altogether. The greatest efficiency gains come not from faster or more sophisticated vehicles but from eliminating the need for transportation in the first place. By minimising the distance between successive production processes, factories reduce both cost and exposure to handling errors, making flow between lines more seamless.
When it comes to automation, experience shows that semi-automation is often more advantageous than full automation. Fully automated systems, such as complex conveyor networks or fleets of autonomous vehicles, promise efficiency but often lack the flexibility needed in dynamic production environments. They can also be costly and brittle, requiring extensive maintenance and precise conditions to operate effectively. Semi-automated systems, by contrast, combine mechanical assistance with human judgment. Examples include tugger trains or guided carts that allow operators to make context-sensitive decisions while still reducing physical strain and travel time. This balance preserves adaptability while capturing efficiency.
Ultimately, optimising in-plant transportation requires a holistic perspective. By rethinking layout, reducing travel distances, and choosing appropriate levels of automation, manufacturers can create safer, leaner, and more resilient material flows that strengthen the overall performance of the production system.
Milk runs and internal logistics
The concept of in-plant milk runs has become one of the most popular strategies in modern manufacturing logistics because it combines efficiency, regularity, and predictability in the internal supply of materials. Borrowing its name from the traditional practice of milk delivery, where a truck followed a fixed route to deliver milk to households and collect empty bottles, the milk run in manufacturing refers to a cyclical material handling system that delivers parts and components to different production areas in a standardised loop (see also: the returnable container). Instead of forklift operators making irregular trips to move pallets whenever a workstation runs low, the milk run ensures that a tugger train or similar vehicle follows a planned schedule, replenishing materials and collecting empty containers or returnables in a disciplined cycle. Baudin and Netland, in Introduction to Manufacturing: An Industrial Engineering and Management Perspective, describe this approach as a means to reduce variability, avoid ad hoc transportation, and support lean principles of flow and waste elimination.
The popularity of in-plant milk runs stems from several interrelated benefits. They decouple material supply from operator discretion, replacing reactive replenishment with predictable delivery. This reduces the risk of line stoppages caused by missing components, while also lowering inventory levels at workstations, since operators no longer need large safety stocks to guard against uncertainty (see also: the assembly process). By moving materials in smaller, more frequent quantities, milk runs free valuable floor space, reduce clutter, and improve ergonomics. Furthermore, they enhance safety, as fewer forklifts circulate unpredictably across the plant. Standardised routes and schedules create a calmer environment with less congestion, while also simplifying supervision and continuous improvement efforts.
The logic of milk runs is not confined to the plant floor. The same principle applies in inbound logistics, where a truck follows a fixed route among multiple suppliers, picking up materials in small, frequent quantities rather than requiring each supplier to send separate deliveries. This consolidates loads, reduces transport costs, and smooths inbound flows into the factory, supporting just-in-time practices. Outbound milk runs, on the other hand, involve delivering finished goods or spare parts to multiple customers on a fixed route. These arrangements are especially beneficial in industries where deliveries are frequent but shipment sizes are small, making it inefficient for each delivery to require a dedicated truck. In both inbound and outbound cases, milk runs create reliability, cut transportation costs, and align supply chain rhythm with production cadence.
In-plant milk runs thus form a bridge between internal and external logistics philosophies. They embody the lean manufacturing emphasis on flow and waste reduction while also demonstrating how logistics can be standardised to create systemic efficiency. Their popularity derives from their flexibility: they can be adapted to different layouts, scales, and product mixes, while still providing the discipline of regular supply. Unlike highly automated systems, milk runs remain relatively simple and cost-effective to implement, yet they yield significant improvements in inventory reduction, safety, and line stability.
Ultimately, the success of milk runs lies in their ability to transform material supply from a reactive activity into a predictable system. Whether inside the plant, across suppliers, or toward customers, they ensure that materials and goods move smoothly, rhythmically, and with minimal waste, reinforcing the broader goals of lean and competitive manufacturing.
FAQ Internal logistics
What is the role of internal logistics in manufacturing?
Internal logistics ensures that materials, components, and semi-finished goods move efficiently within the factory. Its purpose is not to transform products, as production does, but to deliver the right items to the right place at the right time and in the right condition. By adding time, place, and presentation value, internal logistics synchronises material flows with production needs, minimises waiting and searching, and supports lean operations. Without it, production would suffer delays, excess inventory, and inefficiencies.
How does internal logistics differ from production?
Production is focused on the physical transformation of materials into finished goods, whereas internal logistics organises the flow of those materials to make transformation possible. The boundary is often blurred, for example when operators handle unpacking or moving materials, but well-structured plants assign these activities clearly. Logistics ensures materials are delivered in usable condition so that workers can dedicate themselves fully to value-adding tasks. In this way, logistics and production are distinct yet interdependent systems.
Why is optimising internal logistics important?
Optimising internal logistics reduces waste, improves safety, and enhances the efficiency of the entire factory. Poorly organised material flows lead to bottlenecks, cluttered workstations, and unnecessary transportation, none of which add value. By streamlining routes, using methods such as milk runs, and balancing semi-automation with human flexibility, manufacturers can cut costs while making operations smoother and more resilient. As Baudin and Netland note, effective internal logistics is not about moving materials faster but about eliminating unnecessary movements altogether, ensuring that flow inside the plant aligns with the rhythm of production and the broader supply chain.
Takeaway
Internal logistics is more than material handling; it is the backbone of efficient manufacturing, adding time, place, and presentation value to every process. Its effectiveness depends on seamless coordination with production and supply chains while minimising waste and unnecessary transport. The next step in optimisation lies in digitalisation, particularly Real-Time Location Systems (RTLS). By tracking materials, equipment, and even workers with precision, RTLS solutions enable smarter routing, reduces bottlenecks, and ensures timely replenishment. This visibility transforms advanced intralogistics into a proactive, data-driven system that boosts efficiency, safety, and overall production performance.
Delve deeper into one of our core topics: Real time locating system
Glossary
A Warehouse Management System (WMS) is a software solution that supports the efficient control, coordination, and optimisation of warehouse operations, including receiving, put-away, storage, picking, packing, and shipping. It provides real-time visibility into inventory levels, locations, and material flows, ensuring accuracy and reducing inefficiencies. By integrating with enterprise systems, a WMS aligns internal logistics with broader supply chain goals.
References:
(1) M. Baudin & T. Netland (2023). Introduction to Manufacturing. An Industrial Engineering and Management Perspective. Routledge.
(2) Richards, G. (2017). Warehouse Management: A Complete Guide to Improving Efficiency and Minimising Costs in the Modern Warehouse. Kogan Page.
Note: This article was partly created with the assistance of artificial intelligence to support drafting. The head image was generated by AI.
