Supply chain management and logistics are two terms that are occasionally used interchangeably. Some argue that the two concepts are interchangeable, and that supply chain management is the “new” logistics.
To make matters worse, according to the blog of PLS Logistics Services, a logistics management organization in Pennsylvania, what is referred to as supply chain management in the United States is referred to as logistics management in Europe.
The answers differed depending on the functions of a supply chain or pharmaceutical warehousing expert handled when the subject was given in an Inbound Logistics article. Following are some comments from their readers:
• “Today there isn’t a difference,” American Gypsum’s Wayne Johnson remarked.
• “Supply chain management encompasses the field of logistics, and logistics is a collection of sub-processes inside SCM,” National Distribution Centers’ Michael Kirby explained.
• “A ‘supply chain management’ organization is usually a third-party operator that manages the complete overall movement of merchandise, whether incoming or outgoing,” Associated Transport Systems, Inc.’s William Behrens explained.
Many of these functional areas, such as purchasing, materials handling, logistics, transportation, inventory control, and supply chain management, have continued to expand, causing many of them to intersect. Some of these phrases, such as logistics and supply chain management, have hazy definitions as a result of this overlap.
While there are some parallels between these two phrases, they are distinct concepts with distinct meanings. Logistics refers to the transportation, storage, and flow of commodities, services, and information within the broader supply chain, whereas supply chain management is an overarching concept that links together different operations to generate competitive advantage.
What is Supply Chain Management, and how does it work?
According to Michigan State University instructors in the text Supply Chain Logistics Management, supply chain management entails collaboration between companies to connect suppliers, customers, and other partners in order to increase efficiency and produce value for the end consumer. Supply chain management actions are viewed as strategic decisions in the textbook, which establishes “the operational framework within which logistics is done.”
The efforts of several companies working together as a supply chain assist regulate the flow of raw materials and ensure that the finished goods are valuable. Supply chain managers coordinate efforts across departments and corporations to ensure that a final product not only reaches the end user but also fulfills all specifications. The logistics network is only a minor portion of the wider, all-encompassing supply chain.
What exactly is logistics?
“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 requirements,” according to the Council of Supply Chain Management Professionals.
Professors at Michigan State University define logistics as activities such as transportation, warehousing, packing, and other activities that move and position inventory, as well as their role in synchronizing the supply chain.
The goal of logistics is to ensure that the consumer obtains the required goods at the appropriate time and location, with the appropriate quality and price. Inbound logistics and outbound logistics are the two subcategories of this procedure.
The operations involved in obtaining materials, managing, storing, and transferring them are referred to as inbound logistics. Outbound logistics refers to the tasks of collecting, maintaining, and distributing goods to customers. Logistics also includes processes like packing and fulfilling orders, warehousing, stock management, and ensuring supply and demand equilibrium.
It’s vital to understand that, while the terms aren’t interchangeable, they do complement one another. It is impossible for one process to exist without the other. Here are some major distinctions between the two terms that will assist you avoid conflating the two.
• Supply chain management is a method of connecting major business operations within and across organizations to create a high-performance business model that generates competitive advantage.
• The transportation, storage, and flow of commodities, services, and information within and beyond an organization is referred to as logistics.
• The primary goal of supply chain is to gain a competitive edge, whereas the primary goal of logistics is to meet consumer needs.
• Logistics is a term that has been around for a long time, originating in the military, although supply chain management is a newer one.
• Within the supply chain, logistics is an activity.