What is the difference between supply chain & logistics? Aren’t they more or less the same thing?
Simply put, no! I think that the key differences can be summarised:
- Logistics is concerned purely with the movement of goods and materials from one point to another.
- Supply chain encompasses far more of the processes which a business needs to operate. Transfer of goods and materials from supplier or factory to end user.
- Logistics is concerned with getting the right quantity and right thing from a place to another place.
- Depending on your business you may be more heavily leaning towards the logistics function rather than the supply chain function.
It is important to understand what your business requires in the supply of goods or materials. If you’re buying ready made goods from a third-party factory ready pack and delivering straight to your customer, that’s mainly a logistics function.
Supply Chain element would be the successful sourcing, procurement and finally selling to the end customer.
Supply chain covers the end to end requirements to procure, transport, handle, store and distribute products. It does include the logistics requirement as part of it, however a manager would view all elements together and how they interact with each other.
Information flow between all parts of the supply chain must be lean and relevant. This is where all elements within the supply chain must effectively communicate with each other. George Bernard Shaw said “the problem with communication is the illusion that it has taken place”.
If you’re mainly operating a logistics function, without many of the elements in supply chain, what you invest in will be different. Do you need a full ERP (Enterprise Resource Planning) system? These can be very expensive, so it may be that you can rely on a logistics partner to provide other software solutions.