What is logistics
Logistics refers to the planning, execution, and control of the transportation and storage of products throughout the supply chain. This encompasses everything from managing your inventory and warehousing to coordinating the delivery of goods from suppliers to customers. In other words, logistics is the process of ensuring that the right products reach the right places and at the right time. Moreover, logistics also requires an efficient system in place to gather resources, manage workforce activities, and optimise transportation routes. This facilitates smooth operational movements while largely enhancing customer service and satisfaction.
What is supply chain management
Supply chain management is a wider concept that brings together all activities involved in the production and delivery of goods. From sourcing raw materials to transporting finished products to the end user, the full cycle is considered supply chain management. Moreover, this includes various stages such as procurement, manufacturing, distribution, and customer service, all of which work in tandem with each other to create a seamless flow of goods, services, and information. Above all, the ultimate goal of supply chain management is to improve efficiency, reduce costs, and enhance customer service for a business.
Differences between logistics and supply chain management with examples
Logistics is a subset of supply chain management that focuses mainly on transportation and storage, while supply chain management brings together an array of business activities, coordinating all aspects of the product life cycle. To understand the innate differences between logistics and supply chain management, follow the table below:
| Basis for comparison | Supply chain management | Logistics |
| Scope | This is an end-to-end process that includes sourcing, production, distribution, and customer service. | This focuses mainly on the storage, transportation, and distribution of products within the supply chain. |
| Function | Manages strategic planning and coordination of all processes related to a product’s journey. | This handles the operational execution of movement, storage, and fulfilment processes. |
| Components | This includes procurement, manufacturing, marketing, logistics, and customer service. | It primarily involves transportation, warehousing, and inventory management. |
| Time frame | Deals with the entire lifecycle of a product. | Focuses on the movement and storage of goods within a specific timeframe. |
| Focus | Aims for cost reduction, process optimisation, and value creation. | Concentrates on meeting customer demand. |
Benefits of supply chain management
- Cost efficiency: Streamlining supply chain processes can greatly reduce your overall operational costs.
- Improved customer satisfaction: Efficient delivery systems ensure timely product availability which is a contributing factor to improved customer loyalty.
- Enhanced flexibility: A well-managed supply chain can quickly adapt to changes in market demand or supply disruptions.
- Better collaboration: Proper supply chain management fosters stronger relationships with suppliers and partners, facilitating smoother operations.
Conclusion
While logistics focuses on the operational aspects of transporting and storing goods, supply chain management involves a much broader range of activities aimed at optimising the entire production and delivery process. Knowing both these processes is key to ensuring improved operations and customer service. So if you are considering expanding your business operations, a business loan can provide the necessary capital to optimise logistics and supply chain management systems with seamless ease.
