Synergies between Supply Chain and Logistics

1. Synergies between Supply Synergies between Supply Chain and Logistics Chain and Logistics www.katalysttech.com

2. The term supply chain management and logistics are often used together and sometimes interchangeably in the industry; with seemingly little thought to their specific distinctive roles in an organization’s connect with its consumer. Considering the unique processes and needs they both serve for an enterprise, it is critical not only to understand the fundamental difference between them but also essential to understand the overlap between the two. So, for starters, let’s begin by understanding both. What is Supply Chain? A supply chain is a system of activities, information, and other resources that are executed in the pursuit of converting raw materials into finished products and taking them to the end consumer. On the other hand, supply chain management is the planning and control of all the activities, including procurement, demand and supply management, manufacturing, logistics, and collaboration with intermediaries, vendors, and customers. Primarily, supply chain management integrates the flow of value (raw material and final products), information, and funds across the organization to create efficiency. Reference Link - https://medium.com/@katalysttechnologies/synergies-between-supply-chain-and-logistics-7862918e841e

3. What is Logistics? As implied from the above definition, materials are moving from source to destination while going through the process of transformation. The Council of Supply Chain Management Professionals defines Logistics as the part of supply chain process responsible for planning, implementing and controlling this flow and also storage of raw materials, in-process inventory, finished goods at different points of value creation across the supply chain. The movement of materials into the organization from suppliers is called inbound logistics, whereas the flow of materials from the organization to the end consumers is called outbound logistics. It can be inferred that logistics is a fundamental part of supply chain management. Moreover, logistics is its subset, and there can be multiple logistics providers within a supply chain.

4. How Supply chain management differs from Logistics? To understand the primary difference between the two terms, let’s see the activities that are mainly included in logistics. • Logistics procure goods from suppliers as they are responsible for undertaking all the activities that bring materials from suppliers to the organization. • Logistics handle transport and ensure that goods are moving through the appropriate means of transportation and meet all legal requirements. • Logistics receive materials and check that receivables are mapped according to the orders and checks for damages. • Logistics take care of warehousing management by storing the goods in the right conditions and ensure proper packaging. Besides, a logistics function helps plan the supply products as per the demand. • Logistics also helps share information related to the products, customer, materials to be moved, timing, stock levels, availability, and share it with partners across the supply chain. • Logistics take care of outward transport and distribution management as they manage all the activities involved in taking final goods to the consumers. They deal with wholesalers and retailers. • Logistics also takes care of return of the products from consumers to the organization.

5. On the other hand, supply chain management is more complex, and includes all stakeholders from raw material suppliers, manufacturers, logistics, wholesalers, retailers, and end consumers. It is a broader concept that links business processes with the corporate goals to drive competitive advantage. It intends to maximize customer value and achieve long term sustainability by creating synergies among various operational functions. According to Michael Fries, Sr. Logistics BI Analyst, US Foods, “Logistics is the connection from one node or point to another; supply chain is a series of sequential nodes or points connected to one another. Logistics focuses on transporting goods while supply chain focuses on finished product and/or customers.”

6. Why achieve synergy between Supply Chain Management and Logistics? Logistics is regarded as the backbone of the company; it can have a phenomenal impact on the operational and financial performance of the organization. The synergy between supply chain and logistics is essential to make supply chain flexible to keep pace with the market and structural changes in the industry. Logistics is the thread that connects the company to its customers. It brings back real-time inputs derived from the field into the supply chain to make necessary changes to meet the customers’ demands. Besides, logistics offers a continuous scope for improvement in customer service and customer relationship to gain an edge over competitors. The way a logistics strategy is executed reflects the commitments of the organization towards all the stakeholders when they not only focus on customer delight but also overall profitability. The example of McDonald’s, an American fast-food company is worth a mention when talking about the alignment between logistics and supply chain. McDonald’s has aced SCM since 2011 by occupying position in Gartner’s top 10 rankings..

7. Their long term supply chain success is based on the vested business model that is a three-legged stool. It means that company; franchisees and supplier partners have vested interest in supporting each other to create win-win relationships McDonald serves 62 million customers in a day through 36000 restaurants around the world. They rely on third- party logistics provider strategy (supplier optimization) that focuses on shortening the supply chains and maintaining the consistency between supply and demand. Third Party Logistics companies are independent firms that specialize in logistics and support clients’ warehousing and distribution activities. Every restaurant receives fresh and frozen products nearly 2.5 times a week. Thus, despite being a component of the supply chain, logistics has to play a significant role in positioning the companies that differentiate from competitors and also maximizing the value chain.

8. How can technology positively impact upon the synergy between Supply Chain Management and Logistics? It is interesting to note that logistics, supply chain, and transportation industry is transforming with a breakneck speed using emerging technologies. Forbes conducted an Insights Survey of 433 senior industry and functional executives. It reveals that customer experience is the primary driver of digital transformation, and logistics plays a significant role in meeting customer expectations. The survey shows that companies are implementing Data Analytics, Artificial Intelligence/ Machine Learning, Blockchain, and Internet of Things, safety enhancements (lane control, automatic braking, etc.), drones and driverless vehicles to address fast-evolving customer needs and interests.

9. The “Amazon effect,” pioneering the fast-paced delivery services has heightened the expectations of the customers. The expectation of receiving the product in a day or two is inspiring business leaders to become smarter by relying on automation and innovation. For customer satisfaction, nearly two-thirds of the respondents are relying on AI, ML and Blockchain to optimize the routes, equipment, and other resources. These technologies make the performance of assets visible to the logistics team and also allow them to forecast the demand. Unilever exemplifies how the application of technology can empower supply chain and logistics. Unilever has embarked a project where it is implementing Blockchain across tea supply chain to increase reliability of products and validate the sustainability of the tea farmers’ agricultural practices.The company has recently proved as it joined Apple, P&G, Amazon and McDonald’s in the “Masters” category of supply chain leaders, which Gartner introduced in 2015 to recognize sustained leadership over the last ten years. Unilever has been occupying the position among the top five supply chains worldwide in The Gartner Supply Chain Top 25.Unilever continues to adopt the robust digital supply chain processes and operations that include automation, data science, and machine learning.

10. Conclusion Logistics is a primary component of supply chain management that empowers its functioning and makes it responsive towards customer demands and changing business landscape. A strategic alignment between the two is a must to achieve synergies at the organizational level. Moreover, disruptive technologies are offering strong capabilities to the logistics and supply chain industry so that they are working towards a common goal: customer satisfaction. You can also align your supply chain and logistics to create maximum value for your stakeholders. On collaborating with the right technology partners; transformation of supply chain gets simpler. Katalyst Technologies is a leading technology enabling company that can help you to achieve high performance through supply chain mastery. Our innovative supply chain strategies and solutions combined with global industry experience can help you integrate the right technology empowering your business to provide superior customer service. Partner with experts today. Get in Touch https://katalysttech.com/get-in-touch/

11. Katalyst Technologies is a leading IT services and solutions company servicing clients in the manufacturing, wholesale distribution, life sciences, e-commerce, logistics, and retail sectors. We provide industry – specific IT products, strategies and solutions for companies implementing large-scale and transformational projects. Our business and technology experts are highly-skilled and work seamlessly across multiple geographies, with a global footprint in the U.S, U.K, India, and Germany. We specialize in the areas of Digital & e – Commerce, Enterprise Resource Planning, Supply Chain Management, Engineering and Manufacturing, Professional Services and e – Publishing. USA Evanston +1 847 425 4321 Atlanta +1 678 684 5300 UK INDIA Hadapsar, Pune +91 20 6709 3939 Valasaravakkam, Chennai +91 44 4294 3400 Basavanagudi, Bengaluru +91 80 2677 0101 Teddington +44 208 943 5589 sales@katalysttech.com