What Logistics means to Supply Chain Management

What Logistics means to Supply Chain Management

Many of us use these two terms, logistics and supply chain management, interchangeably. However, it should be noted that these two are actually different but used in common practices.  The definitions of logistics against supply chain management replies on the scope. Logistics includes activities that occurs within the scope of a single organizations or company, whereas Supply Chains refer to a network of companies that work cohesively and includes coordination for product delivery.

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Traditional logistics includes procurement, distributions, maintenance and inventory management, whereas supply chain management takes on traditional logistic activities as well as takes on other organizational activities. These include financing, marketing, product development and even customer services.

If you were to look into what logistics means even further, it constitutes the Seven Rs of Logistics that is, “getting the right product, to the right customer, in the right quantity, in the right condition, at the right place, and at the right time.” It involves integrating various departments in an organization for cohesive functioning, and they include a link-up of customer service, purchasing, production planning, warehouse and transport departments together for efficiency and efficacy. Logistics management involves how effectively and efficiently the day-to-day activities are carried out.

It can also be broken down into inbound and outbound, where the former refers to raw materials and goods coming into the coming from suppliers and the latter involves the finished goods sent out to customers.  The customer service and transport activities are often referred to as “customer facing functions.” The transport and logistics can be broken down into two activities. The transportation factors include air, sea, & land transportation, warehousing and customs clearance, and logistics includes the likes of value added service functions from IT to consultations.

Supply chain on the other hand relates to the network  of organization that facilitate linking different processes and activities, both upwards and downwards, to achieve the final goal. That is to offer a valuable product or service and hand it to the customers. Supply chain management on the other hand refers to coordination of various activities such as production, inventory, and transportation within the supply chain in order to achieve the best outcomes in terms of efficiency and efficacy. This integrates the supplier, manufacturer, wholesaler and customer all together, where management will cover everything from planning, implementation and control.