Is Logistics and Supply Chain Interrelated ?

Logistics and Supply Chain

Many people get confused between Logistics and Supply Chain. They often use the words as if they mean the same thing, but they’re actually quite different. This can be a problem for people trying to figure out what they need to do, because these are separate areas with different tasks and responsibilities.

The main point of confusion is thinking that logistics and supply chain management are the same. But here’s the key: Logistics is actually a part of the bigger picture, which is Supply Chain Management.

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What is Supply Chain Management?

Supply Chain Management (SCM) is about companies working together to efficiently deliver value to the end customer. According to professors at Michigan State University, SCM involves making strategic decisions that guide the entire logistics process.

Connects suppliers, partners, and customers
Aims to improve efficiency and create customer value
Involves coordination across companies and departments
Supply chain managers act like conductors, aligning efforts
Logistics is a key but smaller part within the broader supply chain system

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What is Logistics?

Logistics is a key part of the supply chain focused on moving and managing goods efficiently. Experts define it as the flow of products and information from the origin to the customer to meet their needs.

Ensures timely delivery with the right quality and cost
Involves transportation, warehousing, packaging, and inventory control
Covers both inbound logistics (receiving materials) and outbound logistics (delivering products) logistics
Supports order fulfillment, stock management, and demand-supply balance
Plays a vital role in synchronizing the entire supply chain

What are the Key Differences in logistics and Supply chain?

It is important to remember that while the terms logistics and supply chain should not be used interchangeably, they do supplement each other. One process cannot exist without the other. Here are some key differences between the two terms that will help you keep from blurring the lines between them.

Supply chain management is a way to link major business processes within and across companies into a high-performance business model that drives competitive advantage.
Logistics refers to the movement, storage, and flow of goods, services and information inside and outside the organization.
The main focus of supply chain is a competitive advantage, while the main focus of logistics is meeting customer requirements.
Logistics is a term that has been around for a long time, emerging from its military roots, while supply chain management is a relatively new term.
Logistics is an activity within the supply chain.

Feature	Logistics	Supply Chain
Scope	Focuses on the efficient flow and storage of goods within an organization or between points in the chain.	Encompasses the entire network of interconnected organizations and processes involved in bringing a product or service to the end customer.
Objective	Primarily aims for cost-effective and timely delivery of goods, ensuring customer satisfaction.	Seeks to optimize the entire chain for competitive advantage, value creation, and overall profitability.
Focus	Operational and tactical: Deals with the execution of movement, storage, and fulfillment.	Strategic: Involves planning, coordinating, and managing all activities and relationships across the entire network.
Activities	Transportation, warehousing, inventory management, order fulfillment, packaging, material handling.	Supplier management, procurement, manufacturing, demand planning, logistics, customer service, new product development, IT integration, risk management.
Relationships	Primarily internal within a company or with direct service providers (e.g., truckers, warehouse operators).	External and collaborative: Involves strong relationships and coordination with suppliers, manufacturers, distributors, retailers, and customers.

Understanding Logistics within the Supply Chain: A Clear Distinction

While Supply Chain is an end to end practice, the thing that comprises of the process and the positions, logistics is a process that starts with a requirement and completes with the satisfaction of that prerequisite. In business, logistics plays the role of how to get something from point A (routinely, the provider, or source) to point B. From a company’s point of view, it incorporates procedures, for example, collecting, transportation, taking care of, and quality affirmation, among others.

Numerous components play crucial roles in a logistical structure; for instance, costs and volumes are audited to ensure they satisfy the requirements. Quality confirmation manages the exactness of what is being procured and shipping & handling the time that takes to move the things from transportation point to the conveyance point.

Logistics play a crucial role to ensure extraordinary levels of productivity since it can lessen the time it takes to get what is being demanded in the hand of those that are manufacturing or delivering the goods and services to the final customers.

Hence we must understand that a supply chain will define the company’s entire portfolio of suppliers, suppliers’ suppliers, distributors/ whole-sellers, and consumers in the end. It is an overall matter of flow of materials, money, and information, to and fro. But logistics is a particular part of the whole supply chain, which only deals with order taking and delivery of materials, including transportation.