A product’s life cycle goes through a long process from inception to delivery. There are many companies, people, and operations involved that make it possible. Supply chain management and operations management form an essential part of keeping the product and service’s life cycle well oiled.
A symbiotic relationship between supply chain management and operation & maintenance management helps connect systems, cut down resource time and costs, and uncover organizational inefficiencies. This collaborative relationship improves an organization’s procurement, operations, and the customer satisfaction journey.
In a worldwide supply chain study by GEODIS, the Key Performance Indicators (KPIs) used for supply chain monitoring include daily performance (40%), cost reduction (35%), production service rate (29%), inventory turn (28%), and production time (27%). All these KPIs need operations management to function optimally.
Supply chain management and maintenance management – definition
Before we go into details, let’s quickly refer to the definitions.
Supply chain management is the process of handling the entire journey of a production or service flow from inception to delivery that oversees quality, customer experience, and overall cost and profitability.
Maintenance management is the process of maintaining an organization’s assets and resources at maximum efficiency, keeping in mind the time and costs.
Maintenance cogs that affect the smooth running of the supply chain
There are certain operational essentials that need to be in place in order to implement a smooth supply chain. These include planning and overseeing the daily operations within an organization, which can run the whole gamut of material inventory, facility management, factory floor supervision, quality control, storage, technology, to transport.
- Inputs, logistics, and finished goods: The operational and maintenance role is maintaining inventory parts, performing quality analysis, and storing finished goods.
- Transportation: In moving goods from source to stores, transport plays a crucial part in the supply chain. Your mode of transportation has to be in good condition to weather any hiccups or breakdowns. Some products need special temperature deliveries, so refrigeration plays a key role here. Ship, train, aircraft, and fleet maintenance managers all have to ensure that your mode of transportation is in good working condition.
- Production Floor: This involves keeping the plant in excellent working condition so as not to cause delays. One can use a maintenance program that is condition-based (for example predictive maintenance) or a maintenance program that is more time-based – for instance preventive maintenance.
- Warehousing and Storage: Storage and warehousing facilities are the core of the sourcing and end product stages. The warehouse facility management includes labor costs, utility and equipment, information-handling systems, and all maintenance related to supplies, ordering, and storing of the goods.
- If a temperature-controlled environment is needed both for warehousing and transporting, then it has to be maintained at optimal levels to preclude any losses and damages.
- Store maintenance and delivery to customers: The task does not end with just delivering goods to their destination. The goods need to be in good condition for delivery, even the store space that receives goods has to be well maintained.
Why is supply chain management important in operations and maintenance management?
Both SCM and operations management work in tandem to improve their operations through
- Delivery Costs
- Relationships with suppliers
An efficient supply chain management means higher efficiency at an optimal cost. Operations management means keeping the machinery involved in the SCM, aka inventory management, manufacturing and factory floor management, storage, and transport, to be run at the highest efficiency and without hiccups.
Examples of SCM and OM being run at optimal levels
It’s critical to monitor relevant metrics and KPIs to ensure solid benchmarks for essential services and product life cycles. Some key metrics that can be applied are:
Freight Bill Accuracy
Freighting your items from supplier to warehouse or warehouse to the consumer is important, and any error can cost time and resources. Billing accuracy ensures supplier and customer satisfaction, and tracking this metric will help you spot lacuna and improve shipping accuracy.
Perfect Order Rate
It measures the success of your ability to deliver orders without any inaccuracies, damages, delays, and inventory losses. The higher the perfect order rate, the better, as it impacts your customer retention and loyalty levels.
It is a crucial indicator of efficient production planning, process strategy, fulfillment abilities, and marketing and sales management. It helps you calculate how many times your total inventory has been sold and at what time. It enables you to prepare an overall operational management efficiency report.
It is quite evident that SCM and operations management are two sides of the same coin. A collaborative relationship between the two processes will facilitate smoother and more efficient techniques of overall maintenance and management and even innovation, which is crucial for achieving growth and improving resilience.
About the author
Bryan Christiansen is the founder and CEO of Limble CMMS. Limble is a modern, easy-to-use mobile CMMS software that takes the stress and chaos out of maintenance by helping managers organize, automate, and streamline their maintenance operations.