The Role of Lean and Agile Supply Attributes in the Performance of VAS in Distribution Centres: An Exploratory Study.
Authors:   , Klundt Eduard 
Published: May 2023

Background: The integration of different customised value added services (VAS) in warehouse logistics is an increasing trend. This fact requires logistics managers to identify the most appropriate strategies to meet VAS customer demands and to achieve a superior performance over their competitors. However, as VAS are heterogeneous in nature, the customer demand of these services can vary accordingly. Therefore, distribution centres need to develop those supply attributes, which enable them to respond to each particular VAS customer demand. In this context, the choice between lean and agile supply attributes, which are two contradictory concepts, comes especially into focus. The role of such concepts has been broadly introduced in the context of supply chain performance in the Fisher’s framework (1997) and the following models from different researchers. However, the issue of VAS performance in distribution centres under the perspectives of the concepts of lean and agile supply attributes was not considered in the previous warehouse logistics research. Research Aims: This study explored the topic in question from the perspective of distribution centres. The purpose of this study was to gain a greater insight of VAS applications, and particularly, to understand the contributions of lean and agile supply attributes in the performance of VAS in distribution centres. In particular, the study aimed to reframe the meaning of applications of VAS from the perspectives of logistics service providers, to identify the supply attributes necessary to meet VAS customer demands and to understand how managers of distribution centres align their operational strategies with the VAS performance. Methodology: As the research purpose was explorative in their nature, the empirical process in this study was underpinned by the perspectives of the phenomenological interpretivist paradigm. Thus, a qualitative case study of six distribution centres (six companies) in Germany dealing with VAS was carried out. The data was collected by semi-structured interviews, built on the triangulation of sources and use of quota sampling technique. In doing so, the head manager of distribution centre, the operational manager and the customer manager from each distribution centre were included in the research participant circle. The following analysis of the obtained data was based on the principles of Grounded Analysis method that implied an examination of the data by open, axial and selective coding procedures. Results: The main conclusion of this study is that the nature of customer demands of such VAS can vary quite a lot depending on the particular business cases and therefore, the concepts of lean and agile supply attributes have a crucial meaning in the context of VAS performance in distribution centres. This became especially true as, some distribution centres associate VAS performance with the lean concepts of “standards” and “productivity”, while the others link performance of VAS with the agile concepts of “flexibility” and “customer responsiveness”. In addition, the concept of “quality” has a special significance in the context of VAS performance regardless of the nature of customer demand. However, as shown by the analysis of empirical data, concepts of “quality” as well as “customer responsiveness” are not adequately considered in distribution centres. Furthermore, the research findings indicated that the “material-related” supplementary activities, which logistics service providers physically perform in the operations of their distribution centres in order to gain financial benefits, are the dominant model of VAS in the modern warehouse logistics. Moreover, the applications of such VAS with more agile nature of customer demand can bring higher financial benefit and different non-financial positive effects, but at the same time can lead to higher warehouse complexity. Implications: This study addressed the research gaps by providing a greater understanding of contributions of lean and agile supply attributes in the performance of VAS in distribution centres. In this respect, this study indicated that the perspectives of Fisher’s framework (1997) have high relevance in the particular context of VAS performance in modern warehouse logistics. Moreover, the study identified the significance of different concepts related to the VAS warehouse business such as “lack of non-physical VAS concepts”, “peculiarity of non TPL DCs”, “issue of quality” and “deficit of customer responsiveness measurements”, which need to be further explored by future research.