Are these terms interchangeable, or is there a subtle difference? Please explain…
I have worked in these fields off and on for a while now. They are closely related but not exactly the same. I regard logistics as a subset of supply chain management.
This is actually a more academic and difficult topic than most people ever think about. There are supply chain consultants that make mega-bucks telling big corporations how to manage their inventory, cash flow, and make all the little parts come to come together at exactly the right time. The easiest example would be the auto industry where the supply of parts for a given vehicle will look like one of those airline route diagrams in the airline magazines.
Supply chain experts try to figure out statistical models that predict exactly how much of each part should be at a given assembly location on a given day or even hour. It is easy to just order a bunch of every part you might need and store it on site but that cost money in many ways. It is even worse to be short critical parts when the assemblers are sitting there next to the assembly line unable to put a car together.
The goal is to balance those two problems so you have exactly what you need when you need it. That is called Just In Time inventory but that is only part of supply chain management. There are whole books and courses in supply chain management so I can’t cover it all here. Just imagine what goes into every step of every piece of a complex product that you own. There is a lot too it.
Logistics is simpler. Logistics focuses on getting goods from point A to point B although points A and B may be 12,000 apart and require 5 other way-points using cargo ships, planes, and truck for one little part. Logistics is still more complicated than most people realize. It involves figuring out the most efficient transportation routes, negotiating pricing, contracts, and managing transportation fleets. It is more hands on and down to earth in other words.
logistics:
1 The aspect of military operations that deals with the procurement, distribution, maintenance, and replacement of materiel and personnel.
2 The management of the details of an operation.
supply chain:
The movement of materials as they flow from their source to the end customer. Supply Chain includes purchasing, manufacturing, warehousing, transportation, customer service, demand planning , supply planning and Supply Chain management. It is made up of the people, activities, information and resources involved in moving a product from it’s supplier to customer.
There’s a subtle distinction and a lot of overlap. I think logistics is more of a military term anyway. Usually they call it “operations” in business.
Logistics deals more with the management of the operations. It would include buying the parts and equipment needed to keep a warehouse and its trucks running.
Supply chain management deals more with the products and services a company provides. It would be the tracking of goods in and out of the warehouse.
For example, the supply chain for a computer company consists of the parts manufacturers, the factory where the parts are assembled, the distribution centers, and the final retailers. Each segment of the supply chain has its own set of operations and logistics that keeps it running - keeping the kitchen going, janitorial, organizing the trucks, etc.
Anyhow that’s my take on it.
I did some consulting work in supply chain management. It can get very complicated. My client was an airline and we were helping them select vendors for the aircraft parts. Imagine how many parts go into an airplane and you get an idea.
We’d include manufacturing and execution as part of the supply chain, at least in the sense that it’s the conversion of the inbound parts to the outbound products. We’d also include all of the planning functions as part of supply chain, but not necessarily part of logistics (there is a planning component to logistics as well, I’m talking about Sales & Operations planning, Demand and Production planning).
They are almost but not quite interchangeable terms for all intents and purposes.
Shibb, currently working as a supply chain management consultant