Integrated Logistics Management

Nowadays, more and more companies are adopting the concept of integrated logistics management. This particular concept identifying that providing better customer service and trimming distribution costs retain teamwork, both within the company and amongst all the marketing channel organizations. Inside, the company's many functional departments has to work intimately together to maximize the company's own logistics performance. Outside, the company has to integrate its logistics system with those of its customers and suppliers to maximize the performance of the whole distribution system.

Cross-Functional Teamwork inside the Company

In most of the companies, responsibility for many logistics activities is assigned to various different functional units- sales finance, marketing, purchasing, and manufacturing. Too frequently, each function tries to optimize its own logistics performance with no regard for the activities of the other functions.  Though, inventory, transportation, warehousing,  and  order-processing  activities interact, frequently in an inverse way. For instance, lower inventory levels reduce inventory-carrying costs. But they may also reduce customer service and increase costs from stock outs, back orders, special production runs, and expensive fast-freight shipments. Because distribution activities involve powerful trade-offs, decisions by different type of functions must be coordinated to gain superior overall logistics performance.

The goal of integrated logistics management is to match all of the company's distribution decisions. Close working relationships between functions may be achieved in different ways. Some of the companies have created enduring logistics committees made of managers responsible for several physical distribution activities. Companies may also create management positions that connect the logistics activities of functional areas. Various companies have a vice president of logistics along cross-functional authority. The significant thing is that the company coordinate its marketing and logistics activities to create high market satisfaction at a reasonable cost.