You may have heard that first-mile, middle-mile, and last-mile logistics are part of supply chain management. Then, does that mean logistics management and supply chain management are two different things? If yes, what is the difference? Come on, let’s discuss it thoroughly in this article!
About Logistics Management
To begin with, we will explore these two terms, starting from logistics management. We will show you what it is, how it works, what its functions and objectives are, and its general benefits.
Logistics management is the process of planning, organizing, and controlling the flow of goods, information, and services from place of origin to destination to meet customer needs. This process includes various activities, such as transportation, warehousing, material handling, and distribution.
How Logistics Management Works
The keyword for the logistics management process is ‘right’. Logistics management works by ensuring that the right goods and services are available in the right place, at the right time, and at the right price. Meanwhile, the process stages include the following:
- Planning: Starts with understanding customer needs and developing in detail the things that need to be provided, created, and done based on those needs. Timing is also an important point here, to provide their needs only at the right time. Only then can you start developing an effective logistics plan.
- Organizing: In this stage, you need to establish processes and procedures to manage logistics activities. Establish control systems to ensure that logistics plans are implemented, monitored effectively, ensure resource management, logistics activities are equitable and relevant.
- Control: Finally, after the plan is implemented with thorough organization, you need to continue to monitor it. Make sure there are no gaps for your business to run into problems due to imperfect logistics issues. If necessary, carry out periodic evaluations to ensure that the logistics plan remains effective.
The Function and Aim of Logistics Management
Logistics management has the main function of ensuring that the implementation stages of the logistics system run perfectly. For this reason, its functions are divided into three scopes: planning, organizing, and control as explained in the previous point.
Meanwhile, the aim is more to meet customer needs, which includes ensuring availability, maintaining quality, and controlling product prices.
The Benefit of Logistics Management
We need to emphasize at the start that only effective and properly implemented logistics management will bring good benefits to you, including:
- Increase customer satisfaction by ensuring accurate product delivery.
- Reduce transportation, warehousing, and material handling costs with system efficiency.
- Increase business competitiveness with healthy competition in the market.
About Supply Chain Management
Moving on to the next terms, let’s examine one by one the series of definitions, how it works, functions, objectives, and benefits. Let’s jump into it!
Supply Chain Management
Supply chain management is the process of planning, organizing, and controlling the flow of materials, information, and services from the starting point of raw materials to the final point of consumption to meet customer needs. The difference with logistics, this process focuses more on procurement, manufacturing, customer service, and logistics itself.
From this explanation alone, it can be said that supply chain management is a larger series of processes, which includes logistics management. So returning to the introductory paragraph of this article, it is correct to say that logistics models such as first-mile, middle-mile, and last-mile are parts of supply chain management.
The Way Supply Chain Management Works
The way supply chain management works is more or less the same as logistics. Consists of three main stages starting from planning, organizing, and controlling.
The practical steps that must be taken are the same, such as analyzing customer needs, observing market trends, developing plans, managing resource allocation, and observing and taking corrective action if necessary.
Once again, the difference between these two processes is based on the scale of work, where supply chain management needs to plan, organize and control a larger system.
The Function and Aim of Supply Chain Management
Covering a wider system scale, the functions and objectives of supply chain management become more complex. This process targets the development of plans that are carried out effectively and under control, both at the warehousing, manufacturing, goods movement levels, and dealing directly with customers.
The ultimate goal is clearly the satisfaction of all parties, starting from the production center, warehouse management, retailers, to the final consumer. That product availability must always be maintained with the best quality and price at every stage of the process.
The Benefit of Supply Chain Management
Effective supply chain management can provide a variety of benefits to your business, including:
- Guarantee the quality of goods: Careful regulation of the arrangement of goods in the warehouse and the entry and exit system is the key to this.
- Distribution effectiveness: Incoming goods, outgoing goods, almost finished goods, and newly produced goods, are all recorded in a neat system, making management activities very effective and efficient.
- Increased customer satisfaction: Customers are more satisfied when they receive the goods and services they need, at the right time, and at the right price, without having to think about the difficulties they are experiencing.
- Cost efficiency: Integrated supply chain management can help cut many unnecessary costs, including double trip costs, replacement of damaged goods, and so on.
- Increased business performance: The end result of all the good points we mentioned above is achieving optimal company performance.
Similarities and Differences between Logistics and Supply Chain Management
You can certainly understand for yourself what the similarities and differences are between logistics and supply chain management from the explanation above. However, to make it easier for you to understand, we will provide a summary in the simplest form below.
- Both focus on the flow of goods, information, and services.
- Both aim to meet customer needs.
- Both are important for business success.
- Scope: In logistics management, the scope is limited to the flow of goods moving from the starting point to the final destination. Meanwhile, in supply chain management, raw materials, services, and additional information also move with the goods.
- Focus: Logistics management focuses on efficiency and effectiveness. Meanwhile, supply chain management focuses on overall supply chain performance, including customer satisfaction, costs, and competitiveness.
- Role: Logistics management is clearly managed by the logistics department, different from supply chain management which has its own special department or a combination of several departments concerned.
That’s all for this article, we hope it helps when you are confused about looking for logistics or supply chain services. Please review your needs and get the solution here! Feel free to visit our blog for more useful articles!