Value-added services (VAS) in logistics play a crucial role in enhancing customer satisfaction for businesses. They have become an indispensable tool for providing comprehensive benefits. In supply chain management (SCM), warehouse value-added services hold significant importance. These services offer numerous advantages to businesses, such as enhancing efficiency and quality, addressing storage needs, and freeing up time for business expansion. A value-added service (VAS service) extends beyond the typical warehousing scope, encompassing additional services that a warehouse or third-party logistics (3PL) provider can offer to clients, surpassing the standard storage and shipping services.
Value addition includes kitting, bundling, re-branding, customization, re-packaging, and work order processing (where components are put together to create a new item). These services are customizable to the client’s needs whether shipping retail goods, perishable cargo or high-tech devices to streamline logistics & reduce costs.
Why do you need them?
- Whenever logistics providers add value the right way, it affects the level of customer satisfaction, while indirectly increasing their bottom line
- Service providers know the ins and outs of the business and they can assist companies in responding to customers’ needs
- Companies collaborating with value-added logistics providers can focus on their core business and work on being more competent in the market
- Value addition requires continuous maintenance and 3PLs are working toward providing value-added services in conjunction with their more traditional offerings
How do VAS help businesses’ supply chains & logistics?
Forward-thinking companies leverage their supply chain to gain a competitive edge and market share. Entrepreneurs now widely adopt supply chain excellence as a vital business strategy. To stay ahead and outperform competitors, businesses must revamp traditional supply chains. This presents an opportunity for specialists to propose VAS solutions, driving accelerated supply chain innovation.
Increased price wars and competition
- Previously, brand recognition and product features were more than enough to set companies apart but things have shifted
- Brand equity and product innovation are no longer the only tools that can allow a business to set a higher selling price
- Companies now are using two methods to adapt to this trend
- First, they assess cost-reduction strategies and create new techniques to build a more efficient value chain
- These changes will allow them to retain a competitive edge
- Second, companies are searching for strategies to provide value-added services that will enable them to meet savvy customers’ demands
Outsourcing
- Many companies are taking a step back to evaluate their core competency and some realized that outsourcing part of the supply chain can be beneficial
- The marketplace continues to revolve around three pillars:
- Cost and quality of global manufacturing and distribution
- Information mediums and systems
- Product design capabilities
- By outsourcing their supply chain and logistics operations, companies can breathe new life into their business
- When their business model relies too heavily on outsourcing, companies must implement solutions to make up for off-site supply chain capabilities
Complex & shortened Product lifecycles
- Companies are under significant pressure to develop cutting-edge products and launch them to market quickly, without compromising their high-demand existing products
- To meet this ever-growing need, companies require streamlined product lifecycle management processes, which emphasize new product launches, product discontinuation and design
- The primary benefit of product lifecycle management technology and processes is that it helps companies design products that can share components, operations or materials — reducing the risk of obsolescence write-offs, ensuring optimal use of all infrastructure investments and limiting increased costs when buying essential materials
- These practices will also enhance customer perception of your company and establish yourself as an innovative reformer
Types of VAS
Cross Docking
- A cross-docking system allows companies to move products directly from the receiving dock to the shipping dock
- Cross-docking requires close synchronization of all outbound and inbound shipping movements and reduces the cost by decreasing stockpiling
- Cross-docking also involves re-packing, inspection and labeling
Transloading
- The process of transloading requires more than one transport mode
- International shipments, which require multiple modes of transportation, are the best example of transloading
- All shipments get grouped upon arrival, eliminating the need for any distribution center
Palletizing
- In palletizing, items or goods are placed on pallets
- Depending on the business and product, manual, semi-automated or fully automated methods can be used to put the shipments on pallets
- With palletizing, perishable goods can be moved faster and decrease the risk of spoilage
- Palletizing significantly reduces the risk of worker injury as they are durable than other shipping containers, allowing more products to be carried at a single time
Kitting
- The kitting process includes combining multiple products into a simple and easy-to-pick package
- The process works in many ways, whether it’s banding two similar items or creating an integrated solution by pairing two commonly purchased products
Returns processing
- The service providers have dedicated warehouses and ample personnel to process and manage the returns as required
- When a return arrives, workers scan it into the system to determine whether it’s possible to resell
Labelling
- Labelling is done if the company may want a specific branding to be in stores versus sent direct to consumers or for international shipping
- Many markets abroad have different label requirements, and 3PLs ensure that the products have the correct label based on which country they are being shipped to
Repacking
- Repacking services involve packing products into a different type of packaging, such as changing from bulk packaging to retail-ready packaging
Postponement services
- Postponement is the process of bringing multiple individual units together in the fulfillment process to create one unique SKU
Sorting & Inspection
- Sorting and inspection services fall under quality assurance
- Sometimes component parts need to be separated or joined after they are manufactured and need to be inspected for very specific tasks or capabilities
- Companies can have product parts shipped to their fulfillment provider to do this as part of their fulfillment
Benefits of VAS
Flexibility
- Partnering with 3PLs will allow you more flexibility in labor, space and equipment
- They can offer all these components to enable you to meet your customers’ requirements more effectively
- Some 3PL providers also offer extra physical space for a specific time as a value-added service, which could be a warehouse for storing rush inventory or a meeting space for discussing on-the-fly software updates
- Labor resources are also available as part of value-added services
- If any of your product campaigns require a more hands-on approach to attract your audience’s attention, a 3PL can quickly shift their staff to your project and keep your labor cost to a bare minimum
Quality
- With the assistance of a dedicated professional team working or overseeing any customization, you can focus on quality and work efficiency
- The value-adding team provided by a trusted 3PL provider might collaborate with customers
- They can outline the project, ensure accuracy and precision and take the necessary steps to complete the project on time
Ease of integration
- A reliable 3PL can assist you in managing warehousing, transportation and all the value-added services you need
- This help can make the process more seamless to integrate any updates or changes along the way
- Keeping the product in a single fulfillment center can also minimize the cost of moving products and transportation
Closing Thoughts
- Value-added services can transform your Supply Chain, but it is not a one-size-fits-all solution
- Service providers must understand a supply chain’s business model and weak spots
- With an effective solution, you can optimize your supply chain’s operations
- Besides solving logistical challenges, an expert service provider can also provide other long-term benefits
- Customized value-added services can build delivery models that will improve inventory and transportation costs, enhancing your operations and saving time and money
- Value-added service solutions can work on distribution channels to address your company’s trucking capacity and assist you with time-sensitive deliveries
- Service providers can offer consultations and innovative solutions to address your trade landscape and warehousing requirements
- A significant benefit of customizing value-added services is an improvement of the supply chain by finding discrepancies in the process and taking corrective measures to improve them, so you can focus on customer satisfaction by providing optimum services