Operations management is an intricate web of internal and external interrelation

Question

Operations management is an intricate web of internal and external interrelationships of people, processes, and resources. Identifying and assessing these relationships can help keep operational strategies and development headed in the right direction.

What is Supply Chain Management (SCM), and why is it important to business operations?

In what ways is SCM for a manufacturer similar or different than that of a service provider?

What is Enterprise Resource Planning (ERP), and how is it related to SCM?

Does this relationship introduce any specific issues or complexities into managing business operations? If so, how? If not, why?

Explanation / Answer

Supply chain management is the management of network of all types of processes that involve goods from raw material to finished goods till it reaches the end customer. It includes procurement of raw material, manufacturing and distribution of finished goods. Supply chain is the system that makes the final product available to end customers.

Supply chain management is very important for the business organizations and the product availability at right time to customers is ensured by effective supply chain management. It helps in optimizing the operations so that the speed and efficiency of the operations increases. A good supply chain management system helps in delivering the product to the customers fast at reduced cost. Quality is ensured throughout the process. All these factors help to provide competitive advantage for the product in the market and help to make better profit. Business operations become successful when they are able to deliver the product at the right time with reduced cost. Proper inventory control is very important in business operations which are made possible through effective supply chain management.

Both supply chain for manufacturer and service provider need labor and capital investment to start their operations. But manufacturing SCM involves manufacturing of physical product and much physical inputs are needed but service industry needs physical input in very small amount. Manufacturing industry focuses on logistics to move product from one place to another and the cost of the product depends on the product size and distance to be covered. The service industry does not involve any physical product and hence the supply chain management does not depend on transportation of products. The finished good in the SCM of manufacturing sector is the tangible product and can be tested for quality and perfection. The finished good and quality involved in SCM of service industry is determined by the customer satisfaction. Optimization of the supply chain in manufacturing industry is achieved through faster delivery and reduced cost. But in service industry optimization is achieved through better relationship and ensuring efficient information flow.

Enterprise Resource Planning is a tool designed for managing business information, integrating various business systems and processes. ERP system functions include integrating areas like business planning, information flowing, executing and controlling of various sources of company. ERP systems optimize operating efficiency by reducing inefficiencies, decreasing cost and streamlining the processes. When ERP system is integrated with SCM systems it improves the overall efficiency by giving advantages in planning, decision making and execution which increase the firm performance. Successful implementation of both the systems provide competitive advantage to the firm through improved customer service and greater flexibility to the supply chain which helps the firm to meet the needs of the customers according to the changes in the business environment.

The relationship between ERP and SCM makes the systems more complex if the ERP systems are not managed carefully. The ERP systems are different from traditional systems in scale, complexity and cost and it should be implemented and required changes should be made to the business processes to make it successful.ERP systems require more cost to implement including hardware, software, professional services and the staff cost. If not managed properly it will result in failure and would not provide any competitive advantage. The business operations would become complex and affect firm performance to large extent.

Related Questions

Navigate

• Browse (All)
• Browse O
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.