Is Supply Chain and Logistics the Same?

October 14th, 2021

Supply chain management, also referred to as SCM, is a term used to describe the entire system involved in moving a product from its raw material source to the end consumer. Supply chain and logistics can be found all around us and it can impact our daily lives. What we consume, what we wear and where we shop are all supported by a supply chain. Picture in your mind all the necessary activities that must occur to get your favourite brand of jeans from their origin halfway around the globe to your local retailer. They need to be in stock, with the right style and size and be reasonably priced before you will buy them or have them delivered. This is the result of an efficient and reliable supply chain made possible by competent and knowledgeable professionals.

supply chain and logistics  

It is not uncommon for people to confuse the two terms and wonder if supply chain management and logistics are the same. To get started, we will break down the meaning and what each part entails.

Supply chain management links together multiple processes including the movement, planning and timing of materials to save costs and meet demands. According to Jeff Turner, Faculty Head of Supply Chain and Logistics at triOS College, “Supply chain can be described as a global network of manufacturers, distributors, freight forwarders, shipping companies, wholesalers, and retailers, each doing their part in the process of transforming raw materials into final goods and delivering them to where they will be sold.”   

Logistics on the other hand is the movement of goods and services from one point to another. The goal is to ensure that goods reach consumers on time without any losses or delays. Jeff Turner defines logistics as “A crucial function within a supply chain that supports its effective and efficient operation. It is the segment of the supply chain that plans and executes transportation, storage, and material handling activities. Both supply chain and logistics involve a process approach that creates value to each partner in the chain and delights the final consumer.” In other words, without logistics, the supply chain cannot be functional — logistics management is a subset of supply chain management. The supply chain strategy will often direct the type of logistics structure that needs to be executed.

Key Differences Between Supply Chain and Logistics  

Supply chain and logistics have continued to evolve and many areas such as handling raw materials, purchasing, transportation and distribution are intersecting. This often blurs the lines between the two fields. Although supply chain and logistics may come across as being similar with many similarities, they are not interchangeable. 

Supply Chain Management  

Covers a wide range of components: SCM is more complex and includes planning, sourcing materials, labour and product development, vendor management, producing and delivering. 

Coordinates actions: SCM works with a chain of companies and suppliers to get their products and services out to market. 

Focuses on competitive advantage: Efficient management of supply, targeting higher operational performance can lead to cost savings and higher profitability for the organization. 

Logistics  

Part of supply chain management: Logistics is one component in supply chain management but also an essential part in reducing costs and improving efficiency. 

Movement, storage, and transportation of goods: Logistics is about moving products from one place (manufacturer location) to another (customer location) in a timely, smooth, and reliable manner.  

Focuses on customer satisfaction: Logistics aims at achieving high levels of customer service by ensuring goods reach businesses without delays, which in turn keeps customers happy. 

Fun fact: Logistics comes from the term “maréchal des logis” (Marshal-of-Lodgings), a military phrase used by Napoleon for his army. 

Key Trends in Logistics and Supply Chain Management 

Beginning with the introduction of assembly lines all the way to modern advanced solutions, SCM processes continue to evolve. The latest trends have an increasing focus to reduce costs while increasing efficiency. “Supply Chain professionals help power Canada’s economic growth. There is increasing demand for supply chain talent in a wide range of industries,” said Jeff Turner. “Healthcare, Aerospace, Distribution, Manufacturing and Government are just a few of the areas where opportunities are available. Modern Supply chains utilize a great deal of technology and software. Current trends include the use of Drones, Artificial Intelligence, 3D printing, and Robotics.”

Organizations that implement well-thought-out and designed SCM practices can meet customer needs in an efficient manner. Here are some key trends to further understand the concepts and industry: 

Artificial Intelligence (AI) and Automation: There is increasing use of AI and automation in SCM due to increasing access to Big Data. Organizations are using this to simplify and streamline tasks and automate procedures. Algorithms are being used for better planning and decisions, to discover patterns, and to improve inventory management. Efficiency is important for business success and AI and automation are crucial to improving speed and being competitive.  

Sustainability: Because more customers are prioritizing the environment, organizations are paying more attention to creating a sustainable supply chain, with some reporting higher growth in their sustainable product lines. This displays the importance of environmentally-friendly practices like minimizing plastic use and decreasing the size of packaging. Whatever attempts at sustainability are made, organizations need to assure they are sustainable and feasible as minor changes often impact a sizable portion of the supply chain.  

Cloud solutions: For organizations to be competitive, moving from traditional supply chain management solutions to those that provide more flexibility, accessibility and accuracy are key. Software-as-a-Service (SaaS) platforms are beneficial for SCM. They are highly secure and efficient while providing convenience to users. Information is accessible from anywhere at any time as cloud storage is used.  

Internet of Things (IoT): This refers to the millions of physical devices or objects globally that are connected to the internet. By connecting all of these objects and powering them with software and sensors allows them to collect and share data in real-time with minimal human interference. IoT already plays a role in logistics but will continue growing in importance as it can improve the control of inventory, tracking and maintenance. IoT devices can be used together with other technology for further insights. For example, information that is collected by sensors can in turn support forecasting and planning. Digital integration is going to become key to the modern supply chain.  

While there is talk about the loss of jobs due to technological advances, it is important to remember many employers face a shortage of talent. Innovation has always created new opportunities and made it easier for companies to expand into new markets. Those who embrace the evolution of supply chain and logistics management tend to benefit the most. With the challenges like worldwide pandemics and changes in consumer behaviour, companies are looking to their supply chain professionals to help provide the competitive edge they need to thrive, both now and into the future.

Are you ready to step into the world of production, processes and logistics? Learn more about our Supply Chain and Logistics program.