In the E-commerce world, logistics and supply chain management are the life-blood of the business. There are innumerable similarities between logistics and supply chain management. The road that separates supply chain management from logistics is quite blurred, and hence both the terms are often used interchangeably. To understand this blurry road, you need to focus on their different roles and responsibilities.
Before heading on to the differences between logistics and supply chain management, let’s get an overview of what they mean actually!
What is Logistics Management?
Logistics, in common parlance, refers to the process of planning and managing resources like man, material, equipment, inventory etc. in such a way that they are acquired, stored and transported to their final destination. In other words, logistics is ensuring that all the resources are at the right place, in the right position, and at the right time so that the business’s goal to meet the consumer requirement is accomplished.
Note: Poor logistics can adversely impact the bottom line of the business. Collaborate with TruckGuru which provides advanced and comprehensive logistics services that can help you reduce your operational costs while improving your customer relations.
What is Supply Chain Management (SCM)?
Supply chain management, in simple terms, is the process of managing the entire flow of products or services which embodies moving raw material from a supplier to another supplier that transforms it into a final product and sends it to another supplier that directly deals with the customer.
So you can visualize that throughout the process a chain-like structure is created and hence this entire process is known as Supply Chain Management (SCM).
So from this, you might get an idea about the differences between logistics and supply chain management. Still confused? No worries, here’s a more in-depth analysis that is clear as day and gets you a cluster-clear picture of both aspects.
Difference between Logistics and Supply Chain Management
Although logistics and supply chain management intersect each other at a certain point, but they are different from each other in reality. To understand this perfectly, go with the flow without skipping any point!
1. Coverage
· Assume, your body as a supply chain management. It has different organs which perform different activities to keep you active or makes you live your life. Now, assume logistics as respiratory system or digestion system or any other. From this example, one can conclude that supply chain management is a set of various activities like purchasing, manufacturing, planning, warehousing, delivery, logistics and customer services.
· However, logistics is part of supply chain management. It’s an activity without which supply chain management is incomplete. Logistics covers storage, warehousing, material handling, packaging, transportation, information and control.
2. Purpose
· Logistics aims to provide timely delivery so that the business reaches the customers’ needs and expectations. The main focus of logistics is on consumer satisfaction.
· Supply Chain Management aims to optimize the supply chain process in the most efficient and cost-effective way in order to stay ahead of the competitors. The main focus of supply chain management is on competitive advantages.
3. Cycle of Working
· Supply management, distribution management, production management, reverse logistics and product returns – this is how the logistic cycle works. In short, it is a process of integration and maintenance which embodies the flow and storage of goods or products within the company.
· Demand management, supply management, sales and operation planning and product portfolio management – this is how the supply chain management works. These terms of work seem small or little but it consists of numerous activities that should be done with utmost care in order to accomplish them successfully.
4. Commitments
· Logistics are committed to the movement and transport of goods or products within a company.
· Supply chain management is committed to transforming raw materials into finished goods and transporting them from producer to manufacturer so that goods get distributed to wholesalers or retailers who can directly deliver them to the consumer.
5. Organization involved
· Logistics involves only a single organization which means its role is limited inside the company.
· Whereas, multiple organizations or parties like suppliers, intermediaries, distributors, customers etc. are involved in supply chain management.
6. Evolution of Concept
· Logistics is the traditional concept that evolved earlier. It is a fraction of supply chain management.
· Supply chain management is a modern concept. It is the new or updated version of logistics.
7. Benefits
· Delivery fulfillment, enhanced distribution network, cost reduction, improved customer experience, boosting profitability, etc. are the major benefits of logistics.
· Shipping optimization, better quality control, stronger cash flow, better collaboration with suppliers, improved risk mitigation, etc. are the major benefits of supply chain management.
8. History
· Logistics is a term which emerged from a military background, many years ago and deals with the movement of military goods and supplies. Historians believe Alexander the Great, born in 356 B.C., as the Master of Logistics.
· While, supply chain management is a modern concept that arrived in the 20th century out of the logistics industry. According to historians, logistician Keith Oliver is the person who coined the term ‘supply chain management’ in the early 1980s.
9. Software
· Envision, ViewPoint logistics, Acumatica ERP, FreightMaster, etc. are popular logistics software. Warehouse management systems and transportation management systems are used for logistics.
· Oracle, SAP, High Jump, JDA, etc. are the popular supply chain management software. Customer relationship management, big data, and radio frequency identification are used for SCM.
10. Professionalism
· A person who handles all the aspects of logistics management of an organization that involves the function to control, coordinating, distributing and delivering the goods to the right destination is known as Logistics Manager.
· A person who manages the entire flow of goods, resources and information required by the supply chain to ensure the performance and organizational goals is known as the Supply Chain Manager.
Hence, logistics allows supply chain management to keep moving ahead, but there are multiple activities involved in supply chain management that separate the roads and make them different. Both are essential to run the e-commerce industry. Hope you’ve enjoyed reading. For more such interesting information stay tuned with Truck Guru, a leading transport and logistics service provider!