An economist and an accountant may be two of the best friends the logistics function has found in recent years. A letter from George Gecowets, executive vice president of the Council of Logistics Management, talked about the misconception that logistics is an industry. George is frequently asked to give a tangible measure of the "logistics industry," and I have to admit to hearing that question myself. I usually answer with Bob Delaney's figure of $797 billion, but that's really the spending for logistics services, not a definition of an industry.

The visible evidence of logistics is all around us, but you can't point to something and say, "there's a logistics."

That's where Baruch Lev comes into the picture. The New York University professor is espousing some revolutionary concepts- well, revolutionary for accounting. He speaks of the need to measure intangibles.

Lev's argument is that investors are valuing companies on something other than traditional assets. He has examined the past 20 years' financial reports of 6,000 companies and concludes that earnings, cashflow, and traditional assets are becoming less relevant in how the stock market values a company. Analysts and investors, therefore, must be considering intangibles. That's what makes Lev a friend of logistics. (Which, you have to admit, is the management of intangibles that allows commerce to take place.)

US firms currently spend nearly as much on research and development and training as they do on plant and equipment. Lev focuses on these intangibles in his explanation. He suggests R&D expenditures should be capitalized the way any other investment which is intended to bring future benefits is capitalized.

Let's follow that logic. R&D helps you refine your products and develop new ones to meet future demand. This helps you retain marketshare or enter new markets, ensuring continued revenue and growth. The same argument might be made for the way training keeps your company's skill base current. And-this is the important one- don't investments in logistics operations, systems, and services help your company deliver and enhance customer value? And isn't this important to your firm's continued success?

Alan Greenspan commented on continued productivity growth late in this US economic business expansion saying, "This cyclical pattern is contrary to our experience and it suggests there may be an undetected, delayed bonus from technical and managerial efficiencies coming from the massive advances in computer and telecommunications technology applications over the last two decades." In short, the benefits of investments in intangibles are not instantaneous.

With minds like Greenspan and Lev behind you, you should be able to argue that money spent on logistics is an investment in your company's future viability and not an expense. If Lev has his way, we'll actually be able to put a value on your contribution. That's a great way to start the new century.