Logistics & Supply Chain Management – Are They the Same?
Are Logistics and Supply Chain Management the Same?
Worldwide commerce requires a global supply chain. In turn, logistics is central to the success of that supply chain, overseeing the sending, receiving, shipping, and storage of goods.
In our industry, it’s no surprise that “logistics” and “supply chain” are often confused with each other. Oftentimes, people use these words interchangeably. However, there are key differences between their functions, inputs, outputs, and capabilities.
The simplest distinction is that supply chains source process, and deliver goods. On the other hand, a logistics company focuses on the movement and storage of goods between different organizations in the chain.
Logistics As a Subsection of the Supply Chain
The Council of Supply Chain Management Professionals defines logistics in the following way.
Logistics is “part of the supply chain process that plans, implements and controls the efficient, effective forward and reverse flow and storage of goods, services and related information between the point of origin and the point of consumption in order to meet customer’s requirements.”
However, that’s a bit of a mouthful, and it’s worth it to break down the statement. Logistics is part of the end-to-end supply chain. One important distinction to make is that logistics is essential to a good supply chain.
A single chain might involve multiple types of logistics companies. Still, each company works to keep the supply chain running smoothly.
Logistics is responsible for a unique, self-contained part of the supply chain.
Plans, Implements, and Controls
Logistics providers remain responsible for their specific part of the supply chain. This means that they cover the following.
They plan how to move and store goods while producing the proper information and documents. This ensures that reporting and processing are efficient.
They implement the movement and storage of goods, utilizing several modes of transport, and arranging short- or long-term storage.
They control how the goods move. Oftentimes, this occurs through fleet management, technology, sharing information, shipment tracking, and collaborating with partner organizations.
Through these efforts, logistics companies help to raise the value for the supply chain and all the partners within.
Supply Chains: The Overarching Framework
With this understanding of logistics, it’s important to look at the overall supply chain. The supply chain is the connection and collaboration between several parties.
Suppliers produce raw materials or parts.
Manufacturers create parts and products.
Logistics Companies transport and store assets throughout the supply chain.
Wholesalers purchase goods to distribute to stores and outlets.
Retailers sell finished products.
Customers buy the finished products.
The process begins when an organization receives an order for products or services. It finishes upon delivery to the customer. Supply chain management is a function that supervises the production, transportation, and delivery of goods and services from origin to destination.
Supply Chain Management Can Be Responsible for Other Areas
Oftentimes, the supply chain controls other aspects of the process as well. Their expansive role can include the following.
Fostering relationships and partnerships to find better ways for companies to collaborate
Inventory management to ensure items are always available
Tracking the flow of orders throughout the supply chain
Reporting on the movement of goods throughout the chain
Troubleshooting issues with speed, quality, cost, and other aspects of assets
Logistics in Houston and San Antonio
In the end, a supply chain is only as strong as its logistics companies. When everyone works in harmony, they provide a competitive advantage to every organization involved. While the supply chain overall is responsible for marketplace success, logistics plays a crucial role. Good companies ensure raw materials, parts, and products flow smoothly throughout the supply chain.
At Derby, we offer a robust network for logistics focused services, transloading, warehousing, and more. We work within the United States and beyond to help our partners ensure timely delivery of goods, equipment, and supplies. By connecting with our ecosystem, we help to ensure the process runs smoothly and efficiently.