Our response is too long to fit into the chat box, so we’re posting it here

To Delia & welovedcm: Shorter lead time, cross docking and postponement are all value adding services. They help to improve customer service. With better customer service, customers would have the perception that the product has a higher value, compared to one without customer service. As we all know, no one likes to wait. Thus a shorter lead time increases customer satisfaction which increases the value of the product perceived by the customer. For cross docking, we’ll use perishable products as an example. For these products, their value decreases with time, which makes it essential to ship it out asap. For example, when vegetables are kept for a period of time, it will start to turn brown and rot. Once this happens, its value drops drastically and it becomes almost worthless. Cross docking also brings different products from different suppliers together, then consolidating the products together into one package; that is one customer’s order. This package can be sent out altogether to the customer at one arrival time instead of receiving them at different times which would cause confusion. Lastly, postponement allows customization. For example, Dell allows their customers to pick and choose exactly what they want. This creates value as customers can have their computers to suit their liking, rather than having one which does not function using the language they are most comfortable with, or not having a software that they require, which would be of no value to them. We hope that this has answered your question. Please feel free to clarify any other doubts with us. Thanks.

VALUE ADDING ROLES OF WAREHOUSING AND DISTRIBUTING OPERATIONS



What are value adding services?
These services are aimed at increasing the value of the product to the customer. Many do not get what it means as they perceive it as increasing the physical amount of value into the product. However, It does not need to mean that way, but can also simply mean just getting the right product, in the right quantities, to the right place at the right time. And whatever makes that happen, can be counted as a value added service.

Look on further to understand this topic better.

Value adding services include :
1. Labeling/ Tagging
2. Product mixing
3. Shorter lead-time
4. Load unitization
5. Product protection
6. Pick and Pack
7. Quality check/ Quality Assurance
8. Packaging
9. Improve customer service
10. Cross dock
11. Postponement
12. Contingency protection

Let us now go through the individual points to get a clearer picture.

1. Labeling/ Tagging
- Re-labeling goods for export with foreign labels (expiry dates and product description)
- Re-labeling the goods to be loaded and sent out with the customer’s name, address, order quantities, any other relevant details pertaining to the order.
- RFID tags, price stickers, and other promotional labeling- ready for retail display.
- A computer system will print out the order number and other details in a sticker form so it can be stick onto each product to be sent out.
- Radio Frequency Identification (RFID) tags makes reading and storing date about products possible without physical or line-of-sigh. Promises greater efficiency and cost-effectiveness in getting the product to their customer- Errors are decreased significantly.

2. Product mixing
-Companies usually produce items at different plants; a company that does not warehouse all the different goods they need would have to order straight from differing suppliers, causing differing arrival times and opportunity for mix-ups.
-Therefore, the DC will take in customers’ orders then consolidate the orders from their different suppliers, then pack them in one package to send out to the customer.
- This provides convenience for the customers as they don’t have to look for each individual item manually.


3. Shorter lead-time
-Customers get their orders fast. Especially when they are in urgent need of items.
-Increases customer satisfaction and therefore enhance future sales.
- Can be done by airfreight. Although cost of airfreight is relatively high, a company can nevertheless trade it off against the savings in warehousing and inventory costs, therefore reflecting the savings in cost onto the customer.
-Expediting orders

4. Load unitization
-Moving a greater quantity of goods per journey, therefore reducing the number of journeys required, and hence the handling time and cost.
- Therefore customer is able to pay less for their orders.
-Speeding the loading and unloading time
- Minimizes the risk of damage and pilferage.


5. Product Protection
-Temperature sensitive control room for products that require low temperatures to be kept in.
- Keeping the products fresh and preserves the quality.
- Products that usually require low temperatures are unloaded and quickly put into the cold room.
- Also done for fragile products. Eg, with the use of bubblewrap or Styrofoam to cushion the product in case it drops.


6. Pick and Pack
-Products are usually received in big bulks. Therefore the DC has to de-palletize and break bulk to smaller package sizes suitable for customers’ orders.
- Picking individual items (packs or inner packs) from cases for orders and build new cartons, packs, or pallets to meet customer requirements.


7. Quality check/ Quality Assurance
-Upon receiving goods, warehouse/DC will perform QC to ensure products are:
- In correct count/amounts
- up to standard or in good quality
-QC/QA are also done throughout the product’s duration in the facilities of the warehouse/DC.
-Prevent pilferage/damage/ obsolescence
-QA to assure customers that their products are safe with us and they can trust us.
-When goods arrive from the supplier, the receiver will tally the invoice amounts with what is received.
-Any discrepancies are feedback to the supplier and reported to the purchasing department.


8. Packaging
- Packaging for temperature- sensitive products or biological products.
-For food products, it has to keep the food fresh
-Ensure that the goods remain in their original conditions even after transportation and climate changes.
-Reduces the chances of a customer receiving a spoilt product or a defect.


9. Cross dock
-Usually adopted when warehouse/DC follows the U-flow of movement for products.
-After receiving the goods, it is moved to the loading bay to be sent out along with the other products in the customer’s order; the goods do not stay in the warehouse/DC
-Very essential when it comes to products with a short shelf-life, or with very short time constraint.
-Customers are able to get their goods faster and save on chances for the product to become obsolete or prone to pilferage and/or damage.


10. Postponement
-Is the process where finished products are manufactured from components or sub-assemblies, as and when only assembled when customer orders are received.
- This prevents holding large inventories, and prevents goods from becoming obsolete.
-By holding components or sub-assemblies, companies can also actually save costs by eliminating tax payments and in turn reflects onto the customer by being able to pay lesser for their goods.
-Helps to maintain high levels of flexibility and customer service.
-Raw materials are unloaded and kept in the warehouse/DC and only assembled upon customer’s orders then sent out to the customer in the exact specification they desire.

11. Contingency protection
-To buffer for unexpected demand, transportation delays, vendor stock outs, strikes or goods damages during transit.
-By keeping buffer stock, the goods will still be available to customers despite the unexpected situations and will usually lead to customer satisfaction and enhance future sales.
-Done by forecasting the demand and ordering what is needed based on the forecasted demand.


USEFULNESS OF VALUE ADDING ROLES
• When a warehouse or distribution centre adds value to a product, it benefits both the customer and the retailers. For example, packaging helps to prevent a product from being damaged. Both parties benefit from this as the chances of a customer receiving a damaged product would be lower and it would save the retailer on costs they would incur to replace the damaged item. Thus this adds value to products.

• In a distribution centre where they use cross docking, it is a value adding role as it decreases the lead time for customers. When customers lead time is shortened, it increases satisfaction and also the greater possibility for future deals and even loyalty. Thus when a customer keeps coming back in the future, this generates greater profits, which is surely useful.

• One usefulness of the RFID system is that it is easier to identify and track goods. It enables pickers in the warehouse to know where to locate goods by just keying in the identification number given to that particular good. Thus, it will shorten the entire order processing time. This will enable the goods that need to be delivered be sent out to the destination earlier, or on time. This improves the order picking process by increasing efficiency, and useful in a sense such that workers can accomplish orders quickly.



CONSTRAINTS OF VALUE ADDING ROLES
• Although lead time for customers will be reduced, there is a limit to it as the distribution centre and warehouse has to also take into consideration their supplier lead time. Factors such as air freight or express deliveries have to benefit the company in the long run in terms of profits. It is not possible if the customer lead time is shortened such that the distribution centre or warehouse incurs a loss. Thus it will be brought to a point where both parties are still enjoying benefits. Customer sales have to offset the extra charges in air freight transportation costs.

• Radio Frequency Identification (RFID) is extremely useful to a warehouse or distribution centre in terms of saving time and man power. It can also be used to track the location of their goods to see if they are on the right track. However it also depends on the type of goods that are being stored or tracked. Even though each RFID tag only adds a small sum to the costs incurred, it would only be practical if it does not affect the profit margin by a large percentage. For example, placing a tag on a can of coke will be considered expensive as the revenue and profits from each can is small. Having this additional cost might decrease the profits by a large percentage. On the other hand, tagging a laptop would be considered cheap as each laptop could be sold for a few thousand dollars and it would make this additional cost insignificant. Thus RFID is generally used for the middle and higher priced products.

• Facility constraints might occur especially when a warehouse or distribution centre handles a variety of products. For example, products which need to be stored in a cold room might face stock outs when there is a sudden increase in demand. Because the warehouse or distribution centre has only a limit space designated for the cold room, only a certain amount of inventory can be kept and thus, proper planning has to be made

Shaun's Post

The visit to the Army Logistics Base (ALB) has given me a ton of knowledge and has also allow me to experience of what goes on in a warehouse. Here are a few things that I have noticed and can apply to what we study.

ALB uses a through flow system, with the entrance and exit of the warehouse at opposite sides of the building. In this through flow system, there are 5 main warehousing areas. First is the unloading bay, where the trucks unload the goods. Next is the main storage area, where goods that are unloaded are kept. After which is the order picking area, where goods are picked according to each order. Next is the marshalling area, where goods are prepared to be loaded up the outgoing trucks. And lastly, the loading bay, where goods are loaded up the outgoing tucks.

In the storage area, there were many different kinds of storage systems installed in ALB. We saw the Pallet Automated Storage Retrieval System (ASRS), which had 18 racks and 18 layers on each rack. The Bin ASRS, which had 5 aisle, 5 cranes and a total of 29,000 bins. Other storage systems we saw were Very Narrow Aisle (VNA), Mobile Racking System, which was identified at the receiving bay and the Vertical Carousel System, which was identified on the 3^rd Floor and helped stored the medical necessities.

We had also identified the few Material Handling Equipments (MHEs) that are used in the inbound and outbound of the ALB. The forklift, pallet jack and the laser guided vehicle. We identified the laser guided vehicle at the receipt area, however, the vehicle was not in use at it was spoilt.

At the end, we finally saw the delivery trucks that ALB utilizes, which was the 40ft box truck.

The field trip was a fun, interesting and an enriching one. It helped all of us in many ways and I hope that we have more field trips like that in the future.

Zen's reflection

After visiting the Army Logistic Base, I have got a better understanding about how a warehouse functions and the different aspects of it. I’ve seen the 5 main operation areas of a warehouse in ALB; Good-in, Main Storage, Order-picking area, Marshalling and lastly Goods-out area. At ALB, I recognize that it uses a through-flow warehousing floor layout, of which the entrance and exit are opposite each other. My group mates and I estimates that the height of each warehousing floor of ALB building is around 12M high. ALB uses different storage systems, such as the Pallet ASRS, which is used to store vehicle parts. Also the Bin ASRS, for smaller items. There was Vertical Carousel System to store the medical products. It uses the goods to picker concept. I was asked to try to stop the carousel system by putting my hands in between the racks. The VNA; very narrow aisles uses a wire guided system to guide the cranes to the stocks. This makes the picker’s job so much easier. In order to have a better utilization of space, mobile racking is also part of the storage system. We were shown on how to move the racks and it will b immediately stopped when anyone enters the aisles, so interesting! While walking around ALB, we saw a few material handling equipments such as forklift, pallet jack. The workers there also showed us how to use it! Lastly, at the Goods-out area, we saw the 40 feet box truck that is used to deliver the different goods to different army camps. It was a very useful trip for Logistics students as it enhances our understanding for warehouse. I look forward to more of this field trips coming up.

Verena's Reflection

This was the first time I entered the Army Logistics Base and It was a great learning journey for me.

Being able to see the hands-on process instead of just reading it from the text was a great help in my learning process. I witnessed the unloading, reserve storage, picking, marshalling and loading area, all the 5 key areas of a warehouse.

ALB has a ‘through flow’ system of goods. The unloading bay is at one end, while the loading bay is at the other end. Their reserve storage is fully automated. No human personnel is allowed into the storage area unless otherwise specified. It is very effective and efficient as the items handled are in large quantities and bulky. If it were to be handled manually, a lot of manpower and time would be needed to fulfill the order. They also make use of the Pallet ASRS and Bin ASRS. The Pallet ASRS is for larger items whereas the Bin ASRS is for smaller items. Their order picking area is also automated by the carousel system. The order picker will key in the product they need into the computer and the goods will come to the picker where he will take what he needs. This reduces the amount of mistakes committed and saves the picker a lot of travelling time. They also have the mobile racking system at the receiving bay. I saw for myself how much space can actually be utilised by adopting this system.

Justin's Reflection

During my recent visit to the Army Logistics Base(ALB), it was a wonderful opportunity to be able to experience everything first hand. Once in there, I realised that they adopt the through flow layout and also managed to see the Goods in, main storage, order picking, marshalling and goods out areas. A total of 5 different kinds of storage systems are used in ALB, which are the Pallet ASRS, Bin ASRS, very narrow aisle(VNA), mobile racking and the vertical carousel system. It was really helpful to actually see how these systems work as it was very hard to understand without being able to see it happening. At the receiving bay, the powered mobile racking system is used and the goods are transferred to the main storage area as soon as they are received. I also learnt that the vertical carousel system is used to store only small items, for example medical products. It was located at the 3rd floor and retrieving the items were extremely fast, allowing the goods-to-picker concept. The material handling equipment seen at the inbound and outbound areas were the forklift and pallet jack. This allows the staff to move large pallets around the areas swiftly. Using large 40FT trucks to deliver their goods, it helps them to save on delivery costs since having larger truck loads would benefit the company with economies of scale. Thus it was a great learning journey at ALB and I am very grateful for that opportunity.

The group's introduction

I am Justin Lim, 18 years old and currently studying at Temasek Polytechnic. I enjoy playing tennis, soccer, table tennis and going to the gym. Other interests include going for buffets, fishing, listening to music. Of the few, it is only tennis where i play competitively for school and even clubs outside. Apart from just playing, I also do private coaching for tennis during my free time.

My name is Shaun, I am 19 this year and my star sign is Leo. A brief description about myself is that I am a very

helpful and caring person. I always like to help my friends and fellow classmates whenever they need help and approach me. My hobbies include creating and listening to music, and watching and playing football. I play a few instruments, like the drums, guitar and bass guitar.

I am Zen Low, 18 years old, currently pursuing a diploma in Logistics and Operations Management in Temasek Polytechnic. I am a cheerful and friendly person. I am a national bodybuilder and I have won quite a few bodybuilding titles during the past 2 years. I just won a bronze medal in the 2008 Asian bodybuilding Championships held in HongKong this July. I love to eat alot. However, due to the constraints of my diet, I have to stick to almost plain and tasteless food during the pre-contest period. For bodybuilding, we have to shed off excessive water and fats in our body to attain the dry and lean look on stage. Despite the toughness in this sport, I have a deep passion for bodybuilding. Apart from bodybuilding, I do lead my life like a normal teenager. I hang out with my friends and also plays computer games. Pool is my usual game during my free time. Bodybuilding is an expensive sport, therefore I have to work in order to sustain myself. I am doing freelance personal training as a part time job.

I am Verena, 18 turning 19 next year in April. Besides schooling in Temasek Polytechnic, i also work part-time as a retail assistant and give tuition. It is not easy juggling school and work, but with proper time management it is possible to get by. I enjoy going to bangkok for holidays. so much so that i can walk around the place like singapore. I am currently trying to learn the language so i can put it to good use in the future!