Supply Chain in Operations Management: Practices and Performance, and the Role of Production Operations in Supply Chain

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Table of Contents

Introduction
Roles of a Supply Chain
Operations Management
Effects of the Supply Chain over the Operations Management
Conclusion
References
Footnotes

Introduction

Supply chain refers to the interconnected network of business activities that are involved in the process of delivering goods or services to the final consumer. Supply chain activities start from the extraction or acquisition of raw materials up to the delivery of the final goods and services including transportation as well as storage of the raw materials.

The supply chain management is the management of all the activities involved when goods and/or services are being produced.^[1] Operations management on the other hand involves planning, overseeing and monitoring of the operation activities of a business. The roles of operations management involve ensuring that the activities involved in operating processes of the business are efficiently carried out at minimum input levels and a corresponding maximized output capacities.

This paper seeks to discuss the relationship between the supply chain and the operations management with respect to the roles of the supply chain in operations management practices and performance. The paper will look into the roles of supply chain in an organization and its effects on the operations management of an organization.

Roles of a Supply Chain

Supply chain is involved in all types of businesses and organizations. The service delivery organizations, for example, acquire and store materials and equipments that they use to deliver services to their customer while every organization dealing with goods at one level or the other meets the tasks acquisition, handling, storing and delivery to the final consumers.

These activities, however, occur at different levels of the supply chain. The main aim of the supply chain management involves the provision of customer satisfaction by “measuring, planning and managing all the links in the chain” (Basu and Wright, 2007, p. 4).

The activities in supply chain management may differ from one form of organization to another but the principles and the roles remains fairly the same. A general overview of the supply chain reveals activities such as the “conversion of raw materials and information into finished products and services, consuming the products and services and disposing of the products and services” (Basu and Wright, 2007, p. 4).

One of the major roles of the supply chain is the analysis of the movement of inventory into the system and out of the system of an organization.

The analysis of inventory which could be meant for use in an organization or transfer to the next level of the supply chain is supposed to aid the supply chain in ensuring that the quantity of goods produced is actually the quantity that the consumers demand for during a particular period of time.

The supply chain management, in this case, moves to ensure that wastages are minimized by the production of a quantity of goods that will be demanded by consumers.

Excess production of goods would lead to excess supply which will consequently lead to losses in unit revenues as well as losses due to disposal in case of perishable goods. The supply chain management also ensures that the timing of production process up to the delivery of products to consumers is accurate. This role ensures achievement of the objective of customer satisfaction.

The consumers’ rights over hoarding are also applicable in this case because goods and services are legally supposed to be made available to satisfy consumers’ basic needs. The chain management also looks into factors that helps in minimizing costs involved in supply chain. Supply chain management examines costs incurred due to possible losses as a result of inefficient timing of the supply chain processes.

The supply chain management also has the duty of identifying the processes and activities in a supply chain process which are not value additive. This, as well, has the effect of monitoring and controlling costs involved in a supply chain process and thus helps in controlling unnecessary losses. The roles of a supply chain in service delivery sectors is similar to that in products industry in relation to the satisfaction that an organization owes to its customers and suppliers (Basu and Wright, 2007, p. 4).

Roles of a supply chain management can also be identified according to supply chain activities at each level of a supply chain. Supply chain processes can be divided into a number of departments under which the roles of a supply chain are discharged. The roles in these departments include:

Logistics and supply chain strategy, purchasing and supplies management, manufacturing logistics, distribution planning and strategy, warehouse planning and operations management, inventory management, transport management and international logistics and international market entry strategies. (Basu and Wright, 2007, p. 9)

According to Shah (2009), the role of a supply chain is also identified in decision making over activities and processes in supply chain. The decisions can be classified as either “design or operational” decisions. Under the design decisions, a supply chain management determines the activities to be done and the resources needed by an organization at any level of the supply chain.

It is, therefore, the role of a supply chain management to dictate the activities that will be conducted by an organizations’ departments at given times and levels of production and distribution processes. The supply chain management will determine when raw materials are supposed to be acquired, when production is to take place all the way up to when the finished products are supposed to be released into the market. The supply chain also determines how operational partners should be selected.

Operational partners are the entities with which an organization can cooperate with in order to outsource factors that are employed by the supply chain. The supply chain management does the selection of such parties as well as establishes the terms under which the entities will operate.

Supply chain management determines whether the partnerships are supposed to be short term or long term. Supply chain management is also charged with the role of determining the “capacity and location” of various operation activities and equipments. It is the role of a supply chain management, for example, to determine where production and storage facilities are to be located and the operational capacity that the facilities should be accorded (Shah, 2009, P. 8).

Apart from the design decisions discussed above, there is also a need to take into consideration operational decisions. Under operational decisions, supply chain management undertakes the role of shaping particular activities of the operations of supply chain levels. It is for example the role of the supply chain management to provide predictions of demands for resources in all activities of the supply chain.

It offers the outline to organization’s line managers upon which the line managers can determine the refined course of action regarding the organization’s decisions. Determination and monitoring of the procurement processes are also duties of supply chain management. In its determination of the capacity of facilities to be instituted, the supply chain management further makes provisions of the quantity and nature of procurements to be made to fit into the efficient and economic supply chain design.

In line with the objective to ensure customer satisfaction, the supply chain management further determines the operations that involve the “production planning and control, distribution planning and control, inventory management, transportation management, customer order processing and relations management with partners in the chain” (Shah, 2009, p. 9).

Apart from the roles of supply chain management in the internal structures of organizations as well as satisfaction of the expectations of customers and suppliers, there are emerging factors that determines the success of supply chain management. The chain management has over the recent times evolved to acculturate these factors into its roles.

The supply chains undertake measures to ensure proliferation of goods and services. The increased competition levels among supply chains have led to the review of customer satisfaction techniques and provision of a wider range of particular goods and services are being developed to capture customer satisfaction. Supply chain management has also been redefining the chain power structure.

The increased number of product range has empowered the retailers as determinants of the markets for such products. It has been realized that in their decision on what to stock for their customer satisfaction, the retailers are important determinants of the market trend of product varieties. Supply chains are restructuring strategies to satisfy the retailers into promoting the respective chain products.

The globalization revolution has also tasked the supply chain managers with the duty to integrate with international supply chains in order to cope up with the growing competition in the markets. Supply chain incorporations help in the expansion of markets for finished products and services and as well open up the supplies for a wider variety of goods and services for increased customer satisfaction. It will be the role of supply chain management to identify the supply chains to partner with (Shah, 2009, 10-11).

Operations Management

Haynes defines operations management as the “management of all the processes necessary” (Haynes R., 2007, 3) for the production to the selling of products.

The operations management also ensures that the products meet required quality standards. The main functions of the operations manager, according to Hynes include “planning, organizing, staffing, leading and controlling” (Haynes R., 2007, 4) in the operations processes.

The planning process of the operations management include the forecasting into future operations of an organization and making plans for all activities of the production process till the delivery of the products to the ultimate consumers.

The planning process outlines the activities to be carried out and the time at which they are supposed to be done. The planning outlines the designing process of the products, the operation sites, the acquisition and storage of raw materials, product quality checks, employment of human resource and the distribution of the finished product to the consumers. The organization under operations management ensures the coordination of the laid down plan.

The operations management ensures that the activities are well coordinated by orienting and supervising employees to make sure that they understand and correctly perform their duties. The management also determines the people to be hired, retained or even be fired from the organization. In its leadership, operations management makes decisions to be implemented, support employees and find solutions to emerging challenges in the processes.

The operations management is also responsible for controls and checks over the “working conditions, productivity and quality of the processes” (Haynes R., 2007, 6). In this description of roles, the operations management makes decisions regarding what is to be done, when and where it is supposed to be done as well as how and who is supposed to do it (Haynes R., 2007, 6).

Effects of the Supply Chain over the Operations Management

The roles of the supply chain include measuring, planning, and managing the links in the production chain. The supply chain is therefore an extensive process of all the activities involved in the production levels. The operations management is on the other hand the management of the processes in the production levels.

The definitions of the two branches of management illustrate an almost close relationship between the two. The supply chain looks into the links between the chain levels while the operations management looks into the processes at each level of production. It is however clear that both the supply chain and the operations management deals with the activities at the various levels of production.

A review of the relationship between the decisions made in the supply chain and those made in the operations management indicates the dependence of the operations management on the supply chain. Under the design decision making of the supply chain, it determines activities to be carried out in the chain and the resources to be used at each and every level of the chain (Shah J., 2009, P. 8).

The operations management on the other hand makes decisions regarding the plans and organization of the production process. It can be identified that the supply chain gives the directive of what is to be produced and when it is to be produced then the operations management makes arrangements to ensure that the production process is efficiently planned and implemented to meet the targets predetermined by the supply chain (Haynes R., 2007, 3).

While the supply chain provides direction on when raw materials are to be acquired by an organization and the outsourcing criteria, the operations management restricts its mandate to the planning of the utilization of the raw materials in the production process and the supervision of the human resource in the particular organization. Again, the supply chain provides a directive that is then implemented by the operations management. The operational decision makings of the supply chain as well fits into the observed trend of dependence.

The supply chain conduct analysis which are then used to forecast on processes and also carries out monitoring of the undertaken measures while the operations management uses the forecasts from the supply chain to plan and oversee the operation processes which are then monitored by the supply chain. All the other roles of the supply chain and the operations management as discussed in this paper follow the same trend of dependence (Shah J., 2009, 9), (Haynes R., 2007, 6).

Conclusion

The supply chain is responsible for outlining the activities at each level of the supply in terms of time and capacity while the operations management is responsible for the implementation of the decisions made by the supply chain. The supply chain therefore determines the activities of the operations management or in other words, the supply chain affects the activities of the operations management.

References

Basu, R., and Wright, N. (2007) Total Supply Chain Management. Burlington, UK: Butterworth-Heinemann.

Haynes, R. (2007) Operations management. Cape town, South Africa: Pearson South Africa.

Shah, J. (2009) Supply Chain Management: Text and Cases. New Delhi: Pearson Education India.

Footnotes

Take into considerations that the production process starts with the extraction of raw materials and ends at the very point of customer utilization of the product and/or service created.

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