The supply chain and logistics are interdependent and the lifeblood of any business. The main objective of supply chain management is to increase efficiency and curtail overhead costs. At the same time, logistics support the supply chain by providing the required distribution and movement of products, ensuring that goods are delivered successfully to save time and money. However, in the current scenario, this notion in reshaping and customer experiences is taking center stage in defining SCM and logistics management priorities. SCM and logistics are constantly evolving with the advent of modern technology-driven solutions and software for the overall management and meeting the demands of consumers.
This blog is focused on understanding the roles, similarities, and dissimilarities of logistics and supply chain management for building a thriving enterprise. Let’s start with the meaning of these two practices!
What is Supply Chain Management?
At its heart, supply chain management (SCM) handles the freight movements, related information, and finances associated with the goods/services of a company. Typically, this begins with procuring raw materials and ends with delivering the finished product at its final destination. It includes various activities like procurement, order management, fleet management, supply chain operations planning, product lifecycle management, identifying logistics providers, overall process tracking, etc. All these processes play a significant role in maintaining the company’s operations; without a well-planned supply chain in place, businesses can not survive. With technological advancements, the management of supply chains has become organized and more effective through software for database management, material handling & tracking, etc.
What is Logistics Management?
Logistics management is an integral component of supply chain processes, responsible for planning, controlling, and executing the movement of goods/services from the point of origin to end customers. The main aim of logistics management is to allocate the right amount of resources or goods to the correct destination at the right time. A strong distribution network is imperative for running a successful business and maintaining a reputable marketplace position. An organization can achieve efficient logistics management by incorporating reliable strategies, locating the right vendors for transportation facilities, continuously tracking the movement, and adopting a proactive approach.
Are Logistics and Supply Chain Management the Same Thing?
The terms logistics and supply chain management are confused for one and sometimes used interchangeably. Logistics only involves the movement and storage of goods in a supply chain process. And the supply chain is a comprehensive process that includes management & coordination of the overall process. From purchasing goods, distribution management, manufacturing, logistics, delivery, etc., all come under supply chain operations.
To gain more insight into logistics and supply chain management, Let’s dive deeper into similarities and differences to understand their scope.
Similarities of Logistics and Supply Chain Management
Both supply chain management and logistics are concerned with the flow of goods from point A to point B. These two disciplines need to work in synchronization, but each is a unique practice. SCM is an inclusive term that includes the physical movement of items, managing customer service, and order fulfillment.
Common aspects of Logistics Management and SCM-
- The end goal of both disciplines is to achieve customer satisfaction and work on enhancing the experience.
- Both have the ultimate goal of outperforming competitors to support the company’s growth.
- Logistics and SCM both revolve around goods, services, and information tracking.
- The flow of goods and services runs parallel to each other. From supplier to manufacturer to the wholesaler/retailer and lastly to the end customer.
Difference Between Logistics and Supply Chain Management
By now, you must have gained an overview of the functionality and meaning of Logistics and SCM. Although they need to work in sync to maintain efficient operations, there are a lot of dissimilarities between the two in terms of activities, scope, origin, and focus.
Logistics Vs. Supply Chain Management –
- On the Basis of Activities: Logistics is one of the activities under the umbrella of supply chain management. In contrast, SCM covers a wide array of activities, including planning, sourcing, manufacturing, delivering, etc.
- On the Basis of Scope: SCM works towards a higher objective of enhancing the company’s overall performance efficiency to help gain a competitive edge. On the other hand, logistics is focused on cost-effective and time-effective delivery of goods at different supply chain stages and ultimately to the end customer.
- On the Basis of Origin: The term logistics has its roots in the 19th century, first introduced in the military for supplying battleground with troops, equipment, and supplies. Later, the concept was adopted in industries. While modern SCM practices came into being in the 20th Some believe Keith Oliver coined the term, and some credit it to the Ford Motor Company’s production lines for implementing and perfecting the concept.
- On the Basis of Focus: SCM focuses on the entire process from sourcing raw materials to its transformation into finished products. Later the distribution to retailers or customers also comes under SCM. In contrast, logistics includes the movement and transport of goods to the required destination.
The Role of Logistics in Supply Chain Management
Logistics is the backbone of any supply chain and plays a massive role in ensuring that the supply chain runs smoothly. Apart from transporting goods, it involves managing and tracking various other processes like procurement, freight, warehousing, packaging, etc. Logistics management works closely with customs, maintains reliable relations with intermediaries, and establishes routes for returned/discarded goods. All these operations directly impact the effectiveness of supply chain management.
Importance of efficient logistics management in SCM.
- Maintaining cost-effectiveness by keeping a check on delays in deliveries.
- Improving the efficiency of the processes through on-time deliveries.
- Catering to customer demands and working towards satisfaction and customer retention.
- Keeping a check on transportation costs.
- Ensuring transportation in proper conditions without product exposure to damage.
A well-managed logistics company with effective transportation management increases the efficiency of the supply chain, thereby improving bottom-line growth.
Logistics and Supply Chain Management: Significance and Future Scope
Supply chain management provides the strategic direction that guides inbound and outbound logistics for improved operational efficiency and enhancing customer service. Companies can streamline delivery and significantly reduce costs by establishing a collaborative and systematic approach between logistics and SCM.
Another critical aspect in successful logistics and supply chain management is adaptability to automation for the overall process optimization. Many businesses have realized and implemented software solutions for mitigating the complexities of supply chain operations. With ever-increasing customer expectations and fluctuating demands, a need for constant tracking and enhanced order management has risen. In-depth reporting, identifying potential problems, checking on costs, flawless inventory management, keeping a check on all supply chain operations, etc., is becoming possible with modern software solutions. Therefore it’s quintessential for businesses to embrace technological solutions to remain competitive in the market.
One of the major dependability of successful logistics and supply chain management is identifying a competent supplier for products and services. At ESSNPS, we understand these complexities and have proven experience managing the supply process from purchase order to logistics and delivery. Our fifteen-step approach towards the supply process includes effective project management, ensuring optimum quality goods, and concrete logistics planning by anticipating scenarios for the delay and backup plans.
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