Logistics  - dealing with the life line of Supply Chain
 

 

 

The term logistics is derived from the Greek 'Logos' meaning intellect , arithmetic etc. However, a more meaningful is the German word 'Loger' implying to supply , to support. In the business parlance the word logistics is used to describe business management issues ,encompassing a bigger domain than the term transportation.

Supply Chain , put in simple words, is all about maintaining an uninterrupted flow of materials through the entire chain of operations. In this context, Logistics is the

process through which the materials flow. It thus ensures meeting the demands of the customers , both internal and external. Professionally, a well oiled logistics system of a company satisfies the requirement of right material , of right quality, at the right time, in right quantity for the customer.

Logistics and Supply Chain functions can overlap. Different companies define them in their own ways. Logistics is generally concerned with strategy and coordination of flows between marketing and production (i.e. transportation and distribution). However, it cuts across many functions such as Supply Chain.
 

 

 

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Supply Chain tends to focus on purchasing and procurement, but not necessarily so. It can include materials, inventory, and production planning.

There is also Demand Management which focuses on forecasting, but is sometimes included in either logistics or supply chain functions. There is no formal definition that fits all situations.

Logistics encompasses the overall strategic glue that crosses multiple functions including demand chain and supply chain, physical flows, information flows and the systems that support them.

 

The following comes from the Council of Logistics Management Definitions (Cut and pasted from their website):
The Definition of Logistics :
Logistics management is that part of the Supply Chain Management process that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services, and related information between the point of origin and the point of consumption in order to meet customers' requirements.

 

 

 

These are the boundaries and relationships of Logistics Management adopted by the Council of Logistics Management :

"Logistics Management activities typically include inbound and outbound transportation management, fleet management, warehousing, materials handling, order fulfillment, logistics network design, inventory management of third party logistics services providers.

To varying degrees, the logistics function also includes sourcing and procurement, production planning and scheduling, packaging and assembly, and customer service.
It is involved in all levels of planning and execution -- strategic, operational and tactical. Logistics Management is an integrating function, which coordinates and optimizes all logistics activities, as well as integrates logistics activities with other functions including marketing, sales manufacturing, finance and information technology."

The Definition of Supply Chain Management

Supply Chain Management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all Logistics Management activities.

Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers. In essence, Supply Chain Management integrates supply and demand management within and across companies.
 
 

These are the boundaries and relationships of Supply Chain Management adopted by the Council of Logistics Management :

"Supply Chain Management is an integrating function with primary responsibility for linking major business functions and business processes within and across companies into a cohesive and high-performing business model.

It includes all of the Logistics Management activities noted above, as well as manufacturing operations, and it drives coordination of processes and activities with and across marketing, sales, product design, finance and information technology."

As others pointed out, Logistics is typically considered a sub-set of SCM. In SCM, there are five key functions: Procure, Make, Move, Store, and Service.

Most view Logistics as the movement of products from point A to point B and all the activities involved to make this happen (from carrier selection to planning to execution).

Logistics is involved at various stages of a supply chain; from supplier to plants, from plants to distribution centers, from distributions centers to stores, from stores to customers, or any of these combinations.

 

Click here for further reading books and websites on Logistics

 

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