What is Supply Chain Management?

June 12 , 2023 | CATEGORY : SERVICES

Supply chain management is a crucial part of several businesses and logistics is an integral part of it. The terms logistics and supply chain management are used as substitutes for each other on many occasions, sometimes even interchangeably. However, there is a clear distinction between the two.

Supply chain logistics empowers a company by strengthening its supply chain management. As time progresses, innovations are being introduced in supply chain management and logistics, which help companies stay ahead of the curve, increase their profit margins, and enhance the overall experience of the customer.

TThe easiest way to understand the difference between supply chain management and logistics is to view supply chain management as a process that is responsible for the sourcing, processing, and delivery of goods, while logistics is responsible for the transportation and warehousing of finished goods. Every advancement in supply chain logistics leads to an increase in the quality of the product and a subsequent rise in production as well.

What is supply chain management?

Supply chain management enables cooperation between various businesses to increase efficiency and provide value for the final consumer. It is achieved by connecting suppliers, customers, and partners. To control the flow of raw materials and guarantee that the finished goods add value, several firms come together and cooperate to form a supply chain.

The bigger, all-inclusive supply chain network is made up of several smaller components, and logistics is one significant part of it. The framework for operations through which logistics is carried out is supply chain management.

What is logistics?

Logistics is an essential part of the supply chain that enables the flow and storage of goods, services, and related information between the point of origin and the site of consumption.

The goal of logistics is to ensure that the consumer obtains the requested goods at the appropriate time and location, with the appropriate quality and cost. This process can be divided into two subcategories: inbound logistics and outbound logistics.

To meet consumer demands, logistics organizes, carries out, and regulates the efficient, effective forward and reverse flow of goods. Transportation, warehousing, packaging, and other activities that move and position inventory and majorly help in the smooth functioning of the supply chain fall under the category of logistics.

The processes involved in resourcing, handling, storing, and shipping items are termed inbound logistics. All activities related to collection, maintenance, and distribution to the customer are referred to as outbound logistics. Logistics is not limited to these two; other tasks like order packing and fulfillment, stock management, warehousing, and managing both demand and supply enable the company to maximize profits.

Differences between supply chain management and logistics

In conventional usage, both terms complement each other. They are not independent of each other and yet have certain aspects that differentiate them.

Below are some key differences that you need to know:

• Supply chain management is the link between important business operations within and between organizations to support the business and help the company increase productivity

• All activities related to transportation, storage, and shipping of goods within organizations as well as to the customers come under supply chain logistics

• Supply chain management focuses on developing a significant competitive advantage, whereas logistics enables companies to meet customer demands

• Supply chain management is a relatively new term that has evolved over the years, whereas logistics has existed for decades as a technical term for various activities that help move goods from one place to another

• Supply chain management is a collection of related tasks that transfer commodities from raw resources to finished items until they are delivered to the customer. The management of logistics, on the other hand, entails tasks like warehousing, appropriate packaging, order fulfillment, stock control, and stock management

• Supply chain is a bigger umbrella term under which logistics exists

Importance of supply chain logistics

Supply chain logistics helps organizations maintain high standards of customer service while lowering operating expenses. Here are certain benefits that logistics contribute to supply chain management:

• Bringing a level of sophistication in the form of simplicity to the processes is the key to providing unparalleled customer satisfaction

• A satisfied customer would talk about the product to their peers, and this word-of-mouth marketing can be incredibly powerful and influential for a business's reputation and growth

By optimizing transportation routes, minimizing inventory costs, and improving the efficiency of the overall supply chain, logistics can help companies save money and improve their bottom line.

In addition to providing better customer service, supply chain logistics are helping organisations  reduce their operating expenses, while enabling them to invest in other areas of their business and focus on growth and expansion.

Furthermore, with the increasing demand for sustainability and eco-friendliness, supply chain logistics can also play a crucial role in helping companies achieve their sustainability goals. By reducing carbon emissions, using eco-friendly packaging, and adopting sustainable transportation practices, logistics can help companies become more environmentally responsible and contribute to a better world.