Difference between SCM and Logistics

Difference between SCM and Logistics

Introduction

Supply chain and logistics seem to be the same terms but they are different in meanings and scope. The aim of the work is to understand the differences that exist between supply chain management (SCM) and logistics. It is found that the supply chain is a philosophy and is a much poader concept as compared to logistics. Logistics involve the activities which help to facilitate the transportation and procurement of raw material, goods and inventory from one place to another. Concisely, logistics is a subset of supply chain management. The study is significant as it will analyse the selected topic in such a manner that a clear understanding can be developed regarding the differences between both the terms. The scope of the work is limited to the understanding of differences between supply chain management and logistics. The structure includes an understanding of the topic and discussion, differences between both the terms, supply chain networks, types of logistics and logistics challenges within the industry sectors. Apart from the differences, the assignment would also include various concepts that are significant for the study.

Understanding the Topic and DiscussionsThe term supply chain entered the business world in the year 1990 and later it started to be used commonly among the general public (Hogan, Oakden, amp Leonaite, 2011). It reflects a complex process which involves the transformation of goods from the initial step to the final step. The entire process of getting the goods from the sources of raw material, its supply to the warehouses and manufacturing unit and ultimately supplying them to the end user for consumption is reflected in this concept. It involves all types of transactions like business to business, business to customer and supplier to customer. There are two basic concepts of the supply chain which include core supply chain and extended supply chain. Core supply chain involves transactions within a business, among different business and supplies to the immediate customers and suppliers. On the other hand, extended supply chain involves the suppliers of the suppliers back to the farm and customers of the customers (Abbasi amp Nilsson, 2016). A business organization may deal and indulge in multiple supply chains depending on the requirements of the business. For industrial products, the customers of the company are more likely to be business organizations. On the other hand, in the case of consumer products, the customers of the company are generally commercial customer of the end user or consumer. The term supply chain management involves the management of all the activities and processes that are involved in the supply chain of the business firm.

Now a day, the term supply chain management and logistics have been used interchangeably, but there is a difference between them. Logistics is not only related to the flow of material but also with the flow of information. It involves the flow of material from supplier to customer and information flow to different parties. It also involves inventory management and resource utilisation. It is a link between marketing activities and manufacturing operations. Logistics also put forward the various techniques and theories that drive the operations of supply chain management (Christopher, 2016). These theories and techniques involve the concept of inventory management, transportation, distribution channels and warehousing.

Inventory management is a basic concept of supply chain management. Inventory management involves the management of inventory and stocks. It consists of the items like controlling and ordering inventory, storage of inventory and controlling the cost of inventory. Transportation plays an important role in supply chain management for carrying goods and services from warehouse to the distributors, retailers and end users. Distribution channels are the most significant part of supply chain management. Distribution channels are the networks of an organisation through which it transports the goods from warehouse to distributors, wholesalers and retailers (Mangan, Lalwani, amp Lalwani, 2016).

Supply chain management and logistics the differences

The major difference which is identified for the difference of logistics and supply chain management states that supply chain management is a poader concept as compared to logistics. Further, logistics is a sub-part of supply chain management which deals with the management of the flow of goods from the point of origin to the final point of consumption. As it is a small part of supply chain management, it majorly deals with the efficient management of the flow of the goods. The term supply chain management refers to the coordination and management of various activities and steps that are involved in supply chain management. In contrast, logistics management refers to the process that involves the maintenance and movement of goods in and out of an organization (Rushton, Croucher, amp Baker, 2014). The objective of logistics management is to obtain customer satisfaction but on the other hand, the objective of supply chain management is to achieve a competitive advantage. The next point of differentiation indicates that the concept of logistics had evolved earlier but the concept of supply chain management is modern and new.

When it comes to the involvement of organizations, multiple organizations are involved in supply chain management as compared to logistics. It has also been observed that supply chain management is understood as a new version of logistics management whereas logistics management is just a fraction of the vast concept of supply chain management. The processes that are involved in logistics management include warehousing, reverse logistics (returns), inbound and outbound transportation, fulfilment and protective packaging (Coyle, Novack, Gibson, amp Bardi, 2015). When it comes to supplying chain management, the processes involve procurement supply planning, manufacturing, logistics, optimization, demand planning, inventory management and enterprise resource planning. Logistics majorly focus on timely delivery of the goods so that the purpose of customer satisfaction can be achieved. However, in the context of supply chain management, it is something different. Supply chain management focuses on the optimization of supply chain processes and activities so that the organization can remain competitive in the industry. Both concepts need different managers so that the activities and processes can be managed effectively.

Different technologies are used in both the concepts so that the companies can match with the fast-paced developments and evolution in the technological world. The commonly used technologies in logistics management are transportation management system and warehouse management system. Whereas, the technologies that are used in supply chain management involve Enterprise Resource Planning (ERP) software, Customer Relationship Management (CRM) Software, Radio Frequency Identification and Big Data (Said amp Fang, 2019). Logistics activities are associated only with a single organization and when a company interacts with another, no logistics activities are needed. So, it is very clear that its scope is limited as it is concerned with a single organization only. Contrary to this, the scope of supply chain activities is quite huge and it involves interaction with other companies too for the purpose of supplying raw material, processed goods and finished goods. In alignment with the scope, the number of departments and sections for each practice is different. The number of departments and sections for supply chain management in the organization are higher as compared to the number of departments for logistics management. The sections in logistics management for a company include transportation, warehousing and inventory (Stadtler, 2015).

Supply Chains and Networks

The supply chain is a poad concept and many aspects are covered under it. Network in supply chain means the physical arrangements, structural layouts, designs and infrastructure of the supply chain. The major decisions are taken on the basis of size and location of manufacturing plants and warehouse, supply of the raw material to warehouses and the distribution of product to the retail outlets (Grant, Trautrims, amp Wong, 2017). These network decisions involve the technology, capacity and location of the manufacturing unit. Supply chain network is the process of deciding the optimal location, size of the plants and facilities to be allotted in the plants and maintaining the flow of products in the company through mathematical models. It is a mathematical procedure for designing a network. A different viewpoint has also been found on the concept of supply chain networks. The comparison and analysis state that according to the first author it is about the calculation and estimation of the flow of products in the company on the basis of size and location of manufacturing. Whereas, the second author stated that supply chain network is associated with cost and time of transportation of goods and services from market or supplier to the warehouse and from warehouse to market (Srai, Badman, Krumme, Futran, amp Johnston, 2015). Technologies and resources are used in the process of creating a product and selling it to the market. The theories of both authors vary from each other. The four components of the supply chain and networks are physical locations, transport, relationships and systems.

Logistics and AvailabilityThe concept of logistics is evolving continuously because the availability of IT, hardware and applications are increasing and their cost is decreasing. Moreover, the focus is also on the optimization of resources so that the customers can be provided with qualitative and timely products at the lowest costs. In a product business, logistics comprises four sub-sets that include customer service logistics, conversion logistics, reverse logistics and support logistics (Aguezzoul, 2014). When it comes to service logistics, it is related to the availability of non-material resources. Service capacity includes planning for the availability of people (Dias amp paga Junior, 2016).

Logistics challenges within Industry Sectors

The types of logistics include product based logistics and service based logistics. Logistics function is found in various industries pands and these include consumer packaged goods, fast moving consumer goods, automotive, retail logistics, industrial products, military logistics and support logistics (Busse, Regelmann, Chithambaram, amp Wagner, 2017). The consumer packaged goods involve those products that non-durable and are typically food based. These types of products generally have cool chain products and shorter shelf-life. Thus appropriate optimization of the processes is necessary. The durable goods include household products, apparel and electronics. The challenges are related to the geographical differences in manufacturing, distribution and after-sales services of these products. The challenges in the automotive sector are comprised of the designing, assembly and distribution of the parts of the vehicles and then their distribution to the dealers. The chances of waste are more which can be improved by adopting lean management or just in time (JIT) approach (Dahlgaard-Park, Reyes, amp Chen, 2018). In retail logistics, the requirements include accurate forecasting of the market demand, supplying the goods and services on right time, product assortment management, inventory replenishment and financial planning for the purpose of merchandise purchases. Moreover, it also becomes difficult to trace the requirements of the products through the supply chain. These challenges must be dealt with effectively so that retail management can become efficient. Industrial products are delivered directly for business purposes and many times they are made on the basis of orders. In military logistics, two types of supports are found. The first type is deployment logistics in which products and services are moved and troops are provided by ensuring that necessary shelter, uniforms, food and munitions are made available depending on the deployment of forces in different situations and places (Hogan, Oakden, amp Leonaite, 2011). In material logistics, equipment or hardware are made available that comes under integrated logistics support.

ConclusionIt can be concluded from the analysis of the topic that there exist significant differences between both the concepts which are supply chain management and logistics. It is found that supply chain management is a poader concept and its scope is also large. The concept empaces logistics management and thus logistics is a sub-part of supply chain management. From all the aspects and all the points of differentiation like the number of departments in the organization, managers role, scope, objectives, the involvement of organizations and processes both the concepts show noteworthy differences. There are various other underlying concepts that are associated with supply chain management and logistics management. The concept of supply chain network states that it is the process of deciding the optimal location, size of the plants and facilities to be allotted in the plants and maintaining the flow of products in the company through mathematical models. Further, there are various challenges which are associated with logistics management. Different industries face different challenges and these industries include household products, apparel and electronics.

References

Abbasi, M., amp Nilsson, F. (2016). Developing environmentally sustainable logistics Exploring themes and challenges from a logistics service providers perspective.Transportation Research Part D Transport and Environment,46, 273-283.

Aguezzoul, A. (2014). Third-party logistics selection problem A literature review on criteria and methods.Omega,49, 69-78.

Busse, C., Regelmann, A., Chithambaram, H., amp Wagner, S. M. (2017). Managerial perceptions of energy in logistics an integration of the theory of planned behavior and stakeholder theory.International Journal of Physical Distribution amp Logistics Management,47(6), 447-471.

Christopher, M. (2016).Logistics amp supply chain management. UK Pearson.

Coyle, J. J., Novack, R. A., Gibson, B., amp Bardi, E. J. (2015).Transportation A global supply chain perspective. Boston Cengage Learning.

Dahlgaard-Park, S. M., Reyes, L., amp Chen, C. K. (2018). The evolution and convergence of total quality management and management theories.Total Quality Management amp Business Excellence,29(9-10), 1108-1128.

Dias, K. T., amp paga Junior, S. S. (2016). The use of reverse logistics for waste management in a pazilian grocery retailer.Waste Management amp Research,34(1), 22-29.

Grant, D. B., Trautrims, A., amp Wong, C. Y. (2017).Sustainable logistics and supply chain management principles and practices for sustainable operations and management. London Kogan Page Publishers.

Hogan, C., Oakden, R., amp Leonaite, K. (2011). A framework for supply chains logistics operations in the Asia-Pacific region.MHD Supply Chain Solutions,41(3), 73.

Mangan, J., Lalwani, C., amp Lalwani, C. L. (2016).Global logistics and supply chain management. New Jersey John Wiley amp Sons.

Rushton, A., Croucher, P., amp Baker, P. (2014).The handbook of logistics and distribution management Understanding the supply chain. London Kogan Page Publishers.

Said, F. F., amp Fang, M. (2019). A Probe into the Status of global countries Trade Positions in the Global Value Chain (GVC)-based on Value Added Trade Perspective and Network Modeling.European Journal of Sustainable Development,8(1), 305-323.

Srai, J. S., Badman, C., Krumme, M., Futran, M., amp Johnston, C. (2015). Future supply chains enabled by continuous processingOpportunities and challenges. May 2021, 2014 Continuous Manufacturing Symposium.Journal of Pharmaceutical Sciences,104(3), 840-849.

Stadtler, H. (2015). Supply chain management An overview. InSupply chain management and advanced planning. BerlinSpringer.

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