Let’s understand the concept of Supply Chain with a simple example.
Amazon is an excellent example of a supply chain that is one-of-a-kind. As an e-commerce business, they bypass the retail store. This lets them ship directly from the distribution center to the customers’ homes. Amazon innovates on the supplier side as well as in the last supply chain step – delivery.
Because Amazon is a platform rather than a store, anybody may sell items there. So, Amazon has more products than any other online retailer. And, consumers think of Amazon when they purchase online. Then it manufactures low-cost daily products and undercuts suppliers.
Following that, their warehouses use automation for the processes. They group products bound for similar locations for immediate shipment. Finally, the company’s delivery personnel and technology investments get ready for shipment. It can either be 2-day shipping or even same-day delivery. Amazon no longer uses third-party logistics (3PL) and instead fulfills orders in-house.
Now, let’s understand the meaning of Operations and Supply Chain.
What is Operations and Supply Chain?
Operations and Supply Chain Management (OSCM) is a broad term that encompasses several factors. For instance, it includes sourcing, material management, operations arrangement, distribution, logistics, and retailing. Besides, it also includes forecasting demand, order fulfilment, and other tasks. This serves both manufacturing and service sectors.
It comprises everything that happens along the way. It starts from the point of origin to consumption.
The supply chain process accounts for first processing or utilizing these resources. Next, it will deliver services to consumers using these materials. Professionals in these disciplines also deal with various other processes. They find ways to make them more efficient.
The supply chain’s responsibilities include measuring, planning, and managing the production chain’s connections. As a result, the supply chain is a comprehensive process. It embraces all of the actions engaged in the various stages of manufacturing.
Contrarily, operations management is the administration of activities at the production level. Specifically, the supply chain directs what should be produced. It tells you when it should be produced. So, this sector makes the necessary arrangements. Thus, it guarantees that the manufacturing process is adequately planned and implemented. Further, it fulfils the supply chain’s goals.
Subscribers to r/SupplyChain (“a subreddit dedicated to discussing careers, innovations, operations, and plenty more!”) experienced massive growth in the past 5 years from ~1k subs in 2017 to ~35k subs in 2021. That’s a 3400%% increase!! And it speaks a lot about the department.
What is the difference between operations and supply chain?
One major difference lies between supply chain and operations management. It is – supply chain is primarily concerned with what occurs outside the organization. For example, they have to acquire resources and deliver goods. On the other hand, operations management is concerned with what occurs within the company.
This implies that the supply chain manager focuses their time on negotiating contracts. They look into assessing suppliers. However, the operations manager focuses on planning and monitoring everyday operations and processes.
Supply chain management tasks seem typically consistent across sectors. But, operations management duties and responsibilities can differ significantly. It will be influenced by the product or service that the company produces.
All supply chain operations are designed, planned, executed, controlled, and monitored. This is carried out as a part of the supply chain management process.
Planning, coordinating, and overseeing processes are all part of the operation management process. These together lead to improvements. Moreover, its benefits extend to increased income, and engaged staff. It also helps with improved customer happiness, and improved product quality.
What are the two major responsibilities of an operations manager?
Operations manager refers to as anyone in charge of operations. The operations manager is in charge of all aspects of the business. For instance, it involves planning, production, scheduling, staff management, distribution, and more.
The two major responsibilities of an operation manager are as follows:
- Firstly, it extends to analysis of company strategy, creation and development of programs. It takes care of activities, and tasks that correspond to this plan. Further, it has the design of appropriate goods and services. These advance the corporate strategy as among the primary responsibilities. In addition, the operations manager is responsible for planning and overseeing activities. Also, they will consider the procedures, and other aspects of the company’s overall objectives.
- Secondly, the operations manager must assess the efficiency of operations. They should make necessary adjustments to inefficient procedures. Despite this, they must upgrade them with more effective and efficient methods as needed. It shall increase the sales and earnings of the business.
Supply chain management allows businesses to increase their profit margins in various ways. Also, it is especially essential for businesses with big and worldwide operations.