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Added value services in
Logistic
Driving forces and barriers for developing and providing value added services
SUMMARY• Frame of reference
• Service management in logistic
• Make or buy
• 3PL• Analysis
• 3PL positioning
• Value added in logistic
• Development of added value services
• Forces and barriers• Conclusion
“How to become a 3PL leader of added value services ?”
FRAME OF REFERENCE
Service management in logistic
Basic service package consists of core and supplementary services
Customized core serviceCustomized augmented
service
Standard core serviceStandard augmented
service
Service management
Cu
stom
izati
on
Low
Hig
h
Low HighDifferenciation
Value-added services as services adding extra feature, form or function to the basic services
Make or buy
Three reasons such as the lack of capability, scale and ability and lack of capacity to perform it within the organization
Total solutions providerHigh value
Game changersExtremely high value
VendorsLow value
SpecialistsMedium value
Positioning
Imp
ort
an
ce t
o t
he
cust
om
ers
Low
Hig
h
Low HighUniquesness of offerings
3PL positioning
• Specialized services- - Value added services• Basic general services
• ++ Value added services• Advanced general services- - Value added services
Advanced logistic network
Logistic integrator
Specialized logistic
operator
Basic logistics operator
Low HighAsset specificity
Com
ple
xit
yLo
w
H
igh
ANALYSIS
EXAMPLES for 3PL’s
Customer adapterExample : Totally dedicated solutions involving the basic services for each
customers. 3PL firm is seen as a part of the customer organisation
Customer developerExample : The 3PL firms develops advanced
customer solutions for each customer. Enhancing of the knowledge in common. The
role more of a consultant
Standard 3PL ProviderExample : A highly standardized modular system where customers are offered their
own relatively simple combination of standardized services
Service developerExample : An advanced modular system of a large variety of services and a common
IT system used for all customers
3PL Providers
Cu
stom
er
ad
ap
tati
on
Low
Hig
h
Low HighProblem solving general ability
EXAMPLES for PRODUCERS
Customer adapter 3PL
Outsourcing of whole or important part of supply chain
Customer developer 3PL
Outsourcing of whole supply chain and design of optimal and innovative Supply chain
model – consulting partnership
Standard 3PL Provider
Outsourcing of Standard handliing of orders and distribution
Service developer 3PL
Outsourcing of Standard handliing of orders and distribution + outsourcing of
specific service (procurement / custom ..)
3PL Providers
Cu
stom
er
ad
ap
tati
on
Low
Hig
h
Low HighProblem solving general ability
POSITIONING OF 3PL PROVIDER
Value added services in 3PL
Basic logistics Transportation
• Network-based transport • Emergency transport • Transportation management
Warehousing • Storage • Order picking • Inventory management
IT-services • EDI • Tracking and tracing
Value-added logistics Value-added services
(physical handling) • customer-focused service • direct delivery • cross-docking • labeling • repacking • adding usage instructions • promotion-focused service • making point-of-sale displays • adding advertising material to
the product package • shipping of promotion
materials
Manufacturing-focused service • postponement • assembly
Time-focused service • just-in-time • sequenced just -in-time
Basic service • reverse logistics • aftersales service • spare parts • quality control
Administrative services • Purchasing of material • Order processing • Invoicing • Export/import operations • Consulting • Customer support • Telemarketing• Custom clearance• Certification (Tapa, AIO, ISO)
Value added services in 3PL
The earlier the 3PL is participating in the supply chain, the most added value he can bring
Man
ufac
turin
g
Fina
l ass
embl
y, e
tc.
Pack
agin
g, D
ispl
ay, B
uild
ing,
etc
.
War
ehou
sing
and
Distri
butio
n
Supply Chain
Ad
ded
valu
e
METHODOLOGY
How to become a 3PL leader of added value services solution ?Define your strategy
• Choose which king a actor you want to be and include VAS in your long term business plan• Make pro-activeness a value of your company : « Think » as important as « Do »
Prepare your team• Develop your expertize• Reinforce your client relationship• Lead a common team of technical experts, account manager and commercial team
Master the complexity• Develop your tools to handle customized solution as your standard, at a competitive cost
Treat your investment connected to added value services differently than your core business investments• Added value and profit are proportional
DEVELOPMENT OF VAS : Innovation
Innovation
Internal innovation
Customer related innovation
Multi customer related innovation
Single customer related innovation
Innovation at the beginning of the
relationship episode
Innovation in an ongoing relationship
Reactive innovation
Proactive innovation
Proactive cost improvement
Proactive performance improvement
Who takes initiative for developing value added services ?How is development of value added services done ?
Process/support team
Key account manager
Commercial team
Company spiritCompany strategy
DRIVING FORCES & BARRIERS
What are the driving forces in the development and providing of value added services ?Meet customer’s demandLock-in customerBe more competitive and attractive to the customerWarehouse is the suitable place in the supply chain to perform added
value servicesTask that nobody wants to do (customer, customer’s customer, specialist
in providing particular service)Changes in customer business and outer environment : Economical
reasons can be a driving force for 3PL firms to provide value-added services (man hour cost, better possibility to plan work force, etc.)
DRIVING FORCES & BARRIERS
What are the barriers in the development and providing of value added services ?High costs are a common barrier for service development. Necessity of too
big investments in providing value-added services, as well as requirements from customer’s side to extensively customize value-added service
Problems with establishing successful organizational learningLack of trust and communication derived from not enough close
relationships between the 3PL provider and customersLack of proactiveness from the 3PL provider’s side
• Lack of proactiveness can result from, for example, 3PL providers themselves being more oriented towards doing than thinking
• Also depend on logistics seen as a less important development area from the customer company’s point of view.
DRIVING FORCES & BARRIERS
What are the barriers in the development and providing of value added services ?The difficulty for the 3PL provider to coordinate offering of so many different
value-added servicesAccept the probable necessity to work with external partnersThe possible lack of expertise in the area of service which can result in
service of low quality can be seen as a barrier in such extent that somebody needs to pay for the costs of acquiring necessary expertise to ensure quality.
CONCLUSION
How to become a 3PL leader of added value services solution ?
Strategy Team Tools Budget
RESULTS
RESULTS
This strategy has been implemented in the core of FM Logistic and this where we are now :
FM added value services plant
Sered – Bratislava plant in numbers
VAS
FM added value services plant
Basic logistics Transportation
• Network-based transport • Emergency transport • Transportation management
Warehousing • Storage • Order picking • Inventory management
IT-services • EDI • Tracking and tracing
Value-added logistics Value-added services
(physical handling) • customer-focused service • direct delivery • cross-docking • labeling • repacking • adding usage instructions • promotion-focused service • making point-of-sale displays • adding advertising material to
the product package • shipping of promotion
materials
Manufacturing-focused service • postponement • assembly
Time-focused service • just-in-time • sequenced just -in-time
Basic service • reverse logistics • aftersales service • spare parts • quality control
Administrative services • Purchasing of material • Order processing • Invoicing • Export/import operations • Consulting • Customer support • E_commerce• Custom clearance• Certification (Tapa, AIO, ISO)
Contact details
Further questions, clarification, curiosity ?
Jan DrzikPlant manager
Email:[email protected]
Mobile: +421 907 784 424
Brice RouanetSolution Center manager CZ/SK
Email:[email protected]
Mobile: +421 917 550 074
