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How Logistics can be Coordinated to Ensure Customer Value

When assessing their operations, the typical objectives of most organizations is based on

value creation and elimination of waste. Based on such objectives, waste can be termed as things

that do not add value. For instance, in logistics, waste can be related to cost, making the primary

objective in this area to focus on cost-efficient as much as possible. Actually, on most occasions,

it appears that logistics professionals are always preoccupied with their focus on matters related

to efficiency in their firms. However, despite the great importance of cost reduction, it cannot be

termed as an organization’s real goal. Clearly, it is essential to note that the basis of success in

any organization is always related to how it creates customer value. Therefore, it is necessary for

logistic professionals to be concerned with an organization’s value creation factors as they not

only reflect on the resulting success but also are with efficiency. In ensuring customer value,

logistics professionals can use various aspects of judgment like iceberg and perception versus

reality effects.

The Iceberg Effect

The iceberg effect can be perceived as an illusion since individuals are meant to judge

based on what is revealed from them by a business firm. Customers are denied access to the bulk

details of commodities and business operations but only can see a small portion from the outside.

People observing from outside are meant to imagine an organization’s operations. Based on the

iceberg effect, the only visible aspect in a product’s total cost is typically its purchasing or
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sticker price, while all other expenses that might be increased due to purchasing decisions are

hidden below (Al-Homery et al. 3). This approach ensures customer value since it does not

account for the value that a particular purchase might add to the business. Moreover, it does not

cover the amount of money a customer might pay for repairs or how much a client might lose

due to a failed business.

Under an iceberg's surface comes indirect costs like installation, delivery, training, and

even freight which in the real sense depict the TCO (total cost of ownership). If a customer is

made to see through to the end of a pipeline, it positively impacts the logistic system since it

becomes more responsive to actual demand. This aspect means that the service and value to the

customer will be enhanced based on the reduction in the supplier’s cost (Al-Homery et al. 3).

Logistics lead time is reduced in the iceberg theory hence leading to a pronged customer’s order

cycle. However, based on the experience of several growing firms, substantial improvements are

effectively made on the initial capture of demand information and responsiveness. Thus, this

aspect reflects the end results, which are usually better customer value and service at a lesser

cost.

Perception versus Reality

In any firm, perceptions and reality are the only components that customers consider

before offering their loyalty. However, perception goes hand-in-hand with reality. Based on

logistics, when firms opt to deliver particular goods and services to a customer, knowledge of

their customers should be determined in reality. Employees also have the duty of managing their

stakeholder’s perceptions to turn them into a reality by ensuring that customers receive what they

order. Therefore, in case of the failure of such aspects, then reality becomes contrary to

perception and vice versa. Alternatively, perception and reality in logistics when it comes to
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ensuring customer value can be perceived based on the effectiveness in communication (Uvet 2).

Communication between a contract person and a particular customer is vital, especially during

service delivery, since it not only increases the client’s perception but also enhances reality in the

overall business process.

Comparison between Iceberg Effect and Perception versus Reality

Comparatively, there might be some similarities in both the iceberg effect and the

perception versus reality principles regarding their primary focus. The iceberg effect bases on a

business process’ responsiveness while ensuring customer value. This approach gives a customer

the necessary insight into what it entails. Similarly, perception versus reality aims to earn a

customer’s first impression of a particular product by giving him a feeling of reality based on the

promises and assurances that are usually highlighted (Uvet 3). However, unlike perception and

reality that can create customer value and assist in customer retention, the iceberg effect can

easily lead to the reduction in customer attrition based on its problem avoidance and resolution

aspects associated with it. Thus, from a different point of view, the iceberg effect has an

advantage over the perception versus reality effect based on its lower service cost.

Conclusively, logistics specialists in guaranteeing customer value can employ the iceberg

and the perception versus reality effects. The iceberg effect only reveals what is relevant in a

business process, such as the invoice value is displayed to a customer, but indirect costs must

remain hidden. On the other hand, to ensure customer value, firms have an obligation to ensure

that perception and reality go hand-in-hand, and at no point should reality be perceived to be

going contrary to reality. However, for a decision-maker to establish better solutions,

organizations need to ensure both the perception and reality roles are effectively used so that
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while one identifies a more significant problem at hand, the other one tries to focus on one

specific problem based on the bigger image.

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Works Cited

Al-Homery, Hussein A., Hasbullah Ashari, and Azizah Ahmad. "The Application of System

Thinking for Firm Supply Chain Sustainability: The Conceptual Study of the

Development of the Iceberg Problem Solving Tool (IPST)." Int. J Sup. Chain. Mgt

Vol 8.6 (2019): 951.

Uvet, Hasan. “Importance of Logistics Service Quality in Customer Satisfaction: An Empirical

Study.” Operations and Supply Chain Management: An International Journal, 2020, pp.

1-10. OSCM Forum, doi: 10.31387/oscm0400248. Accessed 7 July 2021.