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What is logistics and supply chain management?

Updated on 09 November, 2023

Shivangi Mishra

Shivangi Mishra

Sr. Content Editor

What is logistics and supply chain management? You’ll be intrigued to know that Keith Oliver, a consultant with Booz Allen Hamilton, first used the term supply chain management way back in 1982. The practice and concept would require yet another decade to gain more importance in corporate/business circles. It became imperative when companies started relooking their supply chains and coming up with ways and means of optimizing their operations and lowering costs. They also started the integration of hitherto isolated functions like delivery, planning, and manufacturing within the spectrum of SCM (supply chain management), which also expanded to include risk management throughout the process. Doesn’t this sound interesting to you? 

If it does, then you’re certainly eyeing a career in logistics and supply chain management! Some facts will drive home the relevance of SCM at a broader level. The US alone employs more than 5 million people in warehousing and transportation, as per the Bureau of Labour Statistics’ figures. At the same time, shipping is a trillion-dollar sector in its own right while being a pivotal part of the global supply chain. These findings only point to the huge and ever-increasing importance of the field. 

What is logistics and supply chain management? 

What is logistics management? What is supply chain management and why is it important? The answers to your questions can be listed here for a better understanding: 

  • Logistics or logistics management refers to the efficient and effective management of products and services, enabling consumers to get the right products in the right amounts at the right time and at competitive prices. 
  • Inbound logistics indicates movements of raw materials and goods to companies from their suppliers. Outbound logistics is about the movement of finished goods to consumers from companies. 
  • Supply chains are networks of entities which are involved in the activities and procedures which enable the production and transportation of products and services for customers. Supply chain management is the organization and coordination of production, location, inventory, and transportation amongst participants within the supply chain. 
  • Supply chain management involves building and managing relationships with manufacturers, suppliers, retailers, and transportation players for enabling the most cost-effective and efficient way to get products delivered to their customers. 

What is the meaning of supply chain management?

 It can be illustrated through some other vital points: 

  • Supply chain management involves managing the flow of products and services, while encompassing processes for the transformation of raw materials into finished products. It means streamlining and organizing supply-side business operations for maximizing the value given to customers. 
  • SCM means centralized management of all processes in this regard. 
  • It is important since companies can manage supply chains better to lower extra costs and deliver products more efficiently and quickly to consumers. 
  • Proper supply chain management strategies help companies avoid consumer issues, lawsuits, and costly recalls in many cases. 
  • The key elements of SCM include planning, sourcing, production, distribution, and also returns. 

An IBM report also states how good supply chain management practices and frameworks lower wastage, costs, and time involved in the entire production cycle. 

Activities involved in SCM

There are several activities that are a part of the supply chain management framework. They include the following: 

  • Planning- The supply chain should be backed up by proper strategizing/planning for managing all resources needed for meeting consumer demand. Metrics have to be chalked out for working out effectiveness and efficiency on every parameter, as per the goals of the company. 
  • Sourcing- Suppliers have to be selected for providing services/goods/materials for developing products while setting up procedures for tracking and managing relationships with them accordingly. Some procedures include receipts, orders, inventory management, and authorization of supplier payments. 
  • Manufacturing- This includes organizing activities necessary for the acceptance of raw materials, along with product manufacturing, quality testing, packaging for shipping, and delivery scheduling. 
  • Logistics and Delivery- This includes coordination of orders, delivery scheduling, dispatching of loads, customer invoicing, and payment receipts. 
  • Returning- This is the development of a process/network for getting back products which are not desired, excessive, or defective for consumers. 

The future of SCM 

The future of supply chain management (SCM) may encapsulate some of these aspects: 

  • Higher emphasis on risk management and resilience throughout the supply chain, especially for tackling disruptions. 
  • Higher usage of blockchain and digital twins of supply chains for enabling better decision-making and real-time information inputs. 
  • Supply chain as a service or SCaaS as a major solution. 
  • Circular nature of supply chains for zero-wastage processes and cloud-based solutions. 
  • IoT, AI and other analytics for better decision-making, insights, tracking, and forecasting, along with robotics and automation for higher innovation

KPMG has outlined future supply chain management as being more tailored towards customer-centricity and driven by demand and automation alike. It has also talked about sustainable and ethical supply chains with proper human resources, technologies, data-based decision-making, and micro-supply chains for higher decentralization. Gartner feels that sustainability will be fully integrated in supply chain management by 2030 while McKinsey reports highlight how enhancing the resilience of supply chains is crucial, since companies see approximately 1-2 months of disruption in total after every 3.7 years. The financial impact of the same throughout ten years could be almost 30% of a year’s EBITDA for these companies as per McKinsey Global Institute reports. It also states how future supply chains will be more agile and customer-centric. 

Why Choose Logistics and Supply Chain Management to Study? 

Choosing logistics and supply chain management as a study field could be a great decision on several counts. Here are some reasons that you should note: 

  1. Undisputed Importance- Supply chain management is basically the wheel that drives the world! It’s global, regional, national, local- whichever way you see it! Supply chain management will always be a flourishing field since it is the backbone of the economy. Some studies indicate how supply chains alone contribute more than 127 billion pounds and employ a whopping 1.7 million individuals in the UK! DHL has also stated how there are insufficient supply chain managers to meet growing demand despite the steady growth of the field. Put these two factors together and you get the drift! 
  2. Crucial Skill-Building- Supply chain management programs will help you build several technical and analytical skills for better decision-making and leadership. You will learn vital skills like strategic management, risk management, logistics management, supply management, procurement, sustainability and ethics of supply chains, scheduling, location management, routing, resource allocation, building teams, and relationship management. Not every field gives you such a wide spectrum of learning!
  3. Fulfilling Careers- Supply chain management can help you build a rewarding global career. You can find openings across leading logistics and transportation companies, e-commerce players, and also in areas like finance, HR, and business, along with fields like transport management, inventory management, production management, and procurement management. Supply chain executives earn an estimated £30,420 while analysts can earn up to £34,601. Supply chain managers can earn £46,998 as their average salaries. Of course, demand has skyrocketed for qualified professionals, with the UK Government reporting close to 1,000 vacancies just in procurement. There are opportunities galore across several established and emerging global economies alike. 
  4. Stability Matters- Several reports for the industry in Canada indicate how 93% of professionals in the supply chain arena retained their jobs despite the coronavirus outbreak in 2021.  A whopping 74% did not witness any financial impact due to the same. Job Bank also forecasts 9,000 new openings till 2028, with 68% of workers as per Supply Chain Canada, seeing growth in their workloads. With steady demand, supply chain management can ensure a stable career for skilled professionals. 

Modules Covered in the SCM Courses

SCM courses differ across institutions, countries, and academic levels. However, here are a few modules that you may expect in one form or another: 

  • Introduction to supply chain management 
  • Logistics and transportation 
  • Logistics and warehousing
  • Logistics management and customer service
  • Logistics and financial management 
  • Marketing logistics and business strategy
  • Production or inventory planning, transportation, and procurement
  • Human resource management and logistics 
  • Forecasting
  • Lean Six Sigma
  • Risk management for supply chains 
  • Microsoft Excel and other software tools
  • Forecasting  demand 
  • Warehouse management 

Leading Organizations you can work at 

Gartner has released a list of top companies for 2021, which you can note in this regard. 

  • Cisco Systems
  • Colgate-Palmolive
  • Johnson & Johnson 
  • Schneider Electric 
  • Nestle
  • Intel
  • PepsiCo
  • Walmart
  • L’Oreal
  • Alibaba
  • AbbVie
  • Nike
  • Inditex
  • Dell Technologies
  • HP Inc. 
  • Lenovo 
  • Diageo
  • Coca Cola Company
  • British American Tobacco 
  • BMW
  • Pfizer
  • Starbucks 
  • General Mills
  • Bristol Myers Squibb
  • 3M

Job Positions and expected remuneration 

Here are some top job positions for supply chain management aspirants with their average salaries: 

  1. Inventory Manager- $60,535 annually 
  2. Logistics Manager- $61,605 annually 
  3. Logistics Planner- $61,227 annually 
  4. Transport Manager- $63,508 annually 
  5. Facilities Manager- $64,084 annually 
  6. Supply Chain Specialist- $65,151 annually 
  7. Distribution Manager- $67,912 annually 
  8. Production Manager- $68,230 annually 
  9. Purchasing Manager- $70,396 annually 
  10. Supply Chain Manager- $80,566 annually 
  11. Supply Chain Analyst- $71,307 annually 
  12. Quality Manager- $82,826 annually 

Conclusion

As you can see, supply chain management and logistics represents a fast-growing field for aspirants, one that comes with lucrative salaries, excellent future progression opportunities, higher stability, and scope of life-long learning. Does it sound exciting? Join the bandwagon today!

Frequently Asked Questions

What does a logistics manager do?

Logistics managers supervise shipping, purchases, and operations which are linked to supply chain management. They  have to coordinate amongst various vital business operations as a result. 

What is logistics in supply chain management?

Logistics is one part of the supply chain which enables the storage or delivery of finished products/services to customers, including final consumers, manufacturers, and distributors. 

What is outsourcing in supply chain management?

Outsourcing means hiring a third-party supply chain management provider for taking care of various tasks and activities in the process, while simultaneously optimizing operations and lowering costs. 

What is reverse logistics in supply chain management?

Reverse logistics means the procedure of returning products from final consumers through the company supply chain to either the manufacturer or the retailer. 

What is supply chain management in e-commerce?

E-commerce supply chain management covers raw material procurement, production, distribution of suitable products at suitable times, supply and demand management, inventory monitoring, warehousing, order entry, distribution, order management, and delivery to the customer. 

Shivangi Mishra

Sr. Content Editor

She is an experienced writer and journalist who has extensively covered the education sector in India and Abroad. Now helping Indian aspirants realise their foreign education dream by providing them with relevant content and information through upGrad Abroad. Amateur traveller, loves to read Architectural Digest!

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