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While logistics and supply chain management share some similarities, both are different concepts and vital for organizations to competitive advantage
The terms logistics and supply chain solutions are at times used interchangeably. While logistics and supply chain management share some similarities, both are different concepts.
Logistics is just one component of the supply chain network, which encompasses everything – from the delivery of source materials from the supplier to its eventual delivery to the end-user. Logistics is vital to meet customer requirements whereas supply chain solutions are crucial for organizations to acquire a competitive advantage.
Logistics refers to the storage and flow of goods, movement, services and information within the overall supply chain. It is defined as ‘part of the supply chain process that plans, implements and controls the efficient, effective forward and reverses flow and storage of goods, services and related information between the point of origin and the point of consumption in order to meet customers’ requirements’.
The objective behind logistics is to make sure the customer receives the desired product at the right time and place with the right quality and price. The seven ‘Rs’ of logistics – defined as ‘getting the right product, in the right quantity, in the right condition, at the right place, at the right time, to the right customer, at the right price’ – encapsulates the importance it offers to the customer.
Logistics offers a host of advantages such as minimization of enterprise expenses, consolidation of traffic volumes, improving the quality of service, reduction of actual losses and possible risks, minimizing the need for intermediary services such as transportation, storage, etc., and helps organizations prepare a timely response to changing market demands
Logistics can be divided into two subcategories: inbound and outbound logistics. Inbound logistics pertains to activities concerned with the procurement of materials, handling, storing and transportation. Outbound logistics concerns the collection, maintenance and distribution of goods or products to the customer.
Modern supply chain solutions are complex, dynamic networks and often multi-national. For a business, a supply chain cannot ensure high value if it is offered without effectively organized transport. For this reason, logistics has become a critical factor for any supply chain.
Supply chain management
Unlike logistics, supply chain management is an overarching concept aimed at linking major business processes within and across companies into a high-performance business model. With sustainability concerns attaining critical importance, supply chain solutions have become vital for businesses as it minimizes cost, reduces waste and saves time in the production cycle.
Modern supply chain solutions are at the core of operational excellence as it affects product and service quality, delivery, costs, customer experience and ultimately, profitability. Supply chain management offers multiple benefits that translate to higher profits, greater competitive advantage and better brand image.
Some of the benefits include better ability to predict and meet customer demand, risk management and predictive capabilities, better supply chain visibility, improvements in quality, fewer process inefficiencies and less product waste, increased sustainability, lower overheads, improvements in cash flow and more efficient logistics.
While earlier supply chains focused on the availability, movement and cost of physical assets, modern supply chains are all about the management of data, services and products bundled into solutions. More so, with e-commerce becoming the default shopping choice.
For e-commerce, business efficiency at all operational levels is critical for success. An efficient supply chain accelerates e-commerce processes to meet customers’ expectations of faster and efficient delivery of products. The situation led to the growth of 3PL or third-party logistics.
Third-party logistics companies provide a host of services such as warehousing, picking and packing, transportation, inventory forecasting, order fulfillment, packaging and freight forwarding. The economic crisis triggered by the COVID-19 pandemic and subsequent lockdowns has revealed the critical value of global supply chains and logistics services providers. Having an effective and efficient logistics and supply chain management strategy is key to success in today’s changing business environment.
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