Easily confused, but far from the same, supply chains and logistics are both key components in the process of bringing a product to the marketplace.
Put simply, logistics — and the functions included in a company’s logistics department — are just one aspect of overall supply chain management. The discourse surrounding the subtleties of this relationship, however, varies broadly, and may be confusing for some starting out. Let’s dive into the details below.
What Is Logistics?
Logistics is an old, old art — its roots go back to the Napoleonic era, when the infamous French general carefully calculated the movement of troops, military goods, and essential supplies in his sweeping campaigns. While this concept still applies to the art of war, it’s now also used to keep the modern marketplace running smoothly.
Tactical logistics are a critical part of a supply chain, involving the key processes and vendors responsible for just-in-time (JIT) or direct-to-consumer delivery. The challenges inherent in last-mile delivery are also part of the world of logistics.
Other key aspects of logistics include:
- Inbound transportation — How do you manage the delivery of goods and materials?
- Warehousing — How do you manage the storage of inbound materials and outbound products?
- Outbound transportation — Does your facility complete its own deliveries or rely on a third-party external logistics (3PL) provider?
- Fulfillment — The product needs to get into the customers’ hands, of course. How is this achieved?
Logistics professionals are mainly focused on movement and flow, and how to best execute processes with efficiency and accuracy from the point of initiation to the point of consumption.
The driving goal behind good logistics is customer satisfaction: Make the delivery, and please all parties involved with the right product, in the right place, at the right time.
What Is a Supply Chain?
Supply chain management (SCM) is a discipline of its own — and rightly so. Gaining widespread public awareness in the 1980s with the onset of large-scale global trade, supply chains reach further than logistics. These systems incorporate holistic strategies that encompass every moving element of a company’s operations.
A great supply chain relies on:
- Overall procurement strategy, including the sourcing of raw materials and components from external suppliers, manufacturers, and other partners
- Supply, demand, and enterprise resource planning
- Inventory management
- Continuous improvement
- The manufacture of goods
- Distribution to retail channels and customers — in other words, logistics
A supply chain manager is mainly focused on creating the most effective value chain possible, boosting efficiency along every step of a company’s operations.
The Takeaway
The driving goal behind an effective supply chain is competitive advantage. The specific strategies and tools employed through the supply chain can dramatically affect a company’s bottom line, so taking the time to develop a coherent, tailored plan is paramount. New technology, lower production costs, and social-impact responsibilities all intertwine to shape today’s supply chains.
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