Operations and Supply Chain Management (OSCM) includes a broad area that covers both manufacturing and service industries, involving the functions of sourcing, materials management, operations planning, distribution, logistics, retail, demand forecasting, order fulfillment, and more.
What Is Operations And Supply Chain Management?
With the rising cost pressures and supply constraints, organizations are adopting the concepts of outsourcing and off-shoring operations and supply chain functions to improve performance and ensure competitive advantage. To ensure seamless integration of an offshore operation to the direct operation, it is essential to build a capacity to manage the efficiency, effectiveness and quality of the supply chain.
CME provides exemplary support in Operations and Supply Chain Management to assist you in controlling and driving operational excellence. Our experts have in-depth experience in managing highly complex operations and supply chain functions. We help in:
Strengthening organizational capabilities: While sustaining organizational culture, processes, and best practices through supporting change initiatives
Supporting Mergers and Acquisition: Actively supporting mergers and acquisitions, handling issues related to consolidation of global operations right from the kickoff through post-merger integration and knowledge transfer across functions
Managing large operational workflows: Handling large operational workflows and reducing turnaround times through process re-engineering and improved information flow between internal and external stakeholders
Restructuring organizations: Reducing overheads and increasing operational efficiencies through structure and process redesign
Enabling global customer/supplier value chain management: Enhancing customer and supplier business performance through an integrated approach to demand planning, replenishment planning, and supply chain design
Topics Of Operations And Supply Chain Management
Operations and supply chain management functions involve manufacturing and service industries, including logistics, distribution, demand forecasting, order fulfillment, and more. It involves various areas, including production management, facility management, inventory management, store management, order management, project management, and market and data analysis.
Business analysis problems often stem from a breakdown in the internal supply chain and coordination of these functions. A lack of data exchange between departments, lack of tools for forecasting needs, and unplanned seasonal increases in demand can all lead to disruptions in the supply chain.
To be a successful operations and supply chain manager, you must be able to analyze business data, identify user requirements and make recommendations to improve operational performance. You must also initiate change in the internal processes and establish a clear line of communication between all departments, including sales, marketing, finance and operations.
Introduction To OSSM
Operations and supply chain management (OSCM) involves complex and interrelated functions such as production control, planning and control of materials, movement control, inventory control, order management, and so on. The main aim of considering OSCM is to consider the linkages and efficiency of the supply chain as a whole rather than focusing on one function at a time.
By applying concepts such as demand management, supply chain design, and push-pull systems, organizations can ensure optimal supply chain performance.
Planning and decision support system is often referred to as a roadmap to the OSCM. The roadmap is structured by formulating relevant business objectives such as market share, revenue share, quality service and focus on consumer touch points, and identifying expected and desired outcomes and priorities.
Benefits Of OSCM
- Effective nature of business operations
- Identification of cost reductions
- Ability to compete in a global market
- Lower inventory holding costs
- Decrease in response time
Comprehensive Understanding Of The Supply Chain Process
It is quite evident that OSCM plays a crucial role in an organization’s success. As it enables systematic coordination and optimizes the flow of materials and information through the supply chain, it thus helps in improving the competitive excellence and the organization’s functionality.
OSCM Path Toward Transformation
To make a successful transformation in the supply chain, organization needs to understand the end-to-end value chain, develop a governance structure that fits to the organization, and implement a location-based supply chain organization structure. Further, since the transformation involves balancing the internal and external demands of the supply chain, the process requires a blend of internal and external expert capabilities.
The implementation of OSCM can not only improve business performance, but can also help a company to meet industry benchmark standards, become more competitive and sustain a strong position in the marketplace.
A successful OSCM implementation engages senior management, and hence a multi-stakeholder approach is essential, starting at the top level, with a clear vision and strategy.
Following are the steps to proceed with OSCM successfully:
- Align organization with OSCM strategy
- Implement a change management strategy for OSCM learning and innovation
- Establish effective collaboration and communication
- Establish and maintain performance monitoring and control
- Establish control environment
- Implement supply chain processes and standards
- Assess the risks and develop measures to mitigate the impacts
- Identify and eliminate non-value-added activities
- Production analysis: Understand current operations, identify productivity gaps, reduce costs and improvise customer service
- Operational excellence: Address, monitor and control operating practices that leave room for improvement to ensure optimum performance of the supply chain
- Assess the market opportunities and identify the value chain
- Plan and design supply chain processes and cross-functional processes
- Optimize the information flow in the value chain
- Select the right supplier for supply chain capacity expansion
- Develop an alliance network of trading partners to maximize supply chain value realization
- Provide training in supply chain subject areas to engage employees in OSCM
- Procurement management: Increase supply chain value while reducing costs using transactional and forecasting data for supplier selection, materials management, and distribution optimization
- Order management: Set up and maintain the OSCM system across the enterprise and transfer the system throughout the supply chain
- Logistics and operational planning and control: Use real-time data to improve systems performance and efficiency, reduce response time, and control inventory
- Distribution Management: Enhance service levels by increasing network visibility, item availability, and network control
- Store analysis: Perform ongoing store and supply chain optimization and efficiently manage the costs and delivery risks to meet the targets
- Customer relationship management: Develop and oversee the customer relationship life cycle across the enterprise, the supply chain, and trading partners
- Business and trading partner data management: Manage business data, develop data analysis tools, and operate business information systems to improve supply chain processes and information flow
- Risk management: Reduce operational cost and complexity by identifying and mitigating risks in supply chain operations and processes
OSCM Process Flow
The OSCM process flow identifies all functions related to planning, procuring, transporting, warehousing and selling of goods. Further, it also gives an idea about the effective communication between supply chain partners, stakeholders, and customers.
As it is well known, products are manufactured in different places around the world and is then transported to different places and at different times. This information must be captured and presented in the supply chain.
As shaded in the diagram below, the process begins with identifying the customer need and developing the demand plan.
The effective flow of demand and supply must be managed to ensure customer satisfaction, which can be done by several strategies such as Kan-ban, pull system, Electronic Data Interchange (EDI), and invoicing.
Next step is to approve the supply orders from the suppliers. Once the orders are approved, products are procured from the suppliers and are transported to the warehouses for storage.
Once the products are stored in the warehouses or distribution centers, they are assigned to the customer location. In this step, it is important to minimize the expected cost of transport.
It is important to identify the best location, which calls for the coordination of several factors such as labor, efficiency, customer service, transportation costs, capacity, inventory costs, transportation origin and cost, and communications.
The quality of products must be assessed thoroughly at every stage. In addition to the quality control, the commodity management system must also be in place.
Ideally, supply management should ensure efficient service to the end customer by coordinating the activities of all the concerned departments such as procurement, transportation, warehousing, sales, and stock control.
Supply management is the process of coordinating the activities of all the concerned departments such as procurement, manufacturing, transportation, warehousing, and sales to achieve organizational goals in terms of cost reduction, customer satisfaction, and increase in revenue.
There are several critical success factors for implementing OSCM. Companies must develop a proper strategy and a consistent management approach to ensure supply chain integration, seamless information flow, and effective supplier relationships. When companies succeed in this regard, they can improve their operational excellence and meet customer demands, resulting in an increase in revenue and customer satisfaction.
Implementing the OSCM can be achieved by addressing all of its aspects and using a blend of internal and external expert capabilities, and by synchronizing supply chain supply and demand in an effective manner. The implementation of OSCM can be effectively managed by closely coordinating supply chain activities and integrating the supply chain functions.
Every organization has its own challenges, and therefore proper assessment and feedback are the key to implement a successful OSCM. The OSCM is a continuous process that requires skills, commitment, and resources; therefore, these functions must be part of the company strategic planning, which will ensure that OSCM is implemented in the right direction.
OSCM is a continuous process, and so the improvements that are identified must be implemented as soon as possible. Companies must monitor and operate the OSCM business processes continuously to ensure continuous improvements.
Finally, the effective integration of all the components that make up the OSCM supply chain and thus minimizing the cost of production. It is important for enterprises to identify the need of the customer first, which should be in line with the company’s strategic objectives, and to design a business model that is both customer-centric and supply-chain driven, which is supported by the correct strategic sourcing and supply chain practices, policies, and procedures.