Logistics as a function in a company

Logistics can be classified into various positions depending on how it is viewed as a function in a company. If logistics plays a critical role in a company’s success, it makes sense to position it in the functional organization beside the basic functions of finance, production or human resources. Another option could be further centralization of logistics. But it is debatable whether this serves the cross-sectional function of logistics.

Logistics as an operational function

The functional organization is based on the classification criterion of operations, and is frequently used in small and mid-sized companies. Logistics can be included centrally or decentrally in the current organizational structure as an additional operation. As a result, it is put on the same level as other fundamental operational functions such as production, sales and procurement. The basic condition for this is that logistics is considered an operational function [1].

Broad centralization can be achieved if logistics is placed directly under the managerial level. However, the functional organization opens up wide design possibilities as there are various types of this organizational form - this depends on the degree of centralization, the hierarchical classification and the functional place of logistics tasks in the present organizational units [2].
Despite the possibility of creating a comprehensive centralization, it must be stressed that a functional classification does not reflect the cross-sectional character of logistics. For this reason, this classification is termed skeptically as the “functional-silo approach” [3].

Recommended reading

Logistiksysteme | Pfohl 2004

Logistik-Organisation | Klaas 2002

Strategic Logistics Management | Stock / Lambert 2001

References

[1] Logistikmanagement | Pfohl 2004
[2] Logistical Management | Bowersox / Closs 1996
[3] Strategic Logistics Management | Stock / Lambert 2001

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