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Most logistics professionals and academics agree that logistics is an essential function within business [1], Furthermore, there has been a trend over the last few years to consider logistics as a process that creates value. While the terms value and value-added have experienced popular usage, they are neither clearly defined nor accurately measured. A primary goal of this article is to clarify these definitions, in the context of how value is created by logistics. Based on empirical research, definitions of value and value-added are suggested that are founded upon and related to the perspectives of practicing managers. Following a brief literature review, details are provided about the objectives and methodology of the research that was conducted. Last, managerial implications and the key messages for both logistics managers and researchers are presented.
While there is general agreement that logistics is a necessary function in business, the question arises as to whether logistics is more representative of a valueadding operation or merely a cost [2]. Peter Drucker characterized logistics, as "distribution", as "a cost area and purely a cost area" 131. More recently, an article by John Tracy argued that logistics managers, and hence logistics itself, does add value. He stated that the notions of place and time are essential and must occur just to compete in a market. He reasoned that if an activity is essential, then it must add value. Finally, he states that accountants define most logistics activities as "non-value-adding" [4]. This raises the question, what is the value of logistics and are there benefits to measuring it?
The literature review is intended to identify definitions of logistics, customer service, and customer satisfaction. Also, it will identify the definitions of value and highlight the difficulty in defining logistics value. Finally, it will identify the gaps in the current literature. Definitions of Logistics, Customer Service, and Customer Satisfaction There are a number of commonly accepted definitions of logistics. One simple definition is the "Seven R's of Logistics". The Seven R's defines logistics as ensuring the availability of the right product, in the right quantity and the right condition, at the right place, at the right time, for the right customer, at the right cost [5]. A second definition is one that was adopted by...