The difference between Logistics and Supply Chain
Logistics is a very old term, firstly used in the military, for the maintenance, storage and transportation of army persons and goods. Nowadays, this term is used in many areas, not specifically in the military after the evolution of the concept of Supply Chain Management. Both are inseparable. Hence they do not contradict but supplement each other. SCM helps Logistics to be in touch with the transportation, storage and distribution team.
Logistics Management is a portion of Supply Chain Management that deals with the management of goods. While Supply Chain Management is a broader term which refers to the connection from the suppliers to the consumer. People are quite puzzled between these two concepts.
Logistics: The management process which integrates the movement of goods, services and information from the sourcing of raw material, till it reaches its end consumer. The objective behind this process is to provide the right product with the right quality at the right time in the right place at the right price to customers. The logistic activities are divided into two categories as follows:
- Inbound Logistics: The activities which are concerned with procurement of material, handling, storage and transportation
- Outbound Logistics: The activities which are concerned with the collection, Packaging, and distribution or delivery to the final consumer.
Supply Chain Management (SCM): is a series of interconnected activities related to the transformation and movement of raw material to the finished goods till it reaches to the end user. It is the outcome of the efforts of multiple organisations that helped in making this chain of activities successful. Supply Chain Management has a multi-dimensional approach which manages the flow of raw materials and work in progress (semi-finished goods) within the organisation and the end product outside the organisation till it reaches the hands of the final consumer with a complete emphasis on the customer requirement.
Logistics objective is to obtain customer Satisfaction whilst Supply chain objective is to achieve competitive advantages.
Key Differences Between Logistics and Supply Chain Management:
1. Logistics is an old concept compared to Supply Chain Management .
2. Logistics is only an activity of Supply Chain Management.
3. Logistics is the flow and storage of goods inside and outside the firm. The movement and integration of supply chain activities are known as Supply Chain Management.
4. The main aim of Logistics is full customer satisfaction. Conversely, the main aim behind Supply Chain Management is to gain a competitive advantage.
5. There is only one organisation involved in Logistics while some organisations are involved in Supply Chain Management.
Conclusion:
Logistics = Material Handling + Distribution Supply Chain = Suppliers + Logistics + Consumers