What is the difference between logistics and supply chain ?
In the sector of trade and transport of goods, whether national or international, logistics and supply chain are two terms that are regularly used. This is mainly due to the rise of e-commerce. However, they are not synonyms. Both have specificities and serve specific but distinct purposes.
The Supply Chain determines all the steps between a customer's order and its delivery. It is therefore not only linked to transport, but also to supply from suppliers, production and distribution.
We can thus say that the Supply Chain is the general organization that governs both the choice of a supplier and that of raw materials, up to storage and monitoring of payment. In this, the Supply Chain involves the intervention of many professions and actors:
- The subcontractors
We must therefore see the Supply Chain as the mesh of production and distribution, which aims to obtain a competitive advantage at each stage to lower costs.
To simplify, the Supply Chain is the management of all the stages from the supplier of raw materials to the delivery and payment of the end customer.
To know: it happens that we also confuse the supply chain / the Supply Chain, with the value chain. These are also two very distinct concepts. The value chain expresses the fact that the further a product advances in the Supply Chain, the more value it takes.
Due to the complexity of its organization, the Supply Chain was one of the first sectors to digitize to improve its productivity and its pace. The optimization of its processes can only be clearly determined by the intervention of Supply Chain management (SCM) tools. These make it possible to manage the actors between them, the needs in raw materials, stocks, transport and thus to control the costs.
Logistics consists of managing inventory management and flows up to transport to the end customer.
Its goal is precisely to satisfy its customers as much as possible by optimizing its processes, to deliver better and faster. It therefore concerns fewer players than the entire Supply Chain.
In other words, logistics is not about the previous stages of raw materials, suppliers and production. On the other hand, other segments fall within its field of competence in addition to storage and delivery, starting with returns.
This is what truly distinguishes logistics from the supply chain: logistics is a part of the supply chain. For this reason, by mistake or shortcut, one is sometimes used instead of the other. Basically, of course, this is the same area, but logistics is only a small part, no matter how complex.
However, the Supply Chain and logistics are based on a common evolution through automation and continuous improvement tools, such as:
- The TMS (Transport Management System) which is a transport management tool. It can be dedicated to shippers or transporters. MyTower is for example a TMS and GTM (Global Trade Management) which digitizes all transport processes and covers both upstream and downstream of the Supply Chain.
- The WMS for Warehouse Management System, is directly linked to logistics since it allows efficient management of operations (knowledge of stock, traceability, entry and exit, etc.) in storage warehouses.
- OMS for Order Management System is a newer tool that orchestrates order orders providing businesses with an omnichannel system whether online or in-store since. Clearly, it assigns orders in real time to find the requested product no matter where it is. This aims to improve the Supply Chain and increase the offer in store thanks to a global vision of the stock.
The supply chain and logistics are therefore different segments of commerce. But fully linked to each other, they rely on scalable tools that allow them to improve their performance.