By Kara Andrews
Is Supply Chain Management the ‘New Logistics’?
Logistics and Supply Chain Management have been widely linked together as one and the same business process. However, they are two distinct areas, despite being interchangeable and interconnected.
Logistics has been around for a while, having evolved from a military background for the co-ordination, storage and shipping of goods and army personnel. It is just one component of the supply chain management system, working within it to achieve an end goal of meeting customers requirements in the most efficient and effective way. This includes storage, transport and delivery of goods and services at the right time, right price and in the right condition from supplier to consumer. This system flow is also known as inbound and outbound logistics. It involves the process of managing the planning and transportation of goods and services.
Supply Chain Management is a fairly modern concept, covering all aspects and details that emcompasses the supply chain, such as, managing and monitoring the flow of sourcing and procurement of raw materials, forecasting, scheduling and storage, to the eventual overseeing of the delivery of products and services. Supply Chain Management’s main objective is to achieve this whilst keeping costs down but still maintaining quality and value for money.
Logistics involves only one single organisation to ultimately manage the flow of goods from A to B and without it, the planning, distribution and scheduling would fail to meet supplier and customer requirements. There are, however, many organisations involved in Supply Chain Management, as it endeavours to manage the flow of acquiring raw materials, to the production of the product and the final delivery of the goods to the customer, ensuring all requirements have been met whilst maximising profit.
Therefore, although the term Logistics and Supply Chain Management are often used to describe the same business processes, they are actually two separately defined sectors. Supply Chain Management refers to all elements that are involved in the supply chain and the management and monitoring of the individual segments, whilst logistics refers to all aspects dealing with the transportation of goods and services. However, whilst they have their predefined areas they are also intertwined, with Logistics coming underneath the Supply Chain Management umbrella, working with each other to reach the end goal of customer satisfaction and business competitive advantage.