You will find a lot of people who say that ‘logistics’ is the new name for supply chain management. Both the terms are sometimes used interchangeably. Global logistics & supply chain management is crucial for worldwide commerce. And, shipping, moving, sending, receiving and tracking goods is the central part to that success.
If you ask us, supply chain management is an overarching term that includes multiple processes to gain a competitive advantage. Whereas, logistics is a smaller subsection of the supply chain that takes care of the movement and flow of goods. Over the years, inventory management, Purchase, material handling and transportation have evolved causing many of these functions to crisscross with each other. This intersection has created a vague definition of Supply Chain and Logistics. While they both have some similarities, they also have some different concepts and different meanings. Some do say that Supply chain management incorporates the field of logistics and logistics is several sub-processes within Supply Chain Management. In this blog we will clear out the differences and provide a basic insight of both the terms.
Logistics Management is the process of integration and maintenance of goods in and out of the organization. The Main object of Logistics Management is Customer Satisfaction.
A supply chain will have many different kinds of logistics and companies that take care of logistics within it. However, each section is only responsible for streamlining the logistic process of that section.
Movement of goods and from one point to another is known as Logistics Management. Logistics providers use various sources to move these goods be it Air, Land, Rail or Sea for quicker and efficient delivery.
Apart from moving of goods, warehousing, packaging & Stock Control etc are part of Logistic Management. The goods are stored in the warehouse facility until they are further needed for delivering to the end customer. The main objective is to deliver the product to the end customer at the right time with the right quality.
In the ideal world, Supply Chain Management is a strategic plan which sets up the operational framework for logistics. The complete Process of Coordination and Management of all the activity in Supply Chain is known as Supply Chain Management. The collective efforts put together by multiple organizations like firm, supplier, manufactures , retailers and customers etc make Supply Chain successful.
Multiple partners come together to supply, store, and sell goods. The suppliers produce raw materials, whereas logistics move the goods and store them as they flow through the supply chain. The supply chain is a series or multiple points of sequential nodes connected.
It fosters partnership and collaboration between partners. It helps to manage the inventory while reporting the flow of goods through the entire supply chain process. It also takes care of identifying and troubleshooting the cost, speed, efficiency, and quality of the goods moving through the chain. The supply chain focuses on end customers and finished products.
A good supply chain offers a competitive advantage to any organization that is involved in the process. While the complete supply chain is responsible for revenues and marketplace success, logistics play a crucial role in ensuring parts, raw materials, and finished goods flow through the global supply chain smoothly. Though logistics is only an activity of Supply Chain Management, both are inseparable
It is necessary to remember that while these terms should not be used interchangeably, they do complement each other in a lot of different ways. In the end, one process cannot exist without the other.Also Read: Elements That Motivate The Need For Effective Supply Chain Management