What are the Differences Between Logistics and Supply Chain Management?

What are best practices followed in Supply Chain Management?

In the dynamic world of global commerce, the supply chains are important so that sending, receiving, and storing products and goods are where they should be. That is why the terms “supply chain” and “logistics” have become interconnected and at times used interchangeably; however, it is vital to note that there are essential differences between the two such as their respective functions, results, inputs, and capabilities.

To make things short generally, logistics especially focuses on the functions of transporting and storing products and goods between the different supply chains while supply chains are the ones in charge of the sourcing, processing and the delivery of goods to the end receiver, the customers. 

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In this article we will be discussing the key differences between supply chain management and logistics.

What is Supply Chain Management?

According to NC State University, Supply chain management (SCM) is the active management of supply chain activities to maximize customer value and achieve a sustainable competitive advantage. It represents a conscious effort by the supply chain firms to develop and run supply chains in the most effective & efficient ways possible. 

Supply chain activities cover everything from product development, sourcing, production, and logistics, as well as the information systems needed to coordinate these activities. The organizations that make up the supply chain are “linked” together through physical flows and information flows.

What is Logistics?

According to TechTarget, Logistics is the process of planning and executing the efficient transportation and storage of goods from the point of origin to the point of consumption. The goal of logistics is to meet customer requirements in a timely, cost-effective manner.

Originally, logistics played the vital role of moving military personnel, equipment and goods. While logistics is as important as ever in the military, the term today is more commonly used in the context of moving commercial goods within the supply chain.

What are the Differences Between Logistics and Supply Chain Management?

  1. Process

The main difference between logistics and supply chain management is how they do their processes in which logistics is mostly on planning and executing the transportation and storage of goods from one point to another while supply chain management’s process is the coordination and effective management of supply chain of an organization

  1. Objectives

Another difference between the two is their objectives. The objectives of logistics are to meet the gap between the time of production and consumption of goods and products as well as figuring out how to fill the gap of distance by transporting goods and products efficiently in the best delivery time possible.

While supply chain management’s objectives are to reduce cost, improve the overall organization performance and customer satisfaction by improving product or service delivery to the consumer for better customer experience as well as meeting their demands. 

  1. Number of organizations involved

Logistics is only involved with organization while supply chain management is involved with more than one organization such as coordination of different suppliers, various intermediaries, distributors and a variety of customers. 

  1. Part of a Whole

It is important to note that logistics is part of the supply chain management. The Council of Supply Chain Management Professionals states that logistics is, “part of the supply chain process that plans, implements and controls the efficient, effective 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’s requirements.”

Why Logistics and Supply Chain Management are Important

Logistics is an old term, initially created as a part of military operations in which it meant the transportation and storage of soldiers and military equipment. However, these days it is not only used exclusively for the military but is part of other fields particularly under the supply chain management. The supply chain management encompasses logistics as a whole as such both terms have become interconnected and at times confused. 

In this energetic business age, many global commerce businesses need efficient logistics and supply chain management to keep the flow of their business moving and where it should be. Efficient management helps you grow and thrive in  your business as such, one cannot exist without the other.