Logistics is not Supply Chain

Posted by Barloworld Logisitics on 21 Sep 2017 9:00:00 AM

Logistics is not Supply Chain

Napoleon famously said, “Amateur’s discuss tactics, the professionals discuss logistics”, he should have added….”but those with the advantage discuss Supply Chain”. Napoleon is often referred to as being the grandfather of Logistics thanks to his first use of a regiment solely dedicated to the supply, and transport of equipment. Until this point armies at war had relied on looting and requisition to support troops on the march, which left them susceptible to weakness should the opposing commanders employ “scorched-earth” policies. After Napoleon’s Train regiment, the concept of moving equipment with an army firmly took hold, and the art of Logistics – as a process of getting the right product, to the right place, at the right time was born. More than 180 years later Logistics evolved into a more holistic view of business, becoming Supply Chain management. This modern view encompasses all activities involved in the sourcing of raw materials, manufacturing and distribution of the final product to consumers. In recent time, the field has grown further to include end-of-life functions such as reverse Logistics, waste management and the circular economy, as well as data-driven functions such as payment solutions and data transfer and analytics. Arguably, Supply Chain is, therefore, the lifeblood of any organisation.

In simple terms, Logistics is the tactical function within the greater supply chain, including activities such as inbound/outbound transportation, order fulfilment and warehousing (read about our warehousing solutions here). Supply Chain is the broader term for the connection between source and consumer, including functions such as supply/demand planning, procurement, manufacturing and indeed logistics. At its heart, Supply Chain is the interconnected activities of multiple companies aimed at transforming raw materials into consumable products. The coordination of such activities falls under the banner of Supply Chain management, and the effective coordination results in competitive advantage.

The key differences between Logistics and Supply Chain are:

  1.  Logistics refers to the physical movement and storage of goods within a single organisation to create customer satisfaction. Supply Chain is the integration of activities from multiple businesses to create competitive advantage within an industry. For example, Supply Chain focuses on farm-to-fork, Logistics delivers to the supermarket.
  2.  Supply Chain is the greater strategy, Logistics’ is a tactical function thereof. Supply Chain is the coach, Logistics the team captain – they both provide direction, but the coach provides the game plan, and the captain executes the moves.
  3.  Supply Chain considers every aspect and process needed to produce and deliver a product, including suppliers, intermediaries and customers. Logistics focuses on the planning and execution of the movement of goods.

Despite being remarkably different concerning scope and objective, Logistics and Supply Chain remain interconnected. Arguably Logistics cannot exist without Supply Chain, and any Supply Chain would fail without Logistics. Perhaps the conclusion to be drawn is that to extract the most value from your logistical activities, you not only need leading tactics, but a greater view of the end-to-end supply chain in order gain maximum competitive advantage.

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