Many people use the two terms SCM and LM synonymously, but both terms are similar and different in many ways. They play a significant role and help businesses in many ways like gaining a competitive edge, better customer service, and improving operations. Today, we’ll discuss logistics management and supply chain management; advantages, disadvantages, their key differences among them.
What is Supply Chain Management?
Supply chain management is the method and activity of developing the final product from the raw material and delivering them to the end consumers. The focus of SCM is to amplify the SC process and offer business partners and customers.
Businesses and companies could only refine and optimize SC processes when the SC network and channels are visible and transparent. The transparency helps company to track goods and services at every stage of the supply chain process. However, it becomes much easier if everything goes right as planned. It offers sufficient time for the decision-makers to quickly respond to resistance and disruptions.
Some of the main stakeholders involved in the SCM network and process are as follows;
- Raw supplies providers
- Suppliers
- Manufacturers
- Logistics partners
- Wholesale distributors
- Retailers
- End consumers
The relationship among various stakeholders in the SCM process is different. However, the relationship among suppliers, retailers, manufacturers, materials, and parts could be vertical and horizontal, when the company acquires or merges with other businesses at various stages of the SC network.
For instance, a home cleaning product manufacturer finds and procures required containers and chemicals from the suppliers. They produce the final product and distribute the finished goods to convenience stores, supermarkets, and drug stores.
Advantages of SCM
- Helps companies to achieve cost efficiency by decreasing maintenance cost, lead time, and inventory cost, and improving the delivery performance
- Amplifies control and transparency across the SC network by helping with effective risk management and quickly responding to the market changes relevant to the SC disruptions and customer demands
- The Focus of SCM is to optimize the flow and movement of goods and products from production to consumption; it results in the form of higher profitability and higher customer satisfaction
Disadvantages of SCM
- Results in the form of conflicting goals and objectives and limited streamlining among various functions of the company
- Limited control over external environmental factors like geopolitical factors, weather events, regulatory changes
- Low coordination among various stakeholders and suppliers results in the form of quality issues and delays
What is Logistics Management?
Logistics management comprises planning and implementing the storage and flow of goods and material among various stages in the SC process. It develops coordination among resources, equipment, people, and facilities to make sure that the products and goods move in the right direction where they are supposed to go and that there is sufficient space for them at every stage.
However, some of the main processes involved in the LM are as follows;
- Demand planning
- Fleet management
- Inventory management
- Material Handling
- Order fulfillment
Advantages of LM
- Allows you to amplify customer satisfaction level and delivery time and decrease transportation cost
- Offers control and transparency over the storage and transportation of goods and products, helps you better inventory management, and amplifies your capability to respond to the market changes
- Focuses on the storage and flow of goods and products and making sure to deliver them to the customers in a cost-effective, efficient, and timely manner
Disadvantages of LM
- Limited integration and coordination among functions of the company results in the form of limited goals and objectives
- Not enough control over external environmental factors geopolitical risks, weather events, and regulatory changes
- Results in the form of delays and quality control issues and limited collaboration among various transportation service providers
Logistics Management and Supply Chain Management – Differences
Some of the main differences between logistics management and supply chain management are as follows;
Resource Management
The focus of LM is how you would store and receive store resources and then deliver them to the customers. The focus of SCM is to manage the flow and supply of goods to the end consumers.
Activities
Some of the main activities of LM are inventory control, order fulfillment, managing resources, and the movement of goods. The activities of SCM are forecasting, demand management, resale, return, and retail manufacturing.
Functions
The functions of LM are accounting, tracking, customer service, scheduling, production planning, and sourcing. Some of the main functions of SCM are operations, customer service, marketing, and product development.
Goals & Objectives
The goals of LM are amplifying the desired level of customer service and efficient and effective flow of goods. The objectives of SCM are gaining a competitive edge, delivering goods to the right location on time, and fulfilling customer demands by preparing relevant products.
Tools & Software
Some of the main tools for LM are ERP, Acumatica, Viewpoint Logistics, Freight Master, and Envision. The software for SCM is HighJump, JDA, Oracle, and SAP.
Process
The process of LM comprises maintenance and integration like the movement of goods within the organization. The SCM process comprises collaboration and coordination of goods within the company.
Focused Area
The LM focuses only on one company; the SCM focuses on more than one business and company.
Conclusion: Logistics Management and Supply Chain Management
After an in-depth study of logistics management and supply chain management; we have realized that LM and SCM may seem similar but different in many ways. If you are learning about LM and SCM, then you should keep in mind the abovementioned advantages, disadvantages, and key differences.
References
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