Global business is becoming ever more reliant on logistics and supply chain management in order to keep pace with the demands of an increasingly global economy. This is why business leaders acknowledge that the logistics and supply chain can be value creators and source of competitive advantages. But, there are many people in the marketplace who use these two terms interchangeably. The confusion in distinguishing between supply chain and logistics might stem from the fact that logistics is considered by many people to be a subcategory of supply chain management.
In the wholesale and retail market, many people quite often confuse the term logistics with supply chain. However, both the terms a quite different from one another; in general, logistics refers to the movement of goods between locations whereas supply chain is a broader topic that covers a variety of segments such as planning, management, capacity planning, strategic procurement, factory scheduling, logistics, etc.
What is Logistics?
Generally, logistics focus on the actual transportation and storage of goods. It deals with things such as inbound and outbound freight, reverse shipping, communications during transit, storage and warehousing. Logistics also deals with the delivery of goods and freight, coordination among third-party carriers, fleet management and other activities directly related to the actual transportation of goods from one point to another. Depending on the needs of a particular company, logistics management might also encompass manufacture and packaging, price negotiation for different aspects of transportation, third-party integration and procurement, technology, communications and customer service.
What is Supply Chain?
For the most part, the supply chain encompasses a bigger picture. Supply chain management is the umbrella that covers all aspects of the sourcing and procurement of goods. Basically, supply chain management forms and manages the business-to-business links that allow for the ultimate sale of goods to consumers. Logistics, basically getting the freight from one place to the other, is a function that falls under the wide umbrella of supply chain management, but is only one part of the entire process.
Supply chain management is a broad, integrating process that entails many other aspects aside from logistics. Those aspects include finding and obtaining the goods to sell, negotiating pricing, manufacturing, storage, packaging and inventory control. Supply chain management also includes distribution, cost allocation and control, third-party negotiation and collaboration as well as management of supply and demand.
It has been said that supply chain management is an addition over logistics management as well as supply chain management comprises of logistics. Both are inseparable, hence they do not contradict but supplement each other. Supply chain management helps logistics to be in touch with the transportation, storage and distribution team.