Obviously, we move goods from A to B. But in the 21st century, premium logistics comprises more than just supply chain management and storage. What exactly? Colleagues such as Johannes Schirmer or Dirk Bütow can quickly explain value-added services in logistics. It's about adding production depth and additionally taking over from customers the work that restricts their flexibility. Read here about individual value-added services and why they will continually increase in the future.
VALUE-ADDED SERVICES – A DEFINITION
Value-added services (VAS) are services that add something to pure logistics. Usually they are jobs the customer would otherwise have to do themselves. The term value-added services means much more than post-production work. They include services along the entire value creation chain. Pre-assembly is a typical value-added service in logistics: After goods arrive at our warehouse, we partly assemble them before forwarding them to the manufacturer.
VALUE-ADDED SERVICES ADD VALUE TO THE SUPPLY CHAIN
The increase in value does not always apply directly to the product. It can also upgrade the logistics process itself. Functional testing or surface cleaning are also value-added services although they do not necessarily increase the value of the goods.
Typical value-added services are Picking, packing, labeling, returns management and shelf service. These value-added services affect the supply chain rather than the products we handle. They upgrade the supply chain because we provide services along the supply chain which would otherwise have to be done by a third party (or the customer itself). When we re-pack goods because they are delivered in very large batches from distant locations and will be sold in smaller batches at the destination, that is a value-added service. It does not make the goods themselves more valuable, but the manufacturer benefits from a more efficient supply chain.
Value-added services were born when simple forwarding evolved into logistics
Logistics is not just forwarding on a larger scale, but the theoretical and practical management of large goods flows. The obvious consequence is that certain tasks linked to storage and packing are transferred to logistics processing. This means that logistics has moved ever closer to customers' manufacturing facilities. And where the manufacturers already use logistics providers for picking or packing in their plants, the step to further value-creating services is only logical.
VALUE-ADDED SERVICES AS AN EXTENDED WORKBENCH
Value-added services are already long established as a part of the extended workbench. An extended workbench means that a manufacturer outsources part of its value creation to another company. Therefore, the workbench where the finished product is manufactured is extended into other companies or countries. For a specialized electrical goods manufacturer it can be more efficient to concentrate on producing the individual PCBs and to move pre-assembly and quality control to the warehouse of the logistics service provider and final sales to the retailer. This is the globalized division of work. It means that, as a logistics company, we take on ever more manufacturing steps, adding value at every stage. This takes the load off our customers and gives them better chances of participating in growing markets.
VALUE-ADDED SERVICES FROM LOGISTICS COMPANIES MAKE CUSTOMERS MORE FLEXIBLE AND SUCCESSFUL ON THE MARKET
If one of our customers produces its goods in Asia and sells them in Europe, the products spend four to six weeks traveling by ship. Let's suppose the product needs to be differently configured for different sales countries. It needs one configuration for Germany,
one for Sweden and one for Poland. In this case, value-added services make the manufacturer, our customer, much more flexible. It can ship the products to Europe in a basic configuration. The manufacturer only needs to know how many configurations it needs for the German, Swedish or other sales markets when they arrive in our central warehouse in Germany. Without value-added services, the manufacturer would have to estimate these figures 1.5 months earlier.
Therefore, value-added services prevent excess volumes or delays if demand changes during the 1.5-month sea freight. Our customer's Swedish customer can receive a large batch of the product in the right configuration from the European central warehouse within 48 hours – because sufficient units in the basic configuration are already available and do not have to be delivered from the other side of the world. In a business environment that demands just-in-time delivery of goods tailored to the sales markets, value-added services make all the difference.
VALUE-ADDED SERVICES REDUCE TRANSPORTS
This is one of the major opportunities to achieve more sustainability in logistics. That's because, when the logistics company takes over the services previously supplied by another service company, this eliminates an entire station on the supply chain, saving two product transports. As a logistics company, we are capable of much more than we were decades ago. Our expertise has grown massively. Our customers can shorten their supply chains because we take over final approval, quality control, cleaning or final assembly steps. Through our strong Innovation and digitalization department, we offer services our customers may not even have thought of.