A warehouse is a point in the supply chain, where the products are stored and processed and continue to move on the supply chain. Warehouses play an important role in supply chains (1). Warehouses need both storage space and time of labor operating inside; these are the costs that need to be taken into account when it comes to warehouse management. Warehouse management includes warehouse planning and operations. Warehouse planning includes layout planning, materials handling equipment (MHE) planning, and inventory planning. Warehouse operations include receiving, putting away, picking, packing, and shipping.

The distribution center under study is one of the largest and most modern distribution centers in Vietnam, also a critical link in the company’s supply chain. Products at the distribution center include homecare, personal care, foods, and promotion products. The distribution center has just started an operating warehouse, storing finish goods (FGs), which account for 60% in stock.

The company is concerned that the late order rate in the warehouse (up to 20%) will negatively affect the customer’s service level. Analysis shows that there is plenty of waste in logistics management in the warehouse. Wastes in warehouse operations can be movement waste caused by unreasonable space allocation and waste of resources or time caused by uncareful resource planning. Causes of these wastes lie in the warehouse layout, storage and MHE planning, and operations.

Failure mode and effect analysis (FMEA) indicates that the main reason is warehouse operations. This research uses value stream management (VSM) as the platform to improve warehouse operations with the objectives to reduce the non-value-added time and reduce the lead time and hence reduce the late order rate and increase the customer’s service level. The scope of research is limited to the FG warehouse.

The warehouse under study stores FGs and gifts. The FG storage area is categorized as a pallet layout, using a double deep racking system. FGs are stored with dedicated storage policy and are always picked in full pallet with single cycle operation.

Warehouse operation processes consist of receiving, putting away, picking, packaging, and shipping activities. Besides the storage time and delivery time, other operation times can be reduced by eliminating non-value-added activities. Value-added activities are activities that are essential for warehouse operations and to customers. Non-value-added activities are wait and movements.

In order to assess the current warehouse operations, the current value stream mapping for FGs is developed. For FGs, processes for receiving, putting away, picking, packaging, and shipping with time distributions are shown in these following figures.

The current FG receiving process is shown in Figure 1.

The current FG put-away process is shown in Figure 2.

The current FG picking process is shown in Figure 3.

The current FG packaging process is shown in Figure 4.

The current FG shipping process is shown in Figure 5.

Time distributions in the current processes are shown in Table 1.

From Table 1, the current state map is drawn as in Figure 6.

From Figure 6, the current performance indexes are shown in Table 2.

From Table 2, it can be seen that the Personal Consumption Expenditures (PCE) is quite low due to high NVAT. There is still room for improvement in operation processes. The NVAT needs to be reduced to reduce lead time LT.

The current state map is analyzed and improved in order to achieve the above objectives. Non-value-added activities in the current processes are analyzed to define causes and solutions to the problems. They are all shown in Table 3.

After applying the solutions, the future processes are re-engineered as in these following figures.

The future FG receiving process is shown in Figure 7.

The future FG put-away process is shown in Figure 8.

The future FG picking process is shown in Figure 9.

The future FG packaging process is shown in Figure 10.

The future FG shipping process is shown in Figure 11.

The time distributions in future processes are shown in Table 4.

The future state map is drawn as in Figure 12.

From Figure 12 the future state indexes are summarized in Table 5.

The current and future state indexes are summarized in Table 6.

From Table 6, it can be seen that NVAT decreases by 50.69%, from 143 (mins) to 70.5 (mins), PCE increases by 17.74%, from 69.18 (%) to 81.22 (%), and LT decreases by 19.07%, from 464 (mins) to 375.5 (mins).

Value stream management has been applied as the platform in order to improve the operation processes of the warehouse under research with the objective to reduce the wasted time and to decrease the lead time. Data have been collected to draw the current state map. Non-value-added activities in the current state map are analyzed to define causes and solutions to the problems. The future state map has been drawn after applying the solutions. The result shows that the non-value-added time decreases by 50.69%, from 143 (mins) to 70.5 (mins), and the lead time decreases by 19.07%, from 464 (mins) to 375.5 (mins).

The research has advantages of using scientific methods to solve problems. However, the research still has the disadvantage that the solutions are not implemented to assess their effectiveness, and the future performance indexes are only estimated with the assumption that the solutions are effective. The weakness guides us to future studies.

PN was the thesis advisor of PH, PhatT, and PhuongT. PN has developed the models for the thesis. PH, PhatT, and PhuongT have collected and analyzed the data and run the models. PN has composed the article based on the thesis. All authors contributed to the article and approved the submitted version.