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Supply Chain Management vs. Logistics Management in PGDM

20 November 2023

Due to the COVID-19 pandemic in early 2020, the fragility of global goods and service transportation has brought significant attention to supply chain and its challenges. Due to the rapid expansion of e-commerce, companies are placing a growing emphasis on streamlining supply chain and logistics operations. After COVID-19 pandemic, global e-commerce sales surged to $4.28 trillion, as reported by eMarketer. While "logistics" and "supply chain management" are often used interchangeably, it's crucial to distinguish between these concepts. A solid comprehension of how these areas function can assist businesses in improving efficiency, increasing customer satisfaction, and gaining a competitive advantage. This blog covers a detailed comparison between supply chain management and logistics and their career outcomes.

Supply Chain Management: An Overview

Supply chain management (SCM) involves the processes that transform raw materials into finished products and deliver them to customers. SCM also focuses on improving these processes for the benefit of customers and business partners. It requires visibility across the entire supply chain, allowing companies to track goods and services at each stage and respond to disruptions. SCM encompasses a complex network of suppliers, manufacturers, distributors, retailers, and end-users with various types of relationships, including vertical and horizontal connections. For example, a fashion apparel manufacturer manages its SCM by sourcing raw materials such as fabrics, buttons, and zippers, followed by manufacturing clothing items, warehousing and distribution to various retail locations, and managing customer feedback and returns.

Logistics Management: An Overview

Logistics management is the coordination of activities required to move goods from their source to the final customer. These activities consist of tasks like order processing, material handling, packaging, warehousing, transportation, and managing customer service. Logistics management applies to a diverse range of physical products, spanning from raw materials, finished items, equipment, machinery, food, and consumables. Logistics involves the coordination of facilities, personnel, machinery, and additional resources to guarantee that products are transported according to schedule. For example, logistics management for a smartphone company involves sourcing materials globally, overseeing manufacturing, quality control, warehousing, and efficient distribution to diverse markets. It also encompasses inventory control, order processing, and handling returns and repairs.

Supply Chain and Logistics Management: Similarities

Supply chain management and logistics share a common goal of transporting goods from origin to destination efficiently. Both of these domains require coordination of resources like labour, raw materials, and others. While logistics is an integral part of supply chain management, the latter is a broader field. Here’s an overview of the key similarities between supply chain and logistics management:

  • Both emphasise the movement, storage, and delivery of goods, services, or information.
  • Both aim to enhance a company's success and set it apart from rivals.
  • Both strive to boost customer satisfaction.
  • Both involve the flow of goods and services, spanning from suppliers to manufacturers, wholesalers, and ultimately retailers or consumers.

Supply Chain and Logistics Management: Differences

Supply chain management entails strategizing and executing activities related to planning, sourcing, production, delivery, and handling returns. Logistics, on the other hand, addresses the precise placement of products at the right time and plans to achieve the same. Here’s an overview of the key differences between supply chain and logistics management:

  • Logistics falls within the broader scope of supply chain management, which encompasses activities like production planning, inventory management, labour planning, facility management, and others.
  • Supply chain management aims at improving processes to gain a competitive edge, whereas logistics focuses on meeting customer expectations through efficient and cost-effective product delivery.
  • Logistics emphasises the optimised delivery of goods to customers, ensuring the products reach the right place at the right time.
  • Supply chain management oversees the transformation of raw materials into finished products, tracking their journey from suppliers to manufacturers, warehouses, and ultimately retailers or consumers.

Career Scope

Supply chain management and logistics both enhance customer satisfaction and improve the buying experience. Logistics provides real-time insights into customer demand, while supply chain management leverages this to align production and inventory with consumer preferences. Efficient and cost-effective logistics lay the foundation for effective supply chain management.
Recognising the advantages, many businesses adopt supply chain management software to streamline various supply chain components, from sourcing to production planning, inventory, and order management. This helps meet increased customer expectations while maintaining cost efficiency. Let us see some of the prominent career roles that individuals can explore in these two fields:

  • Supply Chain Analyst: Supply chain analysts use data and analytics to optimise supply chain processes, forecast demand, and improve efficiency.
  • Logistics Coordinator: Logistics coordinators are responsible for coordinating the movement of goods, managing transportation, and ensuring on-time deliveries.
  • Purchase Manager: Purchase managers are responsible for sourcing and procuring materials, negotiating with suppliers, and managing supplier relationships.
  • Inventory Manager: The inventory manager oversees stock levels, monitors inventory turnover, and ensures that products are available when needed.
  • Warehouse Manager: The warehouse manager supervises warehouse operations, including storage, inventory control, and distribution.

Wrapping Up

The COVID-19 pandemic underscored the importance of resilient supply chains and efficient logistics. While often used interchangeably, understanding the differences between supply chain management and logistics is crucial for businesses to enhance efficiency, customer satisfaction, and competitiveness. Both fields play integral roles in meeting the demands of an evolving global market. As e-commerce continues to expand, the significance of these disciplines in the business world is set to grow, offering diverse and rewarding career opportunities for professionals.

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