Differences Between Logistics and Supply Chain Management
- What is logistics management?
- What is supply chain management?
- The difference between logistics and supply chain management
- Logistics and supply chain management challenges
- Logistics and supply chain management in the future
What is logistics management?
The term ‘logistics’ encompasses the process of storing, transporting and handling goods. Even in ancient times, logistics was a science in itself. For example, the Romans maintained their own transport systems and troops specifically for supplying their legions abroad. Today, logistics are active and visible in all areas of life. From public transportation to supermarkets directly supplied with goods, logistics decisively influence our environment and daily life.
What is supply chain management?
Supply Chain Management (SCM) describes a highly process-oriented management of goods and services, often from the extraction of raw materials to the consumption of the final goods. The aim is not warehouse optimisation, but rather the optimisation of logistics processes relating to a product or portfolio of products.
The difference between logistics and supply chain management
The terms ‘logistics’ and ‘supply chain management’ are often used to describe the same business practices. Some would argue that this is technically accurate: both deal with the supply, transfer and handling of goods and people, and contribute to operational efficiency.
However, more commonly, supply chain management is seen as an over-arching concept that links manufacturing, purchasing and distribution into the same process. SCM is a framework that connects manufacturers, suppliers, retailers and customers allowing them to collaborate and ensure efficiency, quality and value deliver a competitive advantage. Logistics is one part of this operational framework.
Logistics and supply chain management challenges
When businesses experience strong growth they often struggle to manage the consequential increase in operational costs and supply chain complexities. When focusing on logistics, growth often leads to pressures on warehouse storage space, pick, pack and dispatch efficiency and transportation provision. When looking at the bigger picture, SCM can face challenges such as more complex supplier networks, sustainable and ethical procurement and quality and compliance demands.
Both logistics and SCM teams are increasingly implementing warehouse management systems (WMS) or Enterprise Resource Planning (ERP) systems to automate processes with the ultimate goal being to reduce costs and increase efficiency.
Logistics and supply chain management in the future
As the global marketplace keeps evolving, supply and demand factors along the supply chain keep changing. For example, consumer demand changes continually as trends come and go and technology advances. Whilst supply variables shift faster than ever as economic and political factors remain volatile.
Smart companies have to be flexible and adapt to such changes to help them avoid major supply chain problems in the future. One way to do this is to invest in inventory optimisation software. ERP plug-ins, such as EazyStock take supply and demand dynamics into account when forecasting demand and managing supply, to allow businesses to replenish inventory, set stock levels and achieve high service level targets – keeping the whole supply chain in check.
For more information about optimising your supply chain using EazyStock contact us today.