Flickr user Paul Miller

Logistics vs. Procurement in Your Supply Chain

How is a “procurement” job role different from a “logistics” job role?

I’ve noticed that the two terms are sometimes used loosely, and while both obviously fall under the larger umbrella of supply chain management, it is sometimes difficult to figure out where logistics ends and procurement begins and vice versa.

The Canadian Institute of Traffic and Transportation (CITT)  asked several of its members this very same question, and I thought the range of their responses was quite interesting. Take a look.

[contentblock id=16 img=gcb.png]

Answer #1
A procurement supply chain person is directly responsible for the purchasing or procurement of any product (i.e. raw materials, components in manufacturing), services (logistics or otherwise). A logistics supply chain person is focused on the logistical cost and efficiencies within the supply chain of an organization.

Answer #2
As soon as I see “procurement,” I immediately think “purchasing”. This excludes selling, operations, management, and finance. As soon as I see “logistics” I see a coordinating role that involves operations and possibly marketing, finance, and management. The predominant and the self-evident difference is that while the scope of a procurement supply chain person’s role is confined to half or lesser of the total supply chain – from source to consumption – that of the logistics supply chain person is an all encompassing one.

Answer #3
A procurement supply chain person would be focused on the purchase of supply chain services. A logistics supply chain person would have a more holistic approach which would encompass purchasing as well as planning, implementation, operations, budgeting and optimization.

Answer #4
The procurement supply chain person needs the logistics supply chain person to organize to a full “journey” from beginning to final end, including all other tools needed to make a sound and safe adventure.

Answer #5
The term “logistics supply chain” encompasses the planning and management of all logistics activities across the supply chain, the activities that add value globally across the supply chain – from procurement end to final distribution of finished goods. Procurement supply chain focuses on the earlier part of logistics within a supply chain, not suggesting a relation to the activities that stem from work-in-progress and finished goods inventory and distribution.

Answer #6
The procurement supply chain person draws up the strategic plans with suppliers to support the manufacturing flow management process and the development of new products. Activities related to obtaining products and materials from outside suppliers involve resource planning, supply sourcing, negotiation, order placement, inbound transportation, storage, handling and quality assurance, many of which include the responsibility to coordinate with suppliers on matters of scheduling, supply continuity, hedging, and research into new sources or programs. The logistics supply chain person is concerned with the movement of a finished product/service to customers. In physical distribution/logistics, the customer is the final destination of a marketing channel, and the availability of the product/service is a vital part of each channel participant’s marketing effort. It is also through the physical distribution process that the time and space of customer service become an integral part of marketing, thus it links a marketing channel with its customers.

Answer #7
Procurement is the buying or purchasing of goods or services. Logistics is the movement, storage, and operations around whatever the business is in.

What do you think? Which answer is most accurate? Is there any dimension of logistics or procurement that they missed?

[contentblock id=5 img=gcb.png]

Aaron Pittman

Aaron is former Corporate Counsel/Director of Marketing at One Network Enterprises,A lawyer by training, heprovides practical advice regarding regulatory, compliance, and transactional matters, and also leads global marketing and communications activities including content, messaging, and analyst and press relations. He holds degrees from Vanderbilt University and the University of Michigan Law School.