It is said that the world we live in is a world of values, that one can distinguish economic, aesthetic, moral, legal, cognitive, and religious values within it, and that all these values form a system known as a value network. However, it is rarely discussed what value is and what methods are used to create it. As a rule, it is assumed that value means something important, desirable, or useful, but it is difficult to provide a single definition of value. There are many of them, and the word itself depends on the context.
An analysis of literature in the field of logistics and supply chain management indicates that the word “value” is used in various meanings. Articles published (including in “Logistyka”) on the subject of “logistical value” stimulate reflection and discussion on certain nuances of value. The present article contains only a few reflections on this subject. Without exhausting it, it may serve as a starting point for a broader discussion.
The definition of logistics I use most often states that it is: “that part of the supply chain process that plans, implements, and controls the efficient, effective flow and storage of goods, services, and related information from point of origin to point of consumption (and vice versa) in order to meet customer requirements” (Council of Logistics Management, 2001).
Thus, logistics is management and, as such, functions within the scope of economic sciences. The term “value,” used in an economic or business context, means the value of something. However, questions arise: should value be measured by costs (of production), price, or profits? How is it determined for the supply chain as a whole, and can it be broken down into parts belonging to (corresponding to) each organization that is an integral part of it? Finally, is this the only good approach? Adam Smith’s (1723 – 1790) assertion that the free market leads to the satisfaction of specific needs is fundamental when it comes to further arguments. “The satisfaction of needs does not occur through economic activity in itself, but through the benefits resulting from it.” In the case of logistics, it is primarily the benefit arising in the area of distribution, resulting from information, place, and time, which as “value added” enriches a product or service. In this context, does the now common term “logistical value” make sense? In my opinion – no. The aforementioned Adam Smith was one of the first to address the topic of “value.” He distinguished two different meanings of the word, writing that the value of a given good can be understood as the quantity of other goods that the owner can acquire for it (exchange value, market value) or its utility to the owner (use value). Speaking of value in the sense of exchange value is a traditional approach (product orientation). The alternative approach is associated with use value and concerns “service orientation.”
When it comes to logistics
According to R. Large (1995), the difference between utility and the use value of a product is significant from the point of view of value creation in the case of logistics. A product (good) has use value if:
1) it is useful for satisfying a specific need;
2) its actual availability exists.
Availability in the distribution system has 2 dimensions: legal and actual. Through the fact of the relationship between actual availability and the effectiveness of logistical activities, it can be said that logistical activities are necessary to create use value. This view is shared by Coyle, Bardi, and Langley (2003). In particular, they distinguish the 4 already mentioned utilities of form, time, place, and possession, which enrich a product or service, and yet… they treat profit as a substitute for value. They also often use price in the context of value.
The article comes from the magazine “Logistyka” 6/2010.