Supply Chain Management Vs. Logistics Management: Key Differences
Think of the supply chain as a band, where logistics is just a drummer.
Proper movement of goods and services is important for business success in today’s fast-paced business environment. While we compare Supply Chain Management Vs. Logistics Management, both are often interchangeable, they are still individual parts of a larger concept.
In this article, we’ll learn about the key differences between SCM and logistics, their similarities, and why they both matter for business success.
What Will We Cover?
Let us move on to find out what is logistics and supply chain management.
What Are Supply Chain Management And Logistics Management?
Some people can initially confuse supply chain management with logistics management. They are often used interchangeably, too. However, each plays a distinct role in controlling your business and keeping it running smoothly. There are specific differences between supply chain management and logistics.
SCM is like a complete orchestra that creates melodious, symphonic music. Every section, from the strings to the brass, plays an essential role.
On the other hand, logistics is just a percussion section that keeps the rhythm of the orchestra.
What is Supply Chain Management?
Supply chain management is a set of activities that comprises creating goods from raw materials and delivering them to the end customers. It is a vast network that consists of suppliers, manufacturers, warehouses, transportation, retailers, etc.
SCM’s main objective is to improve the supply chain process, decrease costs, and make sure that the process is efficient, to benefit the businesses and customers.
Did you know? The global supply chain management market size was USD $23.26 billion in 2023 and is projected to register a CAGR of 11.2% from 2024 to 2030, reaching $48.60 billion by 2030. [1]
What is Logistics Management?
Logistics management is a part of the supply chain which comprises planning, managing, handling and coordination of goods, but the role is confined to managing supplies only. It encompasses all the activities like storage, warehousing, inventory control, packaging, order fulfillment, etc.
Compared to SCM, logistics management focuses on only the operations of moving goods from point A to B in the most-efficient and quickest way possible.
Before we learn about supply chain and logistics management, let us know how similar they are.
Why Are SCM And Logistics Management Similar?
It is easier to get confused between Supply Chain Management and logistics management. These processes ensure that goods are delivered efficiently, save costs, and increase customer satisfaction. Whether inventory tracking, transportation planning, or anything else, SCM and logistics management serve the same purpose.
SCM and logistics management share many similarities. Both focus on moving goods efficiently and effectively, ensuring products reach customers on time. Both use tech to optimize workflows and improve productivity. Conclusively, both save time, reduce business costs, and keep customers happy.
What Are The Common Aspects Between Logistics And SCM?
Although logistics and SCM have different scopes, their purposes and execution processes are the same. Both methods aim to increase operational efficiency, reduce overall costs, and improve customer satisfaction. However, logistics management’s functions differ from those of SCM.
Before discussing supply chain management vs. logistics management, let us know their common aspects.
Both SCM and logistics work toward ensuring goods move swiftly and accurately through the supply process. Their shared goals are as follows:
One of the top functions of SCM is coordinating with suppliers, or the logistics manager manages the warehouse dispatch. Both ensure that products reach the store on time and in good condition.
Shared Activities:
Several functions are standard to both logistics and supply chain management. Here are the activities performed by both.
Streamlining the delivery routes helps the SCM and logistics reduce fuel costs, delivery times, and operational expenditures.
What Are The Differences Between SCM And Logistics Management?
While SCM and logistics are a part of the same huge network, they have many differences too. Let’s now understand the differences between SCM and Logistics Management at a glance!
| Category | Supply Chain Management | Logistics Management |
|---|---|---|
| CAGR (2024–2030/33) |
10.4% to 11.2% |
6.4% to 7.3% |
| Focus |
Suppliers’ coordination, planning, and execution etc. |
Movement and storage of goods. |
| Role |
A strategic approach |
Operational only |
| Main Goal |
Optimizing the supply chain |
Ensure the timely delivery of goods and services |
| Tech Emphasis |
IoT, AI, and predictive analytics |
Robotics, GPS, and real-time tracking |
Logistics and Supply Chain Management are often used interchangeably. Both work together to fulfill customers’ needs and ensure timely delivery. Here is a detailed view of Supply Chain Management vs. Logistics Management.
For instance:Key Differences Between Supply Chain Management & Logistics Management:
Supply Chain Management (SCM) covers the flow of goods, information, and services right from the moment they are raw materials till their final delivery.
On the other hand, logistics management focuses on warehousing, transportation, and goods delivery.
Also, there are differences, such as supply chain managing the flow of goods, finances, and information, whereas logistics manages only the physical flow.
SCM focuses on enhancing overall customer satisfaction through a streamlined process, whereas logistics is about reducing delivery timelines and shipping errors.
Supply Chain Management involves managing products from their entry into the supply chain until they leave for the end customers. Logistics Management, however, consists of the movement and storage of goods.
Let’s learn more about supply chain and logistics management functions in detail.
What Role Does Logistics Play in Supply Chain Management?
Think of logistics as a key in the piano of supply chain management. It ensures that the physical movement of goods is timely, hassle-free, efficient, and cost-effective.
Key Components Of Logistics in Supply Chain
The integration of logistics within SCM ensures both systems contribute to the broader goal of operational excellence. Let’s have a look:
| SCM Phase | Logistics Involvement |
|---|---|
| Procurement |
Transporting materials to the manufacturing units |
| Production |
Managing both the outbound and inbound logistics |
| Distribution |
Warehousing and shipment to the customers |
| Returns |
Reverse return logistics for waste prevention |
Why Do Both Matter For Business Success?
Both supply chain management and logistics management matter for businesses due to various reasons. With their help, businesses can improve operational efficiency, reduce costs, and improve customer satisfaction.
Integration of logistics and SCM leads to better forecasting, higher market demand, and streamlined supply chain processes.
Why the integration of these matters:In short, logistics and supply chain management can be powerful forces behind the supply chain’s success.
The Bottom Line
Supply and logistics management are both essential pillars of supply chain management. Though there are specific differences, Supply Chain Management and Logistics Management are almost the same and are necessary for efficiently moving the supply chain.
Key Takeaways:
Frequently Asked Questions (FAQs)
Here are some of the most commonly asked queries about Supply Chain Management Vs. Logistics Management.
1. Is logistics a part of the supply chain?
Yes, logistics is an essential part of the supply chain. It fulfills all its operational needs. It is focused on the movement and storage of goods and covers broader processes like planning, sourcing, and coordination.
2. What are the top supply chain management software?
SCM Cloud, CommuteLogix, SAP SCM, and Manhattan Associates are the top SCM software. These platforms help businesses execute, plan, and monitor the supply chain from start to finish.
3. What is the best logistics management software?
Some of the best logistics software are CommuteLogix, NetSuite, ShipBob, and FreightPoP. These software programs help streamline warehouse operations, tracking, and transportation.
4. Which is more profitable, logistics or supply chain?
Profitability depends on the business model you choose. SCM often leads to greater strategic influence, while logistics is more cost-efficient. Both of these lead to greater productivity levels.
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References
1. Markets and Markets – (Source)
Irshad Pathan
Web Development Expert
Irshad is a senior technical expert at iCommuneTech. He manages the iCommuneTech’s Web Development Team, and has hands-on expertise in web development, Laravel development, Logistics, fleet management, and Supply Chain Management. He mentors the in-house team and enjoys describing his experience in words.