Edward J. Anderson

In business, operations management is the development, execution, and maintenance of effective processes — whether used continuously for the production and delivery of goods or services or for the one-time execution of a major project. Some mathematical formulas come in handy to keep business operations running as smoothly as possible, from managing inventory to estimating the time and cost of a special project.

You may have heard the saying “Quality is free.” Getting your operations management to implement an effective quality system is anything but free, but the alternative usually proves to be much more expensive. Producing a quality product or service requires the whole organization to be onboard and involved. Quality begins in product design, requires attention in production, and must be at the forefront of customer service.

When assessing quality for operations management, the first question you need to ask is, “What is a quality product?” Only your customer can answer this question because quality is what the customer says it is. A quality product means different things to different people, and expectations differ from product to product.

In a process, some operations can process multiple flow units at a time and others can’t, so it’s important to analyze the operation batch size to maximize the total system’s capacity. To accommodate other operations in a process, a particular operation’s batch size may be lower than its maximum possible output.

Companies spend a lot of time and resources on process improvement projects that fail to produce the desired results in operations management. A primary reason that many projects fall short of expectations is because they fail to follow a structured approach. Documenting where a process has been and where it needs to go provides a road map — with directions — that can save an enormous amount of time and resources that may otherwise be wasted on dead ends and cul-de-sacs.

Point forecasts, or single-number predictions of demand, are generally always incorrect. You want an accurate forecast to inform your operations management. That’s why you need not only an expected value (what you think demand will be) but also a measure of your method’s forecasting error. Here are the fundamental tenets of forecasting: Aggregated forecasts are more accurate than disaggregated forecasts.

Processes vary in thousands of ways for different kinds of organizations with different kinds of operational needs. Start-up firms need to scale up rapidly, and the restaurant business requires some artistry. Pharmaceutical companies must stay focused on strict regulations, and firms in the personal computer industry must worry about shelf life.

All quality management and improvement movements share the same basic foundation, regardless of what your company calls its quality program (some companies spend more time coming up with clever names for the program than actually implementing it). This foundation is built on continuous improvement and statistical analysis.