Edward J. Anderson

Material requirements planning (MRP) led to the development of enterprise resource planning (ERP). As the name implies, ERP integrates an entire company into one information system that operates on real-time data it receives from throughout the organization. The shared database ensures that every location and department can access the most reliable and up-to-date information.

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.

Managing inventory is an important way for a business to manage variations in demand. Inventory can provide a means to manage demand fluctuation so that process capacity and resource utilization are kept steady and used most efficiently.Of course, maintaining an inventory isn't cost-free or risk-free, because inventory represents tied-up cash and storage costs and comes with the risk that the inventory will spoil or become obsolete.

Unlike processes, you don’t perform projects over and over again; they’re usually one-time efforts. The metrics of success for any operations management project depends on the objectives that the project is intended to meet. Yet many project leaders spend too little time before launching a project figuring out what they want to achieve.

In many organizations, managers need to be aware of resources that perform more than one operation in a process or are shared across processes. For example, a receptionist in a doctor’s office not only greets patients but also collects payment and schedules future appointments. Similarly, a product designer may design more than one type of merchandise in a given time period for different brands.

There are a number of ways to track the progress of your operations project. One of the simplest is to set up milestones during the project planning phase of the project life cycle. If there are enough milestones and they are spaced relatively evenly, you can get a good idea of where you are in the project by tracking which milestones have been completed on a regular basis.

If, as an operations manager, you’re lucky enough to be in a situation where demand for your product or service exceeds your ability to make the products or deliver the service, then you want to find ways to increase your production so you can sell more. Effective management of your bottleneck, or constraint — resources that limit a process’s output — is a key to productivity and profitability.

Good operations management is essential for quality. Quality begins with a product’s design, which determines how well the product will meet customers’ needs and, to a large extent, drives the cost of production. Therefore, it’s critical that marketing, product design, and manufacturing work together. Quality function deployment (QFD) is a structured approach for integrating customers’ requirements into a product; it’s also the process used to create the product.