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JOURNAL OF BUSINESS LOGISTICS, Vol. 29, No. 1, 2008 113
THE ROLE OF LOGISTICS MANAGERS IN THE CROSS-FUNCTIONAL
IMPLEMENTATION OF SUPPLY CHAIN MANAGEMENT
by
Douglas M. Lambert
The Ohio State University
Sebastián J. García-Dastugue
Universidad de San Andrés
and
Keely L. Croxton
The Ohio State University
INTRODUCTION
Since the mid 1990s, executives, educational programs, and professional organizations have changed their titles
to reflect the new term “supply chain management,” but there is still a lack of agreement on the domain of supply
chain management. While some still use logistics and supply chain management as synonyms, most agree that
supply chain management includes more than logistics (CSCMP 2007). So then, what is the role for logistics
managers in this broader concept of supply chain management? While most logistics managers understand their role
within the traditional logistics function, they are given less direction on the ways to interface with other functions to
support the overall corporate strategy. Supply chain management can be seen as an opportunity to achieve
integration of all corporate functions (Lambert 2006a; Mentzer et al. 2001). Academics and managers need to
consider the linkages between supply chain management and the business functions and business processes.
As business practices evolve, it is important for researchers to lead the way in defining the role that logistics
managers can play in successfully integrating activities within the firm and across the supply chain. For the health of
the discipline, we need to identify ways to maximize the value that the logistics function can provide. By describing
the role of logistics managers in a broad set of cross-functional activities, we believe our research contributes to this
important academic pursuit. Academics in other fields are also calling for research that is cross-functional, process-
oriented, and meaningful to management (Brown et al. 2005).
Our goal in this paper is to delineate the linkage between logistics and supply chain management by identifying
the role of logistics managers in cross-functional business processes. First, we describe the domain of supply chain
management. Second, we describe The Global Supply Chain Forum (GSCF) framework for supply chain
management. Third, we identify the role of logistics in supply chain management by describing what logistics
contributes and gains from being involved in the cross-functional processes. Finally, we present opportunities for
future research and our conclusions.
114 LAmBERT, GARCíA-dASTUGUE, ANd CROxTON
THE DOMAIN OF SUPPLY CHAIN MANAGEMENT
The supply chain is the network of companies involved in providing products and services to the end-customer.
Many agree that management of the supply chain requires cross-functional involvement (Bowersox, Closs, and
Cooper 2007; Cooper, Lambert, and Pagh 1997; Mentzer 2001; Supply-Chain Council 2006). However, some
suggest that supply chain management is the integration of just three functions: purchasing, operations and logistics
(Wisner, Leong, and Tang 2004). While some efficiency may be realized from integrating these corporate functions,
the end result could be a larger more fortified silo. If all of the business functions are necessary for the management
of one company, how can a network of companies be managed without the participation of all the corporate
functions? Trying to manage the supply chain with three functions is subject to the same drawbacks as managing a
corporation with only three functions. There is the risk that managers from those functions not involved in
management of the supply chain will maliciously or inadvertently subvert the planned effort (Lambert, García-
Dastugue, and Croxton 2006). They will do it to prove that they should have been included or they will do it because
they do not understand what the planned effort is. For example, if the sales organization is not involved in supply
chain management, sales representatives might make promises to the customer that are costly for the logistics
organization to fulfill and therefore erode profitability. Combining purchasing, operations and logistics in one
organization does not eliminate this problem.
We believe that managing the supply chain requires the integration of all corporate functions, including
logistics, sales, marketing, finance, operations, and purchasing. This is in agreement with the view of the Council of
Supply Chain Management Professionals (CSCMP 2007) which recognizes that supply chain management “includes
all of the logistics management activities…, as well as manufacturing operations, and it drives coordination of
processes and activities with and across marketing, sales, product design, finance, and information technology”
(CSCMP 2007).
In order to achieve effective cross-functional integration, many have advocated that the activities of a firm be
organized as business processes (Davenport 1993; Hammer and Champy 1993). Most corporations are organized
around business functions where individuals often engage in behavior that is not customer or shareholder friendly.
Much of this is driven by the metrics employed (Lambert and Pohlen 2001), where each individual is trying to
optimize their functional metrics, frequently at the expense of the overall performance of the firm. While it is often
suggested that processes should replace functional silos (Hammer 2001), we believe that corporate functions cannot
be eliminated because it is inside the functions where the expertise resides. For example, if an organization
manufactures products, it is necessary to have individuals with the knowledge to operate factories. Also, if an
organization spends money on advertising, someone needs to evaluate sales response to that advertising. Rather than
knock down the functional silos, it is necessary to ventilate them and make them less silo-like by implementing
cross-functional business processes that guide the efforts of cross-functional teams. Managers bring their functional
expertise to the process teams and take a more holistic perspective back to their functions, making them less silo-like
in nature. In summary, it is not a choice between functions and processes, both are necessary for corporate success.
The need for processes also has been recognized by CSCMP as noted in the previous paragraph.
Since the supply chain is the network of companies providing services and products to the end-consumer,
management of this supply chain must focus on the relationships between the focal firm and its network of
customers and suppliers (Ellram and Cooper 1993; Lambert, Knemeyer, and Gardner 2004). Supply chain
management should encompass all of the activities in which a firm would engage its customers and suppliers. It
needs to be broad in scope and influence most aspects of managing the business.
Consequently, we believe the domain of supply chain management is characterized by the following criteria: 1)
it needs to be cross-functional; 2) it needs to be process-oriented; and 3) it needs to include all activities for
managing interactions with customers and suppliers. The GSCF framework meets these three criteria and is
described in enough detail (Lambert 2006a) to be a good vehicle for our research objective of identifying the role of
logistics in supply chain management. Next, we provide a brief overview of the GSCF framework.
JOURNAL OF BUSINESS LOGISTICS, Vol. 29, No. 1, 2008 115
THE GLOBAL SUPPLY CHAIN FORMUM PROCESSES
The processes in the GSCF framework were developed by researchers and executives from major global
companies. The business processes have been described at the activity level making implementation possible
(Blackstock 2005a). The GSCF framework is based on the literature and more than ten years of in-depth interviews
and working sessions with Forum members who represent a broad array of industries.
TABLE 1
THE PROCESSES OF THE GLOBAL SUPPLY CHAIN FORUM FRAMEWORK
Processes
Strategic Sub-Processes
Operational Sub-Processes
Customer
Relationship
Management
1. Review Corporate and Marketing
Strategy
2. Identify Criteria for Categorizing
Customers
3. Provide Guidelines for the Degree of
Differentiation in the Product/Service
Agreement
4. Develop Framework of Metrics
5. Develop Guidelines for Sharing Process
Improvement Benefits with Customers
1. Differentiate Customers
2. Prepare the Account/Segment
Management Team
3. Internally Review the Accounts
4. Identify Opportunities with the
Accounts
5. Develop the Product/Service
Agreement
6. Implement the Product/Service
Agreement
7. Measure Performance and Generate
Profitability Reports
Supplier
Relationship
Management
1. Review Corporate, Marketing,
Manufacturing and Sourcing Strategies
2. Identify Criteria for Categorizing
Suppliers
3. Provide Guidelines for the Degree of
Customization in the Product/Service
Agreement
4. Develop Framework of Metrics
6. Develop Guidelines for Sharing Process
Improvement Benefits with Suppliers
1. Differentiate Customers
2. Prepare the Supplier/Segment
Management Team
3. Internally Review the
Supplier/Supplier Segment
4. Identify Opportunities with the
Suppliers
5. Develop the Product/Service
Agreement and Communication Plan
6. Implement the Product/Service
Agreement
8. Measure Performance and Generate
Supplier Cost/Profitability Reports
Customer Service
Management
1. Develop Customer Service Strategy
2. Develop Response Procedures
3. Develop Infrastructure for
Implementing Responses Procedures
4. Develop Framework for Metrics
1. Recognize Event
2. Evaluate Situation and Alternatives
3. Implement Solution
4. Monitor and Report
Demand
Management
1. Determine Demand Management Goals
and Strategy
2. Determine Forecasting Procedures
3. Plan Information Flow
4. Determine Synchronization Procedures
5. Develop Contingency Management
System
6. Develop Framework of Metrics
1. Collect Data/Information
2. Forecast
3. Synchronize
4. Reduce Variability and Increase
Flexibility
5. Measure Performance
116 LAmBERT, GARCíA-dASTUGUE, ANd CROxTON
TABLE 1 (continued)
Processes
Strategic Sub-Processes
Operational Sub-Processes
Order Fulfillment
1. Review Marketing Strategy, Supply
Chain Structure & Customer Service
Goals
2. Define Requirements for Order
Fulfillment
3. Evaluate Logistics Network
4. Define Plan for Order Fulfillment
5. Development Framework of Metrics
1. Generate & Communicate Order
2. Enter Order
3. Process Order
4. Handle Documentation
5. Fill Order
6. Deliver Order
7. Perform Post Delivery Activities and
Measure Performance
Manufacturing
Flow Management
1. Review Manufacturing, Sourcing,
Marketing, and Logistics Strategies
2. Determine Degree of Manufacturing
Flexibility Requirement
3. Determine Push/Pull Boundaries
4. Identify Manufacturing Constraints and
Determine Capabilities
5. Development Framework of Metrics
1. Determine Routing and Velocity
through Manufacturing
2. Manufacturing and Materials Planning
3. Execute Capacity and Demand
4. Measure Performance
Product
Development and
Commercialization
1. Review Corporate, Marketing,
Manufacturing and Sourcing Strategies
2. Develop Idea Generation and Screening
Processes
3. Establish Guidelines for Cross-
functional Product Development Team
Membership
4. Identify Product Rollout Issues and
Constraints
5. Establish New Product Project
Guidelines
6. Develop Framework of Metrics
1. Define New Products and Assess Fit
2. Establish Cross-functional Product
Development Team
3. Formalize New Product Development
Project
4. Design and Build Prototypes
5. Make/Buy Decision
6. Determine Channels
7. Product Rollout
8. Measure Process Performance
Returns
Management
1. Determine Returns Management Goals
and Strategy
2. Develop Avoidance, Gatekeeping &
Disposition Guidelines
3. Develop Returns Network and Flow
Options
4. Develop Credit Rules
5. Determine Secondary Markets
6. Develop Framework of Metrics
1. Receive Return Request
2. Determine Routing
3. Receive Returns
4. Select Disposition
5. Credit Consumer/Supplier
6. Analyze Returns and Measure
Performance
Source: Adapted from Douglas M. Lambert, Sebastián García-Dastugue, and Keely L. Croxton (2005) “An Evaluation of Process-oriented
Supply Chain Management Frameworks,” Journal of Business Logistics, Vol. 26, No. 1, pp. 48-49.
JOURNAL OF BUSINESS LOGISTICS, Vol. 29, No. 1, 2008 117
The GSCF framework is comprised of eight cross-functional business processes: customer relationship
management, supplier relationship management, customer service management, demand management, order
fulfillment, manufacturing flow management, product development and commercialization, and returns
management. As shown in Table 1, each process includes strategic sub-processes that provide the structure for
managing the process as well as operational sub-processes which provide the details for execution (Croxton et al.
2001). The customer relationship management process of the seller and the supplier relationship management
process of the buyer form the links in the supply chain. The interactions with customers and suppliers that take place
in the other six processes should be coordinated through these linkages. The processes are designed to be managed
by cross-functional teams and their implementation requires cross-firm coordination. Together, the eight processes
provide the structure to guide interactions between a firm and other firms in the supply chain.
The Role of Logistics in Supply Chain Management
Each function plays an important role in the successful implementation of supply chain management. While
some suggest that a specific function should play a dominant role in the organization (Day 1997), we believe that no
function should dominate; that is, all functional efforts should be aligned with the business goals and focused on the
management of relationships with customers and suppliers. Since the business processes are not replacing the
business functions, it is important to understand the role that each function plays in each process. Because of the
scope of the processes in the GSCF framework, we believe it is possible to capture a comprehensive view of where
logistics managers should be involved in a broad set of business decisions. The result is a checklist that management
can use to identify ways that logistics provides benefits to the firm, its suppliers and customers, so that decisions are
made throughout the firm with appropriate logistics involvement.
It is generally agreed that the domain of logistics is customer service, inventory management, transportation,
warehousing, information systems and lot size considerations (production set-up costs and purchase acquisition
costs) (Bowersox, Closs, and Cooper 2002; Stock and Lambert 2001). These are all important activities, but not the
focus for this paper. Our goal is to describe what logistics managers contribute to each of the supply chain
management processes and what they gain from this involvement.
In order to identify the role of logistics in supply chain management, we engaged executives in focus group
sessions (Krueger and Casey 2000; Morgan 1997). The executives were from companies in several industries
including agriculture, consumer packaged goods, energy, fashion, food products, industrial goods, high-technology,
paper products, and sporting goods. The companies represented multiple positions in the supply chain including
retailers, distributors, manufacturers, and suppliers to manufacturers of finished products. The executives
represented various functions and their titles included manager, director, vice president, senior vice president, group
vice president and chief operations officer.
The executives were involved in three meetings over a period of 12 months. At the first meeting, the idea for
conducting research on the role of each function on implementing the cross-functional processes was presented and
discussed. Executives agreed that this research could help them achieve cross-functional integration in their
organizations. They provided input on how we could frame and conduct the research and asked us to review the
literature and bring ideas to the following meeting. In preparation for the second meeting, we reviewed the literature
and analyzed the descriptions of the activities in each of the GSCF processes and identified the contributions that
logistics managers make and what they gain from being involved.
During the second meeting, a session in which 17 executives participated, the role of logistics managers in the
cross-functional supply chain management processes was validated and/or revised. We presented slides that
described the role of logistics managers in each process and what they gain from this involvement. Following this
presentation, the executives had an open discussion, providing suggestions on changes in wording and suggestions
for clarification. Based on the executives’ feedback, we produced a manuscript for the following meeting.
In the third meeting, 15 executives participated in another open discussion after which the manuscript was
revised. The executives concluded that some of the roles identified by the research were standard parts of logistics
manager’s job; others were beyond the scope of logistics responsibilities in their organizations. They believed that
this research would help management teams identify where they could use logistics input to improve cross-
functional integration in their firms and drive improved business performance.
118 LAmBERT, GARCíA-dASTUGUE, ANd CROxTON
Next, we briefly describe each of the eight processes, and identify what logistics managers contribute as well as
what logistics function gains from involvement in these processes. At the end of each section, we include a table that
summarizes the benefits to the firm resulting from logistics involvement in the processes (see Table 2 through Table
9).
The Customer Relationship Management Process
Customer relationship management provides the structure for how relationships with customers are developed
and maintained. Decisions are made regarding which customers are critical to the firm’s success now and in the
future. Key customers and customer groups are targeted as part of the firm’s business mission. Management
segments customers based on their value over time, and tailors products and services to increase customer loyalty.
Close cross-functional relationships are forged with key customers while others are managed in a traditional sales
person to buyer relationship. Cross-functional customer teams develop Product and Service Agreements (PSA) that
meet the needs of key accounts and segments of other customers (Seybold 2001). The PSAs define the terms of the
relationship, key performance measures, and how risks and rewards will be shared. The teams work with key
customers to improve processes and eliminate non-value added activities. Performance reports are designed to
measure the profitability of individual customers as well as the firm’s financial impact on customers (Lambert
2006b).
What Logistics Contributes to the Customer Relationship Management Process. The logistics function
contributes to the customer relationship management process by providing knowledge of the logistics capabilities of
the firm that can be used to tailor PSAs with key customers and to design standardized PSAs for customer segments.
The logistics capabilities of the firm can be a source of differentiation (Morash, Dröge, and Vickery 1996; Stock and
Lambert 1992) and logistics managers need to translate logistics capabilities into deliverables. The cost and revenue
potential of each deliverable needs to be estimated. With this information, the customer relationship management
team can better decide what logistics service components to offer to each customer based on the customer’s strategic
importance and contribution to profitability.
Since logistics is an important source of differentiation, logistics managers should provide their vision with
regard to the logistics capabilities that are required to compete now and in the future in the market segments
identified. This includes an assessment of the competitors’ strengths and weaknesses regarding logistics capabilities,
and the identification of improvement opportunities that can be promoted to customers. Also, they should provide an
assessment of the logistics technology and infrastructure trends, in order to define improvement opportunities. In
addition, logistics managers need to identify the value created for customers from higher levels of product
availability, higher inventory turns and cost reductions so the customer relationship management team can sell this
value to the customer (Lambert and Burduroglu 2000).
What Logistics Gains from Being Involved in the Customer Relationship Management Process. By being
involved in the customer relationship management team, the logistics function gains the ability to influence which
opportunities are pursued with the customers. For example, some customers’ requests might add too much
complexity and cost to logistics operations, and should not be accepted. If this request is a sign of future market
needs or can be used to build a sustainable competitive advantage, then investments can be made to develop the
capabilities. Also, the involvement of logistics managers in the cross-functional customer teams results in an
increased ability to influence the implementation of collaborative initiatives such as CPFR (Stank, Daugherty, and
Autry 1999).
Logistics managers gain the ability to plan logistics support for key customers and customer segments based on
their actual contribution to profitability and their strategic relevance to the firm. This results in logisticians dealing
with fewer high-pressure, high-cost adjustments to satisfy demands of high revenue customers that traditionally have
been viewed as important but are not meeting the firm’s profit goals.
Frequently, logistics is considered a cost center where costs are to be minimized. But, customer service
considerations are ranked at the top of the criteria for customer satisfaction (Sterling and Lambert 1989). By
identifying the revenue implications of logistics performance, which is facilitated by involvement in the cross-
functional customer team, logistics managers are better able to make the case to top management that logistics
contributes to customer loyalty and profitability.
JOURNAL OF BUSINESS LOGISTICS, Vol. 29, No. 1, 2008 119
In summary, there are a number of benefits to the firm that result from having logistics managers involved in
the customer relationship management process. These are shown in Table 2.
TABLE 2
BENEFITS TO THE FIRM RESULTING FROM LOGISTICS INVOLVEMENT IN
THE CUSTOMER RELATIONSHIP MANAGEMENT PROCESS
! Logistics costs are captured with the level of detail to include them in the calculation
of profitability by customer and customer segment.
! The cost-to-serve is calculated for each key customer and customer segment.
! Logistics capabilities are translated into specific deliverables.
! Logistics services are tailored based on customer segmentation.
! Logistics services are included in formal PSAs with customers.
! Top management understands and uses logistics capabilities to compete.
! Top management understands competitors’ logistics strengths and weaknesses.
! Management understands how logistics services create value and sells this value to
customers.
! Logistics influences the solutions offered to meet customer requirements.
! Logistics influences the development of collaborative initiatives with customers.
! Logistics planning is improved as a result of service differentiation by customer
segments.
The Supplier Relationship Management Process
Supplier relationship management is the process that defines how a company interacts with its suppliers. As the
name suggests, it is a mirror image of customer relationship management. Just as a company needs to develop strong
relationships with key customers, it needs to forge close relationships with a small subset of its suppliers, and
manage arms-length (transactional) relationships with others (Dyer, Cho, and Chu 1998). A PSA is negotiated with
each key supplier that defines the terms of the relationship. For segments of less critical suppliers, the PSA is
standardized, not negotiable, and the relationship is managed in a traditional manner. Supplier relationship
management is about defining and managing these PSAs. For all types of relationships, the desired outcome is a
win-win relationship where both parties benefit (Lambert 2006c).
What Logistics Contributes to the Supplier Relationship Management Process. Logistics managers help
calculate the total cost of ownership (Ellram and Siferd 1998) of purchased materials in order to evaluate and
segment suppliers. Failing to include logistics costs such as transportation costs, inventory carrying costs, ordering
costs, receiving costs, quality related costs, and the cost associated with service failures when defining requirements
for suppliers could result in higher total cost of ownership for the firm. These costs must be included when selecting
and evaluating suppliers.
Logistics managers can contribute to the development of the PSAs in terms of requirements for order
placement, transportation considerations such as which carriers to use and who should manage the freight,
requirements for communications and how to manage backorders. Logistics managers help specify levels of
performance and how performance will be measured by the firm and the supplier. For segments of less critical
suppliers, logistics managers establish the firm’s minimum logistics requirements that have to be included in the
standardized PSAs and help with initiatives aimed at eliminating non-value-added activities.
PSAs should consider both the firm’s needs and the suppliers’ capabilities and costs implications. Asking the
suppliers to comply with unnecessary or too stringent requirements may result in higher purchasing costs and/or
jeopardize the supplier’s ability to perform successfully. Appropriate logistics involvement contributes to cost
savings in sourcing and to supplier satisfaction.
What Logistics Gains from Being Involved in the Supplier Relationship Management Process. Involvement in
the supplier relationship management process enables logistics managers to understand the logistics operations of
suppliers and find opportunities to reduce inbound logistics costs such transportation and inventory costs. By
encouraging their purchasing colleagues to negotiate prices without freight included, logistics managers have the
120 LAmBERT, GARCíA-dASTUGUE, ANd CROxTON
ability to match high-volume outbound lanes with high-volume inbound lanes and reduce overall freight cost. Also,
increased reliability of deliveries leads to smoother operations and less fire-fighting. Collaborative logistics
relationships such as vendor-managed and vendor-owned inventory have the potential to result in improvement
opportunities for both the firm and the supplier. When the firm’s logistics managers are involved with suppliers,
suppliers are likely to make better decisions because they are more aware of the logistics implications of their
actions. In addition, there might be the opportunity to leverage suppliers’ purchases of logistics services which, if
appropriately managed, results in cost savings to both the firm and its suppliers.
In summary, there are a number of benefits to the firm that result from having logistics managers involved in
the supplier relationship management process. These are shown in Table 3.
The Customer Service Management Process
The customer service management process should not be confused with customer service in logistics. Logistics
customer service is concerned primarily with the activities required to respond to customer requests (LaLonde and
Zinszer 1976). In contrast, the customer service management process involves proactively monitoring the PSAs and
intervening on the customer’s behalf when necessary (Bolumole, Knemeyer, and Lambert 2006).
TABLE 3
BENEFITS TO THE FIRM RESULTING FROM LOGISTICS INVOLVEMENT IN
THE SUPPLIER RELATIONSHIP MANAGEMENT PROCESS
! Logistics costs are included in the calculation of the total cost of ownership of
purchased materials.
! Logistics considerations are included in supplier PSAs based on supplier segmentation.
! Logistics costs are considered when assessing the impact of the firm’s requirements on
the suppliers’ profitability.
! Inbound logistics is improved as a result of understanding the suppliers’ logistics
operations and capabilities.
! Logistics can influence the development of collaborative initiatives with suppliers.
! Inbound logistics costs are reduced by leveraging suppliers’ purchases of logistics
services.
Making the process proactive is achieved by developing triggers and signals to detect and solve problems before
they are noticed by the customer. Standardized response procedures are developed for the events that occur
repeatedly, and empowered employees coordinate with other process teams and functional managers to find the best
solutions for events for which there is not a standardized response. Implementation of the customer service
management process includes the development of information systems and coordination mechanisms among the
corporate functions that are required to support the process.
What Logistics Contributes to the Customer Service Management Process. Logistics managers contribute to the
development of triggers and signals so that customer service managers can monitor proactively logistics related
commitments made to customers in the PSAs. This requires having visibility of logistics activities which requires
information systems for tracking product flow, and detecting and correcting situations that may result in service
failures. Logistics activities are frequently geographically dispersed and logistics managers need to provide the
customer service management team with monitoring capabilities and the key points of contact. Whether the service
failure is related to logistics or not, logisticians are often involved in service recovery. The customer service
management team needs to be able to contact logistics personnel to gather up-to-date information, evaluate the
alternative responses and implement the appropriate response.
Logistics managers analyze logistics-related events in order to minimize their occurrence in the future. Logistics
capabilities should be considered when designing appropriate response procedures for each standardized event.
Additionally, logistics managers contribute to the design of the performance measurement system for the customer
service management process. Performance should be measured from the customer’s perspective and include
JOURNAL OF BUSINESS LOGISTICS, Vol. 29, No. 1, 2008 121
measures such as availability, the number of problems that were detected and solved before reaching the customer,
and the number of satisfactory responses to customer requests.
What Logistics Gains from Being Involved in the Customer Service Management Process. Logistics managers
improve their ability to recover service due to early detection of the logistics events that might affect customers or
disrupt operations. If the customer service management process is appropriately designed, when an event is triggered
by a logistics-related problem, the customer service management team will be able to identify the disruption and
communicate it to logistics managers without delay.
Regardless of the type of event, logistics frequently is involved in service-recovery by, for example, handling an
out-of-specification order, expediting or transshipping, and each of these activities place additional strain on
logistics operations. By involving logistics managers in the customer service management process, smoother
logistics operations are achieved as a result of fewer exceptions and emergency situations.
The delivery of orders is a responsibility of the logistics function. However, a late delivery could be the result of
the many activities, logistics and others, that are necessary for delivering an order complete and on time. The
involvement of logistics managers in cross-functional customer service management teams results in better
identification of the root-causes of late deliveries and other customer complaints.
TABLE 4
BENEFITS TO THE FIRM RESULTING FROM LOGISTICS INVOLVEMENT IN
THE CUSTOMER SERVICE MANAGEMENT PROCESS
! Potential logistics-related failures can be detected quickly and addressed.
! Logistics capabilities are used to recover from potential service-failures that are not
caused by logistics.
! The root-causes of logistics-related customer service failures are discovered and fixed.
! Customer service management performance is measured systematically and is related
to logistics operations.
In summary, there are a number of benefits to the firm that result from having logistics managers involved in
the customer service management process. These are shown in Table 4.
The Demand Management Process
The demand management process is focused on determining how demand can be synchronized with the
capabilities of the supply chain. It includes forecasting, synchronizing, reducing demand variability, increasing
supply chain flexibility, and developing contingency management plans for potential interruptions to supply or
unexpected changes in demand. With the right process in place, management can match supply with demand
proactively and execute the plan with minimal disruptions (Croxton et al. 2006).
What Logistics Contributes to the Demand Management Process. Logistics managers play a critical role in each
aspect of the demand management process. The first contribution is input into the design of the forecasting process.
The forecast must be for the appropriate time frame (Marien 1999) and with the right level of product detail and
geographic disaggregation to meet the needs of the logistics function. Also, individuals in the logistics function are
able to help assess the feasibility and benefits of collaborative initiatives such as VMI and CPFR (Sherman 1998;
Waller, Johnson, and Davis 1999).
Once the forecast has been developed, a cross-functional team synchronizes the forecast with the supply chain’s
manufacturing, supply, logistics, and financial constraints. Many companies refer to this as sales and operations
planning (S&OP) (Jain 2005). Logistics managers need to communicate current inventory levels, existing logistics
capabilities, and any known system constraints. If the supply chain cannot handle the forecasted volume, decisions
must be made about which orders to fill. The goal of synchronization is to foresee the capabilities and constraints of
the supply chain, and make proactive decisions that best meet the needs of the customers. Logistics can provide
important input on cost and recovery alternatives when product shortages require allocation.
122 LAmBERT, GARCíA-dASTUGUE, ANd CROxTON
Not all variability in demand is caused by the customers/consumers. In many cases, it is caused by the policies
and procedures of members of the supply chain (Bolton 1998). For instance, sales activities incentives often lead to
end-of-quarter spikes in sales. Managing a system with high demand variability is difficult and expensive. Variable
demand becomes harder to forecast so the firm faces the costs of higher forecast errors. The supply chain needs to be
ready to handle the fluctuating demands, which usually means having excess capacity available. An important
component of the demand management process is finding ways to reduce variability induced by management
practices. Logistics managers can help assess the implications and costs of variability. Also, they might be able to
make changes to logistics operations that smooth demand and reduce amplification of demand (the bullwhip effect)
(Lee, Padmanabhan, and Whang 1997). For instance, fluctuating lead-times can influence customer order behavior
and make demand harder to predict.
While it might be possible to reduce demand variability, it is unlikely that it can be eliminated completely.
Gaining flexibility in the supply chain allows management to respond to the system variability (Slack 1991).
Flexibility might be gained in the design of the product, in the manufacturing process, in the logistics system, or in
the PSAs developed with customers and suppliers. Logistics managers contribute their insight into ways that the
logistics system can become more flexible as well as identify the costs associated with adding this flexibility. For
example, reducing transit times provides planning flexibility, but likely increases transportation costs. In addition,
the logistician can help assess the impact of other forms of flexibility on the activities of the logistics function, and
of those of customers and suppliers.
Another key activity in the demand management process is to develop contingency management plans to
respond to internal or external events that disrupt the balance of supply and demand (Dobie, Glisson, and Grant
2000). For instance, management needs to develop plans in place for events such as a manufacturing line has to be
shutdown unexpectedly, there is hurricane or a port shuts. The logistics members of the process team need to
identify potential logistics-related interruptions and are involved in finding the most effective solution to any
disruption.
What Logistics Gains from Being Involved in the Demand Management Process. Implementation of the demand
management process results in more accurate forecasts, which enables better planning and smoother execution of
logistics activities. Also, better planning is achieved by cross-functional coordination of promotional activities.
Logistics managers are made aware of the activities early and can begin planning for them. They gain the ability to
influence the number, timing, effectiveness and efficiency of promotions and other marketing activities.
Logistics benefits from any reduction in demand variability that the process team is able to achieve. Less
variable demand results in better capacity utilization and reduced inventory levels. In addition, well-crafted
contingency management plans benefit the logistics function because the plans provide clear directions on how
managers are to respond.
In summary, there are a number of benefits to the firm that result from having logistics managers involved in
the demand management process. These are shown in Table 5.
TABLE 5
BENEFITS TO THE FIRM RESULTING FROM LOGISTICS INVOLVEMENT IN
THE DEMAND MANAGEMENT PROCESS
! The forecasting process fits the needs of the logistics function in terms of timeliness
and level of detail including time horizon, product and geography.
! Decisions about collaborative initiatives (e.g. QR, CPFR) are made with logistics
input.
! Promotional activities are planned with logistics input.
! The synchronization (S&OP) process includes logistics information and capabilities.
! Logistics implications and costs associated with demand variability are understood
throughout the organization.
! The capabilities and costs of logistics-based flexibility are understood throughout the
organization.
! Logistics considerations are included in contingency management plans.
JOURNAL OF BUSINESS LOGISTICS, Vol. 29, No. 1, 2008 123
The Order Fulfillment Process
Order fulfillment involves generating, filling and delivering customer orders. To accomplish these tasks, the
cross-functional order fulfillment process team must design a network and a process that permits the firm to meet
customer requests while minimizing the total delivered cost. This includes establishing order fulfillment policies and
assessing the role of technology in the process. The objective is to develop a seamless process from suppliers to the
firm and to its various customer segments (Croxton 2006).
Order fulfillment is often viewed as the domain of logistics since the majority of the operational activities are
executed within the logistics function. However, at the strategic level, other business functions play a critical role in
the design of the process. For example, sales and marketing need to be involved because the order fulfillment
process must support the customer segmentation. Also, finance knows the tax code in various countries and the
financial implications of global trade laws that influence the design of the network.
What Logistics Contributes to the Order Fulfillment Process. At the operational level, the order fulfillment
process includes traditional logistics activities such as filling and delivering orders, and the logistics function
contributes the resources to perform these activities. At the strategic level, logistics managers need to be involved in
the design of the network and the assessment of the core competencies required by the order fulfillment process.
A key activity of the order fulfillment process is to gain an understanding of the current and future capabilities
and constraints in the supply chain. Logistics managers know the capabilities of the network and how they affect the
order fulfillment process, including lead-times, packaging restrictions, and existing economies of scale. If the
capabilities do not match the requirements, the team engages in a network design project to determine what changes
need to be made (Jimenez, Brown, and Jordan 1998). In this case, logistics mangers provide much of the data
required for the network analysis including lead-times, transportation costs, and warehousing costs. They may be
aware of improvement opportunities to either the network or the process.
Logistics managers contribute to the assessment of the value created for customers by the order fulfillment
process. Management should leverage those parts of the order fulfillment process that provide competitive
advantage and can tailor it based on customer segmentation by offering different lead-times, minimum order
quantities, or customized packaging. The order fulfillment process team works together with the customer
relationship management process team to determine what levels of customization should be included in the PSAs.
Logistics managers identify the logistics options and the associated costs.
Technology such as WMS, EDI, TMS and RFID can be used to streamline the order fulfillment process, and
enable better communication flow between functions and between firms in the supply chain. Logistics provides
input to the assessment of the value of these technologies and the benefits to the firm, its customers and suppliers.
What Logistics Gains from Being Involved in the Order Fulfillment Process. By being involved in the design of
the order fulfillment process, logistics managers are assured that the process can be executed within the capabilities
of the supply chain. As a result, logistics operations should run more smoothly and there should be fewer requests
that cannot be handled efficiently. Often, logistics personnel find themselves going to great lengths to fill a
customer’s request that results in lower profitability. This should be minimized if they are involved in translating the
capabilities of the order fulfillment process into deliverables, and logistics service offerings are based on customers’
strategic value to the firm.
Logistics managers can benefit from the allocation rules that are developed within the order fulfillment process,
because there are clear guidelines for which customer orders need to be filled in order to maximize profitability.
Also, logistics involvement in the order fulfillment process enables managers to understand which parts of the order
fulfillment process are most critical to customers. With this understanding, logistics employees can focus on those
activities that bring the most value to the customer and the firm.
In summary, there are a number of benefits to the firm that result from having logistics managers involved in
the order fulfillment process. These are shown in Table 6.
124 LAmBERT, GARCíA-dASTUGUE, ANd CROxTON
TABLE 6
BENEFITS TO THE FIRM RESULTING FROM LOGISTICS INVOLVEMENT IN
THE ORDER FULFILLMENT PROCESS
! A more complete set of logistics costs and issues are considered when designing global
networks.
! The order fulfillment process is designed to most efficiently and effectively meet the
requirements of customers based on segmentation.
! Logistics resources are aligned with customer requirements.
! The appropriate logistics-related technologies are used to support the order fulfillment
technologies.
The Manufacturing Flow Management Process
Manufacturing flow management is concerned with determining and implementing manufacturing flexibility
across the supply chain. The management of manufacturing flexibility (Upton 1994) requires planning and execution
beyond the four walls of the manufacturer (Goldsby and García-Dastugue 2006). To efficiently move products
through plants, the operations of the firm and its suppliers should be pulled by demand. In order to link end-
customers’ demand to the manufacturing activities of the firm and its suppliers, appropriate cross-functional
involvement is necessary.
What Logistics Contributes to the Manufacturing Flow Management Process. The degree of manufacturing
flexibility in the supply chain can be leveraged or limited by the logistics capabilities of the firm, and those of
suppliers and customers. For a given degree of manufacturing flexibility, the appropriate logistics capabilities need
to be implemented and managed. Logistics managers can identify for the other team members the logistics
capabilities and cost implications associated with the desired degree of manufacturing flexibility. Logistics
capabilities beyond those required are inefficient, but capabilities that fall short hinder manufacturing flexibility.
The logistics function plays a central role in the coordination of activities across the supply chain. For example,
determining the appropriate degree of postponement-speculation is a key component of flexibility across the supply
chain. Logistics managers contribute to the evaluation of the location of decoupling points because determining the
best use of the postponement-speculation concept requires trade-off analysis that includes both logistics capabilities
and costs (Pagh and Cooper 1998). Similarly, they contribute to the implementation and on-going operation of lean
initiatives (such as just-in-time) and quick replenishment programs (such as VMI, CPFR and ECR).
What Logistics Gains from Being Involved in the Manufacturing Flow Management Process. Logistics
managers gain an understanding of how logistics impacts day-to-day production operations and visa versa.
Decisions associated with the manufacturing flow management process are made within the logistics capabilities of
the firm and those of the other members of the supply chain. Lack of appropriate involvement may result in
considerable stress and additional costs to the logistics operations.
Logistics managers gain increased knowledge of the manufacturing capabilities of the supply chain and are
better positioned to evaluate future logistics requirements. Also, logistics managers gain the ability to identify,
evaluate, and propose inter-organizational coordination opportunities such as the adoption of inter-organizational
postponement.
In summary, there are a number of benefits to the firm that result from having logistics managers involved in
the manufacturing flow management process. These are shown in Table 7.
JOURNAL OF BUSINESS LOGISTICS, Vol. 29, No. 1, 2008 125
TABLE 7
BENEFITS TO THE FIRM RESULTING FROM LOGISTICS INVOLVEMENT IN
THE MANUFACTURING FLOW MANAGEMENT PROCESS
! Logistics capabilities and costs are considered when making decisions related to
manufacturing throughput and flexibility.
! Alternatives for postponement and speculation are evaluated considering the impact on
logistics costs.
! Logistics costs are considered when evaluating manufacturing options to respond to
unplanned events.
The Product Development and Commercialization Process
Product development and commercialization provides the structure for developing and bringing to market new
products with the involvement of key customers and suppliers. The process enables management to coordinate the
efficient flow of new products across the supply chain and assists with the ramp-up of manufacturing, logistics,
marketing and other related activities to support commercialization of the product (Rogers, Lambert, and Knemeyer
2006).
What Logistics Contributes to the Product Development and Commercialization Process. Logistics managers
should be involved early in the development of new products (Di Benedetto 1999; Tracey 2004) in order to
contribute their knowledge of the logistics capabilities and constraints of the firm and the supply chain. Logistics
can support (or hinder) the product development and commercialization process; for example, product design can be
influenced by transportation, handling and storing requirements including product/pallet configuration and
packaging decisions.
In addition, logistics managers must estimate the logistics costs associated with sourcing, manufacturing and
distribution of new products. Logistics is a key cost driver for product profitability. The team responsible for each
product development and commercialization project needs to understand logistics costs in detail in order to set the
new product’s profitability targets and to determine if the product has commercialization potential.
Logistics managers help identify the logistics implications (time and cost) associated with alternative
distribution channels for the new product. It is likely that the assessment of the requirements and opportunities
associated with each distribution channel will be different. Logistics plays a central role in successful product
introduction, particularly as it pertains to product availability during the early stage of the life-cycle of products
(Bowersox, Stank, and Daugherty 1999). Also, they identify potential logistics constraints that might hinder
successful product rollout (Billington, Lee, and Tang 1998).
Product proliferation increases complexity of operations and may carve up the market into smaller and smaller
less profitable pieces (Hayes and Wheelwright 1979). This can result in increased demand variability in which case
logistics costs related to inventory, warehousing and stockouts increase. Therefore, logistics managers should help
evaluate the impact of SKU proliferation to help ensure that the introduction of new products will fulfill the business
goals.
What Logistics Gains from Being Involved in the Product Development and Commercialization Process.
Involvement in the cross-functional product development and commercialization process provides logistics
managers with early access to future logistics requirements and capabilities that need to be developed. Also,
logistics resources will be better utilized and should lead to better product availability.
Early involvement in product development projects and product launch plans results in smoother logistics
operations. Logistics managers will have access to the information required to evaluate the impact of the new
products on the logistics network. For example, new products targeted to specific markets or geographic areas may
affect transportation and warehousing capacity and cost, and inventory investment. By being involved in the product
development and commercialization process, logistics managers gain the ability to plan operations and, when
necessary, to develop the capabilities to support new product introductions.
126 LAmBERT, GARCíA-dASTUGUE, ANd CROxTON
In summary, there are a number of benefits to the firm that result from having logistics managers involved in
the product development and commercialization process. These are shown in Table 8.
TABLE 8
BENEFITS TO THE FIRM RESULTING FROM LOGISTICS INVOLVEMENT IN
THE PRODUCT DEVELOPMENT AND COMMERCIALIZATION PROCESS
! Logistics costs are considered when calculating the potential profitability of new
products.
! Logistics capabilities and costs are considered when designing a new product.
! Logistics capabilities and costs are considered in introductions and rollout of products.
! Logistics costs are considered when evaluating SKU proliferation.
! Improvements are made to logistics operations in order to support new products.
The Returns Management Process
The returns management process includes the implementation of avoidance, gatekeeping and the development
of disposition guidelines. Avoidance refers to analyzing returns, determining the root-causes and implementing
programs that minimize the number of return requests. Gatekeeping is the screening of the return request and the
returned product at the earliest point in the reverse flow. There are multiple disposition options including recycling,
remanufacturing, refurbishing and sending the product to a landfill. Disposition options need to be carefully
evaluated because product should flow as quickly as possible to the right destination in order to minimize the lost
value in the reverse flow (Rogers et al. 2006).
What Logistics Contributes to the Returns Management Process. The forward logistics network and the reverse
logistics network may not be the same (Rogers and Tibben-Lembke 1998). Logistics managers provide the data and
analytical skills necessary for performing a network analysis associated with the reverse flow. A key to the returns
management process is to find avoidance opportunities that reduce the number of return requests. These may include
changes to the product design, changes to promotional activities, or including better instructions with the product.
Logistics managers should be involved in the identification and implementation of avoidance opportunities. For
instance, if products are damaged in transit, logistics might need to make changes to how products are being packed.
It is likely that multiple gatekeeping points are required across the supply chain. Logistics should help design
the gatekeeping guidelines in order to make the reverse flow efficient and might be involved in the execution of the
gatekeeping activities. Also, logistics managers provide cost data to evaluate disposition options.
There are some products that management wants to get back, for example reusable containers and pallets.
Logistics managers help assess the value and determine the flow of reusable containers. Returnable containers
should be considered a corporate asset, rather than an expense (Rosenau et al. 1996). Logistics managers help assess
the flow of reusable containers and determine the investment required.
What Logistics Gains from Being Involved in the Returns Management Process. By being involved in the
returns management process, logistics managers benefit from having the reverse logistics network and the process
designed within the supply chain’s capabilities. Also, they might become aware of capabilities that need to be
developed in order to better manage returns. As a result of better gatekeeping and implementation of avoidance
initiatives, fewer products should enter the reverse flow. This benefits the logistics function by reducing costs.
Logistics also ought to be able to better plan and execute the forward flow of product due to a better flow of reusable
assets.
In summary, there are a number of benefits to the firm that result from having logistics managers involved in
the returns management process. These are shown in Table 9.
JOURNAL OF BUSINESS LOGISTICS, Vol. 29, No. 1, 2008 127
TABLE 9
BENEFITS TO THE FIRM RESULTING FROM LOGISTICS INVOLVEMENT IN
THE RETURNS MANAGEMENT PROCESS
! Logistics capabilities are developed considering the reverse logistics network.
! Returns are evaluated in order to identify avoidance opportunities that result from
logistics operations.
! Gatekeeping guidelines are developed to make the reverse logistics flow efficient.
! Logistics costs are considered when evaluating disposition options (refurbishing,
remanufacturing, or use of secondary markets).
! Logistics influences decisions related to the flow of reusable assets.
FUTURE RESEARCH OPPORTUNITIES
We believe this research contributes to the dialog about the role of logistics in the firm and the linkages between
logistics and supply chain management. It also provides a first-step in a broader research agenda. The ideas
presented in this paper can be used by researchers to further investigate the current state of implementation of the
linkages between supply chain management and the logistics function. It became clear in this research that logistics
managers were not involved in all of the activities we have identified. There is a need for research to identify the
gaps between our prescription and current practice, where the biggest opportunities are, and how the gaps might be
closed.
Based on our interviews, we found that cross-functional opportunities are easier to identify than to implement.
Research could examine the enablers and barriers to utilizing logistics management in a more comprehensive
manner. For instance, Zacharia and Mentzer (2007) found that the importance/influence of logistics relative to other
functions in the firm affected the degree of logistics involvement in product development. Future research could
examine other factors that might influence the degree of cross-functional integration, such as performance metrics
and management structure. The checklists provided in this paper could be used to assess the level of integration
being achieved.
Zacharia and Mentzer (2007) also found that those surveyed believed that logistics involvement in product
development projects improved both the project performance as well as the logistics performance (in other words,
the logistics function both contributed to the process and benefited from being involved). This line of research could
be extended to more precisely measure the type and form of logistics involvement in product development using our
checklists. It could also be extended to the other seven SCM processes. In addition there is a need to more precisely
measure the costs and benefits of cross-functional involvement using financial measures.
There is a role for each major business function in managing the supply chain. Just as it is important for
researchers to lead the way in developing the role of logistics, it is also important to do so for the other business
functions. To appreciate the full value of cross-functional integration through supply chain management, we must
understand the role of managers from each functional in the firm. The GSCF framework provides a structure for
identifying the role of the marketing manager, the finance manager, and the other business functions. Researchers
interested in focusing their efforts on improving the practice of a functional area may find a green field of
opportunities associated with the role of that function in cross-functional activities.
Finally, in addition to understanding the role of the logistics function in the firm, we also need to understand the
role it plays in the cross-functional coordination with suppliers and customers. Also with the growth of logistics
outsourcing, there is a need to research the role that third-party logistics providers play as logistics integrators in the
supply chain and the need for their involvement in the cross-functional process teams.
128 LAmBERT, GARCíA-dASTUGUE, ANd CROxTON
CONCLUSIONS
While there has been significant interest in the topic of supply chain management over the last two decades,
there is still considerable confusion as to the domain of supply chain management and the role of logistics within
supply chain management. In this paper, we have shown what logistics mangers contribute and gain from their
involvement in the eight cross-functional processes identified by The Global Supply Chain Forum: customer
relationship management, supplier relationship management, customer service management, demand management,
order fulfillment, manufacturing flow management, product development and commercialization, and returns
management. We selected the GSCF supply chain management framework because it is cross-functional (with a role
for each corporate function), process-oriented, and includes the activities for managing interactions with customers
and suppliers.
In many companies, management has been striving to achieve cross-functional integration. This trend started
when Enterprise Resource Planning (ERP) systems made the integration of information systems across all functions
in the firm feasible. While considerable progress has been made in integrating information systems, the integration
of management activities across functions remains a challenge in most organizations. Viewing supply chain
management as a set of cross-functional processes focused on the relationships between the firm and its supply chain
members will help managers achieve a level of integration that technology alone cannot accomplish.
As long as companies need people to manage logistics activities such as customer service, transportation and
warehousing, there will be a requirement for well trained functional experts in logistics. But there is also a growing
need for cross-functional integration of operations in supply chain networks and in the management of relationships
with customers and suppliers. It is our hope that in this paper, we have provided some clarity regarding the role of
logistics managers in the cross-functional implementation of supply chain management. We have provided a
checklist for each of the eight cross-functional business processes that managers can use to self-assess the degree of
involvement of the logistics function in supply chain management. From a research perspective, we have contributed
to the important and ongoing dialog aimed at defining the role of the logistics function in the firm and identifying
ways to maximize the value that logistics managers can provide.
At the end of the day, supply chain management is all about relationship management with customers and
suppliers. Customer relationship management and supplier relationship management are key processes where
decisions are made regarding the customers and suppliers that are critical to the firms’ success now and in the future.
Who should be making these decisions if it is not the leadership team of the company? In the words of George
Gecowets, former long-time Executive Vice President of the Council of Logistics Management, “…the head of the
supply chain management team in any given corporation should be the chief operating officer of that corporation”
(Gecowets 1997). In support of this chief supply chain officer, we need managers from each function. Just as all
functions are required to manage one firm, they are all required to manage the network of firms that comprise the
supply chain. Tom Blackstock, Vice President Supply Chain Operations, Coca Cola North America, stated that
supply chain management is too important to be just a function and left to “so-called supply chain managers…it
involves so many functions within the company, and so many suppliers and customers that it has to be everybody’s
job” (Blackstock 2005). All functions must be involved in supply chain management and logistics managers have a
critical role to play.
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ABOUT THE AUTHORS
Douglas M. Lambert (Ph.D. The Ohio State University) is the Raymond E. Mason Chair in Transportation and
Logistics, and Director of The Global Supply Chain Forum, Fisher College of Business, The Ohio State University.
Dr. Lambert has served as a faculty member for over 500 executive development programs in North and South
America, Europe, Asia, Australia and New Zealand. His publications include seven books and more than 100
articles. In 1986, Dr. Lambert received the CLM Distinguished Service Award for his contributions to logistics
management. He holds an honors BA and MBA from the Ivey School of Business at the University of Western
Ontario.
Sebastián J. García-Dastugue (Ph.D. The Ohio State University) is an Assistant Professor at Universidad de
San Andrés, Buenos Aires, Argentina and has served on the faculty of executive seminars in North and South
America, Europe and Australasia. His research has been published in Journal of Business Logistics, The
International Journal of Logistics Management and Industrial Marketing Management and as chapters of two
books. Dr. García-Dastugue is a member of the research team of The Global Supply Chain Forum. He has more than
10 years of experience in industry. Dr. García-Dastugue holds a BA in MIS from CAECE, an MBA from IAE –
Universidad Austral.
Keely L. Croxton (Ph.D. MIT) is an Associate Professor of Logistics in the Department of Marketing and
Logistics at The Ohio State University. Her research interests are in logistics optimization and supply chain
management and she has published in the Journal of Business Logistics, Transportation Science, Management
Science and The International Journal of Logistics Management. She has worked in the automotive, paper and
packaging, and third-party logistics industries. Dr. Croxton holds a BS in Industrial Engineering from Northwestern
University and a Ph.D. in Operations Research.
