MBA Boot Camp: Operations Management Basics (6.1)
Concepts & Vocabulary
Operations Management: The administration of business practices to create the highest level of efficiency possible. It’s the process of converting materials and labor into goods and services.
Supply Chain: The entire interconnected network of individuals, organizations, resources, activities, and technologies involved in the creation and sale of a product.
Logistics: A specific piece of the supply chain. It refers specifically to the physical movement and storage of goods from point A to point B.
Core Lesson: The Execution Engine
If a business is a car, strategy is the steering wheel, finance is the gas gauge, and operations is the engine.
A standard supply chain looks like this: Raw Materials → Supplier → Manufacturer → Distributor → Retailer → Consumer
Every step in this chain adds cost, but it must also add value. If a distributor isn't adding value, a company will try to cut them out (this is called "Direct-to-Consumer" or D2C, like Warby Parker or Casper mattresses).
The MBA Marketing Insight: Marketers love to promise fast, free shipping because it increases conversion rates (sales). But "free shipping" doesn't exist—it just means the company is eating the logistics cost. An MBA marketer works with the Ops team to calculate exactly how much shipping costs, ensuring the marketing promotion doesn't accidentally destroy the profit margin.
Application & Reflection
The company that springs to mind when I think about supply chain in the library world is Baker & Taylor, which went out of business right as I was making my career pivot. Baker & Taylor provided a lot of discounts to libraries, as they tried to compete with the likes of Amazon on one side and the focused niche specialists on the other side (e.g. Junior Library Guild, Penworthy). The problem is that these numbers didn’t add up to a business that could survive and the company collapsed from bad management.
