Synergies between Supply Chain and Logistics

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Synergies between Supply Chain and Logistics
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The term supply chain management and logistics
are often used together and sometimes
interchangeably in the industry with seemingly
little thought to their specific distinctive
roles in an organizations connect with its
consumer. Considering the unique processes and
needs they both serve for an enterprise, it is
critical not only to understand the fundamental
difference between them but also essential to
understand the overlap between the two. So, for
starters, lets begin by understanding
both. What is Supply Chain? A supply chain is a
system of activities, information, and other
resources that are executed in the pursuit of
converting raw materials into finished products
and taking them to the end consumer. On the
other hand, supply chain management is the
planning and control of all the activities,
including procurement, demand and supply
management, manufacturing, logistics, and
collaboration with intermediaries, vendors, and
customers. Primarily, supply chain management
integrates the flow of value (raw material and
final products), information, and funds across
the organization to create efficiency.
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What is Logistics? As implied from the above
definition, materials are moving from source to
destination while going through the process of
transformation. The Council of Supply Chain
Management Professionals defines Logistics as the
part of supply chain process responsible for
planning, implementing and controlling this flow
and also storage of raw materials, in-process
inventory, finished goods at different points of
value creation across the supply chain. The
movement of materials into the organization from
suppliers is called inbound logistics, whereas
the flow of materials from the organization to
the end consumers is called outbound
logistics. It can be inferred that logistics is
a fundamental part of supply chain management.
Moreover, logistics is its subset, and there can
be multiple logistics providers within a supply
chain.
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• How Supply chain management differs from
  Logistics?
• To understand the primary difference between the
  two terms, lets see the activities that are
  mainly included in logistics.
• Logistics procure goods from suppliers as they
  are responsible for undertaking all the
  activities that bring materials from suppliers to
  the organization.
• Logistics handle transport and ensure that goods
  are moving through the appropriate means of
  transportation and meet all legal requirements.
• Logistics receive materials and check that
  receivables are mapped according to the orders
  and checks for damages.
• Logistics take care of warehousing management by
  storing the goods in the right conditions and
  ensure proper packaging. Besides, a logistics
  function helps plan the supply products as per
  the demand.
• Logistics also helps share information related to
  the products, customer, materials to be moved,
  timing, stock levels, availability, and share it
  with partners across the supply chain.
• Logistics take care of outward transport and
  distribution management as they manage all the
  activities involved in taking final goods to the
  consumers. They deal with wholesalers and
  retailers.
• Logistics also takes care of return of the
  products from consumers to the organization.

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On the other hand, supply chain management is
more complex, and includes all stakeholders from
raw material suppliers, manufacturers, logistics,
wholesalers, retailers, and end consumers. It is
a broader concept that links business processes
with the corporate goals to drive competitive
advantage. It intends to maximize customer
value and achieve long term sustainability by
creating synergies among various operational
functions. According to Michael Fries, Sr.
Logistics BI Analyst, US Foods, Logistics is the
connection from one node or point to another
supply chain is a series of sequential nodes or
points connected to one another. Logistics
focuses on transporting goods while supply chain
focuses on finished product and/or customers.
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Why achieve synergy between Supply Chain
Management and Logistics? Logistics is regarded
as the backbone of the company it can have a
phenomenal impact on the operational and
financial performance of the organization. The
synergy between supply chain and logistics is
essential to make supply chain flexible to keep
pace with the market and structural changes in
the industry. Logistics is the thread that
connects the company to its customers. It brings
back real-time inputs derived from the field into
the supply chain to make necessary changes to
meet the customers demands. Besides, logistics
offers a continuous scope for improvement in
customer service and customer relationship to
gain an edge over competitors. The way a
logistics strategy is executed reflects the
commitments of the organization towards all the
stakeholders when they not only focus on customer
delight but also overall profitability. The
example of McDonalds, an American fast-food
company is worth a mention when talking about the
alignment between logistics and supply chain.
McDonalds has aced SCM since 2011 by occupying
position in Gartners top 10 rankings..
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Their long term supply chain success is based on
the vested business model that is a three-legged
stool. It means that company franchisees and
supplier partners have vested interest in
supporting each other to create win-win
relationships McDonald serves 62 million
customers in a day through 36000 restaurants
around the world. They rely on third-party
logistics provider strategy (supplier
optimization) that focuses on shortening the
supply chains and maintaining the consistency
between supply and demand. Third Party Logistics
companies are independent firms that specialize
in logistics and support clients warehousing and
distribution activities. Every restaurant
receives fresh and frozen products nearly 2.5
times a week. Thus, despite being a component of
the supply chain, logistics has to play a
significant role in positioning the companies
that differentiate from competitors and also
maximizing the value chain.
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How can technology positively impact upon the
synergy between Supply Chain Management and
Logistics? It is interesting to note that
logistics, supply chain, and transportation
industry is transforming with a breakneck speed
using emerging technologies. Forbes conducted an
Insights Survey of 433 senior industry and
functional executives. It reveals that customer
experience is the primary driver of digital
transformation, and logistics plays a significant
role in meeting customer expectations. The survey
shows that companies are implementing Data
Analytics, Artificial Intelligence/ Machine
Learning, Blockchain, and Internet of Things,
safety enhancements (lane control, automatic
braking, etc.), drones and driverless vehicles to
address fast-evolving customer needs and
interests.
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The Amazon effect, pioneering the fast-paced
delivery services has heightened the expectations
of the customers. The expectation of receiving
the product in a day or two is inspiring business
leaders to become smarter by relying on
automation and innovation. For customer
satisfaction, nearly two-thirds of the
respondents are relying on AI, ML and Blockchain
to optimize the routes, equipment, and other
resources. These technologies make the
performance of assets visible to the logistics
team and also allow them to forecast the
demand. Unilever exemplifies how the application
of technology can empower supply chain and
logistics. Unilever has embarked a project where
it is implementing Blockchain across tea supply
chain to increase reliability of products
and validate the sustainability of the tea
farmers agricultural practices.The company has
recently proved as it joined Apple, PG, Amazon
and McDonalds in the Masters category of
supply chain leaders, which Gartner introduced in
2015 to recognize sustained leadership over the
last ten years. Unilever has been occupying the
position among the top five supply chains
worldwide in The Gartner Supply Chain Top
25.Unilever continues to adopt the robust digital
supply chain processes and operations that
include automation, data science, and machine
learning.
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Conclusion Logistics is a primary component of
supply chain management that empowers its
functioning and makes it responsive towards
customer demands and changing business landscape.
A strategic alignment between the two is a must
to achieve synergies at the organizational level.
Moreover, disruptive technologies are offering
strong capabilities to the logistics and supply
chain industry so that they are working towards a
common goal customer satisfaction. You can also
align your supply chain and logistics to create
maximum value for your stakeholders. On
collaborating with the right technology partners
transformation of supply chain gets
simpler. Katalyst Technologies is a leading
technology enabling company that can help you to
achieve high performance through supply chain
mastery. Our innovative supply chain strategies
and solutions combined with global industry
experience can help you integrate the right
technology empowering your business to provide
superior customer service. Partner with experts
today. Get in Touch https//katalysttech.com/get-i
n-touch/
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