What is supply chain

Supply chain refers to the network of various organizations, people, activities, information and resources used to transfer products or services from the production of raw materials to the hands of the final consumer. It covers the procurement of raw materials, manufacturing, logistics and transportation, warehouse management, sales and after-sales service and other links. The key goal of the supply chain is to maximize efficiency and profit while meeting customer needs.

Although it has the shadow of logistics, it is very different from logistics. The supply chain includes logistics, which is the core component of the supply chain and is responsible for the physical flow of products from production to consumption (transportation, warehousing, distribution, etc.). The supply chain is a broader network, covering the whole chain from raw material procurement to final delivery, including the integrated management of logistics, information flow, and capital flow.

What is Logistics

Logistics is the physical flow process of goods from the supply place to the receiving place. Through the basic functions of transportation, storage, loading and unloading, handling, packaging, circulation and processing, distribution and information processing, logistics realizes the space-time transfer of goods and occupies a key position in economic activities.

Supply chain and logistics relationship definition

Dimension Supply Chain Logistics
Scope Covering the whole chain: supplier → production → distribution → retail → consumer, including upstream and downstream collaboration. Focus on product flow: transportation, warehousing, packaging, loading and unloading and other specific links.
Managed Object Integrate logistics, information flow, capital flow, and coordinate multi-stakeholder. With physical flow as the core, it focuses on the efficiency and cost of goods movement.
Aim Emphasis on overall optimization (e.g. reducing total cost, improving response speed, enhancing competitiveness). Focus on execution-level optimization (e.g., lower transportation costs, shorter delivery times).
Participant Involving suppliers, manufacturers, logistics providers, distributors, retailers, consumers, etc. The main participants are logistics service providers (such as transport companies, warehousing companies).
Tech Application Rely on ERP, blockchain, big data forecasting and other global technical tools. The application of GPS tracking, automated warehousing system (WMS), route optimization algorithm and other technologies.

Of course, even at the broad level, logistics is still a subsystem of supply chain management, and its core is the optimization of physical flows (transportation, warehousing, distribution, etc.). Supply chain management is the system integration covering the whole value chain, integrating logistics, information flow, capital flow and multi-party collaboration (such as suppliers, manufacturers, distributors, etc.). Thus, logistics is the execution of the supply chain to achieve physical flow, while supply chain management is a higher-dimensional strategic system that aims to improve overall efficiency, reduce costs and meet customer needs through global optimization.

Supply chain and logistics in common

  • Same core objectives: Both seek to reduce costs and increase efficiency to improve customer satisfaction (e.g., shorten the lead time).
  • Dependent on data and technology: Processes need to be visualized and monitored in real time through technologies such as the Internet of Things (IoT) and big data analytics.
  • Affected by the external environment: All face challenges such as globalization, policies and regulations (such as customs compliance), and fluctuations in market demand.
  • Emphasis on collaboration: cross-departmental or cross-enterprise cooperation is required (such as logistics companies sharing inventory data with suppliers).

Existing problems in the supply chain

The digitization of logistics supply chains makes data breaches extremely costly (averaging $4 million) and open to attacks such as ransomware and supply chain infiltration. For example, in 2024, Airbus suffered significant losses due to a cyber attack on a logistics company.

Cloud storage and iot devices, such as RFID, expand the attack surface, allowing hackers to exploit vulnerabilities to break into warehousing or transportation systems or even orchestrate large-scale theft.

The lack of interworking of all links of the supply chain system (such as ERP, WMS, TMS) leads to poor real-time data and low quality, affecting decision-making and increasing the risk of misoperation

81% of users are concerned that logistics companies abuse location, transaction and other private data, once leaked may trigger strict supervision.

Protecting supply chain data security remains an important issue for the supply chain industry.

The information island of the supply chain is also the key factor that leads to the information asymmetry of the whole logistics industry. Every supply chain company lacks external sensitivity. A global network is urgently needed to connect them.
Breaking information silos is a problem that every supply chain enterprise needs to solve

Privacy protection is also an important factor restricting the development of the supply chain. Many users worry that logistics companies sell users’ personal information, or that key management or employees of the company can easily obtain users’ private information.

The entire logistics industry should make user privacy a priority. In the context of economic globalization, each enterprise should be able to break technical barriers and form a global logistics network.