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What is the difference between Logistics and Supply Chain Management?

Logistics Management and Supply Chain Management can be visualised like the Universe where Logistics Management is the Solar System of the Supply Chain Management Universe. Both together form the process of storing and shipping goods and services across the supply chain. 

Procurement of raw materials

Manufacturing

Delivery of finished goods to customers

Both the terms are used interchangeably but they cover different aspects of the function, albeit interchangeably. While Supply Chain broadly covers the entire process of production and delivery of goods, it is logistics that supports the entire system. When they work together they give businesses a competitive advantage and offer value to customers. 

In this blog, we will look at how logistics and supply chains differ from each other while complementing one another. 

What is Supply Chain Management All About?

Supply Chain Management or SCM is the sum of all activities that goes into the production of goods and services. Companies track goods and services as they move from one stage to the other of the supply chain. SCM ensures that the operations run as planned and it also enables the administration to remove roadblocks in time to ensure operations go on smoothly. SCM involves monitoring a network of sub-suppliers, suppliers, manufacturers, logistics partners, wholesale distributors and retailers.   

Several organizations need to function in coordination for a supply chain to run efficiently. SCM managers work across multiple functions to ensure that a product meets all the requirements and reach the end consumer on time and in good shape. 

What is Logistics Management All About?

Logistics refers to everything including planning, executing the production and monitoring the movement of goods. It coordinates facilities, people and equipment so that they are at the right spots as per the production requirements. The various aspects of logistics are:

  • Demand Planning
  • Transportation
  • Inventory Management
  • Material Handling
  • Order Fulfillment. 

According to the Council of Supply Chain Management Professionals, logistics is part of the supply chain process that plans, implements and controls the flow and storage of goods, services and information as per the customer’s requirements. The various aspects of logistics include transportation, warehousing and packaging. 

Logistics ensures that a customer receives the desired product. The two broad parts of logistics are inbound and outbound logistics. While the inbound part deals with obtaining, handling and storing materials, the outbound arm covers the collection, maintenance and distribution of goods. Logistics also deals with packing, warehousing, managing stock and maintaining the equilibrium between supply and demand.  

Key Difference Between Logistics and Supply Chain Management

Logistics

Supply Chain

1.It is one activity in supply chain management

1.Covers wide range of activities like planning, sourcing materials, labor and facilities management, producing and delivering goods and services

2.Focuses on efficient and cost-effective delivery of goods

2. Targets higher operational performance for giving businesses a competitive advantage

3.Dates back to the days of the origin of the military

3.Started around 20th century

4.Focuses on movement and transport of goods within a company

4.Oversees development of raw materials into finished goods being transported from the producer to the manufacturer.

We can further break down the differences between logistics and supply chain management into the following heads:

Concept

The term Logistics refers to the overall process of acquiring resources, storing and transporting them to the final destination. 

Supply Chain Management means managing the flow of goods and services. It involves the process of transforming raw materials into final products.  

Meaning

SCM is a broader term that refers to the connection that suppliers have with the consumer. 

Logistics management is associated with only maintenance and storage of goods.

Purpose / Objective

Logistics Management focuses on building customer satisfaction by ensuring that the products reach the customers on time as per their requirements. 

Supply Chain Management is more about giving businesses a competitive advantage. 

Processes

The process includes organizing and implementing an operation. A logistic flow refers to organizational efficacy allocated to the activities or operations in a warehouse. 

Supply Chain Management is the process of delivering a product from raw material to the consumer. SCM includes Supply Planning, Product Planning, Demand Planning, Sales & Operations Planning and Supply Management. 

Number of organisations involved

In Logistics, only one organisation is involved as it is more of an internal function. 

Supply Chain Management involves various organisations. A successful SCM operation requires careful planning and coordination between several companies. 

Common Elements in Supply Chain

The complexity of the supply chain depends on the type and size of the business. However, there are some common elements in the various supply chains.

Customers: The chain of events starts with the customers when they purchase a product. If the product needs to be manufactured, then the sales order will include a requirement that has to be met by the production team.

Planning: The planning department creates a plan to complete the production as per the customer’s orders. The department initiates the procurement process once the requirements for the product are finalised. 

Purchasing: The purchasing department gets a list of raw materials and services that are required by the production department to complete the orders.

Inventory: The raw materials are procured, checked for quality and then moved into the warehouse.

Production: The raw materials are moved from the warehouse to the production areas as per the requirements. 

Transportation: The finished product is taken from the warehouse by the shipping department and the products are shipped in a manner that they are delivered on or before the date specified. 

Closing

Logistics Management deals with the efficient and effective management of handling finished goods and services. Most companies have a department that controls supply chain activity. This is why it is a lucrative career option and has a good career scope, especially in India.

This sector is big in the Indian industrial scenario. Experts say there is a lot of scope for this domain due to the increasing complexities of supply networks, short product life cycles and globalization of business. 

There are a lot of job opportunities for graduates in this sector with some of the common job roles being that of the purchase manager, strategic planner, materials analyst, supply chain manager and warehouse manager. 

Indian logistics has rapidly grown at 10.7% CAGR since the pandemic. The sector has evolved rapidly, thanks to the vaccination drive and the various guidelines that have helped businesses to get back on their feet.   

Enrol with TransGlobe Academy for a fulfilling course

The best start for a career in logistics and supply chain management should begin with enrolling in a course with a reputed college that can provide you with the best training along with the best curriculum and course material. 

TransGlobe Academy offers a 12-month PG Diploma in Logistics & Supply Chain Management. The course covers topics like Supply Chain Management, Warehouse Management, Inventory & Stock Management and Retail Store Management. 

The institution trains students into becoming global leaders. It provides graduates and professionals with a platform to enter the logistics sector as senior executives or entrepreneurs. 

TransGlobe Academy has a great placement cell that helps students to get placed in established logistics companies in the role of their choice. 

You can find more about the course on their website www.transglobeacademy.com. Check out the course details and enrol now.


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