Supply chain management (SCM) and logistics are terms that are often used interchangeably, or get confused with one another, as both involve the transportation and storage of goods. However, there is a difference between the two.

The supply chain is the process of moving goods from supplier to consumer, and its management looks at the entire process. Logistics is focused on smaller areas within the management of the supply chain. So, let’s unpack what each of these terms involves, and see why they are different.

The Supply Chain

SCM is a broader concept than logistics. The supply chain is concerned with three main areas: sourcing, manufacturing, and distribution. Sourcing is the process of obtaining goods from suppliers. Manufacturing is the process of turning those goods into a finished product. Distribution is the process of getting the finished product to customers. In other words, the supply chain is the process of turning raw materials into a finished product and getting it into the hands of the customer.

Supply chain management is the coordination of all activities across the entire supply chain to provide customers with what they need, when they need it, at a competitive price. It focuses on improving communication between suppliers, manufacturers and customers, and also involves tracking product flow and inventory levels throughout the supply chain to ensure that products are delivered on time and in good condition. SCM is also concerned with managing supplier relationships and reducing costs associated with production and distribution.

Logistics

Logistics is defined as the process of managing the flow of goods from one point to another. Once a product is manufactured, logistics takes over to make sure it gets delivered to retailers or customers in an efficient and cost-effective way. In this way, logistics is a smaller part of supply chain management.

Logistics involves the planning, organising, and controlling all aspects of the transportation and storage of goods. This includes warehousing and storage, modes of transport, estimating costs associated with shipping, arranging for packaging, selecting an appropriate route for delivery, coordinating with customs authorities and other necessary activities involved in moving goods from one point to another.

There are different types of logistics organisations that specialise in different aspects of transportation and storage. These include in-house logistics, logistics service providers, third-party logistics, reverse logistics, warehouse providers, and courier shipping.

Both logistics and SCM are essential components for a successful business operation. The whole supply chain is pivotal to achieving success and generating income in the marketplace, with logistics playing a vital part in making sure raw materials, components and finished products flow smoothly through supply chains.

How LTS can help with your supply chain and logistics needs

At LTS, we understand the complexities faced by our customers in sourcing and shipping globally. So, we offer tailored solutions to make their supply chains run more smoothly, from single pallets and short-term storage to complex international freight movements, 360 fulfilment and JIT delivery.

Our state-of-the-art logistics facility in Birmingham is equipped to always provide first-class service, and because we always strive for excellence, you can be sure that your goods will arrive on time and within budget – every time. Contact us to find out more.