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The main difference between supply chain and logistics is that logistics is merely a specialized part of the entire supply chain process.
Supply chain management is a broad, integrating process that entails many other processes aside from logistics. These processes mainly are:
Customer relationship management
Supplier relationship management
Customer service management
Demand management
Order fullfilment
Manufacturing flow management
Prodcut development and commercialization
Returns management
However logistics focuses on the actual transportation and storage of goods. It deals with things such as freight, shipping, communications during transit, storage, warehousing and fleet management..
I totally agree with Mr.Jetley, they are different.
What is the difference between Logistics and Supply Chain Management? Many people use2 terms interchangeably. But, what is the correct way to use them?
Logistics Management Concept Logistics has its root from the military activities associated with moving troops into the battlefield. Later, the application has moved into business field. One of the most confusing thing is the difference between logistics and supply chain management. Lummus et al2001 made a clear distinction between both terms in the article named "The relationship of logistics to supply chain management: developing a common industry definition" that,
The logistics involves planning, implementing and controlling efficient, effective flow and storage of goods and services from the beginning point of external origin to the company and from the company to the point of consumption for the purpose of conforming to customer requirements. Logistics is generally viewed as within one company, although it manages flow between company and its suppliers and customers. Supply chain management includes logistics flows, the customer order management and production processes and information flows necessary to monitor all activities at the supply chain nodes.
Traditional view of many organizations is modelled after the military organizations where many players are under the command of a leader. Then, many related tasks have to be performed by different people from different function. Doing this way, coordination among each function is not effective because each function considers only their own objectives.
Modern logistics are now pay attention to more integrated process under the same unit to formulate more productive workflow.
Supply Chain Management Concept
SCM concept can trace back to the intense competition in textile industry worldwide. Prominent figure in US apparel industry formed the “Crafted with Pride in the USA Council” in1984 (then become Kurt Salmon Associates in1993). They were commissioned to conduct the analysis. The results revealed that total lead-time in apparel industry took66 weeks long from raw material to consumer;40 weeks were spent in the warehouse or in transit. So, Quick Response strategy (QR) has emerged to make suppliers and retailers works together to shorten lead-time. In1993, group of grocery industry leaders formed a task force to examine grocery industry (ECR Working Group). They identified best practices and take an implementation of SCM concept into action. They projected an overall reduction in pipeline inventory of37 percent (Lummus, Krumwiede and Vokurka2001) According to APICS Dictionary, Supply Chain is
"The global network used to deliver products and services from raw materials to end customers through an engineered flow of information, physical distribution, and cash".
Simple structure of supply chain network can be depicted as below,
SCM covers lots of activities to plan, implement and control products from point of origin to point of consumption. Each researcher defines SCM differently. Johnson and Pyke (2000) then compiled the contents taught in many management and engineering schools then develop a framework for Supply Chain Education consists of12 components as following,
1) Location strategy considers how to choose facility location quantitatively and qualitatively. Decision at this point has the impact on the structure of Supply Chain which includes transportation cost at particular location, government incentives or promotion of foreign investment, taxes & duties and country differences. Then strategy will be more tactical.
2) Transportation and logistics includes all aspects of material flows through the supply chain including issues in transportation and warehousing such as vehicle routing, fleet management and material handling.
3) Inventory and forecasting includes various techniques used to develop the good forecasting models for both existing and new product forecasting. Reducing inventory cost by providing right amount of stock level is the basic concept that can lead to more understanding about other issues.
4) Marketing and channel restructuring explores fundamental structure and the use of relationship management to enhance the coordination among each members. This area encompasses mainly the activities from manufacturers to end customers.
5) Sourcing and supplier management pays much attention to determine source of products, whether they should be produced internally or bought from vendors. Managing supplier networks can prevent raw material shortage, material quality problem and delivery reliability.
6) Information and electronic mediated environments addresses application of information technology in many aspects such as to reduce inventory, to better communication between trading partners, integrated software system (ERP, MRP,WMS) and electronic commerce.
7) Product design and product development handles the method used to design the new products and how to introduce them to customers successfully.
8) Service and after sales support deals with the tasks to provide support, spare parts and repair service after the purchase of customers. This area helps to retain customers.
9) Reverse logistics and green supply chain examine the best way to return products back to a manufacturers to repair, reuse, recondition and disposal. Information obtained from returned products will help makers to diagnose production problem to avoid possible defects. Environment related issues are also determined.
10) Outsourcing and strategic alliances consider what kind of activities we should ask specialists to handle and how to create a firmed relationship with service providers. Outsourcing is the great way to reduce capital investment because important assets will be shared.
11) Metrics and incentives control the business performance between trading partners to ensure that every members do their best to provide products and services to customers. Economic incentives from performance compliance will be explored as well.
12) Global issues and global supply chain examine how well each company operates in multiple countries. This category is the widest span of supply chain management.
