Logistics and Supply Chain Management – What are the Key Differences?

Logistics and Supply Chain Management – What are the Key Differences

As the terms logistics and supply chain management are interrelated, they are often confusing to most people. In the entire eCommerce process, both play a crucial role. With an effective logistics and supply chain management, you can expect smooth functioning of your eCommerce business.

In the recent years, there has been a lot of change in the way businesses are carried out. Improvement in technology leads to the development of the important areas of eCommerce business. Both logistics and supply chain management has evolved over the past few years allowing businesses to do better business. It’s important that you understand both the terms properly and its role in the business process.

Defining Logistics Management

Defining Logistics Management

Logistics management is a small part of supply chain management. This process deals with the management of goods in an efficient way by integrating movement of services or goods, right from the point of origin to the doorsteps of the customers. The objective of logistics management is to provide the right product to the right customer at the right time in a seamless manner.

The activities of logistics management are divided into two categories—

  1. Inbound Logistics: Inbound logistics refers to sourcing, transportation and receiving of goods that comes to an organisation.
  2. Outbound Logistics: Outbound logistics refers to warehousing, packaging and goods transportation that goes out of an organisation.

Defining Supply Chain Management

Defining Supply Chain Management

Supply chain management also referred to as SCM is the entire management of products, finances and information, right from the time the products move from the manufacturer, supplier, retailer or wholesaler to the end customer. With supply chain management, you can maximise the effectiveness of your best product reaching the right customer in a timely manner while minimising storage and other related costs.

Differences Between Logistics and Supply Chain Management

Let’s check some key differences between logistics and supply chain management:

  • Supply chain management is a separate part of managing a business while logistics is an activity of supply chain management.
  • Logistics includes activities such as warehousing, inventory management and transportation of goods to the end customers while supply chain management consists of activities such as integration, product development, manufacturing and procurement, goods storage (finished products and raw materials), customer service, logistics and performance management.

Differences Between Logistics and Supply Chain Management

  • Only one organisation is involved in logistics; in case of supply chain management, many organisations may be involved.
  • The objective of logistics is to offer customer satisfaction while the objective of supply chain management is to offer a competitive advantage.
  • In comparison to logistics, supply chain management is a new concept.

Both logistics and supply chain management are inseparable in a business and complement each other very well. Commonly, supply chain management is managed through WMS (Warehouse Management Systems) or ERP (Enterprise Resource Planning). You should make sure that you have an effective logistics and supply chain management.

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