Flow consolidation

Grouping of goods in warehouses and in transport

or flow optimisation processes through the grouping of goods in warehouses and in transport

What is flow consolidation ?

The consolidation of goods flows consists of grouping products in a warehouse or in transport cargo.

This means sharing a storage space in a warehouse or filling a transport vehicle with goods from several customers to optimise stock management and goods transport costs. This practice used by logistics and transport operators reduces costs and improves services provided to customers.

In terms of transport, it is a process for optimising goods flows also known as groupage.

The characteristics of flow consolidation

The consolidation of goods flows is a key part of last mile urban logistics. It allows a carrier to make more deliveries in the city centre while covering a shorter distance thanks to the sharing of vehicles.

It is also a way to limit greenhouse gas emissions and reduce sound emissions, notably caused by the delivery of goods transported at controlled temperature.

This is economically beneficial for supply chain operators and for customers, however, the consolidation of goods flows is rather complex to implement. It requires perfect coordination between logistics operations to master the groupage and degroupage of goods.

To do this, the following digital tools are essential:

• Warehouse Management System (WMS) recording all stock movements in the warehouse ;
• Transport Management System (TMS) or road control tower to manage transport flows.

Examples and application

Consolidation of goods flows in a warehouse

In a warehouse, flow consolidation consists of:

• dividing the lots and sorting the goods on receipt in the warehouse for optimal storage ;
• playing around with storage locations to save space in the warehouse ;
• creating compatible lots of goods with a view to grouped transport.

Goods from various sources can then be grouped together within the same platform. The consolidation of goods flows also allows for:

• optimisation of storage space in a warehouse ;
• reduced operating costs ;
• improved service quality offered to customers by increasing the frequency of shipments through sharing between companies.

Consolidation of goods flows in transport

In transport, the groupage of goods on behalf of several customers takes place on board a vehicle or in containers transported by sea or intermodal means.

Transport operators practising groupage, like GEFCO, offer two methods for grouping goods:

• by full lots: the goods from one customer occupy a full lorry or container ;
• by partial lots: the filling of a lorry or container is shared between several customers.

The aim is to avoid half-empty vehicles driving around if the customer is unable to fill the load with its own goods alone.

Thanks to the consolidation of goods flows, shippers only pay for the volume occupied by their goods in the load. The delivery is then more affordable and deliveries are faster and more efficient. However, collection and delivery times for goods are less accurate when partial lots are used compared to full lots.

Flow consolidation in figures

Regulatory framework

The decree of 11 February 1991 imposes the traceability of goods through the preparation of two regulatory documents on freight forwarders exercising groupage activities:

• a waybill or a receipt per shipment ;
• a summary loading slip by grouped lot.

https://www.legifrance.gouv.fr/loda/id/LEGITEXT000006077284/