Supply Chain vs. Logistics: The Difference You Need To Know
People tend to think of the supply chain and logistics as two identical terms. But if you meet a professional with experience in both industries, you’ll find that they clearly differentiate the terms and rarely use them interchangeably. If you are looking to get into the supply chain and logistics sector or are a seasoned professional who never really had the time to learn the difference, this blog is for you.
Supply Chain vs. Logistics: How Are They Different?
Before we get into the differences between the supply chain and logistics, let’s first understand what each concept means.
What Is Supply Chain Management?
A supply chain is a collective term that involves several processes that create finished goods from raw materials. The final stage in the supply chain is the delivery of the product to the consumer.
Supply chain management affects every process involved in the movement of the product, from sourcing raw materials to delivery to the end user. SCM often requires specialized software like ERP software to be used for better process management.
It is an all-encompassing process that entails managing a network of suppliers, manufacturers, wholesalers, distributors, retailers, and sub-suppliers (such as raw material suppliers).
Supply chain is a very volatile and dynamic industry that is constantly evolving. Businesses need to be on top of the latest supply chain trends in order to succeed in this industry.
What Are Logistics?
Logistics entails organizing and carrying out the storage and transportation of products between various supply chain nodes. Facilities, personnel, equipment, and other resources are coordinated by logistics to make sure that things move when they should and that there is room for them at the next stop.
The procedures that make up logistics include demand forecasting, shipping, inventory management, material handling, and order fulfilment. Logistics is a complex process that requires attention to detail and collaboration between many entities. Companies use various types of custom software like inventory management to manage logistics effectively.
Three Essential Differences Between Supply Chain And Logistics
As you have probably guessed, logistics and supply chain management intersect at some points. However, the scope and focus of these two processes differ. Here’s how.
1. Logistics is a part of Supply Chain Management
Production and inventory planning, managing supplies and facilities, scheduling labour, manufacturing, and shipping goods and services are the operations covered by SCM. Supply chain managers often opt for custom software solutions like inventory management or project management to help them manage these tasks more efficiently.
2. Different focus
Logistics focuses on fulfilling customer demands while SCM is primarily about improving processes to gain competitive advantages.
3. Different responsibilities
Delivery of goods to customers efficiently and at an affordable cost is the main focus of logistics. SCM, for its part, is responsible for managing the turning of raw materials into the finished product and all processes in between, including storage and delivery to retailers or consumers.
It is not difficult to guess that logistics is essentially one of the components of a broader process called "supply chain management". Many companies have come to understand the advantages of utilizing custom software to lessen the complexity and difficulties of supply networks. Custom software can integrate different facets of the supply chain, including sourcing, production planning, inventory management, and order management, to assist businesses in meeting rising customer expectations while maintaining stable prices.
If you are in the supply chain or logistics business and looking to streamline the processes within your organization, reach out to us at Vestra Inet. A custom software development company in Toronto, Canada, we have a team of seasoned developers and business consultants who can help you create a tailored solution for your business.