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Four elements of customer value in logistics

In this step, we look at the four elements of customer value.
There are four elements to customer value in logistics, which are: quality, service, cost and time.

Let’s look at each element in turn:

  • Quality relates to the functionality, good performance and technical specification of the offered product, which covers customer requirements.

  • Service includes all services (or support) that are delivered to the customer after purchasing. This includes the flexibility to meet customer demands or market changes too.

  • Cost includes all the transactions that the customer pays for (eg purchasing and life cycle costs) and is dependent on the logistics costs (including design, production, quality assurance, distribution, inventory and other operational costs).

  • Time is taken to deliver the product to the customer, or respond to their requirements.

So, customer value can be represented as:

Customer value = (Perception of benefits)/(Total cost of ownership) = (Quality/Cost) x (Service/Time)

A diagram to represent customer value and the four elements.

Your task

Using the product you identified in the previous step, discuss your experience relating to each element of customer value (quality, service, cost and time).

© Coventry University. CC BY-NC 4.0
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International Logistics: A Beginner’s Guide to Logistics Management

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