Logistics and supply chain management at a distance
Logistics and Supply Chain Management There are a lot of similarities between supply chain management (SCM) and logistics, but there are key differences that separate the two processes.
Understanding the role each company plays can help make operational improvements, enhance customer service, and build a competitive advantage.
What is supply chain logistics?
Supply chain logistics coordinates the storage and shipment of goods and services across the supply chain. The practice begins with raw materials, continues with manufacturing or distribution, and ends when the company delivers the final goods to the customer or when the products are returned to their final destination.
While many use supply chain management and logistics interchangeably, they cover different (but related) activities.
The supply chain covers the production and delivery of goods and services to all types of customers.
When well implemented, both supply chain management and logistics can give companies a competitive advantage and create value for customers.
Are logistics and supply chain management the same thing?
Logistics focuses on the movement and storage of items in the supply chain. Supply Chain Management (SCM) is more comprehensive, covering all coordination between partners who have a role in this network,including sourcing, manufacturing, transportation, warehousing, and selling.
SCM's ultimate goal is to create processes that ensure the smooth and efficient flow of merchandise that give customers an excellent experience and drive the business forward.
While supply chain management handles activities between separate entities, logistics focuses on the internal movement of goods. In addition, SCM supports all procurement, production and distribution of merchandise.
Meanwhile, logistics transports and stores goods between different points in the supply chain.
Supply Chain Management vs. Logistics
Supply chain management includes the high-level processes involved in sourcing and purchasing raw materials, and ultimately the creation of finished goods.
SCM uses logistics to deliver goods to the consumer, but ultimately it strives to enhance the bottom line and increase the competitive advantage of the business.
In other words, SCM sets the strategy and directs the daily logistical activities that occur in factories, warehouses, local shipping centers and other facilities.
Logistics is the aspect of the supply chain that stores or delivers finished goods or services to a customer, whether it is a manufacturer, distributor, or consumer.
The objective of logistics is to deliver goods and services to the customer on time and at a competitive price.
What is supply chain management?
SCM also focuses on improving supply chain operations, which can benefit both customers and business partners.
A company can continually optimize and improve its supply chain only when it has visibility across its supply chain.
This insight enables companies to track goods and services as they move through each stage of the supply chain, making it much easier to see if everything is working as planned.
It also gives decision makers more time to respond to disruptions or other barriers.
The supply chain involves overseeing an often wide network of sub-suppliers (such as raw material suppliers), suppliers, manufacturers, logistics partners, wholesale distributors, retailers, and end users.
Relationships between the different stakeholders in the supply chain vary. It can be vertical, such as between suppliers of parts and materials, manufacturers and retailers, or horizontal, as the company merges with or acquires a similar business operating at the same stage of the supply chain.
What is the logistics?
Logistics involves planning and executing the storage and movement of goods between different points in the supply chain.
Logistics coordinates facilities, people, equipment, and other resources to ensure products are moved when they are supposed to have space at the next station.
Demand planning, transportation (including fleet management), inventory management, material handling, and order fulfillment all fall under logistics.
How are logistics management and supply chain management the same?
Both supply chain management and logistics focus on the flow of goods from the point of origin to the end point.
Both disciplines require careful coordination of supplies, labor, and facilities to ensure that items can move through the supply chain as required.
Logistics is an essential component of supply chain management, but it is only one part of the equation.
Similarities Between Supply Chain Management and Logistics
Both supply chain management and logistics work to move, store, and deliver goods as efficiently as possible.
Supply chain management provides the strategic direction that directs inbound and outbound logistics.
How is supply chain management and logistics different?
Supply chain management defines the strategy and activities that go into planning, sourcing, production and delivery of merchandise, as well as handling of returns.
Logistics focuses on putting the right products in the right place at the right time and how to get them there.
The main differences between SCM and logistics include:
Logistics is activities in supply chain management. The supply chain covers a variety of activities, including production and inventory planning, work planning, materials and facilities management, and the manufacture and delivery of goods and services.
Supply chain optimizes operations to create competitive advantages, while logistics emphasizes meeting customer needs and expectations.
Logistics focuses on the efficient and cost-effective delivery of goods to the customer.
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