Blog 7: Operation and Supply Chain Management

 Blog 7

Operation and Supply Chain Management

This week in Business Perspective 501A, week 7, we focused on supply chain management and operations management.  Operations management is internal, producing goods (tangible) and services (intangible).  We learned that many businesses offer a mix of both goods and services, like restaurants.  These businesses typically have higher customer interaction and thus greater variability in output, for example, in quality control (Tilles, 2025).  In operations management, decision-making can be defined in terms of the short term versus the long term.  Short-term decision making involves system operations and day-to-day tasks, such as inventory management, scheduling, and ensuring the day runs smoothly.  However, the long-term operations management involves system design.  This can be more extensive, including location, ensuring appropriate assets are acquired (Tilles, 2025).  Lastly, we learned about competitive priorities in operations management, including cost (production/delivery expenses), quality (products/services), flexibility (modifying to meet customer needs), and speed (delivery of products and services) (Tilles, 2025).  Together, this makes up the basis of operations management and how a company internally plans and manages the goods/services.   

Supply chain management is separate but works in tandem with operations management. The supply chain encompasses the entire organization and activities involved in producing, delivering the product, and serving the customer (Stevenson, 2025). Supply chain management can reduce storage costs/inventory, increase productivity, and enhance profit through improved integration with partner companies (Stevenson, 2025).

An article in the Wall Street Journal by Shih (2022) defines the supply chain and how the “supply chains can break down under stress and the more complex they are, the more likely they are to have problems” (Shih, 2022, Figure 1).  The article summarizes seven key principles of a supply chain.

1.      Complex Networks: linking supply chain to consumers from production to distribution.  This process is vast, often involving thousands of parts and multiple tiers of suppliers (Shih, 2022).

2.      Bullwhip Effect: sudden spikes in demand can be misconstrued as long-term trends, causing overordering in inventory and inventory swings leading to increased demand signals and inventory (Shih, 2022).

3.      Just-in-Time Production: Designed to reduce waste and lessen inventory costs through communication (Shih, 2022).

4.      Overordering Worsens Shortages: overordering to avoid losing market share will result in a surplus of inventory and then financial strain for the company (Shih, 2022).

5.      Long Chains are Fragile: The longer the supply chain the more vulnerable to delays (Shih, 2022).

6.      Congestion Reduces Capacity: More ships and containers does not mean faster delivery, ports can slow and bottleneck transit (Shih, 2022).

7.      Limited Visibility: Most companies have difficulty with an internal view. Unable to view beyond their immediate suppliers (Shih, 2022).

This article ties key concepts from week 7, outlining the supply chain in a defined sequence of steps. The article reinforces the delicacy and interconnectedness of the supply chain, as each step is completed to ensure that the next step can proceed. 

References

Shih, W. (2022). Seven Things You Should Know to Understand the Supply Chain. Wall Street Journal. Retrieved July 19, 2025, from https://www.wsj.com/business/logistics/what-to-know-supply-chain-11658152794?gaa_at=eafs&gaa_n=ASWzDAjr34sZEaR5x1n2asbQqnFH3_Dc8_dmMcolDuqprsZGGEx2CFxIhmjj6ltflFI%3D&gaa_ts=687c41d5&gaa_sig=HEbHCyiH1YzTUYaqMohZ7wCK3DZBDviHm4eIKb8KzrD24P-JFcIbSYE91ABz0h8MhM6cvBZ1heRKf5HOt9CgKw%3D%3D

Stevenson, W. (2025, July). Supply chain management [PowerPoint]. University of Illinois Springfield. https://uispringfield.instructure.com/courses/17974/files/2548878/download?download_frd=1

Tilles, O. (2025, July). Operations management Bus 501 [PowerPoint]. University of Illinois Springfield. https://uispringfield.instructure.com/courses/17974/files/2548867/download?download_frd=1