Understanding how supply chain management and logistics relate to each other can help make both processes more efficient, as well as protect your company from losses due to supply problems or situations in which the wrong products are shipped to the wrong locations. Take a look at the information below for an overview of the differences between these two terms.
A Quick Refresher on Supply Chain Management
A company’s success is largely dependent on its ability to control costs, improve productivity, inventory management, and other essential factors. The goal of supply chain management is to oversee every aspect of a company’s relationship with its vendors and retailers.
This includes things like scheduling deliveries, monitoring inventory levels, making sure products are being transported safely from point A to point B, and responding quickly when suppliers run out of a certain product or introduce a new one.
Essentially, supply chain management is all about maintaining an effective flow of goods and services to meet customer demand.
In some cases, businesses may have their internal systems for managing these processes; however, most companies rely on third-party logistics providers (3PLs) like Prestige Logistics Group to help them manage their supply chains more effectively.
Supply Chain Management vs. Logistics – What’s the Difference?
Supply Chain Management (SCM) refers to an integrated approach for planning, executing, controlling, and improving a company’s supply chain processes. It is an enterprise-wide process that brings together suppliers, manufacturers, customers, and other business partners to create value for all concerned.
The movement of people, services, or goods from one location to another. The science of planning and implementing a series of actions to achieve an objective. Logistics is also a domain that deals with design, manufacturing, marketing, or distribution-related activities. For example, it can be used as a part of business process outsourcing (BPO).
In such cases, it is referred to as a logistics service provider. Businesses might outsource certain logistical operations because they are not core competencies; examples include transportation, storage, packaging and labelling, information technology support and maintenance.
As long as a business has control over its inventory flow through these processes, they are generally able to consider itself a logistics service provider.
So, Which Is More Important in Business?
Supply Chain Management (SCM) is a broad term that includes all of an organization’s efforts in keeping inventory and raw materials flowing through production, distribution, sales, and waste management. It also involves planning for future demand by forecasting customer needs.
Logistics is one piece of Supply Chain Management. The portion focused on moving goods from point A to point B as efficiently as possible. Supply Chain Management and logistics are often used interchangeably; however, there are differences between them
Final Thoughts on Understanding Supply Chain Management vs. Logistics
If your company hires a business process outsourcer for logistical services like Prestige Logistics Group, then you can expect them to handle transportation but still keep a close eye on everything from order processing through manufacturing.
In contrast, if your supplier specializes in just one aspect of shipping, be aware that they won’t have much insight into overall efficiency.