Logistics vs. Supply Chain Management are interconnected yet distinct disciplines that play crucial roles in ensuring the smooth flow of goods and services from suppliers to customers.
Supply chain management includes a wide spectrum of activities. It includes sourcing the raw materials, procurement, conversion of materials into finished goods, management in logistics, etc.
Logistics management is a component or subset of supply chain management to tackle raw materials and final goods management efficiently.
It involves cooperation and collaboration among suppliers, intermediates, distributors, and customers. Improvements in critical areas of business, including technology and business operations, have arisen from the development of the management of supply chains.
Take a look at this rundown to get a comprehensive analysis of Logistics vs. Supply Chain Management.
How are Logistics and Supply Chain Management Systems Different?
The difference between logistics and supply chain management systems allows businesses to evaluate the developments in logistics and supply chain management systems. It is due to new technology, internal and external advancements, constraints, and innovations.
To understand supply chain management vs logistics, note that earlier, the businesses were primarily concerned with logistics. Whereas with the technological developments, the focus has been directed toward supply chain management as a whole.
The primary difference between logistics and supply chain management is that logistics management is concerned with integrating and maintaining commodities within an organization. In contrast, supply chain management coordinates and administers supply networks.
Supply chain vs logistics management also highlights the prime focus areas between the two systems. Logistics management is concerned with consumer fulfillment, while supply chain management is tied to gaining a competitive advantage.
Logistics Management vs. Supply Chain Management: Comparison Chart
The comparison chart capturing Logistics vs Supply Chain Management is available to guide the companies and business owners to differentiate between the two:
| Basis for Comparison | Logistics Management | Supply Chain Management |
|---|---|---|
| Meaning | The integration of product movement and maintenance within an organization is called logistics. | Coordination and administration of supply chain activities are part of supply chain management. |
| Objective | It is focused on customer gratification. | The primary objective is competitive growth and scalability. |
| Evolution | It is an earlier and traditional concept. | It is a newer and modern concept. |
| How many organizations are involved? | A single company is involved. | Multiple organizations and companies are involved. |
| Scope | Logistics Management is a part of the supply chain, implying a smaller scope. It focuses on delivering the final goods to the consumers within the given timeframe. | Supply Chain Management has a wider scope, including sourcing raw materials, planning production capabilities, and handling consumer sales and satisfaction. |
| Structure | Logistics Management is a subset of Supply Chain Management. | Supply Chain Management is a broader and newer version of Logistics Management. |
Definition of Logistics Management
Logistics in the manufacturing supply chain entails the physical distribution, distribution, and storage of goods, parts, or final goods. Logistics is the supervision process encompassing products, services, data, and investment.
It facilitates providing products with the appropriate excellence, duration, location, and expenses to consumers. Additional cost and time-saving tasks include warehousing, packing, order fulfillment, stock control, and stock management.
Here are some of the general logistics organizations listed below -
- In-House Logistics - Internal operations are used by an organization to organize, structure, oversee, and implement shipping, save money, and address logistics obstacles.
- Logistics Service Providers (LSP) - Transit, storage, inventory, and international shipping are all managed by logistics service providers.
- Third-Party Logistics (3PL) - Transport actions are supported by 3PL businesses, which allocate single or multiple Logistics operations.
- Warehouse Providers - For short-term storage abilities, independent storage suppliers like Warehouse providers and facilities are used for product storage before shipping.
- Courier Shipping - Courier shipping expedites package and documentation delivery by including a courier in the shipment.
- Reverse Logistics - Companies that use logistics in reverse retrieve and recycle items, generating revenue or disposing of the items after their lifespan.
The Role of Logistics
The role of logistic management is discussed below -
1. Logistics is a subset of the supply chain
Logistics is referred to as that component of the supply chain that focuses on effective forward and reverse transportation. It also streamlines the warehousing of products, services, and data between source and consumerism.
2. Planning and organizing
Logistics suppliers regulate the supply chain by organizing, storing, and releasing data for reliable reporting and analysis. Companies carry out shipping and retain movement control via vehicle administration, monitoring, technological advances, and knowledge sharing.
3. Logistics is a part of the supply chain
Logistics is essential to the supply network and must be implemented for a seamless operation. Various logistics companies cater to distinct requirements, but every operation is responsible for its service, resulting in independent aspects.
4. Logistics moves goods from one place to the other
Powerful logistics system management emphasizes efficient storage and movement via land, air, and sea capabilities. Container shipping enhances intermodal freight flow by eliminating the requirement for multiple forms of travel.
Definition of Supply Chains
Supply Chains entail interconnected operations comprising various organizations such as manufacturers, suppliers, distributors, vendors, and consumers. It helps in converting raw materials into finished goods.
The process includes integration, purchasing, manufacturing, evaluations, logistics, customer assistance, and efficiency analysis. The multidimensional approach of supply chain management (SCM) regulates the transit of raw supplies and semi-finished items within the organization and the end product.
The Role of Supply Chains and Management
Logistics focuses on transportation and storage, whereas the supply chain covers the complete product or service movement.
Look at the role of supply chain management closely -
1. Provides Framework for Sourcing, Manufacturing, and Product Delivery
Manufacturers, suppliers, transit, distributors, retailers, wholesalers, and end users are linked together in a supply network. The effective management of supply chains supports the monitoring of the manufacturing, shipping, and shipment of products and services from the origin to customers.
2. Supply Chain Management Across Multiple Organizations
In SCM, suppliers provide raw materials, manufacturers develop products from other raw materials, and logistics handle transporting and shipping goods. Wholesalers obtain goods for distribution to stores, and retailers sell the finished items directly to the consumers.
3. Multi-Functional Approach
Supply chain management looks after managing order, stock, and supply network operations, promoting cooperation, checking supplies, planning an acquisition, and recording requests. It also entails tracking orders, assets, and shipment flow, generating reports, and resolving problems relating to time, expense, and excellence.
Choose the Right Management System With TranZact
Deciding between logistics management vs. supply chain management is essential for the business. From raw materials to end consumers, supply chains supervise the acquisition, manufacturing, output, and distribution of commodities. Logistics, on the other hand, moves and stores goods among firms.
TranZact's business automation software offers the best of both supply chain and logistics solutions to SMEs. This management software helps businesses analyze and perfectly balance both approaches for smooth business operations.
FAQs on Logistics vs. Supply Chain Management
1. Is logistics management broader than the supply chain?
No, logistics management is a component or a smaller part of the supply chain network that plans and controls the delivery of products. The supply chain includes everything from inventory, labor planning, and material management, to delivery of goods and services, packaging, and warehousing.
2. Is supply chain also known as logistics?
Supply chain and logistics are often referred to interchangeably, but these are two different components of the manufacturing process. Logistics is confined to one company, whereas supply chain management deals with multiple companies.
3. What are the five stages of Supply chain management?
The five stages of supply chain management include strategizing, sourcing the raw materials, developing the products, delivering them to the customers, and handling returns.
4. What is supply chain management with example?
Supply chain management is the mechanism by which multiple departments coordinate and cooperate with each other to handle and work toward various activities. These include production, shipment, and delivery of goods and services as per the customers' satisfaction and gratification. Some examples of SCM include transporting goods, farming, packaging, and manufacturing.
5. What are the next big trends in logistics?
The emerging trends in logistics are real-time or live tracking, effective SCM, automation, labor shortage, cash-to-cash time cycle, and international bill accuracy.
6. Is supply chain management challenging for businesses?
Yes, it is challenging for businesses due to the difficulty of meeting ever-changing consumer demands, remaining competitive, maximizing profits, cutting down losses, and optimizing the full use of raw materials.
7. What are the 5Rs of Logistics?
The 5Rs of logistics regarding products include - Repairs, Returns, Replacements, Recycling, and Reselling.
