# Material Flow Optimization as a Tool for Improving Logistics Processes in the Company
## 3 Methodology
The deficiencies typically include the following:  
* Inefficient layout--poor spatial arrangement of workstations leading to excessive transport distances;
* Excessive transfers--unnecessary or frequent movements of materials increasing overall costs;
* High handling costs--elevated expenses due to inefficient use of handling equipment or labor-intensive processes. By identifying these critical points, companies can prioritize optimization efforts and implement targeted improvements to reduce costs, minimize inefficiencies, and streamline material flow within the production environment. **Step 4: Proposal of Measures**  
Based on the identified deficiencies, targeted measures are proposed to optimize material flow and reduce costs. These proposals aim to improve logistics efficiency, reduce handling costs, and enhance overall productivity within the company's material flow system. These measures may include the following:  
* Layout optimization--redesigning the spatial arrangement of workstations to minimize unnecessary movement of materials;
* Reduction of internal transport--implementing direct supply routes or conveyor systems to limit excessive handling;
* Automation of handling processes--introducing automated guided vehicles (AGVs) or conveyor belts to improve efficiency;
* Optimization of transport fleet--evaluating the feasibility of replacing external transport services with an in-house fleet;
* Implementation of FIFO and FEFO methods--ensuring efficient stock rotation and minimizing material obsolescence. The cost per kilometer is calculated using Formula (4), as follows:  
\[C_{km}=\frac{C_{total}}{d_{km}}\ [\xi] \tag{4}\]  
where  
_Ctotal_--total annual costs (EUR);  
_dym_--total annual distance traveled (km). The savings during transportation are calculated using Formula (5), as follows:  
\[S_{transp}=C_{original}-C_{new} \tag{5}\]  
where  
\(C_{original}\)--current transport cost (EUR);  
\(C_{new}\)--new transport cost (EUR). **Step 5: Evaluation of Measures**  
In the recalculation of the material flow costs after implementing the changes, \(\text{C}_{\text{flow}}\) is recalculated to assess the achieved savings. The calculation of the return on investment (ROI) measures the profitability of the total invested capital and expresses the overall efficiency of the company, earning capacity, or production strength [52]. An ROI is calculated according to Formula (6), as follows:  
\[\text{ROI}=\frac{\text{Savings}-\text{Investments}}{\text{Investments}}*100\% \tag{6}\]  
\[\text{Savings}=\text{C}_{\text{flowB}}-\text{C}_{\text{flowA}} \tag{7}\]  
where  
\(\text{C}_{\text{flowB}}\)--total material flow costs before (EUR);  
\(\text{C}_{\text{flowA}}\)--total material flow costs after (EUR);  
Investments--total cost of implementing measures (EUR). The payback period of an investment is the time required for the initial investment expenses to be offset by the cash inflow generated from the investment. It is calculated using Formula (8), as follows:  
\[\text{PP}=\frac{\text{Initial Investments}}{\text{Annual Cash flow}} \tag{8}\]  
where  
PP--payback period (years);  
Initial investments--initial investments (EUR);  
Annual cash flow--cash flow generated from them (EUR). The proposed methodology offers a practical advantage over complex simulation models in terms of real-world application. The use of a checkerboard table combined with quantitative cost analysis enables a fast and efficient identification of savings without the need for extensive data collection and the creation of simulation scenarios, which can be time-consuming and costly. Simulation modeling often requires comprehensive data on process dynamics and interactions, which may not always be available or sufficiently accurate in industrial practice. Therefore, the proposed methodology provides a practical solution that is easily applicable in a business environment and allows for rapid material flow optimization without the need for complex software tools.