Logistics and Transportation. Transport and logistics. Two words that we are used to seeing travel hand in hand and that we often use interchangeably. In most cases this is not a problem. However, what are the differences behind both terms? And where is the supply chain in this puzzle?
Supply chain, logistics and transport
If we had to summarize it briefly, the most visual way to do it would be to resort to the Matrioska. Like the popular Russian dolls, these three elements can be ranked from highest to lowest, nesting one inside the other. Transport would be included in logistics and this, in turn, would be a part of the supply chain.
Once sorted, let’s see what sets them apart, what are some of their unique features, and how we define them.
Transportation is the movement of things from one place to another, be it merchandise, people, energy, or animals. And therein lies its main difference, being limited to displacement tasks. In this way, some tasks that are already considered to correspond to logistics are left aside.
It is also very common, among transport providers, that one of their natural evolutions is to go from being a carrier to being considered a logistics operator. This happens as companies grow, expanding the services they offer and completing their offer.
If transport executes the movements of merchandise, we could say that logistics is in charge of managing those flows. Its strategic planning and execution tasks separate it from the most basic aspect of mere transportation. Transportation executes logistics plans.
The nature of logistics tasks is very varied. For example, packaging or packaging, something that arrives ready for the “transportation” part and whose preparation corresponds to logistics (although if we are talking about the packaging of the product itself, instead of conditioning it for transport, this task may belong to to the supply chain). Likewise, the various warehouse tasks, such as storage and order preparation, are usually located at this higher level of logistics. We also find cooperation and coordination tasks, either with other suppliers and carriers or with fleet control and vehicle maintenance.
With the Supply Chain we reach the upper link. If transportation takes the beer from the brewery to the shopping mall, it is the supply chain that deals with how the barley ends up in the hands of the consumer. That is, the entire process.
Among the tasks that the supply chain deals with are the purchase of raw materials and supplies, designing how and in what way these materials have to go from one place to another, price negotiation, control over demand and its forecasting, traceability throughout the entire chain, the choice of strategic suppliers, the location of warehouses and distribution centers, etc. And, of course, the supervision of logistics and transportation tasks. That is, it is the overall vision. It is clear the difference between these tasks and the truck that simply transports pallets, although it is an equally important part.
Logistics is about how and when something gets to a place. The supply chain of how the raw material becomes that product and the best way to get the right amount to the consumer. Logistics and transportation go hand in hand, but they are not the same.