What is supply chain management, what is logistics?

Over the last month or so there has been an ongoing debate on Linkedin trying to  answer the question of “how do you differentiate supply chain management and logistics?”. Reading the debate has highlighted a number of things:-

 

1)      The standard of debate is very high and people care deeply about this issue

2)      Widespread disagreement exists over what constitutes logistics and what constitutes supply chain management

3)      The terms are used differently by different companies and individuals

4)      The terms are vague and not adequately defined

This has led to a general confusion and disagreement over the meaning of the exact terms. In this short article I am going to provide some definitions of the two terms.

Logistics

 

A number of definitions exist for example CILT define logistics as:-

‘the time related positioning of resources to meet user requirements” this involves getting the right product to the right place in the right quantity at the right time in the right conditions at the right costs’

Although this sounds simple achieving the 6Rs can be immensely difficult. As such Logistics includes functions such as transport, warehousing, order processing and customer services and it entails the movement of goods from point of origin to the point of use.

 

Supply Chain Management

 

Supply chain management developed from the logistics literature, with it being introduced by consultants in 1982. SCM focussed on facilitating product movement, and the coordination of supply and demand by retailers  who had begun to compete by the management of materials. However, the concept is not well defined and this has led to widespread debate and confusion. A variety of definitions exist such as that of Christopher 1998

 

the management of upstream and downstream relationsjips with suppliers and customers to deliver superior customer value at less cost to the supply chain as a whole’

 

The above definition focussed supply chain management on the management of relationships with the aim of optimising the whole system rather than individual elements.

 

The growth of supply chain management has led to debate over how supply chain management and logistics are related and this has led to new definitions of logistics which include SCM in the definition, for example:-

 

‘that part of the supply chain process that plans, implements and controls the efficient, effective flow and storage of goods, services and related information from the point of origin to the point of consumption’

 

The debate on linkedin has highlighted a lack of consensus over how SCM and logistics are related. A search of the literature and the debate shows there are 4 different perspectives

 

Differentiating Supply Chain Management and Logistics

 

Traditionalist perspective argues that SCM is a small part of logistics often referring to SCM as ‘logistics outside of the firm’

Relabeling perspective argues that SCM is simply the renaming of logistics. This is a common view in organisations where the title and roles of a logistics manager and a supply chain management are often interchangeable and within the academic debate

 

Unionist Perspective this argues that logistics is part of SCM. With SCM being an across business function including:-

  • Customer relationship Management
  • Customer Service
  • Demand Management
  • Order Fulfilment
  • Manufacturing flow Management
  • Procurement
  • Product Development
  • Returns

Intersectionalist perspective – This argues that SCM is a broad strategy which cuts across business processes  and is therefore not the union of various functions as described by the unionist

 

Conclusion

 

As a definitive answer does not exist it is up to individuals to decide the perspective that they take. Personally I take a unionist view with logistics being a subset of SCM

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About richardfaint
Logistics Manager and Consultant at Hull Uni Logistics Institute, Director of the Centre of Adaptive Science and Sustainability, Lean Six Sigma Black Belt, Supply chain advisor to the UKIBC.

6 Responses to What is supply chain management, what is logistics?

  1. Anonymous says:

    Dear Richard,

    many thanks for your comment on Logistics / SCM. I really appreciate your approach especially considering what I posted on LinkedIn for a few months ;o) Hare we are :

    However I read with huge interest all comments on this topic Logistics vs. SCM, you all made me quite uncomfortable with what I learned for years. If I remember well, SC Management is the kind of business organization that aims at creating value through complex relationships within the company (Marketing, R&D, Finances, Production, Sales, etc.) AND the network (suppliers, competitors or customers) for example sharing innovation, warehouses, etc.; all or part of the activities beeing managed on a common processing by the partners.
    Consequently, Logistics should be seen as a different organisation based on bilateral relationships – Supplier / Customer – along the chain from the very first supplier to the very last customer, the consumer. This organisation aims at optimizing costs and quality at the same time, whatever the activity (transportation, storage, packing, etc.). Was that what I learned wrong?
    Thank you in advance for your comments and best regards
    Pierre-Yves

    Reading your lines about the topic, I have now two options : being a unionist OR an intersectionist. My position can probably only be defined by the question : “is every single component from the logistics also belonging to SCM?” In other words, the components of the logistic chain are / are not part from SCM (“supplier – company – customer” and “procurement – production – distribution”)? What is your feeling about this?

    Many thanks in advance for your feedback.

    Kind regards from Strasbourg
    Pierre-Yves

    (Consultant for the University of Strasbourg – Business School EM / Trainer – Consultant – project manager on organization topics like logistics, SCM, knowledge and project management)

  2. Anonymous says:

    Dear Richard,

    many thanks for your comment on Logistics / SCM. I really appreciate your approach especially considering what I posted on LinkedIn for a few months ;o) Here we are :

    “However I read with huge interest all comments on this topic Logistics vs. SCM, you all made me quite uncomfortable with what I learned for years. If I remember well, SC Management is the kind of business organization that aims at creating value through complex relationships within the company (Marketing, R&D, Finances, Production, Sales, etc.) AND the network (suppliers, competitors or customers) for example sharing innovation, warehouses, etc.; all or part of the activities beeing managed on a common processing by the partners.
    Consequently, Logistics should be seen as a different organisation based on bilateral relationships – Supplier / Customer – along the chain from the very first supplier to the very last customer, the consumer. This organisation aims at optimizing costs and quality at the same time, whatever the activity (transportation, storage, packing, etc.). Was that what I learned wrong?
    Thank you in advance for your comments and best regards
    Pierre-Yves”

    Reading your lines about the topic, I have now two options : being a unionist OR an intersectionist. My position can probably only be defined by the question : “is every single component from the logistics also belonging to SCM?” In other words, the components of the logistic chain are / are not part from SCM (“supplier – company – customer” and “procurement – production – distribution”)? What is your feeling about this?

    Many thanks in advance for your feedback.

    Kind regards from Strasbourg
    Pierre-Yves

    (Consultant for the University of Strasbourg – Business School EM / Trainer – Consultant – project manager on organization topics like logistics, SCM, knowledge and project management)

  3. Pingback: What Is Logistics In Outsourcing? | What Is Logistics

  4. logisticsbereau says:

    I have been exploring for a bit for any high quality articles or weblog posts. I like what I see so now I’m following you. Look forward to looking over your web page repeatedly.

  5. Thanks a lot, as now I know I’m actually a Unionist. I like the overview table. Actually I can’t believe we’re having this debate for the last 20 years. It takes thinking time from innovating logistics and supply chain, but neverless an important discussion

    cheers,
    NIels
    http://supplychaintrends.wordpress.com/

  6. I am also in exactly the same situation and it was a relief to find someone with similar experiences.

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