Saturday, September 18, 2010

Supply Chain Management vs Logistics, Aren't They the Same

SCM is the management of material and information flow in a supply chain to provide the highest degree of customer satisfaction at the lowest possible cost. SCM requires commitment of supply chain partners to work closely to coordinate order generation, order taking, and order fulfillment thus, creating an 'extended enterprise' spreading far beyond the producer's location.

Logistics is the management of the flow of goods, information and other resources in a repair cycle between the point of origin and the point of consumption in order to meet the requirements of customers. Logistics involves the integration of information, transportation, inventory, warehousing, material handling, and packaging, and occasionally security. Logistics is a channel of the supply chain which adds the value of time and place utility. Today the complexity of production logistics can be modeled, analyzed, visualized and optimized by plant simulation software.

Logistics is an entity of the SCM system. Supply chain is anything from cradle to grave. Logistics is an interim factor within the chain. Your SCM can entail the beginning of actual purchases, vendors, material, manufacturing, waste, completion, inventory, storage, etc., whereas Logistics is just as Marissa indicated, the movement and tracking of the end product where it gets stored before it gets delivered and the shape it is received in.

Everything you can imagine has some sort of SCM working in place. Even such things as a blog have an SCM. But not everything has logistics. Although they sound familiar and seemingly paths may cross but there is a clear distinction.

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