One of the continuing controversies in organization is whether activities be grouped close to top management or dispersed throughout the divisions of the larger firms. For example, a major electric company had a number of product divisions, such as industrial electric equipment, nuclear power, small appliances, major appliances, and lamps. A centralized organization groups logistics activities at the corporate level for serving all product groups. On the other hand, the decentralized logistics organization puts the responsibility for logistics at the product group or division level.

A separate decentralized logistics organization is established to serve each division.

There are some obvious advantages to each type, and a number of firms create organizational forms that blend both types to seek their combined advantages. The principal reason for the centralized form is to maintain close control over logistics activities and to benefit form the efficiencies associated with the scale of activities that can occur by concentrating all logistics activities for the entire corporation under a single director. Consider the traffic activity as an example. Many firms own private truck fleets. Utilization of the equipment is the key to efficiency. By having centralized control of all traffic activities, a firm might find that the forward haul of one division’s products might be the back haul for another. These movements can then be balanced, whereas under a decentralized organization they might be overlooked. Similar efficiencies can be gained through shared warehousing, shared purchasing, and shared data processing.