While I was shopping at a local hardware store the other day, I started to think about just how much of a role we play in the whole supply chain picture. Think about it, some of us are suppliers, some are distributors and we are all consumers. Logistics also takes on a significant role here. Thanks to our customers, we may well be one of the means through which the pieces of plywood I needed eventually reached this store I was shopping in, and ultimately my kitchen at home. But we are only one of the links in a long complex chain. To make sense of it all, although many tend to assimilate the meaning of “chain management” with “logistics,” there are bold differences between the two which cannot simply be summed up in one or two sentences. So here goes my attempt to help clarify these distinctions.
According to years of research, some experts have alluded to the notion that logistics falls under the supply chain management ‘umbrella’. Needless to say, to them, logistics may not exist if indeed supply chain management is not present. To evade confusion lets analyze supply chain management at its core.
Supply chain management is the management of a network of interconnected businesses involved in the ultimate provision of product and service packages required by end customers. Ultimately the goal of managing the supply chain is providing excellence to customers by moving the product to the final destination and making it a priority to meet all requirements set forth by customers. This makes it possible for the business details to be monitored from an overall depth. From financial aspects, to how accurate the information is given and to how intricate the organization is. All the movement involved begins from the moment a customer agrees to do business. Like the term suggests, it’s a chain!
This includes all the details such as the time from which the goods are placed on the vessel, to the time the goods are shipped to the other end of the spectrum. In addition it deals with the securing of raw materials, and processing the inventory accordingly.
Contrary to supply chain management, logistics first came into play in the early 1950’s. It deals with managing the succession of goods between the point of the departure and the point of arrival. Logistics involves compacting the information and the actual business aspect of the transaction. This includes factors such as: transportation, material handling, packaging, and security measures. The essence of logistics is vital, because without it the routing, scheduling, preparation, distribution, plan, procedures, departure and arrival times of the physical materials being shipped from point A to point B might be distorted.
Essentially, supply chain management and logistics go hand in hand, small details mark the bold differences. The overall spectrum is controlled by the supply chain management team, being that they are not only responsible for achieving customer satisfaction ultimately but also contributing to maximization of profit. Logistics is like the small puzzle piece fitting precisely into the supply chain management picture, being that it takes into account the projection of each step prior to the time of arrival of the expected product. Logistics and Supply Chain Management do not intertwine, in definition. None the less, mutual contribution by both leads to more than just shipping.