The difference between Logistics and Supply Chain Management

Are you confused between logistics and supply chain management? Though both of these terms and concepts seem similar, each of them has distinct functions, tasks, purposes, and responsibilities.

The lines that separate supply chain and logistics management might look blurred, but there is a symbiotic relationship that exists between the two.

Let us compare a supply chain with logistics. A supply chain consists of suppliers, manufactures, retailers and wholesalers, but does not include any specific functions. Logistics management, on the other hand, is tangible, and includes the various activities that aid in the smooth operation of a warehouse, and the movement of goods within the supply chain.

In simple words, logistics can be termed as a part of supply chain management, whereas supply chain management acts as an umbrella that encompasses all of the processes.

Differences Between Logistics and Supply Chain Management

Are you still confused? Let’s look in-depth of how logistics management differs from supply chain management.

The Subsection – Logistics

As we mentioned earlier, logistics is a subsection of supply chain management. Logistics is described as an essential part of the supply chain process that helps with planning, controlling and implementing the reverse and forward flow of goods and services. Logistics also ensures proper storage of goods, and the exchange of important information between the manufacturers and the retailers.

One of the main differences between logistics and supply chain management is that logistics is essential for the optimum performance of a supply chain. A supply chain can consist of different logistics companies and processes, but individually each of them is responsible for a specific part.

Planning, implementation and control

Logistics providers are responsible for specific tasks in a specific part of the supply chain. Some are listed below.

Logistics management helps with the planning of the movement of goods from one point to another. Other responsibilities include storing goods, providing the right information to the supplier and retailers and maintaining the documents.

Logistics management also oversees the movement of goods using the use of various modes of transport and making arrangements for the short-term as well as long-term storage of goods.

In addition, it controls the movement of goods via tracking, fleet management and working hand-in-hand with different partner firms within the supply chain.

Goods management

A logistics management company ensures the timely delivery of goods by providing efficient transport options. The companies make use of sea, air and land transport options to move the products efficiently. Some companies even use intermodal transport to move goods quickly by switching between the different types of transportation.

Storing of goods

The logistics provider also helps with the storage of the goods until the company finds a buyer or until a retailer needs them. The goods are stored in proper warehouses and facilities until the retailer or a different supply chain needs them.

Distribution of products to retailers

A few logistics companies also offer something called the “last-mile delivery.” It includes the planning and distribution of the products to the end customer.

There are different types of logistics organizations too. Some of them are,

In-house – A few wholesalers or manufacturers have in-house logistics departments that handle the movement and storage of goods.

LSPs – LSPs or Logistics Service Providers are those companies which manage the flow of products between the manufacturer or the retailer and the consumer. These companies handle various functions, which include shipping, storing of inventory, packaging, and the undertaking of security during shipment.

Third-party providers – The third-party logistics providers provide customized services to various clients. They can provide cold storage or specialized transportation services to ensure timely and proper storage and delivery of goods.

Reverse logistics – These companies specialize in returns and refunds from the end customer to the supplier, retailer or manufacturer.

Warehouse providers – A few logistics companies only offer the storage of goods in their warehouse and do not handle the transportation of goods. They only provide warehouse services to wholesalers, retailers and suppliers.

Courier – These logistics providers are responsible for the last-mile delivery and ensure that the product is delivered to the end customer without damage and delay.

To sum it up, it can be said that a logistics management provider is a part of a bigger supply chain system.

Now that we understood the role and functions of a logistics provider, let’s quickly understand what supply chains are.

Supply chains work across various organizations and brings various partners together to manufacture, store, transport and sell products. Other than logistics, it is also used to control various other functions involved with inventory and orders. Some of the functions include,

–           Fostering collaborations between different supply chains, ensuring they work together efficiently.

–           Management of orders, and placing orders with manufacturers or retailers within the supply chain.

–           Tracking of shipments, and ensuring the flow of goods and orders.

–           Reporting the flow using proper documentation.

–           Identifying various issues within the supply chain and resolving them

Having a strong supply chain management acts as an added advantage to every firm as it is responsible for growth, success and an increase in revenues. Whereas a logistics company ensures the smooth flow of orders and goods within the supply chain.