Article
Organizing for network synergy in logistics A case study
Synergism can be defined as the co-operative action of discrete agencies such that the total effect is greater than the sum of the effects taken independently. The concept has formed one of the key components of the various strategy formulation frameworks and has been used especially for motivating corporate growth through diversification. However, as many diversification strategies failed and management focus shifted to core businesses in the early 1990s, the synergy concept became less prominent. At the same time, the structurallyoriented strategy framework began to give way to process-based views of businesses and organizations. Recent studies have shown that large multi-unit organizations can balance their dual demands for corporate-level co-ordination and local responsiveness simultaneously by establishing organic networks of interdependent units instead of the rigid vertical structures characteristic of traditional hierarchical organizations. In this context, the synergy benefits are a product of horizontal interactions and processes rather than static notions like product-market configurations.
This paper examines the concept of network organization and presents a case description to illustrate how a company can capitalize on the synergy benefits of a logistics network organization. In short, the synergy benefits are expected to materialize as scale and scope economies in production and logistics, and various spill-over effects related to shared skills and resources in networks. The paper is
oncluded by suggestions for further research on logistics network organizations.