The influence of logistics processes carried out in enterprises on the creation of the value of their results is unquestionable. The concept of value in logistics has entered common usage, but it has not been clearly defined. The purpose of these considerations is to attempt to formulate a definition in the context of how value is created by logistics processes.
Logistics is recognized as essential in conducting business activities, but there are differing opinions on whether it serves a value function or is simply a cost.
P. F. Drucker defined logistics as distribution and as a cost area, and only a cost area. In contrast, J. Tracy argued in the article Do Logistics Managers Add Value? that logistics managers in leadership positions and logistics itself contain value. He also stated that it is necessary to include the place function and the time function in the processes being carried out, and therefore, if these functions are necessary, they must add value. In summary, he concludes that accountants define most logistics activities as non-value-adding. The question therefore arises: does logistical value exist, and are there any benefits for managers in being able to measure it?
The literature on the subject abounds with definitions of logistics and also defines the concept of value, yet a symbolic number of publications address issues related to determining logistical value. Ultimately, it can be stated that there is a gap in the literature in this regard.
The aforementioned few mentions of value creation by logistics processes refer almost exclusively to its links with the customer service process. Undoubtedly, the customer service process adds value to a product or service. The added value is shared in such a way that each party to a given transaction or contract possesses greater value after the transaction than before its conclusion. Given that the customer service process is one of the supply chain processes, customer service is a process that delivers profitable benefits with added value.
Most likely, there is no definition that clearly specifies the value created by a logistics process. There are those that define value creation at a given time and in a given place. They postulate that part of the product’s value is related to the customer’s ability to order the product at a given place and at a given time. Interpreting this literally, logistical value is an extreme choice: either the product arrives in a specific way and logistics helps in creating value, or the product does not reach the customer and logistics does not contribute to value creation. However, it should be taken into account that logistics processes occur not only in the final phase of the customer order fulfillment process, so the analysis must include its individual phases, taking into account the level of value created by logistics. Determining the actual logistical value based on known definitions of logistics or logistics processes is not possible.
Analyzing the concept of value in relation to logistics, the value chain model popularized by M. Porter comes to the fore. It includes inbound logistics, outbound logistics, and customer service as primary activities contributing to value creation. However, this model does not specify the value created by logistics. Furthermore, the value chain model does not help explain the relationship of customer service as part of the logistics process.
LaLonde and Zinszer conducted an analysis of the value created by logistics processes based on the definition of customer service. They identified 3 main elements related to logistics and value:
1) meeting customer needs,
2) measuring performance aimed at meeting customer needs,
3) the company’s commitment philosophy.
As a result, according to these authors, customer service is often used as a substitute for value in defining logistics.
Langley and Holcomb described the way customer value is created in the logistics process. According to them, the aspect of ensuring customer satisfaction has shifted from the area of marketing alone to logistics. Therefore, logistics has taken on the task of meeting customer needs, and customer service has become a key element in defining logistics, which now includes the concept of value. An alternative is to use the concept of quality as a substitute for value. A. T. Kearney states in their work Improving Quality and Productivity in the Logistics Process – Achieving Customer Satisfaction Breakthroughs that customer satisfaction is half of the equation that creates logistical value. The premise was that Total Quality Management (TQM) is an essential part of value creation. Figure 1 shows the relationship between value, logistics, performance, and quality.
The article comes from the journal “Logistyka” 4/2010.