Logistics VS Supply Chain
Many people use the terms logistics and supply chain interchangeably and most of the time they associate both terms with shipping. In a survey conducted in 2017 80% of the people who are not part of the supply chain industry though logistics and supply chain refer to shipping.
What is Supply Chain?
By definition, supply chain is the activities related to managing the 3 most important resources of a company
1- Inventory
2- Money
3- Information
To clarify this further, we will offer an example. Let us assume you are a company based in Pittsburgh, USA that sells computers through various destruction Channels, Retail, Wholesale and ecommerce. You manufacture the products in Shanghai, China.
Now Imagine a long chain that has many links stretching from Shanghai to Pittsburgh. Each link represents an activity, or an action taken by the Company. Here is a short list.
- Purchase order is sent to factory based on sales forecast (PO Management)
Factory starts Producing items according to purchase order.
Money is exchanged
Items are ready to ship
Information conveyed to company by factory
Shipping arrangements are made with a Freight Forwarder
Forwarder confirms shipment to Company.
Shipment arrives at port in New York.
Your Warehouse is advised to expect cargo.
Forwarder handles customs clearance and moves Cargo to your warehouse in Pittsburgh.
Company sells products and forecasts increased demand. Places another order. Advises forwarder of another shipment to be delivered.
The above steps are to be considered the links in the chain that connects manufacturer or factory to end user shows the flow of money, inventory and information in a controlled environment in a simplified manner.
What is Logistics?
By definition, logistics is the movement of goods or services from point A to Point B and all the activities in between needed for that to happen. Imagine that you have cargo ready and you are planning on shipping to Belgium From Miami.
- You Contact one of the “Miami Freight Forwarders” Which are considered ” Logistics Companies” to get a rate and if approved handle the shipping to Belgium.
Forwarder positions the container at your door if you have a warehouse or at the warehouse of a “Third party Logistics Company” I3PL to load the container.
You provide the Forwarder with all the documentation required for customs declaration in Belgium.
Container is moved to the port. Forwarder files the export declaration
BOL is issues and provided to you.
You provide the shipping information including BOL to the receiving party in Belgium
All of the above makes up one of the links in the Supply Chain mentioned above.
This Shows how complex supply chain is. There are many companies dedicated to helping you with your supply chain needs.
In recent years 3PL Companies and Contract Logistics Companies Started offering services under the supply chain umbrella such as Inventory Control, Quality Control, etc.
4PL Companies even offer Purchase order financing which is part of the supply chain. 7Pl Companies take it a step further by offering receivable management.
The Logistics Industry continues to grow at a rapid rate to offer more supply chain Solutions.
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