Differences between logistics and supply chain – Logistics and supply chain relationships are closely related but are different ideas in the realm of business operations. Although the goals of both are similar, namely to optimize the flow of goods and ensure customer satisfaction, there are fundamental differences between these concepts.
We will break it down in detail and reveal the differences between logistics and supply chain. Check out the complete information in TransTRACK article!
Logistics Management is a management process that combines the movement of goods, services, information and capital from the initial stage of sourcing raw materials to the final consumer. The goal of this process is to provide appropriate products of the required quality, at the right time, place and price, to end customers.
Understanding Supply Chain
Supply Chain Management is a series of interconnected activities related to the change and movement of raw materials into final products until they are finally received by the end user. This is the result of collaboration between various organizations that contributed to the smooth running of this series of activities to achieve success.
The Relation Between Logistics and Supply Chain
As discussed previously, the supply chain involves the entire process of producing and distributing goods and services that helps companies provide value to their customers. In this context, logistics plays a role in managing the storage and delivery of goods or services throughout the supply chain. Although logistics and supply chain management are often used interchangeably, they actually involve different activities.
Logistics is a component contained in the supply chain management concept. The main goal is to deliver goods to customers on time and at competitive prices. The main focus is on the internal movement of goods and plays a role in managing the movement and storage of products in the supply chain.
Meanwhile, supply chain management has the responsibility to provide strategic direction that directs the logistics process. The goal is to use processes that ensure the flow of goods runs efficiently. Following are the similarities between logistics and supply chain management.
Difference between logistics and supply chain
Based on the relationship between logistics and supply chain management, it seems that although the two have points of intersection, they have differences in terms of scope and focus. Let’s explore the differences between logistics and supply chain.
|Aspect||Logistics Management||Supply Chain|
|Integration & Maintenance||Involves integration and maintenance of items.||Involves supply chain coordination and management.|
|Objective||Aims at achieving customer satisfaction.||Focusing on competitive advantage.|
|Organizations Get Involved||Get involved in an organization.||Involving several organizations to coordinate with suppliers, distributors and customers.|
|Scope||Focus on order fulfillment, warehousing, packaging, stock control and management.||Involves activities from the movement of raw materials to finished goods to the end user, including inventory planning, production, workforce planning, materials management, delivery of goods, and services.|
- In Logistics Management, there is integration and maintenance of goods, while in Supply Chain Management there is a focus on coordinating and managing an organization’s supply chain.
- The goal of Logistics Management is to achieve customer satisfaction, while Supply Chain Management focuses more on achieving competitive advantage.
- In Logistics Management, one single organization is involved, but in Supply Chain Management it involves several organizations to synergize in coordination with related parties, distributors and customers.
- Another difference between Supply Chain Management and Logistics Management lies in the characteristics of Supply Chain Management (SCM), which is a series of interrelated activities, starting from the movement of raw materials to finished products which are finally received by end users.
In SCM, various activities are included such as inventory planning, production, labor management, material management, goods delivery, and services. On the other hand, Logistics Management focuses more on order fulfillment, warehouse management, packaging according to standards, stock control, and process management.
Conclusion on the Differences between Logistics and Supply Chain
Logistics is a term with a long history, originally applied in a military context to refer to the maintenance, storage and transportation of military personnel and goods. Currently, this term has been widely used in various fields, not only limited to the military realm, especially after the SCM concept has developed.
There is a view that Supply Chain Management (SCM) is a development of the concept of Logistics Management, and in fact, SCM is included in the scope of logistics. These two concepts cannot be strictly separated.
Therefore, the two are not contradictory concepts, but rather complement each other. In this case, SCM plays a role in assisting the logistics aspect in coordinating with the team that handles transportation, storage and distribution.
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