What are the boundaries of Supply Chain? How do Operations fit with those boundaries?
We have closely observed more than 1,000 companies in the last 15 years of our firm’s consulting practice. No two companies have exactly the same boundaries and definitions.
We have seen places where the front-end (customer facing) part of the business was called operations. In other companies, the back-end was called operations. Still, in other companies, manufacturing, production or conversion processes were called operations. All of these were partial delineations at best, clearly resulting in fragmented operations.
The definition of Supply Chain is even more unclear. On this front we have seen it all.
In some companies, procurement, sourcing, supplier management is called Supply Chain. In other companies, logistics – transportation and warehousing – is called Supply Chain. In yet other companies, Supply Chain includes manufacturing and production, while in many others, these functions are kept separate. Customer Service is part of the Supply Chain in many places.
Tactical planning – Supply Chain
Irrespective of this ambiguity, the roles of a Chief Operating Officer COO) and a Chief Supply Chain Officer (CSCO) are becoming increasingly intertwined.
Supply Chain and Operations are the twin engines of a modern organisation. Although the two definitions can be ambiguous and different among companies, they should work in harmony to drive profitability.
When there is no clarity, people tend to act on assumptions instead of seeking clarification. Whether they are right or wrong, it can incur huge costs due to overlapping and duplication.
When it comes to operational transformation, companies often rely on quantitative optimisation and IT systems, which may overshadow the big picture. Qualitative data can provide useful insights while avoiding the race to get the most expensive software can get your focus on the right issues.