What is Logistics and Supply Chain Management?

We will address some of the frequently asked questions in this article, such as the concept of logistics, supply chain and questions like “What is supply chain management and logistics?”   –

Logistics typically refers to acts that take place within the borders of a single entity, and Supply Chain refers to networks of companies working together to organise their acts to enter the market for a product. Conventional logistics also focuses on tasks such as retrieval, delivery, processing and inventory management. Supply Chain Management (SCM) embraces all of the conventional ideas of logistics and also includes actions like advertising, marketing, development of a product, finance and customer service”     – Michael Hugos 

What’s Logistics Management?

“Logistics Management is concerned with the smooth and consistent management of everyday operations in the manufacture of the finished products and services of the company”-Paul Schönsleben

What is Supply Chain Management?

SCM is described by everyone differently. The basic description, however, is;

“Supply Chain Management ( SCM) alludes to the collaboration between supply chain participants of production, bookkeeping, place and transport in order to achieve the best balance of receptivity and productivity for the market being served.” – Michael Hugos

What is Logistics and Transport?

‘Transport and Logistics applies to two categories of operations, namely conventional services such as air/sea/land transport, warehousing, customs clearance and value-added services, including information technology and consulting services.’

What is Logistics International?

These are among the vaguest collections of words that occur in international business. In comparison, they are often used in international supply chain or in international development and transport activities. However, as below, the most lucid description is

“As a single business entity, International Logistics focuses on how to effectively take care and monitor overseas operations. Companies should also try to leverage the potential of international goods, services, marketing, R&D to turn them into a competitive advantage.

What is Logistics for Third Parties or 3PL?

“Third Party Logistics or 3PL refers to the outsourcing of a range of acts, ranging from specialized tasks such as trucking or distribution to wider supply chain service operations such as inventory control, handling of bookings and consultations.”

Many 3PL suppliers historically did not have the experience to work in a sophisticated framework and method of the supply chain. The end result was the development of a new definition.

What is Fourth Party Logistics or 4PL?

The 4PL is the idea that was proposed by Accenture Ltd in 1996 and it is defined as given below,

“Fourth Party Logistics or 4PL refers to an entity that operates on behalf of the customer to conduct contract arrangements and quality management for 3PL suppliers, including the management of the overall supply chain network and the day-to-day activities neglected by others”

You might be wondering if you really need a 4PL provider. As below, the top three reasons why consumers choose to use a 4PL provider are,

— Lack of infrastructure to improve processes in the supply chain

– The rise in operating complexities

– The rapid increase of the demand in the global supply chains

What is Supply Chain Network?

Many corporations have the department that takes charge of supply chain activity so they think that SCM is a “function”. Some companies feel SCM is a type of management system under IT. In fact, SCM is really a “network” that consists of many players as given below,

A general supply chain structure is as basic as Supplier, Manufacturer, Wholesaler and Retailer.

It is possible to briefly describe the word “management” as “planning, execution, regulation.”

What is Exchanging Information?

The easy flow of goods, knowledge, and financial support (these are things that can be found in lean production and the six sigma project as well) is another important trait of supply chain management. While there are 3 types of flow, information flow, which can also be called data exchange, is the most important one.  

Each player in the same supply chain has to make some kind of guess when customer demand data is not provided, and this can lead to severe management problems.

When information is given via demand management from consumer down to the producer, everyone doesn’t have to keep much stock of produce, having the adequate amount will suffice. This results in a lower cost for everyone involved. This is generally termed as the extended supply chain or supply chain visibility. An open line of communication is key between consumers and producers.

Information sharing will also lessen the need to make use of digital technology solutions such as supply chain systems, digital supply chains, predictive analytics or AI.

What is Supply Chain Coordination?

Information sharing needs an adequate degree of “coordination” (it’s also known as collaboration or integration in the common scholarly articles). Do you often think of when exactly did people start working together as a network? Well here is the answer. In 1984, corporations in the clothing business worked in union to lessen the overall lead-time. In 1995, companies in vehicle industry used Electronic Data Interchange to share information between each other. So, functioning as a “chain” is the real-world practice and this practice is being followed even today.

What are Conflicting Objectives?

Working in a network implies that all involved parties have the same objective, but this is very often not the case (even with people in the same company). “Conflicting Objectives” is the phrase used to convey the situation when each part of the process demands something that won’t go well together. For example, people in chare of purchasing will always place the orders with the cheapest vendors (who will have a very long lead-time) but production people or project managers need to get their hands on the material more quickly. This is a conflict of interest.

To get rid of conflicting objectives, the parties involved need to agree on either a time-based strategy, low-cost strategy or something that works in the best interest of all parties involved. A clear-cut direction is needed so that the people who are in charge can make decisions accordingly.

What is the Cost/Service Trade-off?

The idea of Cost/Service Trade-off came up as early as in 1985 but it looks like people really don’t understand it. Here we will try and present a clear picture for everyone to understand.

When you wish to improve your service, the cost of production, obviously, goes up. When you wish to reduce cost, service suffers. It is an inversely proportional relationship, the best you can do is to try your best to even out both sides. It is not an easy task, but one that is necessary.

What is Supply Chain Relationship?

To work in the same team, a durable relationship is key. Otherwise, you’re just a different company with a separate strategy/agenda. So, research keeps talking about the significance of relationship-building but is not applicable to everyone.

Since there are way too many vendors to deal with, a portfolio matrix is usually used to give importance to relationship-building to build a bond with supply chain partners. Focus your energies on creating a durable and sustainable relationship with suppliers of the main products and items with limited avenues of supply (or items that have high supply chain risk.) Because people and human resource are the main factors that can create or destroy your supply chain.

Hopefully, all your questions pertaining to SCM and logistics have been answered and you have been able to gain an insight into the intricate world of logistics. If you are on a look out for a quality logistics company in Kolkata that will take care of all your logistics-related needs, Jayesh Logistics is where all your needs will be met.