Logistics is not Supply Chain Management, End of Story
There still seems to be much confusion about the terms “logistics” and “supply chain management”. Much like accounting, SCM takes a cross-functional perspective within an organization (this includes purchasing, R&D, marketing, sales, IT, and – logistics), but goes beyond the first and second tiers on both the supplier and customer sides. Therefore, supply chain managers are typically concerned with managing the relationships with channel partners. SCM relates to questions like: How can the bullwhip effect be avoided? How can production be ensured if a supplier’s supplier’s plant burns down? How can CO2 emissions of a product be measured, including the emissions of a supplier’s supplier’s plant, an LSP’s trucks, and disposal by consumers? What alternative types of governance are available to coordinate with a second-tier supplier or a retailer, if a direct contract with them is impossible (or you don’t even know who they are)? A logistics manager might ask some of these questions, too, but isn’t she mainly concerned with managing the flow and storage of goods and services?
18 responses to “Logistics is not Supply Chain Management, End of Story”
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- - 2016-01-18
- - 2016-12-24
Thx for good explanation, I agree that logistics is part of collaborate SCM and seems to me that Big Org and Small Org created such confusion because small Org can handle SCM scope easier than Big ones , in other words Big Org is facing constraints to cover all SCM in one division so they will force to spill it up where IT , Procurement , logistics within Org are becoming independent and then things will start hard to optimize.
” but isn’t she mainly concerned with managing the flow and storage of goods and services?”
Who is She?
The logistics manager, or what did you think? :-)
I agree with your definition, Andreas. Logistics management is a subset of Supply Chain Management
The SCM handles relations between all the entities that compose a chain, from the Earth to the Earth, taking in account the flow of materials/product, flow of information. flow of money and flow od decisions (Colaborative planning), SCM is Focuses on the arrive to the final consumer with the best ratio cost/service.
Logistics is responsible for optimizing the flow of materials/product, subject to the rules of SCM.
LOGISTICS IS NOT SUPPLY CHAIN
Perhaps a better title might have denoted that “Logistics” is a discipline that is a bit bigger than SCM. From a broad general perspective “Logistics” in essences consist of 3 component parts – Logistics Engineering, Logistics Analysis and Logistics Management. Some pieces of Logistics Management are contained within SCM.
In agreement that Supply Chain scope most likely wider than Logistics..
It also depends on business nature ( Production or service) ..
Think that SCM Mainly spot on managing the processes and moving the barriers which of course includes logistics.
Logistics is what happens within supply chains.
The meanings have shifted over time and also change from company to company. I was working in a global electronics wholesale company as National Warehousing and Distribution Manager, a clear title, which was responsible from arrival of containers into port through receiving storage pick pack and despatch and handling returns plus stocktakes. Then I moved into a National Planning and Supply Manager role responsible for forecasting, procurement, supply monitoring and import up to the port. Then I became National Logistics Manager and both those previous roles reported into me. So, in that company Logistics was the whole chain from forecasting through to customer delivery including spare parts and accessories. Then in another company I was GM Logistics and Supply. That company saw those areas as separate but connected concerns. Supply Chain Manager is a later development. I have preformed the same roles under the title of Operations Manager as well. My main issue is that recruitment agencies and potential employers are confused or misled by their understanding of such titles and are ruling out good people through automated resume reading software or ignorance of the real meat in those roles.
Logisticians All, When I entered industry from the military over 20 years ago, one of my first tasks was to attend an Integrated Logistics Course. Since then I have been involved in design, manufacturing and operations. IMHO the Supply Chain is a sub-set of Logistics, which is the totality of industrial effort from cradle to Grave” so the saying goes. The litmus test must be: “where does the supply chain get its vehicles, products and warehouse from?” the answer, I believe is from the greater logistic effort.
I fully agree with Andreas’ definitions! But when we translate into French, the issue becomes very confusing as what the French call “La Logistique” rather matches what Andreas calls SCM … As usual, French and English don’t speak the same language, except when the French adopt the terminology “Supply Chain Management” in English as they adopted “sandwich”!
Sorry to disagree with the majority, after more than 50 years working as a logistics manager in major multinational companies. In my opinion SCM is a very important part of the logistics , it is the SPINE and Logistics is the SKELETON.
Sorry to disagree with the majority after more than 50 years working as a logistics manager in major multinational companies SCM is the most important part of the logistics .
In my opinion, SCM is the main ( backbone) SPINE and the LOGISTICS is the skeleton.
Fully agree with detailed description that SCM is a wider concept entailing and covering vast horizons of business. SCM gives a broader look of doing the business. Raw material provision, warehousing, marketing, R&D, IT customer services even till customer’s plate in case of Food. Furthermore, stakeholders / partners / mergers / opportunities to give a real boost to business.Latest applications of technology and many more while Logistics focus on flow of products and services.
So, its rightly stated that logistics is a sub-set of SCM.
What’s in a name? Doesn’t matter what you call a position or a department. Everything is dependent upon the responsibilities assigned or taken on by that department.
Logistics is generally seen as a sub-set of SCM. For an organization logistics can deal with the in-bound or outbound flow of products (whether these are raw materials, components or finished goods). From an integrated perspective, logistics can and should be concerned with the replenishment of demand (internally or externally). From a cross-functional perspective logistics can and in most cases be involved with collaboration (internally with other functions such as marketing, manufacturing and procurement) with customers and suppliers (for forecasting, planning and replenishment purposes). If this is not the case then we are still working in functional silos and performance will continue to disappoint!