Supply Chains and Logistics are no strange terms to today’s business. However, there are different views on these two concepts. Let’s learn and find out in this article the concepts of Supply Chains and Logistics.
Different perspectives on Supply Chains and Logistics
Traditionally, a supply chain is only a small part of logistics and is often considered logistics outside of the business context.
Another view asserts that supply chains and logistics are just interchangeable names. This is a common view among businesses where the title and responsibilities of “Logistics Manager” and “Supply Chain Manager” are interchangeable.
The third view says the supply chain is a broad strategy that cuts across all business processes.
However, the most common one maintains that logistics is a part of the supply chain. Accordingly, a supply chain includes all logistics activities and procedures between departments (in a company) and between companies, that aim at efficiently managing the flow of goods.
Four views on the relationship between Supply Chains and Logistics
A basic supply chain model usually comprises many steps, of which logistics is an important, indispensable part.
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What is logistics?
Is Logistics different from supply chains? Logistics is a fairly common and widely used term around the world. In Vietnam, due to its broad connotation, which covers many different activities in international trade, it doesn’t have a Vietnamese equivalence and keeps its English form as a business term.
The World Maritime University has defined logistics as a calculated, organized process aiming to minimize costs in determining transportation and storage locations for supplies, from the point of origin, through various activities, to the point of final consumption.
The Council of Supply Chain Management Professionals (CSCMP) defines “Logistics Management” as a part of supply chain management including the planning, implementing, and controlling of the efficient transportation and storage of goods, services, and related information, from the point of origin to the point of consumption to meet customer requirements.
In summary, logistics is the planning, storing, and controlling of the flow of goods between different points in the supply chain to the consumer. Logistics activities are responsible for a part of supply chain operations, including
- Organizing storage, arranging short- or long-term warehouses;
- Planning the transportation of goods from one place to another;
- Carrying out goods transport by various modes; administering the shipping process through fleet management, shipment tracking, etc.
What is a supply chain?
A supply chain is a system of activities, organizations, information, people, vehicles, and other resources that are directly or indirectly related to the transport of goods from manufacturers and suppliers to consumers.
Its purpose is to maximize the total value created through the efficient use of available resources to meet customer requirements. This includes the ability to distribute, stock, store goods, and minimize supply costs at all times.
How are supply chains and logistics different? According to the Council of Supply Chain Management Professionals, Supply Chain Management is defined as follows: “Supply chain management covers the planning and management of all activities related to sourcing and purchasing, including all logistics activities. More importantly, it also includes coordination and cooperation with partners in a comprehensive supply chain, who can be suppliers, third-party service providers, and customers. In essence, supply chain management integrates supply and demand management within and between different companies.”
The roles of supply chain management in a business are huge, especially in production and business activities. It determines the developmental prospect of enterprises.
Some popular supply chains nowadays include the pull and push strategy in supply chain, cold chain, green supply chain, global supply chain, etc.
Differentiate logistics and supply chains
After all, what is the difference between logistics and supply chains? In general, supply chains and logistics management both focus on the flow of goods from the point of origin to the endpoint.
In particular, the supply chain is a series of interconnected activities in the process of creating a product and bringing that product to consumers.
Meanwhile, logistics is an important part of the supply chain as it manages and tracks the personnel and resources needed to store, transport and ensure goods move to the right place, at the right time, and within the budget.
On that basis, we can distinguish supply chains and logistics as follows:
|Activities||Transportation, warehousing, delivery, customer services, etc.||All Logistics activities of Logistics and others such as supply management, manufacturing, cooperation with partners and customers, etc.|
|Range||Within the enterprise.||Both inside and outside the enterprise.|
|Scope of influence||Short and medium term.||Long term.|
Supply chains and logistics management are both crucial for businesses. While supply chain management is responsible for efficiency, performance, and revenue, logistics plays a central role in ensuring a continuous flow of goods throughout the supply chain.
Along with the relentless development of world trade and the trend of international economic integration, logistics, and supply chain management are considered the “backbone” to promote sustainable trade between enterprises and between economies, ensuring a stable flow of goods and meeting customer needs.
Hope the above information will help your business distinguish supply chains and logistics. If you want to understand more about solutions to help businesses automate processes, and increase the efficiency of Supply Chain and Logistics, please contact Viindoo via the hotline at +84 225 730 9838!