Difference between logistics and supply chain management

Difference between logistics and supply chain management

In the world of business and operations, the terms logistics and supply chain are prevalent and often used interchangeably. Now, some industry professionals say that there are a lot of similarities between logistics and supply chain management. On the other hand, some professionals claim that role of logistics in supply chain management is pretty different from the common views. 

Now, there is evidently a mixed bag of views on differences between logistics and supply chain management. Like in Europe, supply chain management is largely known as logistics management. And in the United States, they prefer to call it as supply chain management only. 

While both these terms hold some sort of similarities, they do possess different concepts with different meanings factually. Before jumping on to the key differences between logistics and supply chain management, let’s have a look at the concepts individually. 

Logistics

It is basically the process of handling and managing the movement of goods and within a particular department. It includes other related activities as well. And has to have a specific inventory document to keep the track of the inventories. Activities like packaging, transportation, raw material supply, warehousing and more take place within logistics management. The objective is to ensure that the end users receive the desired service or product at the right time and place. 

This process has two categories: 1) Inbound logistics and 2) Outbound logistics

Supply Chain Management

As the name suggests, supply chain management comprises of all the possible activities of any business or operational industry. Starting from purchasing the raw material, to manufacturing and delivering the goods to the end consumers; it includes some parts of logistics as well. In this, a number of companies work in coordination to ensure that the final goods and services are of high quality. It includes suppliers, manufacturers, wholesalers and retailers respectively.

We have a fair idea about both the concepts. Come, now let’s read on to know the key differences between logistics and supply chain management.

Differences as follows: – 

1. Aims and goals: One of the major differences is in their aims and goals. Objectives of logistics within a particular department of a company is to ensure that the end consumers receive satisfaction during their exchange and interactions with the company. 

Supply chain management aims at achieving competitive advantage through efficiency. It also tries to procure raw materials at low prices and sell the final products at high prices.

1. Organisational involvement: Any logistical operation happens within a single organisation as in this case only a company interacts with the another. Whereas supply chain management involves multiple organisations as there is a complete flow of purchasing of raw materials, manufacturing, and delivering the finished products.
2. Evolution: The world believes that there are some overlapping similarities between logistics and supply chain management but historians have a different view. 

According to experts and researchers, logistics is there since the beginning of the exchange of goods between two parties. They further add that logistical management was prevalent in traditional empires and historical wars. 

Now as per studies, supply chain management is fairly new and modern and can be traced back to 19th century. But currently, it is being incorporated by all operational organisations.

1. 1. Departments: The total number of departments involved in both the cases are significantly different. In supply chain management, the number of departments of an organisation are much higher than that involved in logistics. The simple reason is the former includes interactions with multiple organisations and customers.

• Relationship

• With Each Other:  Logistics is a part of supply chain management to handle and manage specific tasks. Supply chain management looks after the entire process of buying, supplying, manufacturing, selling etc.; logistics bridges the gap between these different segments.
  

• With Other Sections: Unlike supply chain management, logistics doesn’t have any active role in handling different departments within an organisation. Supply chain management participates thoroughly in research, purchasing, manufacturing, marketing and selling of goods.

So, what we can derive is logistics is an important process which takes place within the supply chain management. Yes, there are some differences between logistics and supply chain management but the role of logistics in supply chain management can never be overlooked. But with the increase of demands amongst the consumers and rise of technology, supply chain management is more likely to attain popularity in the business industry.