Table of Contents
It’s not uncommon to hear the terms “supply chain management” and “logistics” interchangeably. Perhaps this is because, from a high-level view, each culminates in the delivery of a product to the end user.
But thinking supply chain management is synonymous with logistics misses the point of all that SCM actually involves.
To bring clarity, let’s first hammer out a definition for logistics.
Logistics refers to the movement, storage, and distribution of goods from initial production to final delivery, completed in a way so as to meet the consumer’s expectations.
More simply, logistics is all about ensuring processes are in place so that the end-user can actually receive the product they order.
Logistics is mechanical in nature, with the focus being heavily on finding the path of least resistance when delivering to the customer.
While logistics is a rather large part of supply chain management, it is still only a part of an even larger picture.
The key difference is that, while logistics is concerned with supply chain processes in a vacuum, supply chain management takes a holistic and contextual approach.
Think of it like this …
Logistics are vital to your overall supply chain management efforts. After all, if your company literally isn’t able to physically move your products from Point A to Point B, there’s no way you’ll be able to succeed as a business.
But, supply chain management involves much more than physically delivering your products. In involves improving the intertwining and tangential aspects of manufacturing, storage, delivery, and fulfillment in a way that maximizes your organization’s productivity and allows your business to truly soar.
Reverse logistics is the process of dealing with order returns and exchanges.
As frustrating as returns may be, they’re a part of doing business. According to Statista, returns cost companies $415 billion in 2018 — meaning more than 10% of revenues from sales ended up being negated due to reversed sales and the cost of processing these reversals.
Though the losses are inherent to the returns process, it is possible for companies to minimize the various other costs associated with processing returns, such as:
A poorly-planned returns process will, without question, be detrimental to your overall supply chain and your relationship with your customers. A fully-optimized returns management plan will easily allow you to make the best out of a less-than-ideal situation.