A typical functional organization concept from a recent retail client is
illustrated in Figure 10-11. In their case, logistics only incorporated the traditional
transportation and warehousing functions. Because the key performance
indicator for logistics was storage and handling cost per unit, the
logistics organization would hold outbound store deliveries for as long as
possible to create large picking waves and larger outbound shipments. In the
meantime, the stores were starved for key products resulting in tremendous
lost sales costs in the stores. In this particular case, the lost sales recovery
opportunity available from revising the shipping schedule was more than
$300,000,000 per year.