Did you know that there are many similarities between supply chain management (SCM) and logistics? While core differences split the two processes, it is vital to comprehend how a mix of the two known as ‘supply chain logistics’ can assist companies in making operational improvements, improving customer service, and developing a competitive edge.
To explain this further, let us dive into their definitions and how they can complement each other.
What is supply chain logistics?
Supply chain logistics is considered the spine of worldwide trade. It includes transportation, warehousing, stock, and services to all customers. Supply chain logistics is essentially the coordination of an end–to–end journey of a product – from conception to the customer’s door.
Supply chain logistics challenges usually focus on customer service, cost control, planning and risk management, supplier/partner relationship management, and talent acquisition. Supply chain logistics must operate smoothly enough to benefit customers and suppliers. When customer demands become taxing on the entire supply chain, it becomes a challenge, such as customers wanting to know where their orders are, how they are being fulfilled, and what the stock inventory situation is.
Attaining and then communicating insights for customer orders is of greater desire to them. However, this is not always the case if the company does not have the data to provide it themselves.
Is this not the same as supply chain management?
Supply chain management is about applying logistics and supply chain-related processes to a competitive edge.
While these two terms have some similarities, they are different because supply chain management links together multiple processes to achieve a competitive advantage. In contrast, supply chain logistics is more about coordinating logistics (storage, the flow of goods, services, and information).
Supply chain management can be understood as a collection of strategic decisions, which arranges “the operational framework within which logistics is performed.”
What is logistics?
Logistics is about efficient transport and storage, which is essential to good supply chain performance. A supply chain may have many kinds of logistics within it–committed to supporting the supply chain in operating smoothly because it is fundamental to adequate supply chain execution. However, each logistics operation is only responsible for a unique and self-contained part of the supply chain.
Logistics is regarded as “part of the end-to-end supply chain process” concerning “plans, and the flow and storage of goods,” focusing on the efficient and cost-effective delivery of goods to the customer.
It also concerns the collection of the necessary documentation for reporting and processing, as logistics focuses on the movement and transport of goods within a company.
There are two categories in the logistics industry, inbound and outbound. Inbound logistics concerns obtaining, handling, storing and transporting materials. Outbound involves the collection, maintenance, and distribution of products to customers.
Adequate logistics is about efficient transport and storage and is essential to good supply chain performance. However, each logistics operation is only responsible for a unique and self-contained part within the supply chain. These supply chain ‘subsections’ are managed by different providers such as 2PLs, 3PLs, and 4PLs.
Logistics providers are responsible for fleet management, shipment tracking, and information sharing with partner organizations throughout the supply chain. Using a mix of land, air, and ocean transportation methods to haul goods swiftly, usually in containers for modal transport exchanges. These goods are then stored until required by distributors, retailers, or delivered to end customers (last-mile delivery).