Logistics cuts across department boundaries

- Logistics focuses on managing and filling the customer's order. And doing this, it cuts across the borders of many different business functions so it's important that we understand how logistics interacts with those other roles within the organization. Let's look at three important areas that require communication and coordination. First, consider the manufacturing or operations part of your company. You must deliver the right materials and components to the factory at the right time and then deliver finished products from the factory to the customer. Your deliveries to and from the factory, must of course be coordinated with their production runs and you must do so while controlling inventory and transportation costs. Certainly this is not an easy job. These considerations about quantity and timing of delivery are also influenced by the purchasing function because they write the contracts for materials. In fact, purchasing is so important to operation success in many small and mid-sized companies, the procurement team works directly for the factory manager. The purchasing department also selects the suppliers and this greatly impacts transportation decisions. Whether your suppliers are local or global, logistics must clearly communicate with the purchasing department to ensure on-time deliveries. Lastly, your company's finance department is extremely interested in logistics operations. How you manage transportation vehicles, warehouses, and distribution centers greatly influences return on investment and return on net assets measurements. Simply put, the more efficient you are, the less of these assets you need to do the job. Finance is also interested in costs and efficient logistics operations can lower inventory and distribution costs throughout the entire organization. And of course, finance is interested in revenues and this is directly related to the customer service levels that marketing and logistics people achieve together. Your company's success depends on how well your logistics efforts are coordinated with operations, purchasing and finance. And because they do cut across all these borders, logistics managers should be the ones that drive the coordination effort. Initiating this type of interaction and integration is an important step towards truly understanding how logistics works in your company.