Value-Added Services—adding value to your service

Today’s end users are looking for more personalised and complex services when purchasing goods. Therefore retailers are asking suppliers to help them meet these consumer-purchasing trends and customer demands, while suppliers are looking to logistical providers to help them keep stock levels low and fulfil orders at the last minute. It’s important in an ever-changing environment, for retailers and suppliers to remain competitive. Value-added services can give businesses the competitive edge they need.

The Supply Chain:

A value-added service is offered by a business in the supply chain, when they are able to carry out warehouse functions normally taken care of by their customers. Sometimes these functions can be fulfilled on the customer’s site, but often products are sent to several different sources in order to fulfil end user demand. This is inefficient and time consuming. Therefore, warehouses that offer value added services help their clients match supply with demand, as well as save them money and remove unnecessary steps in the supply chain.

The Services:

Popular value added services include:

• Kitting/Pre-Assembly
  • Building advanced “kits” to merge with finished goods or to stand alone.
• Product Assembly/Configuration
  • Assembling finished products from modules and components.
• Bundling
  • Creating unique combinations of components and peripherals.
• Packaging/Repackaging
  • Can include helping to meet local packaging legislation requirements and can also include the re-packing of finished products to support product launches and promotions.
• Co-packing
  • Wrapping different products together—e.g. samples of new products with existing products, or identical products—e.g. “buy one, get one free”.
• Pick/Pack
  • Bulk picking or picking individual items from bulk or seasonal storage.
• Labelling
  • Includes swing tags, security tags, RFID tags, price stickers and other promotional labelling.

The Service Area:

There are a few challenges to overcome when planning value-added services. Volumes are often seasonal and unpredictable; warehouse management systems don’t always accommodate; and value-added services slow down the order fulfilment process. The first step then, is to map the processes in a way that identifies best practises for each value-added service. Next, and just as important, is deciding where to locate the value-added processing area. Since the value-added area is often not a high-transaction area, expanding your building to accommodate is impractical. For that reason, the best place to locate value-added services in most warehouses is on a mezzanine floor. The mezzanine will usually be placed above the receiving dock or shipping dock, depending on whether the service is to be completed before the product is put away or right before it’s shipped. Mezzanine levels are a great way to capitalise on existing warehouse space, while minimising the disruption to everyday warehouse functions.

All too often value-added services are an after-thought to a supplier’s operations. When they haven’t planned properly, they find they don’t have the tools to manage the services and the system fails. Similar to setting up a warehouse, incorporating value-added services requires careful thought and planning—including the best use of warehouse space. Regardless of what part of the supply chain your warehouse is in, offering value-added services might be the catalyst your growing business needs to evolve.