Supply Chain vs. Logistics

Supply chain management versus logistics—are they the same thing? Well, no. Broadly speaking, supply chain management is a discipline that helps focus an organization on driving value and creating competitive advantage. Logistics is a part of the supply chain process that focuses on the flow and storage of goods.

PARTICIPANTS USE THE TERMS DIFFERENTLY

Interestingly, the terms “supply chain management” and “logistics” are used differently by the participants within a supply chain—supplier, manufacturer, retailer and logistics partner—to describe the discipline or process within their sphere of focus.

As an example, let’s take a look at a refrigerator manufacturer. It is an interesting sample of what the two terms would mean in that type of business.

Supplier

The Refrigerator Supplier is the producer of materials or components needed to manufacture the refrigerator (i.e., the finished goods). Suppliers would produce ice makers, cabinets, cooling systems, water filters and more.

• Supply chain management – Planning and production of materials to meet the demand forecast of a manufacturer and the aftermarket servicing of a finished good (in this case the refrigerator).
• Logistics – Inbound flow of natural resources and outbound flow of parts, components and packaging to the refrigerator manufacturer.

Manufacturer

The Refrigerator Manufacturer is the company that assembles the materials or components into the finished refrigerator (i.e., the finished goods). This company would be referred to as the appliance manufacturer.

• Supply chain management – Planning and production of finished goods (the refrigerator) to meet the demand forecasts of distribution.
• Logistics – Just-in-time delivery of parts, components and packaging to align with the production capacity as well as the distribution of finished goods (the refrigerator) to the retailer.

Retailer

The Refrigerator Retailer is the business that purchases large quantities of refrigerators and resells them individually from a brick and mortar store, website or mobile device to final consumers. These types of businesses would include home improvement or electronics stores, and internet retailers.

• Supply chain management – Planning and procurement of finished goods (refrigerators) to meet the anticipated sales forecast of the business.
• Logistics – Inbound flow of finished goods (refrigerators) to a regional distribution center then on to an individual retail location or delivered direct to the consumer.

Third Party Logistics Provider

The Third Party Logistics Provider is the firm that facilitates the movement and storage of the refrigerator (i.e., materials and finished goods). Types of businesses like this would be warehousing, transportation, and home delivery services providers. 

• Supply chain management – Analysis, planning, design and execution of supply and logistics activities.
• Logistics – Inbound and outbound transportation management, fleet management, warehousing, materials handling, order fulfillment, inventory management and sometimes management of other logistics providers.

Beyond being a business necessity, the supply chain is increasingly defining how successful an organization is in delivering customer satisfaction. Each participant or link in the chain is increasingly focused on satisfying the end customer. The process, therefore, is becoming more integrated.

SUPPLY CHAIN MANAGEMENT VS. LOGISTICS IN YOUR 3PL

Third party supply chain management or logistics partners can vary greatly in their capabilities. One way is not necessarily right or wrong, but when you are choosing a partner, be sure that you are aware what kind of service you may need and can be offered. It is very important for you to determine if the company you’re considering can fully meet your needs at present and in your future growth.

For example, at FIDELITONE, we are experts in supply chain management AND logistics. We partner with organizations to meet a variety of supply chain needs. Our focus is around a set of core specialty areas:

• Inbound logistics – We know the stakes are high, and we keep your manufacturing operation running with the right materials in the right place at the right time.
• Order fulfillment – Speedy, accurate order fulfillment can make or break your customer relationships. We take your brand promise to heart. We deliver on customer expectations.Transportation – We factor your business model into carrier selection and orchestrate your shipments with care. We get the right cargo to your customers in perfect condition.
• Last mile delivery – We cultivate the crucial connection between you and your customers with cost-effective and on-time delivery to the home or business.
• Service parts management – We tackle your service parts needs with a relentless sense of urgency and a focus on keeping your customers satisfied. Our robust solutions for inventory management, procurement and fulfillment improve your service parts performance and your bottom line.

SHARE YOUR THOUGHTS

Now that we have shared on thoughts on supply chain management vs. logistics, hopefully it brings more clarity to the two terms and how they relate.

Do you agree? How would you describe the difference between the two? Share with us!