There is some debate on whether logistics and supply chain management are the same. However, though they often overlap, logistics and supply chain management are not interchangeable.
Logistics is always changing as customer trends change. Training in logistics helps employees and companies to stay on top of best practices.
A company can use training to improve its ability to analyze customer demand, design products, and distribute strategies.
This article will briefly discuss the differences between the two concepts, so continue reading to learn more.
Logistics can be described as the planning and implementation of goods transportation. This flow needs to run forward and in reverse to be successful.
If you work in shipping, receiving, or storing inventory, you work in logistics. The end goal of logistics is to service the supply chain and deliver a finished product to the consumer.
Within the industry, there are further classifications: outbound and inbound logistics. Inbound logistics is associated with the manufacturing process and handling materials needed to produce a good.
Outbound logistics is concerned primarily with delivering finished products to the customer.
Supply Chain Management
Managing supply chains is several concept bundled into one, including the entire logistics industry. As a supply chain manager, you will work with multiple companies like hardware distributors and retailers to optimize the process.
Essentially, logistics is an element of the larger supply chain. The goal of supply chain managers is to increase their relative advantage over competitors in terms of cost, where logistics is concerned with the end customer’s satisfaction.
Though supply chains and logistics are very similar, they are their own industries. If you work in logistics, chances are you have a relatively narrow view of the overall distribution of goods.
If you work for a supply chain management team, you look at a larger overall picture to optimize the efficiency of products moving from one distributor to the next.
Finding the right balance between customer satisfaction and cutting costs in the supply chain is critical for any successful business.
Are Supply Chain Management and Logistics The Same?
Logistics and supply chain management both focus on the movement of goods from their point of origin to their destination.
Both require coordination of labor and supplies to ensure that items move through the supply chain correctly. Although logistics is an important component of supply chain management, it is only one part of the equation.
Similarities in Supply Chain Management and Logistics
Logistics and supply chain management are responsible for moving, storing, and delivering goods as efficiently and effectively as possible.
Supply chain management is the strategic direction for inbound and outbound logistics.
Common aspects of SCM/logistics are:
- Both are focused on information, goods, and services.
- Both are designed to help the company succeed and set it apart from its competitors.
- Both aim to improve customer satisfaction.
- Both revolve around the flow of goods or services from the supplier to the manufacturer to the wholesaler and then to the consumer.
What is the Difference Between Supply Chain Management and Logistics?
Supply chain management is the process of planning, sourcing, producing goods, and handling returns. Logistics is about ensuring the right products are in the right place at the right time and getting them there.
Key Differences between Supply Chain Management and Logistics
It should be obvious that supply chain management and logistics overlap, but they have different scopes and focus.
The key differences between SCM & logistics are:
- Logistics is a part of supply chain management. SCM encompasses a range of activities, such as production and inventory planning and labor planning. It also includes manufacturing and delivering goods or services.
- SCM focuses on improving processes to gain competitive advantages. While logistics focuses on meeting customer expectations and needs,
- Logistics focuses on the cost-effective and efficient delivery of goods to customers.
- Supply Chain Management controls the transformation of raw materials into finished products that move from the producer to the warehouse to the retailer and consumer.
- The military first used logistics. Many historians credit Alexander The Great, born in 356 B.C., as a logistics master.
- Supply chain management was established in the 20th century. Experts credit Keith Oliver, a logistician, as being the one who first coined supply chain management in 1980.
Logistics and Supply Chain Management
Logistics are key components of supply chain management. They manage the movement and storage and the reports and documents that document those movements.
Logistics refers to the many transportation methods used to move inventory from one place to another. This component is crucial to supply chain management. It determines where goods can be stored at each stage until they are needed elsewhere.
Why Logistics are So Important for Supply Chains
Supply chains depend on logistics because they track and manage the people and resources required to store and transport goods and services. Logistics ensure that products and materials move reliably and within budget.
Logistics that support supply chains include:
- Delivering the best products at the right moment
- Increasing efficiency and reducing costs.
- Helping customers retain their loyalty and increase sales.
- A unique proposition for businesses.
- Delivering goods from the most economical location for production to the customer’s place.