Difference between Logistics & SCM (Supply Chain Management)

Nowadays, many people are still wondering about: The difference between Logistics and SCM (Supply Chain Management). This issue is still being debated quite a lot, not only in the community of people working in these fields but also among academics. In this article, we will learn about the common views on the relationship between Logistics and Supply chain.

We have discussed what Logistics is in the previous article. Supply chain is a concept that was born later than Logistics and has gradually become popular since the late 20th century. Along with the development of the concept of Supply chain, there is a need to distinguish Logistics from SCM because there is too much overlap in work between them. However, up to now, people have not been able to agree on the relationship between Logistics and SCM, but have divided it into 4 main schools of thought as below.

Four perspectives on the correlation between Logistics and SCM

Traditionalist

Analysts who follow this view say that SCM is just a small part of Logistics. And SCM is often referred to as “Logistics outside the company.” Traditionalists might create a new “SCM analyst” position within the Logistics team. SCM analysts would expand the scope of Logistics analysis, perhaps linking Logistics activities to other functions within the company as well as other companies in the supply chain.

Relabelling

Relabelling holds that SCM is simply “another name” for Logistics. This is a common view in companies and organizations, where the job titles & responsibilities of “Logistics Manager” & “Supply Chain Manager” can be used interchangeably. This view narrows the practical scope of SCM because SCM is considered equivalent to Logistics: A Logistics manager last year could be an SCM manager this year, with no change in the job!

Unionist

In this view, Logistics is a part of SCM and SCM completely encompasses Logistics. As Giunipero & Brand (1996) said: “SCM does not stop at Logistics”. At the extreme level of this concept, SCM includes most areas of traditional business, including Logistics, marketing, operations management and purchasing. In fact, this “Unionist” view is the most widely supported. Therefore, the following contents on the relationship between Logistics and SCM will be analyzed from this point of view.

Intersectionalist

The concept of intersectionality suggests that SCM is not a combination of logistics, marketing, operations management, purchasing, and other functional areas. Rather, it includes strategic, integrated elements from all of these disciplines. For example, in purchasing, negotiating a long-term agreement is a strategic element, and transferring an order is a tactical element. The supply chain manager will be involved in the negotiation process but not in the actual transfer of the order. Similarly, in logistics, hiring a third-party logistics provider (3PL) is a strategic decision, while selecting goods and packing them in the warehouse is tactical. At the intersection, SCM coordinates the cross-functional efforts of multiple companies. SCM is strategic, not tactical.

Distinguishing Logistics from SCM from a Unionist Perspective

According to Konezny & Beskow (1999), the components of SCM are: Logistics (inventory, warehousing, packaging, distribution, transportation, customer service, purchasing, production planning and demand forecasting); strategic planning; information technology; marketing; and sales. Similarly, in “Essential of Supply Chain Management” by Michael Hugos, it is written: Logistics is the activities within the scope of a certain organization (single organization) while Supply Chain is the network between companies working together. Traditional Logistics focuses on activities such as: Purchasing, distribution & inventory management. Supply Chain Management also includes: Marketing, new product development, finance & customer service”.

For some researchers, the term “SCM” alone is not enough! For example, Sandelands (1994) defines SCM holistically as “the collection and exploitation of quality information for all areas of business, such as finance, marketing, and human resource planning.” Stock & Lambert in Strategic Logistics Management argue that “supply chain management is the management of eight key business processes: (1) Customer Relationship Management (CRM); (2) Customer service; (3) Demand Management; (4) Order fulfillment; (5) Manufacturing flow management; (6) Procurement; (7) product development and commercialization; and (8) returns.”

In summary:
– SCM encompasses all logistics activities and processes between departments and between companies.

– Logistics Management is a part of SCM, including activities that help manage the flow of goods effectively.

To make it easier to visualize, we can compare the difference between Logistics and SCM as in the table below.

Basic for comparison	Logistics Management	Supply Chain Management
Meaning	The process of integrating the movement and maintenance of goods in and out the organization is Logistics	The coordination and management of the supply chain activities are known as Supply Chain Management
Objective	Customer Satisfaction	Competitive Advantage
Evolution	The concept of Logistics has been evolved earlier	Supply Chain Management is a modern concept
How many organizations are involved?	Single	Multiple
One in another	Logistics Management is a fraction of Supply Chain Management	Supply Chain Management is the new version of Logistics Management

Hopefully the above article has helped readers distinguish between Logistics and SCM as well as better understand the relationship between Logistics and SCM. If you need further discussion, need advice or have a need for Logistics services, please comment below or contact our team of experts immediately to receive the earliest support.