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
In the logistics system, warehouses play a crucial role by storing raw materials, semi-finished products, and finished goods throughout the supply chain They not only serve as storage facilities but also provide essential information regarding the status of inventory, including storage conditions and the precise location of items within the warehouse.
Warehouse management plays a crucial role in logistics management, with the selection of a warehouse location being a key factor The strategic positioning of a warehouse significantly influences various aspects, including transportation costs, the quality of customer service, and the efficiency of goods movement throughout the entire logistics chain.
Choosing the right warehouse location is crucial and should consider several key factors, including proximity to major commercial centers, robust infrastructure, and streamlined customs clearance processes Additionally, it's important to evaluate transportation costs and housing market prices to ensure optimal logistics and operational efficiency.
Effective warehouse management and inventory control are essential for enhancing product value through optimized time and location A well-designed warehouse and production facility, aligned with these principles, can significantly reduce input and output costs The pricing of goods often fluctuates based on distance; therefore, efficient warehouse management not only lowers costs but also enhances service quality, ultimately benefiting customers.
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)
Convenient reorganization function For customer:
To optimize warehousing efficiency, it is essential to ensure that the correct item is delivered in the appropriate quantity, to the right location, at the right time, in optimal condition, and at the best price, all while minimizing costs for the organization This principle, known as the 7R in Warehousing, emphasizes the importance of precision and cost-effectiveness in supply chain management.
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 smooth production of finished products, it is essential to source raw materials, components, and spare parts from various manufacturers These materials must be kept in stock and readily available to support the production process without delays An efficient warehouse system plays a crucial role in maintaining a continuous supply, preventing any interruptions in production.
When a company collaborates with multiple suppliers for raw materials, each supplier contributes unique materials tailored to diverse customer demands In the warehouse, these goods serve a crucial aggregation function, where products and materials are consolidated and organized based on specific orders.
Consolidation is essential for customers requiring bulk items, especially when a product supplier cannot meet their needs In such cases, the enterprise's warehouse collects goods from various suppliers to create a large shipment tailored to the customer's request.
Customers often require products in smaller quantities To meet this demand, goods are transported from the factory to the warehouse, where large shipments are divided into smaller batches that align with customer specifications for both quantity and quality.
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 both the product and financial investment Additionally, proper marking with informative symbols and labels conveys important details about the product's content and handling instructions, such as avoiding direct sunlight or handling with care This proactive approach minimizes the risk of damage and enhances overall customer satisfaction.
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.
After packing, loading involves arranging goods on transport vehicles like trucks to prepare for shipping Shipping ensures that items are delivered safely and punctually to their destination.
In warehousing, various types of documentation are essential for the efficient transportation of products from one location to another Prior to shipping, it is crucial to prepare all necessary documents to ensure a smooth logistics process.
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 essential 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 enhances operational efficiency by streamlining warehouse processes This centralized approach minimizes the time spent on collecting shipments from multiple sites, allowing businesses to concentrate more on their development and growth.
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 at a single location before delivery This streamlined process allows products to be shipped directly to the customer, eliminating intermediaries and enhancing efficiency.
This activity relies on a single supplier who delivers a large quantity of products to the warehouse The process involves dividing these products into smaller quantities, creating smaller orders, and distributing them to a wider customer base.
The main benefit of this operation is ship oversized, overweight orders, or delivering products to many different customers.
Warehouse operations
Warehouse operations encompass critical processes such as receiving, organizing, storing, and shipping goods to enhance customer satisfaction According to Rick Stinchcomb from the University of Oklahoma Press, the primary objective of warehouse operations is to meet customer needs while efficiently utilizing space, equipment, and labor It is essential for goods to be both accessible and secure, necessitating continuous planning and adaptation to achieve this goal.
There are 5 key goals we need to pay attention to when operating a warehouse:
Analyzing warehousing productivity is essential for evaluating a company's efficiency and effectiveness Key metrics include cases shipped per person, product lines shipped per person, pallets shipped per person, average warehouse capacity, and utilized forklift capacity By measuring these factors, businesses can identify areas for improvement and enhance overall warehouse 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 safety protocols These facilities must be located at a safe distance from residential areas to minimize risk Additionally, a team of inspectors is assigned to conduct regular assessments, ensuring that the warehouses consistently meet established safety standards.
Ensuring the safety of workers, property, machinery, and vehicles is crucial in any operational environment Proper handling of empty cartons, damaged products, and broken pallets is essential to prevent hazards that could lead to fires or explosions Implementing safe handling measures is vital for maintaining a secure workplace.
Warehouse safety help to reduce injuries, increase employee satisfaction leading to increased work efficiency.
The safe storage of hazardous materials, including explosives, flammable liquids, and solids, is crucial for warehouse managers due to the potential risks of accidents and fatalities Each type of hazardous material has specific storage requirements, necessitating designated storage areas that comply with fire safety regulations and ensure a secure working environment for employees.
Warehousing security is crucial for preventing financial losses and ensuring smooth operations, as it addresses issues such as theft, pilferage, heat and humidity control, vandalism, fire hazards, and power outages Given the vast size of warehouses and the high volume of employees accessing them daily, prioritizing security is essential Protecting inventory not only safeguards against theft but also ensures that environmental factors like temperature and humidity do not compromise the quality of sensitive products, including 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 essential for fostering a productive work environment Addressing hygiene issues is manageable and relies on common sense and diligence, making it straightforward to implement effective cleanliness practices that contribute to business success.
The relationship between Technology and Warehousing
In today's rapidly advancing era of Industry 4.0, technology has become essential to everyday life, particularly in the logistics sector, which serves as the vital link in the service chain To adapt to the fast-paced changes in production and consumer demand, warehouses must integrate automation technologies Historically, warehouses relied heavily on manual labor for sorting, organizing, and arranging goods, resulting in time-consuming processes and suboptimal outcomes The evolution of warehouse management is closely tied to technological advancements, which significantly enhance operational efficiency Numerous technologies are now being implemented in warehouses globally to improve their 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 dozens of workers for sorting and transportation, automated technology streamlines operations, necessitating only a manager to oversee the process This advancement not only minimizes errors but also enhances efficiency throughout the entire workflow.
Utilizing advanced technology can save up to 50% in storage space through standardized mounting patterns, making organization more efficient This innovation allows for a 3 to 5 times increase in capacity, significantly reducing the time spent on manual sorting and arrangement As a result, businesses can enhance operational efficiency and maximize productivity.
The system offers remarkable flexibility and ease of customization, allowing businesses to swiftly adapt to changes without the need for extensive employee notifications Unlike traditional warehouses, where operational adjustments can be cumbersome, technologically advanced warehouses enable quick implementation of new processes, enhancing proactive responses to various situations.
In the era of Industry 4.0, the technological capabilities of logistics and warehousing service providers are crucial for maintaining competitiveness Modern warehouses must integrate advanced technology to fulfill customer demands, as outdated facilities can compromise product quality and delivery timelines Companies must prioritize technological upgrades to keep pace with competitors and market expectations Investing in warehouse technology enhances operational accuracy and efficiency, instilling confidence in businesses to deliver their core products To meet escalating customer requirements and remain relevant in the market, it is essential for warehouses to adopt and upgrade to modern technologies The rapid advancement of warehouses today is significantly driven by the implementation of technology, which has become vital for their survival and growth.
WAREHOUSING MANAGEMENT PRACTICES AT LAZADA INC
Lazada Inc introduction
Lazada is a leading e-commerce platform that has revolutionized online shopping in Southeast Asia Originating from Malaysia, it has expanded its presence across various countries, including Vietnam, where many users frequently shop via Lazada.vn and its mobile app Understanding the history and background of Lazada is essential for ensuring safe and reliable online shopping experiences This article will explore what Lazada is and provide comprehensive insights into its operations and significance in the e-commerce landscape.
Lazada.vn is a prominent e-commerce platform in Vietnam and Southeast Asia, serving as a virtual marketplace where customers and sellers connect, with Lazada acting as an intermediary The platform allows individuals, organizations, businesses, and brands to sell their products, ensuring that all items listed are backed by quality and reliability Lazada earns a commission from sellers, making it a trusted space for online shopping.
Lazada Group, a German electronic trading company founded by Maximilian Bittner in 2012 with the backing of Rocket Internet, operates 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 Jack Ma's Alibaba Group, solidifying its position in the market Today, Lazada continues to be owned by Alibaba Group of China.
3.1.3 What is Lazada's business model
Lazada operates on a marketplace model, positioning itself at the center of online shopping As of January 2016, Lazada partnered with over 3,000 suppliers, offering more than 500,000 diverse products This number has likely grown significantly since then Acting as an intermediary, Lazada earns a small commission on each seller's order while providing exceptional services for both buyers and sellers The platform features a streamlined payment process, numerous options, and top-notch 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, including events like 11.11 and 12.12, have led to millions of products being sold to consumers To ensure rapid delivery, Lazada utilizes modern warehouses equipped with advanced information technology, streamlining processes like general storage and sorting This efficiency enables Lazada to 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 achieved 110 million customer visits, showcasing its popularity in the e-commerce sector With over 2,000 sellers and more than 250,000 products across 13 categories, the platform caters to a diverse range of consumer needs To handle the tens of thousands of daily orders from across the country, Lazada relies on a highly responsive logistics system, ensuring efficient order processing and delivery.
Mr Alexandre Dardy, CEO of Lazada Vietnam, highlighted the company's extensive logistics network in Southeast Asia, which includes eight 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 has established significant warehouses in Hanoi and Ho Chi Minh City, Vietnam's two largest cities, enabling efficient distribution of goods to surrounding provinces.
1 Receive goods 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.
2 Quality Assurance (QA) Quality assurance
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
3 Inventory trackingInside Lazada warehouses, there are software such as automatic identification and data acquisition (AIDC), barcode scanners, or radio frequency identification (RFID) to ensure goods are in good condition The warehouse is accurately identified and easily located when the time of shipment arrives.
4 Import and store goods When the goods are imported into the warehouse, the warehouse management software conducts the storage according to the predetermined rules to facilitate the export of goods later Advanced software provides picking-to-voice, or picking-to-light product recognition to support large, complex, and sophisticated warehouses.
5 Loading and unloading Managers choose picking and picking (Pick-and-Pack) options such as zone picking, wave picking, and wave picking and batch picking to diversify and more convenient for workers In addition, the planning of goods in batches combined with alternating aisles will help workers reduce the travel distance to a minimum and quickly complete the work.
6 Transportation Management (TMS) After the warehouse manager confirms the order, the warehouse management software automatically issues a bill of lading (Bill of Lading) to send to the carrier, printing out a list of goods to be prepared as well as a provisional invoice order for the ordering party to confirm the order Some systems even allow printing out instructions for use, assembly if necessary… Once the items have been packed, the warehouse software can send advance delivery notices (ASNs) to other warehouses within the warehouse the system knows and stops the delivery preparation.
7 Picking (Picking) 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.
8 Labor trackingLabor accounts for 70% of the total fulfillment costs for each order, when all costs are considered excluding overseas shipping There is no space to list the many functions that will become computer-aided and eliminate manual operations Warehouse management systems keep track of all the work done, who completed the work and how long it took.
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 on its e-commerce platform Currently, Lazada boasts a comprehensive logistics infrastructure in Vietnam, which includes 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.
Ho Chi Minh City and Hanoi each host automated sorting centers, with areas of 7,000 square meters and 10,000 square meters, respectively Lazada reports that 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
Lazada's innovative automatic sorting line utilizes advanced 2nd generation wave-sorter technology, enabling the conveyor belt to efficiently redirect gears and expedite the transfer of goods to its delivery facilities.
The conveyor belt efficiently returns trays used for small, non-square, unboxed orders Once the goods are delivered, the conveyor system automatically transports the trays back to the receiving area, optimizing 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 partnership with key retail partners like CircleK, Pharmacity, and Coop Food, alongside over 1,500 logistics partner locations This initiative allows retailers and online shops to conveniently send goods directly, streamlining the shipping process without the need to visit Lazada's post office.
Picture 9: One point of delivery (Drop-off Points) of Lazada cooperates with Coop food system
Warehouse system operations in Lazada Inc
Lazada's warehouse serves as a national hub for storing and managing goods, ensuring efficient delivery across the country Utilizing a modern technology system and a strict process from input to output, it effectively handles the exchange of products Supported by a dedicated team of over 100 employees, this facility is crucial in managing a high volume of orders for Vietnam's leading e-commerce platform.
Lazada's warehouse features three levels equipped with two elevators for efficient goods transportation Upon arrival, products are processed and await further handling.
Before storage, every product undergoes a quality check and is assigned 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 traceability.
Picture 13: Attaching barcodes to products
Once the quality of the products is verified and the information is recorded in Lazada's system, the items are stored accordingly High-value goods and electronics are kept in a secure warehouse protected by iron nets and security personnel Products that need cooler temperatures are placed in cold storage, while others are stored at regular temperatures Due to the rapid turnover of goods, Lazada maintains minimal inventory on hand, ensuring optimal storage quality and replenishing stock daily.
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 transports goods to the packing area, which is staffed by two employees One staff member manages information, printing consignment notes and issuing invoices as necessary, while the other is focused on packaging the items.
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, with the system automatically selecting the ideal delivery service based on each package's dimensions Additionally, the computer system streamlines the process by automatically printing standard delivery notes and ensuring consistent service selection, ultimately saving valuable shipping time.
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 process is a permanent feature of the system, ensuring that packaging staff cannot alter the delivery method.
Advantages and disadvantages of Lazada’s warehouse system
Lazada employs a sophisticated system for transferring goods within its warehouses, utilizing logical algorithms alongside adaptable human operations The company has established a robust infrastructure that includes barcode-marked shelves, a code-reading system, sorting software, and clear instructions for goods transfer, ensuring efficient sorting, ordering, and delivery without errors With four warehouses in Ho Chi Minh City, two in Hanoi, and an expanded facility in Da Nang, Lazada aims to centralize its inventory for improved management and operations This strategic approach not only reduces delivery times, particularly during the Covid-19 pandemic, but also enhances the capacity to manage large daily orders Furthermore, the widespread distribution of Lazada's warehouse network across Vietnam contributes to increasingly flexible and optimized supply chains and logistics activities.
Lazada's advanced warehouse system enhances the efficiency of goods circulation and fosters seamless communication between manufacturers within the distribution channel This system not only minimizes operational conflicts but also reduces product circulation costs, ultimately leading to lower prices and improved competitiveness for manufacturers.
Lazada relies heavily on efficient shipping services rather than maintaining extensive warehouse storage, making delivery operations crucial to its business model Any disruption in the delivery process can significantly impact Lazada's performance and customer satisfaction.
Lazada offers a wide range of products daily while striving for fast delivery to minimize inventory costs However, this approach has led to frequent customer complaints regarding delayed orders, particularly for discounted items.
The simplificated logistics process from seller to customer
In recent years, Lazada's sales campaigns, such as 11.11 and 12.12, have led to millions of products sold to consumers To ensure swift delivery, Lazada utilizes modern warehouses equipped with advanced information technology, facilitating efficient storage and sorting of goods As a result, Lazada can provide customers with rapid delivery times, enhancing the overall shopping experience.
3.2.1 Warehouse system in Vietnam – Lazada Express
In the first half of 2015, Lazada achieved an impressive 110 million customer visits, featuring over 2,000 sellers and more than 250,000 products across 13 diverse categories The platform processes tens of thousands of orders daily nationwide, highlighting the need for a highly responsive logistics system to meet this demand.
Mr Alexandre Dardy, CEO of Lazada Vietnam, highlighted the company's extensive logistics network in Southeast Asia, which includes eight warehouses and 50 distribution centers He noted that Lazada collaborates with 60 couriers and shipping companies to facilitate deliveries to approximately 80 cities across six countries.
Lazada operates extensive warehouses in Hanoi and Ho Chi Minh City, the two largest cities in Vietnam, enabling efficient distribution of goods to surrounding provinces.
Lazada's warehouse location
1 Receive goods 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.
2 Quality Assurance (QA) Quality assurance
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 inventory tracking technologies, including automatic identification and data acquisition (AIDC), barcode scanners, and radio frequency identification (RFID), to maintain the integrity of goods These systems ensure that products are accurately identified and easily located when it’s time for shipment.
When goods are imported into the warehouse, warehouse management software organizes their storage based on predefined rules to streamline future exports Advanced systems utilize picking-to-voice and picking-to-light technologies to enhance product recognition, making them ideal for large and complex warehouse operations.
Loading and unloading 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 methods minimize travel distances, allowing employees to complete their tasks more quickly and effectively.
Transportation Management Systems (TMS) streamline the order fulfillment process by automatically generating a bill of lading once the warehouse manager confirms an order This system produces a detailed list of goods to be prepared and a provisional invoice for the ordering party's confirmation Additionally, some TMS solutions facilitate the printing of user instructions or assembly guides when needed After packing the items, the warehouse software can issue advance shipping notices (ASNs) to other connected warehouses, effectively halting further delivery preparations within the system.
The picking options provide users with the capability to view order queues categorized by different order types, including carrier level, line item versus multiline orders, and special handling orders, allowing for the selection of specific orders efficiently.
Labor tracking is crucial as it constitutes 70% of total fulfillment costs for each order, excluding overseas shipping With the rise of computer-aided functions, many manual operations will be streamlined Warehouse management systems play a vital role by monitoring all tasks performed, identifying who completed them, and recording the duration of each task.
Management System of Lazada
In 2015, Lazada launched Lazada Express, a logistics company designed to enhance the transportation and distribution of goods on 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 and 10,000 square meters, respectively These centers utilize advanced automatic sorting technology to efficiently consolidate and categorize goods for distribution to delivery centers across various districts.
Lazada's automatic sorting system
Lazada has implemented a state-of-the-art automatic sorting line featuring advanced 2nd generation wave-sorter technology This innovative conveyor belt system efficiently redirects gears, ensuring swift and seamless transfer of goods to Lazada's delivery facilities.
The conveyor belt efficiently returns trays used for small, non-square, unboxed orders to the receiving area after goods are redirected to the delivery point, optimizing overall operational performance.
The system of sensors and scanners automatically measures the dimensions,
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 to these drop-off points, streamlining the shipping process and enhancing convenience for users.
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 along with an OTP code via their registered phone number and email, allowing them to easily retrieve their items These lockers, deployed in collaboration with partner ilogic, are equipped with security cameras and safety locks, ensuring a secure environment for both delivery and pickup in high-traffic areas.
A smart locker (Smart Lock) of Lazada in collaboration with partner Ilogic.25
Smart Locker (Smart Locker) is suitable for office workers, students, it is not convenient to pick up goods during office hours.
Lazada is the sole e-commerce platform in Vietnam utilizing innovative smart locker technology, with 36 smart lockers strategically placed in Ho Chi Minh City and Hanoi These lockers are conveniently situated near residential areas, commercial centers, and offices, ensuring easy access for customers Since its launch in 2018, Lazada's smart locker service has enhanced the shopping experience by providing a secure and efficient delivery solution.
The lockers all have security cameras monitoring 24/7, ensuring safety when
Lazada has implemented an advanced information technology system, known as the Logistic Operation Platform, to enhance every stage of the order process, from receiving goods to delivery This system utilizes big data technology for efficient management and real-time order tracking Additionally, the Logistics Network Platform facilitates seamless connectivity and oversight of the entire logistics network, optimizing overall operations.
Lazada Vietnam is launching the "Apollo project," a technology and big data application platform designed to centralize network administration and data management This initiative focuses on optimizing routes and effectively managing costs By enhancing the connection between the e-commerce platform and logistics infrastructure, Apollo aims to create added value and improve the overall experience for Lazada's customers, brands, and sellers.
Lazada shared that it is building a healthy and sustainable e-commerce ecosystem in the long term through investment in technology and logistics infrastructure, with the support of Alibaba.
3.3 Warehouse system operations in Lazada Inc
Lazada's warehouse serves as a nationwide hub for storing and managing goods, utilizing advanced technology and a strict process for input, storage, and delivery Supported by a dedicated team of over 100 employees, it efficiently handles a high volume of orders for Vietnam's leading e-commerce platform.
Lazada's warehouse features three levels and is equipped with two elevators for efficient goods transportation Upon arrival, all items are processed and recorded before being stored.
Lazada’s warehouse
Before entering the warehouse, every product undergoes a thorough quality check and is labeled with a unique barcode This barcode system tracks essential information, including expiry dates, storage dates, release dates, and responsible personnel Each product features a distinct stamp, ensuring that no two items share the same barcode, thereby enhancing inventory management and traceability.
Attaching barcodes to products
Once the quality of products is verified and recorded in Lazada's system, they are stored appropriately High-value items and electronics are kept in a secure warehouse protected by iron nets and security personnel Products requiring a cool temperature are placed in cold storage, while others are stored in standard temperature warehouses Due to the rapid turnover of goods, Lazada maintains a limited inventory to ensure optimal storage quality, replenishing stock daily as needed.
Each employee will be provided with a special device to manage customer orders and find the right item in stock.
Barcodes scanner
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.
Automated coveyor belt in Lazada
The conveyor belt efficiently transports goods to the packing area, where two staff members manage the process One staff member is tasked with handling information, printing consignment notes, and issuing invoices when necessary, while the other focuses on packaging the items.
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, with the system automatically selecting the appropriate delivery service based on each package's dimensions This automated process not only prints standard delivery notes but also ensures consistent delivery service selection, ultimately saving valuable shipping time.
When purchasing small items, the system automatically generates a delivery note for courier service A, while larger items trigger the use of delivery service B This decision is fixed across the entire system, and packaging staff are unable to make any changes.
3.4 Advantages and disadvantages of Lazada’s warehouse system
Lazada's warehouse operations involve a sophisticated system that combines advanced algorithms with adaptable human intervention The company has invested in essential infrastructure, including barcode-marked shelves, a code reading system, and sorting software, to ensure efficient handling of inventory 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 its inventory for improved management and operations This strategic approach not only reduces delivery times, especially during the Covid-19 pandemic, but also enhances the capacity to manage large daily orders Furthermore, the widespread distribution of Lazada's warehouses across Vietnam contributes to a more flexible and optimized supply chain and logistics network.
Lazada's efficient warehouse system enhances the speed of goods circulation and fosters effective communication among manufacturers in the distribution channel This system minimizes operational conflicts, reduces product circulation costs, and ultimately leads to lower product prices, boosting competitiveness for manufacturers.
Lazada operates with minimal inventory and limited warehouse space, relying heavily on efficient shipping services Consequently, the company's primary logistics focus is on delivering products to customers Any disruption in this delivery process could lead to significant challenges for Lazada.
Lazada offers a wide range of products daily and aims to deliver them swiftly to minimize inventory costs However, this has led to frequent customer complaints regarding delayed orders, particularly for discounted items, highlighting challenges in their advanced management system.
Chapter 4: Implications for Vietnamese Businesses
The Covid-19 pandemic has significantly impacted global production and supply chains, prompting the logistics industry to evolve, particularly in warehousing, which serves as a vital link in the supply chain With lockdowns limiting in-person shopping, consumers increasingly turned to online platforms, leading to the rapid growth of e-commerce sites like Tiki and Lazada This surge has intensified competition among e-logistics businesses, revealing that many companies struggle to meet the heightened customer demands An analysis of Lazada's warehouse management system offers valuable insights and lessons for Vietnamese companies aiming to enhance their logistics operations.
Vietnamese companies need to enhance their warehouse infrastructure, as many still rely heavily on manual labor The surge in online orders during the epidemic highlighted the limitations of their workforce, compounded by government policies restricting operations to 50% capacity, which led to order backlogs To address these challenges, businesses should invest in smart warehousing solutions, such as automated sorting systems and robotic picking, to save time and labor costs while boosting productivity and ensuring timely customer satisfaction.
Vietnam's e-commerce platforms should prioritize in-house warehouse management over outsourcing order fulfillment to third parties While this approach can reduce warehousing and transportation costs for small and medium-sized startups, it may not be sustainable for long-term growth and competition against foreign businesses Relying on third-party delivery can lead to challenges in order control and potential damage to a company's reputation due to late or damaged deliveries By managing their own warehousing processes, companies like Lazada and Tiki can minimize rental expenses and maintain full control, ultimately enhancing customer satisfaction.
Companies should prioritize warehouse locations near headquarters or major urban centers to enhance delivery efficiency, especially during peak seasons or pandemics Lazada's strategic investment in logistics across three major Vietnamese cities and the establishment of a nationwide network of distribution centers has significantly improved 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 goods transactions driving the need for robust warehouse infrastructure Historically, warehouses operated on a small scale, but recent economic growth has led to significant investments in modern warehouse management and automation technology This evolution is vital for companies like Lazada, where the quality of storage and efficient goods transfer are key to success By utilizing advanced technologies such as industrial conveyor belts for packaging and transportation, Lazada enhances operational efficiency, saving time and labor costs This strategic investment in warehousing positions Lazada as a leading online retailer, enabling it to effectively compete with Shopee and Tiki in the Vietnamese market Lazada views its warehousing investments as a sustainable, long-term strategy, contributing to its success in the rapidly evolving e-commerce landscape.