Supply Chain Management is a system of organizations, people, technology, activities, information, and resources involved in moving a product or service from supplier to a customer.
Supply chain activities transform natural resources, raw materials, and components into a finished product that is delivered to the end customer. In sophisticated supply chain systems, used products may re-enter the supply chain at any point where residual value is recyclable.
Actually Logistics is the physical execution part of Supply Chain Management. SCM deals with more strategic aspects at macro level whereas logistics is nuts and bolts of its implementation.
The relationships between these various stakeholders in the supply chain vary. They can be vertical, such as between parts and materials suppliers, manufacturers and retailers, or horizontal, where a company merges with or acquires a similar business that operates at the same stage of the supply chain. As part of the SCM function, the company sources the chemicals and containers it needs from suppliers, makes the end product and then distributes the finished goods to convenience stores, drug stores and supermarkets.
Supply chain management touches on every process involved in the movement of those products. Logistics includes planning and executing the storage and movement of goods between different points in the supply chain. Demand planning, transportation including fleet management , inventory management, material handling and order fulfillment are all processes that fall under logistics. To learn more, read our article on logistics management.
Both supply chain management and logistics focus on the flow of goods from the point of origin to the endpoint. Both disciplines require careful coordination of supplies, labor and facilities to make sure items can move through the supply chain as required.
Logistics is a key component of supply chain management, but just one piece of the equation. Supply chain management and logistics both work to move, store and deliver goods as efficiently as possible.
Supply chain management provides the strategic direction that guides inbound and outbound logistics. Supply chain management outlines the strategy and activities that go into planning , sourcing, producing and delivering goods, as well as handling returns. Logistics focuses on the right products being in the right place at the right time, and how to get them there.
As should be clear at this point, supply chain management and logistics definitely intersect, but they differ when it comes to their scope and focus.
Logistics include the numerous transportation methods that get inventory from one location to another. Logistics are a critical piece of supply chains because it manages and tracks the people and resources needed to store and transfer goods and services. Logistics ensure that materials and products reliably move at the right time and on budget. The field of logistics is constantly evolving as customer trends change.
Logistics training helps employees and their companies stay current with best practices. Training gives a company the tools it needs to analyze and improve customer demand, product design and distribution strategies. Logistics and supply chain management help businesses stay competitive. Supply chain logistical components help to manage goods or services. Each element helps move materials, finished goods and services through the many steps in the supply chain.
Supply chain management and logistics both support customer needs and improve the buying experience. Logistics provides direct feedback on customer demand. SCM uses this data to understand what consumers want and plan production and inventory levels. Reliable, cost-effective logistics pave the way to efficient supply chain management.
A well-managed supply chain results in filling orders accurately and on time, which over time will attract new clients and grow the bottom line.
Many businesses have realized the benefits of using supply chain management software to help mitigate the complexities and challenges of supply chains. This software can unify various aspects of the supply chain, from sourcing to production planning to inventory and order management, to help organizations meet rising customer expectations while keeping costs stable. It can also provide in-depth reporting on various aspects of your operations to highlight opportunities for process improvements or call attention to potential problems.
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Inventory management is primarily about specifying the quantity and placement of stocked goods. In other words, logistics management answers the following questions: How can we deliver items to a customer as quickly as possible How many items should we buy from vendor so that they are not spoilt in the warehouse?
Where should warehouse workers pick the goods? What is the optimal path to the item in a warehouse? Where should warehouse workers pack the goods? What vehicle should load the goods? As you can see, logistics management controls processes inside a company warehouse logistics and outside a company transport logistics. Inventory management answers such questions as where an item is stored aisle, row, shelf, etc. For example, transfer an item from one company warehouse to another one, is this Logistics or Inventory management?
Answer is Logistics management. The thing that may confuse is the difference between the supply chain management and logistics management. Supply Chain Management: Supply Chain Management is a system of organizations, people, technology, activities, information, and resources involved in moving a product or service from supplier to a customer. Supply chain activities transform natural resources, raw materials, and components into a finished product that is delivered to the end customer.
In sophisticated supply chain systems, used products may re-enter the supply chain at any point where residual value is recyclable. Logistics is a channel of a supply chain which adds the value of time and place utility. Actually Logistics is the physical execution part of Supply Chain Management. SCM deals with more strategic aspects at macro level whereas logistics is nuts and bolts of its implementation.
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