Many companies use the terms supply chain management and logistics interchangeably when referring to the safe delivery of goods to customers. When businesses want to improve their delivery process and meet high demands, they occasionally separate their supply chain management from logistics. Learning the differences between these concepts can help you improve a company’s logistic operations. Let’s learn more about the key differences between supply chain and logistics.
What is a supply chain?
Supply chain management (SCM) involves a collaboration between companies to connect customers, suppliers, and partners to produce value and improve the efficiency of goods for the final consumer. It refers to facilitating finished manufacturing goods from raw materials and delivering them to customers. These activities may include sourcing, testing, logistics, production, customer service, and integration.
What is logistics?
Logistics is a part of the supply chain process that controls, plans, and implements the efficient storage and flow of goods between various points to meet customers’ requirements. It incorporates equipment, inventory, people, and materials. The logistics resources a company may manage include material, food, animals, liquids, and information. Logistics aims to ensure that customers receive a product at the right place and time.
These are how the two differ.
- Process
– Supply chain management process typically involves the movement and coordination of the supply chain in a company. A supply chain is a network between an organization and its suppliers to produce and distribute products to the final consumer. Standard SCM processes include procurement of goods, demand planning, inventory management, supply planning, manufacturing, logistics, and optimization.
– Logistics process integrates and maintains a company’s goods flow. Its operations usually involve warehousing, protective packaging, order fulfilment, and reverse logistics. Reverse logistics refers to the movement of goods from a customer to the manufacturer.
2. Purpose
– SCM helps companies optimize their business processes to have a competitive advantage in the market. This is because it focuses on the most cost-effective and efficient methods individuals working in the supply chain can use. With SCM, an organization can give value to its customers.
– Logistics focuses on customer satisfaction. It provides in-time delivery to make customers happy and increase sales.
3. Control
– SCM usually controls the related activities of changing raw materials into finished products. It oversees these activities by reviewing production numbers, negotiating suppliers’ prices, checking logistics routes, and collaborating with customers.
– Logistics control the cost and efficiency of delivering materials and products. It also monitors the activities, such as marketing and sales manufacturing.
4. Number of organizations
– Supply chain management often involves multiple organizations collaborating to plan, implement, and store services and goods between the point of origin and the significance of consumption. It involves partners, suppliers, distributors, intermediaries, and customers.
– Logistics involves only one organization. For instance, a business may collaborate with a packaging, branding, and delivery company during SCM, while for logistics, it may hire only a delivery company.
5. Technology
– SCM typically uses the following technology to optimize its processes:
- Radiofrequency identification to capture and read a product’s tag information.
- Enterprise resources planning software to collect data and manage daily activities.
- Customer relation management software that helps companies manage various processes.
– As for logistics implementation:
- The warehouse management system enables companies to administer and control warehouse operations.
- A transportation management system which focuses on helping businesses optimize their transportation.