In business, supply chain management refers to the entire process and stream of products and services, from initial locations and companies, through the intermediate destinations, to touch and be handled by customers. Supply chain management is an important strategic business management function. The primary objective of supply chain management is to provide the customer with the goods and/or services as early as possible, at a reasonable cost, so that they have the greatest likelihood of getting what they want.
Supply chain management is a strategic business management function that is used to determine the cost savings of logistics over the alternative provided by suppliers of goods or services. The ultimate objective of supply chain management is to provide the customer with the goods and/or services as early as possible, at a reasonable cost, so that they have the greatest likelihood of obtaining what they want. In business, supply chains control the movement and location of goods, materials, and service components in relation to one another in a network of sites. This enables a company to make the most of their raw materials (such as labor and machines), their manufactured goods (such as shipping containers), and their finished goods (such as parts).
In addition to providing the customer with the goods at the earliest possible time, logistics also assists a company in meeting demand management. Demand management is a branch of supply chain management that focuses on meeting the supply requirements of a market participant at the most optimal time, by using a planned delivery system. A company in which demand management is not applied will experience either excess inventory or poor sales performance. It can also cause the company to lose money in the long run if it undertakes activities that do not add value to its operations.
Strategic sourcing is a key part of supply chain management. Strategic sourcing involves identifying and researching the supply needs of an organization before it decides where to source those goods and how to source them. The process of strategic sourcing is sometimes combined with demand planning in an effort to get the most value for money out of an organization’s supply planning efforts. Strategic sourcing can also be applied to the manufacturing phase of operations planning, such as determining where to source raw materials and how to source them. This is often considered to be an add-on service, versus simply a part of demand planning.
Supply chain management refers to the entire process of moving raw materials and finished goods from point A to point B. All transportation phases of moving goods along a supply chain are referred to as supply chains, even if only part of the chain is used. Supply chain management is a broad field that encompasses many processes and tools, each designed to improve the efficiency and effectiveness of supply chains. These include improvement in logistical planning and dispatching, quality improvement in the production phase of supply chains, use of financial tools such as warranties to promote product assurance, use of technological improvements such as automated handling systems, improvement of customer service, reduction of cost of production, etc.
Logistics, on the other hand, involves the efficient transport of raw materials from point A to point B. It involves transport of finished products, such as manufactured goods or raw materials, from point A to point B. Logistics can either affect the transfer of one or more elements of a supply chain or can involve only one or more elements. Transportation and distribution are two examples of elements of logistics. Distribution is an example of a process that affects logistics, such as the transportation of finished products to their point of sale.