15 Innovative Trends in Value-Added Service of Logistics
- Written by Jayant
Over the few decades the role of logistics management has undergone a paradigm shift due to advent of information technology & globalisation. At the same time, a number of factors have increased the complexity of logistics management. This has led many companies to change their business strategies. This change is primarily driven through rapid change in consumption patterns, fuelled by expansion of the modern trade, QSR & customer requirement.
In today scenario, success of logistic is not only depend upon timely & cost-efficient delivery but also embracing quality service in B-to-B, B-to-C & C-to-C and to move towards K to K concepts (Key to Knowledge).
Value-added services differentiate the organisation from competitors and build relationships that bind customers to the firm in a positive way. It is also known as Service enhancement. i.e. adding a little extra to the normal service This anticipate customer’s needs ,win the respect and loyalty of the customer by taking personal responsibility of their problems, add value to the commodity at every step and deliver consignments of the promised window.
An activity is value added if and only if three conditions are met
• The customer must be willing to pay for the activity
• The activity must change the product, making it closer to the end product that the customer wants and will pay.
• The activity must be done first time right.
Value Added Service
Adding value to service; provides multiple factors, which set apart from the competition & build loyalty.
• The sense of assurance and trust to customers by ensuring their product is safe at all times through stringent processes and SLA management.
• Focus on innovation and the use of technology for enabling real time visibility, transparency and control, adding value to the customer’s entire supply chain.
• Capability to provide complete, end to end solutions including transportation, storage and distribution.
• Highly dedicated team of experienced and trained resources add skill and knowledge to handle the product requirements while in transit.
15 Innovative Trends in Value Added Service of Logistic:
1. 3PL/4PL: Fright forwarding services, Direct to Store
Transportation & inventory cost are substantially getting increased both at input & output side of production process. This enable companies to outsource their logistics activities to Third Party Logistics (3PL) providers. Today, 3PLs play a critical role in the supply chains of their customers. They are increasingly viewed as strategic channel partners who can play a pivotal role in optimising the supply chain and thereby providing sustained competitive advantage.
Fourth party logistic (4PL) specialists play the role of consultant, by taking over the entire logistic function for the organisation, coordinating the combination of division of subcontractor. 4 PL is an integrator that assembles the resources, capabilities, and technology of its own association and other organisations to plan construct and run comprehensive supply chain solutions. The common value added service provided by 3L/4L are..
• Tax & compliance management
• Cash management, COD
• Vendor management & quality check
• Data Integration
• Custom Clearance & freight forwarding
• Document services
Success to ship directly to store depends on pre-defined business processes and on integrated visibility across the entire supply chain. Not only does this allow to respond more flexibly to changing customer demands, but it also reduces inventory and the associated costs of capital. This apply to more time sensitive, high vale & seasonal products.
3PL & 4PL service provider has more current technology, more technological flexibility, more efficient warehousing, improved customer service, more workforce flexibility to meet today business need.
Diesl (Drive India enterprise solution ltd-TATA), Damco provides such services.
2. Cold Chain: Reefer technology on Indian roads
Product’s requirement such as processed food, dairy, meat, poultry, FMCG, Pharma has increased, thus, both reefer storage as well as transportation demand increases.
For transporting perishable goods, climate has to control from +20 degrees to – 20 degrees Celsius. Cold chain service provider has capabilities to maintain the same.
Gati Kausar Cold Chain Solutions offers customised solutions for temperature sensitive shipments through its cutting edge technology. Kelvin logistic, Global cold chain also provide temperature controlled warehouses, distribution centres and technology to maintain the required temperature on transit.
3. Reverse Logistics: Re-work/Re-packing/Return Management
Stiff competition & stringent environmental regulation have prompted the manufacturer to develop 3PL waste management. Ability to handle customer returns is one of the major challenges in this industry. Business intelligence tool can help effectively manage reverse logistics by associating the returns with the right order, analysing the reasons for returns, and by analysing returns delivery time to the supplier. It can also help to identify patterns in reverse logistics, which can serve as an important feedback to the supplier.
Service and Spare Parts Management (SSPM) are solutions to support the management of critical or time sensitive aftermarket parts. Salvage Parts from Returns is also value added service offered by 3PLs.
Reverse logistic become strategic goal of organisation not only for competitive advantage by reselling product to secondary market but also to provide maximum customer satisfaction thereby retain loyal customer & market share.
Logwin, DHL, UTIi, CWC, Regal Logistics’ provides this services primarily to cell phone, soft drink manufacturer and automotive OEMs.
4. Groupage Services
This services provide clients to an optimum level of services combined with accurate speedy customs clearance and documentation. Groupage services include;
• Door to Door freight forwarding services
• Computerised order tracking facilities
• Customised electronic customs clearance and documentation
• Customs clearance and documentation
• Export consolidation services
• Tariff Clarification advice
• Import de-consolidation services
• Worldwide NVOCC services
• Priority de-consolidation
Highest level of speed, efficiency and reliability.
Tinsel cargo and Oil Company, Kenya, Essers, DHL, Herfurth Logistics, KLG logistics Europe, ATCL logistics, Logwin Logistics provides such services.
Co-packing (also known as Contract Packing) involves outsourcing the manufacturer’s secondary packaging requirements (such as outer boxes or packets) to make products shelf-ready. Secondary packaging has become an important competitive advantage for manufacturers, particularly in the food and beverage, health and pharmaceutical markets
• Provide gift solution
• Ease of management with storage in one pack house
• A wide variety including beauty gift sets and food packs
• Full supply chain – freight, delivery, pack, storage, transport to final recipient.
• Reduction on transportation costs.
• 100% inspection
• Storage flexibility
LF Logistics (UK) Ltd, DHL, Raben Group, Logwin Logistics, Wincanton logistics (UK) are leaders in this segment.
6. Cargo storage & MPS Service
This is more applicable for logistics sectors such as chemicals & hazardous material, pharmaceuticals, and healthcare. It includes the following services:
Multiple-piece shipments (MPS):
MPS can also significantly lower shipping costs for larger packages that cannot be consolidated. This is applicable where more than one package going to the same delivery address.
FedEx world largest leading courier offering value added service such as overnight package delivery, next day delivery, Saturday delivery and money back guarantee.
DHL also has Same Day Logistics features include: 24x7x365 access to inventory, Flexible options for part return, Ability to interface with client TMS systems to provide same-day/next-day order handling.
Esser (It’s Transpossible), FedEx, DHL, TNT Express are in front-runner in this services.
7. Kitting & Packaging
Bundling of parts in predefined kits for shipment is called Kitting. Designing of these kits based on part dimensions and handling requirements is always challenging.
This can significantly bring down the overall transportation cost. Speed of cycle time, minimise touch point, reduce combined & distribution cost
Diesl, DHL provide these services to telecom, automotive, retail and manufacturing industry.
8. Milk Run & Pick-up
On the round trips either goods collected from several suppliers and transported to one customer, or goods collected from one supplier a transported to several customers.
• Fast inventory turnover
• Less inventory & inventory area requirement
• Easier inventory record & monitoring
• Speed & flexibility
• Efficient control on the subsidiary industry and efficient consolidation possible
• Ability to provide common services to different users in subsidiary industry and productivity increase
Panalpina logistic provide this unique service across globe.
9. Cross docking
A Cross-Docking system enables products to move directly from the receiving dock to the shipping dock, saving space and manual handling in distribution centre. Cross docking requires close synchronisation of all inbound and outbound shipment movements.
Following steps typically followed to ship the products.
• High speed camera check in tunnel
• In-motion labelling,
• Label verification,
• Multiple receiving line,
• Transportation to shipping,
• In-motion weighing,
• Destination scan,
• Divert to shipping lane,
• Multiple shipping lane,
• Final verification scan
It helps in reducing cost by reducing stockpiling. It also involves re-packing, labelling & inspection.
CWC logistics, TQS logistics, Kenco group, JSI logistics are front runner service provider.
10. Roll-on/Roll-off (RO-RO)
Roll-on/Roll-off are ship vessels intended to carry wheel cargo such as loaded trucks, railroad cars, trailers that can be driven on and off the ships. RORO vessels include ferries, cruise ferries, cargo ships, trains and air carriers.
• Reducing and optimising transport costs
• Increasing overall efficiency
Konkan railways, Trans-Net, Wallenius Wilhelmsen Logistics, NYK Logistics, BMT Maritime Consultants are some prominent RORO service providers.
11. Lift on / Lift Off (Lo / Lo)
For boats and yachts that are too large to ship on a Ro/Ro vessel the next option is Lift-on/lift-off. The boat is loaded over the top of the vessel using cranes controlled by highly skilful loadmasters.
Lo Lo vessels (Lift on – Lift Off) can transport a range of different products as a result of their flexible cargo space, container capacity and onboard cranes.
A Lo Lo operation is when cargo is loaded and discharged over the top of the vessel using cranes or derricks. Lo Lo vessels load and unload cargo at Roll On-Roll Off (Ro-Ro) ports, Load On-Load Off (Lo-Lo) ports and at unserved jetties, using its own cranes.
Self-geared Lift-on/Lift-off (Lo/Lo) type vessels are loaded and unloaded by a crane, which lifts cargo to a specific location on the Lo/Lo ship.
Trans Global Auto Logistics is leader in this segment.
12. Line Side Feeding (LSF)
LSF is the coordination of sequencing and delivery of inbound materials to the production line on behalf of a customer either from an on-site or nearby location just in time to meet production demand.
• A single point of control and visibility on inbound material.
• The economy of scale through common process utilisation.
• Improved supplier management and full transparency.
Panalpina, DHL, Logwin, Aegis, GATI are major logistics companies providing this service.
Designing products for postponement and performing late-stage product completion as close to demand as possible is vital for profitability.
Strategy used to lower inventory in form of finished goods by delaying final activities like assembly, production/packaging to last possible time. This also includes such as flashing, software load, and product customisation.
Postponement helps in reducing cost for manufacturing, transportation and inventory in industries like Healthcare, Consumer & Retail.
• Minimise wrong inventory, expedited shipping costs and obsolete and markdown products.
• Localisation of components becomes more cost effective.
• More options are available to customers without increasing costs.
• Faster reaction time
DHL, CWC, Panalpina, LF logistics provides this service to Healthcare, Paint industry & Electronic industries.
Garment On Hanger (GOH) (also known in certain circles as ‘Garmentainers’ or ‘Hangtainer’) designed specifically for the apparel and fashion industry which helps speed up inventories to market.
Containers are standard/dry containers that are converted/outfitted with bar & string which carry garments on hangers – the same way hanging in all the major retail stores.
Garment on Hanger (GOH) service provider process of pre-sorting, pre-ticketing, and hanging garments at origin to save time, but also to save on handling, storage, and labour costs because they travel on hanger.
A ‘kimballing’ is a popular value added service to swing tickets and barcodes using Kimball attachments or loop tags attached to hanging goods.
Garments do not need to be refurbished at destination instead, they are ready for distribution direct to the retail store.
APL Logistics’, OOCL logistics are leaders in this segment.
15. Rail Rake
With double-stack & triple stack container trains, huge volume of freight movement between two points become easier. With the container boxes stacked two-high, a double-stack train can potentially double the capacity in a train run. This effectively allows the manufacturer to move boxes out of the port area at a faster velocity in each train run.
• Easing congestion & reducing in fuel and emission. It also offer traffic and environmental benefits over trucks.
• To maximise this benefit, Government of India has recently launched ‘Automatic fright rebate scheme’ for traffic loaded in traditional empty flow direction, monitored by FOIS monitoring system.
Pipavav Rail Corporation, CONCOR, APL Logistics-IndiaLinx, Om Logistics Ltd. are pioneered in this segment.
• Globalisation, consumer demands for customised solutions, cost pressure, networked economy, talent short fall and corporate social responsibility has emerged new trend in logistic.
• Sustainable competitive advantage in logistic will be gained not only by providing timely & accurate delivery of consignment but also by providing customised value added service to customer.
• This has enabled innovative approach in service offering through the customisation of service & introduction of new technological tools in logistic.
• For competitiveness, the manufacturer adopt the innovative approach in service offering through the customisation of unique service activities are designed to increase the efficiency & effectiveness of the logistic operation.
• Introduction of new technological tool like WMS; Ware house management system ,DMS for Tracking & tracing, SAP for invoicing & integrating with client’s ERP, CRM for customer relationship management, WIMAC for warehouse inventory management system, Vision picking, Voice based order filling (VOF), Voice Recognition Talkman Terminals (VRTT) for inventory management tool etc. are disrupting to meet SLA target in terms of dispatch accuracy, on time delivery and 100% inventory accuracy.