The Differences Between the Supply Chain and Logistics

The Differences Between the Supply Chain and Logistics

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The global supply chain is an important part of worldwide commerce, and the center point of its success is the underlying logistics involved in sending, receiving, moving, and stocking goods. This is one of the reasons why both the terms ‘supply chain’ and ‘logistics’ have become conflated and get confused with each other. Though some individuals and companies use the words interchangeably, there are many differences between their functions, inputs, capabilities, and outputs. Not to mention, one has to use different software for them, that is, logistics software and supply chain software.

The basic difference that can help in understanding both of their differences is that supply chains are responsible for complete sourcing, processing, and delivery of goods to the final customer, whereas, on the other hand, logistics particularly focuses on moving and stocking goods between different supply chain companies.

Keep reading to understand the details of the key differences between logistics and the supply chain:

Logistics is a Division of the Supply Chain

According to the Council of Supply Chain Management Professionals, logistics is an important part of the supply chain procedure that plans, applies, and manages the efficient forward and reverse flow and storage of goods, services, and information between the beginning point and the end-point to meet customer’s needs.”

Logistics is an Important Part of the End-to-End Supply Chain Procedure

The biggest difference is that logistics is an individual part of the supply chain which is important to improve the supply chain performance. A supply chain might have several different kinds of logistics and logistics businesses within it, that are all dedicated to helping the supply chain work as smoothly as possible. But, each logistics operation is only responsible for a different and self-contained part of the supply chain.

Logistics Plans, Implements, and Controls

Logistics providers are responsible for certain parts of the supply chain, including:

Planning how to move packages from one place to another, store them, and create the proper information and documents for effective reporting and processing

Applying the movement and storage of packages using various kinds of transport and arranging for short and long-term storage

Managing how packages move, including fleet management, technology, shipment tracking, sharing information, and working with partnered businesses in the supply chain

Drive-up value for different supply chain partners

Logistics Moves Goods from Place to Place

Good logistics management is mainly about effective transport and storage. Logistics providers use different land, air, and ocean assets to transport packages faster and more effectively. They benefit from containerization for transporting packages between types of transportation. Also, many businesses use transportation management software to manage their logistics.

Logistics Stores Goods

After the goods reach their destination, logistics providers store them in warehouses or other facilities. They keep goods until they are required in the further step of the supply chain procedure, whether that’s another supply chain company or for delivery to an end customer.

Logistics Distributes Products to the End Customer

Some logistics companies are specialized in only distribution, that is, delivering packages to the end customer, usually known as “Last-Mile Delivery.”

Supply Chains are the Framework for Sourcing, Manufacturing, and Supplying Products

Now that you have understood what exactly is logistics, it is time to move forward and look at what the overall supply chain actually represents.

The supply chain basically represents the connections and collaborations between all the suppliers, manufacturers, wholesalers, retailers, logistics businesses, and end customers. The supply chain procedure begins when a company gets an order for a product or service and ends when that product or service is delivered successfully to the end customer.

Supply chain management is a feature that analyses and directs the manufacture, transportation, and delivery of packages and services between their origin and their final destination.

Supply Chain Management Works Across Multiple Organizations

The whole supply chain connects multiple partners to source, manufacture, store, transport, supply, and sell goods:

1. Suppliers

Create raw materials or parts that can be made into products

2. Manufacturers

Manufacture parts or products from raw materials and other inputs

3. Logistics

Move and store goods when they move around the supply chain

4. Wholesalers

Buys goods for onward distribution to stores or other sales outlets

5. Retailers

Sells final products to end customers

Supply Chain Management is Responsible for Other Areas As Well

Supply chain management also manages other aspects of the order, inventory, and supply chain procedure, like:

1. Fosters Collaboration and Partnerships

Provides links and improved ways for various supply chain companies to work together

2. Inventory Management

Understanding when the stock of certain products is falling and managing to procure new items

3. Order Management

Analyzing orders with suppliers, manufacturers, and other organizations in the supply chain

4. Order, Asset, and Shipment Tracking

Following the flow of orders, goods, and other assets with the global supply chain

5. Visibility

Reporting on the flow of products through the supply chain

6. Troubleshooting

Managing and controlling problems with the speed, quality, cost, or other aspects of goods working through the supply chain

Eventually, a good supply chain gives a competitive edge to every organization that’s involved in its procedure. The whole supply chain is responsible for marketplace success and revenues, on the other hand, logistics plays a critical, central role in making sure raw materials, parts, and finished goods flow smoothly through the global supply chain.

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