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Logistics vs. Supply Chain Management: What Are the Differences?

Logistics manager posing in a warehouse

Although many use logistics and supply chain management (SCM) interchangeably, they cover different activities. And while they share plenty of similarities, certain differences separate these two practices. Consequently, understanding logistics vs. supply chain management is essential to any business looking to scale its operations.

When well-executed, both logistics and supply chain management can help companies make operational improvements, improve customer service, and get a competitive edge.

Are Supply Chain Management and Logistics the Same?

Although similar, logistics and supply chain management aren’t the same. Logistics focuses on the storage and movement of products in the supply chain. On the other hand, supply chain management is more comprehensive.

SCM covers all coordination between partners who have a role in the network. That includes sourcing, manufacturing, transporting, storing, and selling. The goal of supply chain management is to find processes that ensure a smooth and efficient flow of goods, ensuring a great customer experience and propelling the business forward.

While SCM manages activities between separate entities, logistics handles the internal movement of products. Moreover, SCM supports all buying, production, and distribution of goods while logistics moves and stores products between different points in the supply chain.

Logistics vs. Supply Chain Management

Supply chain management includes processes involved in sourcing and purchasing raw materials and creating products. SCM uses logistics to deliver products to customers and aims to improve the bottom line and boost the company’s competitive advantage. That means SCM develops the strategy and controls logistical activities happening in warehouses, factories, local shipping centers, etc.

Logistics is an element of the supply chain that stores or delivers finished products or services to the customer, whether that’s a consumer, distributor, or manufacturer. The objective of logistics is to deliver goods to customers on time and at a competitive price.

What Are Logistics?

Logistics involves planning and conducting the storage and movement of goods between various points in the supply chain. It coordinates people, equipment, facilities, and other resources to make sure goods move at the right time and place.

Inventory management, demand planning, material handling, transportation, and order fulfillment are the processes falling under logistics.

What Is Supply Chain Management?

SCM refers to the activities that create finished products from raw materials and deliver them to customers. It also focuses on enhancing supply chain processes. A company can continuously refine supply chain management when it has visibility across its supply chain.

Visibility allows companies to track products and services as they go through each stage of the supply chain, making it easier to see if things are going according to plan. Moreover, it gives decision-makers more time to respond to disruptions. Supply chain management involves supervising a network of sub-suppliers like manufacturers, logistics partners, etc.

Let’s use a furniture manufacturer as an example of how SCM works. As part of the SCM function, the company sources wood and other raw materials it needs from suppliers. It makes the end product and distributes them to furniture stores. SCM tackles every process involved in the movement of these items.

Similarities Between Supply Chain Management and Logistics

Both logistics and supply chain management focus on the flow of goods from the point of origin to the endpoint. Both require careful coordination of facilities, labor, and supplies to ensure goods can move through the supply chain as needed. Logistics is a vital component of SCM but just a part of the equation.

Interior of a warehouse

Logistics and supply chain management both work to move, store, and deliver items as efficiently as possible. However, SCM gives the strategic direction that governs inbound and outbound logistics. They share the same goal - to support the business’ success and distinguish it from competitors. Also, they both strive to enhance customer satisfaction.

Differences Between SCM and Logistics

Logistics and supply chain management intersect, but they are different regarding their focus and range. SCM defines the strategy and actions for planning, sourcing, manufacturing, delivering goods, and managing returns.

On the other hand, logistics focuses on the right items being at the right time in the right place and how to get them there. Below are some fundamental differences between logistics and supply chain management:

  • SCM emphasizes improving processes to build a competitive edge, while logistics work toward meeting customer expectations and demands.
  • SCM covers myriad activities, such as inventory and production planning, materials and facilities management, labor planning, manufacturing, and delivering products and services. Logistics are only a part of these activities.
  • SCM handles the development of raw materials into finished products that move from supplier to producer to storage to retailers to consumers.
  • Logistics focus on the cost-effective and efficient delivery of products and services to the customer.
  • The modern practice of SCM began in the 20th century. Many credit Keith Oliver as the person who coined the term supply chain management in the 80s.
  • The term logistics originated with the military and many credit Alexander the Great as a logistics master.

Logistical Elements of the Supply Chain

Logistical elements of the supply chain help manage products or services. Each component assists in moving materials and end products through the various steps in the supply chain. Below are the logistical elements of supply chains:

  • The information assists in tracking the status of goods and supply chain processes, informing business decisions.
  • Material handling refers to the movement of goods within a facility or delivery vehicle. It also includes the storage, transfer, and security of items throughout the manufacturing, distribution, and delivery procedures.
  • Storage refers to holding supplies at the right location in the right quantity. Companies need to balance demand and supply to prevent out-of-stock and overstock situations.
  • Warehousing controls the everyday warehouse processes like receiving, picking, packing, shipping, and put-away.
  • Unitization makes goods efficient to organize, store, and transport. It also ensures material handling gear can move goods efficiently without damaging them.
  • Transportation is responsible for moving products or services along the supply chain. It includes trains, trucks, airplanes, ships, and cars.

Supply Chain Management and Logistics Are Vital to Success

Logistics and SCM both support customer needs and work to enhance customer experience. Logistics provide direct feedback on customer demand and supply chain management uses this information to understand what customers want and plan inventory and production.

Well-organized logistics allow efficient supply chain management. And that is what Unival Logistics provides. You get end-to-end logistics solutions utilizing the latest technologies combined with tried and true methods.

Your goods will travel optimal routes in order to arrive safely and on time. You can track your packages in real-time and integrate your website's functionalities with our API. For added protection, we provide full-value insurance even for high-end goods.

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