Geoffrey Parker

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.

One size doesn’t fit all when it comes to building a supply chain. Each company needs to consider its goals and operation management strategy when designing a supply chain. Companies also need to account for the cultural aspects of their suppliers because communication is key to any successful relationship. Language barriers and the meaning of different phrases can vary across cultures, leading to misunderstandings in directions.

The bullwhip effect exists in all supply chains — it’s the root of the boom and bust cycles that occur in many operations — and it can be devastating if not properly managed. Fortunately, you have ways to manage the bullwhip and minimize its impact. The bullwhip effect is triggered by several different causes.

What’s currently called operations management evolved from a long line of discoveries, inventions, and revolutions. You may find it hard to believe that there was a time when products weren’t mass-produced and available on command. If a person wanted something, she had to make it or persuade someone to make it for her.

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.

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.

Processes fall into four different categories for operations management based on the nature of their function. Some processes relate primarily to a product’s cost structure; others address the company’s product standardization needs, output volume, or production flexibility. Take a look at processes that focus on these types of business considerations and review general guidelines on how to best select a process to meet the requirements of your product.

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.