A SUPPLY CHAIN is comprised of all the businesses and individual contributors involved in creating a product, from raw materials to finished merchandise. LOGISTICS is a specialized field of its own comprised of shipping, warehousing, courier services, road/rail transportation, and air freight.
Retail companies become involved in supply chain management to control product quality, inventory levels, timing, and expenses. In a global economy, supply chain management often includes dealings with companies and individual contributors in other countries, which requires involvement in politics, trade and tariff laws, quality control, and international relationships.
Examples of supply chain activities include farming, refining, design, manufacturing, packaging, and transportation. Because global supply chains are both logistically and technologically complicated, there are now global supply chain management specialists and firms who oversee the process for many different retail companies.
As consuming trends increasingly move towards digital purchases shipped from a central warehouse facility directly to the consumer, the largest retail companies are going to be increasingly involved with supply chain management and logistics.
The Role of Logistics in Supply Chain Management
Globally, Logistics is a $4 trillion business segment. That means that moving and storing goods around the planet is 10% of the global GDP.
The Beginning of Supply Chain and Logistics
“Supply chain” was first used as a military term in the early 1900s to describe the process of getting food, weapons, ammunition, etc. to the front line of battles. It involved creating “supply points” between the military base and the battlefields.
“Logistics” was also a military-related word, first used in 1838 in the book “The Art of War, which was written by a French General in Napoleon’s army.
Supply Chain and Logistics Facts and Statistics
It’s estimated that it costs $.37 to deliver a box of cereal to the breakfast table in the U.S. (source: Council of Supply Chain Management Professionals – CSCMP).
Barcodes were first used to track and label railroad cars. The first product using a barcode was a pack of Wrigley’s gum scanned in a supermarket in 1974.
Approximately 70& of all U.S. freight is transported by trucks each year. (source: PLS Logistics).
In 2015, approximately 671 billion dollars of manufactured and retailed goods were transported in the U.S. (source: PLS Logistics).
Electronics, Furniture, Food, and Clothing are the categories of products that are shipped most often in the U.S. (source: PLS Logistics).