“Regulation” is synonymous with laying down the rules and norms for doing business by all the market players and, therefore, is uniformly applicable to all market participants. “Supervision”, on the other hand, is the process through which the rules and norms are enforced at individual entity level.
Thus, on a very broad level, the difference between the two is that while regulation is applicable to the system as a whole, supervision is entity-specific, with the intensity of supervision being proportional to the perceived risk levels. By making this point, I am trying to underline that supervision is more contextual rather than being generic.