Question

1. Is supply chain management (SCM) the same as integrated logistics management? Indicate how they are similar and which one is more encompassing.

Answer 1

Is supply chain management (SCM) the same as integrated logistics management

The terms logistics and supply chain management are sometimes used interchangeably. Some say there is no difference between the two terms, that supply chain management is the “new” logistics.

To compound this, what is considered supply chain management in the United States is more commonly known as logistics management in Europe, according to the blog for PLS Logistics Services, a logistics management firm in Pennsylvania.

When the question was posed in an Inbound Logistics article, the answers varied based on the functions of a supply chain (or logistics) professional handled. Some thoughts from their readers:

• “There isn’t a difference today,” said Wayne Johnson of American Gypsum.
• “Supply chain management incorporates the field of logistics and logistics is a number of sub-processes within SCM,” said Michael Kirby of National Distribution Centers.
• “A ‘supply chain management’ company is generally a third-party operator managing the total overall movement of product whether inbound or outbound,” said William Behrens of Associated Transport Systems, Inc.

Purchasing, materials handling, logistics, transportation, inventory control, and supply chain management have continued to evolve, causing many of these functional areas to intersect with one another. This intersection has resulted in blurred definitions for some of these terms such as logistics and supply chain management.

While these two terms do have some similarities they are, in fact, different concepts with different meanings. Supply chain management is an overarching concept that links together multiple processes to achieve competitive advantage, while logistics refers to the movement, storage, and flow of goods, services and information within the overall supply chain.

What Is Supply Chain Management (SCM)?

Supply chain management is the management of the flow of goods and services and includes all processes that transform raw materials into final products. It involves the active streamlining of a business's supply-side activities to maximize customer value and gain a competitive advantage in the marketplace.

Supply chain management, as explained by Michigan State University professors Donald Bowersox, David Closs and M. Bixby Cooper in Supply Chain Logistics Management, involves collaboration between firms to connect suppliers, customers, and other partners as a means of boosting efficiency and producing value for the end consumer. The book considers supply chain management activities as strategic decisions, and set up “the operational framework within which logistics is performed.”

It is the efforts of a number of organizations working together as a supply chain that helps manage the flow of raw materials and ensure the finished goods provide value. Supply chain managers work across multiple functions and companies to ensure that a finished product not only gets to the end consumer but meets all requirements as well. Logistics is just one small part of the larger, all-encompassing supply chain network.

Integrated logistics management

The Council of Supply Chain Management Professionals defines logistics as “part of the supply chain process that plans, implements and controls the efficient, effective forward and reverses flow and storage of goods, services and related information between the point of origin and the point of consumption in order to meet customer’s requirements.”

Bowersox, Closs, and Cooper define logistics as activities – transportation, warehousing, packaging and more – that move and position inventory and acknowledge its role in terms of synchronizing the supply chain.

The objective behind logistics is to make sure the customer receives the desired product at the right time and place with the right quality and price. This process can be divided into two subcategories: inbound logistics and outbound logistics.

Inbound logistics covers the activities concerned with obtaining materials and then handling, storing and transporting them. Outbound logistics covers the activities concerned with the collection, maintenance and distribution to the customer. Other activities, such as packing and fulfilling orders, warehousing, managing stock and maintaining the equilibrium between supply and demand also factor into logistics.

Integrated Logistics Management is a technique which utilizes various sources and channels to meet the customer demand in time. First step is to anticipate and forestall the demand the customer.

After that the required resource that will be utilized for fulfilling the need are acquired. These resources range from human resource to technology, material, IT resources etc.

After that all effort are made to meet the customer demand timely by the active participation of all the resources.

It utilizes the various operations like transport, logistics, physical distribution, inventory management etc.

The Council of Supply Chain Management Professionals defines logistics as “part of the supply chain process that plans, implements and controls the efficient, effective forward and reverses flow and storage of goods, services and related information between the point of origin and the point of consumption in order to meet customer’s requirements.”

Bowersox, Closs, and Cooper define logistics as activities – transportation, warehousing, packaging and more – that move and position inventory and acknowledge its role in terms of synchronizing the supply chain.

The objective behind logistics is to make sure the customer receives the desired product at the right time and place with the right quality and price. This process can be divided into two subcategories: inbound logistics and outbound logistics.

Inbound logistics covers the activities concerned with obtaining materials and then handling, storing and transporting them. Outbound logistics covers the activities concerned with the collection, maintenance and distribution to the customer. Other activities, such as packing and fulfilling orders, warehousing, managing stock and maintaining the equilibrium between supply and demand also factor into logistics.

Comparison Chart

BASIS FOR COMPARISON	LOGISTICS MANAGEMENT	SUPPLY CHAIN MANAGEMENT
Meaning	The process of integrating the movement and maintenance of goods in and out the organization is Logistics.	The coordination and management of the supply chain activities are known as Supply Chain Management.
Objective	Customer Satisfaction	Competitive Advantage
Evolution	The concept of Logistics has been evolved earlier.	Supply Chain Management is a modern concept.
How many organizations are involved?	Single	Multiple
One in another	Logistics Management is a fraction of Supply Chain Management.	Supply Chain Management is the new version of Logistics Management.

Integrated logistics management

The management process which integrates the movement of goods, services, information, and capital, right from the sourcing of raw material, till it reaches its end consumer is known as Logistics Management. The objective behind this process is to provide the right product with the right quality at the right time in the right place at the right price to the ultimate customer. The logistic activities are divided into two broad categories they are:

• Inbound Logistics: The activities which are concerned with procurement of material, handling, storage and transportation
• Outbound Logistics: The activities which are concerned with the collection, maintenance, and distribution or delivery to the final consumer.

Apart from these, other activities are warehousing, protective packing, order fulfillment, stock control, maintaining equilibrium between demand and supply, stock management. This will result in savings in cost and time, high-quality products, etc.

Supply Chain Management

Supply Chain Management (SCM) is a series of interconnected activities related to the transformation and movement of raw material to the finished goods till it reaches to the end user. It is the outcome of the efforts of multiple organizations that helped in making this chain of activities successful.

Supply Chain Management has a multi-dimensional approach which manages the flow of raw materials and works in progress (semi-finished goods) within the organization and the end product outside the organization till it reaches the hands of the final consumer with a complete emphasis on the customer requirement.

Conclusion

Logistics is a very old term, firstly used in the military, for the maintenance, storage and transportation of army persons and goods. Nowadays, this term is used in many spheres, not specifically in the military after the evolution of the concept of Supply Chain Management. It has also been said that SCM is an addition over Logistics Management as well as SCM comprises of logistics. Both are inseparable. Hence they do not contradict but supplement each other. SCM helps Logistics to be in touch with the transportation, storage and distribution team.