Last weekend I ran into a Manager of a large multinational, which a few months ago had interviewed me for a vacancy in a new department. During the interview, I think we both realized that I did not meet the profile they are looking for, both by line of business, and also a bit because of my youth, not to mention that I was not totally sure that I wanted a job change.
Back to the present day, I greeted him after recognizing it and before his slight face of discomfort I commented that there was no resentment and that within everything I was flattered by the opportunity to be considered by a company of such importance and for having known it (previous to the interview I did a little research on her and I saw that she was the director of several very important projects). I make this short introduction because much of what we discussed in that interview is related to this publication.
During the interview, upon viewing my CV, she identified me as a logistics sector professional with some experience in project execution and quality. Later, he explained to me that the vacancy "was not containerized and that the line there was another world." I tried to explain to him that I had made my last training efforts to become a project manager and an engineer mainly focused on the development of supply chains, so the position was not totally different from my profile. A simple “well, but it's the same, nothing is containers here” was her response to my comments and it is what today, ten months later, serves as the “background” to this post.
I never thought about the depth of their comments, but the reality is that there are many people who believe that logistics is limited to a simple container, and even worse, they have the idea that logistics and supply chain are the same. This is a very common mistake that he considered should not occur in countries like Panama, where we have areas such as free zones, ports of the largest in the region, new multinationals coming to operate every day and a service economy of the which the logistics sector is a big part of.
Logistics is the planning, execution and control of the delivery of products to customers in the correct quantity, form and time. To accomplish this, logistics typically involves transportation and storage management. In this sense, the term supply chain is a much more evolved concept, as it includes additional elements to logistics, from obtaining and purchasing materials, manufacturing the product and delivering it to the customer. This order makes it clear that logistics is just one more component within the supply chain. Definitely an important component that can lead to savings and many optimizations, but far from being the whole of the supply chain.
With this in mind, let's develop an easy example where we will see some of these concepts in practice:
I have a client who asked me to deliver three red cards to their downtown location by Friday. From a logistics viewpoint, this means that I must proceed to look for the three red cards in my warehouse, plan the movement of my transport fleet to make the delivery, load the cards in a truck and then make sure that all three are delivered. boxes in good condition and meeting the promised delivery time.
What about the three red cards requested in the supply chain ?:
Well, if I need three red cards then I must make sure to get the material of the three cards, in quantity and quality. If they are not naturally red, I must get red paint to meet one of my client's requirements. The material is taken to my factory where the boxes are built and painted. The boxes are stored until the order is processed and the logistics activities are carried out to make the delivery.
Obviously, during all these steps, both examples required resources, such as people, infrastructure and IT support. In both, there could have been subcontracted processes and there must have been money in between for payments to suppliers, collaborators, lessors, purchase of materials, trucks and any related expenses, without forgetting the payment of our client for the product & service provided.
Supply chains operate on 3 channels; The physical channel, the information channel and the financial channel. The reality is that we could say that logistics also has the same channels (logistics is typically limited to the physical channel of the supply chain), but with very different objectives. While logistics seeks to offer a quality service by delivering products to customers at the lowest cost; The supply chain wants to make sure that all costs in the chain are kept under control, so it is necessary from the beginning to find the best raw materials at a good price.
Continuing to refer to a logistics concept as a whole, does not allow us to see the activities that a company performs under process management; locking us in a silo and killing the flow of the three channels I mentioned earlier. The reality is that neither logistics nor the supply chain are limited to "one container", they are not a single activity. Both require various activities to be completed that must be designed with the client's requirements in mind to accomplish their mission.
I would like to know what you think, how do you think the supply chain and logistics help the development of a business? Again, your feedback is highly appreciated.
