What Is the Difference Between Logistics and Supply Chain Management?

The consumer goods industry across the UK and the wider world relies on a strong supply chain management system (or SCM for short), and the logistics workforce within this system too. The logistics industry alone is on the rise- it isa key part of the UK economy, contributing over £127 billion and employing 1.7 million people, around 5% of the national workforce. They share similar concepts, causing many people to confuse the two. So, what is the difference between logistics and supply chain management, and why is logistics such an important part of SCM?

Defining the Terms

Supply chain management and logistics are two integral parts of the consumer goods industry, but what do they mean? Supply chain management, commonly referred to as SCM, involves the coordination and management of all activities involved in the production and delivery of goods and services. Strategic planning regarding the movement of goods from distribution to end use is the main goal of SCM. Logistics is the process of managing how resources are gained, stored, and distributed to their end location. Logistics teams provide more of a focus on the movement front, working with shipping/distribution companies to ensure goods are delivered at the right time. Definitions alone, they’re very similar-sounding; after all, logistics is a subset of supply chain management, a singular activity within this.

Separating the Terms

One way of separating the terms is by assessing key areas of the supply chain, and judging how they differ. The fact that they intersect in various ways is a contributing factor as to why logistics teams are imperative to the success of SCM- the relationship built around coordination ensures that all areas of the goods chain are precisely planned and timed, to keep up with supply and demand. However, there are some important ways in which they deviate from each other, listed below;

Scope

• Logistics focuses on the physical movement and transportation of goods. It includes related activities such as transport organisation, warehousing, distribution, and order fulfilment. Southampton is a good example of a location where goods often arrive, so logistics teams will work closely with distribution firms here.
• SCM has a wider scope that encompasses the entire process; from the acquisition of raw materials to the delivery of the final product to the end consumer. SCM includes logistics but also involves strategic planning, procurement, manufacturing, and the coordination of various stakeholders

Function

• Logistics is primarily concerned with the tactical and operational aspects of moving goods efficiently. It deals with the day-to-day activities involved in transportation, warehousing, and distribution, often communicating with haulage companies.
• SCM is a strategic discipline that involves planning and managing the entire supply chain- not just focusing on one area like logistics does. It includes strategic decision-making related to procurement, production, and distribution to optimise the overall flow of goods and information.

Timeframe

• Logistics works on a short-term timescale, focusing more on the immediate movement of goods, ensuring that they’re transported within agreed timeframes and in good condition too.
• SCM takes a more long-term and strategic perspective; it involves planning for future demand, establishing relationships with suppliers, and designing a supply chain that can adapt to supply and demand needs, aligned with the ever-changing goods market.

Integration

• Logistics does not involve a great deal of integration with other parts of the goods industry, since it is a subset of the wider supply chain. It is an integral part of the broader supply chain but focuses specifically on the physical movement and storage of goods as a priority.
• SCM integrates various functions, including logistics, procurement, production, and distribution, to create a coordinated and efficient supply chain. Unlike logistics, SCM accounts for the overall process as opposed to just a single area of it; it has more of a holistic approach, managing and incorporating the entire process.

Goals

• Logistics has two main end goals; to form an efficient movement/storage of goods strategy, and to reduce the costs associated with movement and storage, reassessing supply routes to reduce fuel expenses and move goods faster, for example.
• SCM has a wider range of goals. The first is to optimise the end-to-end of the supply chain, creating a seamless, integrated, and efficient flow of goods and information. The next goal is to increase customer satisfaction, meeting the demands of the customer across all fronts. Thirdly, SCM aims to improve its strategy to become more adaptable to the ever-changing market, boosting supplier relationships and expanding production capabilities.

Issues With the Supply Chain, and How This Is Managed

In recent years, the UK has faced issues along its supply chain, which has meant that supply chain management has had to adapt to these issues to keep trade routes moving as much as possible. This isn’t just an issue the UK faces, however; there are many reasons as to why trade around the world is disrupted, sourcing from issues within the supply chain and external factors too. Some of these issues include the following;

• Weather - Extreme weather conditions can disrupt the supply chain from each side, from sourcing goods to distributing them. Extreme heat or cold are common disruptors, especially when sourcing goods in the first place.
• Current Conflicts - Conflicts around the world can cause hold-ups in the movement of goods, as well as increase demand for certain goods. Conflict in the Middle East over the years has often resulted in disruption to trade routes around the Suez Canal, which has a knock-on effect on SCM. There have been many historical conflicts that have caused supply-route issues and the availability of certain items, most recently the 2014 Russo-Ukrainian war, which in 2024 is still ongoing.
• Brexit - Since the UK left the EU, it has faced trade barriers with certain countries, impacting imports and exports. The UK supply chain has had to react to this, building new trade deals to increase the movement of goods in and out of the UK once again.
• Other Factors - Many other factors affect the supply chain in the UK, including panic buying, which was increasingly common around the COVID-19 pandemic; the pandemic itself was a major disruptor for the world’s trade. The time of year is also another factor which brings a higher demand for goods, such as over the Christmas/festive period.

The Future: How Logistics Help Supply Chain Management to Go Green

One of the biggest subjects within SCM and wider trade is the need to go green. Businesses are often turning to new ways of becoming more environmentally sustainable, researching deeper into areas such as renewable energy; the consumer goods industry has perhaps one of the biggest responsibilities in terms of becoming more green due to its heavy involvement with transportation, and the wide routes in which they travel. This is where logistics play a big part in the process; as well as making supply routes more cost-effective, logistics teams use data to find more environmentally friendly routes, cutting down on the emission of fossil fuels. Greener transport has become more of a focus in recent years, so logistics need to target companies that are integrating cleaner transport into their fleet- something we’ll see more of, as research progresses.

It’s not just about greener transport, though. Supply chain management systems, being responsible for the entire process, are providing more of an emphasis on sourcing raw materials and components from suppliers that adhere to sustainable and environmentally friendly practices. This includes considering factors such as responsible forestry, ethical mining, and eco-friendly agriculture. The manufacturing process has been something that has turned green in many businesses in recent times, so SCM will often target these more sustainable factories and involve them within the supply chain of goods. Advanced technologies such as data analytics are employed to enhance visibility and traceability within the supply chain. This helps identify areas for improvement and supports sustainable practices.

Does Your Business Involve the Movement of Goods?

At Industrial Polythene, we’re committed to supplying quality pallet covers to protect your goods whilst in transit. We offer a large range of choices, such as heavy-duty, waterproof and gusseted pallet covers. To request a free sample or get a quote, please get in contact with us.