Definition of Supply Chain Management & Logistics
Definition of Supply Chain Management & Logistics
Supply chain management and logistics is rapidly becoming the most important aspect of business success. Those who manage their supply chain and logistics effectively will flourish and prosper, however those who do not may not be around in a few years. Just what is the definition of supply chain management and logistics? Often than not, supply chain management has been confused with the term ‘logistics’ and ‘procurement’.
The term supply chain management has been around for the past twenty years and has had a major influence on today’s business societies. The term logistics originated seventy years ago from the French word “logistique”, (Wilton, 2005) which is derived from the word “loger” meaning quartering troops. However, in today’s age, these terms are often used by various industries, associations and academics, each with their own definition of the terms. These terms are often derived from the perspectives of the author’s background, skill, exposure and experience to the industry. Supply chain professionals offer different definitions that rightly evolve over time. With the magnitude of different definitions of these two terms, one poses the question on what the proper definition of supply chain management and logistics.
Evolution of Logistics
Surely, the definition of logistics has evolved during the seventy years from its origin. Originally, “logistique” is defined as quartering troops or rather to furnish troops with shelter or entertainment. (Wilton, 2005) Today, the term logistic does not just mean to furnish troops with shelter or entertainment, this term is widely used in many facets of business, military, and social wise. Yet, the usage of logistic provides different definitions in different areas of which it is used.
The most well renowned association in regards to knowing most about logistics would be the Council of Logistics Management (CLM). As defined by the Council of Supply Chain Management Professionals, originally known as CLM before, logistics is termed as “the plans, implements and controls that effectively and efficiently forward and reverse the 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.” (CSCMP, 2005) Yet, logistics is notably defined as “The procurement, maintenance, distribution, and replacement of personnel and material”. (Websters Dictionary, 2005) Noticeably, there is a difference in the description of the two definitions. The definition of logistics varies not just based on time and different areas of which logistics is used, but also on culture and economics of different countries. In some Eastern European countries, logistics is still termed as transportation or more specifically, trucks. (Trunick, 2004) Logistics, originally a military-based term, is defined in military terms as the process of coordinating the deployment of troops and equipment. (Muller, 1993) Methodically, logistics is regarded as a process to strategically move and store materials or products and information from any point in the manufacturing process through consumer fulfilment and back. (Jenkins, 1995)
Differences and similarities of logistics defined
There seems little doubt that these associations and people whose work involves them in the field known as logistics entertain a great variety of different notions as to precisely how the logistics should be defined. Regardlessly, all five different definitions noted the notion of transportation or rather the movement of a physical object from one point to another. Just as described by Trunick, logistics to some Eastern European countries is defined more specifically to the physical means of transportation or the means of moving a physical object or goods from one point to another, albeit a truck.
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Obvious to the definitions, the similarities and differences depends on the background from which the definition is derived. In a much plain simple thinking and physical sense, logistics is defined as trucks in Eastern European countries. Eastern European countries are not as economized nor technologically advanced when compared to such countries as United States or United Kingdom. These countries maintained their old culture under Soviet rule and recently the accession to the European Union has been hailed as the end of the Cold War. (Trunick, 2004) The infrastructure and industrialisation on some of these countries are very fragile. Similarly logistics to their culture and thinking would be classified as the movement of goods or the means to move, albeit trucks. Since their accession to the EU, as companies move in to invest into these countries, more or so, the definition of logistics will evolve.
In a much broader definition of logistics, Webster dictionary has included the physical objects that are being transported, albeit the personnel and materials. Similarly, in the defined statement of logistics by Webster dictionary, the overall notion is still transportation as same with the other four different definitions of logistics. However, Webster dictionary has taken a further step as to defining what and why in regards to the transportation notion. The definition “The procurement, maintenance, distribution, and replacement of personnel and material” defined by Webster dictionary clearly shows what logistics is, why it is used what is it used for.
Business or Military?
There are two main areas in which logistics is used more or so than any other area. That is, in business and in the military. Logistics is vital to both these areas and yet the definitions for these two areas are similar but quite different from each other. Even yet, the two definitions of logistics from CSCMP and Jenkins are slightly similar but fairly different, these two definitions are based on the backgrounds of business. Regardlessly, the definitions by CSCMP, Jenkins, and Muller are based on backgrounds and experiences.
Clearly, military is different from business, yet both these areas use logistics. Muller classified logistics as the “process” of coordinating the deployment of troops and equipment. In business sense, CSCMP defined logistics as “the plans, implements and controls that effectively and efficiently forward and reverse the 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 requirement” and Jenkins defined it as regarded as a process to strategically move and store materials or products and information from any point in the manufacturing process through consumer fulfilment and back. Thoroughly examining these three definitions, all three definitions clearly show what logistics is used for and why is it used. The usage of logistics would vary from area to area as seen by the definitions from military based and business wise. Essentially, logistics is undoubtedly the transportation of goods, materials or personnel.
Looking at the two definitions based on business area, these two definitions both included the consumer factor. Consumers are vital to business especially when pertaining to customer needs and wants. Consumers are deemed the lifeblood to any business. To whom is logistics used for? CSCMP’s and Jenkin’s definition of logistics implies to who logistics is used for. Consumers are whom logistics is used for. Without effective logistics, consumers are not aware of the product or will not have the necessary means to purchase the product. Without effective logistics, surely any business will suffer. Their definitions were based on the background. More or so, their definition obviously leans towards the business definition of logistics.
Further examination of these three definitions clearly shows how the definition of logistics has evolved. It clearly has evolved from what, why, who and lastly how is logistics used. Logistics is defined by all three as a “process”. Logistics is no longer defined as the physical means of transportation. Logistics is now clearly defined as a process to effectively and efficiently achieve the means of transportation of goods, materials or personnel. The only major difference obviously would be the areas in which logistics is defined. Muller defines logistics as a process to achieve the means of deploying troops and equipment. Jenkins defines logistics as a process to achieve the means of transporting goods from manufacturer to consumer. CSCMP also defines logistics as a “process” to achieve the movement of goods or services from the point of origin to the point of consumption, therefore meaning the consumer. Ideally, the definition of logistics has now evolved into a process of achieving efficient and effective transportation. Transportation is the largest part of logistics.
Supply Chain Management
Supply chain management is one of the most important strategic aspects of any business enterprises. Yet what eludes most of us is the actual meaning of supply chain management. Often its definition has been confused with the term logistics. CSCMP defines supply chain as “as the material and informational interchanges in the logistical process stretching from acquisition of raw materials to delivery of finished products to the end user.” (Logistics Today’s 10 Best Supply Chains et al, 2003) Logically, logistics is part of a supply chain. So what is the definition of supply chain management?
Supply Chain Management Defined
There has been hundreds and hundreds of various articles explaining what supply chain management is and the importance of it. Notably, CLM or rather CSCMP which CLM has renamed, defines supply chain management as the “planning and management of all activities as well as coordination and collaboration with channel partners which can be suppliers, intermediaries, third-party service providers and customers.” (Bonney et al, 2004) In essence, supply chain management, defined by CSCMP, integrates supply and demand management within and across companies. Siems, a senior economist and policy advisor from the Federal Reserve Bank of Dallas defines supply chain management as ‘Getting the right things to the right places at the right times for profit.’ Trent defines supply chain management as ‘proactively managing the two-way movement and coordination (that is, the flows) of goods, services, information, and funds from raw material through end user.’ Rockford Consulting Group (RCG) defines a supply chain as a ‘stream of processes of moving goods from the customer order through the raw materials stage, supply, production and distribution of products to the customer.’ Effectively, managing this chain is known as supply chain management. (Rockford Consulting Group, 1999) As defined by educators Lisa Ellram and Martha Cooper, supply chain management is "an approach whereby the entire network, from suppliers through the ultimate customer, is analysed and managed in order to achieve the 'best' outcome for the whole system." (Moberg, Speh, Freese et al, 2003)
Similar concept of SCM
Part of the reason why supply chain management is so difficult to understand is the multitude of perspectives and definitions surrounding this term. Several definitions of SCM have been offered over the past two decades. Supply chain management is by now a familiar term to most business people. Yet there is wide disparity in the definitions of SCM among industry bodies, associations and academics.
Examining all five definitions of SCM shows similarities and differences between each definition. All five definitions are similar in terms having the notion of movement of products, goods, information from a point of origin to the end user such as customer. Is this not what logistics is defined as? Many have confused logistics with SCM. Logistics is defined as the process of effectively transporting goods from one point to another. SCM is the management of this process, essentially the management of logistics. Take note, logistics a just one part of SCM. All five definitions also involve the notion of customers. This is effectively what SCM is. It is about how to get goods, product or services to the end user or customer. Just as stated by Siems, it is about getting the right product to the right person at the right customer so as to make sales and eventually make profit. More or so, definitions describe SCM as how will materials, products, services or information arrive at the end point from its original point.
Different exposures of SCM
The wide disparity in the definitions of SCM amongst industry bodies, associations and academics can be attributed to the experiences, skills and experiences to what SCM is.
Clearly, Siems’ statement is very broad and general but effectively this is what SCM is. RCG’s definition has a slight variance when compared to Trent’s definition. RCG’s definition clearly comes from a manufacturer’s perspective. RCG’s signalled the starting point as being the customer order. As the customer order is completed, then the production begins in which SCM is the management of ‘stream of processes of moving goods from the customer order through the raw materials stage, supply, production and distribution of products to the customer’ (Rockford Consulting Group, 1999) to the end in which the customer gets their product. In comparison to Trent’s definition, his view of SCM is from a different perspective. Trent, a supply chain management program director at Lehigh University, critically views SCM what is to believed, more or so, from a transportation perspective. Trent distinctively comments on the flow of goods, services and information to the “end user”.
Educators Lisa Ellram and Martha Cooper define SCM in a very intuitive way and very different from the other four definitions. Being educators in their background, their critical analysis describes SCM as an approach to a system and that system is the supply chain. Ellram and Cooper have theoretically defined what SCM is. SCM is “an approach whereby the entire network, from suppliers through the ultimate customer, is analysed and managed in order to achieve the 'best' outcome for the whole system.” (Moberg, Speh, Freese et al, 2003) Clearly is this not what SCM is? SCM is the management of the supply chain, thus encompasses the analysis of the supply chain and the implementations to achieve the best efficiency of the whole supply chain system.
Finally CSCMP’s definition is broad. In essence its definition covers all aspects of the supply chain. The definition has a magnitude of perspectives. The definition covers not just from the manufacturing side, it also covers the supply side, the transportation side, and the ever important customer side. In truth, this definition is the combination of the other four definitions. CSCMP’s definition encompasses all aspects and the theoretical management or analysis of the supply chain, which is the ‘planning and management of all activities as well as coordination and collaboration.’ (Bonney et al, 2004)
The term supply chain management has been around for the past twenty years and has been gaining popularity by both academics and practitioners. The term logistics has been around for more than seventy years. Clearly, time, technology and areas of knowledge and expertise have evolved our thinking on how logistics and supply chain management should be defined. There is no definite definition for logistics and supply chain management. This is shown by the various definitions stated from various bodies that have differences in backgrounds, skills, and expertise in various industries. However, there are definite similar concepts that can be derived to define logistics and supply chain management.
Based on the discussion of logistics and supply chain management, I would define logistics and supply chain management on the bias of these core concepts. Logistics is defined as the process to achieve the means of transporting materials, goods, personnel from one point of origin to another point. Logistics is not supply chain management, but it is a very large integral of the supply chain. Supply chain management is merely the analysis of how processes such as logistics are achieved and through these analyses, comes the plans and implementations to achieve a higher efficiency in these processes.
Bonney, J. 2004, ‘Beyond transportation and logistics’, Journal of Commerce, pp 1. Retrieved: April 29th 2005 from Proquest
Council of Supply Chain Management Professionals (CSCMP), 2005 Retrieved: April 29th 2005 from http://www.cscmp.org/Downloads/Resources/glossary03.pdf
Jenkins, M. 1995, ‘What is logistics anyway?’, Traffic Management, Vol. 34, Iss. 5, pp 71. Retrieved April 28th 2005 from Proquest
‘Logistics Today’s 10 Best Supply Chains’, 2003. Logistics Today Vol. 44, Iss. 12, pp. 20. Retrieved: April 29th 2005 from Proquest
Morberg, R. C., Speh, T. W., Freese, T. L., ‘SCM: Making the vision a reality’, Supply Chain Management Review, Vol. 7, Iss. 5, pp 34. Retrieved: April 30th 2005 from Proquest
Muller, E. J. 1993, ‘Distribution magazine’s guide to logistics buzzwords’, Distribution, Vol. 92, Iss. 4, pp 38. Retrieved: April 30th 2005 from Proquest
Rockford Consulting Group, 1999. ‘Supply Chain Management’ Retrieved: April 30th from http://logistics.about.com/gi/dynamic/offsite.htm?zi=1/XJ&sdn=logistics&zu=htt p%3A%2F%2Fwww.rockfordconsulting.com%2Fscm.htm
Siems, T. F. 2005, ‘Supply Chain Management: The Science of Better, Faster, Cheaper’ Retrieved: April 29th from http://www.scm.ittoolbox.com/documents/document.asp?i=2864
Trent, R. J. 2004, ‘What Everyone Needs to Know about SCM’, Supply Chain Management Review, Vol. 8, Iss. 2, pp 52. Retrieved: April 28th 2005 from Proquest
Trunick, P. A. 2004, ‘The changing face of Europe’, Logistics Today, Vol.45, Iss.6, pp 42. Retrieved: April 29th from Proquest
Webster Dictionary, 2005 Retrieved: April 29th 2005 from http://www.logisticsworld.com/logistics.htm
Wilton, D. 2005, ‘Origin of the Word Logistics’ Retrieved: April 29th 2005 from http://logistics.about.com/od/logisticsdefined/a/origin.htm