In today's fast-paced market, the efficiency and effectiveness of the supply chain are more important than ever. At the heart of this optimization is Value Added Logistics (VAL).
Defining Value Added Logistics
But what is value-added services in logistics exactly? Value-added logistics is any process that adds ‘value’ to a product moving through the supply chain.
From packaging design to quality control, VAL encompasses a wide range of activities that improve the end-product and the overall efficiency of the supply chain.
Examples of Value-Added Services Provided by 3PLs:
- Co-packing: Combining various products into one package for promotional or sale purposes.
- Kitting: Assembling different items into a single, ready-to-ship package.
- Co-production: Joint production between a manufacturer and a logistics provider in order for the manufacturer to reduce costs on labor.
- Quality inspection: Checking products for defects to ensure they meet quality standards.
- Metal detection: Scanning finished products for any unintended metallic materials in the product.
- Retail display builds: Creating and setting up visual displays in retail settings. A real example is the retail displays we build at Buske Logistics for Starbucks that ship to Walmart.
- Heat tunnel rewrapping: Encasing products in plastic and applying heat to shrink-wrap them securely.
- Repacking: Altering a product's packaging for updates, corrections, or resizing.
- Variety pack creation: Creating a variety pack for three flavors of chips.
Benefits to Manufacturers: Reducing Costs
There are many benefits to manufacturers partnering with a value-added-logistics provider. A few of them include:
- Avoiding expensive labor: Many manufacturers are unionized and cost 150% of the same labor in the open markets. These manufacturers will outsource this work to reduce costs.
- Sticking with core competencies: These processes are often not a manufacturer's core competency. Outsourcing the work to a value added logistics provider saves time and allows the manufacturer to stick with what it is good at.
Benefits to Brands and Their Customers
There are many benefits to companies wishing to use value-added logistics providers. A few examples include consumer advantages and how it’s displayed in retail.
Consumer Advantages: Trust and Customization
- Personalized Products: Techniques like repacking allow for customization, catering to specific consumer preferences, thus enhancing the experience and satisfaction (Source: Harvard Business Review).
- Ensuring Product Quality: By implementing VAL’s rigorous quality checks, companies like Buske Logistics provide consumers with the assurance of purchasing trustworthy and reliable products.
Benefits in Retail: Attracting Customers and Enhancing Presentation.
- Effective Displays: The construction of retail displays and innovative packaging designs plays a pivotal role in attracting customers and driving sales. An example of a display we build are retail displays for Starbucks, showcasing their core and new flavors.
- Variety Packs Requiring Heat Tunnels: Repacking and heat tunnel rewrapping ensure that products meet and exceed consumer expectations in terms of presentation and quality.
Keys to Becoming a Good Value-Added Logistics Provider
What are the key traits of a successful value-added logistics provider?
- Ensuring Compliance: In the tightly regulated food and beverage industry, products must meet health and safety standards. This encompasses a range of guidelines, such as FDA regulations, ISO, AIB standards, and many more, to name a few.
- Strong financials: Most companies will perform a credit check on a value-added logistics provider to ensure they are not imminently about to go out of business.
- References: Manufacturers will want to check that whatever the 3PL says they can do is true. Consistently, potential customers at Buske Logistics often ask us for references from our clients, such as Ball Corp and Anheuser Busch.
- Flexible labor: One of the other reasons a manufacturer outsources this work is the amount of labor hours it can consume. Can be very costly to hire and then move on from newly employed associates. For a given a VAL project, the provider should have the labor resources or pool of labor to tap into.
The Future of Value-Added Logistics
- Adaptation to Technological Advances: With the rapid development of technology, VAL is poised to incorporate cutting-edge tech like AI and IoT. By enabling smarter, data driven decisions and providing real-time tracking and monitoring capabilities. The result is a significant improvement in predictive analytics and the optimization of logistics solutions.
- Eco-Friendly Options: Sustainable VAL practices are adapting to the growing demand for environmentally responsible products. They achieve this by utilizing recyclable and biodegradable packaging materials and optimizing route planning for energy-efficient transportation. Additionally, implementing waste reduction strategies in warehousing further underscores a commitment to reducing the environmental impact of logistics operations.
- Enhanced Customer Experiences Through Personalization: Future VAL strategies will likely prioritize hyper-personalization in logistics, catering to individual consumer needs with even greater precision.
- Global Supply Chain Resilience: Future VAL practices will be crucial in building more resilient global supply chains, capable of withstanding various disruptions. These include adopting strategies like diversifying supplier bases to avoid reliance on a single source and implementing advanced risk management systems to manage potential disruptions before they impact operations.
Conclusion: A Catalyst for Supply Chain Efficiency and Customization
Value Added Logistics is not just a logistics trend; it's a comprehensive approach that benefits every link in the supply chain. From improving manufacturing efficiency to enhancing the consumer experience, VAL is pivotal in today's marketplace.
Interested in learning more about VAL, connect with Buske to explore how our VAL services can transform your business and drive your success.
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