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Five tips for efficient value added services

While no two facilities are alike, and value added services will vary from one customer to the next, any DC manager can improve their processes if they keep a few tips in mind.
December 21, 2011

While no two facilities are alike, and value added services will vary from one customer to the next, any DC manager can improve their processes if they keep a few tips in mind:

Create uniformity into the process when possible:
Requests for value-added services are often added in a text box on an order. That requires someone in the warehouse to interpret what has to be done. A better approach is to create value added service codes that allow uniformity in the process. Like orders can then be released together, and managers can do analysis to determine how much a service cost to perform.

Employ activity-based costing:
Most of the time, the pricing for value added services doesn’t reflect what it really takes to do perform the service. Hale urges clients to create simple engineered standards to do activity-based costing: That might include a base cost for moving a case, adding a ticket, and printing and applying a label. To know what value-added services are really costing, you have to align it with labor standards and unit load movements.

Use intelligent postponement: Orders for rainbow boxes or pallets – that is a carton or pallet with an assortment of product rather than just one SKU – are common. For customers who order assorted packs in a large volume, Hale suggests designing a process to create some assortments ahead of time, but at a rate slightly below typical orders. The balance can be processed when the customer actually places an order.

Design value-added operations like a production process: Although value-added services are performed in a DC, they have more in common with the manufacturing floor than typical pick and pack operations. Many consultants urge their customers to look outside their four walls for engineers who understand manufacturing, rather than warehousing, to design their value-added processes.

If possible, use your WMS: Older warehouse management systems weren’t designed with value-added processes capabilities, but many newer systems do include modules for value-added services. Whenever possible, you want to create a process that can be managed in a WMS like any other process in your operation. That allows you to determine what supplies you need and how many labor hours to allocate to your orders.

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About the Author

Bob Trebilcock, editorial director, has covered materials handling, technology, logistics and supply chain topics for nearly 30 years. In addition to Supply Chain Management Review, he is also Executive Editor of Modern Materials Handling. A graduate of Bowling Green State University, Trebilcock lives in Keene, NH. He can be reached at 603-357-0484.


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