A supply chain is referred to as an integrated system that synchronizes a series of interrelated

business processes in order to: (1) create demand for products; (2) acquire raw materials and
parts; (3) transform these raw materials and parts into finished products; (4) add value to these
products; (5) distribute and promote these products to either retailers or customers; (6) facilitate
information exchange among various business entities (e.g., suppliers, manufacturers,
distributors, third-party logistics providers, and retailers).

Its main objective is to enhance the operational efficiency, profitability, and competitive position
of a firm and its supply chain partners.

More concisely, supply chain management is defined as “the integration of key business
processes from end-users through original suppliers that provide products, services, and
information and add value for customers and other stakeholders.

In a nutshell, the concept of supply chain management has evolved around a customer-focused
corporate vision, which drives changes throughout a firm’s internal and external linkages and
then captures the synergy of inter-functional, inter-organizational integration and coordination.
Herein, integration does not entail merger/acquisition or equity of the ownership of other
organizations. The successful integration of the entire supply chain process can bring about a
number of bottom-line benefits;

Improved customer service and value added—Customer service can be improved through
increased inventory availability, better on-time delivery performances, higher order fill rates, and
lower post-sales costs.

• Enhanced fixed capital—Fixed capacity is maximized through a strategic partnership and joint
planning that can increase overall capacity and throughput.

• Utilized asset—Asset utilization can be maximized by increasing inventory turns and closely
aligning supply with demand.

• Increased sales and profitability—The ability to assess outcomes due to price changes,
promotional events, and new product development can be enhanced through increased visibility
resultant from information sharing among supply chain partners
The supply chain and logistics are interdependent and the lifeblood of any business. The main
objective of supply chain management is to increase efficiency and curtail overhead costs. At the
same time, logistics support the supply chain by providing the required distribution and
movement of products, ensuring that goods are delivered successfully to save time and money.
However, in the current scenario, this notion in reshaping and customer experiences is taking
center stage in defining SCM and logistics management priorities. SCM and logistics are
constantly evolving with the advent of modern technology-driven solutions and software for the
overall management and meeting the demands of consumers.

This blog is focused on understanding the roles, similarities, and dissimilarities of logistics and
supply chain management for building a thriving enterprise. Let’s start with the meaning of
these two practices!

What is Supply Chain Management?

At its heart, supply chain management (SCM) handles the freight movements, related
information, and finances associated with the goods/services of a company. Typically, this
begins with procuring raw materials and ends with delivering the finished product at its final
destination. It includes various activities like procurement, order management, fleet
management, supply chain operations planning, product lifecycle management, identifying
logistics providers, overall process tracking, etc. All these processes play a significant role in
maintaining the company’s operations; without a well-planned supply chain in place, businesses
can not survive. With technological advancements, the management of supply chains has become
organized and more effective through software for database management, material handling &
tracking, etc.

What is Logistics Management?

Logistics management is an integral component of supply chain processes, responsible for

planning, controlling, and executing the movement of goods/services from the point of origin to
end customers. The main aim of logistics management is to allocate the right amount of
resources or goods to the correct destination at the right time. A strong distribution network is
imperative for running a successful business and maintaining a reputable marketplace position.
An organization can achieve efficient logistics management by incorporating reliable strategies,
locating the right vendors for transportation facilities, continuously tracking the movement, and
adopting a proactive approach.

Are Logistics and Supply Chain Management the Same Thing?

The terms logistics and supply chain management are confused for one and sometimes used
interchangeably. Logistics only involves the movement and storage of goods in a supply chain
process. And the supply chain is a comprehensive process that includes management &
coordination of the overall process. From purchasing goods, distribution management,
manufacturing, logistics, delivery, etc., all come under supply chain operations.

To gain more insight into logistics and supply chain management, Let’s dive deeper into
similarities and differences to understand their scope.

Similarities of Logistics and Supply Chain Management

Both supply chain management and logistics are concerned with the flow of goods from point A
to point B. These two disciplines need to work in synchronization, but each is a unique practice.
SCM is an inclusive term that includes the physical movement of items, managing customer
service, and order fulfillment.

Common aspects of Logistics Management and SCM-

1. The end goal of both disciplines is to achieve customer satisfaction and work on
enhancing the experience.

2. Both have the ultimate goal of outperforming competitors to support the company’s
growth.

3. Logistics and SCM both revolve around goods, services, and information tracking.

4. The flow of goods and services runs parallel to each other. From supplier to manufacturer
to the wholesaler/retailer and lastly to the end customer.

Difference Between Logistics and Supply Chain Management

By now, you must have gained an overview of the functionality and meaning of Logistics and
SCM. Although they need to work in sync to maintain efficient operations, there are a lot of
dissimilarities between the two in terms of activities, scope, origin, and focus.
Logistics Vs. Supply Chain Management –

1. On the Basis of Activities: Logistics is one of the activities under the umbrella of supply
chain management. In contrast, SCM covers a wide array of activities, including
planning, sourcing, manufacturing, delivering, etc.

2. On the Basis of Scope: SCM works towards a higher objective of enhancing the
company’s overall performance efficiency to help gain a competitive edge. On the other
hand, logistics is focused on cost-effective and time-effective delivery of goods at
different supply chain stages and ultimately to the end customer.

3. On the Basis of Origin: The term logistics has its roots in the 19 th century, first
introduced in the military for supplying battleground with troops, equipment, and
supplies. Later, the concept was adopted in industries. While modern SCM practices
came into being in the 20 th Some believe Keith Oliver coined the term, and some credit it
to the Ford Motor Company’s production lines for implementing and perfecting the
concept.

4. On the Basis of Focus: SCM focuses on the entire process from sourcing raw materials
to its transformation into finished products. Later the distribution to retailers or customers
also comes under SCM. In contrast, logistics includes the movement and transport of
goods to the required destination.

The Role of Logistics in Supply Chain Management

Logistics is the backbone of any supply chain and plays a massive role in ensuring that the
supply chain runs smoothly. Apart from transporting goods, it involves managing and tracking
various other processes like procurement, freight, warehousing, packaging, etc. Logistics
management works closely with customs, maintains reliable relations with intermediaries, and
establishes routes for returned/discarded goods. All these operations directly impact the
effectiveness of supply chain management.

Importance of efficient logistics management in SCM.

1. Maintaining cost-effectiveness by keeping a check on delays in deliveries.

2. Improving the efficiency of the processes through on-time deliveries.

 3. Catering to customer demands and working towards satisfaction and customer retention.

4. Keeping a check on transportation costs.

5. Ensuring transportation in proper conditions without product exposure to damage.

A well-managed logistics company with effective transportation management increases the

efficiency of the supply chain, thereby improving bottom-line growth.

Logistics and Supply Chain Management: Significance and Future Scope

Supply chain management provides the strategic direction that guides inbound and outbound
logistics for improved operational efficiency and enhancing customer service. Companies can
streamline delivery and significantly reduce costs by establishing a collaborative and systematic
approach between logistics and SCM.

Another critical aspect in successful logistics and supply chain management is adaptability to
automation for the overall process optimization. Many businesses have realized and implemented
software solutions for mitigating the complexities of supply chain operations. With ever-
increasing customer expectations and fluctuating demands, a need for constant tracking and
enhanced order management has risen. In-depth reporting, identifying potential problems,
checking on costs, flawless inventory management, keeping a check on all supply chain
operations, etc., is becoming possible with modern software solutions. Therefore it’s
quintessential for businesses to embrace technological solutions to remain competitive in the
market.