What is Logistics and Supply Chain Management?

The rising global complexity surrounding logistics and supply chains is making it tough for businesses to combat the increasing competition. Increasing rates of raw materials along with transportation costs makes it necessary for businesses to have a better idea of what logistics and supply chain management is and how they’re different. 

Some business owners might use these terms interchangeably, but there are key differences that set them apart. Understanding the differences between supply chain management and logistics is vital for the growth of your business. 

You can find out how to make the most out of your efforts in both logistics and supply chain management for making operational improvements, providing better customer service, and building a competitive advantage. Let’s start by going over a brief description of what is logistics and supply chain management?. 

What is Supply Chain Management (SCM)?

The supply chain management involves the entire journey of the product, from sourcing to reaching the customers’ hands. The Council of Supply Chain Management Professionals (CSCMP) defines that supply chain management entails planning and management of all supply chain activities, such as: 

• Sourcing and procurement
• Conversion
• Inventory management 
• Any logistics management activities

It is important to emphasize the word “all supply chain activities,” which shows that SCM is about partnering with suppliers, third-party service providers, etc. It also means that logistics which entails the movement of inventory falls under SCM. 

What is Logistics? 

Logistics is the part of supply chain management that involves processes for planning, implementing, and controlling the flow of goods. It ensures that there is an effective forward and reverse flow and storage of goods or services along with relevant details from the origin point and the end consumption point (delivery to customers). 

In simple words, logistics is a part of supply chain management that entails activities for packaging, warehousing, transporting, etc. It handles all the inventory movement and synchronizes with the entire supply chain operations. 

The goal of supply chain logistics management is to ensure the right product is delivered to the customer on time at the best price. Businesses achieve this goal by dividing the logistics process into two subcategories: 

• Inbound Logistics – This entails all the activities that the organization has to carry out for sourcing, managing, storing, and transporting the goods. 
• Outbound logistics – This covers all activities that focus on delivering the products to the customers from the point of collection to maintenance and distribution. 

What is the Difference Between Supply Chain Management and Logistics?

So, what is the difference between supply chain management and logistics? Since we’ve established that logistics is a part of the broader SCM, they’re not the same thing. In fact, here are a few things that set logistics and SCM apart. 

Objective 

The one thing that sets logistics and supply chain management apart is the objectives that the organization tends to achieve through it. For instance, logistics focus on the movement of products from in and out of the company. On the other hand, SCM focuses on sourcing raw materials, their production, and the movement to either retailers or consumers.  

Processes 

Supply chain management has various processes that revolve around inventory planning, sourcing materials, resource management, production, and delivering those goods and services. Logistics is one of the processes in the overall supply chain management. 

Focus

The focus of logistics is on delivering goods and services to customers efficiently and cost-effectively. Supply chain management focuses on enhancing the overall operational performance for sourcing, producing, and delivering products. This way, organizations can streamline their processes and gain a competitive advantage.  

Logistics and Supply Chain Management: What Roles Does It Play? 

So, what is logistics and supply chain management’s role in streamlining key business operations? Logistics is an integral part of SCM as it helps businesses to keep track of all resources, including labor, required for storing and delivering goods and services to customers. It ensures that the products move from one place to another without any issues at the right time and on budget. Here are a few challenging aspects of logistics that SCM can help with: 

Reduction in Enterprise Expenses

The primary role of logistics in supply chain management is to enhance the overall value of each delivery, as measured by customer satisfaction. It does this using the following strategies: 

• Streamlining processes – Eliminating unnecessary steps and inefficiencies in the supply chain.
• Implementing automation – Utilizing technology to automate tasks, reduce manual labor, and improve accuracy.

By optimizing labor resources and leveraging automation, logistics can contribute significantly to improving the efficiency, cost-effectiveness, and overall customer experience of the supply chain.

Enhancement in the Service Quality 

Enhancing service quality is a critical aspect of logistics. A key factor influencing customer satisfaction is the speed of delivery and the preservation of product integrity during transportation. Timely delivery is particularly important for perishable goods.

That is where RFID technology comes into play as it can be used to monitor storage conditions and track product movement throughout the supply chain. As a result, it can ensure that products reach customers in optimal condition.

Improved Response

Consolidating transportation volumes is a strategic approach to reducing logistics costs. By combining smaller shipments into larger, more efficient loads, businesses can benefit from economies of scale. This will lead to lower transportation costs per unit of weight for longer distances.

Plus, reduced handling will also ensure fewer transfers and handling operations, minimizing the risk of damage. This consolidation can be achieved by carefully planning and coordinating shipments. As a result, it can ensure that compatible products are grouped for efficient transportation.

What is Logistics and Supply Chain Management – Final Words 

The last thing any business needs is mismanagement of its logistics and SCM processes in the wake of increasing costs and growing competition. Getting a better idea of the difference between supply chain management and logistics will allow you to adopt a macro view of the supply chain.  

The right understanding of Supply Chain Logistics Management can help your team spot challenges and opportunities to deliver the results your customers want. And if want to have the right SCM solutions, you can take Shispare’s assistance and find the best ones according to your business needs and preferences.