There has been much discussion in recent years of the differences between the terms "distribution," "logistics," and "supply chain management." To many people, those terms are synonymous. Yet they are different, and I think it's important to distinguish between them, not only to ensure clarity of communication, but also as a way to understand the progressive levels of capabilities that companies need to develop to successfully compete today.

Here are some definitions I find useful:

• Distribution involves the outbound flow of materials from the supplier or manufacturer to customers. It naturally includes warehousing, transportation, and inventory management activities.

• Logistics, according to the Council of Logistics Management, is "that part of the supply chain that plans, implements, and controls the efficient forward and reverse flow and storage of goods, services, and related information between the point of origin and the point of consumption in order to meet customer requirements."

• Supply chain management, in my mind, is broader than logistics and includes all activities involved in the sourcing, manufacturing or conversion, storage, distribution, and delivery of goods to customers. It involves integration with channel partners, including suppliers, distributors, and customers, to create a linked channel.

That's a lot of words. But supply chain management is more than just words or a concept. In the real world, I find that companies that practice supply chain management use their operations not only to reduce costs and inventories, but also to drive up revenues. For example:

• Seven-Eleven Japan replenishes stores up to eight times a day to provide high in-stock levels, fresh products, and a varying assortment to meet customer needs at different times of the day. Its supply chain capabilities have helped Seven-Eleven Japan become the largest and most profitable convenience store in that country.

• Zara Corporation, a Spanish apparel retailer, has built an operating model that allows it to bring new products to market as well as to replenish stores three times faster than its competitors. The company has effectively used postponement strategies to hold uncut fabrics in inventory, then cut, dye, and sew to fill electronically transmitted orders. This supply chain capability allows Zara to bring hot fashion styles to market very quickly, rapidly replenish hot sellers, and maintain a high level of in-stock availability. This capability also has allowed Zara to grow its revenues at a 20-percent annual rate—far above the industry average.

•Dell Computers' "direct-to-customer" operating model is famous for its efficiency, driving down costs, and enabling Dell to maintain the lowest inventories in the computer industry. It is also a powerful revenue generator because it allows Dell to configure products that are tailored for specific customer needs.

Companies like Seven-Eleven Japan, Zara, Dell, and many others have discovered the true meaning of supply chain management in low costs, high asset productivity, and increased revenues. My advice is to follow their lead: Forget about wordy definitions, but be sure your company is using supply chain management to grow its top line.