Though often used interchangeably, you need to know the differences between the supply chain and logistics. If you don’t know the difference between the two, you won’t know which software will do the better job of streamlining your business.

In fact, knowing the difference between the two is now more important than ever—it has been estimated that by the end of 2018, 83 percent of companies will be automating their supply chains with software.

Supply chain automation is no longer a “nice to have” feature, but a necessity for avoiding customer complaints, reduced visibility, and productivity losses. Companies that don’t embrace software to enhance their supply chain will be at a significant competitive disadvantage.

But do you know for sure which kind of software you really need? Before wasting 37 percent of your software spend on software that doesn’t fit your business needs, you need to know what sets supply chain management software apart from logistics software.

To help you decide whether you need a supply chain or a logistics solution, I’ll cover:


Supply chain vs. logistics

Supply chain

Supply chain management (also known as SCM) is the total sum of all of the activities related to the creation and movement of goods, from the raw material stage to the point it reaches the end user. This involves the processes of demand planning, procurement, inventory management, and logistics management.

These processes are carried out by a multitude of agencies. At the most basic level, these agencies include companies, suppliers, and customers. However, supply chains can comprise many more agencies, including wholesalers, customers of customers, and third-party logistics providers.

Supply chain management software helps to manage these complex, nonlinear relationships, and it also helps to maximize the demand planning processes.

While the features offered within supply chain management software largely varies, common key features include:

  • Supply chain planning: Forecasts customer demand and adjusts the speed and flow of production. Runs simulated demand estimates using historical trend data and promotion schedules to determine how changes in market awareness might affect your future inventory requirements.
  • Demand planning: Improves the accuracy of demand forecasts by reducing biases in data. Multidimensional forecasting can filter by market, time, or customer, and run “what if” scenarios to project future demand.
  • Vendor managed inventory: Gives suppliers the ability to monitor and replenish buyers’ inventory themselves.
  • Procurement: Carries out purchase orders and maintains the financial side of supplier/customer relationships, as well as handling reporting and compliance issues.
  • Transportation management: Guides the movement of materials to and from the warehouse.
  • Warehouse management: Monitors and controls the movement of materials within the warehouse.

 
Although these are the main features of supply chain management software, other features often found in these tools include supplier management, strategic sourcing, and order fulfillment.

It’s important to note that the supply chain management software market is smaller than most, and the range of functionality widely differs between supply chain management products.

Logistics

Rather than a separate business function altogether, logistics management is essentially one component of the entire supply chain process. Logistics management includes activities such as fleet management, warehousing, inventory control, and transportation management.

Essentially, logistics management is focused on the transportation and storing of goods within the supply chain.

Logistics management comprises two main activities:

  • Inbound logistics: Surrounds the activities related to procurement, storage, and transportation of goods.
  • Outbound logistics: covers the collection, maintenance, and delivery of products to customers.

Logistics management software helps companies manage third-party logistics providers, freight forwarders, and other operational parties, in order to enhance business efficiency.

Though logistics software varies from serving specific industries such as dispatch and delivery to full enterprise suites, the key features of logistics software include:

  • Inventory control: Manages purchase orders and supply levels and tracks historical and trend information for forecasting purposes. Supports order fulfillment, warehouse control, and supplier sourcing.
  • Transportation management: Includes automated carrier selection (to determine the smartest carrier or shipping method for each delivery), shipment consolidation, route optimization, real-time tracking of cargo, and dispatch scheduling.
  • Warehouse management: Uses barcode or RFID scanning, inventory transfer, and smart storage tools to support the warehouse manager in storage location decisions and assistance with picking/packing.
  • Import/export support: Helps manage currency exchange, customs, taxes, multiple languages, and trade regulations.
  • Track and trace: Monitors items’ previous and current locations as they move through the supply chain. “Tracking” refers to items’ current locations, while “tracing” refers to items’ previous locations.
  • Risk management: simplifies accident processing, insurance claims, lost freight, or other incidents. Can also be used to identify potential areas to mitigate risk, e.g., analyzing driver history or hazardous materials practices.

 
Other common features of logistics software include integrated accounting and CRM functionality.

See our graphic below, which summarizes the difference between supply chain and logistics software:


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Which tools are out there?

Let’s take a step back and recap—what are the main differences between supply chain management and logistics software?

  • Supply chain management: Covers activities concerned with procurement, demand planning, and transportation management, often involving the coordination of several different strategic stakeholders such as suppliers, distributors, and customers.
  • Logistics: A smaller part of supply chain management that deals with the transportation, storage, and distribution of goods.

Below, I go through some of the options out there for businesses of all types. See the methodology section at the bottom of this article for more insight into how the apps for each section were chosen.

If you’re looking for supply chain software …

NetSuite

NetSuite is a comprehensive business management solution, incorporating ERP, CRM, inventory management, and supply chain management, alongside many other business functions.

NetSuite is a good tool for those managing a global supply chain, due to its “Control Tower Snapshot” feature, which summarizes both current and future inventory positions across your global supply chain. This feature helps users pinpoint any future imbalances in supply and demand.


Demand planning in NetSuite

Demand planning in NetSuite (Source)

SAP Business One

SAP Business One is an ERP system that integrates your data into a single system and is designed for small to midsize businesses. This makes it easy for users to view the status of jobs and improves information sharing across the supply chain. SAP Business One’s inventory management functionality also supports multiple locations and gives increased visibility across an extended supply chain.


Customer receivables in SAP Business One

Customer receivables in SAP Business One (Source)

Microsoft Dynamics AX

Microsoft Dynamics AX is an ERP system with extensive supply chain management modules, including inventory management, demand forecasting, distribution planning, procurement management, and a vendor self-service portal.

Users can view real-time data, use business intelligence features to create custom reports, and access a multisite warehouse management system that manages sites, warehouses, and distribution centers.


Trace inventory in Microsoft Dynamics AX

Trace inventory in Microsoft Dynamics AX (Source)

Priority Software

Priority Software is an ERP solution that has modules for purchase orders, vendor relationship management, demand forecasting, and price quotations.

Priority Software helps users plan purchases for raw materials and purchases items and offers fixed user-designated controls to reorder regular items. Priority Software also comes with built-in quality control and quality assurance checks.


Purchase orders in Priority Software

Purchase orders in Priority Software (Source)

If you’re looking for logistics software …

LogiNext Mile

LogiNext Mile is a logistics solution that automates delivery route optimization using single pickup/multiple drop and multiple pickup/multiple drop algorithms.

Features such as real-time rerouting based on changes in traffic, weather conditions, capacity, and customer locations are designed to help organizations stay on top of their scheduling and dispatching. LogiNext Mile also features an interactive planning dashboard, which uses heat maps and trend lines to analyze your whole delivery network.


Trip planning in LogiNext Mile

Trip planning in LogiNext Mile (Source)

Magaya Cargo System

Magaya Cargo System is a supply chain and logistics solution that allows users to organize their freight operations. The solution generates import and export shipping transactions for ground, ocean, and air. Users are able to allocate their cargo space before it arrives and can view their real-time inventory levels. Magaya also allows you to give your customers online access to shipments, purchase orders, invoices, and more for increased visibility.


Freight quotations in Magaya Cargo System

Freight quotations in Magaya Cargo System (Source)

FreightPOP

FreightPOP is a transport management system that helps users select the optimal carrier for each job, including the ability to compare shipping rates for all carriers and modes.

Users have visibility over their shipments with FreightPOP’s centralized tracking feature, which tracks shipments from pickup to delivery in real-time. Dashboards and custom reporting features also help users compare and analyze shipments and provide handy data for future shipping decisions.


Carrier management in FreightPOP

Carrier management in FreightPOP (Source)

Kuebix TMS

Kuebix TMS is a transportation management system that helps users compare rates and service levels for shipments, request spot quotes for freight matching purposes, and book shipments with connected carriers.

Kuebix also generates reports, carrier scorecards, and shipment trends to help users analyze their shipping decisions and budgets. Kuebix’s carrier relationship management tool also helps hold carriers accountable.


Dashboard overview in Kuebix TMS

Dashboard overview in Kuebix TMS (Source)

More about supply chain and logistics software

Supply chain and logistics software perform vastly different functions. When making the choice between supply chain versus logistics software, you need to ensure that you ‘re aware of the following differences:

  • There are multiple organizations involved in supply chain management, while there is usually only one organization involved in logistics.
  • Logistics is just one facet of the entire supply chain.
  • Logistics deals with storage and movement of goods, while the supply chain deals with more strategic business functions such as procurement, inventory control, and demand management.


METHODOLOGY

Applications highlighted in this article are selected based on several criteria: the current market definition for the category, the Category Leader rankings, and business size.

As part of our formal research efforts, a series of market definitions are developed and leveraged across all of our content for that category. These definitions determine an application’s suitability for the category under analysis. If a formal market definition is not yet created, the individual analyst uses his/her market experience and knowledge to assess an application’s suitability for the category.

After suitability is established, the applications are analyzed against GetApp’s Category Leader ranking for that category of software; this ranking includes user reviews, integrations, mobile app availability, media presence, and security features. Where a Category Leader ranking does not exist, individual apps are chosen based on the highest average overall ratings. Each app has a minimum of 10 reviews written in the past two years in order to qualify for inclusion.

Lastly, applications are then filtered for business size using GetApp’s filtering tool to include options that are suitable for businesses ranging from 0 to 500 employees.