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is logistics taken across inter organizational boundaries y A philosophy that describes how organizations should manage their supply chains to achieve strategic advantage y The objective is to synchronize requirements of the final customer with the flow of materials and information along the supply chain. The goal is to eliminate variability and reach a balance between high customer service and low cost
management has grown over the last decade. y Research would indicate that today the two terns are often used interchangeably, while others feel strongly that there are distinct differences. y The combination of these viewpoints has led to the nebulous grey area where the global transport industry, among others, often finds itself today.
management are inextricably intertwined. y While different enough to be recognized as individual terms or processes, the two are so tightly interwoven that they should not be considered separately. y Logistics and Supply Chain functions can and do frequently overlap. y So what are those different enough and those intertwined threads ?
Is this sufficient??
y Even with these differences it is clear that logistics
areas often cut across supply chain functions and vice versa. y But do really VICE VERSA??? y To get into a more clear image of this complex interconnection, definitions of SCM and LM might clear the in depth interconnection.
depending on the industry and the organization s size, y In a nutshell it can be said that supply chain management encompasses the entire process from raw materials to the final customer. y Effective SCM involves oversight and management of suppliers, buyers, vendors, customers, and any others on whom the organization depends on to deliver a product or service.
supply chain is operating efficiently at the lowest cost with optimum customer satisfaction. y To this end, decisions are made at three distinct levels: 1. Strategic: At the strategic level, organizations focus on high level decisions that impact the entire organization. Decisions often revolve around manufacturing site size and/or location, supplier partnerships, sales markets, or the products or services to be manufactured or delivered.
the flow of physical materials. y In the context of marketing channels, physical distribution and logistics have traditionally been used interchangeably, with the understanding that only finished goods are part of distribution and the proper concern of a marketing channel manager.
into the concept of Supply Chain Management (SCM), which in turn has come to implicate every element of the Value-Added Chain. yGoing backward, or upstream, this means channel logistics encompasses not only inventories of finished goods but also work in process (WIP) and raw materials.
back not only to the factory floor but also to the suppliers of the suppliers of the suppliers.
historical perspective, it would appear SCM has become the more commonly used term, particularly with new and old industry associations alike including or changing their name to include the words supply chain. y To add fuel to the fire that SCM is the brighter star to that of logistics, Ken Ackerman, a noted logistics writer, has gone as far as to question the relationship between the growing popularity of supply chain concepts and logistics. He challenged the differences between the two and even questioned if it was time for the former (supply chain management) to replace the latter (logistics). y Companies increasingly rely on SCM as a key competitive weapon. Impressive results, including dramatic reductions in cycle time and accelerated cash flows, have been noted as a result of effective supply chain management.
under the logistics management umbrella, including warehousing, inventory management, private (i.e., inhouse truck fleets) and purchased transportation such as air, water, highway or rail. y Logistics Management is an increasingly important part of competitive positioning from the perspective of the global transport industry. To stay competitive, exporters must make the right amount of product and services available in the right place at the right time.
Succeed y Logistics management is concerned with the movement of goods and services from suppler to consumer. SCM shares this concern, but additionally is responsible for the flow of information and funds from supplier to consumer. y Perhaps this is why many in the industry believe that as long as there is a matrix-type relationship between the two, it should be up to the individual organization to decide what emphasis works best to meet its needs.
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The Verdict
y The verdict is clear. y Given common concerns between the two, as well as
the clear overlaps seen time and time again as logistics and SCM cross paths, it should be expected that SCM and logistics will both remain intrinsically intertwined and essential to organization success. y So, analyse your need and problem and give preference to two y But still for final success use BOTH!
Questions???