Supply chain management and logistics are correlated concepts. It works between the management of raw material to the movement of goods. The blog answers the question – What is logistics and supply chain management. From the manufacturing to the final delivery of the product, both systems or processes play an important role for the businesses. They are used by every product-based industry like manufacturing, retailing, food production, and healthcare.
Logistics is involved in the structured transportation and goods storage from the pickup point to the drop point. Whereas, supply chain management involves the entire production process of the product from sourcing of the raw material to the utilization.
The blog covers the difference between logistics and supply chain management. You can get their definitions, examples, similarities, dissimilarities, and additional information, such as what is supply chain logistics.
What is logistics and supply chain management?
One common point between logistics and supply chain management is that both of them deal with the product and services industries. It handles the process from the product’s manufacturing place to its delivery to the final user. This includes the product procurement to distribution and managing all the in-between processes.
Logistics is specifically focused on the goods movement, and the supply chain management is focused on broader affairs. The latter deals with the suppliers, manufacturers, and distributors and manages the work coordination for any business. Both of these systems are needed to ensure the business product’s manufacturing efficiency, cost-effectiveness, and timely delivery.
You can learn what is logistics and supply chain management and how they benefit business industries in this blog.
What is Supply Chain Management and logistics?
Logistics is known as the part of Supply chain management, but they both are different in processes, focuses, and includes different activities. Let’s understand their definitions first, to understand a basic difference between them.
Supply Chain Management Definition
Before understanding the supply chain management, let’s acknowledge what is supply chain in simple words. A supply chain is the group or web of organizations, actions, or individuals who are involved in the process of product manufacturing to its delivery to the consumer.
Basic Definition of one part of what is logistics and supply chain management is clear to us now. You can read further to know about it in detail.
Now, supply chain management is the process of handling the flow of materials, goods, or services of the complete supply chain. It is the sourcing of raw material required to make the product to delivering the final user.
- It manages the relationship between the suppliers, wholesalers, manufacturers, retailers, and distributors, and the managers involved in any business. It can be considered as the management of correlated businesses associated in the product production and distribution.
- The objective of Supply Chain Management (SCM) is to reduce expenses for the businesses and improve operational efficiency. The process also includes the on-time delivery of the product to its client or user. Major units of SCM are procurement, manufacturing, dispersal, and logistics.
Let’s move to the next part of what is logistics and supply chain management.
Logistics Definition
The Logistics is only focused on the preparation, application, and handling of the shifting of goods or products in any supply chain. This may involve inventory management, transport, storehouse, and order completion.
Inventory – It includes all the products, goods, commodities, materials, and all merchandise that are stored by any company or organization for selling & earning purposes.
Logistics includes all the actions that are needed during the transportation of a product from one location to another.
- It is not limited to transportation, it also involves inventory and warehouse management.
- It covers the management of the technologies that are used to monitor or track the products across the supply chain.
The outcome of what is logistics and supply chain management in terms of definition is –
Logistics primarily focuses on the smooth transportation & storage of the products, supply chain management covers the coordination management from the product manufacturing to the delivery process participants.
Difference Between Logistics and Supply Chain Management with Examples
Logistics and SCM are often used as replacements, but they are different in reality. They may share some common aspects but are distinctive in services. The basic difference between these two systems is clear to us. Now, let’s move further to know about their advanced differences using some aspects mentioned below:
Example
- Logistics business manages the shift of the products to the retailers.
- SCM business supervises the entire process from raw material sourcing to final-user delivery.
The examples differ, what is logistics and supply chain management? Let us now observe some more aspects of these services.
Concentration
- Logistics concentrates on cost effectiveness, timely delivery, and efficacy.
- SCM concentrates on the coordination management from the product manufacturing to the delivery process participants.
Focus
- Logistics focuses on transport, storage. and shift of the products.
- SCM focuses on a broader perspective from raw material sourcing to delivery of the final product.
Actions
- Logistics actions include inventory management, transport, storehouse, and order completion.
- SCM actions include procurement, manufacturing, dispersal, and logistics.
System
- LMS (Logistics Management System) supports product-based companies in shipment tracking, route optimization, inventory management, and expense control.
- SCMS (Supply Chain Management System) supports the product-based companies in managing procurement, inventory, manufacturing (raw material sourcing), logistics, and final delivery to the right client & location.
You can find an appropriate example to understand what is logistics and supply chain management?
Difference Between Logistics and Supply Chain Management with Example –
In a Shoe business, the SCM team will focus on the procurement of the raw material (leathers, textiles, synthetics, rubber, foam, and plastic), monitor the production plan, and confirm the final delivery of the product to the right location. The logistics will take care of the transportation of this raw material for shoes to manufacturing sites, products to their warehouses, and timely delivery to the retailers or suppliers.
Role of Logistics in Supply Chain Management
As you are familiar that logistics is a part of SCM and plays a central role in the fulfillment of its procedure. Now, what is logistics and supply chain management in terms of their roles? A structured logistics can support organizations to minimize expenses, enhance customer satisfaction rate, and simplify the operations for the betterment. The major roles that logistics play in Supply chain management are:
- Inventory Management (Product’s appropriate quantity and right time delivery)
- Transport (Shifting products from one place to another)
- Storehousing (Storage of products and simplified access to it)
- Order Completion (Client product taking, transferring, and delivering)
Logistics and Supply Chain Management Process
We can understand the difference between Logistics and SCM with their process dissimilarities. A process is a series of action and it can tell you what is logistics and supply chain management.
Supply Chain Management Process
The key stages of the SCM process are:
- Planning the process from raw material sourcing to delivery.
- Product Sourcing and finding the right raw material suppliers and distributors
- Product Manufacturing, including assembling and packaging
- Product Delivery to Users involving the transportation process
- Handling Returns & Exchanges requested by Customers.
Logistics Process
The key stages of Logistics are:
- Transport planning, route modification and vehicle selection.
- Storage, products kept in the repository.
- Manage inventory, stock availability.
- Timely Shipment of product to client.
What is Supply Chain Logistics?
Supply Chain Logistics (SCL) involves handling the product’s movement across the supply chain. We have tried our best to make what is logistics and supply chain management clear above, depending on various aspects. An effective supply chain logistics ensures that the product is delivered to the customer in the appropriate condition and on time. Supply Chain Logistics process flow includes all from transportation to order completion.
Watsoo – Best Logistics and Supply Chain Management
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We have customizable logistics solutions that are integrated to the organization’s supply chain – Fleets, storehouses, and homes. Contact our team to automate your business’s SCM and get real-time updates. Major benefits of joining hands with us are:
- Complete Logistics and Warehousing
- Third-Party Risk Management
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- Automated Billing and Invoicing
- Global Transportation Management
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- Prompt Dispute Resolution Services
Conclusion
Logistics and Supply Chain Management (SCM) are essential for the product-based businesses as they both focus on the processes involved in the supply chain operations. The blog answers what is logistics and supply chain management, including their definitions, examples, differences, processes, and much more. The former deals in the product’s storage and transportation, and the latter responsibly handles or monitors the processes involved from the procurement of raw material to the delivery of the product to the final user.
The blog covers most of the aspects of the Logistics and Supply Chain management, like their difference, commonalities, and what is supply chain logistics. We hope you like the given information and get what you were looking forward to from the topic.