1.

The difference between logistics and supply chain management

Logistics - is the direction of the company's activities, which consists in the management of material and
related flows (money, information).

The main activities for logistics, are:

- procurement management,

- warehouse management (if any),

- transport management,

- FEA management (if any),

- management of inventory distribution.

It is possible to achieve the best results in logistics if the participants are united in one department.
Otherwise, optimization will be carried out locally in each department, which will inevitably lead to two
results:

Cost optimization within the company will not be achieved,

inter-functional conflicts will arise due to the presence of local tasks.

Supply Chain Management (SCM) is a more complex category. In contrast to logistics, SCM is about
performing the same tasks, but within a chain. That is, optimization takes place not within a company,
but when working with its counterparties.

The goal of supply chain management

► To achieve maximum competitiveness and profitability of the company, as well as the entire supply
chain network structure, including the end customer.

► In this regard, the integration and re-engineering of supply chain processes should be aimed at
improving the overall efficiency and productivity of supply chain participants.

Logistics is responsible for the physical implementation of material flow management. Efficient or
inefficient logistics can determine about 10% of business success.

SCM is responsible for balancing needs and supply throughout the customer value chain. The efficiency
or ineffectiveness of DRM can determine about 30% of business success.

Explain theory of competitive advantage and value chain

The value chain is the set of actions a company takes to bring its goods and services to market. But what
does the "chain" have to do with it? The fact is that the activities of any business can be "decomposed"
into a chain of sequential processes. For example, in order to produce telecommunications equipment,
you need to think up and patent the idea, develop the design, manufacture and assemble the device,
develop software for it and, perhaps, integrate it with external software.
Why logistics and supply chain management is important

The role of logistics in a company's work

It ensures the management of commodity flows, helps organize deliveries quickly and at a minimum
cost. Thanks to the optimization of transportation at each stage, the final cost of production is
significantly reduced.