You may be familiar with the terms logistics and distribution and at some point or the other, you must have wondered whether if both of them are the same or, is there is any difference between these two. First of all, you must understand that both these activities are different in the business sense. Both of them do the same act of collecting the goods from one place and distributing the same to the other place. Then what makes these two different?
Logistics is the process of movement of goods from one point to the other to meet a corporate or customer demand. It is a broad term as it comprises most of the business activities such as the flow of information, material handling, production, packaging, transportation, inventory management and also warehousing. Logistics is the management of the supply chain through proper strategy and plan which will help the required parties, not only in the movement of goods but also in the transaction of information. The activities of logistics include the management of transportation, material handling, and also supply and demand planning of available customers.
The term distribution has a different meaning in a different context. One thing that you must understand is that it is a part of supply chain management and it only has a much smaller scope than logistics. Distribution management refers to analyzing and planning the movement of goods from the manufacturer to the retailers and finally to the customer. The activities of the small distribution business span only to procurement of consignment from one place, and delivering the same on to the required destination. Sometimes distribution also plays a role in providing the service of collecting the payment from the destination and depositing the same as per the demand of the consigner.
In this new era of business, most of the manufacturing and distribution companies establish a well-designed supply chain or distribution channel for the efficient and effective conduct of the business. Since the distribution channel plays a major role in the timely completion of business activity, proper planning in distribution is necessary. Presently there is a trend in many large businesses to outsource the distribution activities, to decrease their burden of formulating strategy, and also to improve their focus to their core activities. Most of the online merchants or e-commerce vendors are using existing distributors to facilitate the reach of their products to the customers.