Organisation Structure

Prior to the 1950s functions now accepted as logistics were generally viewed as facilitating or support work and dispersed in the organization. As these dispersed functions reported to separate functional heads no cross-functional links existed between them. At that time it was thought that commercial, manufacturing and marketing were the only functions important to business. Later on, it was thought that logistics could be used to bring about functional integration. The idea was that functional proximity would facilitate improved understanding of how decisions and procedures in one area affect performance in other areas. Today, the emphasis is to examine the role of logistical competency in the overall process of creating customer value. The thinking now is how best to achieve integrated logistical performance. Today, the question with the logistical managers is not how to organize individual functions, but to manage the overall logistical process. The present day logistical organization came into being in three evolutionary stages. It is a fact that improvements in the logistical system are taking place everyday. However, while elaborating the evolutionary stages what is described is how the present-day logistical set up was evolved and what deficiencies were overcome.

Logistical Organization Stage I 1. Late 1950s or early 1960s saw a grouping of logistical activities 2. Heads of materials management and physical distribution management were created But these heads remained under the control of traditional management functions of manufacturing and marketing respectively

3.

4. Most traditional departments were not changed. The organizational hierarchy was not altered significantly. Logistical Organization Stage II 1. Late 1960s or early 1970s saw emergence of physical distribution management 2. It was decided to elevate logistics into an independent function internally integrating all outbound logistical functions. Materials remained attached to manufacturing 3. The concept of a fully integrated logistics unit was not achieved. Rather, integration was focused on either physical distribution or materials management. 4. Integrated physical distribution and/or materials management began to gain acceptance among financial, manufacturing, and marketing counterparts Logistical Organization Stage III 1. Decade of 1980 saw emergence of a new organization This organizational structure sought to unify all logistical functions and operations under a single senior manager. 2. The trend at the stage 3 level of organization structuring is clearly to group as many logistical planning and operational functions as practical under single authority and responsibility.Organized activities of inbound and outbound logistics were brought under one control 3. The goal is the strategic management of all materials and finished product movement and storage to the maximum benefit the enterprise 4. The rapid development of logistical information systems provided an impetus for stage 3 organizations. Information Technology became available to plan and operate systems that fully integrated logistical operations

5. Each area of logistics purchasing, manufacturing support and physical distribution is structured as a separate line organization 6. Each of the areas of operation such as purchasing, manufacturing, physical distribution become self-sufficient. Hence, flexibility is possible Logistical Organization Stage IV 1. Flatter or horizontal organization 2. There is a shift in emphasis from function to process leading to higher productivity. 3. The development of the highly involved work environment with self directed Work team (SDWT)to generate the maximum performance; 4. The rapid sharing of accurate information that allows all facets of Organization to be integrated. 5. Focus is on value added to the customer. An activity exists and is justified only to the extent that it contributes to customer value. Logistical manager must develop the capacity to think externally. 6. Since organizational grouping on the basis of selected functions can artificially separate natural workflows and create bottlenecks , all skill necessary to complete the work be available, regardless of their functional organization. Critical skills need to be positioned to ensure that required work is accomplished. 7. It resulted in a Matrix organization, where the major logistics functions are performed as Management Services in liaison with traditional functions. It helps to coordinate the flows of products into, through and out of the firm smoothly.

Logistical Organization Stage V 1. The formal hierarchical command and control organization structure will be replaced with an informal electronic network often referred to as a virtual organization

2. . In the case of logistics, key work teams may be electronically linked to perform critical activities in an integrated fashion. These work teams could be transparent in terms of the formal organization structure of their membership 3. To customer requirements for speed and response, authority will be pushed down the organization. Strategic direction can be expected to originate at headquarters. 4. Operational adaptations will increasingly be made on the front lines. Frontline managers will be expected to define strategy and apply it directly to operations. Centralization and decentralization will increasingly become meaningless terms. Organizations of the future will seek to capture the best of centralization and decentralization without commitment to either concept. 5. The transparent logistical network organization is properly viewed as a composite affiliated business functions that are motivated and directed by common interest and goals. The informal network is facilitated by information sharing.

Integrated Matrix Logistical Organisational Structure Integrated Logistics Activities Transportation Marketing Financial Accounting Manufacturing

Outbound and selection of carrier

Budgets

Inbound and Outbound.Carrier selection for Raw materials Warehouse locations for Raw materials,WIP and Finished Goods.Factory locations.

Networks and Facilities

Warehouse locations for Finished Goods

Budgets

Inventory

Finished Goods,Spare parts and service support

Budgets

RM,WIP & Finished Goods, Spare parts and service support along with purchasing. Systems in factory and factory warehouses, packaging Production Scheduling

Material Handling Systems in field Budgets warehouses,packaging

Communication

Order processing,Demand Forecasting

Budgets