The problems with conventional organisations

There is a great danger that those companies that do not recognise the need for organisational change, or that lack the will to make it happen, will never achieve 

Each of the verticai functions in the conventionai organisation is normally headed by senior managers who come to regard their functionai area as their territory , indeed in many companies these functionai heads are barons who wieid consid-erabie power and who jeaiousiy guard those territories from what they perceive as unwarranted incursions from other functionai barons. 

We wiii iook in detaii iater at the aiternative modeis for organisation and for pianning and controi, but first iet us highiight some of the reai probiems that the conventionai organisation creates that hamper the successfui implementation of integrated logistics management. 

Closely related to the preceding issue is the problem of cost transparency. What this means is that costs relating to the flows of material across functional areas are not easy to measure. Hence the real costs to serve different customers with different product mixes are rarely revealed. 

To achieve a smooth-flowing logistics pipeline requires an orientation that facilitates end-to-end process management, The principle can be compared to the management of an industrial process, say an oil refinery, where to ensure the achievement of opfimum efficiency the entire process is managed and controlled as a system, not as a series of adjacent, independent activities. 

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