The 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 compound this, what is considered supply chain management in the United States is more commonly known as logistics management in Europe, according to the blog for PLS Logistics Services, a logistics management firm in Pennsylvania.
When the question was posed in an Inbound Logistics article, the answers varied based on the functions a supply chain (or logistics) professional handled. Some thoughts from their readers:
Purchasing, materials handling, logistics, transportation, inventory control and supply chain management have continued to evolve, causing many of these functional areas to intersect with one another. This intersection has resulted in blurred definitions for some of these terms such as logistics and supply chain management.
While these two terms do have some similarities they are, in fact, different concepts with different meanings. Supply chain management is an overarching concept that links together multiple processes to achieve competitive advantage, while logistics refers to the movement, storage and flow of goods, services and information within the overall supply chain.
Supply chain management, as explained by Michigan State University professors Donald Bowersox, David Closs and M. Bixby Cooper in Supply Chain Logistics Management, involves collaboration between firms to connect suppliers, customers and other partners as a means of boosting efficiency and producing value for the end consumer. The book considers supply chain management activities as strategic decisions, and set up “the operational framework within which logistics is performed.”
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 the finished goods provide value. Supply chain managers work across multiple functions and companies to ensure that a finished product not only gets to the end consumer, but meets all requirements as well. Logistics is just one small part of the larger, all-encompassing supply chain network.
The Council of Supply Chain Management Professionals defines logistics as “part of the supply chain process that plans, implements and controls the efficient, effective forward and reverse flow and storage of goods, services and related information between the point of origin and the point of consumption in order to meet customer’s requirements.”
Bowersox, Closs and Cooper define logistics as activities – transportation, warehousing, packaging and more – that move and position inventory and acknowledge its role in terms of synchronizing the supply chain.
The objective behind logistics is to make sure the customer receives the desired product at the right time and place with the right quality and price. This process can be divided into two subcategories: inbound logistics and outbound logistics.
Inbound logistics covers the activities concerned with obtaining materials and then handling, storing and transporting them. Outbound logistics covers the activities concerned with collection, maintenance and distribution to the customer. Other activities, such as packing and fulfilling orders, warehousing, managing stock and maintaining the equilibrium between supply and demand also factor into logistics.
It is important to remember that while the terms should not be used interchangeably, they do supplement each other. One process cannot exist without the other. Here are some key differences between the two terms that will help you keep from blurring the lines between them.