When a Thai factory starts a factory transport cost reduction project, the discussion often jumps straight to AGVs, AMRs or conveyors. Yet without measuring what moves, between which points, how often and after how much waiting, automation can simply make waste travel faster. This guide treats intralogistics improvement as more than a labour-saving exercise. It covers empty travel, waiting, work in process, material-shortage downtime, safety exposure and coordination work. It provides a practical route from a 7–14-day baseline through route improvement, forklift reduction, technology comparison, a 90-day PoC and measurable RFP, FAT and SAT acceptance.
Factory transport cost reduction is not only labour reduction
Transport does not directly add value to the product, but production cannot continue unless the correct material reaches the correct point at the required time. Toyota’s official history describes Just-in-Time logistics as supplying only what is needed, when it is needed and in the quantity needed. Good transport is therefore not the fastest possible movement. It is a service that meets production demand while minimising unnecessary movement, inventory, waiting and handling.
A labour-only calculation hides several important cost pools:
- empty returns, low vehicle utilisation and many small trips to the same area;
- material, vehicle, dispatch and receiving waits;
- excess WIP, temporary storage, re-handling, searching and label checks;
- equipment downtime, expedite trips and overtime caused by shortages;
- congestion, crossings, manual carrying, pushing, pulling and lifting risks;
- telephone calls, paper tickets, spreadsheet entry, dispatch coordination and investigations;
- carts, forklifts, chargers, batteries, energy, maintenance, insurance and spares.
Thailand’s minimum wage has ranged from THB337 to THB400 per day by province and business category since 1 July 2025. THB400 applies to specified locations and activities, including Bangkok, Phuket, Chachoengsao, Chonburi, Rayong and Samui; it is not a single nationwide manufacturing wage. A real employment cost also includes allowances, social security, overtime, recruiting, training and cover for absence. An investment model should use the factory’s loaded employment cost, not minimum wage alone.
Fix the service level before naming the equipment
The first question is not “How many AGVs?” The project team should agree:
- which material moves from which supply point to which consumption point;
- the required quantity per hour or shift;
- the latest arrival, permitted wait and shortage buffer;
- container, mass, dimensions, stacking, ESD and environmental limits; and
- how demand changes during normal, peak, changeover and abnormal conditions.
Once those requirements are measurable, manual carts, milk runs, call-based dispatch, conveyors, AGVs and AMRs can be compared on one basis. If the requirement is vague, suppliers are merely presenting the method they sell best.
Build the intralogistics baseline in 7–14 days
A baseline does not require a major software project. A current layout, observation sheet, timer, smartphone and spreadsheet can be enough. Keep the variation by hour, shift, product family and route rather than reporting only an average. Include changing conditions—month-end, material arrivals, changeovers and overtime—during a 7–14-day period.
Create a controlled from-to table
Record each movement by supply point, consumption point, product family, container, quantity per move, frequency and actual travel distance. Use location codes that match the layout, such as WH-A-03 and LINE-2-KIT-IN, instead of ambiguous names such as “warehouse” or “line side.”
| Data | Example definition | Decision supported |
|---|---|---|
| Request time | Call, kanban issue or scheduled departure | Demand peaks and levelling |
| Start and finish | First movement to unloading complete | Travel, waiting and handling split |
| From / To | Unique location code | Distance, crossing and duplicate route |
| Handling unit | Pallet, box, cart or kit | Consolidation and equipment fit |
| Quantity and mass | Actual quantity, total mass, volume | Utilisation, capacity and safety |
| Available capacity | Container or vehicle limit | Denominator for utilisation |
| Empty leg | Distance or time without a load | Empty-travel rate and return pairing |
| Wait reason | Material, vehicle, aisle, receiver or document | Ownership of the improvement |
| Shortage downtime | Start, finish, equipment and cause | Service failure and loss |
| Abnormal or hazard | Near approach, load shift, floor, crossing | Route and safety design |
Define KPI formulas before collecting data
- Load utilisation = actual load ÷ available load
- Empty-travel rate = empty distance ÷ total distance
- Call response = movement start − transport request
- Transport lead time = unloading finish − transport request
- Delivery achievement = requests completed within promise ÷ total valid requests
- Shortage downtime = equipment stop time caused by transport failure
- Manual work time = time used for calling, searching, handling, driving and recording
For bulky light items, track both mass and volume and use the binding capacity. Pair a time-based empty rate with the distance-based rate to expose congestion. Separate logistics causes from planning changes and quality holds, so that the transport team is not assigned losses outside its control.
Eight signals worth finding
- Several departments drive the same from-to route separately.
- Outbound travel is full while almost every return is empty.
- Calls cluster in a short period while vehicles wait during the rest of the hour.
- A vehicle is called before the load is ready.
- The destination has no defined space, creating temporary storage and re-handling.
- Small urgent moves are mixed into a long regular route.
- Loads suitable for a cart are routinely moved by forklift.
- Fear of shortage creates excessive line-side stock, blocked aisles and poor visibility.
These are operating-rule problems before they are equipment-capacity problems. Fixing them first can reduce the number of vehicles required.
A cost equation and an explicitly hypothetical example
At minimum, use this structure:
Annual transport cost = direct work + equipment ownership + maintenance and energy + coordination + transport-caused downtime loss
For an investment option, annualise capital under the company’s accounting rule and include residual value and cost of capital where required. Include software, mapping, radio infrastructure, floor repairs, barriers, charging, interfaces, standby equipment, training and support—not just vehicle price.
Illustrative assumptions, not a result or quotation
Assume a factory uses 72 direct person-hours per day for transport, operates 300 days per year and has a loaded labour cost of THB120 per hour. Assume forklift ownership, maintenance and energy total THB1,200,000 per year; dispatch and reporting cost THB480,000; and transport causes 40 hours of downtime at a hypothetical loss of THB25,000 per hour.
- Direct work: 72 × 300 × THB120 = THB2,592,000/year
- Equipment: THB1,200,000/year
- Coordination: THB480,000/year
- Downtime: 40 × THB25,000 = THB1,000,000/year
- Hypothetical baseline total: THB5,272,000/year
Now assume a proposed design reduces direct hours by 25%, equipment cost by 10%, coordination by 40% and shortage downtime by 50%.
- Direct work benefit: THB648,000/year
- Equipment benefit: THB120,000/year
- Coordination benefit: THB192,000/year
- Downtime benefit: THB500,000/year
- Hypothetical gross annual benefit: THB1,460,000
If the initial investment is assumed to be THB2,800,000 and incremental operating cost THB360,000/year, an illustrative simple payback is 2,800,000 ÷ (1,460,000 − 360,000) = about 2.55 years. This is not a promised outcome. Test pessimistic, base and optimistic cases for utilisation, labour redeployment, downtime value, working days and asset life.
Separate released time from cash saved
Removing 18 person-hours per day does not automatically remove 18 paid hours. If the time supports increased output, absence cover, training or quality work, it is capacity benefit rather than cash reduction. Classify benefits as:
- cash: avoided overtime, contractors, leases, fuel, service or recruitment;
- capacity: more throughput or flexibility with the same workforce; and
- risk: reduced probability or impact of shortage, injury, mix-up or late delivery.
This distinction prevents inflated ROI claims and makes post-launch validation credible.
The improvement sequence: automation comes seventh
1. Do not move it
Eliminate a transfer, move the store closer to consumption, combine inspection or packing with a process, or stop moving material merely to transfer information. A movement that disappears never needs a vehicle, interface or recovery procedure.
2. Shorten the route
Place high-frequency from-to pairs together, reduce crossings and create one-way flow. Use safe actual travel distance—including turns, doors, slopes and traffic—not a straight line on the drawing. If a major layout change is impossible, reposition supermarkets and rotate loading faces.
3. Consolidate
Group small requests for the same area within a defined time window and standardise containers and carts. Do not wait indefinitely for a full load; set a maximum hold time and protect delivery achievement.
4. Level calls
Align production release, kanban collection and completion reporting. Separate scheduled milk runs from genuine exceptions. This stabilises normal service and makes an urgent trip visible as a problem rather than normal work.
5. Improve aids and standard work
Low-resistance carts, lifters, rollers, tow trains and standard handling heights reduce handling time and exposure. OSHA identifies lifting, pushing, pulling, repetition and awkward posture as musculoskeletal risk factors in warehousing and recommends reducing distance, weight and frequency and using engineering controls such as conveyors and carts. OSHA is not Thai law; these are useful design principles that must be combined with local requirements.
6. Add small-scale digital control
Use a call button, barcode, e-kanban, dispatch screen and completion event to retain request, start, arrival and exception times. Even a simple system needs unique IDs, automatic timestamps, duplicate protection and recovery after an offline period.
7. Apply semi-automation or automation
Only now compare conveyors, AGVs and AMRs. Standardised containers, routes, handovers and levelled demand reduce vehicle count and integration scope, and they make PoC acceptance measurable.
Compare manual carts, milk runs, conveyors, AGVs and AMRs
| Method | Best-fit condition | Strength | Main limitation | Data required first |
|---|---|---|---|---|
| Manual cart | Low volume, high variety, frequent change | Flexible, low initial cost | Variability, ergonomic load, weak records | Mass, distance, posture, peak |
| Milk run | Scheduled supply to several points | Consolidation and visible rhythm | Poor schedule raises stock or shortage | Loop time, window, stop time, load |
| Call dispatch | Variable demand, shared fleet | Priority control and wait visibility | Call abuse and rule dependence | Demand distribution, priority, response |
| Conveyor | High frequency, fixed route, stable load | Throughput and explicit flow | Low layout flexibility, blockage | Rate, shape, jam, maintenance access |
| AGV | Standard fixed or semi-fixed route | Repeatability, towing and pallet fit | Route and obstacle constraints | Route, floor, crossing, stop, charge |
| AMR | Changing route in shared space | Dynamic routing and detour | Software and traffic dependence | Map, traffic, obstacles, Wi-Fi, API |
For a deeper equipment, TCO and acceptance comparison, see How to select material-handling equipment for a Thai factory. For interfaces, handover ownership and multi-vendor controls, see the AGV system integration guide.
Forklift reduction means separating uses, not forcing zero vehicles
Forklifts remain effective for heavy goods, stacking and truck loading. Using them for every light-box replenishment creates pedestrian crossings, driver dependency and excess capacity. A practical split is:
- receiving, shipping and rack storage: forklift;
- long scheduled box routes: tugger and milk-run carts;
- frequent fixed two-point route: conveyor or AGV;
- small, variable-route delivery: AMR or call-based cart; and
- several metres within a work cell: gravity roller, cart or lifter.
Do not optimise only for forklift count. Track forklift distance, pedestrian crossings, driver waiting and reserve capacity. Removing too many vehicles can make peaks and failures fragile.
Ten implementation issues in a Thai factory
1. Language and authority
Use Thai as the operating language and add English or Japanese where needed. Define who may acknowledge an alarm, intervene manually, change a priority and release a blocked job. Do not rely on colour alone; standardise icon, state, sound and lamp meaning.
2. Floor condition
Cracks, joints, drains, slopes, oil, water and dust matter more than a catalogue specification. Test the worst route with the actual load, including stopping distance, vibration and load stability.
3. Crossings and segregation
A crossing includes sight lines, pedestrian volume, forklifts, doors and noise. Combine right-of-way rules, speed limits, stop logic, warning, mirrors, barriers and marked crossings. Test under normal-shift traffic, not only on an empty weekend.
4. Power, wireless and upstream outages
Specify whether a vehicle stops immediately, retreats to a safe point or retains its mission when communication fails. Test recovery from duplicate jobs, stale commands and lost position after power returns.
5. Maintenance and spares
Confirm support response in Thailand and availability of batteries, wheels, sensors, chargers and controllers. Contract for software-update downtime, licence expiry behaviour and customer export of diagnostic logs.
6. Shift and charging model
Include breaks, battery ageing, peaks and maintenance when sizing the fleet. Opportunity charging can itself create a queue if all vehicles arrive during the same break. Charging fire protection, ventilation and traffic are part of the design.
7. Contractor boundaries
Define responsibilities among the logistics contractor, equipment supplier, integrator, factory IT and production. A RACI should cover a missing request, a vehicle arriving before the load, and equipment failing to confirm handover.
8. Safety standards and local requirements
ISO 3691-4:2023 is the current published standard covering safety requirements and verification for driverless industrial trucks and their systems. ISO marks it for revision and a next-edition DIS is under development. Confirm the applicable edition at procurement and combine it with Thai law, fire, building, occupational-safety and insurance requirements. A product conformity declaration does not replace a layout-specific risk assessment.
9. Verify current BOI conditions
Thailand BOI publishes Automation and Robotics information, but qualifying activity, expenditure, local-equipment conditions and application deadlines vary by measure and year. Do not assume a measure with a 2025 deadline remains available in 2026. Build a base case that works without an incentive and confirm current conditions directly with BOI.
10. Cybersecurity and log ownership
Fleet control, dispatch and WMS/MES interfaces are part of the factory network. Define accounts, remote access, patching, backup, APIs, time synchronisation and audit logs. Confirm that the customer can export settings, maps and history for incident analysis and contract exit.
A 90-day PoC that leads to an investment decision
A PoC is not a demonstration that a vehicle can move. It is a bounded operation proving whether service, cost, safety and recoverability improve against the baseline. Choose one theme, such as scheduled kit supply from warehouse to two assembly lines.
Weeks 0–2: measure and select
- Collect 7–14 days of from-to, frequency, distance, utilisation, empty travel, wait and shortage data.
- Observe operators and define normal, peak and abnormal scenarios.
- Freeze baseline formulas and data owners.
- Implement urgent safety corrections immediately.
Weeks 3–4: design
- Evaluate elimination, shorter route, consolidation and levelling first.
- Specify container, method, handover, priority and exception flow.
- Design power, wireless, charging, floor work and system interfaces.
- Approve risk controls, test cases, pass criteria and stop conditions.
Weeks 5–8: limited operation
- Start with one route, one shift and restricted items.
- Review requests, achievement, response, empty travel, manual work and stops daily.
- Test communication loss, blockage, missing load, equipment outage and manual intervention.
- Use coded exception reasons and the same baseline definitions.
Weeks 9–12: verify and decide
- Evaluate normal, peak and abnormal acceptance.
- Separate cash, capacity and risk benefits.
- Estimate full-scale vehicles, licences, works, maintenance and spares.
- Compare pessimistic, base and optimistic TCO cases.
- Record continue, correct-and-continue, scale or stop decisions with open conditions.
Acceptance KPI for RFP, FAT and SAT
An RFP should request measurable results and an evidence format, not only a feature list. FAT proves defined functions in the supplier or simulated environment; SAT proves operation under real factory conditions.
| KPI | Example definition | Evidence | Control |
|---|---|---|---|
| Delivery achievement | On-time completions ÷ valid requests | Request and completion event log | Exclude cancellations and duplicates |
| Call response | Start − request | Event-ID log | Report P95 as well as average |
| Empty-travel rate | Empty distance ÷ total distance | Vehicle and job log | Separate charging and retreat |
| Shortage downtime | Minutes caused by transport | MES/andon and approved reason | Agree cause codes |
| Manual work | Net human intervention time | Observation and activity log | Define monitoring time |
| Safety-stop recovery | Detection to permitted restart | Safety event and recovery record | Limit automatic restart |
| Log completeness | Required events recorded ÷ expected | Exported file | Check time sync and missing sequence |
Minimum scenarios include maximum and off-centre load; peak queues; blocked aisles; pedestrians and forklifts; wireless, server and power loss; emergency stop and recovery; missing or misaligned loads; charger or vehicle failure; duplicate, late and cancelled upstream commands; and Thai-language alarm recovery by the factory team.
A criterion such as “99% delivery achievement during a normal shift” is only an example, not a universal recommendation or guarantee. Set the value from product risk, line-side buffer and downtime impact.
Common failure patterns
- Sizing on averages: an hourly average can conceal a 15-minute peak. Check distributions, P95 and maximum wait.
- Automating the current waste: empty runs and temporary storage produce extra vehicles and traffic logic. Redesign first.
- Creating special PoC conditions: an empty weekend, no load and permanent supplier attendance do not prove production operation.
- Calling all released time labour savings: distinguish redeployment from cash reduction.
- Relying on the vehicle certificate for safety: assess crossings, handovers, maintenance and intervention in the actual layout.
FAQ about factory transport cost reduction
How much does a factory transport cost reduction project cost?
There is no responsible flat price. Route, load, throughput, floor, radio, interfaces, safety devices and fleet size change the TCO. Start with a 7–14-day baseline and compare an operating-only option, light digital control and equipment investment. Verify any BOI incentive under the current measure and retain a viable no-incentive case.
Does intralogistics improvement always require an AGV?
No. Eliminating a transfer, shortening the route, standardising containers, using a milk run and levelling calls may meet the goal. Consider AGV or AMR when the flow is sufficiently repeatable and when safety, service and TCO are stronger than the manual alternative.
How should transport-waste reduction be measured?
Measure load utilisation, empty travel, response, delivery achievement, shortage downtime and manual time under identical before-and-after definitions. Separate cash, capacity and risk benefits and assess peak and abnormal conditions as well as averages.
What if route-improvement data is missing?
Choose one route and record request, start, arrival, from-to, quantity, wait reason, empty leg and stoppage for 7–14 days. Unique IDs and consistent responsibility matter before precision positioning technology.
What KPI should be used for forklift reduction?
Use forklift travel, pedestrian crossings, driver wait, share of light-load work and peak reserve as well as vehicle count. Concentrate forklifts on receiving, shipping, stacking and genuinely heavy work.
Which safety standard applies to AGVs and AMRs in Thailand?
ISO 3691-4:2023 is the current published international standard for driverless industrial truck systems, while a revision is planned and a DIS is in development. Reconfirm the edition at procurement and assess Thai legal, building, fire, occupational-safety and insurance requirements for the actual site.
Conclusion: measure first, then improve in “do not move” order
Factory transport cost reduction is not simply replacing labour with a cheaper machine. Preserve the required delivery service while eliminating movement, shortening distance, consolidating, levelling calls, improving aids, adding light digital control and only then automating. A 7–14-day baseline and a 90-day PoC across normal, peak and abnormal conditions allow management to decide on business results rather than equipment labels.
If you are still at the stage of designing the baseline, narrowing the improvement theme, comparing conveyors, AGVs and AMRs, or preparing PoC and RFP requirements, you can contact TOMAS TECH. The discussion can begin before a product is selected and can reflect the operating, safety and service realities of a factory in Thailand.
Primary and official sources
- Thailand Ministry of Labour: minimum wage effective 1 July 2025
- ISO 3691-4:2023
- ISO/DIS 3691-4 development status
- Toyota: Production Parts Logistics
- Toyota: Increasing Efficiency in Logistics
- OSHA: Warehousing Hazards and Solutions
- OSHA Technical Manual: Ergonomics
- Thailand BOI: Automation and Robotics
*All ROI, hours, distances, reduction percentages and monetary figures in this article are explicitly illustrative assumptions. They are not TOMAS TECH or supplier performance data, quotations or guarantees.*
