Re- engineering means recreating the organizations and systems rather than making minor changes.

In a traditional organization logistics functions were scattered throughout the organizations with no single department responsible for it. Traditional approach increases inefficiency and duplication of work and thus it is now replaced by Integrated Logistics Functions. Integrated Logistics has many departments handling specific functions which helps in reducing cost and improving the quality.

The competitive situations have compelled the organizations to be responsive.

A responsive organizations puts the customers at the centre of the business and designs all its systems and procedures to improve the speed of response and reliability of response. An organization can be responsive and reliable by the following : From functions to process From profits to performance. From products to customers. From inventories to information. From transaction to relationships.

1.

2.
3. 4. 5.

A matrix organization is one where functional leaders are responsible for more than one area.
Employees report to both their immediate manager and a cross function leader. In matrix organizations, there is a solid line manager and a dotted line manager. The solid line manager is a functional manager and will not change whereas the dotted line manager is a manager who co-ordinates between different departments for a specific project.

Changing corporate culture.

Having a common vision. Establishing employee ownership. Training and educating employees. Changing management processes.

Strategic goal setting.

Resources.

Performance environments.
Communication processes. Qualities of leadership and decision making. Organizational adaption and innovation.

CHIEF EXECUTIVE
COMMERCIAL MANUFACTURING PURCHASING INVENTORY CONTROL RAW MATERIAL WAREHOUSING FINISHED GOODS FACTORY ORDER PROCESSING TRANSPORTATION INDUSTRIAL ENGINEERING PRODUCTION SCHEDULING CUSTOMER SALES ORDER INTERFACE MARKETING

FORECASTING

FACILITIES PLANNING

FINISHED GOODS WAREHOUSIN G

 Prior to 1950, logistical functions were not given

importance.

Organizations underwent a series of changes post 1950 and logistics began to receive importance gradually. These dispersed functions reported to separate functional heads and no cross-functional link existed between them. Commercial, manufacturing and marketing were the only important functions to business.

Re-organization started after 1950 which brought some of the logistical functions together and grouped these but were still reported to different heads.
As some of the functions were deleted from the functional heads, they felt their importance was being depleted and thus they resisted these moves. This functional closeness started yielding performance improvement and the organizations accepted the change. This grouping resulted into stage 1 organizations.

Material department dealt with inbound logistics and reported to manufacturing department.
Marketing department dealt with customer service. Traditional departments remained as they were

 A new function called physical distribution was created

which directly reported to the CEO of the company.

It had direct responsibility for outbound logistics. Inbound logistics still remained with the materials management.

Integration of logistical functions was now accepted.

This integration was focused on the physical distribution or the material management.
Logistics started contributing to the strategy of the company as the head of physical distribution function.

At the top most level of management hierarchy, single authority for logistics was created around 1980.
The organization unified all logistical functions and operations under a single senior manager. Clear cut areas of responsibility and overall integration facilitated by Logistics and inventory system. This type of organization is rarely seen in practice.

Horizontal organizations were formed where span of control is very large.

Introduction of the concept of self-directed work teams generated maximum performance. Teams have clear goals and they try to achieve them without depending upon the top management. The rapid sharing of accurate information allowed the integration of the organization.

Electronically connected virtual organizations were formed.

All logistical activities are transacted by relevant functions of management with electronic support Here, integration is in the form of informational support.