Logistics and supply chain are two concepts that often lead to confusion. As purchasing consultants, our job is not only to manage sourcing processes, but also to help and assist our customers, which is why in this post we will focus on the differences between logistics and supply chain.
Before getting into the details of this matter, it is important to highlight that actually logistics are a part of the supply chain, which is much wider concept, made up of a variety of tasks, involving a number of departments in a company. But, given the increased popularity of both concepts over the last few years, it can often be seen that they are interpreted at entirely independent ideas.
The concept of supply chain can easily be understood when looking at it in a literal sense: a series of tasks (chain) related to delivering something (supply). So, in other words, supply chain refers to the entire process through which a product (or service) passes, all the way from being planned (before production) until it reaches the final consumer, it is all part of that chain.
The width of the supply chain
Without doubt, the fact that so many steps are part of the supply chain converts this process in a fundamental element in most companies, especially in those who either import or export products. And as a consequence, the professionals in this field, known as supply chain managers, tend to have a very complete profile, combining the abilities of both a purchasing manager as an expert in logistics.
Precisely the fact that the supply chain is such a wide process means that not only several departments, but even different companies can be implicated in it. A clear example can be seen in importing activities: a chosen supplier is part of the supply chain of a company – since it is the one manufacturing its product – but it is not necessarily part of its logistics processes.
In general terms, we can say that the supply chain handles four major tasks:
- Operations: planning and forecasting demand.
- Purchasing: regardless of this being for raw materials or the import of fully manufactured products, the supply chain manages everything related to the sourcing activities of the company.
- Resource management: optimizing production and distribution at the lowest cost.
- Logistics: part of the supply chain, it makes sure the products arrive at the final consumer.
So, what exactly does logistics?
As a critical part of the supply chain, logistics makes references to a whole set of operations linked to the warehousing and transport of goods, whether this is from the point of origin (supplier or manufacturer) to the warehouse or from the warehouse to its final destination (customer).
It is worthwhile noting that, beyond the mere transport activities, logistics also covers other main aspects like product handling or order preparation, both of which are key actions in any sales process in a company.
The specific nature of these tasks shows that the main objectives of the supply chain and logistics are also different. Whereas the supply chain is aimed at achieving the best competitive advantage for the company, logistics is focused on customer satisfaction.
Logistics + supply chain: a combination leading to success
Regardless of the fact that both processes are quite different, logistics and the supply chain are very complementary and key processes for any company. Additionally, both concepts focus on agility and aim to increase the customer’s satisfaction, either with more competitive prices or with the adequate delivery of the goods at the agreed time.
As it happens with other departments as well, it is critical that the supply chain and logistics work hand in hand, an objective that has become nowadays easier to achieve thanks to a variety of technological tools.
It should be highlighted that many companies obtain the optimization of these processes by means of external partners, like the option of an international supply chain manager, an expert in international purchasing, offering in many occasions its services as a partnership.
At S3 Group, with nearly 20 years of experience in sourcing, we are used to work completely integrated with any type of companies managing part of their supply chain and helping them reach the targets of their respective customers, thanks to an adequate implementation of their supply chain.