Completion of the European single market has removed the barriers to the free movement of goods within the EU and encouraged the establishment of European Distribution Centers (“EDC”) to cover pan-European operations. From a centrally located warehouse more than one country can be served with cross-border deliveries. On the other hand, companies are faced with increasingly shorter product lifecycles and customer demands for more varied products.

The third party logistics industry has developed their services within the concept of Value Added Logistics (“VAL”) in order to increase efficiencies and supply chain savings while improving customer service. In view of this, the number of outsourced EDCs has increased significantly over the years in comparison to own-account operations.

VAL means the services offered include much more than just warehouse management. Besides the fact that a company can store its semi-finished products and/or components in a central European warehouse, other services can include: customizing, assembly and configuration, repair and testing of products. Instead of carrying huge country- or customer specific inventories, a basic inventory of modular and generic parts can be assembled in a number of different ways after the receipt of the customer's order or customized right before shipment. The generic parts can be made in different countries, while final assembly and custom configuration take place in the EDC.

The advantages of a VAL center are:

	the company can already sell its products before the final stage of production takes place, thereby reducing inventory risk and inventory volume;
	the company can on short notice deliver according to specific customer demands and local standards at a minimum of costs. This will increase the service level.
	save cost and administrative effort in not having to maintain a large staff for distribution requirements

Location requirements for such a VAL center are:

	Easy access for supply of parts and components
	Proximity and sufficient key market coverage
	Excellent and intelligent logistics infrastructure
	High quality and flexible workforce

In conclusion, the benefit of logistics outsourcing allows companies to concentrate on their core business and do what they do best and let specialists handle warehousing and distribution.