An Approach to Modeling Modular Warehouse Services in the Logistics Industry

Abstract

Logistics service providers (LSPs) face fierce competition despite increasing demand for third-party logistics (3PL). LSPs must tackle increasing costs and complexity, labor shortages, and scarce warehouse space while meeting individual customers’ needs. Studies suggest modularity could provide LSPs a competitive edge, but few methods for modeling logistics service modules exist. Although there are numerous product design approaches, these are seldom applied to services. This study applies insights from product design literature to develop a top-down approach for modeling and modularizing warehouse services. To test the proposed approach, three case studies across seven warehouses were conducted at a world-leading LSP. The study shows the approach can identify and define warehouse service modules using the warehouse service variant master (WSVM) technique, which clarifies the variety of warehouse services in three domains: client, service, and resource. The study also suggests LSPs can reduce complexity by offering warehouse services from standardized service modules.