www.syspro.com Copyright © 2015 SYSPRO All rights reserved. What is the Difference between Supply Chain and Logistics?
What is the Difference between Supply Chain and Logistics?
Jul 26, 2015
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www.syspro.com
Copyright © 2015 SYSPRO All rights reserved.
What is the Difference between Supply Chain and
Logistics?
'Logistics' typically refers to activities that happen
inside or between organizations in order to move
items from one point to another.
'Supply chain'(which we extensively covered in What is Supply Chain?) includes
logistics, but refers to a network of businesses that work together in a coordinated
manner to deliver a product to market. Confusion between the definitions of these
concepts is common and most probably stems from a past where businesses
attempted to own and control as much of their supply chains as possible.
Many businesses do still own their own
supply chains, but most businesses
today choose to outsource as many of
the functions of supply chain as possible
in order to attain higher efficiencies and
lower costs.
Today's fast moving markets require a more
flexible response with lower costs and higher
efficiencies. Vertical integration has given way to
"virtual integration." Businesses now focus on
their core competencies and partner with other
businesses to create supply chains capable of
serving these requirements.
While logistics is a focus on
transportation activities, such as
procurement, distribution,
maintenance and inventory
management, supply chain
management acknowledges all
of the logistic activities and
extends to include activities
such as marketing, sales, new
product development, finance
and customer service.
Sales
Marketing
Product
Development
Finance
Customer
Service
SCM
The concept of supply chain is therefore
more encompassing of all activities that
play a role in fulfilling final customer
requests. It views the businesses and
activities conducted between them as a
single entity as opposed to multiple
separate entities.
This perspective enables a system approach to be used in
understanding and managing all the activities needed to
regulate the flow of products and services. The ultimate
goal of the system is to optimize all resources without
conflicting the needs of various business requirements or
sacrificing the service level provided to the end customer.
Effective management of the supply
chain requires simultaneous
improvements in both customer
service levels and internal operating
efficiencies of all businesses within
the supply chain.
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