Are you struggling to keep up with the complexities of logistics and supply chain management? Are you confused between these two terms? Well, don’t worry, we at QodeNEXT, are here to help you out.
In this blog, we’ll discuss logistics and supply chain management in detail. We will explore the underlying similarities and differences between the two. Without further delay, let’s get set to explore!
What Is Logistics?
Logistics, in simple terms, refers to the management process of acquiring, storing, and transporting goods from their point of origin to the final destination.
For example: let’s consider the example of a clothing company. There are many processes that take place behind the scenes before you see the final dress in the store. Firstly, raw materials are collected and stored safely.
Then, they are sent for production in batches. After production, the final products are shipped to stores. This process also includes important documentation. The entire efficient management of the process is termed logistics.
Logistics includes various activities such as storage, inventory management, transportation, etc. It’s important for businesses, especially manufacturing ones, because it manages the flow of goods and products, thus ensuring that they reach the customer on time.
It’s a cost-effective process and is a part of supply chain management. With logistics management, companies can improve their efficiency, reduce costs and satisfy customers better.
What Is Supply Chain Management?
Supply Chain Management (SCM) is the term used to describe the centralized end-to-end process of producing completed goods from raw materials and delivering them to clients. This complex process encompasses the complete path raw materials take (from inventory) to reach the client as a product.
Let’s understand supply chain management better with an example. Let’s take a company that manufactures smartphones. The supply chain for this company includes raw material suppliers, manufacturers, distributors, and retailers.
For efficient supply chain management, the company must ensure that they have sourced enough raw materials from suppliers. Besides, they also need to ensure that manufacturers manufacture and assemble the smartphones properly on time, distributors store the manufactured products and transport them safely, and retailers have enough inventory to meet customers’ demands.
This efficient management of the pathway of the product from suppliers to the retail store is called supply chain management. Logistics is a part of supply chain management.
One may find logistics and supply chain management to sound exactly the same. While they are similar, they have a lot of differences between them. Firstly, let’s explore the differences between them to avoid further confusion.
Differences between Logistics and Supply Chain Management
Logistics and supply chain management are two closely related terms. However, they have some differences between them. We have listed them below for you:
- The term ‘logistics’ revolves around the storage and management of goods, whereas supply chain management is a broader concept that, in short, is the connection that bridges the gap between suppliers and ultimate customers.
- Logistics involves activities centralized around warehousing, stock management, stock control, order fulfillment, proper packaging, etc. At the same time, supply chain management includes all the activities between procuring raw materials and delivering final products to the customers. Thus, we can say that logistics is concerned with the physical pathway of goods, whereas supply chain management involves a broader range of activities within the supply chain.
- Logistics focuses on short-term activities such as inventory management, transportation, etc. On the contrary, supply chain management focuses on long-term activities such as the entire life of a product.
- Logistics focuses more on cutting down warehousing and transportation costs, whereas supply chain management is a more holistic concept where operations and cost optimization are considered at every step.
- Logistics revolves around the collaboration between logistics service providers and the company, whereas supply chain management revolves around the collaboration between all components of the supply chain, including suppliers, manufacturers, distributors, retailers, customers, etc.
Similarities between Logistics and Supply Chain Management
We hope that you’re now aware of the differences between logistics and supply chain management. So, let’s dive in to explore the similarities between the two concepts.
- Both logistics and supply chain management revolve around the movement of goods. The only difference being while logistics focuses on the physical transportation of products, supply chain management involves the entire process from raw materials to the finished product.
- Both logistics and supply chain management involve inventory management and related activities to ensure that there’s sufficient inventory to meet the customers’ demands.
- Both logistics and supply chain management involve cost management although logistics focuses on cutting down transportation and storage costs, and supply chain management focuses on transportation costs, inventory carrying costs, and other expenses associated with logistics and supply chain.
- Both logistics and supply chain management involve information management, with the basic difference in the information being processed.
- Logistics is a part of supply chain management, which is a relatively new and umbrella concept. Both are aimed at improved customer satisfaction and efficiency in operations, making them crucial for a business’s success.
- Moreover, both logistics and supply chain management involve cooperation and collaboration. While the former demands collaboration between logistics service providers and products, the latter demands collaboration between all the essential stakeholders of the supply chain.
- Both logistics and supply chain management require adaptability in order to meet the changing demands of the customers and market conditions. Moreover, both involve risk mitigation to reduce the likelihood of disruptions that could impact the delivery of goods.
Role of Logistics in Supply Chain Management
Logistics is a crucial component of supply chain management and plays a pivotal role in it. Here are the key roles which logistics play in supply chain management:
1. Inventory Management:
With logistics management, you’re always aware of the number of products present in your inventory. This reduces the risk of stockouts and overstocking, which thus helps in inventory management.
2. Transportation Management:
With logistics management, you need to select the appropriate mode of transportation, optimize routes, and manage the delivery process to ensure that products are delivered on time and in good condition. Thus, logistics is important for managing transportation and optimizing its costs.
3. Warehousing and Distribution:
Logistics also involves the management of warehouses and distribution centers where products are stored before they are shipped to their final destination. This includes managing the storage, handling, and distribution of products to ensure that they are delivered to customers on time and in the right condition.
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Logistics and Supply Chain Management: FAQ
1. What is logistics?
Logistics, in simple terms, refers to the management process of acquiring, storing, and transporting goods from their point of origin to the final destination.
2. What is supply chain management?
Supply Chain Management (SCM) is the term used to describe the centralized end-to-end process of producing completed goods from raw materials and delivering them to clients.
3. What is the relationship between logistics and supply chain management?
Logistics and supply chain management are two closely related terms. Although they sound similar, there are some differences between them. In fact, logistics is a part of supply chain management.
4. Are logistics and supply chain management the same?
No, logistics and supply chain management aren’t the same. However, they sound similar in meaning but have many technical differences.
5. What’s the basic difference between logistics and supply chain management?
The term ‘logistics’ revolves around the storage and management of goods, whereas supply chain management is a broader concept that includes all the activities between the procurement of raw materials and delivery of final products to the customers. In simple terms, we can say that logistics is concerned with the physical pathway of goods, whereas supply chain management involves a broader range of activities within the supply chain.
Conclusion
Logistics and supply chain management is a complex yet necessary process to ensure any business’s efficient operation. Understanding each step’s basics and their interrelated steps can help streamline processes, improve customer satisfaction, and cut costs.
With careful planning and consideration, you can use your logistics and supply chain management knowledge to ensure a successful and efficient operation.
Do you want to make your supply chain management simpler? Well, OneSETU by QodeNEXT is here to rescue you! Our software has the best set of functionality which helps businesses like yours achieve consumer protection, supply chain visibility, statutory compliance, warranty tracking, and other crucial applications.
Don’t logistics and supply chain management sound simpler to you now? We’re pretty sure that you can now distinguish between these two terms easily. Also, don’t forget check out OneSETU by QodeNEXT.
Get in touch with us now to help you make the best choice to manage your fleet!
