The term ‘value’ is an abstract and intangible concept and is often defined in a different form according to the views of managers (Rutner and Langley, 2000). Value is, however, commonly understood as ‘the perceived worth in terms of the economic, technical, service and social benefits received
fIgurE 4.2 Process of maritime logistics
• shipping service:
providing shippers with cargo space of ships;
offering regular schedules of sails for maritime carriage
• forwarding service:
planning shipping route;
arranging payment of freight; documentation required for customs clearance or insurance
Maritime Logistics System
Logistics Services Shippers
Arranging inventory management; packing;
warehousing; inland transportation, etc.
Secondary activityPrimary activity
Inbound/outbound B/L;
container tracking and information; intermodal service, etc.
Warehousing; repacking;
assembling; product mixing, etc.
Ocean movement
Ma ritime
Logisti
cs Valu e
Ma ritime Logistics alue V
• port operations:
shipping reception;
loading/offloading;
stevedoring; delivery of goods via inland transportation
Human resource management; information system; administrative skill; finance
Shipping Lines Port Operators
Freight Forwarders
Introduction 60
by a customer firm in exchange for the price paid for a product offering’
(Anderson and Narus, 1991). Although firms provide differentiated goods or services, unless customers are satisfied with the goods or services offered, those goods or services may not be valuable. Therefore, the maritime logis- tics value should reflect how well the system fulfils customer needs. In this sense, this paper defines the maritime logistics value as the extent to which the maritime logistics system responds to customer demands by success- fully managing the flow of goods, services and information in maritime logistics.
The value can be discussed from a customer’s or a service provider’s point of view. This paper focuses on the latter, since the value of a service could be assessed by customers (Anderson and Narus, 1991). For example, even though the service provider (ie a firm) regards their service as valuable, if the service cannot be perceived as valuable by their customers, the service ultimately could not be regarded as valuable. When examining the elements that constitute the maritime logistics value, firms should initially identify who their customers are and what they demand. Customers in maritime logistics would primarily be shippers who are in demand for shipping and freight forwarding services, and shipping lines are the customers of port/
terminal operators. However, since all of the activities in a logistics sys- tem are inter-connected with each other and their operations are directly or indirectly affected by others, the quality of maritime logistics services may also affect the behaviours of all the players in an integrated logistics system. For instance, delays in shipping or carrying cargoes may cause seri- ous problems not only with processing other successive works but also with delivering goods on time to the final consumers. Such problems may lead to serious dissatisfaction among final consumers and others in the entire logistics system. Therefore, the boundary of maritime logistics would not be limited only to shippers or shipping lines. Rather, all the entities in the whole logistics flow should be included as the customers of the maritime logistics system.
As far as the customer needs of maritime logistics system are concerned, the overall demands from all the customers in a logistics system should be taken into account. Today’s customers seek a service that is quick, reliable, flexible and yet also offers the lowest price. These components are associ- ated with organizational efficiency and effectiveness. Thus, maritime logis- tics value can be also reflected in the operational efficiency and effectiveness of services offered (Lai et al, 2002).
Having suggested that ‘efficiency measures how well the resources are utilized, and effectiveness concerned with the extent to which goals are accomplished’, Lai et al (2002) measure operational efficiency and service effectiveness widely used in transport logistics such as costs, assets, reliabil- ity and responsiveness/flexibility. The first two criteria are about efficiency- related indicators of a firm, while the other two are effectiveness-related criteria. Table 4.3 indicates measurements representing the efficiency and
Defi ning Maritime Logistics and Its Value 61
effectiveness in the context of transport logistics. Since maritime logistics is a part of transport logistics, the framework can be applicable to assessing maritime logistics value.
Bearing the above points in mind, this chapter suggests two major indi- cators of maritime logistics value: 1) reduction of lead-time and business costs; and 2) improvement in service quality (eg fl exibility, responsiveness and reliability). The fi rst is concerned with effi ciency-related elements of maritime logistics value, whilst the second relates to effectiveness. The cur- rent research considers the reduction of lead-time as an important factor for the effi ciency of maritime logistics, although it was not included in Lai et al (2002). The reason for its inclusion is that a lead-time occurred in the maritime logistics system does signifi cantly affect the overall cargo move- ments and associated costs. For example, cargoes not delivered on time may have repercussions, such as shipping congestion, ineffi cient utilization of transport equipment, delays in handling cargoes, and customer dissatisfac- tion. However, this chapter excludes the ‘asset’ factor of Lai et al (2002) from maritime logistics value. This is because, in the context of maritime logistics value, customers may be much more concerned about service qual- ity and price than about the degree of asset utility of service providers, since the service quality and price may have a direct infl uence on the costs and degree of satisfaction of the customers in regard to the maritime logistics service.
TaBLE
4.3Measurement of effi ciency and eff ectiveness in transport logistics
Supply chain
process Measurement
criteria Performance indicators
Effi ciency-related (Internal facing)
Cost Total logistics management costs Productivity
Return processing cost Assets Cash-to-cash cycle time
Inventory days of supply Asset turns
Effectiveness-related (Customer facing)
Reliability Delivery performance Order fulfi lment performance Perfect order fulfi lment Flexibility and
Responsiveness
Response time Production fl exibility
SOuRCE Lai et al (2002)
Introduction 62