The messy shift from Logistics to Supply Chain Management
Alejandro Serrano – . Feb 2012 | Spain
The word Logistics, initially borrowed from a military context, has had to do with the ability to move materials and personnel in an efficient way from one place to another. In a business context, according to the APICS dictionary, its meaning has changed to include additional activities, such as procurement and production. Sure enough, in this context, Logistics is defined as
“The art and science of obtaining, producing, and distributing material and product in the proper place and in proper quantities.” (APICS dictionary on line, accessed in Feb 2012)
However, the CSCMP dictionary does not include production activities, but specifically mentions storage and refers also to services and information:
“The process of planning, implementing, and controlling procedures for the […] transportation and storage of goods, including services, and related information from the point of origin to the point of consumption […] This definition includes inbound, outbound, internal, and external movements.” (CSCMP. Terms and Glossary. Feb 2010)
which is closer to its original meaning, i.e., “just” transportation and storage. it seems that, as the realm of the discipline was increasing an attempt was done to adjust the word logistics to the broader context of application, what explains the broader scope of logistics according to APICS.
Enter Supply Chain
In the early eighties, logistics was not enough to refer to all the increasing types of activities performed by “logistics” managers, and a new term was coined: “Supply Chain Management”. A strategic flavor was added and the scope was enlarged both longitudinally (from “end to end,” or E2E) and transversely (not only material flows, but also information and cash was considered.) The two aforementioned dictionaries agree on this scope, except for the CSCMP dictionary, which does not mention cash.
“The global network used to deliver products and services from raw materials to end customers through an engineered flow of information, physical distribution, and cash.” (APICS dictionary on line, accessed in Feb 2012)
“The material and informational interchanges in the logistical process stretching from acquisition of raw materials to delivery of finished products to the end user. All vendors, service providers and customers are links in the supply chain.” (CSCMP. Terms and Glossary. Feb 2010)
Since then, the two terms have coexisted, but the evolution of the word Logistics towards Supply Chain (as it can be seen in the definition of Logistics according to APICS) still creates a lot of confusion in industry and academia. In my opinion, the relationship between the two could be defined as follows: “Logistics is the portion of Supply Chain that is concerned with the activities of transportation and storage of parts,” which is line with the CSCMP definition.
Supply Chain, however, is concerned not only with transportation and storage, but with many other key processes, such as demand forecasting, planning, purchasing, collaboration (contracts), outsourcing, facility location (network design), or inventory management (how much and where to hold inventory.)
To learn more about Supply Chain www.zlc.edu.es
One response to “Do not call it Logistics if you mean Supply Chain”
Great piece. If always think its unbelievable that we’re still discussing logistics versus supply chain. That means we’re not moving on and innovating.