Updating and repacking products that would otherwise be a loss keeps them in the supply chain as viable, valuable stock. Instead of losing profits, let’s look at how a rework warehouse can help you along.

What is a Rework Warehouse?

During their journey through the supply chain, products may need to be reconfigured to maintain value to the end user. In order to comply with a new format, suppliers or distributors contract with a rework warehouse to make sure the products conform to revised standards.

Typically offered as a value added service (VAS) to their clients, many 3PL companies have warehousing services specifically set up for the process of reworking inventory. As a form of reverse logistics, this allows suppliers the convenience of not having to re-ship merchandise and recover what would otherwise be lost profits from dead inventory.

Why the Need for Reworking?

Not all outbound inventory makes it all the way through the journey from manufacture to final destination in exactly the same format from beginning to end. As a fairly common practice, reworking products involves reconfiguring them to make them suitable for delivery to the customer should the need arise.

For example, a product may be manufactured and packaged in a foreign country, then shipped to another country for distribution and final sale but have a problem along the way. For instance, products may arrive with an issue not suitable to the country of destination – such as a manual written in the wrong language. In such cases the customer may decide to not accept delivery of the product in its current state.

At this point, your options are to either ship the products back to the country of origin thus incurring significant costs and time delays, or have the products reworked in the country where they currently reside. By utilizing a local rework warehouse or similar service, your products can be reconfigured with the required updates to ensure compliance for your end customers.

Moreover, when you scale this up to a few thousand units for a few hundred stores, the task of reworking such a large amount of freight can quickly move above and beyond your normal operational resources.

Situations Where Rework Warehouses and Companies Can Help

Bundling slow selling products.

We’ve all seen extra products added as an incentive to make a purchase: “Buy this and that, get this for free!” or something similar. When a product’s sell-through slows or isn’t selling, a common method of spurring renewed interest is to offer a new configuration or bundle them together with better selling products to drive sales.

For example, two low-selling items can be combined into a single discounted package. Or selling a previously bundled item on its own as a loss-leader. To get this new format into the market, new “special offer” or “limited edition” packaging can be created and coordinated with your 3PL partner. They in turn rework the new product configuration with its own SKU, new packaging, labelling and a new barcode.

From a logistics point of view, these individual products sometimes need to be taken out of their respective warehouse locations then combined together with the new packaging.

Previously bundled products need to be reorganized.

Sometimes normally bundled products can have faulty or flawed components. For example, let’s say you have combined products usually sold as a set of six. However, you find out two out of the set are not in sellable condition. In such cases, a rework company can reconfigure the combination into sets of four with appropriate pricing, packaging and shipping information for re-entry into the market.

Product labeling requires an update.

Periodically, manufacturers may need to update item numbers or other product information. Labels may also be misaligned or product codes may not be scanning correctly requiring relabelling. In such cases your 3PL partner can print and apply new labels, or affix new labels you supply. In other instances, ‘blocker labels’ may provide a convenient answer by covering up the old labels.

A product component needs to be replaced.

Sometimes product components, even manuals as previously mentioned, need to be replaced for one reason or another. If your product has a piece that needs replacing, the existing package needs to be opened, the new piece or part replaced, then have the contents repackaged. With the appropriate directions and replacement materials, your 3PL service provider can perform the necessary operations to prepare the product for restocking and distribution.

The package is missing a component.

If you’ve ever assembled anything from a kit, you’ve probably experienced the frustration of not having enough of the right kind or right amount of fasteners – thank you IKEA. If, as a manufacturer or supplier, you find yourself in this position whereby human error has thrown you a curve ball, you can, after determining the oversight, coordinate with your 3PL to correct the problem.

Repackaging returned products for resale.

When products get returned, they need to be sorted and inspected. The end decision being either to update them for resale or dispose of them. For those products that still carry value and can be restocked and resold, a rework warehouse carries out the necessary steps needed to get them ready to re-enter the marketplace.

Products or packaging are damaged.

Estimated at nearly 11%, damage in-transit is a predictable occurrence within the supply chain. In other words we know it’s going to happen.

For example, boxes can get wet or ripped during shipment. If the product or your product’s packaging is damaged, your 3PL’s rework warehouse can repackage your products, apply any new labeling required, and get them back out for distribution.

In Summary

Any time products or packaging need to be corrected before their final destination, suppliers and manufacturers are faced with having to make an uncomfortable decision: either write off the problem and declare a loss, or engage with a service provider that can rework the products for resale.

From a cost per unit point of view, a company that carries out a rework project for a client will charge a small amount per unit to bring them back to re-sellable condition. While the process may take anywhere from a few days to a few weeks depending on the variables, the savings to the company in terms of extra shipping costs and time spent is well worth it.

Having a 3PL provider that can inspect and repackage merchandise to go back into “good stock” for resale saves the company time and money. By employing a rework service, the burden of updating flaws, damage or complete repackaging is offloaded.

In this sense, rework warehouses and product rework companies provide a valuable service within the supply chain.

Based in Southern Ontario Canada, Brimich Logistics and Packaging is one of the most experienced product rework companies in the region. To learn more about the benefits of our rework and other value added services, contact Brimich today.

If you could outsource in-house operations and, at the same time, drive growth, reduce costs, improve workflows and gross profit margins – wouldn’t you take advantage of it? Welcome to the world of value added logistics services.

What is the Value of Added Logistics Services?

Value added logistics services are those additional distribution and warehousing services, such as custom packing, cross-docking and quality controls offered by 3PL partners. These services allow businesses to outsource what would normally be in-house operations and offset associated costs. By taking advantage of value added options, businesses free up resources which can then be used to strengthen core competencies.

In a highly competitive industry such as the supply chain, many SMB companies realize that partnering with a robust logistics provider who provides solutions beyond transportation and warehousing is a top criteria in a growth strategy.

“Modern logistics starts in the customer’s plant, not afterward. Manufacturers have realized that it makes economic sense to transfer certain in-house tasks to a logistics company.”

Dirk Bütow, Global Key Account Manager at BLG LOGISTICS

Types of Value Added Logistics Services

Just as there are many different types of businesses, there are a host of value added services designed to enable the logistical needs of those businesses. From industrial to pharmaceutical, the food industry and cold chain requirements, customers in the supply chain rely on the specialty and expertise of their 3PL partners to extend their workbench.

For logistics companies that provide value added services, supply chains may focus on more discrete characteristics such as time sensitivities, price or warehousing capabilities depending on the value chain they serve.

A few examples of value-added services offered by logistics companies include:

• Cross Docking
• Co-packing & Assembly
• Product Rework/ Sorting
• Reverse Logistics
• Quality Checks
• Container De-stuffing
• Shrink Wrapping
• Custom Packing
• Labelling (UPC & Barcode printing)
• E-Commerce Drop Shipping Services
• Providing EDI to Customers (Standard or Customized solutions)
• Detailed management reports

Value Added Services Make Customers More Flexible

In order to provide a higher level of service to clients, 3PL and logistics companies tailor their services to meet the specific needs of their customers. The benefit of value added services to the customer is in a more efficient supply chain. The benefit to the logistics provider is in more business through diversification.

Value added activities in logistics enable customers to offload in-house operations that are restricting growth thereby allowing them to reallocate resources that improve or maintain market competitiveness.

For instance, pre-assembly is a typical value-added service in logistics. If you employ a JIT strategy in your business, partnering with the right 3PL provider can facilitate a cost effective method of  forwarding partially assembled goods through the supply chain without having to switch carriers.

Furthermore, workers that specialize in pre-assembly are employed within the managerial sphere of the logistics provider. For your business, this further removes the burdens attached to human resources by not having to maintain staffing for these outward services.

Value Added Services and the Supply Chain

The globalization of sourcing and manufacturing has facilitated the need for more diversity in logistics. Just as early freight forwarding evolved into logistics, value-added services became a natural extension of evolving supply chain opportunities.

Where value creation was traditionally held as an internal control by the customer, the availability of cost effective outsourcing shifted value creation into becoming a collaborative effort with an external 3PL partner.

Businesses with optimal supply chains have 15% lower supply chain costs, less than 50% of the inventory holdings, and cash-to-cash cycles at least three times faster than those not focused on supply chain optimization.

Logistics Bureau

Depending on the nature of your business, key activities may require optimized trucks and container loads. Or you may require co-packing, repacking or custom packaging from your logistics relationship.

One value added service for instance, may involve re-packing goods that arrive in large batches from a distant location. The repacked goods are then sold in smaller batches at their final destination.

Another value added service may involve true diversity in customer fulfillment. For instance, a 3PL partner can both manage and fulfill B2B and B2C orders from a single pool of inventory. In a market where space is at a premium, avoiding the expense of warehousing for what would otherwise be distinct inventory sets provides an essential advantage.

Value Added Services and Sustainability

By combining transportation routes that would otherwise involve another service company, a logistics provider that offers a value added service solution can streamline an entire leg of a supply chain. For instance, by eliminating product transports, customers enjoy the benefits of more efficient transport and add to the sustainability of the supply chain itself.

Trust and Information

Like any partnership, a 3PL-client relationship works like marriage, therefor there must be a high degree of trust and the sharing of information between the two parties.

It would be fair to say a high level of trust is not only the anchor of the relationship, it’s also a prerequisite for the creation of value-added services. Meeting deadlines and expectations ensures success and facilitates the easy sharing of sensitive information. For instance, customer information may be required by a logistics provider to customize services and improve process efficiencies.

Final Thoughts

Nobody can predict the future with absolute certainty. Take the Pandemic for example. We would like to think our existing infrastructures and supply chains are robust enough to weather minor hiccups, and perhaps they are, but these are evolving technologies in a world currently experience a bullwhip effect after a near dead-stop.

The shortage of truckers and the start-stop jerkiness of the availability of products has been working its way through the supply chain for a number of years now.

Yet, according to a recent report from Statistics Canada on rental space in commercial markets:

Compared with the fourth quarter of 2020, commercial rents were up 3.3%, supported by increases across all building types: industrial buildings and warehouses (+4.2%), retail buildings (+3.8%), and office buildings (+1.8%).

These positive growth numbers would seem to reflect a continuous and expected demand. As for the supply chain hiccups, they may just be growing pains.

Will the wrinkles smooth out eventually? Hard to say. But being able to share the load of value creation for your customers through good logistics partnerships makes sense. Plus, partnering with a reliable, environmentally responsible 3PL provider who offers value added services tailored to your needs has the added benefit of increasing sustainability.

To find out how Brimich Logistics and Packaging can help your business grow through value added services, contact us today!