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What is the difference between logistics and supply chain management?

Logistics is part of supply chain management, but the two terms are often used synonymously. Here's a quick explanation of how these two are different.

Anyone new to the logistics or the supply chain management arena may wonder what the differences are or whether they mean the same thing.

With that in mind, let's consider the two terms, and provide some understanding to set the stage for improved operations in both areas.

What logistics and supply chain management encompass

The term logistics comes from the military, where it refers to procurement, supply, maintenance, movement of personnel and other support functions. In the industrial world, logistics is used to mean obtaining, producing and distributing material (not personnel). Everyday usage generally focuses on transportation and warehousing. Many transportation providers call themselves logistics companies, logistics partners or logistics service providers. The supply chain community recognizes any and all providers of services, such as contract warehouse providers, shipping companies and transportation service providers -- e.g., agents and brokers -- as third-party logistics, or 3PL, companies.

Supply chain management includes acquisition, movement, storage, deployment and distribution of material from the mine to the landfill or farm to table -- in other words, the entire lifecycle. The APICS Supply Chain Council defines the basic functions of the supply chain as planning, sourcing, making, delivering and returning, with enabling to include supporting functions, like IT and HR.

Despite these differences, today, the terms logistics and supply chain management are often used interchangeably as there is much overlap in the definitions.

Technology for logistics and supply chain management

In a global manufacturing environment, supply chains have become increasingly complex. To that end, logistics and supply chain management software cover a wide range of functions. Supply chain software covers a wider range of functions, including supply chain planning, inventory optimization, demand management, demand planning, sales and operations planning, and various flavors of analytics and optimization applications, among others. Although the terms logistics and supply chain management are often used interchangeably, when it comes to software, logistics generally focuses on a more narrow area of the supply chain, such as transportation, warehousing and other closely related functions. Software includes modules, or components, of an ERP system, stand-alone applications and connected third-party applications with built-in interfaces to major ERP suites.

Because there is a great deal of interaction between the logistics and supply chain functions, it is imperative that all these applications are fully integrated to share information and visibility across the entire supply chain.

This was last published in September 2018

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