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

You go to a stationary store and ask for a pen. That pen was manufactured in a factory, located hundreds of miles away from the store you're at. Now you take the pen into your hand and write a few words with it. Impressed with the product, you google the manufacturer ABC pens -
Image result for What is the difference between supply chain, operations, and logistics?
Using this as an example, lets define all the above
  1. Operations - A broad term covering every department present at the factory site enabling the manufacture of pens - human resources, power, water, maintenance, machinery, security, information technology etc. When the CEO says “Our operational costs for this year have gone up”, he means they had to spend more money to produce a pen per se this year as compared to the last.
  2. Supply Chain - Supply chain consists of a chain of suppliers - individuals, their factories and trucks(or trains). Lets say companies A, B and C supply ink, plastics and lead to ABC pens respectively.
Following constitute the supply chain of ABC pens
A - supplier of ink to ABC pens
B - supplier of plastics to ABC pens
C - supplier of lead to ABC pens
However if we drill down, A, the ink supplier will have his own supply chain from where he will be procuring raw materials to manufacture ink while B and C will have their own supply chains supporting them to manufacture plastics and lead respectively. When the CEO says “Prices have gone up across the supply chain”, he means that his suppliers supplied ink(or plastics or lead) to him at a higher price which in turn led to increase in the price of the pen.
3. Logistics - Logistics is a fraction of supply chain. It only includes the transportation component of the whole deal. For ABC pens, there will be inflow of raw materials and outflow of finished products i.e pens. Logistics department of ABC pens manages both inflow and outflow i.e. they take care of receiving ink,lead and plastics into the factory, putting them on to the conveyor belt, collecting the pens flowing at the other end of the belt and transporting them to dealers including the stationary shop you bought that shiny little pen from. When the CEO says “We’re working on the logistics to get to the customer”, he basically means they are working to find a solution to ship the pens to the customer.

Comments

Post a Comment

Popular posts from this blog

The future of supply chain and logistics

The future of supply chain and logistics, in my view, revolves around several key trends, including the last mile, drones, and self-driving trucks. These trends at the intersection of technology and logistics evolve out of a long history of innovation. In fact, i nnovation in transportation  has helped to shape our world in powerful ways. In 1869, Leland Stanford drove the Golden Spike into the ground in Utah, creating the first coast-to-coast railroad. In 1956, Malcolm McLain refitted an oil tanker to carry 58 shipping containers from Newark to Houston. Both of these breakthroughs helped the US to build a world-class infrastructure and lead the global economy. Today, we are in the early stages of a powerful technology disruption that will reshape our world in even more significant ways. How will drones shift freight patterns? Will self-driving trucks take over the roads? Can 3-D printers enable companies to compress their supply chains? Will “the Amazon effect” spark a new ...
Read more

Musharraf pressured me to read statement on nuclear proliferation, claims Dr Qadeer

Image
LAHORE:  In a letter written to the Lahore High Court chief justice, the pioneer of Pakistan’s nuclear programme Dr Abdul Qadeer Khan claimed that former president General (retd) Pervez Musharraf, under the influence of the United States, had pressured on him to read a statement written by him [Musharraf] on the television. According to Dr Qadeer, Musharraf had promised him that the nuclear scientist would be restored after a few days of the speech but Musharraf did not abide by his promise. Former prime minister Chaudhry Shujaat Hussain and lawyer SM Zafar were also witnesses in this matter, he added. Following no response from the provincial chief justice Sardar Shamim Ahmed Khan, Dr Qadeer filed a writ petition in the Lahore High Court requesting to allow him to move freely and appear in-person in a case already pending at the court, restraining the security officials from creating any hindrance in doing so. Dr AQ Khan makes plea for free movement A lawyers’ delegatio...
Read more

Sustainable Earth – science, policy, society

Image
Earth Day’ was first celebrated in 1970 and gave voice to many concerns about the global environment. Scientists played a major role in drawing attention to our impact on the planet and millions marched in response. Across the world nations, cities, businesses and communities began to address environmental issues. The 1970s and 80s saw the rise of environmental science, environmental protection agencies, environmental policy and environmental assessment with the worst pollution of air, water and land being addressed. But deeper issues about our consumption of energy, materials, food and forests began to surface and serious questions were asked about global limits and the pursuit of single-minded economic development. Should we stop economic growth? What about the 1 billion people in extreme poverty? The UN’s World Commission on Environment and Development in 1987 resolved this issue in theory by creating the idea of ‘sustainable development’. This suggested that we could grow ec...
Read more