Logistics and Supply Chain Management- Unfolding the differences
Though they do sound similar and have been mistaken as one and the same by many, the truth differs. Logistics Management evolved first as a concept and eventually merged into Supply Chain Management and represents a part of it now. Before we discuss the differences, let us understand what each of these terms stand for.
Logistics has everything to do with the movement and management of goods from the manufacturer to the end consumer with the objective of delivering the right good at the right time, right price, right quantity and right quality to the right person. It stands for a seamless journey of the good from its origin to the destination with interim stages namely purchase, warehousing, inventory control, maintenance, transportation and distribution.
Supply Chain Management (SCM)
With the changing business equation and rising consumer expectations, logistics management continually expanded in concept and form and eventually resulted into a modern approach now known as supply chain management. Wikipedia defines SCM as the "design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand and measuring performance globally.
The first difference stems out from the definition of both processes. Logistics is just a part of SCM while SCM is a much broader concept encompassing various aspects of supply chain. Alike the conceptual differences, the end purpose differs too. The objective of logistics management is to optimize customer satisfaction through effective management and delivery of products while that of supply chain management is to see through the competitive advantage of the product in the marketplace by bringing all its aspects in a perfect sync.
As we all know, the functional scope of logistics management is limited to one organization which is singularly responsible behind moving the product from its origin to end consumer. Supply Chain Management however involves collaboration between various organizations and integration of their functional expertise to optimize each activity of the supply chain.
Lastly, logistics management is usually applied to every business model. However big or small, businesses have a perpetual need for logistics- transportation and delivery of goods from one place to another. The scope for supply chain management however arises as the businesses scale up and feels the need to optimize risks, costs, inventory, and demand-supply equation.
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