Operations Management and Supply Chain

1. Define the term operations management
Operations management is concerned with the good and services provided by the organisation and interested in the management of systems or processes to transform recourses into products or services. Operations management has the responsibility of ensuring that the business processes are efficient as possible to bring about the greatest profit.

2. Explain operations management’s role in business
In a business this may typically involve turning inputs into outputs. Ensuring that the business processes employed by the organisation are not only effective but also efficient. This may involve the use of business process modelling and further, business process improvement and re-engineering. Overall operations management is responsible for managing the core processes used to manufacture goods and produce services.


Within an organisation the scope of operations management includes many interrelated activities such as forecasting, capacity planning, scheduling, managing inventories, assuring quality, motivating employees, deciding where to locate facilities and much more.


Some of the decisions made by operations management within an organisation include:


• What resources will be needed and in what amounts?


• When will each resource be needed? When should the work be done? When should materials and other supplies be ordered?


• Where will the work be performed?


• How will the product or service be designed? How will the work be done? How will resources be allocated?


• Who will perform the work?

3. Describe the correlation between operations management and information technology
It plays a fundamental role in the effectiveness of operations management. IT is able to heavily influence the decisions made by operations management including productivity, costs, flexibility and quality and customer satisfaction. IT has significant benefits for the operational decisions because Operations Management has a large influence over the degree which the goals and objectives of the organisation are carried out.

Operational Management information systems are vital for managers in making decisions which involve various outcomes, there is a need to weigh up possibilities. These systems are critical if operations management intend to make well informed decisions. The decision support systems and executive information systems are employed by operations management when making these decisions.


4. Explain supply chain management and its role in a business
Supply chain management involves the management of information flows between stages of the supply chain to maximise the effectiveness. There are five steps involved with supply chain management;


1. Plan-plans for managing all resources that go towards meet customer demand for services.


2. Source-selecting reliable suppliers that will deliver goods and services required for making products.


3. Make –companies manufacture products or services


4. Deliver-often referred to as logistics, set of processes that plans for and controls the efficient and effective transportation and storage of supplies from supplier to customer.


5. Return-companies must create a network for receiving defective and excess products and support customers who have problems with their product or service.
Supply chain management plays a significant role in business and has a large advantage in offering a competitive advantage. If a business has an effective supply chain, they are able to offer high quality customer service and provide good products and services. By implementing good supply chain metrics an organisation can assess how the supply chain is operating over time period and make any necessary improvements. An effective supply chain will involve reduced operating costs, improved asset productivity and compressed cycle time.

• Follow this clip to see the effect of bad supply chain management

Dell computers are a good example of a successful supply chain management system which has led to a successful business. Dell incorporates a highly efficient built- to-order business model which enables it to deliver customised products to its users. Dell employs supply chain tools to provide global views of forecasted product demand and materials requirements as well as improved factory scheduling and inventory management.

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  Fords supply chain
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  Dell Suuply Chain

5. List and describe the five components of a typical supply chain

• Supplier-company producing the product or service, they form the initially step in the supply chain. This involves developing the product and service.

• Manufacturer-this involves the building or making of the product or service to be sold.


• Distributor-responsible for distributing the product from the warehouse to the retail outlet.


• Retailer-shop or business where the product or service is sold from.

• Customer-the person who purchases the final product or service.

6. Define the relationship between information technology and the supply chain.

IT is responsible integrating the supply to achieve greater capabilities and profits. The primary role when it comes to supply chain management is creating the integration of processes and information within a firm such as marketing, finance, sales, manufacturing and distribution. It is also responsible for the integration between firms which brings about smooth flow of information and products between customers, suppliers and the transportation. IT integrates the decision making process, business operating processes and information sharing for business performance management. Thus the relationship that exists between IT and the supply chain is one in which IT improves the supply chain through integration. IT has made it possible bring the notion of an integrated supply chain to life.