Logistics Vs. SCM

What are the key differences between Logistics and Supply Chain?

Adapted from responses by Cheryl on Wednesday, January 21, 2004

Logistics and Supply Chain functions can overlap. Different companies define them in their own ways. Logistics is generally concerned with strategy and coordination of flows between marketing and production (i.e. transportation and distribution). However, it cuts across many functions such as Supply Chain.

I believe that Supply Chain tends to focus on purchasing and procurement, but not necessarily so. It can include materials, inventory, and production planning. There is also Demand Management which focuses on forecasting, but is sometimes included in either logistics or supply chain functions.

I think there is no formal definition that fits all situations. I recently took a graduate school class, and our textbook put Logistics as the overall strategic glue that crosses multiple functions including demand chain and supply chain, physical flows, information flows and the systems that support them.

I also worked as a Supply Chain consultant for J.D. Edwards and on SAP; however, they put the focus on Supply Chain, not much on Logistics. Personally, I think it there is a matrix relationship between them. It is up to each company to decide what emphasis works best for their goals.

The following comes from the Council of Logistics Management Definitions (Cut and pasted from their website):

The Definition of Logistics
Logistics management is that part of the Supply Chain Management process that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services, and related information between the point of origin and the point of consumption in order to meet customers' requirements.

These are the boundaries and relationships of Logistics Management adopted by the Council of Logistics Management: "Logistics Management activities typically include inbound and outbound transportation management, fleet management, warehousing, materials handling, order fulfillment, logistics network design, inventory management of third party logistics services providers. To varying degrees, the logistics function also includes sourcing and procurement, production planning and scheduling, packaging and assembly, and customer service. It is involved in all levels of planning and execution -- strategic, operational and tactical. Logistics Management is an integrating function, which coordinates and optimizes all logistics activities, as well as integrates logistics activities with other functions including marketing, sales manufacturing, finance and information technology."

The Definition of Supply Chain Management
Supply Chain Management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all Logistics Management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers. In essence, Supply Chain Management integrates supply and demand management within and across companies.

These are the boundaries and relationships of Supply Chain Management adopted by the Council of Logistics Management: "Supply Chain Management is an integrating function with primary responsibility for linking major business functions and business processes within and across companies into a cohesive and high-performing.