Logistics is a specialized part of the broader supply chain process, focusing on transportation and storage of goods. Supply chain management covers procurement, sourcing, manufacturing, warehousing, inventory control, distribution, cost allocation, and supply and demand management. The two areas may overlap, and responsibilities may shift depending on the company’s size and specialization. It’s important to define responsibilities clearly.
The terms “supply chain” and “logistics” are often used interchangeably in the transportation industry. However, they are distinct areas, each with specific processes, duties and responsibilities. Confusion in distinguishing between supply chain and logistics may stem from the fact that logistics is considered by many people to be a sub-category of supply chain management. The main difference between supply chain and logistics is that logistics is simply a specialized part of the whole supply chain process.
In general, logistics focuses on the actual transportation and storage of goods. It deals with things like inbound and outbound transportation, reverse shipping, in-transit communications, warehousing, and warehousing. Logistics also deals with the delivery of goods and cargo, coordination between third party carriers, fleet management and other activities directly related to the actual transport of goods from one point to another. Depending on the needs of a particular company, logistics management may also include manufacturing and packaging, price negotiation for different aspects of transportation, third-party integration and procurement, technology, communications and customer service.
For the most part, the supply chain encompasses the bigger picture. Supply chain management is the umbrella that covers all aspects of procurement and sourcing of goods. Basically, the supply chain management modules and manage the business-to-business links that enable the final sale of goods to consumers. Logistics, which is essentially moving goods from one place to another, is a function that falls under the broad umbrella of supply chain management, but it is only part of the whole process.
Supply chain management is a broad and integrated process that involves many aspects beyond logistics. These aspects include sourcing and procuring goods to sell, negotiating prices, manufacturing, warehousing, packing, and inventory control. Supply chain management also includes distribution, cost allocation and control, negotiation and third party collaboration, as well as supply and demand management. The large territory covered by supply chain management is why some of these processes have fragmented into another sub-category of supply chain management known as demand planning, which, like logistics, can be viewed as a separate but related area of expertise.
The precise details and definitions for both the supply chain process and logistics will vary from company to company and overlap at certain levels. Out of necessity, many of the duties and responsibilities inherent in logistics management will shift to supply chain management and vice versa. Depending on the size and specialization of a given company, the two areas could be grouped together as one and the same individual could manage both supply chain and logistics. Anyone looking to get involved in supply chain or logistics management within a business should ensure that the parameters of their responsibilities are clearly defined.
Protect your devices with Threat Protection by NordVPN
