Supply chain and logistics: what are the differences?

The terms supply chain and logistics are part of the everyday life of many companies. Often confused, these 2 notions, although complementary, nevertheless have distinct objectives. So what are the differences between supply chain and logistics? Find out what these concepts correspond to in this RAJA article to better understand their differences.

What is logistics?

Logistics represents a small link in the supply chain. Thus, logistics is part of the supply chain.

Definition

The objective of logistics is the management of the physical flow of products from the supplier to the end customer. It is a question, for the company, of implementing various operations enabling it to meet its specifications.

The operations implemented to ensure flow management concern both receiving products and storing them, but also handling and transporting the goods. To do this, companies rely on advanced tools that provide a real-time view of goods movements. The idea is to offer the end customer quality services, including optimal management of delivery times.

The different types of logistics flows

Logistics flows can be distinguished into 2 main families:

• The internal logistics flows: also known as “production flows”, these flows are made up of activities related to the circulation of raw materials and components of the manufacturing network, but also processing, handling, or storage operations.
• The external logistics flows: these include supply flows, or “upstream flows”, and distribution flows, or “downstream flows”. The former concern the circulation of materials and consumables from the supplier to the company. The latter concern the circulation of finished products from the company to the end customer.

What is the supply chain?

The term supply chain can be translated as “supply chain”, or “logistics chain”.

Definition

The supply chain incorporates a large number of tasks related to procurement. It therefore includes logistics, mentioned earlier, but also purchasing and relations with suppliers, inventory management, transport, or even customer service. Thus, the supply chain pilots the logistic chain from the first supplier to the final customer. Its objective is to optimise results and improve competitive advantage. Its scope is therefore much broader than logistics.

In order to coordinate the operations of the supply chain, and the various actors involved in that chain, the supply chain has IT tools. These are essential to optimise the stages of the supply chain, and lead to greater efficiency.

Supply chain stages

The supply chain is therefore organised around a large number of departments within and outside the company. Thus, this supply chain encompasses several points, such as:

• Production;
• Sourcing;
• Transport;
• Storage;
• Distribution of products;
• Stock management;
• Customer service, including returns management;

Supply chain management therefore represents a major strategic issue within the company, as it enables the quality of services to be improved, and therefore the customer experience.

The differences between supply chain and logistics

While logistics and supply chain are related, there are however several differences between these 2 concepts. Indeed, they are distinguished by:

• Their concept: logistics is the process of integrating the flow of goods within the company, but also outside. It concerns the movement, flow and storage of goods. The supply chain coordinates different departments. It is concerned with the stages of production, up to the delivery of products.
• Their purpose: logistics and supply chain processes do not have the same objectives. Indeed, the goal of logistics is to provide an optimal customer experience. To achieve this, the company implements various means to deliver the customer in the best conditions, in terms of deadlines, but also in terms of quality of services. The main objective of the supply chain is to gain market share, in other words, to gain a competitive advantage. To achieve this, it takes into account customer satisfaction, like logistics, but also cost control.
• The number of companies involved: logistics is managed by a single company, whereas the supply chain can be managed by several. Indeed, the supply chain brings together many different businesses, from manufacturers to commercial service providers and distributors. Thus, each of the companies supplying it represents a link in the chain.

The link between supply chain and logistics

While there are differences between the concepts of supply chain and logistics, the two activities are still linked. Indeed, in order to function optimally, a company must necessarily ensure good management of both activities. As logistics is integrated into supply chain activities, the effects of its management are reflected in the latter, and vice versa.

Thus, in order to implement efficient logistics and optimise their supply chain, companies need to be flexible, particularly in order to adapt to changes in the trade sector. It is essential to provide the best possible customer experience. This includes the company’s ability to be responsive, for example in its logistics stages, but also to personalise its services.

While logistics is a business-related service, the supply chain is about the synchronisation of processes with the main objective of customer satisfaction. The optimisation of the 2 concepts, namely the supply chain and the logistics dimension of the company, with the aim of improving efficiency, is called “supply chain management”. This strategy is essential to improve the company’s performance in terms of both flow and cost management.