Nowadays, we are facing an ever evolving world. In this world, the needs of all individuals are supposed to be addressed in the best possible way. Thanks to this, terms such as transportation, logistics, air freight, supply chain management, materials, suppliers, and inventory are becoming more familiar for everyone in almost any industry.
This mix and mingle of terms has made it difficult for individuals actually to define what they mean. This is particularly visible when companies try to set a difference between logistics and supply chain management (SCM). Most companies seem to think that both concepts respond to the same needs and share a similar meaning.
We have seen that in reality, logistics and SCM are similar but considerably different. SCM is not only a more evolved way to present logistics, but it also englobes the general meaning of logistics, enriching it with different considerations about the suppliers and the final consumer.
In a way, SCM is in charge of integrating all the processes related to the gathering of materials, services, money, and information within one company. It is also responsible for the creation of networks that allow the manufacturing processes to be more effective and cost-efficient. SCM takes care of the entire process of producing goods and delivering those goods to their final consumers according to their needs.
How different are logistics and SCM?
To answer this question briefly, we could say that logistics and SCM are very different. The main reason why this happens is that logistics tends to focus on some of the SCM applications. It takes care of the immediate customer, deals with the suppliers and is in charge of communicating with all the intermediaries involved.
Logistics take care of functional activities from an economic perspective. In this way, they are concerned about performance, the proper execution of functions and the consolidation of useful partnerships. They also have a long-term vision that includes teams working flawlessly across different activities and functions.
Due to its nature, SCM focuses on the way companies related to each other, executing cross-functional activities and processes. It goes beyond the mere execution of functions from an economic perspective. It aims to target the end user and create the required conditions to meet its demands.
SCM cares about both products and services. In order to do this, it integrates teams among different industries that are open and trustful. These teams are always concerned about the value of their activities.
Market demands and sales
SCM differs from logistics in a way it comprises processes in different functions and in and out logistics companies. It is responsible for focusing on the final consumer needs and aims to forecast what this consumer will need in the future to come.
Experts in SCM are professionals who work closely with trading partners in order to stay ahead in the game. They must understand how the demand/supply interaction works and in the meantime they try hard to add value to their products along the supply chain.
If the SCM is not able to forecast what is happening with the market demands, those who are in charge of logistics will have little or nothing to do. Forecasting what is coming next is the way SCM makes sure that companies remain competitive in the long-term. Also, forecasting gives producers the chance to make plans in the short-term, which can finally lead to draw a company’s numbers every month.
When we think about logistics related to the market demands and sales, we will see how they only take care of the way operations are planned, and resources are addressed. In this sense, logistics are more prone to make plans in the short-term, more specifically, in the next three to six months.
Logistics forecast the number of workers they will need to do something. Also, they are able to predict if something is going to be produced or delivered in a specific period of time. Most of the logistics predictions are based on the way they plan their schedules and the information they collect from all the parties involved in their processes.
Finding common ground
During the past years, some companies have tried to find common ground between SCM and logistics. This is why they believe in something called “Supply chain logistics.” This hybrid embraces all the nodes related to the supply chain as well as the functional and economic vision of logistics experts.
For instance, nowadays many organizations work with highly organized inventories thanks to the help of logistics. This inventories not only take into account the finished products but also care about those that are being produced at the moment. In order to be able to do this, companies use SCM tools.
This is a good way to find balance and give visibility to products along the supply chain. Also, inventories remain controlled and customers are satisfied.
Related: What You Need To Know About Warehouse Management Systems by David Kiger
* Featured Image courtesy of freestocks.org at Pexels.com