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Logistics -
dealing with the life line of Supply Chain
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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
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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. |
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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. |
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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. |
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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.
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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. |
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Download now
"Outsourced Logistics vs. In-house :
Comparisons and Strategies" |
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