Within an organization, the difference between logistics and supply chain is of vital importance in actions and processes. Its main objective is to control the flow of production and information, so its correct use is a competitive advantage over other competitors today.
Despite sharing many similarities, there is a difference between logistics and supply chain that makes them different and unique activities at the same time, but they depend on each other in an organization
To understand the importance of both, you must first define each term separately, explain how they are related and see what role each one plays within a business strategy, as we will see later.
Let’s get started!
What is logistics?
Logistics is a set of procedures that facilitate the coordination of a product from its point of manufacture to the final customer.all this through the management of the transport necessary to make shipments of merchandise already sold by prioritizing the and .
In summary, logistics is responsible for satisfactorily delivering a product to the ideal place and time. It also meets multiple requirements, among which the condition of the merchandise stands out, both in quality and quantity and delivery time.
What is the supply chain?
On the other hand, controls all the functions of the logistics process and manages the entire workflow in the administration of products, from basic activities such as the manufacture, storage or distribution of merchandise, to detailed functions such as the selection of suppliers, marketing, and even the relationship with customers.
In this area, the use of resources and tasks necessary to collect the raw material, transform it into a final product and deliver it to a point of sale destination, without errors or delays, is synchronized.
What is the difference between logistics and supply chain?
Both concepts bear a certain responsibility in the life of a product. But logistics seeks to reduce distribution costsdeliver the merchandise in the shortest possible time as well as improve the relationship with the client and in general terms, it is one more element within the .
Secondly, global decisions are made through the supply chainsuch as the search for materials for the manufacture of the product, its storage, customer service with suppliers and control of process times.
With this clear, we can establishe the difference between logistics and supply chain lies in the fact that the former is tasked with moving the merchandise from point A to point B. While the latter term covers a broader spectrum of operations involved in the creation from scratch of the product or provision offered up to the after-sales service.
What is the relationship between logistics and the supply chain?
Although logistics is identified as one more link in the supply chain, there are key aspects in common that relate them to each other.
The relationship between logistics and the supply chain is based on storage and inventory management, the transportation system of product, delivery times and after-sales service to meet customer needs.
Therefore, an effective connection between the two will achieve the satisfaction of customers and suppliers alike in both departments.
This pair of activities dedicated to the logistics operation incorporates all the areas that make up the company and for the workflow to be as ideal as possible, they must work together.
In summary, if logistics meets your objectives directly, it will optimize the supply chain and the success of the company will be achieved.
How is a supply chain and its logistics structured?
In order for each function to be performed efficiently, it is important to have a structure of a supply chain and its logistics that allow fluidity to be maintained during the process, which is constant and coordinated.
To have this structure, it is key to involve all the actors and areas that participate, which are:
- providers
- Production
- Storage
- Communication
- Customers
providers
The search for suppliers is crucial due to the increase in competition day by day. Having reliable suppliers will have a direct impact on the contribution of higher income at lower cost, without reducing the quality of the products. If you know, for example, your structure is different from that of a company that has physical stock.
Production
This area is in charge of transforming the raw material into a finished product, complying with production times and the highest quality.
Storage
After the manufacture of merchandise, depending on the time, inventory control and warehouse management must be adapted to minimize the risk of losses and preserve the quality of the product in optimal conditions.
Communication
In order for all the processes from start to finish to flow correctly, it is essential to have impeccable communication and relationships between all the company’s departments, in order to coordinate work throughout the supply chain.
Customers
The quality and quantity of production is based on them with the aim of covering your needs correctly and in the shortest possible time so that your satisfaction is greater. This results in higher profitability of the business.
What are the parts of the supply chain?
- Obtaining raw materials
- Manufacturing
- Inventory management
- demand forecast
- Distribution
- Delivery and after-sales service
Let’s explain each of these. parts of the supply chain next:
Obtaining raw materials
For product development, it is of vital importance to successfully search for materials and subsequently execute the process of transferring the raw material to the manufacturing area.
Manufacturing
During this process it is extremely important to have all the information on production, because it varies according to the demand for the product and thus will contribute to a successful management of resources.
Inventory management
In order to better control the product to avoid certain obstacles such as shortages and excess sales. This process facilitates inventory visibility to know what you have and where it is located within the warehouse.
With this, the fulfillment of customer orders and the reduction of delivery times by having an orderly warehouse are guaranteed.
demand forecast
This element is one of the most important within the supply chain, since both the precision and the productivity of the entire process depend on it.
This element becomes more important as the company becomes larger due to the wide range of products it generates.
The collection and analysis of data in real time within this stage helps to increase the profitability of the company, by generating some of these benefits:
- Better plan all resources.
- Order the flow of sales and the production process.
- Automation of orders for raw materials to suppliers.
- Improve and minimize costs.
Distribution
To optimize distribution times, the logistics operation area is responsible for organizing the transport system chosen for the delivery of merchandise.
Within these activities is coordinating the monitoring and properly carrying out the shipment of the finished product from the company to its final destination with the clients to meet the required supply.
Delivery and after-sales service
Product delivery and after-sales service are not only essential to satisfy customer needs. It also helps to generate and provide information that allows obtaining reports to have feedback, which serves to continuously improve the supply chain.
conclusion
Now that you know the difference between logistics and supply chain, you can implement improvements in your organization to optimize these processes.
The importance of these elements is vital not only for large companies, but also for businesses that sell online. Because entrepreneurs directly need their logistics services and their supply chain to work in sync so that their customers have a satisfactory shopping experience.
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