Integrating logistics into the supply chain

- What's the difference between logistics and the supply chain? Before we can talk about integrating logistics into your supply chain, we need to quickly define both terms. A supply chain is the channel for moving materials and goods and services from your supplier to your customer. And logistics is the process of filling a customer's order. There's a clear connection between these two efforts because every activity in the supply chain is driven by that customer order. In fact, many people refer to a supply chain as a demand-driven supply network, and that's actually a much better expression. Goods and services are produced and moved based upon forecasts or actual demand from customers. And because your organization has so many suppliers, supporting so many products and services, sold to so many customers all around the world, this is actually more of a very complex network rather than links in a simple chain. It's logistics, the movement, storage, and distribution of those products and services that enables the supply chain success. Efficiently filling the customer's order is what builds your business reputation over time. If a company can't deliver its products as promised, the supply chain simply breaks. But of course, you must reasonably manage cost while doing so. We meet our customers' expectations by integrating six activities of logistics management into our supply chain strategies. The first activity is transportation management, which ensures that inventory is moved through the supply chain as effectively and efficiently as possible. From supplier to factory to customer, transportation is often the most significant logistic expense. Another important role is warehouse management. Making sure the right inventory is in the right place when needed by your factory or your distribution center. Good management of your distribution center ensures that the customer's order is properly filled. Distribution centers today use advanced robotics and software technologies to make them move inventory more efficiently. Logistics managers are also responsible for order management. And this involves close coordination of transportation, warehousing, and distribution activities. The fifth activity is returns management. This is becoming very important, as customer return policies continue to be very liberal. Logistics managers must move material and goods in the reverse direction without disrupting the smooth flow of the supply chain. I hope you noticed how many times I mentioned inventory so far. Inventory control is the last of our six activities and logistics managers are in charge of inventory throughout the entire supply chain. The goal is to have a proper balance between inventory cost and customer service. How well are your logistics activities integrated with your supply chain? For an answer, transportation is generally a pretty good place to start. Pick any product from your company. How well does your transportation system support the supply chain goal of on-time delivery to your customers?