When we talk about logistics, there’s somewhat of an air of mystery around what this actually means. Obscure terms such as supply chain management, disruption, and risk management, only add to the intrigue. Arguably, the obscurity of these concepts makes them sound altogether more complex than they are. As such, if you’re not professionally employed in or actively studying the industry, you’re unlikely to even know what these terms signify.
So, stay with us as we uncover the procedures, protocols and processes involved in logistics and supply chain management, and also, as we explain how risk management plays its part.
Logistics and Supply Chain Management Processes: What are They, Exactly?
Admittedly, unless you’re a university student who is completing a tertiary degree in the field – such as a Master’s in Supply Chain Management online, for example – you’re very unlikely to have any sort of in-depth understanding of what is involved in logistics. You may not even realise that logistics and supply chain management are not quite the same. Indeed, there are subtle differences between the two concepts that you can only become aware of if you research them. So, let us break it down for you.
The Logical Explanation: A Beginner’s Breakdown of Logistics
If we don’t know much about logistics, we can make the mistake of referring to it as supply chain management, or even, using the two terms interchangeably.
However, it’s important to be aware that voices of authority in the conversation around supply chain management vs. logistics, assert that logistics makes up just one small portion of supply chain management. That is to say, the logistical component of supply chain management is mostly focused on how to get goods out to the consumer.
Supply chain management processes, on the other hand, are multifaceted, and cover a huge variety of different procedures.
Sussing Out Supply Chains: What Does it Mean to Manage Them?
According to the experts, supply chain management incorporates the full circle of consumer goods delivery. This includes sourcing, manufacturing and producing products, as well as getting them out onto the market and to the consumer.
For this reason, supply chain management is arguably a more complex concept than just simply logistics. However, it is also important to note that several risks can disrupt the supply chain process. Keep reading to learn more about how to avoid them.
Risky Business: How to Mitigate Logistical Issues
So, what are some of the risks that can contribute to supply chain disruption? And, perhaps more importantly, how can these be avoided?
Some of the most prevalent risk-inducing factors (and how to lessen them) include:
- Miscalculating product demand.
Solution: Identify ways to make future supply chain demand more visible, and make sure your market research and forecasting are always up to date.
- When internal supply needs are not met.
Solution: To avoid this, ensure that you are working with suppliers and distributors you can trust, and who you can rely on. Cultivating positive relationships with regular suppliers is a must.
- Disruptions to manufacturing processes.
Solution: Always have a backup or contingency plan in case of an emergency, or when
things go wrong on the production line.
- External and environmental factors.
Solution: Political, socio-economic and other environmental factors can have a massive
impact on supply and demand. Stay abreast of current events and endeavour to forecast
their potential impact on your business.
- Internal business issues.
Solution: Keeping your internal procedures in check – especially in terms of managing your staff and business protocols – is essential. Fostering a culture of productivity and cohesiveness will help to ensure this.
Risk management in logistics can be hard to navigate. To be able to lessen the impact of the many factors that can influence supply chain management and logistics, we need to be able to plan and forecast effectively.
The good news? Risks such as miscalculating product demand, not having internal supply needs met, and experiencing manufacturing disruptions can all be prevented with adequate planning. Of course, external and environmental factors can be harder to manage. Despite this, having contingency plans in place can help mitigate these risks.
As they say, failing to plan is, essentially, planning to fail. So, when it comes to supply chain management and logistics, it pays to be prepared for the unexpected.