Supply Chain vs Logistics
Since the global supply chain rocketed into the mainstream news, the public has worked to make sense of the field and its terminology.
The difference between supply chain and logistics is a particularly common source of confusion. Reporters and industry professionals use the terms interchangeably, leading many people to assume they’re the same.
While the two fields are interrelated, several key differences are important to understand. Whether you’re interested in a supply chain management career or just want to be more informed, here’s what you need to know.
What is the relationship between supply chain and logistics?
Most non-professionals use “logistics” when talking about how to make something happen—I’ll handle the logistics of the Aspen trip. In supply chain—and commerce more broadly—logistics refers specifically to the storage, movement, and positioning of goods and materials.
According to the Chartered Institute of Procurement and Supply, the supply chain process encompasses all steps necessary to deliver a consumer product. That includes:
- Production planning: Determining what supplies will be necessary and when
- Procurement: Finding and acquiring supplies
- Inbound logistics: Delivering raw materials from a point of origin to the manufacturer
- Warehousing: Storing supplies before and after manufacturing
- Outbound logistics: Delivering products to retailers
- Order fulfillment: Ensuring the end-user receives the finished product
Logistics at each stage keep the supply chain moving forward.
What are the differences between supply chain and logistics?
Supply chain has broader scope than logistics:
- Supply chain is about creating an uninterrupted, cost-effective flow between consumer demand and the delivery of finished goods.
- Logistics is about planning and organizing operations to ensure supply chain and commerce processes run smoothly.
A supply chain manager’s (SCM) goal is to drive performance and gain competitive advantage. SCMs align business processes within a company and with third-party suppliers. They develop strategies and lead initiatives to reduce time and money waste, while ensuring supply keeps up with demand.
Logistics focuses more on mechanics. A logistics professional is responsible for getting supplies from Point A to Point B, on time and within budget. They strive to meet or exceed customer expectations for delivery. Priorities are clear communication, proactive contract negotiation, and monitoring of transportation activity.
In general, the same logistics practices keep the supply chain moving forward, but there are multiple steps involved in the supply chain. These steps distinguish supply chain jobs from logistics roles.
Does supply chain fall under logistics?
No; it’s actually the other way around—logistics falls under supply chain. Supply chain management includes logistics but extends further, incorporating more of the end-to-end between manufacturer and consumer.
What kind of jobs are in supply chain and logistics?
Supply chain and logistics professionals are in high demand. Some blurring still exists between the two fields, so training and experience in one area typically translates well to the other. Job descriptions may vary between organizations, so always check requirements before applying.
Supply chain management
To bring a finished product to the consumer, the supply chain manager (SCM) has to coordinate a vast network of relationships. Supply chain managers develop partnerships with distributors, transportation providers, and many others parties.
Supply chain managers are experts at:
- Demand planning: Coordinating the supply chain based on consumer needs
- Strategy development: Increasing production and delivery speed without sacrificing quality or reliability
- Relationship building: Negotiating and maintaining contracts that strengthen their company’s bottom line
Logistics managers oversee the flow of goods and materials along the supply chain. Their responsibilities include:
- Cultivating business relationships
- Negotiating contracts
- Developing schedules for inbound and outbound transportation
- Maintaining a logistics network that includes suppliers, storage facilities, transportation providers, and more
Logistics managers earn an average of $71,834 per year.
Procurement managers work at the beginning of the supply chain. They ensure companies have reliable sources for the products they want to create and sell.
Procurement managers are responsible for:
- Selecting vendors based on cost, availability, and quality of materials
- Optimizing purchase schedules based on demand and supply chain patterns
- Analyzing and improving purchasing costs
The average salary of a procurement manager is close to $100,000 a year. The high salary reflects the role’s importance for cost control, product quality, and the overall supply chain.
Operations managers work in the middle of the supply chain. The role tends to involve more internal business administration, but many operations managers also have supply chain duties.
The national average salary for operations managers is $70,865 per year—close to the compensation for a logistics manager. Typical job duties include:
- Coordination of production, sales, and distribution
- Budgeting, cost control, and profitability
- Supply and demand
- Staff management
Depending on the company, operations managers will have different levels of involvement with the broader supply chain:
- Larger companies often ask their operations manager to focus more on internal business logistics.
- Operations managers in smaller organizations will likely wear multiple hats.
The smaller a company is, the more likely an operations manager will have supply chain duties.
Warehousing is an important component of logistics and the supply chain. A well-run warehouse ensures goods reach the end user in time and in good condition, without adding to the manufacturer’s cost burden.
Warehouse managers must understand:
- Inventory management
- Staff management
- Operational efficiency
- Workflow coordination
- Collaboration with internal and external logistics professionals
According to Glassdoor, the average salary for a warehouse manager is $54,707 per year.
Transportation managers serve a critical role in logistics. A transportation manager coordinates the movement of goods and supplies, particularly in industries like manufacturing.
A transportation manager must be able to:
- Choose the most appropriate transportation methods
- Establish expectations about cost and timeframes
- Liaise with transportation contractors
On average, a transportation manager in the U.S. earns $69,924 per year.
Becoming a professional in supply chain logistics
Skilled supply chain professionals are always in high demand. LinkedIn currently lists more than 200,000 supply chain jobs across the United States in industries ranging from healthcare to food service.
Certifications strengthen a candidate’s application. The Council of Supply Chain Management Professionals offers SCPro™ Certification, a three-tiered credential for professionals at different levels.
Another option is the Association for Supply Chain Management, which offers three credentials:
- Certified in Planning and Inventory Management (CPIM)
- Certified Supply Chain Professional (CSCP)
- Certified in Logistics, Transportation, and Distribution (CLTD)
All certifications have eligibility requirements you’ll need to meet before testing.
If you’re new to the supply chain and logistics fields or looking to advance in your career, an online course is often the best place to start. edX offers stand-alone courses, professional certificates, and even degree programs from some of the world’s top institutions. Financial aid is available to those who qualify.
In today’s logistically complicated world, a skilled supply chain professional is worth their weight in gold. Start studying supply chain today for a rewarding, lucrative, and in-demand career.