Hopefully, you now have a strong understanding of what is business operations and the function of operations management.

Now, we are going to take a look at a specialized area of operations – supply chain management.

What is a Supply Chain?

A supply chain, also known as a “supply network”, is process through which materials are procured or delivered. More specifically, it concerns how material (work-in-process material as well as finished products) are transformed into a final product. Additionally, it involves the movement of materials (such as parts) between various value-added points (such as assembly locations).

In simple terms, think of it as involving everything that goes into producing a product and the conversion of these things into the final product.

Hence, a supply chain describes the combination of things involved right from the delivery of raw material to how the material is transformed into a finished product that can be marketed to a set of buyers or consumers.

It is the network of processes that a product goes through to before it is eventual delivered to the end user. 

As you can discern, the supply chain is at the heart of the operations process – particularly in manufacturing businesses.

Supply chain also applies in service businesses. This is because, more generally, supply chain includes the totality of technologies, resources, individuals, organizations, activities, processes, information and procedures that result in the production of a good or service.

What is Supply Chain Management (SCM)?

Now that you understand what is the supply chain, we can look at supply chain management (SCM).

SCM refers to a set of activities that plan and control the flow of goods and services into and through the organization.

Thus, it explains the coordination and execution of activities needed to maximize customer value and achieve the desired level of outputs. So, supply chain management cover the processes ranging from product development to the realization of final products.

Aspects of supply chain management generally include:

• materials and component management,
• tracking inventories,
• reducing production cost,
• logistics of the shipping, storage, and distribution of goods and services

Operations Management vs Supply Chain Management?

While supply chain management is generally a component of operations management, the core focus of each is distinct.

Operations management focuses on process efficiency and improvement within an organization, whereas supply chain management uses and advances theory, tools, and practices for operations across organizations.

That is, operations management focuses primarily internal processes. Supply chain management focuses on process upstream and downstream of the organization. 

Of course, many of the methodologies of relevance and application in operations management can be applied to supply chain management.

What is Business Logistics?

A core function of supply chain management is logistics. “Business logistics” concerns the shipping, handling, storage, and deliver component of operations management.

In simple terms, logistics management begins with the raw materials and ends with the ultimate delivery of the product. Ultimately, this enables the organization to effectively control its costs. 

The terms supply chain management and business logistics management (logistics) are often used synonymously. However, logistics is just one part or element of the entire supply chain process.