By Xingjian Zhou
School of Management, Wuhan Textile University
The Concept of Logistics Value Chain
Value chain is a theoretical tool of analysis the competitive advantage for an enterprise. Introduction the theory to logistics area, so-called logistics value chain (LVC), refers to the chain with a series of intrinsic logistics value. Logistics value chain exists in the relationship of logistics process, from upstream to downstream. Logistics value chain reflects the nature of supply chain, and shows the origin driving force to form the supply chain. The usual sense of the “logistics contract” is a concrete form, and the value chain has been translated into supply chain as a constraint. In the traditional structure of value chain, the “logistics” activities were shown in internal logistics (i.e., industrial logistics) and external logistics (i.e., business logistics), but all of them are parts of logistics value chain.In fact, logistics value chain is one part of the enterprise’s value chain, which includes such external logistics activities as delivery of raw materials and finished goods, and also involves such internal logistics activities as production and selling. So we can think that, in the supply chain, logistics is used to optimize and integrate the logistics resources, while logistics value chain is used to design and plan the value-added activities in the logistics process. Therefore, all those activities constitute a new chain, that is logistics value chain. The “value flow” in logistics value chain is shown in Figure 1.
Figure 1. “Value flow” in logistics value chain.
Logistics value chain can be used to optimize logistics system and reconstruct the logistics process of express enterprises, and then make the logistics value maximized. The express enterprises provide the logistics services, and there are different levels of value-added activities in the process of express delivery, which includes recipient, branch transportation, transit, trunk transportation, transit again, branch transportation again, distribution, etc. . If the express enterprises want to improve its competitiveness, they need the cooperation and synergy from above activities to get the maximum values. Those values come from the logistics value chain, which exist in the express delivery process and networks. The logistics value chain of express enterprises is shown in Figure
Model of Logistics Value Chain Analysis
Value chain reflects the enterprises’ history, strategy, and tactics. All these activities in the enterprises can be divided into basic activities and ancillary activities, and the basic activities are considered as the key business in the enterprises. Generally, the basic activities include internal logistics, production and management, external logistics, marketing and service, which lead to better services, and more effectiveness; ancillary activities include design of the system, information sharing between logistics activities, inventory visibility and good coordination of operation, which lead to lower costs, and more efficiency.According to above value chain analysis (VCA), the activities in the logistics enterprises can be also divided into basic activities and ancillary activities. For example, the basic activities in the process of express delivery: recipients, sorting (including the packaging and receiving), transportation, and distribution. In order to achieve synergy between the four aspects of the express delivery, the express enterprises need to optimize delivery network,Figure 1. “Value flow” in logistics value chain.Figure 2.
Figure 2. Logistics value chain of express delivery.
Logistics value chain of express delivery.design delivery process, etc. Ancillary activities are beyond the basic activities, and extend the basic activities, such as payment collection, e-commerce, etc., which meet and create the demands of customers.Above logistics value chain analysis (LVCA) help the express enterprises identify the key business, find new profit growth points, make the value of both the enterprises and customers improved, and then get the core logistics competitiveness.
Specifically, for express enterprises, the basic activities include four main aspects: strategic positioning, network optimization, value-added services and performance evaluation, such as layout of logistics network, optimization of delivery process, establish of call centers, evaluation of delivery performance, and so on. The ancillary activities include two main aspects: delivery infrastructure and information platform, such as sharing the delivery information, construction the delivery network, developing e-commerce, collection payment, and so on. Basic activities are the fundamental of express enterprises to enhance competitiveness, and the source of logistics profits. Ancillary activities support the basic activities to implement successfully. All those activities create logistics value from “the third profits resource”.
Through above analysis, we can build the model of logistics value chain analysis of express delivery, as shown in Figure 3.
Figure 3. Model of LVCA for express delivery.
The logistics value chain of express delivery is a dynamic process with creating logistics value for customers. In the traditional, the “customer” is the external customers of an enterprise, and the “service” is the internal “customers”. In logistics value chain, combining the internal and external factors, the express enterprises improve the service quality of external and internal customers synchronously, so as to get the fully and continued advantages of internal and external resources, and then form the core logistics competitiveness.
About The Authors:
Xingjian Zhou,School of Management, Wuhan Textile University, Research Center of Hubei Logistics Development, Wuhan, China. Email: firstname.lastname@example.org
This article is an excerpt from a technical paper, titled – “Research on Logistics Value Chain Analysis and Competitiveness Construction for Express Enterprises” published at American Journal of Industrial and Business Management Vol.3 No.2(2013), Article ID:29831,5 pages DOI:10.4236/ajibm.2013.32017 under Creative Commons License 3.0