The supply chain plays a significant role in the growth of businesses and companies across the world. The logistics process comprises sending, moving, storing, and receiving products and goods. Often, many people confuse logistics with SCM, and some of them even use the term interchangeably. Today, we’ll discuss logistics distribution and supply chain management; their definitions separately, and key differences among them.
LD is the core of many online stores and e-commerce businesses and companies. It would be highly difficult to deliver goods and satisfy customer demands and wishes without it. In order to perform various distribution processes right, it is significant that you should have sufficient inventory to satisfy customer demands while keeping the cost low and optimizing the storage space.
What is Logistics Distribution?
Logistics distribution means that there are various things reliant on the industry. It outlines the whole method of delivering finished products and goods from the supplier and manufacturer to the distribution center and retailer where the process of order fulfillment process happens.
Here, the team prepares and makes orders ready for the final delivery in the logistics distribution method. E-commerce brands and online stores collaborate with carrier and shipping partners and deliver products and goods timely at the most affordable price.
Many experts suggest that logistics distribution is a key element of SCM and it focuses on planning, implementing, and controlling the movement of goods, services, and information efficiently and effectively from the point of origin to the point of consumption in order to satisfy the needs and demands of customers.
The goal of logistics distribution is to deliver the right products to the right customer at the right time and place of the right quality. You can divide the logistics distribution process into two main categories, and they’re as follows;
Inbound logistics comprises various activities and processes that focus on receiving raw supplies and materials, and then managing, storing, shipping, and distributing them to the end customers.
The outbound logistic process consists of various activities and processes focused on gathering, maintaining, and distributing it to the end consumers.
However, some of the other activities of logistics distribution are as follows;
- Packing and packaging
- Order fulfilling
- Managing stock
- Equilibrium maintenance
What is Supply Chain?
Supply chain management is the method of developing finished products and goods from raw supplies and delivering them to the end consumers. The focus of SCM is to amplify various supply chain processes that would benefit both business partners and customers.
Businesses and companies could refine and optimize SCM processes when it is visible across the SC channel and network. Transparency helps businesses and companies to track goods as they flow in various stages of the SC network; it allows you to analyze that everything is working as planned. However, it helps you to make timely decisions and quickly respond to roadblocks and disruptions.
SCM focuses on managing the wide network of raw material suppliers, logistics partners, manufacturers, wholesale distributors, end consumers, and retailers. The relationship among various stakeholders is different.
- Vertical: develops relationships among retailers, manufacturers, suppliers, material, and parts
- Horizontal: acquires and merges with other same businesses that function at the same stage of the SC network
For instance, the function of a cleaning company is to find the chemicals and containers that they need from the suppliers; develop the final product, and deliver it to convenience stores, supermarkets, and drugstores.
Logistics Distribution and Supply Chain
Some of the main differences between logistics distribution and supply chain management are as follows;
LD is one of many activities of SC processes. Whereas, SCM consists of various activities and processes like planning, finding material, facilities and labor management, developing, and shipping goods and services.
The focus of LD is to deliver goods and products to the customer in the most cost-efficient way. However, the target of SCM is to achieve higher operational performance that would give them a unique competitive edge.
The origin of the term LD is military. However, the modern strategy of SCM began earlier in the 20th century; Ford Motor Company further developed the concept. Keith Oliver coined the term SCM in the 1980s.
Role and Function
SCM allows you to establish connections with other businesses and companies within and outside the process and that would help you to gain a competitive edge. The role of LD is to manage the flow and storage of goods and information inside and outside the organization.
The focus of LD is to satisfy the needs and wishes of customers. The focus of SCM is to achieve a competitive edge over competitors.
Conclusion: Logistics Distribution and Supply Chain
After an in-depth study of logistics distribution and supply chain management; we have realized that LD and SCM may seem similar terms, but they’re different in many ways. If you are learning about LD and SCM, then you should keep in mind the abovementioned elements and differences.
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