A 3PL company offers both logistics and supply chain management services, but aren’t they the same thing? Actually, they’re not. In today’s blog post, we’ll define both, tell you why logistics plays an important role in supply chain management, and how you can use logistics to increase value to your customers.
Defining Logistics and Supply Chain Management
To understand how logistics plays into supply chain management, we first need to determine the difference between the two terms. While third-party logistics companies offer both of these services, they are distinctly different. Just take a look at their definitions below:
Supply chain management is the process by which an organization creates a competitive advantage by focusing on driving value.
Logistics is one part of the supply chain management process, which focuses on the movement and storage of products or goods.
Supply chain management is a value-driving process whereas logistics is a functional process.
Logistics vs. Supply Chain Management
Depending on who you ask, logistics and supply chain management could mean very different things. The meanings of both vary depending on the perspective and job duties of the worker being asked.
To better understand what they mean, we talked to people working in four parts of a supply chain: parts supplier, product manufacturer, product retailer, and logistics partner.
The Parts Supplier defines supply chain management as the process of designing, planning, and producing the materials needed to meet the forecasted demand of a specific manufacturer, as well as the aftermarket servicing of the finished product. This person describes logistics as the receipt of materials and sending off of finished parts and components, as well as the packaging and shipment of the parts to the manufacturer.
The Manufacturer defines supply chain management as the planning and production of the fully finished product to meet the forecasted demand of distribution. This person describes logistics as delivery of parts, components, and packaging from the parts manufacturer, and the finished product to the retailer.
The Retailer defines supply chain management as the planning and gathering of finished products to meet the forecasted demand of the business. This person describes logistics as the receipt of finished goods and the distribution of those goods to each retail location or customer.
The Third-Party Logistics Provider (3PL) defines supply chain management as the planning, design, execution, and analysis of the supply and logistics activities. Logistics is defined here as management of inbound and outbound transportation, management of shipping fleet, order fulfillment and warehousing, materials handling and inventory management, as well as managing other logistics providers such as shipping carriers and installation specialists.
How Logistics Plays into Supply Chain Management
As you can see, logistics plays a huge part in supply chain management. And while each person in the supply chain has a different perspective, there are some major similarities across the board. By partnering with a 3PL, retailers, manufacturers, and suppliers can gain transparency in the process, save on costs, and increase efficiency of the entire supply chain process.
Contact the team at Amware now to find out how a 3PL could simplify your supply chain, or request a free 30-Day trial of Amware’s cutting edge LTL management software, Amrate, below.