The term “Operations and Supply Chain Management” (OSCM) refers to the management of an organization’s supply chain & operations. It involves various tasks including sourcing, materials management, operations planning, distribution, logistics, retail, demand forecasting, order fulfillment, and more. It covers both the manufacturing and service industries.
The objective of supply chain and operations management is to assist organizations in increasing their operational effectiveness and efficiency while lowering expenses.
Similarities and differences between operations and supply chain management
Both operations management and supply chain management are necessary for improving business operations, enabling more productive workflows, and eventually boosting profits for the organization. The two positions are closely related to one another to achieve those goals.
Even sharing the same goals, both of them have many different features.
Why is “operations and supply chain management” important?
OSCM is critical to all businesses since it includes the planning and execution of all the actions required to produce goods and services. It involves controlling the movement of resources, data, and money throughout the full value chain, from suppliers to clients. We can list some vital benefits of an efficient OSCM as follows:
Streamlining operations and supply chain can help a business improve efficiency. When all the important processes are well managed and planned, there is no repetition and gap time for unnecessary things. It means that you can minimize resource waste and reduce costs.
Increase customer satisfaction
Another potential advantage of proper OSCM is customer satisfaction. According to zippia.com, 70% of companies believe that supply chains are a key driver for quality customer service. Effective management of operations and supply chains results in shorter lead times, greater overall service levels, and higher-quality goods and services. As a result, you will have more happy customers who are more inclined to do business with your company again.
Improved coordination between various departments and organizations throughout the supply chain is another benefit of effective OSCM. An operation is more streamlined and effective when all team members are communicating with each other and working towards reaching the same goals.
Cost savings may be the greatest advantage of implementing OSCM. With effective operations and supply chain strategies, businesses can allocate resources efficiently and growth potential is harnessed. As a result, businesses can reduce production costs significantly and raise profits in the end.
In addition, businesses can more efficiently acquire resources and goods when they have a better understanding of their supply networks. It paves the path for higher quality and reduced prices.
Increase cash flow
Last but not least, improved OSCM results in enhanced cash flow. Effective management of operations and supply chains results in decreased inventory levels and shorter lead times for businesses. As a result, there is less money held in inventory and more cash is available for corporate reinvestment.
Challenges of operations and supply chain management
This is a new and one of the most exciting challenges to OSCM. Using new technologies to radically alter how your organization operates and provides value to customers is what OSCM needs to approach. It’s not simply about deploying new technology. The fundamental goal of operations and supply chain digital transformation is to enhance customer experience by lowering barriers between consumers and suppliers through improved communication channels, real-time visibility into inventory levels, etc. For example, if you have a retail business, retail operations solutions can help you simplify all operation processes, especially automating inventory management and delighting your customer with an omnichannel experience.
The core of any organization is its qualified personnel, which ensures the company’s sustainability and expansion. Building a workforce with the necessary expertise and ability to continuously move the business’ needs ahead is necessary for effectively managing operations and the supply chain. This movement comprises the capacity to not just finish a task at hand but to see beyond it, innovate, and continuously get better. However, finding talented people who are enthusiastic and engaged in this field of employment has grown more difficult over time. It is a big challenge.
Quality customer service
OSCM is centered on client requirements. Giving the proper amount of a product, of the right quality, for the right price, and at the best customer service is important. However, customers have a variety of preferences, thus we must always cater to their needs. Offering distinctive solutions to clients makes a huge difference. Businesses that put forth the effort to learn about and invest in new technology are the ones that succeed in this industry.
Raw material, energy, and labor costs have all increased globally as a result of economic restrictions. This is a big challenge to OSCM. Your business needs to make some adjustments to maintain operations for production to continue and for customers to receive high-quality products at reasonable prices.
Risk management and forecasting
The risks for OSCM are always existing as a result of the market’s ongoing changes, brought on by a range of factors including consumer desires, political objectives, and global sourcing. Your business has to forecast and always be prepared with a risk management plan.
In a survey by EcoVadis and the HEC Paris business school in 2017, sustainability was recognized as one of the top five priorities by 97% of the procurement officers. The three pillars of sustainability are social, environmental, and economic. Operations management needs to consider how the business’s activity affects a community’s safety and welfare, the environment, and economic sustainability. When any of the three pillars’ outcomes are threatened, your business must also start and monitor corrective action. The path of operations management sustainability and supply chain management is to pursue social, economic, and environmental goals within the business operations and operational links that extend outside the firm to encompass the supplier chain and communities.