Big organizations manage their businesses carefully to make a profit. From the manufacturing of goods, transporting them, delivering them safely at the right time can be a tricky task to be managed. This is why logistics and supply chains play a major role in management.
Logistics vs Supply Chain
The difference between logistics and supply chain is that logistics is a critical part of the supply chain which manages storing and transporting of goods between different supply chains of on organization. On the other hand, the supply chain includes the entire process from the manufacturing of products to delivering them in the end.
Logistics is defined as the management including the processes of acquiring, transporting, and storing resources from manufacturers to the customers. Logistics was the only management used decades back but now it has been replaced by the supply chain. Logistics is now a part of the supply chain.
Supply Chain is defined as the network between a company and its suppliers to manufacture and deliver a specific product or service in time. It manages all the processes starting from raw materials to delivering the product. Logistics is also a part of these processes.
Comparison Table Between Logistics and Supply Chain
|Parameters of Comparison||Logistics||Supply Chain|
|Definition||A process of storing and transporting goods and products.||The entire process from manufacturing to after-sale services.|
|Work||Planning and implementation of a business or operation, etc.||Procurement, manufacturing, supply and demand planning, etc.|
|Objective||Customer Satisfaction.||Competitive Advantage.|
|Evolution||It is an outdated concept to solely handle multiple organizations.||It is a modern concept that has replaced logistics.|
|Interdependency||Works independently.||Supply Chain partially depends on Logistics.|
What is Logistics?
Logistics is one of the primary objectives of the supply chain. It is defined as the management including the processes of acquiring, transporting, and storing resources from manufacturers to the customers. Logistics management is all about the efficient transportation of goods. Organizations provide use of variety of land, air, and ocean vehicles to move goods quickly and safely.
Logistics as management was first introduced in the military. Rome initially introduced a logistic system to supply resources to the army. The officers who were responsible for ensuring the supply and allocation of resources were called ‘Logistikas’. With the industrial revolution after World War 2, logistics advanced vastly with the introduction of technology.
The major objective of logistics is customer satisfaction. Since logistics is responsible for transporting, customers expect the products or services to be delivered on time. It plays a huge role in the overall reputation and future scope of its organization. There are namely five elements of logistics including storage, packaging, inventory, transport, and control.
Before modernization, logistics was the only management practiced by organizations. Ever since the emergence of new companies, the manufacturing rate, complexity, infrastructure, investment, etc., have increased and as a result, managing all the work is also a vast operation. Hence, the supply chain is now practiced everywhere and logistics is only a part of the whole.
What is Supply Chain?
Supply Chain is defined as the entire process of manufacturing and selling commercial products, including every step from the supply of resources and the manufacture of the products through to their delivery to the customer. Supply Chain is necessary for every company looking to compete in the market.
The major objective of the supply chain is gaining a competitive advantage in the business. For example, if a product of some company is well made, it is delivered to the customer in time, and the company offers excellent services regarding the product to its customer then the customer is likely to invest in the company’s products again. If a customer somehow feels dissatisfied, then he is likely to shift his investment to another company in the future. Since the competition is aggressive, the supply chain is a necessity.
There are mainly four stages to a successful supply chain including Logistics, Operations, Marketing, and Sales, After Sales Services. Every stage of a supply chain is essentially an industry by itself. If there is a disturbance in any activity of any stage, the whole supply chain delays and the company suffers considerable losses. Hence, the supply chain is dependent on various factors including Logistics.
Main Differences Between Logistics and Supply Chain
- Logistics is only a small portion of the supply chain whereas the supply chain includes all the activities in the organization.
- Logistics’ objective is to provide customer satisfaction while the supply chain focuses on gaining competitive advantages over other organizations.
- Logistics usually involve only one organization whereas the supply chain includes business with multiple organizations.
- The fundamental concept of logistics has already evolved whereas supply chain is a modern concept and is considered as the new version of logistics.
- Logistics is a narrower concept associated with only maintenance and storage whereas supply chain is a broader concept which refers to the connection of manufacturers with the consumer.
Business as a field of profession that has proven to be marginally competitive in the last few decades. Since the world is growing, technology also is. As a result, more and more products are manufactured every day and delivered to customers. Everything is available online and people do tend to take full advantage of this facility. This makes the management of all activities very complex in the company.
Logistics and supply chain are two interdependent processes to ease this burden. While the supply chain is an obvious step taken by every company to manage all the activities revolving around their products, logistics is a major part of it. Without the safe transportation of products in time, the whole supply chain fails.
People often get confused between the terms as before the complexity in businesses, logistics was the only management idea that was there. Less investment, fewer orders, and fewer deliveries meant easy management of everything. In today’s world, a company can simply not depend on logistics for management. That is why the supply chain idea is practiced, and logistics performs as an integral part of it. Supply Chain is considered as the result of the evolution of logistics over the decades.