Why Logistics is an Essential Part of Supply Chain Management

December 4, 2020

Supply chain planning has become more complex than ever. To meet customer demands, business leaders must appreciate the critical importance of one supply chain aspect, logistics management. Logistics is the part of the supply chain involved in managing the forward and reverse flow and storage of goods, services, and related information between the point of origin and the point of consumption to meet customers’ requirements. Use of advanced logistics, lean management, and optimization produce the most efficient, cost-effective, and sustainable supply chains.

To leverage well-run logistics, it helps to understand the history of the field, and its wider integration into supply chain management, a relatively new term.

The difference between supply chain management and logistics

With its roots in the U.S. military practices of the 1940s and 1950s, logistics as a business concept and academic discipline finally emerged in the early 1960s. Originally, logistics referred to the physical distribution of resources. Over the following decades, businesses and academic scholarship recognized the importance of supply chains on efficiency and profit margins.

By the end of the 20th century, logistics had been identified as an early “boundary-spanning” role, meaning that someone engaged in logistics would often work with other departments to improve the functionality of an organization in its entirety. A logistician could play a role in strategic planning, marketing, and accounting. Over time, these duties of the logistician fell under the umbrella of the newer role of “supply chain manager.”

Currently, the Council of Supply Chain Management Professionals defines the field of logistics as just one aspect of supply chain management. Supply chain management involves the planning and oversight of a variety of elements surrounding supply and demand. Industry leaders focus on supply chain optimization and stay engaged throughout the customer satisfaction process. They also uphold moral obligations and address supply chain trends, such as ensuring sustainable sourcing and reducing carbon footprints. More specifically, logistics in more narrow usage is the part of supply chain management that plans, executes, and monitors the flow of goods and services.

Still, in many companies, roles in logistics, supply chain, operations, and manufacturing tend to overlap. They have become, in casual usage, interchangeable now that they all have become subsumed into the larger division of supply chain management.

How management and logistics work together in the supply chain

Management and logistics coincide and are vital to any supply chain industry. Consider the success of well-known companies with the most innovative and in-demand ideas—it would not be possible for them to deliver on their promises without allocating sufficient time and resources toward supply chain planning and then executing on these plans through core activities such as logistics.

Logistics and the supply chain go hand-in-hand

Logistics management and planning require intricate problem-solving to get products from Point A to Point B without disrupting participants throughout the end-to-end supply chain. Supply chain management can participate in the early innovative phases before a product or service is launched. While product designers are still at the drawing board, logistics managers can help determine how to best establish the flow of the supply chain from suppliers to customers.

Simply put, supply chain management oversees a more extensive process, which includes determining the specifications and type of materials needed for a product. Moreover, within that process, the logistics manager determines how long it will take to move those materials and the most efficient way to ship them to the manufacturer.

Logistics influences growth in the supply chain

The essential role logistics plays in supply chain management is clear in the digital age. Businesses of all sizes can scale logistics operations and generate massive growth through new technologies like artificial intelligence and machine learning. Technological innovations assist logistics professionals who are often responsible for work within the end-to-end supply chain: from the conception of a product to customer service after a product has been delivered.

As stated by Mary Holcomb—a supply chain management professor at the University of Tennessee, Knoxville’s Haslam College of Business—transportation and logistics are “evolving at breakneck speed, and keeping up has never been more important.”

Advanced logistics scales operations

To operate a workflow in the age of same-day shipping, technology is indispensable. Under traditional logistics management, for example, standalone company systems may be responsible for keeping track of day-to-day activities within that organization. But no company in the supply chain is operating in a vacuum, and a standalone system prevents visibility on shipments with third-party suppliers and shippers. Problems with suppliers can go unresolved for weeks because there isn’t a tracking system in place to identify the issue in real-time.

In 21st-century logistics, the holistic supply-chain-management-oriented system uses technology to bridge the gaps between nodes on the supply chain and make better decisions overall. Digitalization of logistics takes operations management to new levels and allows for superior supply chain collaboration. Scanning and tracking systems immediately identify problem areas that managers can resolve with fast and seamless communication APIs. Workhouse wearables produce valuable data that help create a “touchless” supply chain, so employees can optimize movement and limit the amount of lifting done on the job.

With the help of advanced logistics and optimization, supply chain managers carry a competitive advantage. They have more time to focus on pressing issues and trends in the global supply chain, such as maintaining ethical operations, cultivating a sustainable supply chain, and guaranteeing trade compliance.

Professor Holcomb stated that “far too many logistics and supply chain professionals are spinning their wheels as it relates to their ongoing digitization efforts.” This assertion is based on the findings of the [28th Annual Study of Logistics and Transportation Trends Study (Masters of Logistics])(https://www.logisticsmgmt.com/article/masters_of_logistics_28th_find_your_digital_direction) ), wherein the report revealed that over one-third of respondents were slow to adopt new technologies.

The future of careers in supply chain management and logistics

Careers in supply chain management offer a competitive salary and promote professional growth opportunities. Supply chain executives fulfill valuable responsibilities and develop a long-term supply chain strategy that impacts an organization’s bottom line. Individuals qualified to work in logistics automation are in high demand, and supply chain professionals who have not shifted from traditional logistics fall short when compared to their competitors.

Working in many aspects of the global supply chain, supply chain leaders carry out a broad range of managerial obligations. Supply chain managers must be analytical, technical, and strategic. They must also possess critical soft skills such as active listening and emotional intelligence—to react quickly to emergencies and rapidly resolve relational issues. Logistics professionals can hone operational skills while focusing on automation and efficiency in raw material collection, inventory, warehousing, and transportation.

Roles in supply chain management and logistics

There are a variety of roles in both supply chain management and logistics. Supply chain professionals work at every level of an organization, from entry-level positions to managers to vice presidents to C-suite executives. Supply chain operations are increasingly recognized as a key role for company leadership and supply chain expertise is well-represented in a number of jobs at the highest levels of management: CEOChief Supply Chain OfficerChief Production OfficerChief Logistics Officer, and Chief Procurement Officer.

Third-party logistics

Supply chain professionals can also explore third-party logistics—often referred to as 3PL services—a term that refers to businesses that outsource elements of sourcing, distribution, warehousing, and delivery services to a logistics provider. Third-party logistics professionals specialize in outbound logistics while scaling operational needs for small and large businesses.

Become a logistics expert at Haslam

The Master of Science in Supply Chain Management Online at Haslam is designed to grow future logistics leaders in the supply chain.

With the MS SCM – Online, you do not have to leave your current job or relocate to access faculty and resources within the esteemed Global Supply Chain Institute. Meet with an MS SCM – Online admissions counselor and become a leader equipped for the future.