Difference Between Supply Chain Management and Operations Management

Supply Chain Management and Operations Management are two terms that are often confused by managers in big organizations. There are many similarities and overlapping in between these two concepts yet there are differences for them to exist as two distinct processes in an organization. This article will highlight these differences so as to enable a better understanding.

In the simplest of terms, Supply Chain management (SCM) is what happens outside the company, whereas Operations Management (OM) is what happens inside a company. However, the two terms are closely linked to each other and heavily dependent on each other also. In general SCM is considered to be a part of OM as OM includes all activities in the context of manufacturing a product or providing a service. SCM is the control and monitoring of procurement and use of material and equipment required to manufacture a product. The end objective of SCM is to cut out inefficiencies in the chain, reduction of costs and thus improvement of profits.

OM on the other hand is a larger set of activities that includes SCM as it is engaged with controlling and monitoring every aspect of the processes used to manufacture the products made by your company. SCM is getting material in and out of the factory whereas OM refers to what you do with the material inside the factory.

In a nutshell, SCM is a collection of activities that are basically independent of the type of business you are conducting. Supply chain basically remains the same as you buy raw material, stock it, you transform it into final product, you stock again and finally sell the products. Operations management is actually what you do with the raw material and how well you do it. It is different for different businesses and makes use of human resources and machinery to manufacture finished products.