Supply chain, operations and logistics - the differences
Terms logistics and supply chain management are sometimes used interchangeably. Some say there is no difference between the two terms, that supply chain management is the “new” logistics.
To complicate matters, what is considered supply chain management in the United States is more commonly referred to as logistics management in Europe, according to the PLS Logistics blog. Services, a logistics management company in Pennsylvania.
Although these two terms have some similarities, they are actually different concepts with different meanings. Supply chain management is a holistic concept that links multiple processes to gain competitive advantage, while logistics refers to the movement, storage and flow of goods, services and information in the supply chain. global supply.
What is supply chain management?
Supply chain management, as explained by Michigan State University professors in Supply Chain Logistics Management, involves collaboration between companies to connect suppliers, customers and other partners to increase efficiency and generate value for the end consumer. The manual considers supply chain management activities to be strategic decisions, and sets out “the operational framework within which logistics are carried out. "
It is the efforts of a number of organizations working together as a supply chain that help manage the flow of raw materials and ensure that end products deliver value. Supply chain managers work with multiple functions and companies to ensure that the finished product not only reaches the end consumer, but also meets all requirements. Logistics is only a small part of the supply chain network, which is larger and encompasses all aspects.
What is logistics?
The Council of Supply Chain Management Professionals defines logistics as "a part of the supply chain process that plans, implements and controls the efficient and effective flow and storage, upstream and downstream, of goods, services. and related information between the point of origin and the point of consumption, in order to meet customer requirements ”.
As part of supply chain logistics management, Michigan State University professors define logistics as the activities - transportation, warehousing, packaging, and others - that move and position inventory and recognize its role in terms of supply chain logistics. of supply chain synchronization.
The goal of logistics is to ensure that the customer receives the desired product at the right time and in the right place, with the right quality and the right price. This process can be divided into two subcategories: inbound logistics and outbound logistics.
Inbound logistics cover activities related to obtaining materials, then handling, storing and transporting them. Outbound logistics cover activities related to collection, maintenance and distribution to the customer. Other activities, such as packing and order fulfillment, warehousing, inventory management and maintaining the balance between supply and demand, are also part of logistics.
The difference between supply chain and logistics
How are supply chain management and logistics the same?
Management of supply chain and logistics both focus on the flow of goods from the point of origin to the end point. Both disciplines require careful coordination of supplies, manpower, and facilities to ensure that items can flow through the supply chain as they should. Logistics is a key component of supply chain management, but it is only part of the equation.
Similarities Between Supply Chain Management and Logistics
Supply chain management and logistics both aim to move, store and deliver goods as efficiently as possible. Supply chain management provides the strategic direction that guides inbound and outbound logistics.
Here are some aspects common to SCM and logistics:
- Both focus on goods, services or information.
- Both have the ultimate goal of supporting the success of the business and distinguishing it from its competitors.
- Both seek to increase customer satisfaction.
- They both revolve around the same flow of goods and services, from the supplier, to the manufacturer, to the wholesaler and finally to the retailer or the consumer.
How are supply chain management and logistics different?
Supply chain management describes the strategy and activities that go into planning, sourcing, production and the delivery of goods, as well as the management of returns. Logistics is all about the right products, in the right place, at the right time, and how to get them.
Key differences between supply chain management and logistics
As it should be clear at this point, supply chain management and logistics undoubtedly overlap, but they differ in scope and purpose.
The main differences between SCM and logistics are as follows:
- Logistics is an activity of supply chain management. SCM covers a variety of activities including production and inventory planning, workforce planning, materials and facilities management, manufacturing and delivery of goods and services.
- SCM aims to improve processes to create competitive advantages, while logistics emphasizes meeting customer needs and expectations.
- Logistics focuses on the efficient and cost-effective delivery of goods to the customer.
- Supply chain management controls the development of raw materials into finished products that flow from supplier to producer, warehouse to retailers and / or consumers.