Industry 4.0: The Connected Factory - Part 5, Internal Logistics
By Georg Frey and Sepp Gmeiner
It does not matter where you are currently on the scale of logistics. The important thing is that you baseline it and get better at it.

At an ever-increasing pace, technology is transforming almost everything in our life, at home and at work. At home we control heating, lighting and the security system with our smart phones. Internet-based businesses are devouring market share from traditional “brick & mortar” businesses. And the Internet of Services (IoS) and the Internet of Things (IoT) are also affecting our industry.

Industry 4.0, also referred to as The Connected Factory and the 4th Industrial Revolution, is transforming the woodworking and furniture industry. Woodworking companies can be leaders and early adopters, or late adopters. There is no waiting on the sidelines until this “fad” is over. The elements of the revolutionary game changers are available and need to be applied and integrated.  Industry 4.0 is not a product you can buy and install. It is a term for internet-based technology that you can apply in your organization. It does not replace good engineering and solid organizations.  But it does allow you to grow more effectively.

Industry 4.0 touches all aspects of business.  To prepare for The Connected Factory, we need to look at all facets of the company.  In this series so far we have looked at the first three of the 7 key areas that all need to be addressed in order to get your company prepared. By analyzing and evaluating these seven subjects, you create a snapshot of where your company is now. Gaps will show up, and future investments can be evaluated on the impact they make on the score card. In the previous article we focused on Strategy, Product and Technology (machines). In today’s article we will do a deep-dive on “Internal Logistics."


We define logistics as the processes that ensure product is manufactured correctly, on time, and complete, when and where it is needed.  Logistics drive the efficiency in a manufacturing plant.  In simplified terms, if you cannot ensure having components “fit (correct) and complete” when needed, you lose production time, which can never be recovered.  In the past, the speed of production was often determined by the pure speed of the machine.  Comparisons were done on linear feet per minute, or pieces per hour. Today “fast” machinery is seen as a given. More than ever, the logistics between the machines and work-centers determine the efficiency of the overall system -- moving product along the value stream with the least amount of human intervention and effort.  The expectation is that parts or material end up in the right place, in the right orientation and in the right sequence. 

Logistics drive the efficiency in a manufacturing plant.

This process is in many companies still a very manual process. Employees with extensive product and process knowledge, equipped with stacks of lists and highlighters, work through the piles of material.  But just like speedy machines, the right material in the right quality are almost taken for granted.  By enabling Industry 4.0 technology we minimize all the searching for parts, identification, sorting and manual staging.  The focus of Industry 4.0 driven logistics processes lies in time (speed) and cost.  Since fast throughput times and complex processes require complex logistics, the human element needs to be supported (or replaced) by technology.

Define your internal logistics strategy

Do all elements of your internal logistics approach fit into an overall concept? Are the elements aligned and integrated according to a master plan?  The more that manufacturing is moving to smaller batch sizes, or ultimately to batch size one, the more important logistics becomes.  The product variety requires tools to manage the intelligent and reliable flow of material on the shop floor.

Basics need to be put in place

In order to take advantage of the Industry 4.0 logistics solutions that are out there, very basic but fundamental principles must be established.  For example, unique part numbers, inventory locations, replenishment quantities, bin quantities, sizes, weights, etc. need to be known to the system. Workplaces and racks need to be set-up in a way (digitized) that automation can take place.  Load carriers need to be defined and standardized in cooperation with your suppliers, to avoid or eliminate re-packing or resorting.

Processes need to be defined

Do employees have to leave their workstations to fetch their own material?  The separation of production and logistics (material transport) is one of the underlying principles to achieve uninterrupted work on equipment and workplaces.  Eliminating or reducing the transport and searching for material increases overall productivity.

Re-work organization

In our industry, especially when working with natural materials like solid wood and veneer, things go wrong from time to time. Reject rates during production are not in the parts-per-million, but more in parts-per-thousand or parts-per-hundred. No matter the reason (damage, operator error, or faulty material…), once the non-conformance is identified, a stable and fast corrective action must be initiated to avoid late completion. Is there an efficient, rule-based process to re-work (repair) or re-make (produce new) parts quickly?  Does the organizational loop minimize the down-stream interruption?

Material supply

Is the availability of required material assured by an efficient method? To what extent is the material supply triggered automatically? There are different tools available such as Kanban, J.I.T. (just-in-time), J.I.S. (just-in-sequence), FIFO (first-in-first-out), or MRP (material requirement planning). Are the applied methods efficient (accurate) and appropriate (cost effective)? Tracking your production progress with an MES (manufacturing execution system)  allows fast decision making on real-time data and information.

Choosing the right technology

Raw material, work-in-process, and finished goods are moved, sorted and handled over numerous times within the value-added process.  To what extent is technology applied to support the processes of identifying, counting, storing, retrieval and sequencing?  Warehouse management systems (WMS) support the warehouse by suggesting locations (racks, bins) where to store the material and the software optimizes the sequence for the most efficient retrieval system.  For several years now, board storage and retrieval systems have managed the board supply logistics for panel processing.  The system provides machines like nesting routers and panel saws with the required boards, sheet by sheet.  If the requirement for the next shift is given in advance, the machine can reshuffle the entire stock and stage the oldest sheets in the required sequence.

Pick-by-light or pick-by-voice prompt and guide the warehouse staff visually or acoustically to the right storage location hands-free. In similar applications, either based on barcode, QR-codes or RFID’s (radio-frequency identification chips) the operator/material handlers are guided to place the parts coming out of a machine in the correct sequence and location in transport carts. Cobots work with people on the fulfillment of orders side by side.  RFIDs are either imbedded in printed labels or inserted (invisible to the eye) in the product. In 5-piece doors, for example, they are inserted with the center panel in the groove.  In veneered slab doors a small device drills the edge and inserts the RFID. The edgebanding seals the hole. On painted MDF doors it is more of a challenge, as the bore hole needs to be plugged and sealed. With this process, wherever the parts go, they can be automatically identified.

Carts or transport skids are sometimes equipped with RFIDs. This allows the software to associate all the parts on the cart with the cart.

Carts or transport skids are sometimes equipped with RFIDs. This allows the software to associate all the parts on the cart with the cart. A sensor picks up the signal of the cart, the computer knows which parts in what sequence were stored in it.  These logistic carts might be released for transport to the next work station only when all required parts are received, or the system sends out a notification that a required part is not accounted for. This allows manual interventions, expediting and/or rework.

Is the layout and the factory floor suitable to allow self-guided /automatic guided vehicles? Are they able to follow predetermined paths by following a signal in the floor or do they have more autonomy and are guided by a building-internal GPS.  This can be taken all the way to the end customer to ensure that all correct product has been delivered and invoicing can be triggered (Amazon for example).  The installers of a custom kitchen cabinet manufacturer scan the RFID code of a damaged part at the installation site. The information is immediately transmitted back to the manufacturing plant and the part is immediately produced, ready for installation the next day.

Data driven

Are your logistics processes geared to be data driven? To what extent are the processes digitized? Not to steal the thunder from the article about data integration, but to what extent are the elements of Material Requirement Planning (MRP), Warehouse Management System (WMS) and the Manufacturing Execution system (MES) aligned?

Take a Board Storage and Retrieval System for example. The MES might only relate to Melamine board by color, thickness and square foot, whereas the WMS needs the length, width and weight. If the board has two different finishes (colors), it needs to know which color is up. If you have veneered board (i.e. cherry veneer) the system needs to know that these boards cannot stay uncovered and be exposed to light. All this info needs to be made available in the right data format.

You need to work on your internal logistics

It does not matter where you are currently on the scale of logistics. The important thing is that you baseline it and get better at it. By identifying logistics as a critical discipline, you give it the needed attention. As you give it attention, the possibilities will become obvious. Apply the system of Continuous Improvement. The most important step is to get started.


We will continue to write about Industry 4.0 and the seven key areas of Industry 4.0. The next article will focus on Data Integration in the Connected Factory.  We welcome and encourage your feedback, and you can reach us at [email protected].
Georg Frey
Sepp Gmeiner

About the authors

Georg Frey is the president of Lignum Consulting. Sepp Gmeiner is a partner at Lignum Consulting.  They can be reached at [email protected].




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