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.
Purchasing, logistics, transportation, inventory control, and supply chain management have been evolving, causing many of these functional areas to intersect with one another. This intersection has led to loose definitions for some of these terms, such as logistics and supply chain management.
While these two terms have some similarities, they are, in fact, different concepts with different meanings. Supply chain management is a general concept that links multiple processes to gain competitive advantage, while logistics refers to the movement, storage, and flow of goods, services, and information within the overall supply chain.
What is supply chain management?
Supply chain management, as Michigan State University professors explain, involves collaboration between companies to connect suppliers, customers, and other partners as a means to increase efficiency and create value for the end consumer. They view supply chain management activities as strategic decisions and establish "the operating framework within which logistics is performed."
It is the efforts of various organizations working together within the supply chain that manage the flow of raw materials and ensure that finished products provide value. Logistics is just a small part of the larger, all-encompassing supply chain network.
What is Logistics?
Logistics could be defined as the part of the supply chain process that plans, implements, and controls the efficient and effective round-trip flow and storage of goods, services, and related information between the point of origin and the point of consumption. to meet customer requirements.
The goal behind logistics is to make sure that the customer receives the desired product at the right time and place at the right quality and price. This process can be divided into two subcategories: inbound logistics and outbound logistics.
Inbound logistics covers activities related to obtaining materials and their subsequent handling, storage, and transportation. And outbound logistics covers activities related to collection, maintenance and distribution to the customer. Other activities, such as packaging, storage, stock management, and balancing supply and demand, also influence logistics.
key differences
It is important to remember that while the terms should not be used interchangeably, they complement each other. One process cannot exist without the other. Here are a few key differences to avoid blurring the lines between the two terms:
- Supply chain management is a way to link major business processes within and between companies into a high-performance business model that drives competitive advantage.
- Logistics refers to the movement, storage, and flow of goods, services, and information within and outside the organization.
- The main focus of the supply chain is competitive advantage, while the main focus of logistics is to meet customer requirements.
- Logistics is a long-standing term with military roots, while supply chain management is a relatively new term.
- Logistics is an activity within the supply chain.
Fuente: Michigan State University