The terms logistics and supply chain management are often used interchangeably. Many also consider these concepts the same. But logistics and supply chain management are two different concepts, though they have many similarities. With around 90% of merchandise getting shipped by sea globally, it is essential to have an in-depth knowledge of the two and understand their distinction. This will help make your business's logistics and supply chain operations successful.
Supply chain management (SCM)
SCM indicates the management of all operations in the supply chain, from resource procurement to product delivery. Businesses can build effective and affordable SCM systems by actively streamlining their processes to optimize consumer value and get an advantage over competitors.
Elements in a successful and sustainable supply chain management
The different elements in supply chain management include the following:
1) Flexibility: A firm's supply chain must align with its operating model and corporate strategy.
2) Data: Data-driven insights can help businesses make wise choices for efficient supply chain management.
3) Integration: Supply chain processes must be integrated across the company, vendors, suppliers, 3PL service providers, clients, etc.
4) Innovation: The supply chain must be redesignable to include the new products developed by the firm.
5) Performance measurement: The processes in supply chain management should be assessed for profitability, cost-effectiveness, and efficiency.
6) Focus on the end customer: Supply chain management should focus on the end customer's satisfaction.
Logistics refers to the processes under a company's supply chain, including all operations facilitating product movement from the manufacturing hub to the user end. Logistics management is an essential component of supply chain management. It concentrates on planning, organizing, storing, and transporting products and resources. Logistics management aims to achieve client satisfaction.
Types of Logistics in supply chain management
Logistics is an essential component of supply chain management. The different logistics activities involved in supply chain management include:
Inbound logistics involves the transportation of materials into an organization. This process encompasses all the steps to order, acquire, transport, store, and manage incoming goods. The different activities in inbound logistics include identifying the supplier, order processing, transportation, procurement, material handling, warehousing, and inventory management.
It starts after a product or material is delivered to a company. It entails storing the goods in the company and sending it to clients. The different activities in outbound logistics include warehousing, packing, inventory management, shipping, delivery, order fulfillment, and order-related customer service.
Significance of supply chain management and Logistics in the modern world
The successful operation of the business nowadays is greatly influenced by supply chain management techniques. An efficient logistics system and appropriate technology can reduce storage and transportation costs. Studies show 14% of firms allocate their logistics and warehousing yearly budget to technology. Businesses are now adopting processes that mitigate environmental damage. The future of supply chain management is green logistics, which centers on lowering carbon emissions and resolving the conflict between economic growth and sustainable development.
Efficient logistics & supply chain management is necessary for making a company successful. A business can tap into numerous opportunities by implementing novel supply chain management solutions. Mojro, an automated logistics optimization solution, can help businesses optimize their logistics and supply chain processes to improve efficiency and profitability.
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