QUESTIONS ON LOGISTICS AND SUPPLY CHAIN MANAGEMENT
Question 1
Logistics refers to processes and activities of a company’s supply chain pertaining to specific controls used to enhance efficiency in the flow of services, products and information in the supply chain (Walker and Jones, 2012). Notably, both forward and reverse flow of logistical activities, between the points of manufacture and consumption, characterize supply chains. The logistics of supply chains are designed to meet the expectations of customers, such as efficiency, cost effectiveness and delivery of goods in desired conditions (Christopher, 2016). On the other hand, supply chain management refers to the control, supervision and monitoring of the flow of materials, financial resources and information across all sectors of a supply chain (Ballou, 2007). It is important to note that a supply chain refers to interrelated processes and activities facilitating the flow of resources from suppliers through manufactures, wholesalers, retailers to customers. The divergent definitions of logistics and supply chain management demonstrate that logistics is a small aspect of supply chain management. Walker and Jones (2012) explain that supply chain management is the overall oversight of the whole supply chain. This is unlike logistics which focuses on oversight of the movement of resources across the supply chain.
Logistics and supply chain management can be distinguished on the basis of the objectives their processes and activities seek to achieve. The main objective of logistics is to achieve the highest level of customer satisfaction (Christopher, 2016). This means that logistics focus on meeting the unique needs of customers, such as customizations and delivery of manufactured products at right time and conditions. On the other hand, the main objective of supply chain management is to achieve competitive advantage (Ballou, 2007). This shows that supply chain management is related to the strategic approaches a company implements to ensure that its supply chains are competitive, cost effective, efficient and aligned with industry standards. Through supply chain management, a company seeks to make its supply chain activities better than those of other manufactures in the same industry with a goal of achieving strategic goals related to profitability, business growth and market share (Christopher, 2016).
The number of organizations involved in logistics and supply chain management operations and activities also demonstrate the differences in the scope of the two concepts. Notably, logistics often involves a single organization. On the other hand, supply chain management involves multiple organizations. This reaffirms the fact that supply chain management is a larger concept applicable in all of a company’s supply chain operations. Walker and Jones (2012) specify that logistics is one of the fractions of supply chain management. Regardless of the wider scope of supply chain management, it is notable that it emanated from the concept of logistics (Walker and Jones, 2012). This indicates that supply chain management is a modern version of logistics. The concept of managing resources across a supply chain was postulated in the early 20th Century when companies needed to create assembly lines to facilitate the movement and utilization of resources (Ballou, 2007).
The concept of logistics is specifically traced back to the early 1900s. During this time, logistical operations were simple as products moved directly from firms to the market (Cooper, Lambert and Pagh, 1997). Between 1940s and 1960s, logistical operations evolved through fragmentation. This means that the activities of a company’s supply chain were segmented into specific operations, such as sourcing, demand forecasting, production planning, warehousing, material handling, packaging, distribution planning and order processing and customer service (Figure 1) (Christopher, 2016). In this sense, logistics became specialized with each of a company’s operational areas focusing on specific processes geared towards the achievement of common goals or objectives.
