We pride ourselves on providing flexible solutions for our clients, so we continue to look for ways to respond effectively to lead time requirements. Sometimes lead time requirements can be met by optimizing the clients' network. Because of our multi-client campus distribution center environment and comprehensive transportation network, our clients are able to reconfigure their distribution network with OH Logistics to better serve their customers-and respond to shorter lead times.
Demand For Value-Added Services
Spieth: Demand for value-added services (VAS) is certainly on the rise and provides opportunities for supply chain companies to differentiate themselves and lower labor costs for manufacturers. We welcome the opportunity to provide value-added services and find that they can take various forms, including packaging solutions, display building, kitting, engineered solutions and consulting, as well as traditional repacking activities.
We perform many VAS services, including repacking specialized variety packs for a major packaged foods manufacturer to support their promotional activities throughout the year. We also support our clients' international requirements by relabeling, repalletizing and acquiring USDA stamps for shipments being exported from the US.
We perform full time repacking efforts for a major condiment manufacturer that include end of aisle displays, repacking of quantities, repacking of varieties, rebundling of quantities and varieties, inspection of product and packaging, reconfiguring pallet quantities and relabeling of product. All these activities ensure integrity and quality of the finished product. Our proximity to this client's largest manufacturing facility as well as our expertise and labor cost saving solutions have brought value to the client.
A client who manufactures nutritional beverages requires a quality assurance hold period of 72 to 96 hours after production to ensure there is no contamination. We provide this service for the client at our distribution center.
We also operate a photography studio so that our e-commerce clients' products look great online.
We believe in the customer benefits of providing value-added services in the distribution center and believe it will continue to represent a greater percentage of the services offered by supply chain management companies.
Sanker: There are major trends that will continue to prompt a growing need for value-added services-globalization, retailer specialization and competition and outsourcing.
A flattening world has allowed suppliers to offshore more and more manufacturing. If you think back to when steel mills were offshored, an unusual thing happened. A few smaller specialty steel producers in the U.S. prospered. The same is true for semi-conductors.
As more buyers sourced commodity products offshore, they needed even more specialty, high value-added work done in the U.S. The same thing will occur in the logistics industry--as companies source big projects offshore, they will need to fill in the gaps with smaller projects in the U.S. These are high value-added projects.
As the retail industry gets increasingly competitive, many retailers have made changes to their formats, created new concepts and have asked suppliers to give them special products-products that aren't just commodities. America's leading retailers will open over 94,000 new store locations over the next five years, according to The Nielsen Co.
If they fill shelves with all of the same stuff at the same prices, what's the point? How will they compete? They will increasingly work with suppliers to create chain-specific products, special displays and pre-assembled modules.
They'll also need to use tools (for example, RFID, direct-store-delivery, consolidation, etc.) to reduce costs to stay competitive. CaseStack's systems are new and designed to make these efficient.
Outsourcing is a trend. CaseStack is counting on more companies focusing on core competencies and outsourcing to qualified logistics service providers. That's exactly what we are seeing. We have a competency in value-added services-making them efficient-so our clients can focus on their strengths, but still be flexible.
Underwood: Fuel shortages and rising prices have been creating intermittent disturbances on the supply chain radar screen for decades. But we're quickly approaching a time when those disturbances won't be intermittent anymore. We might even have reached it already.