Logistics and supply chain management are closely related, so much so that it might be tempting to use these terms interchangeably.
But there are distinctions between the two fields. Let’s take a look at what separates supply chain management from logistics, while also exploring how they work together.
Logistics is concerned with the storage and transportation of products, and covers things like warehousing, storage, fleet management, inbound and outbound freight, reverse shipping and communication during transit.
It can also include – depending on the company – customer service, price negotiation for different parts of transportation, manufacturing and packaging.
Managing a supply chain typically means looking at the bigger picture, an umbrella covering all the components of procuring and sourcing goods. Supply management means establishing and maintaining the business relationships that allow a company to bring its goods to the market. Logistics is just one part of that process, involving the movement of freight from one place to another.
Other pieces of supply chain management include cost allocation, third-party negotiation, managing supply and demand and distribution.
How do logistics and supply chain management overlap?
We’re saying all this with the caveat that the definitions for logistics and supply chain management can vary from company to company. In fact, when Inbound Logistics asked its readers about the difference between supply chain management and logistics in 2003, it got a host of different answers:
“In my opinion, there is very little difference between the two,” one respondent said. “Logistics was always a military term.”
“Supply chain management incorporates the field of logistics,” another replied. “Logistics is a number of sub-processes within SCM.”
“If there is a distinction, it may be in the degree to which planning and collaboration has spread,” still another reader said. “Logistics was a specific business organization required to form strategic alliances and leverage logistics volumes (among other things). Today, in best practice, many areas collaborate with each other, including the logistics group.”
In the Inbound Logistics piece, author Dr. Edward J. Marien writes that logistics differs from SCM in that it “comprises cross-function and inter-enterprise logistics processes.”
Here are five tips for effective logistics management from The Daily MBA. (We like to think that a supply chain manager could learn from them as well.)
1. Plan Ahead
An effective logistics manager is a good planner. With a solid plan, there are fewer chances for delays along the supply chain.
2. Don’t Panic
An effective logistics manager can think on their feet and come up with short-term solutions when a problem arises. When your team sees you staying calm during a crisis, they’ll remain calm as well.
3. Don’t Get Too Confident
An effective logistics manager remembers Murphy’s Law: Anything that can go wrong will. That’s why it’s important to have contingency plans in place. It’s also a good idea to have a whole network of suppliers and vendors rather than relying on just one. That brings us to our next point…
4. Cultivate Strong Relationships Along The Supply Chain
An effective logistics manager make an effort to build good relationships with vendors and suppliers. Goodwill can keep their operations moving. A soured relationship might bring things to a halt.
5. Learn From Your Mistakes
An effective logistics manager recognizes that mistakes happen to even the best of us. They don’t make excuses. They do learn from them, and realize that success can come from failure.
Managing an international supply chain is just part of what we do at Mars International. By making sure our global network reaches our customers’ doors, our clients get their products on the market in a way that’s quick, reliable and cost-effective.
We give our clients a competitive edge by keeping management overhead to a minimum, and building relationships in a way that lowers risk.