Logistics vs. Supply Chain Management: What’s the Difference?
Summary: Supply chain management (SCM) is the process of engaging an entire network of stakeholders. Logistics involves managing inventory flow from suppliers and delivering final products to customers. When performed accurately, they result in a competitive advantage for companies. And, of course, they help you offer a great experience to consumers.
Does logistics mean supply chain management? Are the areas of focus the same for both departments? Is it right to use supply chain management and logistics interchangeably? The simple answer to all these questions is: No.
While supply chain management is inevitably intertwined with logistics, there is a fine but clear demarcation between the two. Logistics is a component of supply chain management but not vice-versa. To put it simply, SCM focuses on macro-level planning of procurement. Logistics is a subset of SCM which micromanages the transportation of goods to ensure hassle-free delivery to the end user. This makes SCM more organization-oriented, while logistics is customer-centric.
Before we delve into the finer aspects of both operations, let’s understand what each of them brings to the table in an organization.
What is Supply Chain Management?
Supply chains are a proportionately extensive network of suppliers, manufacturers, logistics providers, and end customers. Whether a fashion label sources raw materials, creates finished goods, or ships products to customers, qualified SCM professionals oversee every activity till the product gets delivered to the end user.
SCM relies on dedicated software platforms and managerial experience to ensure uninterrupted and efficient collaboration with stakeholders. This includes keeping a track of the real-time flow of information on raw materials and finished goods, making transportation and warehousing decisions, negotiating sourcing with vendors and complying with regulatory norms. The SCM ensures ongoing coordination between sourcing, manufacturing, marketing, and logistics teams.
Application of SCM strategies helps in:
- Reduction of operational costs
- Increased competitiveness in pricing
- Managing vendors in a multiple-sourcing policy
- Informed strategizing for uninterrupted procurement
- Buffering against geopolitical disruptions
- Complying with regulatory procedures
- Smooth customer experience
What is Logistics Management?
Logistics is a part of the supply chain management process. It takes a more focused route to planning, implementing, and controlling the inward and outward flow of goods and raw materials. Transportation and warehousing are, quite naturally, the critical functions of the department. This subsection of the supply chain often works as a self-contained part. It helps in micromanaging the shipping of goods in a clothing brand and ensuring last-mile delivery of products to the end users.
Application of logistics helps with:
- Monitoring storage levels and updating requirements
- Optimizing inventory and reducing dead stock
- Cost-effective transport and shipping
- Tracking updates from sourcing partners
- Ensuring seamless last-mile delivery
Key Differences Between Logistics and SCM
Even though logistics and SCM may have overlapping functions, there are several differences in the scale of operations and areas of focus for both processes. The fundamental difference between the two is the scope of work. Let’s get down to the finer aspects that set them apart as an operational process and subset, respectively.
1. Macro vs micro-planning
SCM is a broader term that deals with macro-level planning in markets and vendors spread around the globe. Logistics focuses on micro-level management of warehousing and delivery.
2. Orientation: Competition vs customer satisfaction
The objective of Supply Chain Management is a competitive advantage over other players. Logistics is more customer-oriented and focuses on their satisfaction.
3. Scope of operation
SCM is the umbrella system managing procurement via the stakeholders. Logistics is a critical department in this system that ensures the SCM decisions are executed timely within the regulatory framework.
4. Evolutionary attributes
SCM evolved from logistics. That makes logistics an older program that has now been subsumed by a more modern and comprehensively dynamic program.
5. Suppliers vs supplies
Every time confusion sets in regarding the roles of the two processes, remember that SCM deals with suppliers and engages in procurement policies. Logistics deals with supplies and meets deadlines and deliveries on behalf of the organization.
A Global Vendor Network With Real-time Monitoring
In a modern-day market, an apparel manufacturer bets on competitive pricing to gain an advantage over other players. Enter: Multiple sourcing. With vendors spread across the globe, a brand puts a well-defined but flexible supply chain management to monitor the procurement process. But it also needs a trustworthy logistics team with sufficient resources to handle the deliveries and ensure customer satisfaction.
Key takeaways
- Processes under supply chain management are comprehensive. SCM covers coordination between all stakeholders, whether it is sourcing, manufacturing, transporting, selling, or storing. Logistics, on the other hand, is dedicated to monitoring and managing transportation and warehousing.
- Supply chain management is the evolved version of logistics which has become a critical subset in the operations involving procurement and delivery of goods.
- For an organization to gain a competitive advantage and make strategic decisions in a global sourcing policy, SCM and logistics have to be in complete sync with each other.
Fashinza’s cutting-edge platform powered by state-of-the-art AI helps clothing brands plan their procurement with the best cost advantage. The clients get access to the best materials through a trusted network of global suppliers.
Connect with us at Fashinza to make procurement easier and more insightful.
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