When it comes to supply-chain management and logistics, the two often get mixed up. That said, it’s important to understand the difference between these two service offerings as they can contribute to the overall success of a company in different ways.
Together, both logistics and supply chain manage the process of delivering your goods and services to the marketplace, regardless of your business type.
In simple terms, logistics is the process of integrating the movement and maintenance of goods in and out of an organization, whereas supply-chain management is the planning, coordination and management of supply-chain activities in an organization (Source). It is worth noting that logistics is only one function within a larger supply-chain strategy.
While the objective of logistics is to gain customer satisfaction, supply-chain management helps an organization stand out amongst their competitors by maximizing customer value and overall efficiency in their business processes.
Logistics is an internal function and refers to the activities of one more department within an organization. Supply-chain management involves multiple companies working together to coordinate actions to efficiently deliver an organization’s products and services to market. For example, the integration between a supplier, manufacturer, wholesaler and retailer is a supply chain.
Supply chain focuses on the development and delivery of products to market, while logistics is concerned with the proper management and movement of goods from your business to your end customer.
To quickly recap, here are some key differences to remember:
- Logistics is a heritage term, while the concept of supply chain is new
- Supply chain management integrates key processes from multiple businesses to create a high-performance business model
- Logistics is the movement, storage and flow of goods and services in and out of an organization
- Supply chain focuses on standing out amongst competitors, while logistics is more client-facing and addresses meeting customer needs
- Logistics is only one function within a larger supply-chain strategy