When it comes to operations management vs. supply chain management, or even ops supply chain, you may find these terms are often used interchangeably. While closely related, they have some major differences. Let’s take a deeper dive into the inner workings of operations management vs. supply chain management, uncover what makes them unique, the degree you need to work in each discipline, and the right path for you.
What Is Operations Management?
Kicking us off, exactly what is operations management? Adam Hayes of Investopedia (2023) explains the key component of operations management is its primary focus on achieving the highest level of efficiency for the company to reduce costs (and, therefore, increase revenue). Writes Hayes, “Operations management (OM) is the administration of business practices to create the highest level of efficiency possible within an organization. It is concerned with converting materials and labor into goods and services as efficiently as possible to maximize the profit of an organization.” It’s important to note all of the operations within this purview are internal to the company.
What Is Supply Chain Management?
Supply chain management, according to Oracle, is the management of goods, materials, finances, product and service data – and everything in between – starting from procurement until all of these pieces reach their final home. Oracle succinctly summarizes it: “At the most fundamental level, supply chain management (SCM) is management of the flow of goods, data, and finances related to a product or service, from the procurement of raw materials to the delivery of the product at its final destination.”
Operations Management vs. Supply Chain Management: What Are the Differences?
On the surface, when comparing operations management vs. supply chain management, the two sound incredibly alike. Digging a bit further, however, you will spot the differences between the disciplines. Career site Indeed breaks down the two paths, highlighting the major difference setting them apart. While operations management largely deals with internal processes – such as tracking finances, data, materials, and more within a company – supply chain management oversees external processes that include, for example, any materials that are sent or received from outside the company. While the two disciplines work closely together to function, they are distinct operations.
Operations Management vs. Supply Chain Management: How Are They Similar?
Still, there are many similarities when it comes to operations management vs. supply chain management. They rely on each other to process services, materials, data, information, and the like for a given company, and they must pass that knowledge back and forth to one another through efficient communication. For instance, operations management and supply chain management, per Indeed, are similar in the following ways:
- Integrated processes: Operations management focuses on the internal processes and activities within an organization to produce goods and services efficiently. Supply chain management encompasses the entire process from raw material acquisition to product delivery to the end customer. It involves coordinating and integrating various processes across multiple organizations.
- Efficiency and optimization: Operations management aims to optimize internal processes, improve efficiency, and maximize productivity in the production of goods or delivery of services. Supply chain management aims to optimize the entire supply chain – including suppliers, manufacturers, and distributors – to ensure smooth flow and minimize costs.
- Customer focus: Operations management focuses on meeting customer demands by producing goods or delivering services that meet quality standards and are delivered on time. Supply chain management prioritizes customer satisfaction by ensuring products are available when and where customers need them. It involves managing the entire supply chain to meet customer demands efficiently.
- Coordination and collaboration: Operations management involves coordinating internal departments and resources to ensure seamless production or service delivery. Supply chain management requires collaboration with external partners, such as suppliers and distributors, to optimize the entire supply chain network.
- Risk management: Operations management addresses risks within the production process, such as equipment failures or quality issues. Supply chain management manages risks across the entire supply chain, including risks related to suppliers, transportation, and market demand fluctuations.
- Continuous improvement: Operations management emphasizes continuous improvement in processes, often using methodologies like Six Sigma or Lean to eliminate waste and enhance efficiency. Supply chain management strives for continuous improvement in the overall supply chain, aiming for greater visibility, responsiveness, and efficiency.
Overview: Operations Management vs. Supply Chain Management
While operations management focuses on internal processes, supply chain management extends beyond organizational boundaries to encompass the entire network of entities involved in bringing a product or service to the end consumer. Both disciplines are crucial for organizations seeking to achieve operational excellence, deliver value to customers, and remain competitive in the market.