Supply chain management and logistics are often confused with one another in business. While they might appear to be interchangeable, each has its unique function and purpose.
The supply chain management market size is projected to grow to $37.41 billion by 2027, so shippers need to know these differences.
Getting these two functions confused can cause issues in your organization’s processes. We encourage you to learn the differences between logistics and supply chain management to see how each is important in its own way.
What is Supply Chain Management?
Supply chain management, or SCM, is the process that oversees the movement of services and goods from the supplier to the end customer. Those who work in this area are responsible for ensuring the lifecycle of products and services runs smoothly from party to party.
No supply chain is a sole actor in these processes. They’re responsible for working with other groups to ensure products and materials get where they need to go. Here are some of the partners SCM organizations work with to keep the manufacturing and selling process moving.
- Suppliers, who provide the raw materials
- Manufacturers, who assemble the raw materials
- Wholesalers, who receive these products and sell them to stores
- Retailers, who take the finished products and sell them
SCM is designed to keep the manufacturing and selling processes moving to meet consumer demand. This requires adherence to segmented, practical steps along the way, some of which are logistics.
Logistics: Part of a Whole
Goods and services don’t reach their destinations at the right time and properly without intricate planning. This is where logistics comes in. It’s the part of the SCM process that dedicates its resources to one distinct step and ensures the goods get where they need to go.
If you were to imagine the SCM as a chain, logistics would be a link (or multiple) links on that chain. Their function is more specific in scope, ensuring the movement of goods from a specific partner is moved properly to the next location.
There are a variety of logistics organizations that make up supply chains. Each is focused on a distinct aspect of the supply chain.
Here are five of the main types of logistics you’ll see working within supply chains.
- Procurement logistics gathers the raw materials
- Production logistics manage and produce products
- Sales logistics ensures products and services find sellers
- Recovery logistics take care of the leftover materials
- Recycling logistics recycle the leftover items
Understanding Logistics and Supply Chain Management
Knowing the differences between logistics and supply chain management is essential to your role as a shipper. You’ll have a better idea of which piece of the process you’re most qualified for as well.
If you’re ready to use logistics and supply chain management to their utmost potential, explore our business solutions today. We’d love to hear from you!