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 integrates 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.
Supply Chain Management is the process by which an organization creates a competitive advantage by focusing on driving value through its supply chain.
Logistics is one component 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 supply chain professional 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 manufacturer of the parts to its distribution channel(s), 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.
Supply Chain Execution
if a supply chain is what businesses all over the world use, and supply chain management is where value is added, then supply chain execution is how that value is added.
Supply chain managers and professionals add value and gain a true competitive edge by making great decisions in their execution. They look for partners and products that can help their company’s supply chain become better, faster, more efficient, nimble, and cost-effective.
3PL’s like Amware leverage their expertise to help growing companies more effectively execute the logistics-related components of their supply chain:
- Warehousing/management systems/reverse logistics
- Transportation management systems
- Pick and pack fulfillment services
The team at Amware can help your growing company reduce supply chain logistics costs by 30% or more annually through their LTL service. Additionally, with an asset-based fleet of trucks and multiple warehouses, we can help your supply chain stay nimble while you grow.
Contact us today or request a free trial of our transportation management system, Amrate, below.