Operations Management and Supply Chain Management

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Question:
How does Operations and Supply Chain Mgmt enhance company profitability? 1.Content
2.Charts and Graphs
3.Evidence to support your position
4.Examples that highlight your conclusion

Table of Contents:
I.Executive Summary…………………………………………………………………………………………………………………….2 II.Operations Management and Profitability………………………………………………………………………………….3 III.Supply Chain Management and Profitability……………………………………………………………………………….5 IV.Examples/Case Studies……………………………………………………………………………………………………………….8 V.References………………………………………………………………………………………………………………………………..10

Today more than before have the functions of Operations and Supply Chain Management (SCM) impacted the bottom line of companies that recognize the facets of these functions and use them to their advantage. Operations Management: Inventory Management strategies and vendor improvement initiatives create innovativeness within the supply chain ensuring that the company is implementing best practices across the board affecting the bottom line. Supply Chain Management: Cost savings via the win-win negotiation and auction strategies that SCM implements gives straight savings to Finance to account for in the Company’s Income Statement. Examples illustrated therein are of companies such as Salisbury Supermarkets Ltd., IKEA, Best Buy, Campbell’s Soup, Proctor and Gamble, to name a few that have since understood the importance of having the COO (Chief Operating Officer) and the Director of Supply Chain at C-Levels due to their significant contribution to their company’s profitability.

The Journal of Operations Management defines Operations Management as an area of management concerned with overseeing, designing, and redesigning business operations in the production of goods and/or services in the most efficient and effective way. Operations Management can and will impact your business bottom line, translated to PROFITABILITY, in the following ways: • Costs of operations

Levels of service to customers
Business working capital
Costs of operations:
Management must make all linkages between contracted vendors, internal business stakeholders and customers into one integrated supply chain, to understand the real cost of all the operations of a business. How is this done? By measuring and tracking Key Performance Indicators, KPIs that focus on 3 key areas; 1. Service levels (order fulfillment, delivery time) 2. Cost of operating the supply chain (vendor receipt, customer delivery) and 3. Inventory levels Level of Service to customers:

Service levels can vary by type of product, customer and by geography. A company should always provide visibility to customers when the business has a problem. Communicating that a Root Cause Analysis as done to fix the problem and to ensure it does not happen in the future will gain the trust of customers even in bad times (recession). Business working capital:

Generally over a third of working capital inventory is tied up in product inventory and support facilities. See Graph below by REM Associates of Princeton, New Jersey.
How can issues such as high inventory levels minimize the cost of business working capital? Knowing what to order, knowing the cost of carrying excess inventory, and how to measure product and service performance against inventory will ensure a company stays lean and keeps the business working capital to a minimum.

According to the Institute of Supply Management, Supply Chain Management is defined as a function that considers all interdependent functions within an organization and all external organizations involved in the process of making a product or service available for use or consumption. It is an orchestrated network that creates value for the consumer through the streamlining of the process that purchases, stores, converts, and ships to the customer and meets required expectations of the customer. SCM aims to do the following: •Identifies the processes necessary to meet customer...
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