The relationship between Technology and Warehousing...12 Chapter 3: WAREHOUSING MANAGEMENT PRACTICES AT LAZADA INC.. DANH MỤC HÌNH ẢNHPicture 1: Automated guided vehicle of Sharp Japan..
INTRODUCTION
Problem stament
The scientific and technological revolution is transforming various aspects of social life, particularly in management, where Information Technology (IT) is increasingly replacing traditional manual methods Effective warehouse management is crucial for enterprises, requiring complex activities across centralized and distributed models Traditional approaches are becoming ineffective, prompting the need for IT solutions that provide timely information on goods and supplies This enables managers to make informed decisions, reduce costs, enhance competitiveness, and improve overall business performance Lazada exemplifies the successful application of IT in management This article aims to analyze warehouse management and propose suitable solutions for businesses in Vietnam.
Research objective
This report focuses on 3 main objectives:
Introduction to Lazada warehouse management Management systems, special information technologies are applied by them.
Analyze the highlights in warehouse management and give lessons forVietnamese businesses
Scope of the report
Warehousing management practices at Lazada Inc
Structure of the report
The report has 4 chapter Chapter 1: chapter 1: Introduction; Chapter 2: Literature review; Chapter 3: Warehousing management practices at Lazada Inc, and the last,Implications for Vietnamese Businesses.
LITERATURE REVIEW
Warehouse and Warehouse management definition
The warehouse plays a crucial role in the logistics system, serving as the storage hub for raw materials, semi-finished, and finished products throughout the supply chain It not only holds essential inventory but also provides vital information regarding the status of materials and goods, including storage conditions and the precise location of items within the facility.
Warehouse management plays a crucial role in logistics management, with the selection of a strategic warehouse location being vital The chosen location significantly impacts transportation costs, customer service quality, and the efficiency of goods movement within the overall logistics chain.
Choosing an appropriate warehouse location is crucial and should be based on several key factors, including proximity to major commercial centers, robust infrastructure, and streamlined customs clearance processes Additionally, considerations such as transportation costs and housing market prices play a significant role in evaluating the ideal warehouse site.
Effective warehouse management and inventory control are essential for enhancing product value by optimizing time and location A well-designed warehouse and production facility can significantly reduce input and output costs The pricing of goods varies based on distance, making efficient warehouse management crucial for delivering high-quality services to customers at the lowest possible cost.
The role of Warehousing
Warehousing is an important function of a business involving logistics Efficient warehouses are critical to increasing customer satisfaction and help ensure that products are delivered to customers quickly and accurately.:
To match different flow rates or amounts when production and consumption patterns do not coincide
Storing surplus product (avoid material shortages, take advantage of the seller's affordable offer)
The 7R principles in warehousing emphasize the importance of obtaining the correct item in the appropriate quantity, delivered to the right location, at the right time, in optimal condition, and at a competitive price, all while minimizing costs for the organization.
The function of Warehousing
As mentioned in the concept of warehouse and warehouse management, it depends on the business model of the business that the warehouse design is appropriate.
Save shipping costs to the maximum
Supply raw materials, semi-finished products, finished products quickly and on time.
Always maintain the supply to serve the production and business process
Meeting the needs of customers in a timely manner
2.3.1 What is the function of the warehouse?
To ensure the seamless production of finished products, it is essential to source raw materials, components, and spare parts from various factories These materials must be efficiently stored and readily available to support the production process without delays A well-managed warehouse plays a crucial role in maintaining a continuous supply, preventing any interruptions in manufacturing operations.
When a company works with multiple suppliers, each one delivers distinct raw materials, catering to a diverse customer base with varying product demands In the warehouse, these goods serve an aggregation function, where products and materials are organized and consolidated based on specific orders.
Customers often require bulk items, and when a product supplier is unable to meet their needs, the enterprise's warehouse can consolidate goods from various suppliers This enables the company to fulfill large shipment requests efficiently, ensuring customer satisfaction.
Customers often require products in small quantities To meet this demand, goods are transported from the factory to a warehouse, where large shipments are divided into smaller batches tailored to the specific quantity and quality needs of the customers.
Warehousing activities
The main purpose of the activities in the warehouse is to create a smooth flow of goods, making it easier for products to come in and out
Some basics activities of warehousing:
Identification: identifying the products, matching with the order and confirm the number of products in stock.
Inspection: checking the quality, quantity of products, condition of goods damaged or lack of components, materials, …
Receiving and unloading: accepting the products and unloading goods from vehicles.
Put away: the process of importing products from the container to the storage area in the warehouse.
Storage: Moving the products to appropriate storage areas for different types of goods Each types of goods will have a separate area for easy control and retrieval of goods.
Replenishment: Replenish goods if the suppliers deliver lack of products or wrong, damage products and needs to be replaced for the new products.
Order selection: The products from the stock will be selected based on customer requirements.
Unitizing and shipping: Unitization is the grouping of small units of goods together into larger units of goods, such as onto a pallet, to facilitate packaging and transportation
Effective cargo packaging is essential for ensuring that products arrive at their destination undamaged, safeguarding against potential financial losses Proper marking, which includes the use of symbols and informative labels, conveys critical information about the product's contents and handling requirements By highlighting specific care instructions, such as avoiding direct sunlight or handling with care, businesses can minimize the risk of damage to goods during transit.
Staging and consolidation: A staging area is a temporary storage area for goods that have been consolidated by each other and then brought into the warehouses or another locations.
Loading and shipping involve the careful arrangement of goods on transport vehicles, such as trucks, to ensure safe and timely delivery The shipping process is critical for ensuring that items reach their destination securely and punctually.
In warehousing, proper documentation is essential for the efficient transportation of products, as various types of documents must be meticulously prepared before shipping to ensure a smooth transfer from one location to another.
Housekeeping: It includes keeping the warehouse clean, maintaining an orderly and untidy work area help everything go more smoothly, to get job done
Effective management of material handling equipment is crucial for optimizing the transportation, storage, and protection of goods within a warehouse By streamlining these processes, it enhances convenience, speeds up operations, and improves overall efficiency in warehousing activities.
Assist in stocktaking: It is the activity of counting goods currently in stock, helping to control inventory, verifying the actual quantity and condition of goods stored in the warehouse.
Consolidation activity: o It means collecting raw materials, small shipments from many supplier and bringing them together in the same place o There are many benefits to doing this activity:
Consolidating diverse components and materials in a single location significantly enhances operational efficiency By centralizing all warehouse activities, businesses can save time on collecting shipments from multiple sites, allowing them to concentrate on growth and development.
It does not take time to transfer between places to finished goods, it can save delivery time and increase customer satisfaction
Consolidation significantly reduces shipping costs by gathering all goods in one location for direct delivery to the customer, eliminating the need for intermediaries.
This activity relies on a single supplier who delivers a large quantity of products to the warehouse The process involves breaking down these bulk shipments into smaller orders, allowing for distribution to a greater number of customers.
The main benefit of this operation is ship oversized, overweight orders, or delivering products to many different customers.
Warehouse operations
Warehouse operations encompass essential processes such as receiving, organizing, storing, and shipping goods to enhance customer experience According to Rick Stinchcomb from the University of Oklahoma Press, the primary objective of warehouse operations is to meet customer needs while optimizing space, equipment, and labor It is crucial for goods to be both accessible and secure, which necessitates continuous planning and adaptation to achieve these goals effectively.
There are 5 key goals we need to pay attention to when operating a warehouse:
Analyzing warehousing productivity is essential for companies to assess their warehouse efficiency and effectiveness Key metrics to measure include cases shipped per person, product lines shipped per person, pallets shipped per person, average warehouse capacity, and utilized forklift capacity These measurements provide valuable insights that can drive improvements in operational performance.
Safety considerations : The construction or rental of warehouse will all be affected by
Government regulations mandate that warehouses storing hazardous materials adhere to strict fire protection standards and be located a safe distance from residential areas Regular inspections by a dedicated team ensure that these facilities comply with safety requirements.
Ensuring the safety of workers, property, machinery, and vehicles is crucial in any operational environment Proper handling measures are essential to mitigate hazards caused by empty cartons, damaged products, or broken pallets, which can lead to fire or explosion risks.
Warehouse safety help to reduce injuries, increase employee satisfaction leading to increased work efficiency.
Proper storage of hazardous materials, including explosives and flammable substances, is crucial for warehouse safety Warehouse managers must prioritize the careful control of these materials to prevent accidents and protect employees from potential harm Each type of hazardous material has specific storage requirements, necessitating designated storage areas that comply with fire protection standards and promote a safe working environment for all staff.
Warehousing security is crucial for preventing financial losses and ensuring efficient operations Key security issues include theft, pilferage, vandalism, fire, and environmental factors like heat and humidity Given the vast size of warehouses and the constant flow of employees and goods, prioritizing security is essential Protecting not only against theft but also maintaining optimal temperature and humidity levels is vital for preserving the quality of sensitive products such as fresh foods and pharmaceuticals.
Cleanliness and sanitation are crucial in the foodservice industry, as they directly impact employee comfort and safety Maintaining a clean warehouse is manageable through common sense and diligence, which are essential for running a productive business Prioritizing hygiene not only fosters a healthier work environment but also enhances overall operational efficiency.
The relationship between Technology and Warehousing
In today's rapidly evolving landscape of Industry 4.0, technology has become essential in everyday life, particularly in the logistics sector, which serves as a vital link in the supply chain To meet the demands of modern production and consumer expectations, warehouses must adopt automation technologies Historically, warehouses relied heavily on manual labor for sorting, organizing, and arranging goods, a process that was time-consuming and often inefficient The integration of advanced technologies is crucial for enhancing warehouse management and operations, ensuring that these facilities keep pace with industry advancements Various innovative technologies are now being implemented in warehouses worldwide to improve efficiency and effectiveness.
Automated guided vehicle: transport materials and goods to pre-marked locations without human intervention.
Picture 1: Automated guided vehicle of Sharp (Japan)
Sorting and picking systems: The line will automatically classify products based on criteria such as size, height, weight, … helping to classify according to the manufacturer’s information and purpose.
Picture 2: Sorting and picking systems – Resource: [ CITATION Tổn \l 1033 ]
Blockchain item tracking: helps warehouse managers track the physical location of products, detect theft, and can forecast product demand based on data logs the technology.
The application of technology to the warehouse will bring a number of benefits to businesses:
Implementing fully automated systems significantly reduces labor costs and risks by automating the most complex stages of the process Unlike traditional methods that require numerous workers for sorting and transportation, automation streamlines operations, necessitating only a manager to oversee the process This technology minimizes errors and damages throughout the workflow, enhancing overall efficiency.
Utilizing advanced technology can save up to 50% in storage space through standardized mounting patterns, simplifying the organization process This innovation allows for a 3 to 5 times increase in capacity, significantly enhancing operational efficiency and maximizing productive hours.
The system offers flexibility and easy customization, allowing businesses to swiftly adapt to changes without the need for extensive employee notifications Unlike traditional warehouses, where modifications can be cumbersome, technologically advanced warehouses enable quick adjustments to operations, facilitating a proactive approach to various situations.
In the era of Industry 4.0, the technological capabilities of logistics and warehousing service providers play a crucial role in their competitiveness Modern warehouses equipped with advanced technology are essential to meet customer demands, as outdated facilities can negatively impact product quality and delivery timelines Companies must invest in upgrading their technology to keep pace with competitors and respond effectively to market needs By doing so, they enhance operational accuracy and efficiency, ensuring confidence in their core product offerings To avoid market rejection and satisfy increasing customer expectations, it is imperative for warehouses to adopt and upgrade to modern technologies The rapid advancement of warehouses today is significantly driven by technological integration, which is vital for their sustainability and growth.
WAREHOUSING MANAGEMENT PRACTICES AT LAZADA INC
Lazada Inc introduction
Lazada is a prominent e-commerce platform that has gained popularity among online shopping enthusiasts, particularly in Vietnam through its website Lazada.vn and mobile apps Understanding the origins and history of Lazada is essential for ensuring safe shopping experiences In this article, we will explore what Lazada is, its country of origin, and all relevant information related to this leading online shopping destination.
Lazada.vn is a premier e-commerce platform in Vietnam and Southeast Asia, serving as a virtual marketplace where customers and sellers connect, with Lazada acting as the intermediary The platform allows individuals, organizations, businesses, and brands to sell their products, ensuring that all goods listed meet high standards of quality and reliability Lazada earns a commission from sellers for facilitating these transactions.
Founded in 2012 by Maximilian Bittner and backed by Rocket Internet, Lazada Group is a German electronic trading company operating in Southeast Asia By 2015, it expanded its presence to six countries: Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam In the same year, Lazada was acquired by Alibaba Group, led by Jack Ma, and remains under its ownership today.
3.1.3 What is Lazada's business model
Lazada operates on a marketplace model, serving as a vital intermediary in online shopping As of January 2016, Lazada collaborated with over 3,000 suppliers, offering more than 500,000 products This number has likely increased significantly since then By facilitating transactions between buyers and sellers, Lazada earns a small commission on each order while providing exceptional services, including a streamlined payment process, diverse payment options, and professional transportation and customer service.
Picture 4: The simplificated logistics process from seller to customer
Introduction about Lazada’s Warehouse
In recent years, Lazada's sales campaigns, such as 11.11 and 12.12, have resulted in millions of products sold to consumers To ensure rapid delivery, Lazada utilizes modern warehouses equipped with advanced information technology, streamlining processes like general storage and sorting As a result, Lazada can deliver products to customers in the shortest time possible.
3.2.1 Warehouse system in Vietnam – Lazada Express
In the first half of 2015, Lazada attracted 110 million customer visits, featuring over 2,000 sellers and more than 250,000 products across 13 categories The platform efficiently handles tens of thousands of orders daily nationwide, necessitating a robust logistics system to meet high demand.
Mr Alexandre Dardy, CEO of Lazada Vietnam, highlighted the company's extensive logistics network in Southeast Asia, which includes 8 warehouses and 50 distribution centers Lazada collaborates with 60 couriers and shipping companies to efficiently deliver products to approximately 80 cities across six countries.
Lazada operates significant warehouses in Hanoi and Ho Chi Minh City, Vietnam's two largest cities, facilitating efficient distribution of goods to surrounding provinces.
Record the supplier's claim for damages;
Generate barcodes for each order;
Determine the next receiving location and quantity when received into Lazada's warehouse system
Report receipt status to warehouse and sales staff for resolution.
Store vendor and product or SKU sample test criteria;
Store product specifications for QA;
Assist and provide supplier with key metrics, on-time delivery, delivery errors and pick up when product is shipped put into the warehouse…;
Report the problem receipt status to the warehouse and sales staff for resolution
Lazada warehouses utilize advanced technologies like automatic identification and data acquisition (AIDC), barcode scanners, and radio frequency identification (RFID) to maintain the quality of goods These systems ensure that products are accurately identified and easily located when it's time for shipment.
Warehouse management software streamlines the storage of imported goods based on established guidelines, ensuring efficient future exports Advanced systems enhance operations with features like picking-to-voice and picking-to-light, which aid in managing large, complex warehouses effectively.
Managers utilize various picking methods, including zone picking, wave picking, and batch picking, to enhance efficiency and convenience for workers By strategically planning goods in batches and alternating aisles, these approaches minimize travel distances for employees, enabling them to complete tasks more swiftly and effectively.
Upon order confirmation by the warehouse manager, the warehouse management software automatically generates a bill of lading for the carrier, along with a list of goods to be prepared and a provisional invoice for the ordering party's confirmation Some systems also provide the option to print usage or assembly instructions if needed Once the items are packed, the warehouse software can send advance shipping notices (ASNs) to other warehouses within the system, effectively halting further delivery preparations.
Options also include the ability to view order queues by various order types and records; carrier level, line item versus multiline order, special handling order, to select a specific order.
Labor constitutes 70% of total fulfillment costs for each order, excluding overseas shipping With numerous functions transitioning to computer-aided processes, manual operations are set to decrease significantly Additionally, warehouse management systems meticulously track all tasks performed, recording who completed the work and the duration taken for each task.
Picture 6:Warehouse Management System of Lazada
In 2015, Lazada launched Lazada Express, a logistics company designed to enhance the transportation and distribution of goods for its e-commerce platform Currently, Lazada boasts a comprehensive logistics infrastructure in Vietnam, featuring two distribution centers, two automated distribution centers, and 70 delivery centers that facilitate nationwide shipping.
Specifically, 2 distribution centers of Lazada Vietnam are located in Ho Chi Minh City Ho Chi Minh City and Hanoi with a total area of 20,000 m2 and 14,000 m2 respectively.
Lazada operates two automated sorting centers in Vietnam, located in Ho Chi Minh City and Hanoi, covering areas of 7,000 square meters and 10,000 square meters, respectively These centers utilize advanced automatic sorting technology to efficiently consolidate and categorize goods for delivery to various districts.
Picture 7: Lazada's automatic sorting system
The innovative automatic sorting line utilizes advanced 2nd generation wave-sorter technology, enabling the conveyor belt to efficiently redirect items This automated system significantly accelerates the transfer of goods to Lazada's delivery facilities, enhancing overall logistics efficiency.
The conveyor belt system efficiently returns trays used for small, non-square, unboxed orders Once the goods are delivered, the trays are automatically redirected back to the receiving area, optimizing overall operational performance.
Picture 8: The system of sensors and scanners automatically measures the dimensions, weighs the goods
Lazada has established 500 drop-off points in collaboration with key retail partners like CircleK, Pharmacity, and Coop Food, along with over 1,500 logistics partner locations This initiative allows retailers and online shops to send goods directly, streamlining the shipping process and enhancing convenience for users.
Picture 9: One point of delivery (Drop-off Points) of Lazada cooperates with Coop food system
Lazada offers a convenient service known as the Smart Locker, which many customers may not be aware of When opting for this delivery method, orders are securely placed in a designated smart locker by the delivery partner Customers receive a notification and an OTP code via their registered phone number and email, allowing them to easily retrieve their items These smart lockers, deployed in collaboration with partner ilogic, feature a security camera system and safety locks, ensuring a secure pickup experience in high-traffic locations.
Picture 10: A smart locker (Smart Lock) of Lazada in collaboration with partner Ilogic
Smart Locker (Smart Locker) is suitable for office workers, students, it is not convenient to pick up goods during office hours.
Warehouse system operations in Lazada Inc
Lazada's warehouse serves as a vital hub for nationwide goods storage, organization, and delivery, utilizing a state-of-the-art technology system With a rigorous process overseeing everything from input to output, the facility is managed by a dedicated team of over 100 employees This efficient operation directly supports the handling of a high volume of orders for Vietnam's leading e-commerce platform.
Lazada's warehouse features three floors and is equipped with two elevators for efficient transportation of goods Upon arrival, items are processed and await information processing before further handling.
Before storage, every product undergoes a thorough quality check and is labeled with a unique barcode that tracks its expiry date, storage date, and release date, along with the responsible personnel This ensures that no two products share the same barcode, maintaining strict inventory control and product integrity.
Picture 13: Attaching barcodes to products
Upon quality inspection and data entry into Lazada's system, products are stored in designated facilities High-value items and electronics are secured in warehouses with iron nets and guarded for added protection Products requiring cool temperatures are stored in cold storage, while other items are kept in standard warehouses To maintain optimal storage quality, Lazada adopts a just-in-time inventory approach, storing limited quantities and replenishing stock daily to ensure efficient and timely order fulfillment.
Each employee will be provided with a special device to manage customer orders and find the right item in stock
After finding the right item for the customer, the staff will put it on the automatic conveyor belt to take it to the packing area
Picture 15: Automated coveyor belt in Lazada
The conveyor belt efficiently transports goods to the packing area, where two staff members collaborate One staff member manages information, printing consignment notes and issuing invoices as required, while the other focuses on the packaging process.
When packing, a warranty stamp will be included in the consignment note If customers encounter any issues with the product, they can affix this stamp to the defective item and return it to Lazada for resolution.
Packing counters efficiently manage various package sizes, allowing the system to automatically select the most suitable delivery service for each shipment This technology not only streamlines the process by generating standard delivery notes but also ensures consistent service selection, ultimately saving valuable time in the shipping process.
When purchasing a small item, the system automatically generates a delivery note for courier service A, while larger items are assigned to delivery service B This decision is implemented across the entire system, and packaging staff have no authority to alter it.
Advantages and disadvantages of Lazada’s warehouse system
Lazada's warehouse operations involve a sophisticated system that combines logical algorithms with adaptable human intervention The company has invested in essential infrastructure, including barcode-marked shelves, a code reading system, sorting software, and clear transfer instructions, ensuring efficient sorting and accurate order fulfillment With four warehouses in Ho Chi Minh City, two in Hanoi, and an expanded facility in Da Nang, Lazada aims to centralize inventory for improved management and operational efficiency This strategic approach not only reduces delivery times, particularly during the Covid-19 pandemic, but also enhances the capacity to handle large daily orders Furthermore, the widespread distribution of Lazada's warehouses across Vietnam optimizes supply chain and logistics activities, making them more flexible and efficient.
Lazada's efficient warehouse system enhances the flow of goods and fosters effective communication among manufacturers within the distribution channel This streamlined process minimizes conflicts among parties involved, reduces product circulation costs, and ultimately lowers prices, thereby increasing competitiveness for manufacturers.
Lazada operates with minimal inventory and limited warehouse space, relying heavily on shipping services for its logistics Consequently, the efficiency of delivering goods to customers is crucial for Lazada's operations Any disruption in the delivery process could lead to significant challenges for the company.
Lazada offers a wide range of products daily while prioritizing fast delivery to minimize inventory costs However, this advanced management system has led to numerous customer complaints regarding delayed orders, particularly for discounted items.
Implications for Vietnamese Businesses
The Covid-19 pandemic has significantly strained global production and supply chains, while simultaneously creating new opportunities for the logistics sector, particularly in warehousing, which plays a crucial role in supply chain connectivity With lockdowns preventing traditional shopping, consumers increasingly turned to online platforms, leading to the rapid growth of e-commerce giants like Tiki and Lazada This surge has intensified competition among e-logistics providers, revealing that many companies struggle to meet evolving customer demands Analyzing Lazada's warehouse management system can offer valuable insights and lessons for Vietnamese businesses aiming to enhance their logistics operations.
Vietnamese companies need to enhance their warehouse infrastructure as they currently rely heavily on manual labor The surge in online orders during the pandemic highlighted the limitations of their workforce, especially with government regulations capping operations at 50% capacity, resulting in order backlogs To address these challenges, businesses should prioritize the development of smart warehousing systems, incorporating automated sorting lines and picking robots This modernization will help reduce labor costs, improve efficiency, and ensure timely fulfillment of customer orders.
Vietnam's e-commerce platforms should prioritize in-house warehouse management over outsourcing order fulfillment to third parties While outsourcing may reduce warehousing and transportation costs for small and medium-sized startups, it poses challenges for established businesses aiming to compete with foreign rivals Relying on third parties can lead to difficulties in order control and potential delays or damages during delivery, which can harm a company's reputation By managing their own warehousing, companies like Lazada and Tiki can minimize rental expenses and maintain full control over the fulfillment process, ultimately enhancing customer satisfaction.
Companies should prioritize warehouse locations near their headquarters or in major urban centers to enhance delivery efficiency, especially during peak seasons or pandemics This strategic positioning allows for quicker order fulfillment and improved capacity to manage large daily orders Lazada has recognized this need by investing in logistics systems across three major cities in Vietnam and establishing distribution centers nationwide The development of a comprehensive network of warehouses, both large and small, enhances the flexibility and optimization of supply chains and logistics operations.
Logistics is crucial in the trade chain between sellers and buyers, with the demand for online transactions significantly increasing the need for efficient warehouse infrastructure Historically, warehouses operated on a smaller scale, but recent economic growth has led to substantial investments in modern warehouse management and automation technologies This evolution is particularly evident in Lazada, where the quality of warehousing and efficient goods transfer are vital for its growth By integrating advanced technologies like industrial conveyor belts for packaging and transportation, Lazada enhances operational efficiency, saving time and labor while providing significant advantages This strategic focus on warehousing positions Lazada as a leading online retailer, enabling it to compete effectively with Shopee and Tiki in the Vietnamese market Lazada views its investments in warehousing as a sustainable long-term strategy, contributing to its success in the ever-evolving landscape of e-commerce.