It is common for people to confuse logistics and supply chain management. Those who have no direct relationship with the two can often mistake one for the other. Despite having some similarities, the two concepts are poles apart. Let’s take a look at the two concepts and how they differ from each other:
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What Is Supply Chain?
To understand supply chain logistics, you need to first understand that there is usually a proper chain of distribution which starts with the supplying of materials. These materials can be different things, from raw materials to components. The process also includes the distributor and the retailer. Once the chain is complete by the retailer, the next step is for the product to reach the consumer.
Supply chain management involves all the different activities it takes for the raw product to not just reach its final form but also to reach the consumer. The process can be extensive and may involve lots of different suppliers, manufacturers, and retailers. In simple words, supply chain management is the movement of one product from start to finish.
What Is Logistics?
While supply chain management is the complete cycle of the movement of products, logistics is the fragment of that cycle. This fragment includes the activities that happen to a product between two points of the supply chain management. This includes actions such as the transportation of the product. Logistics helps ensure that the product moves safely and does not get lost or is damaged between the points.
Many people coordinate the logistics, such as the people involved in the movement of the product, the equipment that is involved in the moving, and any other resource that may come in handy. For logistics, experts need to deal with several factors such as transportation, inventory management, handling of the material, and other requirements.
Differences Between Supply Chain Management And Logistics
There are core differences between supply chain management and logistics that are very important to understand:
· The first thing to understand when counting the differences between the two is that logistics are a part of supply chain management. For instance, supply chain management includes different activities, and logistics is one of those activities.
· Both of the concepts have different purposes. Supply chain management works on different strategies that can help improve the supply process so that you can gain an advantage over your competition. On the other hand, logistics is more focused on covering all the needs of customers and the expectations they have with the product. Moreover, it also focuses on coming up with different ways to make the entire process cost-effective.
· Logistics is an older concept, while supply chain management is a fairly newer concept. The term ‘logistics’ originated from the military, while supply chain management got its name from Keith Oliver in the year 1980.
· Logistics talks about just one activity between two points, while supply chain management talks about lots of different activities. These activities can include things such as collecting material, labor, production, and delivery.
· While logistics focuses on customer satisfaction, supply chain management primarily focuses on improving the complete method that can result in higher efficiency, cost-effectiveness, and or other improvements.
· As logistics is a single activity, it does not take many organizations. Only one organization is involved in the logistics, while there are multiple organizations that are involved in the supply chain management. This means that supply chain management requires a lot of planning and organization to ensure that things run as smoothly as possible.
Logistics In Supply Chain Management
Logistics are very important for the supply chain management. The supply chain is broken into different fragments, and logistics focuses on these different fragments. Logistics focuses on all the people and resources that are involved in certain activities that require the storage and the delivery of different goods and services.
Without logistics, it can be difficult to support the supply chain. There are several features of logistics that are crucial for supply chain management. If there were no logistics, it would be difficult to deliver all the products at the right time and in the right state. Other than that, logistics also focuses on bringing down the prices of the process. Without logistics, the entire process can be more expensive than it has to be.
With logistics, you are providing your customers with the product in the best way and timing. This is highly appreciated by customers and promotes customer loyalty. With expert planning, logistics help with the efficient processing of goods, all the while keeping a report of them. Without logistics, supply chain management is incomplete and can impact the complete process.
It is important for businesses to use supply chain management and logistics together to have a successful cycle. This way, they will be able to improve their customer satisfaction and also increase the efficiency of the movement. With logistics, you will be able to get direct feedback that can help you improve your process and make all the right changes that can make for an efficient supply chain. With the right fusion of logistics and supply chain, your business can grow exponentially. This is why it is important for you to understand both the concepts and then use them accordingly.