Logistics and Supply Chain Management – What Is the Difference between the Two?

Are logistics and supply chain management the same thing? Are there any differences? These are questions that a lot of people ask, but do not find a precise answer. Read on to find out what these two operations are, how they work and what the similarities and differences between them are.

Let’s look at the definitions of logistics and supply chain management first. Logistics is the management of the flow of a product or service from the point of origin to the point of consumption. Supply chain management (SCM) is the strategic and systematic coordination of business functions and the strategies for the implementation of these functions within a company or a chain of companies forming a network.

The difference between logistics and supply chain management is evident from their definition. While the former deals with the management of a flow between a business and its customer, the latter is designed to manage an entire chain of businesses which are linked in a production and consumption process. It is worth explaining this concept in detail.

When a business has the ready product, it manages its storing, transportation and the product inventory. Sometimes security has to be managed as well. All these are logistics operations done so that the customer can finally get the ready product. SCM does virtually the same thing. However, it is done across a number of businesses. The business that gets the ready product of the first one in the chain uses it to produce another one. Then they perform their logistics operations so that the product is delivered to the next customer in the chain and so on and so on.

Basically, logistics and supply chain management overlap in the sense that the former is an element of the later. SCM is more complex as it deals with coordination between a number of businesses and not just two. In this respect, it involves the management of larger and more complex physical and information flows. In turn, the operations are on a larger scale and become more complex.

With the changing in the economic and business environment within different countries and globally, both logistics and supply chain management undergo changes and development. Individual businesses and supply chains can now choose from different kinds of models to implement. In addition, managers within companies and networks devise specific strategies that suit the operations and goals of these entities.

Due to all these reasons, different companies define logistics and supply chain management in different ways. Since the functions of these two overlap, the clear differences between them are becoming more and more difficult to recognize, especially if you try to define them on individual company basis. In general, the two are taught together as part of any postgraduate program in the world. This is a certain sign that companies need professionals capable of working in both fields, irrespective of their formal definitions and the definitions given to them by different businesses and supply chains.

Now you know the most important things about logistics and supply chain management and the differences and similarities within the two.