Difference Between Logistics and Supply Chain Management Explained

The terms logistics and supply chain management are often interchanged. Although there are various similarities between logistics and supply chain management, they are entirely different from one another. They both represent different functions when it comes to managing goods, information and resources. Businesses must understand the difference between supply chain management and logistics in order to optimise operations in the right way and also deliver value to customers. 

In this article, we will look deeper into the difference between logistics and supply chain management in terms of definitions, along with its roles and functions.

What Is Supply Chain Management?

Supply chain management (SCM) is the entire process of efficiently producing and delivering goods or services. All the processes that come in between are considered a part of the supply chain. It involves coordinating and involving different activities and stakeholders to meet customers’ demands in the end.

Below are the key components of supply chain management:

• The first component or step in supply chain management is planning. Planning involves analysing market data, understanding customer expectations, and finding the proper means to satisfy the customer’s demand. Lack of planning may lead to sudden cost increase and unsynced and messy production and distribution processes, which in turn may cause customers to be unsatisfied.
• The next essential component is the procurement of raw materials that will be used for production purposes. This process includes identifying suppliers and also negotiating contracts apart from acquiring materials.
• Next is production, where the raw materials are converted into the final goods that are sent out to the customers.
• The next step is logistic management, which includes the transportation, warehousing, and distribution of goods.
• Apart from these processes, it is also essential that processes are overseen so that they run smoothly and glitches can be avoided.

Related – Top Supply Chain Management Companies in the world

What Is Logistics Management?

Logistics is a part of the supply chain where the finished goods are stored, preserved, and distributed. Logistics management primarily focuses on the storage and movement of goods from the point of origin to the point of destination (delivery to the customer). Planning, executing, and monitoring are also required in logistics management for the proper movement of goods.

Below are the key components of logistics management:

• One of the key components of logistics is to keep the goods secure until they are sent out for delivery. Proper warehousing is essential to maintain the quality and condition of the goods for a long time. It is significantly necessary for goods that are fragile or perishable. Proper temperature and pressure control systems are required in the warehouse. 
• Next is inventory management. Businesses must monitor stock levels to avoid situations like overstocking and understocking. 
• Another critical component of logistics management is the transportation of goods via different modes, such as rail, road or sea. It is essential to pick the proper mode of transportation to optimise resources while reducing unnecessary costs.
• One of the most vital components is order fulfilment. It involves activities to ensure that the goods were delivered to customers on the promised timeline.
• Also, in the case of returns, logistics management involves handling returns, replacing them or recycling them.

The primary goal of logistics management is to deliver goods on time while maintaining their best condition.

What Is the Difference Between Logistics and Supply Chain Management?

Logistics and supply chain management are intertwined and closely related. Logistics is an essential part of the whole supply chain management. There are some similarities, but they are essentially different. Below is a table that shows the difference between supply chain management and logistics management:

Comparison Aspect	Logistics Management	Supply Chain Management
Scope	It is a part of supply chain management that focuses more on handling goods, their movement and delivery.	It has a much larger scope. Several processes, like logistics, are part of much larger end-to-end business processes.
Objective	Ensure proper storage and transportation of goods from one place to another while maintaining efficiency.	A smooth flow in all the processes leading to timely delivery at the end, and maintaining the quality of the products to ensure customer satisfaction.
Key Activities	Warehousing, inventory control, transportation and order fulfilment.	Planning, sourcing materials, production, logistics, forecasting demand and supply chain management.
Technologies Used	Uses software like GPS, tracking, routing, and warehouse management.	Technologies that are majorly used are IoT, blockchain, ERP and AI for end-to-end assistance.
Stakeholders Involved	Logistics management involves stakeholders like transport companies, warehouse operators, and delivery partners.	It includes all the stakeholder’s rights, from the supplier and manufacturers to retailers and logistics service providers.
Primary Focus	It primarily focuses on the movement of goods up until the delivery	It focuses on all aspects of business operations, including logistics management.

Similarities Between Logistics Management and Supply Chain Management

Since logistics management and supply chain management are correlated, there are several similarities between the two. Below are significant similarities between supply chain management and logistics management:

• Both processes aim to provide efficient delivery of final goods to the customer for profit.
• Both processes eventually aim at a smooth flow of goods, whether it is between the supplier and the business or between the business and the customer.
• Both processes ultimately help to optimise resources and maximise profits.

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Conclusion

Both logistics management and supply chain management are vital processes that ensure a business’s success. As these processes are correlated and co-dependent, it is easy to get confused between them. They have similarities, yet they are pretty different from each other. Logistics management is an essential process in the whole supply chain management. Logistics mainly included storing, managing and delivering the goods that a business produces. On the other hand, supply chain management is a process that involves overseeing all the processes, from planning and acquiring raw materials for production to efficiently delivering goods to the customer. Customer satisfaction while maintaining profits is the ultimate goal of both logistics management and supply chain management.

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