Service Logistics operations usually represent the two largest numbers in many service operations books of accounts. On the Balance Sheet this is represented as the value of Parts Inventory: on the Profit and Loss it is the total cost of logistics. As a result, most Financial Directors focus on keeping the value of Inventory and cost of logistics as low as possible, often with focus on cost. With good reason FDs will resist all attempts to increase the Inventory, and will minimise what is considered unnecessary investment in service logistics. This is particularly true where the Service Logistics operation has been established as a cost centre, as it is considered a cost of doing business and not a revenue earner.

An efficient and effective service logistics operation becomes invisible to the business when the operation becomes reliable, and is taken for granted. However, inventory has never been less of an asset and more of a liability than it is today; and many businesses actively avoid owning inventory and either prefer someone else to own it, or they provide for the item on purchase so that it does not appear on the balance sheet and it is treated as a revenue item.

In a highly competitive environment, any differentiation is seen as crucial competitive advantage and an effective service logistics operation as a core competency. The right tools, the right skills and sufficient investment, either internally or externally sourced, will supply the differentiation that will prove a valuable weapon in a company’s competitive armoury.