Logistics : Logistics includes planning and executing the storage and movement of goods between different points in the supply chain. Logistics coordinates facilities, people, equipment and other resources to ensure products move when they’re supposed to and there is space for them at the next stop.
Demand planning, transportation (including fleet management), inventory management, material handling and order fulfillment are all processes that fall under logistics. To learn more, read our article on logistics management.
Supply Chain Management :Supply chain management refers to the activities that create finished goods from raw materials and deliver them to the customer. SCM also focuses on improving supply chain processes, which can benefit both customers and business partners.
A company can only optimize and continuously refine SCM when it has visibility across its supply chain. This visibility enables companies to track goods and services as they move through each stage of the supply chain, which makes it much easier to see if everything is running as planned. It also gives decision-makers more time to respond to disruptions or other roadblocks.
SCM involves overseeing an often-vast network of sub-suppliers (like raw materials providers), suppliers, manufacturers, logistics partners, wholesale distributors, retailers and end users. The relationships between these various stakeholders in the supply chain vary. They can be vertical, such as between parts and materials suppliers, manufacturers and retailers, or horizontal, where a company merges with or acquires a similar business that operates at the same stage of the supply chain.
To illustrate how supply chain management works, let’s use a home cleaning products manufacturer as an example. As part of the SCM function, the company sources the chemicals and containers it needs from suppliers, makes the end product and then distributes the finished goods to convenience stores, drug stores and supermarkets. Supply chain management touches on every process involved in the movement of those products.
| Logistics |
Supply Chain |
| Logistics is one activity in supply chain management. |
Supply chain management covers a wide range of activities, including planning, sourcing materials, labor and facilities management, producing and delivering those goods and services. |
| Logistics focuses on the efficient and cost-effective delivery of goods to the customer. |
Supply chain management targets higher operational performance that will give the business a competitive advantage. |
| Logistics started with the military. Many say Alexander the Great, born 356 B.C., as a logistics master. |
The modern practice of supply chain management started in the 20th century. The Ford Motor Company production lines perfected the concept. Many credit logistician Keith Oliver as the person who coined the term in the early 1980s. |
| Logistics are centered on the movement and transport of goods within a company |
SCM oversees the development of raw materials into finished goods that move from the producer to the manufacturer. Those goods get distributed to retailers or directly to consumers. |
