Logistics as a business discipline has experienced a remarkable evolution in professionalization; the MRP concepts (late '70-s), the Theory of Constraints of Goldratt (mid' 80-s), the Collaborative Planning Forecasting & Replenishment (CPFR) initiated by Wal-Mart (mid'90-s) and the Sales & Operations Planning (S&OP) in ('00-s). This begs the questions - does your current logistics organization mirror these developments, or does your logistics structure still consist of just a transport- & warehouse manager/director with a direct report to the plant manager?

Where the classical logistics manager presents himself/herself as the budget owner for transport- and warehouse costs, the modern VP Supply Chains has become an initiator for multi-disciplinary process improvements with the objective of providing a competitive advantage to the company as a whole. The VP Supply Chains strives to optimize the end to-end supply chains through collaboration with external partners in the supply and demand network.  

Without expressing a judgment, it's clear that these two roles operate on different business levels with different stakeholder: i.e. the operational efficiency within the transport- & warehousing arena versus the strategic financial interests of inventory working capital and cash-to-cash cycle time. Particularly within the large multi-nationals, both roles are separated between different staff members; however, more often than not reporting through the same hierarchical lines. Mid-sized companies typically combine both roles into one function (FTE), under the assumption that both roles separately do not require a full working week.

Selecting the right person for the right job is of the utmost importance as both roles require different management styles. A business process manager will not necessarily be able achieve the maximum operational output in the daily warehouse operations, as where an operational manager will not necessarily be able to do this within an S&OP setting. 

Global versus local

A logistics manager focuses mostly on improvements on a national/regional level, e.g optimization of warehouse operations or the negotiation of lower carrier rates. In most professional organizations such initiatives are coordinated and standardized on a European/global function; however, the European/global organization is typically just a facilitator, as the practical implementation remains the responsibility of the local legal entity. For this reason a logistics manager is most effective when directly reporting into the country organization with a dotted line to the VP Supply Chains. 

The preferable organizational structure for the supply chains management role is however distinct from that of the logistics manager. Principally, Sales & Operations Planning is an integrated management process that synchronizes different business functions as sales, production, logistics, purchasing and finance. The S&OP concept looks for international coordination rather than in-country optimization. Apart from that S&OP should embed global escalation procedures, for instance, determining which countries are awarded product volumes in periods of inventory shortage. From this perspective supply chains should per definition be impartial and positioned above all parties involved, both geographically as well as hierarchical.

In today's environment, competition is more broadly defined than just companies competing against companies, but rather supply chains competing against supply chains. Companies that adapt to implement a dual logistics structure will be able to achieve a competitive advantage. By using a top- down approach, the VP Supply Chains can ensure that market demand will be fulfilled with the most effective use of resources. However, in order to service today's agile consumers, the bottom-up approach of the logistics manager is equally crucial to guarantee that an efficient, flexible logistics operation is steadfastly maintained. In such a setup, 1+1=3, provided that both logistics roles pursue the same goals and continuously align their actions.