Many functional areas intersect with each other due to the terms purchasing, material handling, logistics,transportation, inventory control and supply chain management.This intersection has blurred definitions of logistics and supply chain management.
Supply chain management- It is the efforts of a number of organizations working together as a supply chain that helps manage the flow of raw materials and ensure the finished goods provide value. Supply chain managers has to ensure that finishes product not only reaches the end consumer but also meet the other requirements as well.Supply96 chain management involves collaboration between firms to connect suppliers,customers as to produce value for the end customer. It sets up the operational framework under which logistics function is performed.Supply94 chain management is found 1982 by Keith oliver. Supply chain management is a way to link major business processes within and across companies into a high-performance business model that drives competitive advantage.
Logistics has a miltary origin in the form of movement of troops and supplies in battlefield.Then logistics further entered into business gradually.Logistics refers to the movement, storage, and flow of goods, services and information inside and outside the organization.It96 is concerned with both material and information flow .Also concerned with resource and inventory utilization and customer feedback.Logistics covers areas : transportation, inventory control, network design.
- Network design - Manufacturing plants, warehouses, stores etc.
- Inventory planning - If demand is forecasted accurately, then there will be no need for extra inventory.But, at real, forecasted numbers can take you so far and inventory has to be maintained to satiate any surges in demand.Overstocks lead to increase in insurance costs, blocked resources ,working capital requirements.
- Transportation - It accounts for 1/3 of the total logistics cost.Truck shipments take more time for delivery compared to air transport.Cost to offload and reload> cost of letting goods stay in vehicles.Factors determining economy of transportation: distance between starting and end point ,density, volume of goods.For example, flipkart has ekart for logistics operations.
Main focus:
Supply chain - Competitive advantage
Logistics - Meeting customer requirements
Key difference:
Logistics is an activity within the supply chain.
Logistics is a term which emerged from its military roots while supply chain is a new term.