The formulations contained in the definition of logistics developed by the Council of Logistics Management indicate that logistics activities are related to, among other things, customer service, demand forecasting, information flow, production site location, procurement processes, handling activities, etc. This is consistent with the theory of the firm presented by J. Schumpeter, who believed that organizations, through their own activity, innovate by implementing and introducing new products and services as well as new forms of organization and sales, which lead to the creation of entirely new products.
By converting a tangible good into an intangible one, such as a service, it can be observed that logistics processes also find their place in the management practice of for-profit (banks, brokerage houses) and non-profit (schools, hospitals) service organizations.
Analogously to manufacturing enterprises, in these organizations, logistics solutions related to the distribution of a service from the provider to the recipient require planning, control, and monitoring. They also involve streams, resources, and infrastructure typical of logistics processes. Service organizations also feature all elements of the logistics process, such as: coordination of flow, striving to minimize costs, and subordinating logistics activities to customer requirements.
In all organizations, the primary goal of logistics processes is to reduce costs and generate profit, although in non-profit organizations, profit is not the primary goal but merely determines the processes taking place.
The central place among an organization’s logistics activities, regardless of the purpose of their operation and legal form, is occupied by the customer and the satisfaction of their needs. Customer service can generally be defined as the ability of a logistics system to satisfy customer needs in terms of time, reliability, convenience, and communication. In every case, this requires integrated management of relevant logistics activities in such a way as to achieve the necessary degree and level of this satisfaction at the lowest cost. This goal is consistent with the expectations of all stakeholders of the organization and, acting as a driving force for technological innovation, determines the undertaking of actions to improve existing services/processes or to plan new ones, which are hoped to bring improvements in terms of product, service, process, or management method.
The pursuit of cost minimization as the primary goal of every organization means that logistics solutions can be implemented in every area of its activity. Technological innovations can therefore occur both in areas of activity related to the core business and in areas classified as non-core business.
An organization’s innovative goals are related to its mission, i.e., what the organization should be doing. In this aspect, three main goals of every organization related to innovation can be distinguished: product, social, and managerial. The first refers to products or services and consists of introducing new methods of creating and providing services or significant improvements in the way they are performed. The second is related to consumer behavior, while the third consists of actions necessary to introduce them to the market.
However, regardless of the type of organization (manufacturing or service), technological innovations in logistics concern every link in the chain that makes up the customer service process.
Delivering a product or service as the final effect of the logistics aspects of customer service is related to the level of service. This level can be considered as the ability of the organization’s logistics system to satisfy consumer needs in terms of information accuracy, ease and convenience of access, courtesy, comprehensiveness, and availability time. Shaping this level should be treated as the most important aspect of the logistics process, because the opinion on the level of service has a significant impact on how the organization is perceived by its environment. However, a high level of customer service entails significant non-linear logistics costs, which can be partially offset by an increase in revenue. Additionally, the development of customer service standards by organizations can provide a benchmark against which the results of innovation efforts can be measured.
The article comes from the magazine “Logistyka” 5/2011.