Quantification of the value of logistics : creating an understanding of the value process

There is little doubt that logistics adds value to the total business process. Various authors have identified the different types of value from the traditional place and time utility to the more recent concepts of customer service. This understanding leads to the question of quantifying that value.

The research was conducted in three phases. The first consisted of a literature review of the current writings. Next, a research team conducted a series of case studies and a mail survey. The third phase consisted of a follow-up survey. There was a detailed analysis after each case study and survey.

The dissertation identified the most common measurement techniques. The most commonly used methods were the operational performance measures. The less popular techniques were the financial and cost type measures. Also, the dissertation determined the relationship between specific measures. The financial measures of logistics value were highly correlated.

Another key point was the finding of the definition of value. While companies attempted to measure logistics value, less than half had a clear definition of what they were trying to quantify, Fortunately, two-thirds of the individual respondents had some personal concept of the definition of value.

Part of the definition of the value of logistics was value-added. The terms, value and value-added, were used interchangeably in the case studies. However, the survey identified significant differences in the application of value-added services. The companies that provided value-added services appeared more advanced in the quantification process. They had a better definition of value and more success in measuring customer service quality in dollar terms. Finally, the companies that provided value-added services were more likely to view logistics as a competitive advantage.

In addition to identifying definitions and measurement techniques, the dissertation determined the areas that logistics organization measured value, costs and operational performance. There were fifteen areas examined in the dissertation and a previous study by A. T. Kearney, Inc. There was tremendous growth in the involvement of logistics in the company's overall operations.

The final portion of the research was the presentation of a number of models from the findings. These included definitions, best practices and an implementation process.