If you’re like most business owners, you’re always looking for ways to improve your bottom line. One way to do this is by offering value-added services through your logistics business. What are 3rd Party Logistics (3PL) value-added services? And why do they matter?
In this blog post, we’ll discuss the benefits of offering value-added services and provide some examples of what you can offer. Plus, we’ll introduce SphereWMS – a powerful warehouse management system that can help you streamline your operations and provide even more value to your customers.
What Are Value-Added Services in Supply Chain?
Value added services (VAS) are any additional services you can provide to your customers that will improve their experience or add value to their business. For logistics businesses, examples might include packaging and assembly, kitting features, inventory management, or even just storage.
Basically, anything that goes above and beyond standard shipping and handling can be considered a value-added service.
Why 3PL Companies Need to Offer Value-Added Services
There are a few reasons why third-party logistics providers need to offer value added services.
First, it’s a great way to differentiate your business from the competition. If you can offer something that other logistics businesses can’t, you’re more likely to gain a competitive advantage and win new customers.
Second, value added services can help you build stronger relationships with your existing customers. By providing more than just shipping and handling, you’re showing your customers that you’re invested in their success across the entire supply chain. This can help build brand loyalty.
And finally, offering value added services can be a great way to boost your revenue. If you can make money meeting consumer demands, you’ll be able to increase your prices and improve your bottom line.
Ultimately, offering VAS is a win-win for 3PL companies and their customers. 3PL businesses can increase their revenue and build stronger relationships with their customers, while customers can get the additional services they need to improve their operations. Increasing the services offered to your clients can have a big impact on 3PL company’s growth and sustainability.
Types of Value-Added Services for Logistics and Supply Chain Management Providers
When it comes to VAS, there are a few things to keep in mind. First, you want to make sure that you’re offering services that your customers need and that will add value to their business. Second, you want to make sure that your services are scalable and can be easily implemented into your existing operations. And finally, you want to make sure that you have the right tools and partners in place to help you deliver on your promises.
With those things in mind, let’s go over some of the most common VAS you can offer as a 3PL business.
1. Packaging and Assembly
One of the most common VAS that third-party logistics providers offer is packaging and assembly. This can be a great way to add value for your customers, particularly if you offer specialized packaging or assembly options.
2. Kitting
kitting blog post is another common VAS that 3PL businesses offer. This involves putting together products and materials that your customers need in order to complete a project or task.
For example, if your customer is a construction company, you might put together a kit of nails, screws, and other fasteners that they need for their next job. Kitting can save your customers a lot of time and hassle, and it’s a great way to add value to their orders.
3. Negotiating Shipping Rates
One way to reduce your customer’s shipping costs is to negotiate lower rates with carriers on their behalf. This can be a valuable 3PL service, particularly for businesses that ship large volumes of products.
4. Repackaging and Rebranding
If your customers need help with their packaging and branding needs or repackaging or rebranding their products, you can offer this as a VAS. This can be a great way to differentiate your 3PL business from the competition.
5. Returns Management / Reverse Logistics
Another value-added service that you can offer is returns management or reverse logistics. This can be a valuable service for businesses that sell products online, as it can help them manage the return process and make sure that their products are returned safely and efficiently.
6. Postponement Packaging
Postponement packaging is a type of VAS that allows businesses to delay the final packaging of their products until the last possible moment. This can be a valuable service for businesses that need to wait for final product approvals.
For instance, pharmaceutical companies may need to wait for market-specific labeling before they can package and ship their products.
7. Managing Recurring Subscription Boxes
If you have customers that sell recurring subscription boxes, you can offer to manage the packaging and shipping of their products. This can be a valuable service for businesses that are part of this huge trend in eCommerce.
8. Cross-Docking
Cross-docking is a type of VAS that allows businesses to ship their products directly from one location to another without having to store them in between. This can be a valuable service for businesses that need to save on storage costs or that need to get their products to their customers quickly.
9. Export Management
If your customers sell products internationally, you can offer export management as a value-added service. This can help them comply with customs regulations and make sure that their products are shipped safely and efficiently using cost-effective international shipping methods.
Why Should Businesses Outsource to Value-Added Service Providers?
There are many reasons why businesses choose to outsource to logistics providers, but one of the most common is that it allows them to focus on their core competencies. When businesses outsource their 3PL needs, they can free up time and resources that can be better spent on other areas of their business.
In addition, outsourcing to 3PL providers can also help businesses save money. 3PL providers often have economies of scale that allow them to pass on savings to their customers. Finally, 3PL providers often have access to better technology and resources that can help them improve the delivery of their products.
Technology and Equipment Required to Offer VAS
If you want to offer VAS, you’ll need to have the right technology and equipment in place. This will vary depending on the type of service that you’re offering, but some common pieces of software and equipment that you might need include:
- Warehouse Management System (WMS): A warehouse management system is software that helps businesses track and manage their inventory levels. If you’re offering VAS that requires you to manage inventory, a WMS is a must.
- Shipping Software: Shipping software can help businesses automate the shipping process and make it more efficient. For any 3PL, but especially if you’re offering VAS that involves shipping, this type of software is a valuable investment.
- Packaging Equipment: If you’re offering a VAS that involves packaging, you’ll need to have the right equipment in place. This might include things like packaging tables, conveyor belts, and wrapping machines.
- Special Equipment and Stations: Depending on the type of VAS that you’re offering, you might need specific types of equipment or stations. For example, if you’re offering kitting services, you might need a special area for that packing process. If you’re offering product customization, you might need a special printing station. For cross-docking service, you will need the right kind of warehouse and loading dock layout to efficiently perform this service.
SphereWMS: Helping 3PLs Offer Value-Added Services
If you’re a 3PL business that is looking to offer VAS, SphereWMS can help. Our software is designed to help 3PLs manage their operations more effectively and efficiently. With SphereWMS and our modules, you can automate your 3PL processes, including order management, warehouse management, and transportation management. In addition, our software is integrated with leading shipping carriers, which makes it easy for you to offer carrier-negotiated rates to your customers.
The Bottom Line
Offering value-added services is a great way for third-party logistics warehouses to differentiate their business from the competition. Not only can it help you win new customers, but it can also help you retain existing customers and grow your business. SphereWMS can help you manage your 3PL operations more effectively and efficiently, so you can focus on delivering the best possible service to your customers. Contact us today to learn more.
Frequently Asked Questions
What are common 3PL value-added services?
Value-added services extend beyond basic storage and shipping to include kitting and assembly, custom packaging, labeling and ticketing, quality inspection, returns processing, and light manufacturing. These services differentiate 3PL providers while generating additional revenue. Offering value-added services enables 3PLs to become strategic partners rather than commodity service providers.
How do value-added services benefit 3PL customers?
Customers benefit from outsourcing specialized functions they cannot efficiently perform internally. Value-added services reduce customer facility requirements and staffing needs. Centralizing activities at 3PL locations improves consistency and quality control. Flexible capacity accommodates seasonal demands without fixed costs. Customers focus resources on core competencies while 3PLs handle logistics complexity.
How should 3PLs price value-added services?
Pricing should cover direct labor, materials, overhead allocation, and profit margin. Activity-based costing accurately captures service costs. Transaction-based fees work for standardized services while time-and-materials suits variable work. Volume commitments may justify discounted rates. Clear service definitions prevent scope creep and billing disputes with customers.
What equipment is needed for value-added services?
Equipment requirements depend on services offered. Kitting needs assembly workstations and packaging supplies. Labeling requires printers and applicators. Returns processing may need testing equipment and refurbishment tools. Quality inspection demands appropriate measurement devices. Investing in proper equipment ensures service quality and worker efficiency for value-added operations.
How do value-added services impact warehouse layout?
Value-added areas require dedicated workspace separate from standard storage and fulfillment operations. Material flow design should minimize handling between storage, processing, and shipping. Adequate staging space for work-in-process prevents congestion. Ergonomic workstation design supports worker productivity and safety for repetitive assembly tasks. Flexible layouts accommodate changing service requirements.
