What is the Difference Between Supply Chain and Logistics?

man working in a supply chain and logistics company

Supply chain and logistics are terms often used interchangeably by many. However, these two terms are different but fall under the same department. A supply chain is essential to global commerce and the logistics involved is fundamental to the success of a company. As such, supply chain management and logistics are conflated terms.

In simple terms, supply chain and logistics are a series of steps that occur for a product to reach the consumer. In between, there are plenty of things that happen to ensure every step is followed to the latter. In this article, we focus on the two terms and how essential they are for any business.

Defining supply chain and logistics

It is essential to learn the definition of both supply chain and logistics to pick out the difference. A supply chain is a series of trades and activities that moves raw products from suppliers to consumers. Logistics, on the other hand, is the process of obtaining, transporting, storing, packaging, and delivery of products to reach the end consumer.

Therefore logistics is part and parcel of the supply chain process. It deals with planning, implementing, and regulating the effective forward and reverse movement and storage of products and services from the initial point to consumption. Logistics is essential to the supply chain as it maintains order and ensures good performance.

A supply chain entails different types of logistics, and as such, it partners with plenty of logistics companies to streamline the processes involved. It is worth noting that every logistics operation tackles a unique and self-contained part in the supply chain process.

What is involved in the supply chain?

Typically, supply chains consist of manufacturers, suppliers, distributors, and retailers. They connect significant chains of the companies within a system. The supply chain is responsible for connecting and collaborating with traders, manufacturers, logistics, retailers, wholesalers, and end-users.

  • Upon receiving an order, the company’s supply chain and logistics processes begin. The process will only end successfully once the end-user gets their products according to their specifications or requirements. The weight of the supply chain varies depending on the size of the company and the number of manufactured products. However, all the processes share the following in particular.
  • The customer places an order on the product offered for sale by a company. Doing this starts the chain of events.
  • The department for planning then creates a production plan to have the goods ready as per the customer’s requirements. This may require the company to acquire raw materials.
  • The department responsible for purchasing will acquire the items on the list of requirements for the production team.
  • The materials are sourced from suppliers, tested for quality, and transferred to the warehouse.
  • Following the production plan, the raw materials are taken to the production area- where they are used to manufacture the end products and then sent to the warehouse for shipping.
  • Upon arriving in the warehouse, the finished product is taken to the shipping department to determine the best way to ship the products to reach the customer in good time.

What happens in logistics?

As mentioned, logistics is the process that regulates the flow of things from the beginning to the consumption point. Most resources are usually physical items like materials, food, animals, liquids, and equipment. Other abstract items include information and time.

The logistics include customer service, sourcing, planning production, packaging, and product assembly. It plans and executes all the processes from the time or order until the product reaches the end-user.

Well-organized logistics ensures that goods are shipped safely, efficiently, and on time. Ultimately, it helps save costs for companies and keeps customers satisfied.

Supply chain and logistics are essential processes for any business. They help streamline every other process and determine the success of the company. If the customer is happy, the company thrives on satisfaction.