Connect Learn Finance


Logistics and services, do they go hand in hand?

Inventories, which are so common in the supply of products, remain unused when it comes to intangible products that cannot be accumulated. Discover the differences between products and services.

Share this article

Published by ConnectAmericas


Management skills are critical in service logistics

When we speak about logistics, the first thing that comes to mind is the supply structure of a tangible good for it to reach the final customer properly and on time. This gives rise to related concepts such as "inventory" or “distribution and dispatch centers," where the product is the common factor. But when it comes to services, these cannot be combined or distributed in the strict sense of the word. We are faced with intangible inventories that are impossible to quantify but as real as a vacuum cleaner.

This is where logistics are redefined and play an important role, for instance, in regard to health, education, banking, insurance, and in the so-called services industry in general. As with product logistics, the main focus is on the customer only that in this case the primary objective is delivering a satisfactory experience.

The difference between product logistics and service logistics mainly refers to their nature, whereby products are susceptible of being accumulated while services are not. Hence, where inventories are critical in the former, management capacity is in the latter. One of the most underlying features of this industry is the high level of skill and specialization of companies in this line of business. This is why logistics play such a decisive role; if efficient, they can maximize the quality of the experience that is offered.

For these suppliers, the careful design and planning of all the tasks involved in developing the service agreed upon are very important , especially those where the customer has a direct role (on- line purchase of services) or indirect role (advice from the sales agent). It is essential to present friendly platforms that allow the customer to make the best decision when buying the service, where the information regarding all aspects of the purchase is visible or available for delivery.

The quality, variety, cost, response time and availability of the service are amongst the variables that reduce or eliminate the gap between the service offered by these companies and the one appreciated by the customer. In order to achieve this, companies must correctly understand the needs and preferences of their customers since this is critical for the continuous improvement of the logistics management system.

Detailed description

Traditionally, the SCOR (Supply Chain Operations Reference) Model was used to describe the main logistics processes: “source” (obtain products), “make” (transform them), “deliver” (turn over), and “return” (processing returns to and from customers and/or supplier). However, in service logistics, service production is simultaneous to its delivery; therefore, the "make" and "deliver" occur at the same time.

In some cases, for instance with technical car services, products are combined (in this case, spare parts) with customized service. When the service includes a product, it is mandatory to comply with that of “the right product in the right place at the right time and under the right conditions." Sometimes the service requires a device to interact with the customer, such as a coffee machine at a medical emergency center. In this case, we should expand logistics to include not only the supply of coffee and hot water but also the availability of electrical power for the machine and also its proper maintenance.

However, whichever the service, the customer's expectations and perceptions are more difficult to capture, and hence to satisfy. Authors typically say that when a service is involved, the customer does not know what he is buying and the supplier does not know what he is selling. Notwithstanding these complexities, logistics can do much for services.

Today there is a high level of competition among more and more demanding and selective customers. This urgently calls for companies in the field to acquire a high level of competition due to the many difficulties in fulfilling the desired level of service and the associated high costs.

Share this article

{{'LOADING_COMMENTS' | translate}}...
{{'NO_COMMENTS_YET' | translate}}
{{'TO_POST_A_COMMENT' | translate}}

Other users also viewed

Sign In to ConnectAmericas
Forgot your password?
Don't have an account? Register here
Enter the e-mail you used when you registered
for ConnectAmericas to create
a new password