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By now, you’ve heard the words “logistics” and “logistics management” tossed around. It’s a popular keyword used in all kinds of marketing and advertisements. But what exactly is it? Is it just a fancy way of referencing the supply chain, or is there a difference between logistics vs supply chain? While the two are related, logistics and supply chain are different. However, to better serve every point along your supply chain, it is important to know the difference between logistics and supply chain. That way, when working with a distributor, supplier, or directly with customers, you can better relate to them when discussing how you can improve their own business logistics.
There are different steps within the supply chain. It begins as raw material, which is collected and sent to the supplier. The supplier then ships the product out to the company using it or manufacturing. Once the product is created, it’s collected by distribution, transporting the goods to the various stores selling the product. These stores are the customers of the manufacturer. Then, the final step in the supply chain is the consumer.
All of this falls under the supply chain. It may also be referred to as supply chain management. Basically, every step a raw material makes from collection to final sale is all part of the supply chain.
Logistics is specific to one area within the supply chain. Whether you are a supplier or a manufacturer, your logistics centres on everything within your plant. This includes storage, placement of products, the quantity of storage, in addition to shipments coming in (either from the supplier if you’re in manufacturing or from the collector of raw materials if you’re the supplier). Your logistics also focus on the shipment of your product. All of this is part of logistics, whether this is to the various manufacturing facilities or customers.
You will rely on your other service partners to maintain complete logistics of what is going on. While you will be in charge of all the logistical information associated with the raw material or products within your facility, you will need to connect with the logistical services of distribution.
So what is the difference when it comes to your own business? While you are part of the supply chain and likely not the entire supply chain (few companies handle everything from collecting raw materials to selling directly to consumers. Some companies might occupy several points of the supply chain, but almost never will they occupy all of them). Supply chain management is still an important aspect of the overall breadth of your business.
For starters, the goals of each are different. The goal of logistics is all about customer satisfaction. You want to keep your customers happy, so logistics will help you send your product to the customer in the shortest, fastest way possible. You’re also able to stay on top of your inventory, which makes it easier to tell customers what you have available, how much stock they can order, and when you will receive your next shipment to increase stock.
While logistics is all about the customer, the supply chain is all about your business and how you compete against similar companies. Supply chain management focuses on your ability to obtain products at the lowest cost possible while selling the products at the highest possible price.
Although that might be the largest difference between logistics and supply chain management, there are others. Logistics is all about what happens within your business. You don’t have any logistical connection with a service provider not connected with you. So anything that you directly work with is part of your logistics. If you’re a manufacturer, logistics will cover everything within your business, plus how you send and receive products.
The supply chain is different. Supply chain management differs in that it refers to every point of the supply chain. Different points that you don’t directly associate with can still affect your business. If there is a problem with collecting the raw material, it will cause problems with the supplier and then manufacturing. It creates a domino effect all the way down to the consumer.
As an example, most recently, there has been a significant shortage of small computer chips. The raw material could not be collected, so the supplier could not obtain the material and send it to the manufacturer of the computer chips. Then, the computer chips could not be sent out to automakers, which meant vehicle production had to stop. This left the customer/dealerships without vehicles to sell, and, in the end, it left car buyers without either the ability to buy a vehicle or forced them to spend more for one of the few on the lot. In short, logistics is everything directly associated with your business, while supply chain management is every point on the supply chain and how it may potentially affect your business.
Originally Posted On: https://www.rjslogistics.com/the-difference-between-logistics-and-supply-chain/