Logistics and supply chain management are two essential business terms that are sometimes talked about and used interchangeably. This makes it difficult for some people to understand them since their functions are interrelated. Logistics and supply chain coexist in their activities but they have significant differences.
You must know the comparisons between these two broad terms if you are a business owner. To start with, logistics is an important part of supply chain management. Learn more about the scope of logistics and supply chain and their differences in this article.
What Is Supply Chain Management?
Supply chain management refers to the entire process of sourcing and buying raw materials from suppliers and creating them into finished goods to be delivered to the customer. It requires efficient supervision of multiple activities that include procurement, production, and transportation of goods from one location to another. It connects the suppliers, manufacturers, wholesalers, retailers, and consumers who receive the goods and services.
What Is Logistics?
Logistics is included in the supply chain management that deals with the storage and transfer of goods until these reach the consumers. It coordinates people, facilities, equipment, and other things for the seamless movement of products.
Supply chain management is a broader concept that covers diverse activities while logistics is more focused on the transportation of goods in a safe and faster method. Take a closer look at how logistics and supply chain differ from one another.
5 Key Differences Between Logistics and Supply Chain Management
The functions of logistics and supply chain management may overlap but they still differ in their scope and focus.
1. Logistics is an activity in supply chain management while the latter covers a variety of activities that include production and inventory planning, sourcing of materials, labor and facilities management, manufacturing, and delivery of goods and services.
2. Logistics has only one organization for a single operation while multiple organizations are involved in the supply chain. The efforts of several organizations contribute to the success of this chain of activities.
3. Logistics aims for the total satisfaction of customers as it focuses on the efficient and cost-effective delivery of goods to them. Supply chain management targets to gain a competitive advantage for the business.
4. Logistics centers on the efficient transport of goods within a company. Supply chain management supervises the development of raw materials into finished products from the producer to the manufacturer. These goods are then distributed to the retailers or the consumers.
5. The term logistics is previously associated with military applications. Many historians say Alexander the Great was a logistics master. Supply chain management is a modern term that began in the 20th century. Many experts recognized Keith Oliver as the person who introduced the term during an interview in the early 1980s.
ALSO READ: The Importance Of Warehousing Logistics In The Retail Supply Chain
Logistics and supply chain management coexist in their activities and they complement each other. Supply chain management covers all activities starting from the procurement of raw materials until the finished goods are delivered to the customers. Logistics has an important role in the supply chain. The terms are sometimes used interchangeably so it is essential to understand their key differences and identify what your business needs.
Worklink Services, Inc. (WSI) is a privately owned Filipino corporation that has been providing different services like courier, forwarding, trucking, and logistics to various destinations in the Philippines. Our ground transportation fleet can handle a wide range of land freight service requirements. WSI can assist you with the most cost-effective way to pack and transport your shipments.
Do you need a reliable partner for your delivery requirements? WSI can help.