Automation

07/09/2026

Material Flow Optimisation: How to Improve Warehouse Efficiency

Reading time: 8 minutes

In warehouse logistics, material flow plays a central role in operational efficiency. When goods move smoothly through a warehouse, companies can reduce costs, shorten throughput times and improve inventory turnover.

An optimised material flow ensures that goods are transported, stored and picked with minimal delays and unnecessary movements.

This in-depth guide explains how companies can systematically analyse and improve their internal material flow in order to increase warehouse efficiency and operational performance.

Why Material Flow Is Crucial for Warehouse Efficiency

Optimising material flow is one of the most important foundations of effective warehouse management.

An efficient flow of goods enables you to:

Increase productivity: Goods move faster and more smoothly through the warehouse, allowing more orders to be processed in less time
Increase flexibility: An optimised material flow allows quicker responses to changes in demand or order volumes
Reduce costs significantly: Fewer unnecessary movements mean lower energy consumption, less wear and tear on equipment and reduced labour costs
Benefit from better outcomes: Shorter lead times and fewer errors result in higher service levels

Before investing in complex technologies, it is essential to understand and improve the fundamentals of your material flow.

Analyse the Current State

Start by taking a detailed look at your existing processes:

Where do bottlenecks occur?
Where are waiting times or congestion points?
Which routes do goods take through the warehouse?

Flow charts, process mapping and data analysis help create transparency and reveal optimisation potential.

Optimise Your Warehouse’s Layout

The physical layout of your warehouse has a major impact on material flow.

Are goods receipt, storage, picking and dispatch logically arranged?
Are routes as short and direct as possible?

Applying Lean principles helps eliminate unnecessary movements and shorten transport distances.

Proven Methods for Optimising Material Flow

Studies show that companies can reduce warehousing costs by up to 20% by optimising material flow. Several established methods support systematic material flow optimisation:

Value stream mapping: Visualise all process steps and eliminate waste
5S method: Create a clean, structured and efficient working environment
Kanban: Control material flow based on actual demand
Simulation: Test alternative layouts and process scenarios before implementation

Video: Short animation explaining value stream mapping, 5S, Kanban and simulation

Improve Inventory Management

Efficient inventory management is a key driver of smooth material flow:

Use just-in-time principles where appropriate to reduce unnecessary inventory levels
Reduce lead times and avoid overstocking
Ensure fast access to frequently picked items

Implement Warehouse Technology

Modern technologies can significantly accelerate material flow:

Automation solutions such as conveyor systems, stacker cranes and automated guided vehicles (AGVs)
Warehouse management systems (WMS) for real-time transparency, optimised picking strategies and process control

Inventory Turnover Rate & Storage Costs

The inventory turnover rate is one of the most important key performance indicators in warehouse management and is closely linked to material flow. It shows how often inventory is sold and replenished within a defined period.

A high turnover rate means faster movement of goods, lower storage costs and less capital tied up in stock.

Inventory Turnover Rate Explained

Definition: The ratio of cost of goods sold (COGS) to average inventory over a specific period
Formula:
Inventory Turnover Rate = Cost of Goods Sold / Average Inventory
Significance: Indicator of warehouse efficiency and capital utilisation

Why Increasing Inventory Turnover Rate Matters

A low inventory turnover rate often indicates underlying problems, such as:

Overstocking and excessive capital commitment
Inefficient warehouse processes and long lead times
Poor demand forecasting
High storage costs and increased risk of obsolescence

Increasing the turnover rate helps achieve:

Lower storage costs

Reduced space requirements and fewer write-offs

Improved liquidity

Faster conversion of stock into cash

Higher customer satisfaction

Better product availability

Optimised processes

Shorter lead times and smoother material flow

How to Increase Inventory Turnover in Your Warehouse

Optimise Warehouse Processes

Warehouse automation: Use automated storage systems, conveyor technology and robotics to accelerate goods handling
Layout optimisation: Store fast-moving items close to picking and dispatch areas
Warehouse management software: Enable real-time inventory visibility and process optimisation

Improve Demand Forecasting

Data analytics: Identify sales patterns and trends
Cross-department collaboration: Align inventory planning with sales and marketing activities

Reduce Overstocking

Just-in-time deliveries: Order goods only when they are actually needed
Regular inventory reviews: Adjust order quantities based on demand
Clear slow movers: Use targeted promotions to reduce excess stock

Inventory Turnover and Material Flow: A Question of Technology

Automation, warehouse management software and data analytics have become essential tools for improving material flow and inventory turnover, which eventually leads to increased efficiency.

With over 70 years of experience, Jungheinrich supports you with a comprehensive portfolio of intralogistics solutions — from analysing your existing processes to planning and implementing automated warehouse systems and training your employees. Together, we help you reduce storage costs, improve liquidity and sustainably increase customer satisfaction.

What is a good inventory turnover rate?

This depends on industry, product type and company objectives. Generally, higher is better — as long as supply reliability is maintained.

What role does WMS play in increasing turnover?

A WMS provides real-time visibility, optimises processes and supports demand forecasting.

What are the risks of an excessively high turnover rate?

Supply shortages, increased transport costs and reduced service levels.

What is the difference between material flow and value stream?

Material flow describes the physical movement of goods, while the value stream includes all value-adding activities.

How often should material flow be analysed?

At least once a year or when significant operational changes occur.

What are the biggest challenges in material flow optimisation?

Process complexity, lack of data and resistance to change.

How can Jungheinrich help?

With integrated solutions covering consulting, automation, software and service.

Conclusion: Optimise Material Flow and Inventory Turnover with Jungheinrich

Optimising material flow is a continuous process that can significantly improve warehouse performance. By combining efficient layouts, structured processes and modern technologies, companies can reduce costs, improve throughput and strengthen their competitive position.

With more than 70 years of intralogistics expertise, Jungheinrich supports companies in analysing, optimising and automating their warehouse processes.

Contact us today and let’s optimise your material flow together.

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