The purpose and function of Logistics can be placed into context by using Porter’s Value Chain model, which separates Primary Activities from Support Activities as illustrated in Figure 2. Primary activities are those which are easily visible to the customer whereas support activities facilitate the effectiveness of the primary activities.
The logistics role is found within the Inbound Logistics, Outbound Logistics and Sales and Marketing activities. Primary Activities are frequently the source of competitive advantage for an organisation because they are seen to have the largest influence on the customer experience of the product or service. However, the model also illustrates how all the activities add value to an organisation and are interdependent, forming a chain of value throughout the organisation which a customer is willing to pay for. This demonstrates how logistics is able to contribute to the success of an organisation through cross-functional collaboration.
Figure 2: Porter’s Value Chain