What is the difference between Supply Chain, Operations and Logistics?

What is the difference between supply chain, operations, and logistics-

Transportation, logistics, supply chain management, materials handling, and inventory control continue to evolve. This evolution has created cross-fertilization among these functions, driven by factors both conceptual—matching demand to supply—and technological—an enhanced ability to communicate and collaborate.

This cross-fertilization has also blurred the definition of some terms. For example, is logistics the same thing as supply chain management?

People working in different functional areas of logistics often define supply chain management (SCM) as it relates to what they do. A recent survey of Inbound Logistics readers supports this. Some respondents say SCM is the same old thing with a new handle, while others note it is more encompassing than logistics.

Many logistics veterans believe we have progressed from transportation to physical distribution to logistics to supply chain management. By contrast, purchasing managers have evolved their thinking from purchasing management to procurement and now to supply management (SM). Some couch supply management as SCM. Others don’t want to give up the term purchasing, and now refer to this functional area as purchasing and supply management.

Manufacturing professionals hold yet another perception of SCM: as the task of allocating and committing resources for obtaining necessary supplies and capacity, handling, and positioning products to meet customer demands. MRP and ERP systems now address resource commitments that go beyond manufacturing to include other enterprise and supplier resources, ultimately directed to satisfying customer demands with limited and efficient use of resources.

Other departments in the company also wonder about SCM and its orientation. In marketing—as well as the broader functionality that includes business and consumer research, promotions, and sales—SCM addresses the needs and market potential of not only immediate customers and consumers who buy products and services, but also end users. Naturally, market research analyses of end product usage are extremely important.

By its nature, SCM encapsulates inter-enterprise, cross-functional processes that target end users of products and services. It requires integrated teams who are open and trustful in their value engineering and activities analysis.

Initially, logistics practitioners focus on supply chain applications that interface with immediate customers, suppliers, and intermediaries. Economic functional “activity” tradeoffs are analyzed in terms of who can best perform functions that are for the good of all trading partners. The long-term vision is inter-enterprise teams working seamlessly across all functions and activities to meet end user needs.

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How Social Media can be exploited by Logistics Industry?

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Social media is often quickly thought of as something we use to keep up with family and friends. But, is there business value in applying social media to logistics and supply chain management? Let’s get to know about it.

In the world of logistics, social media is like a mechanism for discovering and communicating with people one would like to interact with – texting and other forms of messaging are part of that. But a more primary benefit of social media is that it gives others permission to communicate with you.

Basically, in a logistics context, let’s imagine that you, the warehouse manager, have discovered that it you aren’t going to be able to fulfil an order to the company’s most important customer on time. Here, having a private social media group can help resolve, where the Vice President of supply chain, the account manager of the customer, the customer’s purchasing manager as well as the logistics director can be pulled into a social media platform to discuss the issue, resolve it and track the root of the problem. To put it in the light, risk management is what can be done by utilising social media.

Demand forecasting is another great advantage that can be taken into account. For marketing purposes, many leading companies in the FMCG sector are monitoring social media, from which the logistics industry can also utilise.

Although, the question should be ‘How can social media help in quantifying the business value?’ To answer this, one must understand that there are two contradicting philosophies to it.

First: Trying to measure the direct ROI of something as otherworldly as social media is the wrong approach altogether. One can track usage, adoption, how people are using the system, and what their connections are. But one cannot create direct correlations between usage and business numbers that are needed for ROI. Simply put, going and spending money on ROI would be honestly just a waste of money because the true value of using social media is your people are coming back to you.

Second: It involves using SMART method, which is having specific, measureable, achievable, realistic, and timed goals relatable to social media and social networking.

To sum it up, we can put it in an apt phrase:

Social networking is not really about socialising, but about facilitating people-to-people communication and collaboration, and social media can (should) play a major role in logistics and supply chain management.

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5 step plan to choose enclosures with the internet of things for Manufacturing Units

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We’ve put together this five-point checklist for choosing computer enclosures to future-proof the Internet of Things on your manufacturing floor. Knowing this will help you to quickly identify a solid solution for your factory or plant.

1. Only opt for National Electrical Manufacturers Association (NEMA) rated enclosures. Anything else will offer about as much protection as an umbrella in a hurricane. Reputable suppliers will specify a NEMA rating, which determines what level of protection an enclosure provides against water, dust, and other foreign bodies.

2. Decide what application you need. If you’re looking to protect IT equipment from water or you work on a manufacturing floor where cleanliness is crucial, you should consider waterproof NEMA 4 computer enclosures.

If you’re looking to future-proof internet connected computers used in a more grueling environment, you should research industrial computer enclosures.

3. Opt for enclosures to suit your manufacturing floor layout. Computer enclosures can be wall, stand or floor-mounted; which is useful when it comes to saving or creating space and putting computer equipment even further out of harm’s way.

4. Opt for enclosures that offer flexibility – To minimize downtime, and to prevent lengthy periods of no internet connection, you need to be able to swap out IT equipment quickly and conveniently to get your manufacturing floor up and running again. Therefore, you should pick enclosures that allow almost instant access.

5. Opt for enclosures with a warranty – For your peace of mind, choose a supplier that offers a warranty on their enclosures.

Computers will play a key role in bringing the Internet of Things to your manufacturing floor. Integrate them correctly and you can sustain IoT for years to come.

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Areas to Focus for reducing Logistics Cost

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As per the global standards, the cost of logistics should be 8-9% of the cost of product. Unfortunately, in India, it is nearly 1.5 times that of the global standard, hovering around at 13-14%. That’s why most logistics companies’ big task is to answer the question ‘How should we reduce our logistics cost?’

Before jumping into answering it, one must acknowledge that the essential ingredient to logistics cost reduction is ‘Treat people well and profits will follow’. One must listen to its people, they do have great ideas.

Now, let’s take a look at all the things one should focus at –

  1. Use of Systems & Technology: An excellent Warehouse Management System (WMS) can help reduce costs. Other similar things like product slotting (having top demand SKUs near shipping), robotics, Transportation Management System (TMS), Warehouse Execution & Control System among others can aid in logistics cost reduction through automated, cost-effective transportation and warehousing.
  2. Labour Cost: Every project should focus on reducing labour costs. Various measures can be implemented for this purpose like adopting Labour Management Software systems, incentive programs for warehouse employees, and warehouse mobility. This will help in reducing overhead costs and will increase individual productivity.
  3. Safety: First and foremost, shippers and logistics providers should understand the safety considerations like ensuring safe warehouse operations and avoiding injuries. They must really be proactive with safety. They should have someone like a Safety Manager who can be accountable and responsible for safety and ongoing safety training.
  4. Preventive Maintenance: In cases such as equipment breakdowns and accidents, one would lose man hours, and maybe customers as well. It is important to note that preventive measures must be taken along with keeping a contingency plan.
  5. Suppliers: The best tip is to collaborate and partner with suppliers. They can help with working and creating a win-win cost reduction program. Although, keep in mind that never jeopardise quality whole reducing the costs of components.
  6. Customers: The happier the customers are, the lower can be the cost of logistics. By going beyond customers’ expectation, companies can spread the burden of logistics cost reduction over a greater number of orders/customers. That’s why customer service should be factored primarily.

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Is Logistics Outsourcing a right decision for your company?

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Everybody understands the benefits of outsourcing logistics processes to a third-party logistics provider (3PL). It is becoming increasingly difficult for business organisations to control all their warehousing, transportation and administrative tasks that come with shipping and managing inventory. That’s why they are turning to 3PLs that help them with cost reductions and overall management of supply chain. However, they must be careful to ensure they do not overstep their bounds before/during/after selecting a 3PL.

Before we go forward to answer the question ‘Why?’ we must understand what services one needs to outsource. It includes inventory management, auditing services, package processing, labelling , tracking, and order & payment processing.

Once you have made the decision to outsource, you should look to a 3PL as a new employee and not just a service provider. That’s why you need to consider four key points of 3PL practices before making a final decision.

1.       3PLs aren’t designed for short-term benefits: Even the best 3PLs in the world cannot help an organisation which is financially bankrupt or does not have any customers. There is no guarantee that outsourcing will be successful, but it will definitely not be successful if one is looking for short-term gains. One needs to understand that the benefits of a 3PL are seen in the long-term. One may not save money in the first few weeks, or maybe months, but the savings will start to roll in later.

2.       3PLs want a mutual beneficial business strategy: One must understand that outsourcing is not a business strategy, it is only a small portion of a business strategy. The key to making this work is aligning the business strategy with the long-term strategy of the 3PL.

3.       There are many different types of 3PL services: They come in all shapes and sizes. All 3PLs must be given an equal opportunity to work with the company. One must look at the whole picture, and select a 3PL that goes beyond what a company actually needs. In addition, partnering with a 3PL offering one-stop solutions is a bonus. Simply put, one should be able to complete all outsourcing requirements with one 3PL that can connect with others if needed.

4.       3PLs are fruitless without collaboration: A 3PL can provide a company with plenty of metrics, but the company needs to let the 3PL know the problem if the employees are not happy with a specific process. Therefore, the company is more important part of the supply chain’s chain of command. As a result, the company should collaborate on both sides of the bridge (employees and 3PLs) to ensure that everybody gains out of their business relationship.

Outsourcing is a great opportunity for a company, however not all of them are ready for the expansion and capability granted by outsourcing. But a company should prepare itself for outsourcing by understanding where it stands and stays realistic in its expectations when outsourcing logistics.